Is the Market Classification of Risk Always Efficient? - Evidence from German Third Party Motor Insurance

The efficiency of market-determined risk classification in automobile insurance is a lasting matter of controversy. It can be traced back to the 1950s (Muir, 1957) and received broad economic attention in the 1980s when spiralling car insurance premiums in the US were blamed on tariff regulations prohibiting the use of sex, age and location as risk characteristics (Blackmon/ Zeckhauser 1991, Cummins/ Tennyson 1992, Harrington/ Doerpinghaus 1993). In a mirroring move the EU saw a heated political and legal debate on the use of special tariffs for foreigners, in the 1980s, which resulted in a legal ban of ‘discriminatory’ tariffs for mandatory insurance schemes in many European countries. The latest blow against risk classification in car insurance comes with the EU Employment and Social Affairs’ draft directive on gender equality which proposes to prohibit gender specific calculation of all private insurance products, including non-mandatory branches such as life, private health or comprehensive car insurance.

A Matter of Opinion: How Ecological and Neoclassical Environmental Economists Think about Sustainability and Economics

The differing paradigms of ecological and neoclassical environmental economics have been described in various articles and books and are also embedded in different institutional settings. However, we cannot take for granted that the paradigm debates described in the literature are actually mirrored in exactly the same way in the perceptions and opinions of researchers looking at sustainability from an economic perspective. This paper presents empirical results from a German case study on how economists and others involved in economic sustainability research from different schools of thought think about the issues of sustainability and economics, how they group around these issues, how they feel about the current scientific divide, and what they expect to be future topics of sustainability research. Knowing that sustainability research is highly and still increasingly internationally intertwined, and assuming that the opinions of German economic sustainability researchers do not dramatically differ from those in other countries, we think that these results will be of interest to the international scientific community. We analyze the data using cluster analysis. Based on a literature survey, we generated forty sustainability-related statements and asked 196 economic sustainability researchers about their degree of agreement or disagreement with these statements. In evaluating our survey results, we discuss to what extent the clusters that we identified do - or do not - represent the two schools of thought of ecological and neoclassical environmental economics. We also propose some research concepts that can help to bridge the gaps amongst economic sustainability researchers as well as others more suitable for a scientific 'competition of ideas'. Key results of the study are: We identify two primary scientific clusters, one clearly confirming the existence of the ecological economics schools of thought, and the other largely capturing the neoclassical environmental view. Yet, there are some surprising exceptions: Both schools of thought share a conceptual definition of sustainability that is integrative in considering ecological, societal and economic dimensions ('three pillar concept') and is based on preserving the development potentials of society. We also find a shared critique of 'pure economic growth' strategies in our sample. These agreed opinions may provide bridging concepts between the schools of thought. Also both clusters agree with respect to a wide range of future fields of sustainability research. Yet, the research agenda of the ecological economics cluster contains a large number of additional topics, primarily related to social, distributional and evolutionary aspects of sustainable development as well as a strong microeconomic focus. Strong divides between the clusters that seem to be more suitable for a kind of scientific competition of ideas are primarily related to the question of how to achieve sustainability, including suitable environmental policy measures.

Can Minimum Prices Assure the Quality of Professional Services?

This papers studies the effects on service quality and consumer surplus of a minimum price which is fixed by a bureaucratic non-monopolistic professional association. It shows that the price floor set by a Niskanen-type professional assocation will maximize consumer surplus only if consumers demand the highest possible average quality. If consumers demand services of lesser quality, the association's price floor will be too high if measured by consumer surplus. Moreover we show that a de-regulated market will always reproduce the favorable result of a uniformly high price in the case of top quality demand while delivering superior results in the case of a mixed demand for high and low quality services. The general picture that emerges from this discussion is that the current EU Commission's initiative to abolish fixed price schemes for professional services will not lead to a decrease in quality that would be undesirable from a standpoint of consumer protection. This holds even if we acknowledge the opponent's claim that there is a chance of deprivation of professional ethics due to price competition.Liberal professions; Price regulation; Quality; Professional association; Self-regulation; EU competition policy; Intrinsic motivation

The Political Economy of Natural Disaster Insurance: Lessons from the Failure of a Proposed Compulsory Insurance Scheme in Germany

This paper studies the politico-economic reasons for the refusal of a proposed compulsory flood insurance scheme in Germany. It provides the rationale for such scheme and outlines the basic features of a market-orientated design. The main reasons for the political down-turn of this proposal were the misperceived costs of a state guarantee, legal objections against a compulsory insurance, distributional conflicts between the federal government and the Ger-man states (Länder) on the implied administrative costs, and the well-known charity hazard of ad-hoc disaster relief. The focus on pure market solutions proved to be an ineffective strategy for policy advice in this field.

Ökonomische Wirkungen des Umwelthaftungsgesetzes

Führt die zivilrechtliche Umwelthaftung in einem technisch und naturwissenschaftlich komplexen Bereich wie dem Umweltschutz zu einer Stärkung des Verursacherprinzips und zu erhöhter Sorgfalt, oder läuft sie hier ins Leere? Diese Frage beschäftigt Umweltjuristen und Umweltökonomen intensiv seit der Einführung des Umwelthaftungsgesetzes (UmweltHG) im Jahre 1991. Sie hat eine aktuelle Brisanz durch die neue Umwelthaftungsrichtlinie der EU, die eine in Einzelpunkten, etwa der Haftung für Biodiversitätsschäden, weitergehende Umwelthaftung EU-weit einführt. In diesem Beitrag wird untersucht, ob das UmweltHG zu einer Internalisierung von Umweltschäden, d. h. zur Umsetzung des Verursacherprinzips, und zu einer messbaren Verbesserung der Störfallvorsorge geführt hat. Dies geschieht auf der Grundlage einer Beobachtung der Rechts- und Versicherungspraxis sowie der Störfallstatistik des Umweltbundesamtes. Es zeigt sich ein ambivalenter Befund: Zum einen hat - bei wenigen erfolgreichen Umweltklagen - die Verbreitung der neuen Umwelthaftpflichtversicherung in den vergangenen zehn Jahren stark zugenommen; zum anderen ist kein Rückgang der Unfälle und Schäden im gleichen Zeitraum erkennbar, das heißt, es ist eine Internalisierungswirkung ohne messbare Präventionswirkung zu beobachten. Dieses Ergebnis kann darauf zurückgeführt werden, dass bereits zuvor durch gesetzliche Regelungen zur Anlagensicherheit anspruchsvolle Sicherheitsniveaus erreicht wurden.

Wettbewerb in der Wasserwirtschaft

Nach den Versorgungsbereichen Telekommunikation, Strom und Gas steht die Liberalisierung der Wasserwirtschaft auf der politischen Tagesordnung. Welche Besonderheiten sind bei dem Gut Wasser zu berücksichtigen? Welche Wettbewerbsform führt zu den besten Ergebnissen? --

Architekturbüros: Ausweitung der Berufshaftpflicht verstärkt Marktkonzentration

Der Markt für Architekten- und Ingenieursleistungen zeigt eine starke Segmentation. Einer kleinen Zahl umsatzstarker Bürogesellschaften steht eine Vielzahl von Einzelbüros gegenüber, die am Rande oder unterhalb der Schwelle zur Wirtschaftlichkeit arbeiten. Haftungs- und Deckungsausweitungen haben erhöhte Versicherungskosten für Architekturbüros zur Folge. Sie verschärfen die Anbietersegmentation und führen kurzfristig zu einem Anstieg der Arbeitslosigkeit in dieser Branche.

A Theory of Optimal Green Defaults

This paper develops an analytical framework for studying the Baumol–Oates efficiency of traditional single instrument abatement policies vis-à-vis green defaults in the face of price inertia and passive choice by subpopulations. In this special case of behavioural heterogeneity, command and control approaches can outperform price-based instruments while pure tax/subsidy schemes need to be adjusted in order to achieve politically desired levels of abatement. We also prove that choice-preserving nudges are superior to any single-instrument policy in this case. An average marginal abatement cost rule is developed to optimize the green defaults and traditional policies of standards and prices under different degrees of market rigidity.EC/H2020/653255/EU/PLAtform for Climate Adaptation and Risk reDuction/PLACAR