Fiscal economy potentials of a county structure reform in Saxony-Anhalt
Simone Scharfe
Wirtschaft im Wandel,
No. 5,
2006
Abstract
In view of the foreseeable demographic and finance-political developments the public house holds of Eastern Germany are under considerable strain to consolidate. This applies particularly to Saxony-Anhalt and there especially to local authorities. In 2003 the municipal expenses level (running material expenses and personnel expenses) of counties and communities in Saxony-Anhalt amounted 1,015 Euro per inhabitant and was clearly higher than the other East German states. Beyond the means of economisation through the efficient application of public funds, considerations are given to the potentials of country structure reforms. In the last legislative period, the CDU/FDP government already established the amalgamation of 24 counties to eleven new ones with the bill of 11.11.2005. The SPD - as an oppositional party at that time - submitted a proposal for an even further-reaching structural change with a concentration to five counties. This article comprises an estimation of the fiscal economisation potentials of both versions. In the first step, the (long term accessible) county expense levels of Saxony-Anhalt within the scope of the existing structure of a county is determined with the help of a Benchmarkanalysis. These results are then compared with expected expense levels of a reformed county structure which leads to the saving effect of the respective county reform. In the result of the analysis it appears that the suggestion of the SPD to the county structure reform allows to expect clearly higher saving effects than the suggestion of the former CDU/FDP government, a strong meaning of the already enforced community administrative reform is imputable.
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Longterm development of return on assets – an empirical panel data analysis
Olaf Neubert
Wirtschaft im Wandel,
No. 5,
2006
Abstract
One of the basic propositions of economic theory is the fact that competition does not allow permanent very high or very low returns. But how can the permanent surplus gain of a monopolist be distinguished from innovation gains? In which markets is a regulatory interference necessary? Contrary to the static analysis, the concept of dynamic competition explicitly considers the temporal development of return and gain. An entrepreneur can achieve an advantage over the competitors through new products or new production processes. Hence arising innovation gains function as incentives for imitators to join the development which in turn leads to a reduction of the surplus gains. Thus, these gains are not contradictory to an effective competition. On the basis of annual balance sheets of German firms, this article analyses the temporal development of returns on assets. It is to evaluate whether the adaptation process assumed by Schumpeter that matches very high and very low gains with a longterm level can be confirmed, and how fast this process works. The average industry returns of the manufacturing industry show a convergence to a longterm level. During this process, an average of 40% of the deviation from the longterm level are melted every year. However, the analysis of company returns shows longterm differences. The adaptation rate of companies, 50%, is significantly higher compared to the industry value. The analysis of the connection between the adaptation rate and the longterm return level of companies proves that companies which face above-average competition strength obtain a higher longterm return level than other companies. When firms operate within markets with high stress of competition they do not achieve below-average returns but rather significantly above-average returns in the long term.
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The Loss Distribution of the Entrepreneurial Bad Debt Risk – a Simulation-based Model
Henry Dannenberg
IWH Discussion Papers,
No. 10,
2006
Abstract
The risk of bad debt losses evolves for companies which grant payment targets. Possible losses have to be covered by these companies equity and liquidity reserves. The question of how to quantify the level of risk of bad debt losses will be discussed in this paper. Input values of this risk are the probability of default, exposure at default and loss given default. It is shown how companies can derive probability functions to describe uncertainty and variability for each input value. Based on these probability functions a simulation model is developed to quantify the risk of bad debt losses. Based on an empirical study probability functions for probability of default and loss given default are presented.
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Does Transparency of Central Banks produce Multiple Equilibria on Currency Markets?
Axel Lindner
Scandinavian Journal of Economics,
No. 1,
2006
Abstract
A recent strand of literature shows that multiple equilibria in models of markets for pegged currencies vanish if there is slightly diverse information among traders; see Morris and Shin (2001). It is known that this approach works only if the common knowledge in the market is not too precise. This has led to the conclusion that central banks should try to avoid making their information common knowledge. We develop a model in which more transparency of the central bank implies better private information, because each trader utilises public information according to her own private information. Thus, transparency makes multiple equilibria less likely.
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Forced to Freedom? Empirical Relations between Aid and Economic Freedom
Tobias Knedlik, Franz Kronthaler
IWH Discussion Papers,
No. 8,
2006
Abstract
The paper explores the relationships between economic freedom on the one side and development aid and IMF credit as approximation for conditional aid on the other side. After a short review of current literature on the issue of economic development, economic freedom, aid, and IMF credit, the paper develops a simple panel regression model to evaluate the relationship between “economic freedom” as dependent variable and “aid” and “IMF credit” as independent variables. The estimation is based upon data taken from the World Bank’s World Development Indicators and the Heritage Index of Economic Freedom. In contrast to previous research, our results allow the rejection of the hypothesis that IMF credit increases economic freedom and that aid is not contributing to economic freedom. The estimation results suggest that, firstly, aid is positively correlated with economic freedom, and secondly, that IMF credit is negatively correlated with economic freedom. Taking IMF credit as proxy for conditional aid, we conclude that for the period of observation it could not be shown that countries can be forced to economic freedom by aid conditions.
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Network Investment and the Threat of Regulation – Preventing Monopoly Exploitation or Infrastructure Construction?
Ulrich Blum, Christian Growitsch, Niels Krap
IWH Discussion Papers,
No. 7,
2006
Abstract
In summer 2005, the German telecommunication incumbent Deutsche Telekom announced its plans to build a new broadband fibre optics network. Deutsche Telekom decided as precondition for this new network not to be regulated with respect to pricing and third party access. To develop a regulator's strategy that allows investments and prevents monopolistic prices at the same time, we model an incumbent's decision problem under a threat of regulation in a game-theoretical context. The decision whether to invest or not depends on the probability of regulation and its assumed impact on investment returns. Depending on the incumbent's expectation on these parameters, he will decide if the investment is favourable, and which price to best set. This price is below a non-regulated profit maximising price, since the incumbent tries to circumvent regulation. Thus, we show that the mere threat of a regulator's intervention might prevent supernormal profits without actual price regulation. The regulator, on the other hand, can influence both investment decision and the incumbent's price via his signals on regulation probability and price. These signals an be considered optimal, if they simultaneously allow investment and minimize the incumbent's price.
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Progressivity and Flexibility in Developing an Effective Competition Regime: Using Experiences of Poland, Ukraine, and South Africa for developing countries
Franz Kronthaler, Johannes Stephan
IWH Discussion Papers,
No. 6,
2006
Abstract
The paper discusses the role of the concept of special and differential treatment in the framework of regional trade agreements for the development of a competition regime. After a discussion of the main characteristics and possible shortfalls of those concepts, three case countries are assessed in terms of their experience with progressivity, flexibility, and technical and financial assistance: Poland was led to align its competition laws to match the model of the EU. The Ukraine opted voluntarily for the European model, this despite its intense integration mainly with Russia. South Africa, a developing country that emerged from a highly segregated social fabric and an economy dominated by large conglomerates with concentrated ownership. All three countries enacted (or comprehensively reformed) their competition laws in an attempt to face the challenges of economic integration and catch up development on the one hand and particular social problems on the other. Hence, their experience may be pivotal for a variety of different developing countries who are in negotiations to include competition issues in regional trade agreements. The results suggest that the design of such competition issues have to reflect country-particularities to achieve an efficient competition regime.
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Management von Mitarbeiterrisiken in Unternehmen
Henry Dannenberg
Risikomanagement im Unternehmen Praxisratgeber für die Einführung und Umsetzung, Kapitel 12-7,
2006
Abstract
The paper shows how to quantify the risk of loosing employees. Firstly, reasons will be determined that explain the loss of an employee. Dependent on these reasons, it is shown how to quantify the probability of losing an employee and possible losses that follow an employee loss. Based on these components of risks, a simulation based model is developed which aggregates the risk of all employees of a company to the distribution of the employees risk for the whole company. Finally, a tool for an easy calculating of this risk is presented.
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A Game Theoretic Analysis of the Conditions of Knowledge Transfer by New Employees in Companies
Sidonia vonLedebur
IWH Discussion Papers,
No. 3,
2006
Abstract
The availability of knowledge is an essential factor for an economy in global competition. Companies realise innovations by creating and implementing new knowledge. Sources of innovative ideas are partners in the production network but also new employees coming from another company or academia. Based on a model by HECKATHORN (1996) the conditions of efficient knowledge transfer in a team are analysed. Offering knowledge to a colleague can not be controlled directly by the company due to information asymmetries. Thus the management has to provide incentives which motivate the employees to act in favour of the company by providing their knowledge to the rest of the team and likewise to learn from colleagues. The game theoretic analysis aims at investigating how to arrange these incentives efficiently. Several factors are relevant, especially the individual costs of participating in the transfer. These consist mainly of the existing absorptive capacity and the working atmosphere. The model is a 2x2 game but is at least partly generalised on more players. The relevance of the adequate team size is shown: more developers may increase the total profit of an innovation
(before paying the involved people) but when additional wages are paid to each person a greater team decreases the remaining company profit. A further result is
that depending on the cost structure perfect knowledge transfer is not always best for the profit of the company. These formal results are consistent with empirical studies to the absorptive capacity and the working atmosphere.
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Angewandte Industrieökonomik: Theorien, Modelle, Anwendungen
Ulrich Blum, Simone Müller, Andreas Weiske
,
2006
Abstract
Modern entrepreneurship comprises a mix of bourgeois morale and the striving for adventure: Bourgeois morale implies efficiency, reputation, the rule of the law. And adventure implies new frontiers, the spirit of competition, innovation and a pioneer’s attitude – up to the destruction of competitors. The modern entrepreneur’s social position thus is a ambiguous; the entrepreneur needs a special attitude with respect to economic activity as discussed by Werner Sombard (1913) and Max Weber (1905); society has to accept the positive ethical quality of profit seeking in order to survive. The modern theory of the enterprise promoted by neoclassic theory does not include any of these elements of real entrepreneurship. Industrial organisation theory tries to structure models closer to reality, thus allowing empirical testing. In many aspects, it is based on neoclassic theory, but also accepts the concept of strategic behaviour which includes potential reactions of other market participants in ones own activities. Elements of evolutionary economics, risk theory and modern information theory thus become important. The overarching question of the entrepreneur, who strives for a higher than normal profit in the market becomes: under which conditions should I enter the market and under which conditions will potential entrants do the same? How should I set my prizes and what reactions must I expect? How can I signal friendly behaviour to competitors? How can I differentiate myself from them? What importance do innovations and advertising have? The book roles out these questions in three large chapters on technology and market structure, on prize setting and signalling, and on research, development and innovation. An introduction explains individual behavioural patterns within the societal context – often in a historical perspective. Three methodological chapters introduce the reader into strategic thinking as the core aspect of the industrial organisation theory, the “old industrial organisation theory” and the neoclassic basic models. Each chapter is extended by exercises and tips for solutions.
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