Browsing by Subject "511 Economics"

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  • Ekman, Mats Johan (2017-12-21)
    This article extends the Coase Conjecture to ethical issues of property rights. The Coase Conjecture combines well with the Lockean labour-mixing criterion to limit the boundaries of morally legitimate initial acquisitions of unowned property; whenever the Coase Conjecture applies, the Lockean Proviso that there be “enough and as good” left is automatically satisfied. The essential point is that, when a claim is made, the marginal willingness to pay for the last portion of it is zero (infra-marginally, willingness to pay may be arbitrarily high). Thus, the market price of the claim is zero, except for the part of it that the claimant inhabits or improves. “Excessive” claims therefore come to have a zero market price, so anyone may take possession of them, by purchase or theft. In either case they must compensate the original claimant by a zero amount. It follows that non-claimants do not lose by putatively “excessive” grabs by claimants. Under these circumstances, any initial claims are just.
  • Fredström, Ashkan; Peltonen, Juhana; Wincent, Joakim (2020-02-21)
    Developing the concept of institutional incongruence and employing panel data from 60 countries, we outline an alternative view of the informal economy and the effects of regulative institutions on entrepreneurship productivity. We find evidence that the informal economy's size is, largely, negatively associated with entrepreneurship productivity, and that in the presence of a large informal economy, governmental efforts to improve governance quality can be counterproductive. Our results suggest policy interventions aimed at changing institutions to practice formal entrepreneurship should be implemented cautiously to avoid inducing institutional incongruence.
  • Catani, Paul; Teräsvirta, Timo; Yin, Meiqun (2017)
    A Lagrange multiplier test for testing the parametric structure of a constant conditional correlation-generalized autoregressive conditional heteroskedasticity (CCC-GARCH) model is proposed. The test is based on decomposing the CCC-GARCH model multiplicatively into two components, one of which represents the null model, whereas the other one describes the misspecification. A simulation study shows that the test has good finite sample properties. We compare the test with other tests for misspecification of multivariate GARCH models. The test has high power against alternatives where the misspecification is in the GARCH parameters and is superior to other tests. The test is not greatly affected by misspecification in the conditional correlations and is therefore well suited for considering misspecification of GARCH equations.
  • Miettinen, Topi; Poutvaara, Panu (2014-03)
  • Gehrig, Thomas; Shy, Oz; Stenbacka, Rune (2012)
  • Hyytinen, Ari; Steen, Frode; Toivanen, Otto (2018-07-26)
    We study the contracts of 898 legal Finnish cartels. Cartels that exclusively allocate markets, either geographically or in the product/production space, are dominant in manufacturing. They are often bilateral and include a vertical dimension. Structural industry characteristics predict the type of a cartel; e.g., consistent with theory, quota cartels are more common in manufacturing and when buyers are primarily industrial. The contracts of quota cartels include more (governance) clauses. Pure pricing cartels are the dominant cartel type in non‐manufacturing and are more common when demand is primarily from retail buyers. Pricing cartels are larger than other types of cartels.
  • Boly, Amadou; Gillanders, Robert (2018-06-19)
    We analyse policymakers’ incentives to fight corruption under different institutional qualities. We find that ‘public officials’, even when non-corrupt, significantly distort anti-corruption institutions by choosing a lower detection probability when this probability applies to their own actions (legal equality), compared to a setting where it does not (legal inequality). More surprising perhaps is the finding that policy-makers do not choose a zero level of detection on average, even when it applies to them too. Finally, corruption is significantly lower when the detection probability is exogenously set, suggesting that the institutional power to choose detection can itself be corruptive.
  • Shy, Oz; Stenbacka, Rune (2018-09-18)
    We construct an overlapping generations growth model, where young consumers choose how to allocate resources among real investment (deposits), acquisition of bank ownership, and young-age consumption. At old age, consumers sell bank ownership and collect their bank deposits to support consumption. The model shows that an increase in banks’ market power stimulates bank profit and bank value, thereby raising the resources required for young consumers to acquire bank ownership. This causes a crowding-out effect on real investment, the magnitude of which is amplified with higher endowment growth rate and real investment return. Finally, we conduct a welfare analysis of the investment crowding-out effect.
  • Hyytinen, Ari; Steen, Frode; Toivanen, Otto (2018)
    How many cartels are there, and how long do they live? The answers to these questions are important in assessing the need for competition policy. We present a Hidden Markov Model that takes into account that often it is not known whether a cartel exists or not. We take the model to data from a period of legal cartels - Finnish manufacturing industries 1951-1990. Our estimates suggest that once born, cartels are persistent; by the end of the period, almost all industries were cartelized.
  • Miettinen, Topi; Perea, Andrés (2015-07)
  • Stenbacka, Rune; Tombak, Mihkel (2020-03-12)
    We develop a model including many features of health care systems: a limited number of approved treatments of certain qualities, insurance schemes reimbursing costs of a standard service, and nonprofit organizations competing with for-profit suppliers. All the equilibria exhibit quality differentiation, and the nonprofit captures a higher market share. Nonprofits (for-profits) supply the standard service when the quality upgrade induces a sufficiently high (low) increase in production costs. When the nonprofit provides the standard quality, all patients are served. In contrast, in a for-profit duopoly the standard-quality provider chargesa price premium, implying that there are excluded consumers.
  • Korkeamäki, Timo; Pöyry, Salla Fanny Helena; Suo, Maiju (2014)
  • Stenbacka, Rune; Van Moer, Geert (2021-02-12)
    Even though cross ownership raises industry profits, we demonstrate that it is prone to a commitment problem. Specifically, we show that producers in a Cournot duopoly have unilateral incentives to resell their minority share-holdings in the rival to outside investors, leading to an equilibrium with complete divestments. This feature challenges the stability of cross ownership configurations.
  • Tatham, Peter; Oloruntoba, Richard; Spens, Karen (2012)
  • Rönnqvist, Samuel; Sarlin, Peter (IEEE Computer Society, 2015)
  • Boly, Amadou; Gillanders, Robert; Miettinen, Topi (2019-06)
    In our framed laboratory experiment, two Public Officials, A and B, make consecutive decisions regarding embezzlement from separate funds. Official B observes Official A’s decisions before making his/her own. We find a contagion effect of embezzlement in that facing a corrupt official A increases the likelihood of embezzlement by Official B. Likewise, deterrence matters in that higher detection probabilities significantly decrease the likelihood of embezzlement. Crucially, when the same deterrence policy applies to both officials, detection is more effective in curbing embezzlement if chosen by an honest public official A rather than a corrupt public official A. This legitimacy effect may help explain why anti-corruption policies can fail in countries where the government itself is believed (or known) to be corrupt.
  • Andersson, Ola; Ingebretsen Carlson, Jim; Wengström, Erik (2021-04-16)
    Several behavioural models of choice assume that decision makers place more weight on attributes where options differ more, an assumption we test in a set of experiments. We find that subjects are more likely to choose an option when we add options increasing the maximal difference in the original option’s strongest attribute, suggesting that the decision maker’s focus is drawn to attributes with a high spread. Additional experiments corroborate this finding. Still, we document that the focusing effect diminishes when options are presented using numbers instead of graphs or when subjects are forced to wait before submitting their answers.
  • Holmén, Martin; Nivorozhkin, Eugene; Rana, Rakesh (2014)
    In this paper we use Heckman selection models to analyse the relation between the likelihood of the firm becoming a takeover target, the takeover premium, and the use of anti-takeover devices. Ordinary least squares regressions suggest that anti-takeover devices, especially dual class shares, are associated with a higher takeover premium. However, we also document that anti-takeover devices reduce the likelihood that the firm will be taken over. When we control for the fact that takeover targets are selected, we do not find a significant relation between the takeover premium and dual class shares. Hence, our results suggest that the takeover premium is indeed influenced by private information about the likelihood of takeover.
  • Peltonen, Juhana; Johansson, Edvard; Wincent, Joakim (2020-06-22)
    Attention‐deficit hyperactivity disorder (ADHD) is a highly inheritable condition with a rather stable prevalence over time and geography, and it is associated with a broad range of negative life outcomes. Increasing knowledge on the condition has led to a growing trend of dampening ADHD symptoms through medication. Although this development has led to many positive outcomes, the broader societal implications are still poorly understood. In particular, person‐level studies suggest that ADHD‐like behavior may possess some advantages for engaging in entrepreneurship and the initiation of new businesses, which is considered a key activity for economic development. Using recent panel data from 11 countries and one special administrative region (SAR), we investigate if the increasing use of ADHD medication in adults is associated with an unintended outcome of reducing entrepreneurship. We find that a roughly one unit increase in the prevalence of adult ADHD medication is associated with a one unit decrease in limited liability company registrations per working age population. In practical terms, the effect of a one within‐country/SAR standard deviation increase of adult ADHD medication prevalence corresponds to a decrease in new business formation of 20% of its mean in the sample.
  • Afzali, Mansoor; Colak, Gonul; Fu, Mengchuan (2021-12-01)
    We study the influence of policy uncertainty on the moral behavior of firms. When facing uncertainty, managers perceive various socioeconomic obstacles as more severe and disruptive to their business. Using data from policy uncertainty spouts in 93 countries, we document that some firms engage in norm-deviant behavior by cheating on taxes and paying more bribes. While private firms prefer to cheat on taxes, public firms choose bribery as a favorite tool to “grease the wheels” during periods of uncertainty. Strong social capital (local trust and religiosity) breaks this link between uncertainty and corruption.