The West’s contribution to the modernization of China—

It is China’s intention to draw level with world standards in crucial areas of production, services and infrastructure by the end of the twentieth century. The Chinese development objectives are creating an interest in close cooperation with the Western industrialized nations wishing to contribute to the modernization of China? What limits have to be kept in view?     

Enlargement and the EU budget: The battles ahead

The coming enlargement of the EU is unprecedented as regards both the number of acceding countries and the wealth differentials existing between the Union's current members and the candidates. The contributors to this forum present their views on how the complex financial issues involved can be solved in a way that will enable the enlarging Union to continue to function while ensuring a fair distribution of the costs and benefits of enlargement. This article is part of the project “Membership of Central and Eastern European Countries in the EU” funded by the Otto Wolff-Stiftung, Cologne.     

Can the HM-test be brought to an end?

A significant change seen in the new regulatory framework for communications markets regards issues of market delineation. Relevant markets according to the new regulatory framework should be defined in accordance with competition law methodology/principles, most notably the so-called Hypothetical Monopolist Test (HM-test). Our discussion points to the conceptual and practical difficulties associated with evaluating the effects of a 5–10% price increase on the costs and therefore on the profitability of a hypothetical monopolist. Applying our analysis to fixed retail voice telephony markets we show that, in the presence of scale economies, final results crucially depend on assumptions about the cost function, in particular the relation of variable to fixed costs and the resulting (competitive) margin. The latter, in turn, will depend on the time horizon that is deemed to be relevant for market delineation purposes. Overall quantitative techniques applied to carry out the HM-test rigorously on empirical grounds are highly sensible to those assumptions a priori even if one assumes that (empirical) estimates of elasticities can be derived reasonably.*The views expressed are those of the authors and do not represent those of RTR or TKK.     

Tarifpartnerschaft — ein altes,aber gefährdetes Bündnis?

100 years ago, in November 1918, the Stinnes Legien Agreement was drawn up between various employers’ associations and trade unions. It included collective bargaining autonomy and collective agreements, the eight-hour work day and work councils. It soon failed, but served as a model for the legal regulation of collective bargaining relations after the Second World War. In the meantime, however, collective bargaining has declined significantly. Many employers are members of their associations without a collective agreement. At the same time, union memberships are declining. In view of increasingly precarious forms of employment, the government apparently needs to implement stronger regulations on collective bargaining relations again, such as the Minimum Wage Act. Finally, a look back: In 1918, editorial member Alfred Schmidt-Essen commented on the agreement from a current perspective. We document the article.     

Problems with leakages at large flanges in the BASF new ammonia plant

Leakage from large diameter flanges had occurred several times in a new 1360 t/d ammonia plant. One such incident resulted in a large fire. The causes of this incident are examined.     

The purity of impure public goods

In this paper, we provide a new perspective on the links between the analysis of the voluntary provision of pure and impure public goods. In particular, it is shown that the impure public good model can be transformed into a pure public good one. This innovative method not only leads to new comparative statics results, but also provides new insights on the impure public good model, for example, on causes of the nonneutrality of income transfers with regard to Nash equilibria in the impure public good case.     

Substitution across profit shifting methods and the impact on thin capitalization rules

International Tax and Public Finance - Thin capitalization rules limit firms’ ability to deduct internal interest payments from taxable income, thereby restricting debt shifting activities of...     

Decomposing industry leverage: The special cases of real estate investment trusts and technology & hardware companies

Different industries exhibit significantly different leverage; companies in the real estate investment trust (REIT) and technology/hardware sectors are extreme examples. In the United States, the leverage ratio is twice as high for REITs (50%) as compared to non-real-estate firms (around 25%), and the technology/hardware sector has the lowest ratio (around 17%). We theoretically and empirically analyze their differences. By decomposing the difference into three channels, we find that the industry-specific channel explains around 67% for REITs and 68% for technology/hardware firms; the value-based channel is mostly responsible for the remaining portion. Taking the nonlinear influences of extreme values into account, the relevance of the industry-specific channel is considerably reduced.     

An Italian perspective on the development of financial mathematics from 1992 to 2008

This paper is intended to be a survey of the development of financial mathematics as seen through the events that I organised, and partly co-organised, between 1992 and 2008. These events all took place in Italy between 1992 and 2003, while in 2008 I was involved in the organisation of an entire special semester in Linz (Austria); this semester is included here because it marks quite well the state-of-the-art of the period just before the so-called big financial crisis that lasted from, roughly, 2008 to 2012. Even if the survey may be affected by my personal views, it can still be seen as reflecting the actual global development since what I am going to describe here concerns major occurrences. For completeness, I also mention, although only briefly, some events that took place in Italy during the given period, but where I was not personally involved.