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DIW Discussion Papers 796 / 2008
We analyze market dynamics under Bertrand duopoly competition in industries with network effects and consumer switching costs. Consumers form installed bases, repeatedly buy the products, and differ with respect to their switching costs. Depending on the ratio of switching costs to network effects, our model generates convergence to monopoly as well as market sharing as equilibrium outcomes. Convergence ...
2008| Irina Suleymanova, Christian Wey
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DIW Discussion Papers 795 / 2008
Money growth in the euro area has exceeded its target since 2001. Likewise, recent empirical studies did not find evidence in favour of a stable long run money demand function. The equation appears to be increasingly unstable if more recent data are used. If the link between money balances and the macroeconomy is fragile, the rationale of monetary aggregates in the ECB strategy has to be doubted. In ...
2008| Christian Dreger, Jürgen Wolters
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DIW Discussion Papers 794 / 2008
We analyze duopoly Bertrand competition under network effects. We consider both incompatible and compatible products. Our main result is that network effects create a fundamental conflict between the maximization of social welfare and consumer surplus whenever products are incompatible. While consumer surplus is highest in the symmetric equilibrium, social welfare is highest in the asymmetric equilibrium. ...
2008| Irina Suleymanova, Christian Wey
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DIW Discussion Papers 793 / 2008
We analyze the listing decisions of a retailer who may ask her suppliers to make upfront payments in order to be listed. We consider a sequential game with upfront payments being negotiated before short-term delivery contracts. We show that the retailer is more likely to use upfront payments the higher her bargaining power and the higher the number of potential suppliers. Upfront payments tend to lower ...
2008| Pio Baake, Vanessa von Schlippenbach
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DIW Discussion Papers 792 / 2008
We analyze the effect of imposed benefit sanctions on the unemployment-to-employment transition of unemployed people entitled to unemployment compensation on the basis of register data from the German Federal Employment Agency. We combine propensity score matching with a discrete-time hazard rate model which accounts for the dynamic nature of the treatment. We find positive short- and long-term effects ...
2008| Kai-Uwe Müller, Viktor Steiner
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DIW Discussion Papers 791 / 2008
In view of rising wage inequality and increasing poverty, the introduction of a legal minimum wage has recently become an important policy issue in Germany. We analyze the distributional effects of the introduction of a nationwide legal minimum wage of € 7.5 per hour on the basis of a microsimulation model which accounts for the complex interactions between individual wages, the tax-benefit system ...
2008| Kai-Uwe Müller, Viktor Steiner
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DIW Discussion Papers 790 / 2008
In this paper we develop a dynamic structural life-cycle model of labor supply behavior which fully accounts for the effects of income tax and transfers on labor supply incentives. Additionally, the model recognizes the demand side driven rationing risk that might prevent individuals from realizing their optimal labor supply state, resulting in involuntary unemployment. We use this framework to study ...
2008| Peter Haan, Victoria Prowse, Arne Uhlendorff
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DIW Discussion Papers 789 / 2008
School education in Germany is under the responsibility of the federal states and as a consequence average grades differ widely across regions. Since school leavers apply nationwide for admission to university, regional provenance may thus matter a lot for the success probability in the admission process. Using a comprehensive dataset of the German central clearing house for university admissions in ...
2008| Sebastian Braun, Nadja Dwenger
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DIW Discussion Papers 788 / 2008
We analyze below-cost pricing in retail markets and examine its impact on social welfare as well as on suppliers' incentives to invest in quality. Considering negotiations about a linear wholesale price between the retailer and her suppliers, we find that below-cost pricing aggravates the double marginalization problem and causes welfare losses compared to a regime where below-cost pricing is banned. ...
2008| Vanessa von Schlippenbach
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DIW Discussion Papers 787 / 2008
A couple of recent papers have shifted the focus towards disagreement of professional forecasters. When dealing with survey data that is sampled at a frequency higher than annual and that includes only fixed event forecasts, e.g. expectation of average annual growth rates measures of disagreement across forecasters naturally are distorted by a component that mainly reflects the time varying forecast ...
2008| Jonas Dovern, Ulrich Fritsche
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DIW Discussion Papers 786 / 2008
In developed countries, obesity tends to be associated with worse labor market outcomes. One possible reason is that obesity leads to less human capital formation early in life. This paper investigates the association between obesity and the developmental functioning of children at younger ages (2-4 years) than ever previously examined. Data from the German Socio-Economic Panel Study are used to estimate ...
2008| John Cawley, C. Katharina Spieß
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DIW Discussion Papers 785 / 2008
In this study, we investigate whether population aging influences employment shares in different economic sectors. To this end, we employ dynamic panel data analysis. Our unbalanced data set comprises 54 countries and extends to a maximum time period from 1970 till 2004. Our results suggest that the aging variable - approximated by the ratio of elderly either to the total population or to the labor ...
2008| Ulrich Thießen, Konstantin A. Kholodilin, Boriss Siliverstovs
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DIW Discussion Papers 784 / 2008
This paper investigates the determinants of liability maturity choice in transition markets. We formulate a model of firm value maximization that describes managers' choice of optimal debt structure. The theoretical predictions are tested using a unique panel of 4,300 Ukrainian firms during the period 2000-2005. Our estimates confirm the importance of liquidity, signaling, maturity matching, and agency ...
2008| Andreas Stephan, Oleksandr Talavera, Andriy Tsapin
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DIW Discussion Papers 783 / 2008
The ratio of Indian to US per capita output over the past 45 years has displayed a distinctive "V"-shaped pattern. We show that a strikingly similar V-shaped pattern is visible not just in aggregate output .figures, but also as the primary determinant of long-term movements in the cross-sectional distribution within the All-India total, at both sectoral and state output levels. We also carry out preliminary ...
2008| Chetan Ghate, Stephen Wright
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DIW Discussion Papers 782 / 2008
We analyze the effects of accidents and liability obligations on the incentives of car manufacturers to monopolize the markets for their spare parts. We show that monopolized markets for spare parts lead to higher overall expenditures for consumers. Furthermore, while the manufacturers invest more in order to offer cars with higher qualities, monopolization tends to reduce social welfare. Key for these ...
2008| Pio Baake
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DIW Discussion Papers 781 / 2008
Mobility of workers involves flows of labour, human capital and other production factors and thus contributes to a more efficient allocation of resources. Besides these effects on allocative efficiency, migrant flows affect relative wages and also change the international and national distribution of skills and thereby equality in the receiving society. This paper suggests that skilled immigration ...
2008| Martin Kahanec, Klaus F. Zimmermann
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DIW Discussion Papers 780 / 2008
This paper discusses the impact of a firm's technology portfolio on its market value. Two concepts are used to characterize a firm's portfolio: the number of technological fields and the degree of relatedness within the portfolio characterized by the amount of joint occurrences of patents in technological fields. Based on a theoretical framework using an expanded Tobin's q approach, it presents evidence ...
2008| Jens Schmidt-Ehmcke, Petra Zloczysti
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DIW Discussion Papers 779 / 2008
The positive association between moderate alcohol consumption and wages is well documented in the economic literature. Positive health effects as well as networking mechanisms serve as explanations for the "alcohol-income puzzle." Using individual-based microdata from the GSOEP for 2006, we confirm that this relationship exists for Germany as well. More importantly, we shed light on the alcohol-income ...
2008| Nicolas R. Ziebarth, Markus M. Grabka
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DIW Discussion Papers 778 / 2008
This paper uses the newly constructed Luxembourg Wealth Study data to document cross-country variation in homeownership rates and the homeownership-income inequality among young households in Finland, Germany, Italy, the UK and the US, and relate it to cross-country differences in mortgage market maturity. We find that aside from Italy, homeownership rates and inequality in the four countries correspond ...
2008| Alena Bicakova, Eva Sierminska
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DIW Discussion Papers 777 / 2008
In response to increasing health expenditures and a high number of physician visits, the German government introduced a copayment for ambulatory care in 2004 for individuals with statutory health insurance (SHI). Because persons with private insurance were exempt from the copayments, this health care reform can be regarded as a natural experiment. We used a difference-in-difference approach to examine ...
2008| Jonas Schreyögg, Markus M. Grabka