Self-interest, Social Wealth, and Competition as a Discovery Procedure

In Economics, as in any social science, empirical tests of theoretical results face a problem: researchers are unable to reproduce the whole economy (or at least its relevant parts) in their laboratories. Nowadays, Experimental Economics uses stylized experiments, drawing on the experience of Psychology, to test at least the basic assumptions of the economic theory of human behavior. Even classroom experiments may serve this purpose. This paper describes a simple classroom experiment that serves as an empirical test of Adam Smith's invisible- hand hypothesis. Furthermore, it demonstrates to the students that competition acts as a discovery procedure. The experiment is of high didactical value, since the students gain insights into empirical research and experience how markets work.Hayek-Hypothesis, Efficiency, Double Oral Auctions,

European Policymaking: An Agency-Theoretic Analysis of the Issue

In various European legal acts the Council has delegated power to the Commission to set common policy, conditional on specific procedural requirements, which are commonly known as "comitology". In this paper we analyse whether and how far these implementation procedures help to overcome a dilemma of delegation, which arises if (a) a principal and an agent have conflicting interests and (b) the principal, due to the structure of the principal-agent relationship, cannot perfectly control the agent (structure-induced agent discretion).

Effizienz als Leitbild der Wettbewerbspolitik: Für einen "more economic approach"

Die jüngsten Reformen im Europäischen Wettbewerbsrecht geben Anlaß, sich erneut mit Grundsatzfragen der Wettbewerbspolitik zu beschäftigen. Unter Rückgriff auf die moderne Wettbewerbstheorie, die Industrie- und die Neue Institutionenökonomik werden in diesem Paper die Grundlagen eines "more economic approach" entworfen. Wettbewerb wird als Parallel- und Austauschprozeß begriffen, in dem Werte (social surplus) geschaffen und angeeignet werden. Allokative, produktionstechnische und innovative Ineffizienzen sind in diesem Wettbewerbskonzept Folge einer mangelnden Aneignung von Wertschöpfung. Konkret wird in diesem Paper vorgeschlagen, daß Wettbewerbsbehörden und Gerichte in allen Verfahren gegen Unternehmen und Unternehmensgruppen einen überzeugend begründeten Effizienzeinwand als Rechtfertigung für ein in traditioneller Sicht wettbewerbsbeschränkendes Verhalten zulassen. Der Vorschlag basiert auf einer partialanalytisch interpretierten Theorie des "second-best"; bei ihr sind "second-best-tradeoffs" ausschließlich auf den relevanten Markt bezogen. Um Anschuldigungen zu entkräften, sollten die Beschuldigten zweierlei nachweisen: Erstens, das beanstandete Verhalten ist eine Reaktion auf ein identifiziertes Marktversagen oder technische oder dynamische (Neuerungen betreffende) Ineffizienz im relevanten Markt. Zweitens, das beanstandete Verhalten steigert per Saldo die Wohlfahrt. Die Kartellbehörden hätten zwei Dinge zu prüfen: Erstens, behindert das beanstandete Verhalten in wesentlicher Weise spätere private oder staatliche Versuche, die Gründe für das Marktversagen, die technische oder dynamische Ineffizienz zu beseitigen? Zweitens, gibt es weniger stark gegen die Antitrust-Gesetze verstoßende Maßnahmen zur Erreichung derselben Wohlfahrtssteigerung? Wenn die Unternehmen ihre Argumente überzeugend dargelegt und die Kartellbehörden die beiden Fragen mit nein beantwortet haben, dann sollte das Verfahren eingestellt werden. Das Paper diskutiert auch die Vor- und Nachteile eines innermarktlichen "second-best"-Ansatzes in der Wettbewerbspolitik und zeigt die Vorteile gegenüber einer Wettbewerbspolitik auf, die nur den Wettbewerb schützen will. -- Taking the fundamental and comprehensive reform of EU competition policy which embodies a shift from a formalistic regulatory approach towards a more economic approach as a point of departure, this article argues that it is time for antitrust policy to move beyond structural understandings of competition ("preserving competition") and into the realm of explicit welfare analysis. A "more economic approach" should reflect current economic thinking about competition, incentives and efficiency. Competition is defined in the paper as a process of creating and appropriating value (social surplus). Allocative, technical and innovative inefficiencies are viewed as fundamentally due to failures of capturing value. The paper argues that antitrust laws should recognize a defence for all private acts that restrain ?competition? under the traditional antitrust analysis but advance total welfare. The proposed efficiency defence is, however, limited to intramarket second-best tradeoffs, i.e. tradeoffs involving market failures in the relevant market. To rebut a finding of illegality based upon a traditional presumption of anticompetitive effects, defendants should have to establish, first, that the challenged conduct is responsive to an identifiable market failure, broadly defined as allocative, technical or innovative inefficiency in the relevant market; second, that the conduct produces a net increase in total welfare ("intramarket second-best claim"). The antitrust authorities should accept the defence if, first, the conduct will not substantially impair the ability of public or private actors subsequently to ameliorate the effects of the market failure; and if, second, there is no less restrictive alternative consistent with the antitrust laws that could achieve similar welfare gains. The paper also assesses the costs and benefits of implementing an intra-market second-best defence and argues that this approach provides better criteria for a workable antitrust policy than an antitrust standard based on protecting "competition".more economic approach,second-best tradeoff,Williamson-tradeoff,"Post Chicago" antitrust policy,efficiency defense,property rights

Zoology of a non-local cross-diffusion model for two species

We study a non-local two species cross-interaction model with cross-diffusion. We propose a positivity preserving finite volume scheme based on the numerical method introduced in Ref. [15] and explore this new model numerically in terms of its long-time behaviours. Using the so gained insights, we compute analytical stationary states and travelling pulse solutions for a particular model in the case of attractive-attractive/attractive-repulsive cross-interactions. We show that, as the strength of the cross-diffusivity decreases, there is a transition from adjacent solutions to completely segregated densities, and we compute the threshold analytically for attractive-repulsive cross-interactions. Other bifurcating stationary states with various coexistence components of the support are analysed in the attractive-attractive case. We find a strong agreement between the numerically and the analytically computed steady states in these particular cases, whose main qualitative features are also present for more general potentials

Hele-Shaw limit for a system of two reaction-(cross-)diffusion equations for living tissues

Multiphase mechanical models are now commonly used to describe living tissues including tumour growth. The specific model we study here consists of two equations of mixed parabolic and hyperbolic type which extend the standard compressible porous medium equation, including cross-reaction terms. We study the incompressible limit, when the pressure becomes stiff, which generates a free boundary problem. We establish the complementarity relation and also a segregation result. Several major mathematical difficulties arise in the two species case. Firstly, the system structure makes comparison principles fail. Secondly, segregation and internal layers limit the regularity available on some quantities to BV. Thirdly, the Aronson-B{\'e}nilan estimates cannot be established in our context. We are lead, as it is classical, to add correction terms. This procedure requires technical manipulations based on BV estimates only valid in one space dimension. Another novelty is to establish an L1 version in place of the standard upper bound

European Policymaking: An Agency-Theoretic Analysis of the Issue

In various European legal acts the Council has delegated power to the Commission to set common policy, conditional on specific procedural requirements, which are commonly known as "comitology". In this paper we analyse whether and how far these implementation procedures help to overcome a dilemma of delegation, which arises if (a) a principal and an agent have conflicting interests and (b) the principal, due to the structure of the principal-agent relationship, cannot perfectly control the agent (structure-induced agent discretion). --European Union,comitology,principal-agent-relationship,structure-induced agent discretion

Recht, Eigentum und Effizienz: Zu F. A. v. Hayeks Verfassung der Freiheit

Dieser Beitrag prüft (1) Hayeks Behauptung, daß abstrakte Verhaltensregeln und Eigentum die einzige Lösung für das Problem darstellen, individuelle Freiheit mit konfliktfreiem Handeln zu versöhnen. Er zeigt (2), daß der von Hayek vorgeschlagene Test der Verträglichkeit auf das überkommene Rechtssystem als Leitlinie für Richterrecht dem Prinzip der Ordnungskonformität entspricht, das auf W. Röpke zurückgeht. Der Beitrag interpretiert (3) Hayeks "Recht der Freiheit" im Lichte des Coase-Theorems und begründet, warum Effizienz das einzige funktionsfähige Kriterium für die Spezifikation und personelle Zuteilung von Property rights darstellt. Es wird (4) gezeigt, daß Hayek trotz seiner Bewunderung der schöpferischen Kräfte spontaner Ordnungen der Gesetzgebung eine korrigierende Rolle zubilligt. Der Beitrag diskutiert abschließend Hayeks Interpretation der Rule of Law.This paper (1) investigates Hayek's proposition that law in the sense of universal rules of conduct and property are the only solution to the problem of reconciling individual freedom with the absence of conflict. It (2) argues that the test of the compatibility with the inherited body of law as a guide line for the evolution of judge made law, basically comes down to the principle of "Ordnungskonformität" originating from W. Röpke. It (3) interprets Hayek's "law of liberty" in Coasean terms and advances the contention that efficiency is the only workable criterion for the specification and alloca-tion of property rights. It (4) delivers evidence that Hayek - despite his admiration of the create powers of spontaneous orders - makes out a case for government interven-tion. Finally, the paper discusses Hayek's interpretation of the Rule of Law

To Help or not to Help: The Samaritan's Dilemma Revisited

Helping somebody may undermine his incentives to work. What Buchanan identified more than 25 years ago as the Samaritan's dilemma is basically a time-inconsistency problem. The paper discusses possible solutions of the dilemma such as punishment within an iterated game, reshaping the game in the direction of a dynamic one-shot game and the delegation of the power of decision to an agent. The paper shows that only the latter option works.Jemandem Hilfe zukommen zu lassen verwässert seine Arbeitsanreize. Was Buchanan vor über 25 Jahren als Samariter-Dilemma identifiziert hat, ist im Grunde ein Zeit-Inkonsistenz-Problem. Der Beitrag diskutiert mögliche Auswege aus dem Dilemma, etwa Bestrafungen innerhalb eines wiederholten Spiels, Änderung der Spielstruktur in Richtung eines dynamischen Einmal-Spiels und die Delegierung der Entscheidungsmacht an einen Agenten. Es wird gezeigt, dass nur die letztere Möglichkeit das Dilemma löst

Kirche, Geld und Seelenheil

Die Kirchen in Deutschland werden in diesem Essay als Multiproduktunternehmen analysiert, die sich in einer Krise befinden: die Kunden laufen weg, die Kirchensteuereinnahmen sinken. Ausgehend von der Idee, daß das Heilsversprechen ein knappes Gut ist, wird eine Empfehlung an die Kirchen entwickelt, sich nicht in der Konkurrenz zu sozialen Diensten aufzureiben. Die Konzentration auf ihre Kernkompetenz - die Produktion des Heilsversprechens - dürfte sie aus ihrer problematischen Situation herausführen.The churches in Germany are analyzed as multiproduct firms. Even though these enterprises raise their revenues in part through the tax system, they find themselves in a crisis: the number of customers is persistently decreasing. Starting with the idea that salvation is a scarce economic good, this essay develops a recommendation that the churches should abstain from competing with other social services. To concentrate on the production of salvation as their core comeptency might lead the churches out of their problematic situation