Public-Good Provision with Many Participants

For a nonexcludable public good with benefit and cost functions independent of the number of participants, this paper studies second-best allocations under Bayesian interim incentive compatibility and interim individual rationality. As the number of participants becomes large, second-best provision levels converge in distribution to first-best levels if the latter are bounded. Second-best provision levels become large in absolute terms but small relative to first-best levels if benefit and cost functions are isoelastic. In contrast, for an excludable public good, the ratio of second-best to first-best levels is bounded away from zero.     

A general equilibrium evaluation of trade and industrial policy changes in Austria and Hungary

A General Equilibrium Evaluation of Trade and Industrial Policy Changes in Austria and Hungary. — Two linked static CGE models — based on 1990 data — are used to study effects of trade liberalization, problems of migration and changes in industrial policy in Austria and Hungary. The huge differences in factor endowment (Hungary is relatively labour abundant, Austria is relatively capital abundant) gives Hungary a strong competitive position in the production and export of lowwage products. Austria should have comparative advantages in products with high capital content when trading with Hungary. Although trade liberalization helps to improve welfare, much stronger effects follow from factor migration and capital accumulation through the transformation process in Hungary.     

Risk aversion and incentive compatibility with ex post information asymmetry

Summary. The paper extends Diamond's (1984) analysis of financial contracting with information asymmetry ex post and endogenous “bankruptcy penalties” to allow for risk aversion of the borrower. The optimality of debt contracts, which Diamond obtained for the case of risk neutrality, is shown to be nonrobust to the introduction of risk aversion. This contrasts with the costly state verification literature, in which debt contracts are optimal for risk averse as well as risk neutral borrowers. Received: December 7, 1998; revised version: June 9, 1999     

EURATOM—Community in a crisis

The founders of the European Atomic Energy Community (EURATOM) acted “In the conviction that only a concerted action … offers the chance to achieve a performance which corresponds to the creative forces of its members”. This sentence is still anchored in the treaty of the Community, but it seems to disapper from its activities. National egoism has oppressed stronger and much earlier than in the EEC the work of EURATOM. The dispute about the research programmes is followed by the quarrel over the finances. Lack of determination to make decisions and adherence to national competences are endangering the existence of the Community. We discussed with Dr Hellwig, who is competent in the EEC Commission for the sectors of energy, research and technology, the destiny of EURATOM.     

Utilitarian mechanism design for an excludable public good

This paper studies the design of optimal utilitarian mechanisms for an excludable public good. Excludability provides a basis for making people pay for admissions; the payments can be used for redistribution and/or funding. Whereas previous work assumed that admissions are governed by the payment or nonpayment of a price, this paper allows for arbitrary admission rules. With sufficient inequality aversion, nondegenerate randomization in admissions is shown to be desirable for certain model specifications, with and without participation constraints. The paper also gives a sufficient condition on the distribution of preferences under which randomization is undesirable.     

The effects of comparative product testing on industry and trade: Findings of a research project

According to findings presented in this paper, comparative product tests substantially influence the market behaviour of industrial and trade businesses in the Federal Republic of Germany. Moreover, they most likely have an impact on market structures and market performance as well. This points to the enormous potential of product testing as an instrument of consumer and anti-trust policies. There is some evidence, however, that product testing may also produce effects which are less desirable from a consumer or anti-trust point of view. Yet, these unwanted side effects of product testing could largely be prevented by observing a number of measures, aimed at improving product test procedures. It is therefore no doubt feasible to improve the degree to which product testing meets the goals of consumer and anti-trust policy.

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Wirkungen vergleichender Warentests in Industrie und Handel — Ergebnisse eines Forschungsprojekts

Zusammenfassung Vergleichende Warentests haben nach den im vorliegenden Beitrag präsentierten Untersuchungsergebnissen in der Bundesrepublik Deutschland einen erheblichen Einfluß auf das Marktverhalten von Industrie- und Handelsunternehmen und wirken sich darüber hinaus auch mit hoher Wahrscheinlichkeit auf die Marktstrukturen und die Marktergebnisse aus. Diese Perspektiven lassen das enorme Wirkungspotential erkennen, das dem Warentest als Instrument der Verbraucher- und Wettbewerbspolitik zukommt. Es liegen jedoch Hinweise darauf vor, daß der Warentest teilweise auch Wirkungen entfaltet, die in verbraucher- und wettbewerbspolitischer Hinsicht nicht uneingeschränkt zu begrüßen sind. Der darin erkennbaren Gefahr unbeabsichtigter Nebenwirkungen des Warentests ließe sich aber durch die Verwirklichung einer Reihe vorgeschlagener Maßnahmen zur Verbesserung der Warentestpraxis in erheblichem Maße vorbeugen. Eine Verbesserung des verbraucher- und wettbewerbspolitischen Zielerreichungsgrades des Warentests liegt daher durchaus im Bereich des Möglichen.The paper is based on the research project The efficacy of comparative product testing for suppliers and consumers carried out by the research term Konsumenteninformation at the University of Mannheim under the sponsorship of the Federal Ministry of Research and Technology. The research team was led by Hans Raffée and Günter Silberer. Other team members were Friedrich Förster, Wolfgang Fritz, Gosbert Gottmann, Harald Hilger, Bernd Kierdorf, and Ulrich Schwetz. The final project reports are being published by Campus-Verlag (Frankfurt and New York); see Raffée & Silberer, 1984, and Silberer & Raffée, 1984.Translation into English of this paper was carried out by Martin Marganus.

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Hans Raffée is Professor of Marketing at the University of Mannheim. Wolfgang Fritz is a Research Assistant at the Faculty for Business Administration at the same university. Their mailing address is: Universität Mannheim, Schloß, D-6800 Mannheim 1, Federal Republic of Germany.     

Exploring Different Types of Sharing: A Proposed Segmentation of the Market for “Sharing” Businesses

Sharing instead of buying is regaining traction among today's consumers. This study aims at identifying segments of sharing consumers to unearth potentially viable clusters of a consumer behavior that is a market of growing economic relevance. By means of a qualitative study and a survey with a roughly representative sample of 1121 Swiss‐German and German consumers, a set of trait‐related, motivational, and perceived socioeconomic variables is identified that can be used to group individuals into segments that differ with regard to their approach to sharing. A cluster analysis based on these variables suggests four potential clusters of sharing consumers—sharing idealists, sharing opponents, sharing pragmatists, and sharing normatives. Two sets of testable propositions are derived that can guide further research in this domain and pave the way to a more targeted approach to the growing market of “sharing” businesses.     

An estimated two-country DSGE model of Austria and the Euro Area

We present a two-country New Open Economy Macro model of the Austrian economy within the European Union’s Economic & Monetary Union (EMU). The model includes both nominal and real frictions that have proven to be important in matching business cycle facts, and that allow for an investigation of the effects and cross-country transmission of a number of structural shocks: shocks to technologies, shocks to preferences, cost-push type shocks and policy shocks. The model is estimated using Bayesian methods on quarterly data covering the period of 1976:Q2–2005:Q1. In addition to the assessment of the relative importance of various shocks, the model also allows to investigate effects of the monetary regime switch with the final stage of the EMU and investigates in how far this has altered macroeconomic transmission. We find that Austria’s economy appears to react stronger to demand shocks, while in the rest of the Euro Area supply shocks have a stronger impact. Comparing the estimations on pre-EMU and EMU subsamples we find that the contribution of (rest of the) Euro Area shocks to Austria’s business cycle fluctuations has increased significantly.