Topic Firms

Declining Effective Tax Rates of Multinationals: The Hidden Role of Tax Base Reforms

This paper documents the rise of corporate tax-base narrowing measures in the EU using a novel dataset covering both tax rate and tax base reforms implemented between 2014 and 2022. Our findings indicate a shift away from the ’cut rate – broaden base’ approach, as governments increasingly align corporate taxation with industrial policy objectives. We show that EU tax competition exerts downward pressure ...

The Impact of Financial Support to Firms during Crises: The Case of Covid Aid in the EU

The Covid-19 pandemic caused a global economic crisis, leading governments to provide substantial State Aid to support firms. This paper examines the effectiveness of Covid-related financial support in Spain and Italy, focusing on its impact on firm recovery. Using a difference-in-differences (DiD) approach combined with propensity score weighting, it compares outcomes of similar firms receiving aid ...

The Non-linear Impact of Risk Tolerance on Entrepreneurial Profit and Business Survival

Entrepreneurs tend to be risk tolerant but is higher risk tolerance always better? In a sample of about 2100 small businesses, we find an inverted U-shaped relation between risk tolerance and profitability. This relationship holds in a simple bilateral regression, and even after controlling for a large set of individual and business characteristics. Apparently, one major transmission goes from risk ...

Multi-mode Trade Policy Retaliation

Previous studies have found evidence that countries may choose to retaliate against countries for certain trade actions.  What has not been empirically examined is the use of multi-modal retaliation in trade policy. Using an exporter-importer-sector panel of antidumping (AD), sanitary and phytosanitary (SPS), and technical barriers to trade (TBT) actions between 1995 and 2019, we find evidence of...

Broken Ties: Impact of Venezuela’s Suspension from Mercosur on Trade Networks

This paper examines the impact of sanctions on the structure of regional supply chains, focusing on Venezuela's suspension from the Mercosur trade bloc in 2016. To analyze this, we exploit a uniquely comprehensive database encompassing firm-to-firm transactions across several Latin American economies from 2014 to 2019. Our findings reveal how buyer-supplier linkages adapted to the shock along...

The 17th Berlin IO Day

The Berlin IO Day is a one-day workshop sponsored by the Berlin Centre for Consumer Policies (BCCP) and supported by the Berlin's leading academic institutions, including DIW Berlin, ESMT Berlin, Freie Universität Berlin, Humboldt-Universität zu Berlin, and Technische Universität Berlin. The aim is to create an international forum for high quality research in Industrial Organization in the heart...

New Trade Models, Same Old Emissions?

This paper investigates the elusive role of productivity heterogeneity in new trade models in the trade and environment nexus. We contrast the Eaton-Kortum and the Melitz models with firm heterogeneity to the Armington and Krugman models without heterogeneity. We show that if firms have a constant emission share in terms of sales — as they do in a wide range of trade and environment models — the...

Joint venture and increase of prices

Wage Markups and Buyer Power in Intermediate Input Markets

How are market imperfections in different input markets related? I show theoretically that the extent of buyer power in intermediate input markets determines both wages and wages relative to the marginal revenue contribution of employees if collective bargaining characterizes labor markets. This relationship is examined empirically using data on the universe of Dutch manufacturing firms from 2007...

Brown Bag Seminar Industrial Economics