Group Identity and Discrimination in Small Markets: Asymmetry of In-Group Favors

We experimentally study the inuence of induced group identity on the determination of prices and beliefs in a small market game. We create group identity through a focal point coordination game. Subjects play a three-person bargaining game where one seller can sell an indivisible good to one of two competing buyers under four different treatments varying the buyer-seller constellation. We find evidence of in group favoritism on the buyer side. However we do not detect a lower ask prices for in-group sellers for in-group buyers, indicating that in-group favoritism is in favor of the more powerful market participant.Group identity, Experiments, Markets, Bargaining

The European Added Value of a Directive on Combatting Violence Against Women: Annex 2 Economic Aspects and Legal Perspectives for Action at the European Level

The paper investigates the economic cost of violence against women for the EU and compares the costs of action and inaction. Violence against women is estimated to cost the EU EUR 226 billion each year, including EUR 45 billion for services and EUR 24 billion in lost economic output. The costs of preventive measures are substantially less than the cost of the violence

Company tax coordination cum tax rate competition in the European Union

This paper reviews the recent theoretical literature that analyses the European Union's policy to eliminate preferential corporate tax regimes and the proposal to introduce a consolidated EU tax base with formula apportionment for the taxation of multinational firms. Since neither proposal includes a harmonisation of corporate tax rates, a core issue is how tax competition between member states will be affected by these partial coordination measures. The conclusions from our review are supportive of the EU's ban on preferential tax regimes, but the economic incentive effects of a switch to formula apportionment are found to be ambiguous

Why borrowers pay premiums to larger lenders : empirical evidence from sovereign syndicated loans

All other terms being equal (e.g. seniority), syndicated loan contracts provide larger lending compensations (in percentage points) to institutions funding larger amounts. This paper explores empirically the motivation for such a price design on a sample of sovereign syndicated loans in the period 1990-1997. I find strong evidence that a larger premium is associated with higher renegotiation probability and information asymmetries. It hardly has any impact on the number of lenders though. This is consistent with the hypothesis that larger lenders act as main lenders, namely help reduce information asymmetries and provide services in situations of liquidity shortage. This constitutes new evidence of the existence of compensations for such unique services. Moreover, larger payment discrepancies are also associated with larger syndicated loan amounts. This provides further new evidence that larger borrowers bear additional borrowing costs

Triadic Power Relations with Production, External Markets and Multiple Agents

We discuss whether Basu's (1986) model of triadic power relations is robust to generalizations where we allow multiple landlords, merchants and laborers. In the special case of one landlord and multiple merchants we show that the landlord's threat towards any laborer becomes credible even in the original stage game model. For the case of multiple landlords we need to generalize more recent solution concepts. We add realism by allowing the laborers' reservation utilities to vary with the costs of trading in external markets and the characteristics of the laborers. We allow production by landlords and merchants, as well as Cournot competition among merchants. In equilibrium the rural wages are a function of the number of landlords and merchants, the characteristics of the laborers and distance to external markets. We estimate the model, using household survey data from Nepal, and find strong support for the triadic model.

Rethinking International Subsidy Rules. Bertelsmann Working Paper 28/02/2020

Geo-economic tensions and global collective action problems call for international cooperation to revise and de-velop rules to guide both the use of domestic subsidies and responses by governments to cross-border competition spillover effects. Current WTO rules that divide all subsidies into either prohibited or actionable cate-gories are no longer fit for purpose. Piecemeal efforts in preferential trade agreements and bi- or trilateral configurations offer a basis on which to build, but are too narrow in scope and focus. Addressing the spillover ef-fects of subsidies could start with launching a work program at the 12th Ministerial Conference of the WTO to mobilize an epistemic community concerned with subsidy policies, tasked with building a more solid evidence base on the magnitude, purpose and effects of subsidy policies

Company Tax Coordination cum Tax Rate Competition in the European Union

This paper reviews the recent theoretical literature that analyses the European Union’spolicy to eliminate preferential corporate tax regimes and the proposal to introduce aconsolidated EU tax base with formula apportionment for the taxation of multinationalfirms. Since neither proposal includes a harmonisation of corporate tax rates, a coreissue is how tax competition between member states will be affected by these partialcoordination measures. The conclusions from our review are supportive of the EU’s banon preferential tax regimes, but the economic incentive effects of a switch to formulaapportionment are found to be ambiguous.Corporate taxation, tax coordination, multinational firms

Tax Competition – Greenfield Investment versus Mergers and Acquisitions

In this paper, we analyze tax competition in a model where investor firms have the choice between two types of investment, greenfield investment and mergers and acquisitions. We show that the coexistence of these two types of investment intensifies tax competition in comparison to the case where there is only greenfield investment. If a specific tax on acquisitions is available, this result changes. Then, tax competition is mitigated compared to the pure greenfield case. The existence of an acquisition tax may even lead to corporate overtaxation.corporate taxation, mergers and acquisitions, tax competition