Gambling in contests with regret

This paper discusses the gambling contest introduced in Seel & Strack (Gambling in contests, Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 375, Mar 2012.) and considers the impact of adding a penalty associated with failure to follow a winning strategy. The Seel & Strack model consists of $n$-agents each of whom privately observes a transient diffusion process and chooses when to stop it. The player with the highest stopped value wins the contest, and each player's objective is to maximise their probability of winning the contest. We give a new derivation of the results of Seel & Strack based on a Lagrangian approach. Moreover, we consider an extension of the problem in which in the case when an agent is penalised when their strategy is suboptimal, in the sense that they do not win the contest, but there existed an alternative strategy which would have resulted in victory

When do firms leave cartels? Determinants and the impact on cartel survival

We use a dataset of 615 firms which participated in 114 illegal cartels – convicted by the European Commission between 1999 and 2016 – to investigate the determinants of the duration of a firm’s participation in a cartel. Applying a Weibull proportional hazard model with a particular focus on the impact of internal and external time-varying determinants, we find that firms show an increased probability to leave a cartel if prior exits occurred as well as in periods of high demand growth. However, we find a reduced exit probability in situations of prior entries to the cartel or in periods of high interest rates. Additional estimations on the cartel level further suggest that firm exits increase the probability of a cartel breakdown substantially

Evaluating Treatment Effect and Causal Effect of Fiscal Rules on Procyclicality New assessments on old debate: rules vs. discretion

This article is the first to renews the old debate of "rules versus. discretion" by introducing propensity score matching methods in macro analysis, such as Tapsoba (2012), and by using instrumental methods, to consider the national stability culture. By taking into account, at the same time, the self-selection problem and the omitted unobserved factor bias, in a sample of 126 countries of all level of development over the period 1985-2010, we provide strong evidence about the positive causal effect of fiscal rules adoption on the reduction of fiscal policy procyclicality. We find an asymmetrical impact, since fiscal rules adoption contributed to upgrade budget balance in periods of expansion, while it doesn't increase budget deficit in periods of recession. Furthermore, we show that the budget balance rules and the debt rules are more effective to dampen procyclicality than expenditure rules. We also provide evidence that the coverage of fiscal rules is not a critical issue to strength against procyclicality. Empirical results also displays the positive impact of the adoption of flexible rules, but also the adoption of fiscal rules combined to improve policy responsiveness. Finally, we find that FRs are effective when taking into account the national stability culture. This positive impact of fiscal rules adoption on fiscal policy cyclicality comes from an improvement of fiscal policy disciplinary, by ensuring a sustainable path of deficit and debt, or by smoothing business cycles

Which firms use trademarks - and why? : representative firm-level evidence from Germany

Trademarking firms are more productive, generate higher profits, and have a better survival rate. Trademarking firms are in one word more successful, which might motivate non-trademarking firms to adopt a trademark strategy. But this seems not to be the case. The proportion of trademarking firms in the German business sector amounts to just 18%. This figure is quite low, given that nearly each firm has reputation to protect. But why has the vast majority of firms no registered trademarks? Using a representative sample of German firms, the present paper links certain firm characteristics to a firms' propensity to register trademarks. The empirical results point to circumstances under which trademarks are significantly more often used: this is the case where a large distance between a firm and its customers exists, a firm's product quality is difficult to assess, a firm's products are characterized by a limited (but not strong) substitutability, and where a firm is engaged in R&D and introduces innovative products. Trademarks are considerably less frequently used if none of this is the case

The Macroeconomic Imbalance Procedure: A useful tool for predicting sovereign crises?

This paper provides an empirical analysis of the Macroeconomic Imbalance Procedure (MIP). It explores the relationship between sovereign bond yields spreads and the variables contained in the MIP scoreboard using quantile regressions. Results suggest that MIP indicators can explain the behavior of sovereign spreads two, three and four quarters in advance. The scoreboard can’t capture strong non-variant country effects that affect the evolution of spreads as well as the different impact that each indicator has on different countries. The introduction of employment indicators has reduced the aggregate effect that country effects have on sovereign spreads

An auction mechanism for the optimal provision of ecosystem services under climate change

The provision of many ecosystem services depends on the spatial pattern of land use across multiple landowners. Even holding land use constant, ecosystem service provision may change through time due to climate change. This paper develops an auction mechanism that implements an optimal solution for providing ecosystem services through time with multiple landowners who have private information about the net benefits of alternative uses of their land. Under the auction, each landowner has a dominant strategy to truthfully reveal their private information. With this information a regulator can then implement the optimal landscape pattern, which maximizes the present value of net benefits derived from the landscape, following the rules of the auction mechanism. The auction can be designed as a subsidy auction that pays landowners to conserve or a tax auction where landowners pay for the right to develop. Our mechanism optimizes social adaptation of ecosystem management to climate change. (C) 2018 Elsevier Inc. All rights reserved

Compulsory Licensing in Relation to Unitary Patent Package

This study takes a thorough look at compulsory licensing in the EU and its future under the new Unitary Patent system. Essentially, patents are a cornerstone of intellectual property and competition, while compulsory licensing has served as an important exhaust pipe and insurance in many cases; ensuring better public reach for inventions and innovation in general. In effect, the new unitary patent will be a single patent encompassing all participating Member States, as opposed to the current EU patent, which practically is a bundle of national patents. Yet the new Unitary Patent system of the EU has been seemingly created with such haste that compulsory licensing has been overlooked and left to Member States to regulate. However, it would appear that the Member States’ competence to limit the exclusivity of an EU level patent with national legislations could be insufficient. Effectively, this could signify compulsory licensing to be impossible in most cases in regards to unitary patents. After familiarizing the reader with essential elements of the topic, the study aims to elaborate on the aforementioned situation. The effects of compulsory licensing (or the lack off) of unitary patents is analyzed in intricate detail, encompassing innovation, competition and market, while also providing solutions and alternatives to amend the situation

Finanzinnovationen am Kapitalmarkt

Der erste Teil dieser Dissertation geht der Forschungsfrage nach, ob Banken bei einem CoCo auf die bei konventionellen Wandelanleihen etablierte klassische — den Wert des CoCo minimierende — Kündigungsstrategie bedenkenlos setzen können. Zu diesem Zweck wird ein Strukturmodell zur Ermittlung der optimalen — den Wert des Eigenkapitals maximierende — Kündigungsstrategie von CoCos unter Verwendung einer komplexen Kapitalstruktur mit Eigenkapital, CoCo und zusätzlichem Fremdkapital entwickelt. Durch den zusätzlichen Fremdkapitaltitel kann gezeigt werden, dass die optimale Kündigungsstrategie stark von dem einfacher zu implementierenden klassischen Ansatz abweichen kann. In einer umfangreichen empirischen Studie mit 79 europäischen CoCos kann im zweiten Teil dieser Dissertation festgestellt werden, dass der kritische Aktienkurs, zu dem der CoCo optimalerweise gekündigt werden sollte, im Durchschnitt um 56,49% von dem Ergebnis der klassischen Kündigungsstrategie abweicht. Diese immensen Abweichungen in der Kündigungsentscheidung übertragen sich auch auf den CoCo Wert. Unter Anwendung der optimalen Kündigungsstrategie im Vergleich zum klassischen Pendant können maximale CoCo Preisabweichung von durchschnittlich 8,73% mit Extremwerten bis zu 78,56% festgestellt werden. Die Ergebnisse bestätigen, dass lediglich bei einer Refinanzierung per Kapitalerhöhung keine Abweichungen zwischen klassischer und optimaler Kündigungsstrategie bestehen. Des Weiteren führt die Ausgabe von nachrangigem Fremdkapital zwar zu Abweichungen, diese sind im Spezialfall eines CoCos mit niedrigem Nennbetrag im Vergleich zum vorhandenen Fremdkapital und einer zusätzlich auftretenden verspäteten Kündigung des CoCos lediglich marginal. In allen anderen Fällen unterscheidet sich die optimale deutlich von der klassischen Kündigungsstrategie. Der dritte Teil dieser Dissertation beschäftigt sich mit einer zweiten Finanzinnovation, die in den vergangenen Jahren immer mehr an Bedeutung gewonnen hat: Green Bonds. So werden grüne Anleihen im Vergleich zu ihren konventionellen Pendants regelmäßig mit einer gerin-geren Rendite emittiert und gehandelt. Dieser Finanzierungsvorteil aus Sicht des Emittenten wird als Green Bond Premium (Greenium) bezeichnet. Da die Bundesrepublik Deutschland seit September 2020 in wiederkehrenden Emissionen ein grünes zu einem ansonsten iden-tisch ausgestalteten konventionellen Bundeswertpapier begibt, wird im dritten Teil dieser Dissertation dieses Zwillingskonzept genutzt, um das Greenium abzuschätzen. Dazu ist zu-nächst der beobachtbare Renditeunterschied von grünen gegenüber konventionellen Anlei-hen von einer gleichzeitig vorherrschenden Liquiditätsprämie zu separieren. Bei grünen Bun-desanleihen lässt sich so ein reines Greenium von durchschnittlich 41,2 bis 50,6 Basispunk-ten ermitteln