H Egger, P Egger, D Greenaway, Intra-industry trade with multinational firms, European Economic Review, Vol. 51 (8), 2007. (Journal Article)
Recent developments, including the analysis of firm-level adjustment to falling trade costs, have contributed to a revival of interest in intra-industry trade (IIT). Most empirical work still relies on the standard Grubel–Lloyd measure. This however refers only to international trade, disregarding income flows stimulated by repatriated profits of multinational firms. Given the overwhelming importance of the latter, this is a major shortcoming. This paper provides a guide to measurement and estimation of the determinants of bilateral IIT shares from the perspective of new trade theory with multinational firms. We develop an analytically solvable general equilibrium model to investigate the impact of investment costs, multinational activities and income flows from repatriated profits. We also discuss and quantify the bias of the Grubel–Lloyd index associated with repatriated profit flows of multinationals. Using bias-corrected versions of the Grubel–Lloyd index as the dependent variable, we demonstrate that the determinants motivated by our theoretical analysis offer important insights into variations in IIT shares. |
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Peter Zweifel, Mark V Pauly, Market outcomes, regulation, and policy recommendations, In: Private voluntary health insurance in development : friend or foe?, World Bank Publications, Washington, D.C., US, p. 115 - 146, 2007. (Book Chapter)
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Martin Barbie, Marcus Hagedorn, A Kaul, On the interaction between risk sharing and capital accumulation in a stochastic OLG model with production, Journal of Economic Theory, Vol. 137 (1), 2007. (Journal Article)
We analyze the interaction between risk sharing and capital accumulation in a stochastic OLG model with production. We give a complete characterization of interim Pareto optimal competitive equilibrium allocations. Furthermore, we provide
tests of Pareto optimality/suboptimality based on (risky) rates of return only. |
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Andreas Werblow, Stefan Felder, Peter Zweifel, Population ageing and health care expenditure: a school of red herrings?, Health Economics, Vol. 16 (10), 2007. (Journal Article)
This paper revisits the debate on the red herring, viz. the claim that population ageing will not have a significant impact on health care expenditure (HCE). It decomposes HCE into seven components, includes both survivors and deceased individuals, and estimates a two-part model of the demand for health care services, using a large Swiss data set for 1999. It finds no or weak age effects on HCE for the components of HCE when proximity to death is controlled for, and points to differences between users and non-users of long-term care (LTC). For deceased non-users of LTC services, a falling age curve for all components of HCE except for inpatient care is observed, while survivors show a weak age effect in ambulatory and inpatient care once proximity to death is controlled for. As to surviving users of LTC services, their probability of incurring LTC expenses markedly increases in old age, while most of the components of their conditional HCE show a decreasing age profile. Thus, a school of red herrings can be claimed to exist-with the possible exception of LTC, where ageing might matter regardless of proximity to death. |
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Daria Knoch, Ernst Fehr, Resisting the power of temptations: the right prefrontal cortex and self-control, Annals of the New York Academy of Sciences, Vol. 1104 (1), 2007. (Journal Article)
Imagine you are overweight and you spot your favorite pastry in the storefront of a bakery. How do you manage to resist this temptation? Or to give other examples, how do you manage to restrain yourself from overspending or succumbing to sexual temptations? The present article summarizes two recent studies stressing the fundamental importance of inhibition in the process of decision making. Based on the results of these studies, we dare to claim that the capacity to resist temptation depends on the activity level of the right prefrontal cortex (PFC). |
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R E Leu, K Beck, Risikoselektion und Risikostrukturausgleich in der Schweiz, In: Wettbewerb und Risikostrukturausgleich im internationalen Vergleich: Erfahrungen aus den USA, der Schweiz, den Niederlanden und Deutschland, Nomos Verlagsgesellschaft, Baden-Baden, p. 115 - 159, 2007. (Book Chapter)
Die Bedeutung des Risikostrukturausgleichs ist aus gesundheitsökonomischer Sicht zumindest im schweizerischen Kontext unbestritten. Soll am System der Einheitsprämien und am Kassenwettbewerb festgehalten werden, braucht es einen befriedigenden Risikostrukturausgleich (RSA). Sonst besteht die Gefahr, dass volkswirtschaftlich unerwünschte Risikoselektion in grösserem Mass auftritt und im Zeitablauf
Kassen trotz gutem Management immer wieder in existentielle Nöte geraten. Die Frage ist allerdings, wie ein solcher Risikostrukturausausgleich im Einzelnen ausgestaltet werden sollte. Damit beschäftigt sich der vorliegende Beitrag auf dem Hintergrund des schweizerischen Gesundheitswesens. |
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Peter Zweifel, Boris Krey, Maurizio Tagli, Supply of private voluntary health insurance in low-income countries, In: Private voluntary health insurance in development: friend or foe?, The World Bank / The International Bank for Reconstruction and Development, Washington DC, p. 55 - 113, 2007. (Book Chapter)
This chapter describes how economic theory (and experience) of the demand for insurance predicts that risk-averse individuals purchase coverage if available at so-called fair premiums, which amount to no more than the expected value of the loss to be covered. In the case of health, additional fi nancial means (provided by coverage) may be even more important when a person is ill than when he or she is healthy. If so, demand for health insurance, even in
low-income countries, could be high.
Every insurer needs to charge a “loading” for administrative expense, compensation for risk, and profi t (in the case of a public insurer, the loading amounts
to the effi ciency loss caused by taxation needed to finance the insurer’s operations). Therefore, the behavior of health insurance suppliers becomes of crucial importance. The loading contained in their premiums (or contributions) is just one of several supply dimensions, which include comprehensiveness of benefits, amount of risk selection effort, degree of vertical integration with health
services providers, and degree of seller concentration in the market. This chapter addresses these dimensions of supply and the powerful effect on them of moral hazard (the tendency of consumers to underinvest in prevention, choose
the most intensive treatment alternative, and push for application of the latest medical technology). In the presence of marked moral hazard effects, health
insurers are well advised to include only a few items in their benefi t list, because each of these items tends to increase in price, quantity, and hence expenditure. Moreover, premium regulation induces risk selection efforts. If allowed to charge contributions according to true risk, health insurers will set premiums such that
high and low risks yield the same contribution margin on expectation. In that event, risk selection (“cream skimming”) is not worthwhile. These phenomena hold not only for private health insurance in low-income countries but also for community-based and public health insurance.
Because little empirical data on the supply of health insurance exist, case studies, mainly of low-income countries, are used to illustrate theoretical predictions.
On the whole, the limited empirical evidence suggests that the theory developed in this chapter may be suffi ciently descriptive to provide some guidelines for policy. |
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Daron Acemoglu, Philippe Aghion, Claire LeLarge, John Van Reenen, Fabrizio Zilibotti, Technology, information, and the decentralization of the firm, Quarterly Journal of Economics, Vol. 122 (4), 2007. (Journal Article)
This paper analyzes the relationship between the diffusion of new technologies and the decentralization of firms. Centralized control relies on the information of the principal, which we equate with publicly available information. Decentralized control, on the other hand, delegates authority to a manager with superior information. However, the manager can use her informational advantage to make choices that are not in the best interest of the principal. As the available public information about the specific technology increases, the trade-off shifts in favor of centralization. We show that firms closer to the technological frontier, firms in more heterogeneous environments and younger firms are more likely to choose decentralization. Using three datasets of French and British firms in the 1990s, we report robust correlations consistent with these predictions. |
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Bruno Frey, Eric W K Tsang, The as-is journal review process: let authors own their ideas, Academy of Management Learning and Education (AMLE), Vol. 6 (1), 2007. (Journal Article)
Recently, the problems associated with the existing journal review process aroused discussions from seasoned management researchers, who have also made useful suggestions for improving the process. To complement these suggestions, we propose a more radical change: a manuscript should be reviewed on an "as is" basis and its fate be determined in one round of review. The as-is review process shortens the time period from submission to final acceptance, reduces the workload of editors, referees and authors, provides frank author feedback to referees, and, most important, lets authors own all of the ideas in their publications. |
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Simon Luechinger, Myra Rosinger, Alois Stutzer, The impact of postal voting on participation: evidence for Switzerland, Swiss Political Science Review, Vol. 13 (2), 2007. (Journal Article)
Many countries are forging ahead with convenient balloting methods, in particular electronic and postal voting, in order to re-engage voters. In this paper, we test whether the cost reductions with postal voting increase turnout. The empirical analysis is based on a newly collected data set on the introduction of postal voting in Swiss cantons. We take advantage of the unique fact that voting by mail was introduced at different times across cantons. This allows identifying the impact of postal voting on turnout, independent of time, issue and canton specific effects. The estimated average effect on turnout is roughly 4.1 percentage points for an average turnout of 43 percent between 1970 and 2005. |
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M Spitzer, U Fischbacher, B Herrnberger, G Grön, Ernst Fehr, The neural signature of social norm compliance, Neuron, Vol. 56 (1), 2007. (Journal Article)
All known human societies establish social order by punishing violators of social norms. However, little is known about how the human brain processes the punishment threat associated with norm violations. We use fMRI to study the neural circuitry behind forced norm compliance by comparing a treatment in which norm violations can be punished with a control treatment in which punishment is impossible. Individuals’ increase in norm compliance when punishment is possible exhibits a strong positive correlation with activations in the lateral orbitofrontal cortex and right dorsolateral prefrontal cortex. These
activations are also modulated by the social nature of the task. Moreover, activation in lateral orbitofrontal cortex shows a strong positive correlation with Machiavellian personality characteristics. These findings indicate a neural network involved in forced norm compliance that may constitute an important basis for human sociality. Different activations of this network reveal individual differences in the behavioral response to the punishment threat and may thus provide a deeper understanding of the neurobiological sources of pathologies such as antisocial personality disorder. |
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Peter Zweifel, The theory of social health insurance, Foundations and Trends® in Microeconomics, Vol. 3 (3), 2007. (Journal Article)
The objective of this text is to develop the theory of social health insurance (SHI; the expression used especially in the United States is “public health insurance,” which will be viewed as one variant of SHI here). While a good deal is known about the demand and supply of private insurance, the theoretical basis of SHI is much more fragile. Specifically, on the demand side, what are the reasons for social (or public) health insurance to exist, even to dominate private health insurance in most developed countries? With regard to supply, what do we know about the objectives and constraints of SHI managers? Finally, economists can predict properties of the equilibrium characterizing private health insurance (PHI). However, what is the likely outcome (“performance”) of SHI? At the normative level, one may ask, Should the balance be shifted from SHI to PHI? |
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Stefan Boes, Three essays on the econometric analysis of discrete dependent variables, University of Zurich, Faculty of Economics, Business Administration and Information Technology, 2007. (Dissertation)
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Bruno Frey, Matthias Benz, Towards a constitutional theory of corporate governance, In: Corporate governance: policy perspectives, The Icfai University Press, Hyderabad, India, p. 1 - 26, 2007. (Book Chapter)
Matthias Benz and Bruno S. Frey critically examines the theoretical perspective that the corporations should aspire for an uniformly optimal structure of governance structure in "Towards a Constitutional Theory of Corporate Governance." They make a comparative study of the pros & cons of limited constitutional rights to shareholders under the US corporate laws with the extensive constitutional rights under the Swiss corporate laws. They advocate the democratic approach under Swiss law as a better alternative to direct approach of the US that allows shareholders to set up corporate governance according to their preferences. |
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S A Mason, A Muller, Transforming environmental and natural resource use conflicts, In: The economics of global environmental change: international cooperation for sustainability, Edward Elgar, Cheltenham, p. 225 - 272, 2007. (Book Chapter)
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Bruno Frey, Daniel Waldenström, Using financial markets to analyze history: the case of the second World War, Historical Social Research, Vol. 32 (4), 2007. (Journal Article)
A central aspect of historical research is to provide explanations for the causes and effects of events that occurred in the past, in particular the Second World War. History can be analyzed and explained from different perspectives. Two such perspectives are considered, the first being the traditional historiographic approach, in which the main emphasis is on the qualitative analysis of various kinds of historical sources and documents, and the second being what we call the financial market approach, a recent methodology for linking significant changes in historical market prices to simultaneously occurring geopolitical events. The fundamental characteristics of the two approaches are identified and compared in answering some important historical questions concerning the Second World War. The financial market approach, as reflected in the secondary market for government bonds, is studied for various countries. Both approaches rely heavily on interpretation – but in different ways. They complement each other in a useful way. |
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Harry Telser, Peter Zweifel, Validity of discrete-choice experiments evidence for health risk reduction, Applied Economics, Vol. 39 (1), 2007. (Journal Article)
There is growing interest in discrete-choice experiment (DCE) as a method to elicit consumers' preferences in the health care sector. Increasingly this method is used to determine willingness to pay (WTP) for health-related goods. However, its external validity in the health care domain has not been investigated until now. This paper examines the external validity of DCE concerning the reduction of a health risk. Convergent validity is examined by comparing the value of a statistical life with other preference elicitation techniques, such as revealed preference. Criterion validity is shown by comparing WTP values derived from stated choices in the experiment with those derived from actual choices made by the same individuals. Both tests provide strong evidence in favour of external validity of the DCE method. |
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Matthias Benz, Bruno Frey, Was kann die Corporate Governance in der Schweiz von der Public Governance lernen?, Die Unternehmung, Vol. 61 (4), 2007. (Journal Article)
Das vorliegende Papier schlägt eine neue Sicht auf Probleme der Corporate Governance in der Schweiz vor. Es wird analysiert, wie der Unternehmenssektor bezüglich Governance vom politischen Bereich lernen kann. Demokratien haben einzigartige Institutionen der Führung und Kontrolle von Akteuren im öffentlichen Bereich geschaffen, welche neue Einsichten für die Governance von Unternehmen geben können. Drei Bereiche werden diskutiert und konkret auf den Kontext der Schweizer Corporate Governance angewendet: Gewaltenteilung im Unternehmen, kompetitive Wahlen für Kernfunktionen in der Firma, und direkt-demokratische Beteiligungsrechte für Aktionäre. |
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R Foellmi, M Oechslin, Who gains from non-collusive corruption?, Journal of Development Economics, Vol. 82 (1), 2007. (Journal Article)
Non-collusive corruption, i.e., corruption that imposes an additional burden on business activity, is particularly widespread in low-income countries. We build a macroeconomic model with credit market imperfections and heterogeneous agents to explore the roots and consequences of this type of corruption. We find that credit market imperfections, by generating rents for the incumbent entrepreneurs, create strong incentives for corrupt behavior by state officials. However, non-collusive corruption not only redistributes income from non-officials towards officials but also within the group of potential entrepreneurs. If borrowing is limited, bribes prevent poorer but talented individuals from starting a business. But this is likely to benefit those who may enter anyway; the cost of capital is lower and there is less competition on the goods markets. |
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Beat Fluri, Assessing Changeability by Investigating the Propagation of Change Types, In: Proceedings of the 29th International Conference on Software Engineering, IEEE Computer Society, January 2007. (Conference or Workshop Paper)
We propose an approach to build a changeability assessment model for source code entities. Based on this model, we will assess the changeability of evolving software systems.
The changeability assessment is based on a taxonomy of more than 30 change types and a classification of these in terms of change significance levels for consecutive versions of software entities. We consider change type propagation on different levels of granularity ranging from method changes to interface and class changes.
We claim that this kind of assessment is effective in pointing to potential causes of maintainability problems in evolving software systems. |
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