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Several European countries have followed the USA in introducing prospective payment for hospitals with the expectation of achieving cost efficiency gains. This article examines whether theoretical expectations of cost efficiency gains can be empirically confirmed. In contrast to previous studies, the analysis of hospitals in Switzerland provides a comparison of a retrospective per diem payment system with a prospective global budget and a payment per patient case system. Using a sample of approximately 90 public financed Swiss hospitals during the years 2004–2009 and Bayesian inference of a standard and a random parameter frontier model, cost efficiency gains are found, particularly with payment per patient case. Prospective payment, designed to put hospitals at operating risk, is more effective in terms of cost reduction than the retrospective alternative. However, hospitals are heterogeneous with respect to their production technologies, making a random parameter frontier model the superior specification for Switzerland.

Die Wasserpreise in Deutschland werden im Zuge der neuerdings aktivierten kartellrechtlichen Missbrauchsaufsicht verstärkt kontrovers diskutiert. Insgesamt ist der Regulierungsrahmen der Wasserwirtschaft unter Veränderungsdruck. Dabei steht die Entgeltkontrolle im Mittelpunkt des Interesses. Eine allein auf Effi zienz setzende Preiskontrolle wird aber der komplexen Zielstellung von Wasserpreisen nicht gerecht. Zwar ist der Wassersektor kein effizienzfreier Ausnahmebereich, doch die konkurrierenden Vorgaben des Gebühren-, Wettbewerbs- und Wasserrechts müssen aufeinander abgestimmt und Nachhaltigkeitsprobleme einer Effizienzregulierung stärker beachtet werden. The regulatory framework of the German water sector is currently undergoing a reorientation process at both the EU and national levels. Price regulation of water utilities is particularly controversial. Recently, some national antitrust authorities have significantly increased their oversight of abusive practices. However, the focus of the regulation in this field is exclusively on efficiency while neglecting other pricing objectives (e.g. internalisation of environmental costs). The article examines the current practice of different price regulation schemes (cost plus pricing and control of abusive practice) and identifies its shortcomings. It is shown that different regulating principles of relevant laws (law of charges, competition law and water law) have to be better aligned and sustainability issues need to be taken into account in theory and practice when addressing efficiency requirements for water utilities.

Krankenkassen, Krankenhausverbände und der Bund beklagen unisono die öffentliche Unterfinanzierung der deutschen Krankenhausinfrastruktur. Zuständig für die Infrastruktur sind die Länder, die seit Jahren die Haushaltsmittel für Krankenhausinvestitionen reduzieren. In diesem Beitrag werden erstmals mögliche Ursachen der Investitionsmittelkürzungen mithilfe einer Regressionsschätzung überprüft. Hierbei kann die Vermutung bestätigt werden, dass die rückläufige Entwicklung der öffentlichen Investitionsmittel vor allem Folge der zunehmenden Bemühungen der Länder um eine Haushaltskonsolidierung ist. Verschärfend wirkt die zunehmende Patientenwanderung zwischen den ändern. Ein steigender Anteil von Patienten wählt zur Behandlung ein Krankenhaus außerhalb des eigenen Wohnsitzlandes und kommt damit in den Genuss einer von fremden Steuerzahlern finanzierten Krankenhausinfrastruktur. Dies reduziert die Investitionsanreize der Länder zusätzlich.

Economic development implies that the efficiency of firms in developing countries is approaching that of firms in advanced economies. We examine the extent of this convergence in the Czech Republic and Russia, economies that represent alternative models of implementing development policies, often referred to as the Washington Consensus, that have promoted privatization, competition and foreign investment. We also test hypotheses positing that only firms near the efficiency frontier benefit from these policies and catch up. Using 1992-2000 panel data on virtually all industrial firms in each country, we find that privatization to domestic owners did not markedly improve the efficiency of firms; domestic firms are not catching up to the (world) efficiency standard given by foreign-owned firms; and the distance of the Russian firms to the efficiency frontier is much larger than that of the Czech firms and continued to grow for most firms beyond 1997 while remaining constant in the Czech Republic. Domestic firms closer to the frontier are not more likely to catch up than firms further from the frontier although foreign firms do exhibit this behaviour. Foreign-owned firms are increasingly displacing domestic firms in the top deciles of the overall distribution of efficiency, due in part to slower ‘learning’ by domestic firms, higher efficiency of foreign startups, and foreigners’ acquisitions of more efficient domestic firms. The two alternative implementations of the Washington Consensus policies have thus not enabled domestic firms to start catching up to the world standard although the Central European model.

This article proposes productivity analysis for evaluating the relative efficiency in corporate real estate usage across decision-making units. Using data from the Greek Telecommunications Organization (GTO), we measure the productivity of 127 branches using the number of employees and the total area covered per building as inputs and the number of telephony access lines as outputs. We apply three nonparametric Data Envelopment Analysis (DEA) models assuming: Constant Returns to Scale (CRS), Variable Returns to Scale (VRS) and Slacks-Based Measures (SBM), respectively. We discuss how the proposed approach can provide real estate managers and analysts a multi-informational tool that allows the quantification of targets and may serve as a guide tool for the efficient employment of real estate assets.

The objective of our study was to evaluate the efficiency of public, private for-profit, and private non-profit hospitals in Germany. First, bootstrapped data envelopment analysis (DEA) was used to evaluate the efficiency of a panel (n = 1,046) of public, private for-profit, and private non-profit hospitals between 2002 and 2006. This was followed by a second-step truncated linear regression model with bootstrapped DEA efficiency scores as dependent variable. The results show that public hospitals performed significantly better than their private for-profit and non-profit counterparts. In addition, we found a significant positive association between hospital size and efficiency, and that competitive pressure had a significant negative impact on hospital efficiency.

In diesem Papier geben wir einen Überblick über den Wettbewerb und die Effizienz im deutschen Bankensektor. Wir nehmen dabei die Entwicklung in den letzten 15 Jahren in den Blick. Frühere Studien für Deutschland weisen darauf hin, dass das deutsche Bankensystem durch monopolistische Konkurrenz und durch moderat hohe Kosteneffizienz gekennzeichnet ist. Zudem scheinen Wettbewerb und Effizienz positiv miteinander verbunden. Des weiteren bestanden deutliche Unterschiede zwischen großen und kleinen Banken. Kleine Banken bevorzugten mehr das traditionelle Bankgeschäft, geringere Risiken und haben eher auf regional segmentierten Märk ten agiert. Die gegenwärtige Krise könnte zu tieferen Änderungen im Bankensystem führen, mit möglichen Folgen für Wettbewerb und Effizienz. In this paper we review the main findings on competition and efficiency for the German banking sector. Our aim is to give a bird view of the evolution during the past 15 years. Previous studies on Germany point to a banking system dominated by monopolistic competition and moderate cost efficiency. Competition and efficiency seem to be positively related. Furthermore significant differences existed between small and large banks. The business model of small banks was often more traditional, they preferred less risk and they acted on more segmented regional markets. The current crisis may lead to deep changes of the banking system, potentially with consequences for competition and efficiency.

Productivity growth of the Finnish regions in 13 manufacturing industries is decomposed into micro-level sources by using plant-level data from 1975 to 1999. There are substantial regional differences in the intensity of productivity-enhancing restructuring. Dynamic competition is more intensive in Southern Finland, where the productivity level is also high. In contrast, plants located in Eastern Finland are equipped with lowproductivity technologies owing to persistently sluggish micro-level dynamics. Productivity dispersion between plants within industries is greatest in Southern Finland. We argue that intensive experimentation is a more reasonable interpretation of this finding than large static X-inefficiency in this high productivity region. – productivity ; competition ; efficiency ; micro-level restructuring ; regional disparities Suomen alueiden tuottavuuskasvu 13 teollisuusalalla vuosina 1975–1999 on hajotettu toimipaikkatason aineistoja käyttäen mikrotason lähteisiin. Tuottavuutta vahvistavan rakennemuutoksen intensiteetti vaihtelee alueiden välillä merkittävästi. Dynaaminen kilpailu on intensiivisintä Etelä-Suomessa, jossa tuottavuuden taso on myös korkea. Itäisen Suomen toimipaikoilla sen sijaan käytetään alhaisen tuottavuuden teknologioita, mikä johtuu pitkään jähmeänä pysyneestä mikrotason dynamiikasta. Toimipaikkojen välinen tuottavuushajonta on suurinta Etelä-Suomessa. Argumentoimme, että tällä korkean tuottavuuden alueella esiintyvä intensiivinen kokeileminen selittää paremmin tämän havainnon kuin se, että X-tehottomuus olisi siellä suurta. – tuottavuus ; kilpailu ; tehokkuus ; mikrotason rakennemuutos ; alue-erot

In den letzten Jahren wurde eine Vielzahl an Steuerreformvorschlägen in Deutschland unterbreitet. Zu den aktuellen gehören neben der Unternehmensteuerreform 2008 (UntSt-Reform), die Duale Einkommensteuer des Sachverständigenrates (DIT) und die Kirchhof'sche Einheitssteuer. Dieser Aufsatz quantifiziert und vergleicht die gesamtwirtschaftlichen Auswirkungen dieser Steuerreformvorschläge mithilfe des eigens für Deutschland entwickelten dynamischen, allgemeinen Gleichgewichtsmodells ifoMod. Wie die Ergebnisse zeigen, bewirken die DIT und die Einheitssteuer einen positiven Impuls auf das Wirtschaftswachstum, während sich die UntSt-Reform als leichte Wachstumsbremse herausstellt. Im Hinblick auf die Wohlfahrtsaspekte der Reformen erzielt lediglich die DIT positive Resultate. Die UntSt-Reform hemmt insbesondere die Investitionstätigkeit der Kapitalgesellschaften, da diese Unternehmen mit Einführung der Abgeltungssteuer auf Dividenden und Wertzuwächse einer Doppelbesteuerung unterliegen. Dennoch generiert diese als einzige Reform einen langfristigen Finanzierungsüberschuss. The past years have seen several tax reform proposals being put forward in Germany. The most prominent ones count the Business Tax Reform 2008 (BTR 2008), the Dual Income Tax (DIT) proposal advanced by the German Council of Economic Advisors and Kirchhof's flat tax. We analyze, compare and quantify the effects of these reform proposals by applying ifoMOD, a dynamic computable general equilibrium (CGE) model. ifoMOD was in particular developed to simulate the effects of capital income tax reforms for the German economy. The simulation results show that both the DIT and the flat tax have a positive stimulus for economic growth while the BTR 2008 slightly impedes growth. Regarding the welfare effects of the reforms, the DIT is the only reform proposal which achieves positive results. The BTR 2008 impedes in particular the investment activity of corporate firms since these are effectively subject to double taxation following the introduction of a withholding tax on dividends and capital gains. Nevertheless, this reform proposal is the only one which generates a financing surplus in the long run.

Internationale Vergleiche von Krankenhausleistungen sind bislang selten. Die vorliegende Analyse untersucht die Effizienz der Krankenhäuser in Sachsen und der Schweiz mittels der Data Envelopment Analysis (DEA), einem Verfahren zur Ermittlung der effizienten Grenze. Dabei wird im Sinne eines Benchmarkings die Ineffizienz von Krankenhäusern in Relation zu der aus effizienten Krankenhäusern gebildeten Grenze gemessen. Die Untersuchung berücksichtigt den Einfluss institutioneller Gegebenheiten in beiden Ländern, wie z. B. die Vergütung von Krankenhausleistungen und die Krankenhausplanung. Die schweizerischen Krankenhäuser werden überraschenderweise als weniger effizient in der Erstellung eines gegebenen Leistungsbündels identifiziert.

Strategic delegation to an independent regulator with a pure consumer standard improves dynamic regulation by mitigating ratchet effects associated with short term contracting. A consumer standard alleviates the regulator's myopic temptation to raise output after learning the firm is inefficient. Anticipating this tougher regulatory behavior, efficient firms find cost exaggeration less attractive. This reduces the need for long term rents and mitigates ratchet effects. The regulator's welfare standard biased towards consumers comes, however, at the cost of some allocative distortion from the genuine social welfare perspective. Hence, a trade-off results which favors strategic delegation when efficient firms are relatively likely.

In recent years the world has been a wave of mergers that is unprecedented as regards both the number and the size of the enterprises involved. The firms concerned have frequently complained that the government agencies in charge of merger control do not sufficiently take account of the welfare-enhancing efficiencies created in the process. This article analyses the differences in merger control practice and the underlying theories in Germany, the European Union and the USA.

The Democratic Republic of Congo (DRC) is one of the poorest countries in the World. The construction sector will play an essential part to bring the country on the path of economic growth, and competition within the sector is crucial to achieve this goal. In this paper we analyze the effect of competition in public works tenders in the DRC. Using a unique and newly assembled database on tenders we find that the number of participating bidders and the observed spread of submitted bids both significantly reduce contract prices, confirming our prior that competitive pressure can enhance the overall performance of the sector.

While fossil energy dependency has declined and energy supply has grown in the postwar world economy, future resource scarcity could cast its shadow on world economic growth soon if energy markets are forward looking. We develop an endogenous growth model that reconciles the current aggregate trends in energy use and productivity growth with the intertemporal dynamics of forward looking resource markets. Combining scarcity-rent driven energy supply (in the spirit of Hotelling) with profit-driven Directed Technical Change (in the spirit of Romer/Acemoglu), we generate transitional dynamics that can be qualitatively calibrated to current trends. The long-run properties of the model are studied to examine whether current trends are sustainable. We highlight the role of extraction costs in mining.

We investigate the competitive effects of the merger between Delta Air Lines and Northwest Airlines (2009) in the domestic U.S. airline industry. Applying fixed effects regression models we find that the transaction led to short term price increases of about 11 percent on overlapping routes and about 10 percent on routes which experienced a merger-induced switch of the operating carrier. Over a longer period, however, our analysis reveals that both merger efficiencies and post-merger entry by competitors initiated a downward trend in prices leaving consumers with a small net price increase of about 3 percent on the affected routes.

This paper studies the aggregate and distributional implications of introducing user fees for publicly provided excludable public goods into a model with consumption and income taxes. The setup is a neoclassical growth model where agents differ in earnings and second-best policy is chosen by a Ramsey government. Our main result is that the adoption of user fees by the Ramsey government not only increases aggregate efficiency, but it also decreases inequality. This result is in contrast to common view and policy practice.

We analyze the efficiency defense in merger control. First, we show that the relationship between exogenous efficiency gains and social welfare can be non-monotone. Second, we consider both endogenous mergers and endogenous efficiencies and find that merger proposals are largely aligned with a proper social welfare analysis which explicitly considers the without merger counterfactual. We demonstrate that the merger specificity requirement does not help much to select socially desirable mergers; to the contrary, it may frustrate desirable mergers inducing firms not to claim efficiencies at all.

A worker co-operative is a firm that is owned and managed by those who work in it. This paper provides a selective review of research in economics on worker cooperatives. It concentrates on the volatility of earnings and employment in the co-ops compared with conventional capitalist firms; on the long-term viability of co-ops; on the relative productive efficiency of co-ops; and on problems of democratic governance within co-ops. Using modern empirical methods applied to large numbers of observations, recent research has substantially enhanced our understanding of worker co-ops.

Most nations spend a considerable part of their gross domestic product (GDP) on defense. However, no previous study has addressed the productivity and efficiency of the core area of the armed forces, operational units, using Data Envelopment Analysis (DEA). Introducing a model for the production process of an operational unit, productivity and efficiency are estimated by DEA for units of one branch of the Norwegian armed forces. Small samples are a characteristic of DEA studies in the military, and the public sector in general, resulting in a lion's share of the units being estimated as fully efficient. We find that, by using the bootstrap technique to estimate confidence intervals, we can point at the uncertainty of the estimates and reduce the number of candidates for best practice.

This paper analyzes the implications of bilateral bargaining over wages and employment between a producer and a union representing a finite number of identical workers in a monetary macroeconomic model of the AS-AD type with government activity. Wages and aggregate employment levels are set according to an efficient (Nash) bargaining agreement while the commodity market is cleared in a competitive way. It is shown that, for each level of union power, measured by the share it obtains of the total production surplus, efficient bargaining implies no efficiency loss in production. Depending on the level of union power, temporary equilibria may exhibit voluntary overemployment or underemployment with the competitive equilibrium being a special case. Due to the price feedback from the commodity market and to income-induced demand effects, all temporary equilibria with a positive labor share are not Nash bargaining-efficient with respect to the set of feasible temporary equilibrium allocations. While higher union power induces a larger share of the surplus and a higher real wage, it always implies lower output and employment. Moreover, the induced nominal equilibrium wage is not always a monotonically increasing function of union power. Therefore, all temporary equilibria with efficient bargaining are only “Second-best” Pareto optimal, i.e., bargaining power and production efficiency do not lead to temporary optimality. The dynamic evolution of money balances, prices, and wages is analyzed being driven primarily by government budget deficits and expectations by consumers. It is shown that for each fixed level of union power, the features of the dynamics under perfect foresight are structurally identical to those of the same economy under competitive wage and price setting. These are: stationary equilibria with perfect foresight do not exist, except on a set of parameters of measure zero; balanced paths of monetary expansion or contraction are the only possibilities inducing constant allocations; for small levels of government demand, there exist two balanced paths generically, one of which with high employment and production is always unstable, while the other one may be stable or unstable.

We investigated the effects of privatization on hospital efficiency in Germany. To do so, we obtained bootstrapped DEA efficiency scores in the first stage of our analysis and subsequently employed a difference-in-difference matching approach within a panel regression framework. Our findings show that conversions from public to private for-profit status were associated with an increase in efficiency of between 3.2 and 5.4%. We defined four alternative post-privatization periods and found that the increase in efficiency after a conversion to private for-profit status appeared to be permanent. We also observed an increase in efficiency one year after hospitals were converted to private non-profit status, but our estimations suggest that this effect was transitory. Our findings also show that the efficiency gains after a conversion to private for-profit status were achieved through substantial decreases in staffing ratios in all analyzed staff categories with the exception of physicians. It was also striking that the efficiency gains of hospitals converted to for-profit status were significantly lower in the DRG era than in the pre-DRG era. Altogether, our results suggest that converting hospitals to private for-profit status may be an effective way to ensure the scarce resources in the hospital sector are used more efficiently.

We demonstrate the existence of an intergenerational equity-efficiency tradeoff in policy-making that aims at Pareto-efficiency across generations and sustainability, i.e. non-decreasing utility over time. Our model includes two salient characteristics of sustainability problems and policy: (i) temporal irreversibility, i.e. the inability to revise one's past actions; (ii) closed ignorance, i.e. future consequences of present actions in human-environment systems may be 'unknown unknowns'. If initially unforeseen sustainability problems become apparent and policy is enacted after irreversible actions were taken, policy-making faces a fundamental trade-off between intergenerational Pareto-efficiency and sustainability.

The big Chinese state-owned banks came as winners out of the global financial crisis. According to the Banker ranking, Chinese banks led the global banking profitability ranking through the years from 2008 to 2010 and contributed one fifth of global banking profits in 2010. The Chinese banking sector, which was deemed as wholly insolvent ten years ago, was reborn like a phoenix from the fire of the Asian financial crisis and the current financial crisis. The banking reform in the last decade with large-scale capital injection, assets carve-outs, restructuring and public listing celebrated great success. However, the low efficiency in Chinese banks is still persistent, as evident in many empirical studies (e.g. Feyzioglu, (2009)). The contradiction of high profitability and low efficiency causes great confusion in understanding banking in China. Our paper aims to reveal the real sources of the high profitability of the big Chinese banks. We compare their profitability pattern with peer banks from Asia, Europe and North America. We first test the hypothesis that the average asset return of the big five Chinese banks will fall below the international comparative level if the current high net interest margin given by the managed interest system in China falls to the international peer average level. Surprisingly, the hypothesis has to be rejected. Instead, our results show that the profitability of Chinese banks stays at international comparative level, despite the high inefficiency in Chinese banks. We therefore test a second hypothesis stating that the profitability of Chinese banks will fallbelow their international peers if staff costs increase by 30 percent in average to reach the international level, with the joint condition of margin decrease. This hypothesis can be proved, which means that the big five Chinese banks compensate its inefficiency by a combination of a non-competitive high interest margin and unsustainable lower labor cost. The above results of course raise the question how the big Chinese banks can stay competitive if China continues to liberalize its interest rate system and labor cost increases. In our concluding remarks, we discuss the possibility that Chinese banks change their business model towards universal banking with additional non-interest income to compensate the drop in interest margin.

The paper estimates cost efficiency of 99 general hospitals in the Czech Republic during 2001-2008 using Stochastic Frontier Analysis. We estimate a baseline model and also a model accounting for various inefficiency determinants. Group-specific inefficiency is present even having taken care of a number of characteristics. We found that inefficiency increases with teaching status, more than 20,000 treated patients a year, not-for-profit status and a larger share of the elderly in the municipality. Inefficiency decreases with less than 10,000 patients treated a year, larger population, and more hospitals in the region.

With prospective payment of hospitals becoming more common, measuring their performance is gaining in importance. However, the standard cost frontier model yields biased efficiency scores because it ignores technological heterogeneity between hospitals. In this paper, efficiency scores are derived from a random intercept and an extended random parameter frontier model, designed to overcome the problem of unobserved heterogeneity in stochastic frontier analysis. Using a sample of 100 Swiss hospitals covering the years 2004 to 2007 and applying Bayesian inference, significant heterogeneity is found, suggesting rejection of the standard cost frontier model. Estimated inefficiency decreases even below the 14 percent reported by Hollingsworth (2008) for European countries. Accounting for unobserved heterogeneity would make hospitals rated below 85 percent efficiency according to the standard model gain up to 12 percentage points, serving to highlight the importance of heterogeneity correction in the estimation of hospital performance.

The non-distribution constraint of non-governmental organizations (NGOs) would be harder, and financiers as well as recipients could expect more charitable output from them, if less efficient NGOs were squeezed out of international development cooperation. We employ Probit and complementary log-log estimations to analyze which factors determine the probability of 'market' exit for almost 900 US based NGOs with overseas aid activities during the 1984-2003 period. Apart from their size and experience, we consider administrative overheads as an important aspect of NGO efficiency. We also account for other dimensions of NGO heterogeneity, including the importance of official refinancing. We find that larger administrative overheads increase the probability of exit for secular NGOs, though not for religious NGOs. Furthermore, we detect complex non-linear effects once the interactions between administrative overheads and official refinancing are taken into account.

Using firm-level data from nine developing countries we demonstrate that (a) certain institutions like restrictive labour market regulations that are considered to be bad for economic growth might be beneficial for production efficiency, whereas (b) good business environment which is considered to be beneficial for economic growth might have an adverse impact on production efficiency. We argue that our results suggest that the debate about the implications of institutional quality is far from being over, and classification of institutions into good and bad might be premature.

We investigate whether the simple plurality rule aggregates information efficiently in a large election with three alternatives. The environment is the same as in the Condorcet Jury Theorem (Condorcet (1785)). Voters have common preferences that depend on the unknown state of nature, and they receive imprecise private signals about the state of nature prior tovoting. With two alternatives and strategic voters, the simple plurality rule aggregates information efficiently in elections with two alternatives (e.g., Myerson (1998)). We show that there always exists an efficient equilibrium under the simple plurality rule when there are three alternatives as well. We characterize the set of inefficient equilibria with two alternatives and the condition under which they exist. There is only one type of inefficient equilibrium with two alternatives. In this equilibrium, voters vote unresponsively because they all vote for the same alternative. Under the same condition, the same type of equilibrium exists with three alternatives. However, we show that the number and types of coordination failures increase with three alternatives, and that this leads to the existence of other types of inefficient equilibria as well, including those in which voters vote informatively.

This paper analyzes the welfare implications of buyer mergers, which are mergers between downstream firms from different markets. We focus on the interaction between the merger's effects on downstream efficiency and on buyer power in a setup where one manufacturer with a non-linear cost function sells to two locally competitive retail markets. We show that size discounts for the merged entity has no impact on consumer prices or on smaller retailers, unless the merger affects the downstream efficiency of the merging parties. When the upstream cost function is convex, we find that there are “waterbed effects,” that is, each small retailer pays a higher average tariff if a buyer merger improves downstream efficiency. We obtain the opposite results, “anti-waterbed effects,” if the merger is inefficient. When the cost function is concave, there are only anti-waterbed effects. In each retail market, the merger decreases the final price if and only if it improves the efficiency of the merging parties, regardless of its impact on the average tariff of small retailers.

This paper examines the efficiency effects of foreign bank entry on domestic banks in sub-Saharan Africa during the period 1999-2006. Using a recently compiled dataset on foreign bank presence, the competition and spillover effects of North-South, regional and nonregional South-South banks are distinguished. The results show that the competitive pressure on domestic banksʹ net interest margins emanates only from regional South-South banks. There is evidence of spillover effects from North-South and regional South-South banks on domestic banks. As domestic banks invest in foreign technologies, their overhead costs increase in the short-run. Non-regional South-South banks seem to have little effect on the efficiency of domestic banks.

In this paper we claim that distance alone is a poor proxy for international transport costs in empirical studies. We model a manufacturing and a transport sector and let the level of manufacturing exports determine the demand for transport services. Above a particular trade level, transport service suppliers find it profit-maximizing to invest in an advanced transport technology, which lowers their marginal costs and as a consequence, equilibrium transport prices. Transport costs thus vary with two characteristics: with the distance between two locations and with the endogenous decision to invest in a more efficient technology which is driven, in turn, by the bilateral export level. A simulation exercise reveals that ignoring the effect of the investment decision on transport costs biases empirical results. The empirical estimations rely on newly collected transport price data from United Parcel Service (UPS). We apply an instrumental variable (IV) estimator to account for the endogeneity of the investment decision. Our results confirm that transport prices are influenced by both the distance and the level of exports between two countries. We find that trade partners with 10% more exports enjoy 0.8% lower transport prices.

This paper shows that cross country differences in the generosity and the quality of the welfare state are associated with differences in the trustworthiness of their citizens. We show that generous, transparent and efficient welfare states in Scandinavian countries are based on the civicness of their citizens. In contrast, the generosity but low transparency of the Continental European welfare states survive thanks to the support of a large share of uncivic individuals who consider that it can be justifiable to misbehave with taxes and social benefits. We also explain why countries with an intermediate degree of trustworthiness of their citizens and of transparency of the government, like Anglo-Saxon countries, have small welfare states. Overall, this paper provides a rationale for the observed persistence of both efficient and inefficient welfare states, as a function of the civicness of the citizens.

"Im Rahmen eines Matching-Modells wird die optimale Investitionsentscheidung heterogener Agenten in Humankapital untersucht. Generisch existiert ein Gleichgewicht, in dem einige, aber nicht alle Agenten investieren. Reguläre Steady-State-Gleichgewichte sind im starken Sinne beschränkt ineffizient. Die Hosios-Bedingung ist für beschränkte Effizienz weder notwendig noch hinreichend. Weiter zeigen wir Restriktionen auf, die hinreichend sind für die Existenz eines Gleichgewichts, das durch Über- oder Unterinvestition in Bildung gekennzeichnet ist. Schliess- lich diskutieren wir komparativ-statische Eigenschaften des Modells sowie wohlfahrtssteigernde Politikmassnahmen." (Autorenreferat) "We consider a random matching model where heterogeneous agents choose optimally to invest time and real resources in education. Generically, there is a steady state equilibrium, where some agents, but not all of them, invest. Regular steady state equilibria are constrained inefficient in a strong sense. The Hosios (1990) condition is neither necessary, nor sufficient, for constrained efficiency. We also provide restrictions on the fundamentals sufficient to guarantee that equilibria are characterized by overeducation (or undereducation), present some results on their comparative statics properties, and discuss the nature of welfare improving policies." (author's abstract)

Similarly to West Germany in the 1960s and 1970s, the eastern part of Germany has experienced a still ongoing process of numerous amalgamations among counties, towns and municipalities since the mid-1990s. The evidence in the economic literature is mixed with regard to the claimed expenditure reductions and efficiency gains from municipal mergers. We therefore analyze the global efficiency of the municipalities in Saxony-Anhalt, for the first time in this context, using a double-bootstrap procedure combining Data Envelopment Analysis (DEA) and truncated regression. This allows including environmental variables to control for exogenous determinants of municipal efficiency. Our focus thereby is on institutional and fiscal variables. Moreover, the scale efficiency is estimated to find out whether large units are necessary to benefit from scale economies. In contrast to previous studies, we chose the aggregate budget of municipal associations ('Verwaltungsgemeinschaften') as the object of our analysis since important competences of the member municipalities are settled on a joint administrative level. Furthermore, we use a data set that has been carefully adjusted for bookkeeping items and transfers within the communal level. On the 'eve' of a mayor municipal reform, the majority of the municipalities was found to have an approximately scaleefficient size, and centralized organizational forms ('Einheitsgemeinden') showed no efficiency advantage over municipal associations. Seit Mitte der 1990er Jahre findet auch in Ostdeutschland - ähnlich wie in den 1960er und 1970er Jahren in Westdeutschland - ein noch keineswegs abgeschlossener Prozess mit zahlreichen Verschmelzungen auf der Ebene der Landkreise, Städte und Gemeinden statt. Die Ergebnisse in der ökonomischen Literatur sind uneinheitlich, was die behaupteten Ausgabeneinsparungen und die Effizienzgewinne durch Gemeindegebietsreformen betrifft. Aus diesem Grunde untersucht der vorliegende Beitrag die globale Effizienz der Gemeinden in Sachsen-Anhalt unter Anwendung eines doppelten Bootstrap-Verfahrens, das Data Envelopment Analysis (DEA) und trunkierte Regression kombiniert und in diesem Zusammenhang bislang noch nicht verwendet wurde. Dadurch wird es möglich, Umweltvariablen einzubeziehen, um so für exogene Bestimmungsfaktoren der gemeindlichen Effizienz zu kontrollieren. Der Fokus liegt dabei auf institutionellen und fiskalischen Variablen. Außerdem berechnen wir die Skaleneffizienz, um zu prüfen, ob große Gemeinden nötig sind, um von Skaleneffekten profitieren zu können. Im Gegensatz zu den Arbeiten anderer Autoren wurde bei kommunalen Verbänden ('Verwaltungsgemeinschaften') das aggregierte Budget als Untersuchungsgegenstand gewählt, da wichtige Entscheidungsbefugnisse der Mitgliedsgemeinden auf der gemeinsamen Verwaltungsebene angesiedelt sind. Außerdem wurde der verwendete Datensatz sorgfältig um reine Buchhaltungspositionen und Transferzahlungen innerhalb der Gemeindeebene bereinigt. Am 'Vorabend' einer umfassenden Gemeindereform erwies sich die Größe der Gemeinden mehrheitlich als annähernd skaleneffizient und stärker zentralisierte Verwaltungsformen ('Einheitsgemeinden') wiesen keinen Effizienzvorteil gegenüber Gemeindeverbänden auf.

This paper studies the difference between public production and public finance of public goods in a dynamic general equilibrium setup. By public finance, we mean that the public good is produced by private providers with the government financing their costs. When the model is calibrated to match fiscal data from the UK economy, the main result is that, ceteris paribus, a switch from public production to public finance can have substantial aggregate and distributional implications. Public providers cannot beat private providers in terms of aggregate efficiency. We finally design a transfer scheme that can make a switch to private provision welfare improving for all agents including public employees.

We focus in this paper on the effects of court errors on the optimal sharing of liability between firms and financiers, as an environmental policy instrument. Using a structural model of the interactions between firms, financial institutions, governments and courts we show, through numerical simulations, the distortions in liability sharing between firms and financiers that the imperfect implementation of government policies implies. We consider in particular the role played by the efficiency of the courts in avoiding Type I (finding an innocent firm guilty of inappropriate care) and Type II (finding a guilty firm innocent of inappropriate care) errors. This role is considered in a context where liability sharing is already distorted (when compared with first best values) due not only to the courts’ own imperfect assessment of safety care levels exerted by firm but also to the presence of moral hazard and adverse selection in financial contracting, as well as of non-congruence of objectives between firms and financiers on the one hand and social welfare maximization on the other. Our results indicate that an increase in the efficiency of the court system in avoiding errors raises safety care levels, thereby reducing the probability of accident, and allowing the social welfare maximizing government to impose a lower liability [higher] share for firms [financiers] as well as a lower standard level of care.

This paper studies the impact of buyer power on dynamic efficiency. We consider a bargaining model in which buyer power arises endogenously from size and may impact on a supplier's incentives to invest in lower marginal cost. We challenge the view frequently expressed in policy circles that the exercise of buyer power stifles suppliers' incentives. Instead, we find that the presence of larger buyers keeps a supplier 'more on his toes' and induces him to improve the competitiveness of his offering, in terms of both price and quality, relative to buyers' alternative options.

This paper analyzes the productivity development in the German public theater sector for the seasons 1991/1992-2005/2006. Using a stochastic distance frontier approach that allows to decompose total factor productivity change into different sources we examine (a) whether Baumol's cost-disease hypothesis is valid in this sector and (b) if so, whether its negative influence on productivity can be compensated by efficiency gains. The findings indicate an increase in real unit labor cost as a result of rising wage rates and, thus, support the cost- disease hypothesis. Furthermore, increasing returns to scale are observed for the majority of the theaters which implies that significant efficiency gains can be realized by the exploitation of scale economies. However, because of the increasing unit labor cost and an increasing scale inefficiency we find an overall decrease in average productivity of about 8 percent within the sample period.

This article analyzes the efficiency in the provision of child care services at the municipal level and identifies the main determinants of inefficiency. We use a unique data set on the local child care expenditures in the eastern German State of Saxony. The analysis is performed in two stages. First, we measure the efficiency by using a Data Envelopment Analysis (DEA). Second, we consider political, fiscal and demographic variables in a truncated regression to identify the determinants of inefficiency. We find substantial differences in efficiency; the median municipality is up to 28% inefficient in expenditures on child care. Explanatory variables such as an uncompensated mayor or a larger share of over 65-year olds significantly increases inefficiency.

We assess the determinants of the wide variation in the efficiency of foreign aid activities across US-based non-governmental organizations (NGOs). In particular, we analyze whether noncharitable expenditures for administration, management and fundraising depend on the intensity of competition among NGOs and on the degree to which they are refinanced by governments. We control for NGO heterogeneity in various dimensions as well as major characteristics of recipient countries. We find that fiercer competition is associated with more efficient foreign aid activities of NGOs, rather than leading to “excessive” fundraising. Official funding tends to increase administrative costs. Nevertheless, officially financed NGOs spend relatively more on charitable activities since they are less concerned with collecting private donations through fundraising efforts., info:eu-repo/semantics/published

This paper investigates whether there is any consistency between banks' financial strength ratings (bank rating) and their risk-return profiles. It is expected that banks with high ratings tend to earn high expected returns for the risks they assume and thereby have a low probability of experiencing financial distress. Bank ratings, a measure of a bank's intrinsic safety and soundness, should therefore be able to capture the bank's ability to manage financial distress while achieving risk-return efficiency. We first estimate the expected returns, risks, and financial distress risk proxy (the inverse z-score), then apply the stochastic frontier analysis (SFA) to obtain the risk-return efficiency score for each bank, and finally conduct ordered logit regressions of bank ratings on estimated risks, risk-return efficiency, and the inverse z-score by controlling for other variables related to each bank's operating environment. We find that banks with a higher efficiency score on average tend to obtain favorable ratings. It appears that rating agencies generally encourage banks to trade expected returns for reduced risks, suggesting that these ratings are generally consistent with banks' risk-return profiles.

In the post war period, telecommunications - being services of 'general economic interest' - were initially managed by public administrative bodies in many Western European countries. With the rise of New Public Management (NPM) in the 1980s, these bodies were often transformed into public corporations or joint stock companies. Following corporatisation, the provision and the management of these services of general economic interest was gradually transferred to private actors. This paper analyses whether privatisation, as part of NPM reforms, has benefited the consumer. We have, therefore, compiled data on privatisation in the telecommunication sector for 15 European countries from 1980 to 2006. The data set covers the corporatisation process, as well as the transfer of the service provision to the private sector. Three empirical findings stand out: first, the reform processes have differed widely from each other. Second, it's not just the transfer of ownership to the private sector that has ensured efficiency gains and increased consumer benefits; corporatisation has done this as well. Third, efficiency gains have been transferred to the consumer, especially at the beginning of the reform process. In der Nachkriegszeit wurden Telekommunikationsdienstleistungen in vielen westeuropäischen Ländern zumeist von Verwaltungseinheiten bereitgestellt. Mit dem Aufkommen des New Public Managements (NPMs) in den 1980er Jahren wurden diese Verwaltungseinheiten in öffentlich-rechtliche Unternehmen oder Aktiengesellschaften umgewandelt (=formelle Privatisierung) und anschließend stückweise an private Akteure übertragen (=materielle Privatisierung). Dieser Beitrag untersucht, ob die Konsumenten von diesen Privatisierungsmaßnahmen profitieren konnten. Zur Beantwortung dieser Frage wurde ein vollständig neuer Paneldatensatz zusammengestellt, mit dem die Privatisierung im Telekommunikationssektor für 15 europäische Länder von 1980 bis 2006 abgebildet werden kann. Der Datensatz umfasst erstmals sowohl formelle als auch materielle Privatisierungsschritte. Drei empirische Ergebnisse sind besonders hervorzuheben. Erstens, der Privatisierungsprozess unterscheidet sich teilweise erheblich zwischen den Ländern. Zweitens, die Konsumenten konnten nicht nur vom Verkauf von Unternehmensanteilen profitieren, sondern auch von formellen Privatisierungsmaßnahmen. Drittens, Effizienzgewinne wurden insbesondere am Anfang des Reformprozesses an die Konsumenten weitergegeben.

We empirically explore the relevance of risk taking behavior in tournaments. We make use of data from the NBA season 2007/2008 and measure risk taking by the fraction of three-point shots. Current heterogeneity of teams is taken into account by intermediate results. It turns out that indeed teams who are behind increase the risk in terms of more three-point attempts. We additionally analyze the consequences of this change in behavior. Enhanced risk taking is inefficient for the vast majority of cases and only beneficial in terms of a higher winning probability if a team is behind with a rather large amount of points. We discuss possible explanations for these decision errors.

This paper addresses two basic issues related to technological innovation and climate stabilisation objectives: i) Can innovation policies be effective in stabilising greenhouse gas concentrations? ii) To what extent can innovation policies complement carbon pricing (taxes or permit trading) and improve the economic efficiency of a mitigation policy package? To answer these questions, we use an integrated assessment model with multiple externalities and an endogenous representation of technical progress in the energy sector. We evaluate a range of innovation policies, both as a stand-alone instrument and in combination with other mitigation policies. Even under fairly optimistic assumptions about the funding available for, and the returns to R&D, our analysis indicates that innovation policies alone are unlikely to stabilise global concentration and temperature. The efficiency gains of combining innovation and carbon pricing policies are found to reach about 10% for a stabilisation target of 535 ppm CO2eq. However, such gains are reduced when more plausible (sub-optimal) global innovation policy arrangements are considered.

Das Erneuerbare-Energien-Gesetz (EEG) hat sich als sehr erfolgreich beim Aufbau der noch nicht wettbewerbsfähigen erneuerbaren Energien (EE) erwiesen. Nachteilig ist, dass durch die gezielte Auswahl der einzelnen EE und die Festsetzung spezieller Einspeisevergütungen auf einen Wettbewerb der EE untereinander verzichtet wird. Die Bundesregierung gibt in der Leitstudie sowohl allgemeine als auch individuelle Ausbauziele für die einzelnen EE aus, womit implizit die Einspeisevergütungen bestimmt werden. Wir untersuchen die Effizienz dieser Ausbauziele anhand der Kosten der Kapazitätsinstallation und zeigen mit einem einfachen statischen Modell, dass die allgemeinen Ausbauziele für das Jahr 2020 kostengünstiger erreichbar sind. The German Renewable Energy Law (EEG) has been a very successful instrument in raising the share of the renewable energies that are not yet competitive. However, a detrimental consequence of this policy is that, through specific feed-in tariffs, it hinders the competition among particular renewable energies. Within the framework of the Lead Study 2008 the German Government set targets both for renewable energies and related technologies and hence affects the particular feed-in tariff. By means of a static model, we analyse in this article the efficiency of the targets for 2020 regarding renewable energies and show that they can be achieved at lower costs.

In generosity games, one agreement payoff is exogenously given, whereas the other is endogenously determined by the proposer's choice of the pie size. This has been shown to induce pie choices which are either efficiency or equality seeking. In our experiment, before playing the generosity game, participants are asked to buy their role via a random price mechanism. This should entitle them to exploit the chances which their role provides and at the same time avoid the selection bias of competitive auctions. We find that entitlement crowds out equality seeking and strengthens efficiency seeking. Interpreting participants' willingness to pay as an aspiration level of how much they want to earn, our design further allows us to test for satisficing behavior. Indeed, we find evidence for satisficing behavior in the data.

Contests between groups are plagued by intra-group externalities (freeriding). Yet, costless incentive schemes that entirely avoid free-riding within a group might not be desirable, neither individually nor socially. In contests among two groups, a relatively weak (i.e., small or unproductive) group will optimally not implement them because they compound strength differences between groups. If both groups rein in their intra-group externalities, they are both worse off, compared to a situation with free-riding, if they are relatively similar. If they are sufficiently heterogenous, the weak group loses at the expense of the relatively strong group.

Every finite noncooperative game can be presented as a weighted network congestion game, and also as a network congestion game with player-specific costs. In the first presentation, different players may contribute differently to congestion, and in the second, they are differently (negatively) affected by it. This paper shows that the topology of the underlying (undirected two-terminal) network provides information about the existence of pure-strategy Nash equilibrium in the game. For some networks, but not for others, every corresponding game has at least one such equilibrium. For the weighted presentation, a complete characterization of the networks with this property is given. The necessary and sufficient condition is that the network has at most three routes that do traverse any edge in opposite directions, or it consists of several such networks connected in series. The corresponding problem for player-specific costs remains open.

Social preferences have been shown to be an important determinant of economic decision making for many adults. We present a large-scale experiment with 883 children and adolescents, aged eight to seventeen years. Participants make decisions in eight simple, one-shot allocation tasks, allowing us to study the distribution of social preference types across age and across gender. Our results show that when children and teenagers grow older, inequality aversion becomes a gradually less prominent motivating force of allocation decisions. At the same time, efficiency concerns increase in importance for boys, and maximin-preferences turn more important in shaping decisions of girls.