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.     

Valuation in Over-the-Counter Markets

We provide the impact on asset prices of search-and-bargainingfrictions in over-the-counter markets. Under certain conditions,illiquidity discounts are higher when counterparties are harderto find, when sellers have less bargaining power, when the fractionof qualified owners is smaller, or when risk aversion, volatility,or hedging demand is larger. Supply shocks cause prices to jump,and then "recover" over time, with a time signature that isexaggerated by search frictions: The price jump is larger andthe recovery is slower in less liquid markets. We discuss avariety of empirical implications.     

The determinants of industry concentration: two new empirical regularities

This paper reports two new empirical regularities concerning industry concentration. First, concentration levels closely correlate in related industries. Second, the correlation is moderated by the degree of relatedness between the industries. These regularities are derived from the Trinet database, using a survivor‐based measure of relatedness. We argue that these previously overlooked relations may be explained in terms of (1) ‘spillover effects’ between industries and (2) life cycle factors. Copyright © 2009 John Wiley & Sons, Ltd.     

The taxation of foreign profits — The old view,the new view and a pragmatic view

The increasing importance of multinational firms raises the question as to whether and how governments should tax repatriated profits, i.e. affiliate profits returned to the headquarters. The answer to this question is especially relevant for profit repatriations within the European Union where multinational firm investment is substantial and tax competition is supposed to be of rising intensity. This paper reviews the criticism of the standard view (the “old view”) of foreign profit taxation, which goes back to Peggy Musgrave. The “new view” of international taxation is based on recent empirical studies and favours a system in which foreign profits are exempt from tax. The debate between old view and new view proponents is critically discussed and, finally, the two are confronted with a “pragmatic view” on foreign profit taxation which crucially incorporates compliance and tax administration costs.