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The outbreak of COVID-19 pandemic is a great economic shock, both for the European countries and for the entire world. The subject of the study is the unexpected profits or losses connected with the coronavirus pandemic. The authors of the article focus on the areas affected by losses and the areas, which achieved windfall profits during the discussed period. The purpose of this article is to analyze and evaluate the profits and losses resulting from the ongoing SARS-CoV-2 pandemic. The world economy has been struggling with epidemic phenomena, varying in intensity and extent, since at least the Roman Empire. This is also the case when the global economy is affected by the pandemic. The business environment has radically evolved. The pandemic contributed to losses in many areas, the most influenced fields are the following: aviation, hospitality and tourism. Profits, on the other hand, relate to the Zoom company, which enables and facilitates videoconferencing, it is so important in the case of remote work. Online shops, such as Amazon, have also recorded an increase, especially during the closure of brick and mortar shops. Stock market increases were also observed among companies supplying food and food products. It should be emphasized, however, that the financial situation of individual companies also depends on the principals and permanent contracts.

This paper investigates to which extent the Dutch feed-in premium scheme for on-shore wind projects has resulted in windfall profits during 2003-2018, a period in which the design of the scheme changed several times. Using Monte Carlo simulations, for 2003, 2009 and 2018, years that represent distinct scheme designs, we estimate the distributions of the required subsidy across virtually all potential on-shore wind projects, and compare them to the granted subsidies. We find that the average windfall profits of randomly drawn projects from the pool of potential investments have decreased over time, largely as a result of differentiating in the subsidy level among projects on the basis of the wind speed at the turbine's location. Despite these improvements, actual investments still experience substantial windfall profits, implying that investors successfully seek out projects that yield the highest windfall profits. Overall, the results imply that accounting for heterogeneity by differentiating in the subsidy level contributes to mitigating windfall profits.

We exploit the randomized assignment of lottery prizes in a large administrative Swedish data set to estimate the causal effect of wealth on stock market participation. A $150,000 windfall gain increases the stock market participation probability by 12 percentage points among prelottery nonparticipants but has no discernible effect on prelottery stock owners. A structural life cycle model significantly overpredicts entry rates even for very high entry costs (up to $31,000). Additional analyses implicate pessimistic beliefs regarding equity returns as a major source of this overprediction and suggest that both recent and early-life return realizations affect beliefs.

Economic agents preffered to invest in foreign exchange in recent year. Where circu- lation of money and capital are faster than transaction on goods & services one of the common type of then is arbitrage The high return from one transaction facility will give the high risk, as a result the decision making for such investment in foreign exchange is becoming important The purpose of this study is to do the simulation by using Arbitrage facilities for such investment on foreign exchange. This study will find the best foreign exchange between US Dollar, Deutsche Mark, Poundsterling and Yen, with the bestinterest rate and the best inflation rate for such transaction by using Arbitrage transaction mechanism. in foreign exchange transaction, the speculation risk is very high but this is becoming a reason why this kind of transaction being attractive and obviously more economic agents done this business. When the exchange rates become high, economic agents have a chance to get the high profit because of such differences occurred on exchange rates. The problem is how to manage this situation as well as possible mainly for managers. The role of estimation on foreign exchange for example by knowing the variables that determined foreign exchange rates, is important for trading on foreign exchange. Beside that, Arbitrage can give an additional profit from such investment in a foreign exchange and windfall profit from spread of the foreign exchange.

Research finds that engaging in prosocial behavior has many positive psychological outcomes (e.g., enhanced well-being, optimism, perceived control, and a boost in self-concept), and research on monetary risk-taking reveals these psychological outcomes are associated with increased risk-taking. Merging these findings, we propose that when people's volunteering behavior is made salient in their minds, they take more monetary risks. Making research participants’ volunteering behavior salient by having them recall an act of prior volunteering (studies 1 and 3), choosing whether to volunteer (study 2), or choosing one of two volunteering activities (study 4), four experiments (and a fifth reported in the Appendix S2) reveal increased risk-taking across several monetary-risk outcomes (incentive-compatible gambles, allocation of a windfall gain, and a behavioral risk-taking measure involving escalating risk). Lastly, when the decision maker attributes a decision to volunteer to an external source, the effect of salient volunteering on monetary risk-taking attenuates.

Policy prescriptions for managing natural resource windfalls are based on the permanent income hypothesis: none of the windfall is invested at home and saving in an intergenerational SWF is dictated by smoothing consumption across different generations. Furthermore, with Dutch disease effects the optimal response is to intertemporally smooth the real exchange rate, smooth public and private consumption, and limit sharp fluctuations in the intersectoral allocation of production factors. We show that these prescriptions need to be modified for the following reasons. First, to cope with volatile commodity prices precautionary buffers should be put in a stabilisation fund. Second, with imperfect access to capital markets the windfall must be used to curb capital scarcity, invest domestically and bring consumption forward. Third, with real wage rigidity consumption must also be brought forward to mitigate transient unemployment. Fourth, the real exchange rate has to temporarily appreciate to signal the need to invest in the domestic economy to gradually improve the ability to absorb the extra spending from the windfall. Fifth, with finite lives the timing of handing back the windfall to the private sector matters and consumption and the real exchange rate will be volatile. Finally, with nominal wage rigidity we show that a Taylor rule is a better short-run response to a crash in commodity prices than a nominal exchange rate peg.

Human society has evolved to allow third parties-the court system, parents or other societal arbitrators-to punish norm violators and compensate victims. Few studies explore the effect of stress or time pressure on a third-party judge. Under time pressure, people will likely show a more instinctual reaction or judgment style. We investigated third-party punishment and compensation within the context of unfairly shared losses and gains in a dictator game under time pressure. Our results show that under no time pressure, participants were inclined to punish dictators who unfairly split windfall gains; however, participants chose to compensate victims more than punish the norm-violating dictators in the context of unfairly shared losses. With added time pressure, third-parties were disposed to inflict punishment upon the dictator in both the gain and loss contexts-punishment became the action of choice. Our results shed light on the way observed behavior and stress affect social cognition and decision making in the context of altruistic social interventions and the enforcement of social norms.

We study how Americans respond to idiosyncratic and exogenous changes in household wealth and unearned income. Our analyses combine administrative data on U.S. lottery winners with an event-study design that exploits variation in the timing of lottery wins. Our first contribution is to estimate the earnings responses to these windfall gains, finding significant and sizable wealth and income effects. On average, an extra dollar of unearned income in a given period reduces pre-tax labor earnings by about 50 cents, decreases total labor taxes by 10 cents, and increases consumption by 60 cents. These effects are heterogeneous across the income distribution, with households in higher quartiles of the income distribution reducing their earnings by a larger amount. Our second contribution is to develop and apply a rich life-cycle model in which heterogeneous households face non-linear taxes and make earnings choices along both intensive and extensive margins. By mapping this model to our estimated earnings responses, we obtain informative bounds on the impacts of two policy reforms: an introduction of UBI and an increase in top marginal tax rates. Our last contribution is to study how additional wealth and unearned income affect a wide range of behavior, including geographic mobility and neighborhood choice, retirement decisions and labor market exit, family formation and dissolution, entry into entrepreneurship, and job-to-job mobility. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Starting in 2009, the German state of Saxony distributed sports club membership vouchers among all 33,000 third graders in the state. The policy’s objective was to encourage them to develop a long-term habit of exercising. In 2018, we carried out a large register-based survey among several cohorts in Saxony and two neighboring states. Our difference-in-differences estimations show that, even after a decade, awareness of the voucher program was significantly higher in the treatment group. We also find that youth received and redeemed the vouchers. However, we do not find significant short- or long-term effects on sports club membership, physical activity, overweightness, or motor skills.

Many major cities around the world have undergone a steep housing price appreciation in recent years, creating windfall profits for some, while for others, the costs of living have risen considerably faster than their income. The resulting social stratification effects have received much scholarly scrutiny, and also raised discussions on whether or not we have to abandon ‘older models’ of class. By extending Marx's notion of surplus populations from primary work-related exploitation to housing-centred secondary exploitation, this article argues that older models are perfectly equipped to account for the various strata of 'asset-haves' and 'asset-have-nots'. Focusing in particular on the 'asset-have-nots’, the article utilizes the Dutch city of Amsterdam as a case study to illustrate how the acceleration of housing as a site of accumulation not only co-creates surplus populations but also an increasing share of people who find themselves at the frontiers of becoming surplus populations. The city of Amsterdam is particularly interesting as it has undergone one of the highest and most rapid real estate price increases in Europe in recent years, which has not only decreased the affordability and accessibility of housing for the low- but increasingly also middle-income strata. The article shows that the accelerated accumulation in the realm of housing, and the concomitant creation of surplus populations, are not mechanical law-like regularities of financialised capitalism. Instead, various forms of state regulation have facilitated and mediated the scale, timing and the way in which overaccumulated surplus capital has been absorbed through housing.

To evaluate is to judge outcomes, often within a policy framework. This chapter is on what Norway has to show for her windfall resource gains, which is at least the GPF-G. How well has one done under the circumstances? Windfall gains from oil set in train mechanisms that countries differ in their ability to address. Norway had developed good institutions before the oil was discovered. Social democrats with frugal spending attitudes ruled for decades based on majorities in Parliament. The 1970s saw infrastructure investments, partly financed by debt. The SWF signaled a net asset position from the 1990s: When debts were paid off, both oil production and prices soared. An opportunity to invest heavily was seized by the government. There are no signs of low growth due to resource curse. However, fiscal populism is present, and spending habits have changed. The wealth may have changed Norwegians. Many things could still go wrong. Perhaps most fundamentally, government spending could take off.

This paper proposes a risk-constrained decision-making approach for a wind power producer participating in the day-ahead market. In the developed model, a flexible demand response trading scheme between the wind power producer and different customers is employed. Through the proposed demand response mechanism, the wind power producer is able to trade demand response resource internally with different customers, and then trade energy externally with the market to increase the expected profit and the wind energy utilization. The uncertainties in the wind power and demand response are modeled by using the information gap decision theory approach from risk averse (robust) and risk-seeking (opportunistic) perspectives. The objective of the robust model is to maximize the robust level while satisfying the desired profit, whereas the opportunistic model aims to evaluate the possibility of achieving windfall profits with favorable uncertainties. The overall offering strategy problem is modeled as a bi-objective mixed integer nonlinear programming, which is linearized by proper techniques and solved efficiently by using the normal boundary intersection technique. Simulation results show that utilizing demand response resource to mitigate wind power deviations can increase a wind power producer’s profit and reduce potential risks. In addition, the results demonstrate that the proposed bi-objective optimization approach enables the wind power producer to select appropriate offering decisions with respect to uncertainties.

In the promising trend of low-carbon emission, new energy sources are being used for high-speed railways to decrease operating costs. Photovoltaic energy (PV) is a new energy source that can be easily obtained but high uncertainty involved. This paper proposes an Information Gap Decision Theory(IGDT)-based energy management approach for the co-phase traction power system considering the integration of PV and hybrid energy storage system(HESS). This approach aims to reduce total costs with the IGDT model, which resolves the uncertainty of PV. The proposed approach offers Day-Ahead robustness and opportunity strategies to guarantee the expected cost and pursue the windfall profit, respectively. The relevant national standards are met as well. The result of case studies verifies the approach can provide effective risk-averse/risk-seeking decisions under PV uncertainty conditions.

The recent spread of COVID-19 has led to the worst economic crisis since the 1930s. To boost demand after the crisis, direct monetary transfers to households are being discussed. Using novel microdata from the Eurosystem Household Finance and Consumption Survey (HFCS), we study how much of such a transfer households would actually spend. We do so by exploiting the unique opportunity that the new wave of the survey included an experimental question to calculate the marginal propensity to consume from hypothetical windfall gains. Our results show that households on average spend between about 33% (the Netherlands) and 57% (Lithuania) of such a transfer. In all countries, answers are clustered at spending nothing, spending 50% and spending everything. Marginal propensities to consume decrease with income but are not as clearly related to wealth., Highlights • We discuss helicopter money as an option to boost demand after the COVID-19 crisis. • Marginal propensity to consume across Euro area countries is between 33% and 57%. • Marginal propensity to consume decreases with income but is unrelated to wealth. • Helicopter money would lead to heterogenous effects across and within countries. • Lump-sum transfers might be preferable to inequality-preserving transfers.

The recent boom in US oil production has prompted debates on levying new taxes on oil. This paper uses new well-level production data and price variation from federal oil taxes and price controls to assess how taxes affected production. After-tax price elasticity estimates range between 0.295 (0.038) and 0.371 (0.025). Response along the shut-in margin is minimal. There is no evidence of spatial shifting of production to minimize tax liabilities. Taken together, the results suggest that taxes reduced domestic production in the 1980s, and the response largely came from wells that continued to pump oil, but at a reduced rate. (JEL H25, H32, L71, L78, Q35, Q38)

The European Union (EU) Emissions Trading System (ETS) introduced emissions allowances as a new asset worth tens of billions of euros. This article examines how this asset value has entered...

By surveying formal models, I demonstrate that the political resource curse is the misallocation of revenues from natural resources and other windfall gains by political agents. I show that the curse always exists if political agents are rent-seeking, since mechanisms of government accountability, e.g. electoral competition, the presence of political challengers, and even the threat of violent conflict, are inherently imperfect. However, the scope for rent-seeking becomes more limited as the competition over political power that threatens the incumbent government becomes more intense.

This study analyzes a public-spending option from mining and oil resources and its impact on Niger's economy. The windfall gain from mining and oil revenues provides an opportunity for the country to reinvest natural resource rents, enhance economic development, and address infrastructure gaps. Drawing on the country's recent and expected mining and oil exploitation, we evaluate the effects of a reinvestment policy in road infrastructure using a dynamic computable general equilibrium (CGE) model. We find that investment in road infrastructure brings positive spillover effects to other sectors of the economy and benefits to the economy in the long run. Our analysis additionally shows that reinvestment in road infrastructure, given the initial state of infrastructure in Niger, could help mitigate the resource curse.

The introductory article of this special issue looks at the genesis, characteristics and challenges of social protection schemes in the Middle East and North Africa (MENA). It argues that social protection policies in the MENA should be seen as a key ingredient of the social contract that governments offered to their citizens after independence. To compensate for the lack of political participation and accountability, free public health and education systems, generous food, energy and water subsidies, social insurance and assistance schemes and mass public‐sector employment were established. This was possible because MENA countries benefitted from substantial windfall profits (from the export of oil, gas and minerals; Suez Canal user fees), as well as from income from remittances from migrant workers and income from politically motivated aid. The decline of income from some of these sources and population growth has led MENA governments to focus more closely their social protection spending on strategically important social groups: typically, the urban upper middle class. As a result, social protection systems in MENA countries currently suffer from severe weaknesses in terms of social fairness, efficiency and sustainability. Although MENA countries still spend a very considerable share of gross domestic product on their social protection schemes, these have only very limited effects on the reduction of poverty, vulnerability and inequality – and some even exhibit perverse “bottom‐up” redistributive outcomes. The articles that comprise this special issue selectively spotlight a number of opportunities and challenges for the development of sustainable social protection in the MENA countries.

Recently, increasing numbers of nonprofit studies have used experiments to understand individuals’ charitable giving decisions. One significant gap between experimental settings and the real world is the way in which individuals earn the incomes that they use for charitable donations. This study examined the relationship between individuals’ income sources and their charitable giving decisions. To do so, we conducted a laboratory experiment with 188 college students and asked them to donate with windfall money or with money earned from a real task, respectively. The findings showed that participants donated more to charities if their funds derived from windfall gains. Implications for conducting experiments and motivating donors are also discussed.

Subsidies for renewable energy sources are increasing around the globe and amounted to more than 100 billion euro in 2013. This study aims to answer whether the subsidies only ensure that green electricity plants are profitable or whether other market participant – as, for example, landowners – benefit from the subsidy in the form of windfall gains as well. To identify the causal effect of the subsidies, we investigate the impact of the introduction of a price guarantee in the form of a feed-in tariff for wind electricity in Germany on land prices. We employ two different approaches. Both approaches exploit quasi-experimental variation in wind strength across 260 non-urban counties in combination with the introduction of the subsidies. Based on a difference-in-differences design, we find that land prices increased by roughly 1100 euro in high-wind areas after the introduction of the subsidy. Further, using an instrumental variable estimator we document that around 18% of expected wind turbine profits are capitalized into land prices. Finally, we show that wind turbine subsidies account for 4% of overall agricultural income in 2007.

Many least developed countries (LDCs) face commodity dependence on the export and import side. This paper develops a structuralist computable general equilibrium model for commodity-dependent LDCs and simulates global commodity price shocks for Burkina Faso, Ethiopia and Mozambique. Results show important macroeconomic and distributional effects. Although increasing export commodity prices are beneficial, the high correlation with import commodity prices causes low or even negative combined effects. The magnitude of effects depends on the degree of import and export dependence, the production structure of the key commodity sectors and policies that determine the distribution of windfall profits.

We examine conditions under which a new or tighter restriction on emissions from a competitive polluting industry creates price effects in adjacent markets. Price effects may arise when a quantity restriction on emissions causes output to fall and, therefore, output price to rise. They may also arise when the required reduction in output causes the price of a polluting input to fall. We model emissions as a fixed proportion of output, limiting the possibilities for input substitutions. The possibility of price effects exists whenever the set of regulated firms is large relative to its input or output markets, a possibility that is expressly ruled out in Montgomery’s (J Econ Theory 5:395–418, 1972) paper. Two potential implications of price effects are explored. One is an efficiency concern: a welfare-maximizing regulator who neglects price effects will require more than the optimal level of abatement. The other is a distributional concern: an emissions restriction might create windfall profits for the polluting industry.

We investigate a unique setting which enables us to distinguish between two theories of work performance. A standard labor supply framework implies a negative effect of the nonpecuniary cost of work on the employee’s effort. In contrast, a model of worker morale that is consistent with a widely used theory of Akerlof and Yellen (QJE,1990) predicts this negative effect is stronger (weaker) for low-morale (high-morale) workers. We exploit a natural experiment design of a firm relocation from Milwaukee’s Central Business District to the area’s suburban ring in 1992. Since the employees did not choose the location of the new plant, there is an exogenous source of variation on the adjusted commuting distance amongthose who stay at the firm. Some of the workers received a windfall gain, whereas other workers experienced an unforeseen cost in longer commuting time. The estimates indicate that low-morale workers are responsive to the shock in commuting time. We conclude that the results favor the model of worker morale.

These remarks deal with financialisation of accounting. Financialisation is a process by which windfall capital market gains are crystallised from future earnings over and above those available from current earnings and profit. Accounting numbers reported by business firms are increasingly including the product of windfall gains from capital markets into those accounting numbers. Thus a significant disturbance in market valuations embedded in firm’s assets and earnings could have a significant and material impact upon firm-level financial stability.

Oliver Williamson has coined the term “fundamental transformation”. It captures the following situation: before they strike a deal, buyer and seller are protected by competition. Yet thereafter they find themselves in a bilateral monopoly. With common knowledge of standard preferences, both sides conclude the contract regardless if its expected value exceeds their outside options. We run an experiment to test whether additional behavioral reasons deter mutually beneficial trade. If the risk materializes, another individual makes a windfall profit. She does so by intentionally exploiting the first individual. The first individual is let down, although she has knowingly exposed herself to this risk. Participants sell the opportunity to enter the contractual relationship at a price below its expected value. This effect is driven by risk aversion, and already present if the risk is stochastic. Behavioral effects are heterogeneous. About a quarter of participants exhibit the hypothesized additional deterrent effect.

The COVID-19 pandemic has exposed the deep systemic inequalities and massive failures in our economic system, leaving tens of millions of people in the United States without jobs, devastating public services, and bankrupting countless small businesses. Yet as we face our deepest economic downturn since the Great Depression, a subset of companies is experiencing windfall profits. Seventeen of the top 25 most profitable US corporations, including Microsoft, Johnson & Johnson, Facebook, Pfizer, and Visa, are expected to make almost $85 billion more in 2020 super-profits compared to previous years, this research shows. If we continue with business as usual, these windfall profits will not be handed out to workers in wages, won’t be used to lower consumer prices, nor used to pay a bit more in taxes to fund healthcare workers. These profits will be paid to shareholders, a group of largely white, rich men who already control the vast majority of our country’s corporate stock. The wealthiest 10 percent of Americans own 87 percent of all corporate stock in the US, compared to less than 1 percent of shares owned by the bottom half. Racial disparities are even more stark. this paper estimates that 9 out of every 10 dollars of pandemic profits will end up with white Americans in 2020. Black and Latinx families—already disproportionately affected by COVID-19—receive only 16 cents each. COVID-19 presents us with a choice as a society: Do we want to continue distributing our economic resources to the already-wealthy and well-connected, or shall we choose to redeploy this money into the once-in-a-century fight against COVID-19 and the inequalities it brings in its wake? Resurrecting an emergency tax tool used during World War II, this paper estimates that temporarily taxing the excessive profits of the top 25 US companies could raise almost $80 billion annually to re-invest in tackling COVID-19 inequalities across the US and around the world.

This paper analyzes the determinants of the labor-capital split in national income for 20 countries since the late 1800s. Our main identification strategy focuses on unique historical quasi-experimental events: i) the introduction of universal suffrage, ii) close election wins of left-wing governments, iii) decolonization, iv) unionization shocks, and v) wars. We also run instrumented panel regressions. Our findings show that the capital share decreased in response to radical institutional and political shifts, such as the introduction of universal suffrage in the early 1900s, the undoing of colonialism and the implementation of redistributive policies during the post-war period. By contrast, the capital share increased following the erosion of trade unionism since the 1980s. Wars, despite destroying the capital stock, generated windfall profits that increased the capital share.

During Phase 3 of the EU Emission Trading System (ETS), to remedy the so-called windfall profits obtained by companies that benefited from the free allocation of emission permits, the EU introduced an auction-based method for the allocation of carbon emission allowances. We estimate the effect on firms' profits from participating in auctions during Phase 3 of the EU ETS using a propensity score matching approach. The work shows that the introduction of the new market mechanism for allocating carbon emission allowances has no significant effect on corporate profits, whatever the measure of profitability used. From a policy standpoint, this result seems to suggest that this new allocation mechanism might fail to improve the incentives for companies to increase their production cost efficiency or to invest in breakthrough technologies that reduce CO2. The rather flat auction price trend seems to support this conclusion.

This paper presents a Fisher index measure of the total factor productivity (TFP) performance of Irish dairy farms over the period 2006–2016 using the Teagasc National Farm Survey (NFS) data. The removal of milk quotas in 2015 has led to an increase of over 30% in dairy cow numbers since 2010, and although suckler cow numbers have dropped slightly, the total number of cows in Ireland reached an all-time high of 2.5 million head in 2016. This large increase adds to the environmental pressures attributed to agricultural output and puts the focus firmly on how efficiently the additional agricultural output associated with higher cow numbers is produced. The primary purpose of this paper is to identify a standardised measure of the TFP performance of Irish dairy farms that can be routinely updated using Teagasc NFS data. We found that relative to 2010 the TFP of Irish dairy farms has increased by almost 18%; however, in one production year 2015, when milk quota was removed, the TFP measure increased by 7% and TFP continued to grow by 2.5% in the production year 2016. It would seem therefore that the removal of the European dairy quota system has resulted in a windfall gain for Irish dairy farmers but that productivity gains are continuing. Future data will be required to investigate the longer-term TFP performance of Irish dairy farms in the post-milk quota era.

Deployment policies based on economic incentives are among the most effective tools for speeding up the diffusion of clean energy technologies. Policy instruments such as feed-in tariffs have played a critical role in driving the growth of solar photovoltaics, and could accelerate the uptake of other technologies that are key to the decarbonization of energy systems. Historical experiences, however, show that failing to adjust economic incentives to falling technology prices can fundamentally undermine these policies' effectiveness and cost-efficiency. This paper addresses this challenge by assessing three novel policy designs. Based on control-theory principles, the proposed mechanisms modify incentives in response to changes in deployment, policy costs, or profitability for adopters. We assess the outcomes that each policy design would have achieved when applied to Germany's feed-in tariff for solar photovoltaics between 2000 and 2016. For this purpose, we developed an agent-based model that allows us to simulate the adoption decisions of individual households and medium-sized and large firms, as well as the evolution of technology prices. Our results show that responsive designs inspired by control theory might produce policies that follow their targets more closely, and at a lower cost. In addition, our analysis suggests that the studied designs could greatly reduce uncertainty over policy outcomes and windfall profits. This research also highlights the role of the temporal distribution of policy targets, and identifies policy design tradeoffs, drawing relevant implications for the design of future deployment policies., Environmental Research Letters, 15 (4), ISSN:1748-9326, ISSN:1748-9318

How can the business maximize revenue while providing discounts? This research suggests that hospitality operators may stimulate add-on purchases with the adoption of surprise discounts. Two experiments investigated factors that influence hospitality consumers’ ancillary spending. Study 1 tested the discount and product type effects on additional spending intentions for a cruise booking. Study 2 identified how the depth of surprise discount and add-on product type influence consumers' add-on purchase decisions for an online hotel booking. The findings indicate that a surprise discount and hedonic items induce consumers' unplanned purchases. A hedonic add-on item is preferred over a utilitarian item when a low discount is offered. Impulse buying mediates the effect of surprise discount and product type on unplanned purchase intentions. This research extends the traditional discount role, by demonstrating that a discount promotion can induce consumers' additional purchases. The findings provide guidance for effective pricing strategies and add-on marketing mix.

Do political institutions limit rent seeking by politicians? We study the transformation of petroleum rents, almost universally under direct government control, into hidden wealth using unique data on bank deposits in offshore financial centers that specialize in secrecy and asset protection. Our main finding is that plausibly exogenous shocks to petroleum income are associated with significant increases in hidden wealth, but only when institutional checks and balances are weak. The results suggest that around 15% of the windfall gains accruing to petroleum-producing countries with autocratic rulers is diverted to secret accounts. We find very limited evidence that shocks to other types of income not directly controlled by governments affect hidden wealth.

The house money effect predicts that individuals show increased risk-seeking behavior in the presence of prior windfall gains. Although the effect’s existence is widely accepted, experimental studies that compare individuals’ risk-taking behavior using house money to individuals’ risk-taking behavior using their own money produce contradictory results. This experimental field study analyzes the gambling behavior of 917 casino customers who face real losses. We find that customers who received free play at the entrance showed not higher but significantly lower levels of risk-taking behavior during their casino visit, expressed through lower average wagers. This study thus provides field evidence against the house money effect. Moreover, as a result of lower levels of risk seeking, endowed customers yield better economic results in the form of smaller own-money losses when leaving the casino.

This paper analyzes the implementation of pollution permits. It focuses on the distributional impacts linked with the stringency of output-based allocation when two sectors are covered by the market for permits and the total cap is held constant. A new type of profit increase in sectors that are not exposed to international competition, when energy-intensive trade-exposed (EITE) sectors are granted output-based allocations, is demonstrated theoretically. The paper also illustrates a profit increase in the electricity sector in a possible fourth phase of the European Union Emission Trading Scheme, in which output-based allocation will be granted to EITE sectors, compared with the case in which all permits are auctioned.

(ProQuest: ... denotes formulae omitted.)IntroductionTo date, not a single cubic meter of shale gas has been extracted and sold in Europe. While the substance still sits deep in the ground, it has already fuelled a fierce debate, protests, hopes and fears across the continent. Poland is the forerunner of exploration of natural gas from unconventional (shale rock) deposits. Nevertheless, little economic research has been conducted on the topic of shale gas in Poland. This exploratory study hopes to contribute to the scholarship on the topic.The aim of this article is to approach the study of shale gas from an economic perspective, with welfare at the centre of the analysis, and to deliver policy recommendations for the Polish government on the taxation of the shale gas extracting firms in Poland.The key result of the static analysis is that is that lump sum tax is the first best of all taxation methods. The second best option for taxation is a combination of the CIT and a windfall profit tax. From the dynamic perspective, this research argues that Gazprom can remain the market leader thanks to the sequential character of the competition in the Polish natural gas market, but this would not have negative welfare effects.This study is structured in the following way: section two introduces the topic of shale gas in Poland, section three elaborates on the methods, section four provides an analysis of the tax mechanisms from a static perspective, section five looks at the dynamic effects and sections six concludes the research.1.Shale gas in PolandThe Polish government initially offered the licenses to explore, or explore and extract, shale gas in the form of concessions. The second license type, to explore and extract, was introduced in order to simplify the market regulation and to attract investors. For a low price firms could purchase the right to explore and extract, regardless of the findings. Concessions are individual parcels of land. The price of each concession is determined by its size multiplied by a single rate that the Polish government sets per square kilometre (km2). A single rate applies to all concessions in the country. For exploration only, the price per km2 had been set at PLN 105.811 and for exploration and extraction PLN 211.622. In addition, the firm that bought the license only for the exploration process had the pre-emptive right to upgrade the license to extraction of shale gas. There were two reason behind this design. First was lack of knowledge about the quantity and quality of natural gas in the Polish shale rock formations. Second, the investors, not the taxpayers, bore the cost of exploration and the associated risk. Shifting the costs and risk associated with exploration process on investors was compensated by the government to the firms in the form of the pre-emptive right to purchase a license for extraction and the single exploration/extraction licenses. A new law, introduced in 2014, has combined previous types of concession into one, in a further effort to simplify access to the market. In all cases the legal set- up has ruled out auctions at the extraction stage. For this reason the Polish government has turned to taxation as a method to collect revenue from the potential shale gas extraction and sales. In the Polish government's view the 19 per cent profit tax is insufficient. Warsaw decided, in the 2014 change of law, to raise the potential revenue from taxation of shale gas firms by adding a complementary tax on fossil fuels, that depends on the profitability of the source, and can amount to 0, 12,5 or 25 per cent and also an additional tax of 1,5 per cent on the total value of extracted natural gas from shale sources. Nevertheless, collection of the complementary tax has been suspended until year 2020, in an attempt to stimulate the industry. Possibly, taxation of shale gas will be adjusted once again in the future. Without certainty about tax regulation and the size of the tax burden, investors are reluctant to invest in exploration or move from exploration to extraction; what harms consumers of natural gas in Poland. …

Giving in dictator games has been shown to vary with the nature of the endowment (earned vs. house money) and the action space (give only vs. the option to give or take). This article is the first to test if these factors similarly affect warm-glow giving alone. There is no reason that one would expect the same outcomes given that the motivations for warm-glow giving are different from the motivations for total (warm-glow plus purely altruistic) giving. We find that warm-glow giving to charity or philanthropic institutions in a real-donation experiment increases when the endowment is earned. The option to take does reduce warm-glow giving to charity, but significant giving remains. Our results suggest that donating earned income creates greater utility than donating an equal amount from a windfall gain, and that warm glow comes not merely from the act of giving, but also from the characteristics of the recipient. (JEL C90, D64, H41)