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Lumpy Investment in Regulated Natural Gas Pipelines: An Application of the Theory of the Second Best

We address investment in regulated natural gas pipelines when investment is lumpy and the demand for gas is stochastic. This is a problem that can be solved in theory as a dynamic program, but a practical solution depends on functions and parameters that are either subjective or cannot be estimated. We then reformulate the problem from the standpoint of consumers that face incomplete markets. It is ...

Is the Boone-Indicator Applicable? Evidence from a Combined Data Set of German Manufacturing Enterprises

Boone (2008a) proposes a new competition measure based on Relative Profit Differences (RPD) that, from its theoretical properties, proves to be more robust than the Lerner-Index. However, the proof of the empirical practicability and robustness of the Boone-Indicator is missing. To fill this gap, we use a rich, newly built, data set for German manufacturing enterprises and test its empirical validity ...

One Last Puff? Public Smoking Bans and Smoking Behavior

This paper investigates the short-term effects of public smoking bans on individual smoking behavior. In 2007 and 2008, state-level smoking bans were gradually introduced in all of Germany's federal states. We exploit this variation to identify the effect that smoke-free policies had on individuals' smoking propensity and smoking intensity. Using rich longitudinal data from the German Socio-Economic ...

Virtual Life Satisfaction

We study life satisfaction data from the 2005 World Values Survey and a 2009 survey of users of the virtual world Second Life. Second Life users do not have the same demographic profile as the general population, but the differences are not as large as we expected. The mechanisms and causes of life satisfaction seem to be similar in the two samples. Among Second Life users, satisfaction with their ...

Spillovers of Institutional Change in Africa

While previous research has looked at the determinants of the quality of institutions, not much research has been done that looks at the determinants of institutional change. This paper examines what determines the probability of an improvement in political freedoms. Several path-dependent variables, such as the history of political freedom, are clearly influential. In addition to that, economic openness ...

How Do Tourists React to Political Violence? An Empirical Analysis of Tourism in Egypt

This paper uses a detailed database of political violence in Egypt to study European and US tourists' attitudes towards a conflict region. We study the heterogeneous impacts of different dimensions of political violence and counter-violence on tourist flows to Egypt in the 1990s. Both US and EU tourists respond negatively to attacks on tourists, but are not influenced by casualties arising in confrontations ...

Security as a Public, Private or Club Good: Some Fundamental Considerations

Security is often defined as the absence of threats. However, security has far more aspects, reaching from security of nation states to health security. Baldwin (1997) formulated seven questions to narrow the (broad) concept of security. Along with Baldwin's questions, this paper analyses 'security' in the context of private, public, and club goods and their changing mixture. On the individual level, ...

The Economics of Terrorism from a Policy-Maker's Perspective

This paper introduces a brief framework on the political decision-making process in the context of terrorism. I relate the trade-offs policy-makers are faced with to the economic terrorism literature. Past years have shown a steady increase in theoretical and empirical contributions. However, the major part of the empirical advances is on the economic effects of terrorism, its origins, and drivers. ...

The Economics of Security: A European Perspective ; Introduction

Terrorism Risk Concern in Europe

Motivated by the Bayesian framework, we explore terrorism risk perception differences across European countries. Perception variation is explained by the long-term terrorism countries face, while the cyclical part of terrorism does not seem to play any role.