Max Planck Institute for Research on Collective Goods

Displaying 1-14 of 14 results

  • White Papers // Nov 2010

    Matching Allocation Problems With Endogenous Information Acquisition

    The paper introduces the assumption of costly information acquisition to the theory of mechanism design for matching allocation problems. It is shown that the assumption of endogenous information acquisition greatly changes some of the cherished results in that theory: in particular, the first-best might not be implementable. Moreover, it might...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Nov 2010

    Political Competition And Mirrleesian Income Taxation: A First Pass

    The authors study Downsian competition in a Mirrleesian model of income taxation. The competing politicians may differ in competence. If politicians engage in vote-share maximization, the less competent politician's policy proposals are attractive to the minority of rich agents, whereas those of the competent politician are attractive to the majority...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Nov 2010

    On The Existence And Prevention Of Asset Price Bubbles

    The authors develop a model of rational bubbles based on the assumptions of unknown market liquidity and limited liability of traders. In a bubble, the price of an asset rises dynamically above its steady-state value, justified by rational expectations about future price developments. The larger the expected future price increase,...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Oct 2010

    Fallacies, Irrelevant Facts, And Myths In The Discussion Of Capital Regulation: Why Bank Equity Is Not Expensive

    The authors examine the pervasive view that "Equity is expensive," which leads to claims that high capital requirements are costly and would affect credit markets adversely. They find that arguments made to support this view are fallacious, irrelevant, or very weak. For example, the return on equity contains a risk...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Sep 2010

    Public Ownership Of Banks And Economic Growth - The Role Of Heterogeneity

    In an influential paper, La Porta, Lopez-De-Silanes and Shleifer (2002) argued that public ownership of banks is associated with lower GDP growth. The authors show that this relationship does not hold for all countries, but depends on a country's financial development and political institutions. Public ownership is harmful only if...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Sep 2010

    Too Much Information Sharing? Welfare Effects Of Sharing Acquired Cost Information In Oligopoly

    By using general information structures and precision criteria based on the dispersion of conditional expectations, the authors study how oligopolists' information acquisition decisions may change the effects of information sharing on the consumer surplus. Sharing information about individual cost parameters gives the following trade-off in Cournot oligopoly. On the one...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Aug 2010

    The More The Better? Effects Of Training And Information Amount In Legal Judgments

    In an experimental study the authors investigated effects of information amount and legal training on the judgment accuracy in legal cases. In a two (legal training: yes vs. no) x two (information amount: high vs. low) between-subjects design, 90 participants judged the premeditation of a perpetrator in eight real-world cases...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Jul 2010

    Capital Regulation After The Crisis: Business As Usual?

    The paper discusses the reform of capital regulation of banks in the wake of the financial crisis of 2007/2009. Whereas the Basel Committee on Banking Supervision seems to go for marginal changes here and there, the paper calls for a thorough overhaul, moving away from risk calibration and raising capital...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Jul 2010

    The Impact Of Firm Entry Regulation On Long-Living Entrants

    What is the impact of firm entry regulation on sustained entry into self-employment? How does firm entry regulation influence the performance of long-living entrants? In this paper, the author addresses these questions by exploiting a natural experiment in firm entry regulation. After German reunification, East and West Germany faced different...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // May 2010

    Entry And Incumbent Innovation

    The authors explore how the threat of entry influences the innovation activity of an incumbent. They show that the incumbent's investment is hump-shaped in the entry threat. When the entry threat is small and increases, the incumbent invests more to deter entry, or to make it unlikely. This is due...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // May 2010

    Transaction Costs, Liquidity And Expected Returns At The Berlin Stock Exchange, 1892-1913

    The authors estimate effective spreads and round-trip transaction costs at the Berlin Stock Exchange for the period 1892-1913 using daily stock market returns for a sample of 27 stocks. The results show that transaction costs at the main stock exchange in a bank-based financial system at the turn of the...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Oct 2009

    Share To Scare: Technology Sharing In The Absence Of Intellectual Property Rights

    The author studies the incentives of Cournot duopolists to share their technologies with their competitor in markets where intellectual property rights are absent and imitation is costless. The trade-off between a signaling effect and an expropriation effect determines the technology-sharing incentives. In equilibrium at most one firm shares some of...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Feb 2009

    Strategic Information Disclosure And Competition For An Imperfectly Protected Innovation

    The imperfect appropriability of revenues from innovation affects the incentives of firms to invest, and to disclose information about their innovative productivity. It creates a free-rider effect in the competition for the innovation that countervails the familiar business-stealing effect. Moreover, it affects the disclosure incentives such that full disclosure emerges...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Dec 2008

    The Underpricing Of Initial Public Offerings In Imperial Germany, 1870-1896

    In this paper, the authors evaluate under pricing of Initial Public Offerings (IPOs) at the Berlin Stock Exchange between 1870 and 1896. In contrast to modern data, first day returns were extraordinary low and averaged less than five percent, even during the speculative period of the early 1870s. Moreover, standard...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Oct 2009

    Share To Scare: Technology Sharing In The Absence Of Intellectual Property Rights

    The author studies the incentives of Cournot duopolists to share their technologies with their competitor in markets where intellectual property rights are absent and imitation is costless. The trade-off between a signaling effect and an expropriation effect determines the technology-sharing incentives. In equilibrium at most one firm shares some of...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // May 2010

    Entry And Incumbent Innovation

    The authors explore how the threat of entry influences the innovation activity of an incumbent. They show that the incumbent's investment is hump-shaped in the entry threat. When the entry threat is small and increases, the incumbent invests more to deter entry, or to make it unlikely. This is due...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // May 2010

    Transaction Costs, Liquidity And Expected Returns At The Berlin Stock Exchange, 1892-1913

    The authors estimate effective spreads and round-trip transaction costs at the Berlin Stock Exchange for the period 1892-1913 using daily stock market returns for a sample of 27 stocks. The results show that transaction costs at the main stock exchange in a bank-based financial system at the turn of the...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Jul 2010

    Capital Regulation After The Crisis: Business As Usual?

    The paper discusses the reform of capital regulation of banks in the wake of the financial crisis of 2007/2009. Whereas the Basel Committee on Banking Supervision seems to go for marginal changes here and there, the paper calls for a thorough overhaul, moving away from risk calibration and raising capital...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Sep 2010

    Too Much Information Sharing? Welfare Effects Of Sharing Acquired Cost Information In Oligopoly

    By using general information structures and precision criteria based on the dispersion of conditional expectations, the authors study how oligopolists' information acquisition decisions may change the effects of information sharing on the consumer surplus. Sharing information about individual cost parameters gives the following trade-off in Cournot oligopoly. On the one...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Sep 2010

    Public Ownership Of Banks And Economic Growth - The Role Of Heterogeneity

    In an influential paper, La Porta, Lopez-De-Silanes and Shleifer (2002) argued that public ownership of banks is associated with lower GDP growth. The authors show that this relationship does not hold for all countries, but depends on a country's financial development and political institutions. Public ownership is harmful only if...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Nov 2010

    Matching Allocation Problems With Endogenous Information Acquisition

    The paper introduces the assumption of costly information acquisition to the theory of mechanism design for matching allocation problems. It is shown that the assumption of endogenous information acquisition greatly changes some of the cherished results in that theory: in particular, the first-best might not be implementable. Moreover, it might...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Feb 2009

    Strategic Information Disclosure And Competition For An Imperfectly Protected Innovation

    The imperfect appropriability of revenues from innovation affects the incentives of firms to invest, and to disclose information about their innovative productivity. It creates a free-rider effect in the competition for the innovation that countervails the familiar business-stealing effect. Moreover, it affects the disclosure incentives such that full disclosure emerges...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Aug 2010

    The More The Better? Effects Of Training And Information Amount In Legal Judgments

    In an experimental study the authors investigated effects of information amount and legal training on the judgment accuracy in legal cases. In a two (legal training: yes vs. no) x two (information amount: high vs. low) between-subjects design, 90 participants judged the premeditation of a perpetrator in eight real-world cases...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Jul 2010

    The Impact Of Firm Entry Regulation On Long-Living Entrants

    What is the impact of firm entry regulation on sustained entry into self-employment? How does firm entry regulation influence the performance of long-living entrants? In this paper, the author addresses these questions by exploiting a natural experiment in firm entry regulation. After German reunification, East and West Germany faced different...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Oct 2010

    Fallacies, Irrelevant Facts, And Myths In The Discussion Of Capital Regulation: Why Bank Equity Is Not Expensive

    The authors examine the pervasive view that "Equity is expensive," which leads to claims that high capital requirements are costly and would affect credit markets adversely. They find that arguments made to support this view are fallacious, irrelevant, or very weak. For example, the return on equity contains a risk...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Nov 2010

    On The Existence And Prevention Of Asset Price Bubbles

    The authors develop a model of rational bubbles based on the assumptions of unknown market liquidity and limited liability of traders. In a bubble, the price of an asset rises dynamically above its steady-state value, justified by rational expectations about future price developments. The larger the expected future price increase,...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Nov 2010

    Political Competition And Mirrleesian Income Taxation: A First Pass

    The authors study Downsian competition in a Mirrleesian model of income taxation. The competing politicians may differ in competence. If politicians engage in vote-share maximization, the less competent politician's policy proposals are attractive to the minority of rich agents, whereas those of the competent politician are attractive to the majority...

    Provided By Max Planck Institute for Research on Collective Goods

  • White Papers // Dec 2008

    The Underpricing Of Initial Public Offerings In Imperial Germany, 1870-1896

    In this paper, the authors evaluate under pricing of Initial Public Offerings (IPOs) at the Berlin Stock Exchange between 1870 and 1896. In contrast to modern data, first day returns were extraordinary low and averaged less than five percent, even during the speculative period of the early 1870s. Moreover, standard...

    Provided By Max Planck Institute for Research on Collective Goods