Budget repair or budget spectacle? The passage of Wisconsin’s Act 10

Strategic planning processes use budgets to implement control and accountability. However, budgets can also be used to generate support for strategic decisions, for example by creating a political spectacle. A political spectacle is a problem engineered to have a specific political impact. This paper investigates politicians’ use of a state budget as a political manoeuvre to defend strategic decisions regarding public employee unions in Wisconsin. The analysis shows how the 2011 state budget in Wisconsin was used to create a political spectacle to generate support for eliminating collective bargaining for public workers, especially public (state) school teachers.     

Evidence of Distortionary Effects of Decoupled Payments in U.S. Indica Rice Production

Using a generalized method of moments technique for dynamic panels we estimate the acreage response of indica rice production in the U.S. to decoupled payments under the 1996 and 2002 farm bills. We find that these payments exert significant effects on the number of acres planted and, although the response is inelastic, a given change in decoupled payments may have a greater effect on acreage planted than an equal change in payments directly linked to output. Thus, even purely decoupled payments may be vulnerable to WTO sanction or de minimis limits. This research also suggests that the subsidy formula in the proposed 2014 farm bill will have a reduced distortionary effect compared to existing policies.     

Strategic Trade Policy through the Tax System

If conventional instruments of strategic trade policy are unavailable, the system of foreign profit taxation and transfer price guidelines may serve as surrogate policy instruments. In this paper, I consider a model where firms from two countries compete with each other on a market in a third country. Both firms have affiliates in the third country where (part of) the production takes place. I analyse optimal policy choices of the firms' residence countries aiming at strategically manipulating the competitiveness of their firms. I show that, first, countries prefer the tax exemption system over the tax credit system if there is no intra‐firm trade. Second, if the headquarters provide inputs for production in the affiliate, countries prefer the tax exemption system if the transfer price for these inputs is close to the headquarters' variable cost and if the residence country's tax rate is high. However, if transfer prices are high and the residence country's tax rate is low, I show that the tax credit system is an optimal tax policy choice for both countries. From a policy perspective, the view that the tax exemption system is generally the best policy response if domestic firms' competitiveness is a policy goal has to be qualified.     

Drivers of optimal prices in two-sided markets: the state of the art

In two-sided markets, a platform has two groups of customers and enables their interactions. Demand on one market side depends on demand on the other; therefore, when platforms set prices, they must consider this interdependency and set prices on both sides simultaneously. By surveying the vast theoretical marketing and economics literature, this article provides a clear and systematic overview of profit-maximizing pricing in two-sided markets. It identifies and structures the various drivers of those optimal prices. Using this framework, it summarizes the findings from prior research and offers an assessment of the state of the art with regard to drivers of optimal prices and their impacts on a platform’s price setting. This improves understanding of both the principles of two-sided markets and their optimal pricing. Finally, this state of the art paper suggests some directions for further research.     

Thoreau's economic philosophy

Abstract

This paper provides an encompassing portrayal of Thoreau's economic thought. It is analyzed against the background of the history of economic thought and the economic thinking of his time. Thoreau's economic thought is an extensive examination of the ideas of classical political economy, and particularly of Jean-Baptiste Say, and it is a fundamental critique thereof. Thoreau recognizes that some aspects and foundations of the modern conception of the economy lead to an alienation of the human being from itself as well as to an alienation from nature. I demonstrate that this critique is a result of Thoreau's specific approach to the economy, which, based on his particular understanding of the human being and his philosophy of nature, seeks the meaning of the economy for human life and for nature. In this philosophical approach, which I characterize as an economic philosophy, Thoreau's deeper defiance of classical political economy and his original place within the history of economic thought are grounded. It leads Thoreau to an alternative conception of an economy of moderation, which is identified and described in detail. I conclude with considerations on the potential meaning of Thoreau's thought for current economic research.     

Comprehensive Support for Creativity-Intensive Processes

Creativity is an important precondition of innovation. However, the management of creativity-intensive processes (CIPs) is beyond the scope of standard methodologies for business process standardization and automation because of the contradictory properties of CIPs, which require both process structure and creative freedom. We develop an explanatory design theory based on theoretical constructs from BPM theory, creativity research, and collaboration engineering, with the core component of an integrated IS architecture that facilitates the design of systems providing comprehensive support for CIPs. Automated control of structured processes and support of idea development in groups increase process efficiency and creative performance. Evaluation of a sub-portion of an expository instantiation (CreativeFlow) of the architecture in a laboratory experiment suggests that working with CreativeFlow leads to ideas that are more specific, while working without the tool generates ideas that are more feasible. Further, idea evaluation support of CreativeFlow must be improved in order to increase ideas’ feasibility and relevance. The validity of our theory is derived from a deductive development approach. We indicate limitations and further research.     

A comparative analysis of water price support versus drought compensation scheme

This paper examines the preferred governmental intervention towards crops growing methods in semi-arid regions. These regions are characterized by an average amount of rain which is sufficient to grow the crop but it is also very risky. The farmers' attitude towards risk motivates the government to encourage them to shift to more profitable and riskier crop rotations. The paper analyses two alternatives of which the government can work through: drought compensation scheme (DCS) and water price support (WPS). The semi-arid region in Israel is analyzed and policy conclusions are derived. In particular it is shown that for different sub-regions within the semi-arid region different mechanisms are preferred by the government and the farmers. Sometimes these mechanisms coincide and sometimes they do not. A welfare analyzes compares the different situations.