nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒05‒19
ten papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. What Can be Learned from Behavioural Economics for Environmental Policy? By Markus Pasche
  2. Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables By Kristinn Hermannsson
  3. Endogenous Cartel Organization and Antitrust Fine Discrimination By Tim Reuter
  4. Traditional industrial districts in the face of globalization: the case of the Marche footwear district By Eleonora Cutrini; Giacinto Micucci; Pasqualino Montanaro
  5. Методологическая концепция анализа социально-экономических систем By Filippova, Irina
  6. What drives fraud in a credence goods market? Evidence from a field study By Alexander Rasch; Christian Waibel
  7. Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany By Fuest, Clemens; Peichl, Andreas; Siegloch, Sebastian
  8. The Data Revolution and Economic Analysis By Liran Einav; Jonathan D. Levin
  9. Competitors, complementors, parents and places: Explaining regional agglomeration in the U.S. auto industry By Luis Cabral; Zhu Wang; Daniel Yi Xu
  10. Do the Rich Save More in Canada? By Sule Alan; Kadir Atalay; Thomas F. Crossley

  1. By: Markus Pasche (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: Behavioural economics attracted attention from environmental economists: it should help to understand why people do not respond to environmental policy measures, based on neoclassical assumptions, as predicted by theory. Moreover, understanding motives and driving forces behind pro-social, pro-environmental and cooperative behaviour should help to improve environmental policy design. The aim of this paper is a critical discussion of the way how this branch of research is interpreting the explanatory power and the normative (policy) implications of behavioural economics.
    Keywords: Behavioural economics, environmental economics, policy design, methodology
    JEL: B41 D0 D70 Q57 Q58
    Date: 2013–05–08
  2. By: Kristinn Hermannsson (Department of Econonics, Fraser of Allander Institute, University of Strathclyde)
    Abstract: 1 Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables Dr Kristinn Hermannsson, Fraser of Allander Institute, Department of Economics, University of Strathclyde Abstract It is a well-established fact in the literature on simulating Input-Output tables that mechanical methods for estimating intermediate trade lead to biased results where cross-hauling is underestimated and Type-I multipliers are overstated. Repeated findings to this effect have led to a primary emphasis on advocating the accurate estimation of intermediate trade flows. This paper reviews previous research and argues for a qualification of the consensus view: When simulating IO tables, construction approaches need to consider spill-over effects driven by wage and consumption flows. In particular, for the case of metropolitan economies, wage and consumption flows are important if accurate Type-II multipliers are to be obtained. This is demonstrated by constructing an interregional Input-Output table, which captures interdependencies between a city and its commuter belt, nested within the wider regional economy. In addition to identifying interdependencies caused by interregional intermediate purchases, data on subregional household incomes and commuter flows are used to identify interdependencies from wage payments and household consumption. The construction of the table is varied around a range of assumptions on intermediate trade and household consumption to capture the sensitivity of multipliers.
    Keywords: Input-Output; Location Quotients; Commuting; Consumption; Glasgow; Scotland.
    JEL: C67 R12 R15 R23
    Date: 2013–05
  3. By: Tim Reuter (Department of Economics, University of Konstanz, Germany)
    Abstract: Third parties such as trade associations often assist cartels by collecting and evaluating market behaviour at the firm level. Under incomplete information neutral market oversight helps to distinguish defecting from complying behaviour, increasing the effectiveness of punishments for defectors and increasing cartel persistence. We investigate how cartels sort themselves into different organizational forms and whether cartel enforcement can be improved by setting fines contingent on the organizational form. A fine reduction for firms operating without the help of a third party causes some cartels to switch to a less persistent organizational form. Two drawbacks of this fine differentiation are that some new cartels will arise and that some of the existing cartels will become more persistent as the need to punish defectors decreases. Our paper is the first in the marginal deterrence literature to identify this second effect.
    Keywords: cartel organization, antitrust enforcement, trade association, marginal deterrence
    JEL: K21 K42 L41
    Date: 2013–05–06
  4. By: Eleonora Cutrini (University of Macerata); Giacinto Micucci (Bank of Italy); Pasqualino Montanaro (Bank of Italy)
    Abstract: This paper studies the case of the Marche footwear districts. Statistical evidence and interviews with entrepreneurs suggest that the traditional inter-firm relationships within these districts have significantly changed during the past decade. Some leading firms have been building up more exclusive relations with their suppliers, including those abroad, along “buyer-driven” value chains. Moreover, firms have been adopting different strategies, following two main paths: the first is a “focusing-on-quality” strategy, based on upgrading the quality of the goods and investing in brands, R&D and specific distribution channels; the second is a “focusing-on-costs” strategy, which aims at minimizing the production costs of a medium-quality range of goods, including outsourcing abroad. This study shows that firms which focused on quality did better than others, both in the years before the crisis of 2008-09 and during the recession.
    Keywords: global value chain, industrial districts, internationalization, footwear industry, firms’ organization and strategies
    JEL: L23 L25 L67 R11
    Date: 2013–02
  5. By: Filippova, Irina
    Abstract: The purpose of the monography is to develop the methodology for analysis of socio-economic systems. To this end, we propose a holistic concept including the system of interrelated concepts and categories, exposing the underlying mechanisms, cause-and-effect relationships and regularities of socio-economic processes. All the more urgent problem is the control of socio-economic processes on the basis of a clear understanding of the hidden underlying mechanisms that give rise to social dynamics. But effective governance requires, firstly, a clear statement of purpose, secondly, the "feedback" from "managed object", ie the monitoring of social reality on the basis of a clear set of indicators characterizing the orientation of social dynamics. In this perspective, the main goal of regulation should be the social progress based on a economic growth subservient to first one. That brings to the fore the problem of accurate determination of the content of this concept. Monitoring the social reality suggests the formulation of key indicators for the "feedback". Thus, if the main purpose of the research is to seek for the way of increasing the controllability of the socio-economic processes, we should elucidate their underlying mechanisms and influencing factors, secondly, clearly identify key indicators, and third, formulate the basic principles of regulation.
    Keywords: Socio-economic system, Institutions, Institutional Matrix, Labour, Social Capital, Human Capital, Social Responsibility, Social Control
    JEL: B49
    Date: 2012
  6. By: Alexander Rasch (University of Cologne); Christian Waibel (ETH Zurich, Switzerland)
    Abstract: This paper investigates the impact of four key economic variables on an expert firm’s incentive to defraud its customers in a credence goods market: the level of competition, the expert firm’s financial situation, its competence, and its reputational concerns. We use and complement the dataset of a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition and high competence lower firms’ incentive to overcharge. A low concern for reputation and a critical financial situation increase the incentive to overcharge.
    Keywords: Asymmetric information; Auto repair market; Credence goods; Expert; Fraud; Overcharging.
    JEL: D82 L15
    Date: 2013–05
  7. By: Fuest, Clemens (ZEW Mannheim); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA)
    Abstract: Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden.
    Keywords: business tax, wage incidence, administrative data, local taxation
    JEL: H2 H7 J3
    Date: 2013–05
  8. By: Liran Einav; Jonathan D. Levin
    Abstract: Many believe that “big data” will transform business, government and other aspects of the economy. In this article we discuss how new data may impact economic policy and economic research. Large-scale administrative datasets and proprietary private sector data can greatly improve the way we measure, track and describe economic activity. They also can enable novel research designs that allow researchers to trace the consequences of different events or policies. We outline some of the challenges in accessing and making use of these data. We also consider whether the big data predictive modeling tools that have emerged in statistics and computer science may prove useful in economics.
    JEL: C10 C18 C50 C80
    Date: 2013–05
  9. By: Luis Cabral; Zhu Wang; Daniel Yi Xu
    Abstract: Taking the early U.S. automobile industry as an example, we evaluate four competing hypotheses on regional industry agglomeration: intra-industry local externalities, inter-industry local externalities, employee spinouts, and location fixed-effects. Our findings suggest that inter-industry spillovers, particularly the development of the carriage and wagon industry, play an important role. Spinouts play a secondary role and only contribute to agglomeration at later stages of industry evolution. The presence of other firms in the same industry has a negligible (or maybe even negative) effect on agglomeration. Finally, location fixed-effects account for some agglomeration, though to a lesser extent than inter-industry spillovers and spinouts.
    Keywords: Economic growth ; Regional economics ; Automobile industry and trade
    Date: 2013
  10. By: Sule Alan (Koç University); Kadir Atalay (University of Sydney); Thomas F. Crossley (Koç University, University of Cambridge, and Institute for Fiscal Studies, London)
    Abstract: This paper is an attempt to answer the long standing question of whether more affluent households save a larger fraction of their income. The major difficulty in empirically assessing the relationship between incomes and saving rates is to construct a credible proxy for long-run income – purged of transitory fluctuations and measurement error. The Canadian Family Expenditure Survey provides us with both unusually good data on savings rates and potential predictors with which we can construct reliable long-run income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and long-run incomes is sensitive to the predictor used to proxy long-run income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across predicted long-run income groups.
    Keywords: Health inputs; saving rates; income; permanent income.
    JEL: C81 D12
    Date: 2013–05

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