Differential Pricing Policy

Differential pricing is a valid means of improving profits, keeping the total cost of air transportation down, and making it possible for more people to use air transportation

A Soft Budget Constraint Explanation for the Venture Capital Cycle

We explore why venture capital funds limit the amount of capital they raise and do not reinvest the proceeds. This structure is puzzling because it leads to a succession of several funds financing each new venture which multiplies the well known agency problems. We argue that an inside investor cannot provide a hard budget constraint while a less well informed outsider can. Therefore, the venture capitalist delegates the continuation decision to the outsider by ex ante restricting the amount of capital he has under management. The soft budget constraint problem becomes the more important the higher the entrepreneur’s private benefits are and the higher the probability of failure of a project is.Contract Theory; Corporate Finance; Venture Capital

Unbounded Operators on Hilbert C∗C^*-Modules

Let $E$ and $F$ be Hilbert $C^*$-modules over a $C^*$-algebra \CAlg{A}. New classes of (possibly unbounded) operators $t:E\to F$ are introduced and investigated. Instead of the density of the domain \Def(t) we only assume that $t$ is essentially defined, that is, \Def(t)^\bot=\{0\}. Then $t$ has a well-defined adjoint. We call an essentially defined operator $t$ graph regular if its graph \Graph(t) is orthogonally complemented in $E\oplus F$ and orthogonally closed if \Graph(t)^{\bot\bot}=\Graph(t). A theory of these operators is developed. Various characterizations of graph regular operators are given. A number of examples of graph regular operators are presented ($E=C_0(X)$, a fraction algebra related to the Weyl algebra, Toeplitz algebra, Heisenberg group). A new characterization of affiliated operators with a $C^*$-algebra in terms of resolvents is given

The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access

Does the internet increase competition? To address this question, I exploit two institutional details unique to Germany: (1) Some municipalities received glass fibre cables that cannot be upgraded to DSL; I use these municipalities as a treatment group with reduced online competition. (2) German law mandates resale price maintenance for books; I compare three retailing sectors, electronics (price competition), books (no price competition), and food (no online sales), to identify the effect of price competition: The effect of price competition is highly significant. Full broadband access reduces offline electronics retailers’ producer rents by 1.5 percent per year from 1999 to 2007

Determinants of capital market reactions to seasoned equity offers by German corporations

Our study provides evidence on the share price reactions to the announcement of equity issues in Germany, where capital market is characterized by institutional features distinct from the U.S. market. German seasoned equity issues yield a positive market reaction which contrasts to the significant negative abnormal returns reported for the U.S. We provide evidence that these results are due to differences in both issuing characteristics and floatation methods, and in the corporate governance and ownership structures of the two countries. Our study explains much of the empirical puzzle of different market reactions to seemingly similar events across financial markets

Free Riding in the Lab and in the Field

We run a public good experiment in the field and in the lab with (partly) the same subjects. The field experiment is a true natural field experiment as subjects do not know that they are exposed to an experimental variation. We can show that subjects' behavior in the classic lab public good experiment correlates with their behavior in the structurally comparable public good treatment in the field but not with behavior in any of two control treatments we ran in the field. This effect is also economically significant. We conclude that a) the classic lab public good experiment captures important aspects of structurally equivalent real life situations and b) that behavior in lab and field at least in our setting is driven by the same underlying forces.Field and Lab Experiments; External Validity; Public Goods; Team Production