nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2014‒02‒08
six papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Between efficiency and effectiveness By Sergey V. Tretyakov
  2. PWYW Pricing ex post Consumption: A Sales Strategy for Experience Goods By Egbert, Henrik; Greiff, Matthias; Xhangolli, Kreshnik
  3. Commitments or prohibition? The EU antitrust dilemma By Mario Mariniello
  4. Value added tax (VAT): the impact on the chain producer - processor - trader - consumer - state budget By Toma, Mircea
  5. Merger control procedures and institutions: A comparison of the EU and US practice By William E. Kovacic, Petros C. Mavroidis, Damien J. Neven
  6. The Poor and the Poorest, Fifty Years On By Gazeley, Ian; Newell, Andrew T.; Reynolds, Kevin; Searle, Rebecca

  1. By: Sergey V. Tretyakov (National Research University Higher School of Economics)
    Abstract: The main idea of this paper is that some sort of legal theory dealing with the law’s social impact is an indispensable element of the legal profession in the time of late modernity. Can legal theory pro-vide an adequate understanding of the social context of the application of law, relying solely on in-ternal resources? If not, which interdisiplinary discourse is the best and why?
    Keywords: efficiency, effectiveness, social context of law, neoclassical economics, behav-ioral law and economics, Hart, Kelsen, Sunstein, Glaeser
    JEL: K10
    Date: 2014
  2. By: Egbert, Henrik; Greiff, Matthias; Xhangolli, Kreshnik
    Abstract: Pay What You Want (PWYW) pricing has received considerable attention recently. Empirical studies show that a PWYW pricing mechanism is able to increase a seller’s turnover and profit. This paper addresses PWYW pricing for bundles of experience goods. The paper shows that a PWYW pricing mechanism, if applied ex post consumption, separates the decision to buy from the decision how much to pay. Information asymmetries about the quality of the good are reduced during the act of consumption so that buyers are informed about the product’s quality when they decide how much to pay. As a consequence, risk-averse buyers who would otherwise refrain from purchasing under a fixed price mechanism, can be attracted to purchase under a PWYW pricing ex post consumption (PWYW-EPC) mechanism. In this case, the pricing mechanism itself constitutes a signal. The paper concludes that a PWYW pricing mechanism, applied ex post consumption, can be a profitable strategy for a seller if she sells bundles of experience goods and if she wants to attract risk-averse buyers for realizing economies of scale in production.
    Keywords: PWYW pricing, PWYW-EPC, asymmetric information, economies of scale, experience good, bundling, ex post consumption
    JEL: D4 D49 D8 M31
    Date: 2014–02–03
  3. By: Mario Mariniello
    Abstract: The issue: Excluding cartels, most investigations into suspected infringements of European Union competition law are resolved with â??commitment decisionsâ??. The European Commission drops the case in exchange for a commitment from the company under investigation to implement measures to stop the presumed anti-competitive behaviour. Commitment decisions are considered speedier than formal sanctions (prohibition decisions) in restoring normal competitive market conditions. They have a cost, however: commitments are voluntary and are unlikely to be subject to judicial review. This reduces the European Commissionâ??s incentive to build a robust case. Because commitment decisions do not establish any legal precedent, they provide for little guidance on the interpretation of the law. Policy challenge: The European Commission relies increasingly on commitment decisions. More transparency on the substance of allegations, and the establishment of a higher number of legal precedents, are however necessary. This applies in particular to cases that tackle antitrust issues in new areas, such as markets for digital goods, in which companies might find it difficult to assess if a certain behaviour constitutes a violation of competition rules. To ensure greater transparency and mitigate some of the drawbacks of commitment decisions, while retaining their main benefits, the full detail of the objections addressed by the European Commission to defendants should be published.
    Date: 2014–01
  4. By: Toma, Mircea
    Abstract: Counteracting the crisis, theoretically but also practically cannot ignore the direct and consequential effects (collateral) of taxes and contributions due to the state budget and distribution of profits, on the chain: Financial Institutions ⇒ Suppliers of inputs ⇒ Agricultural producers ⇒ Wholesalers ⇒ Processing industry ⇒ En – detail traders ⇒ Consumer ⇒ State budget. Solutions require transparency, solidarity, equity, social justice in the distribution of efforts and usufruct (profit) on all chain participants to achieve useful goods and services useful for the human society. An orderly adjustment of tax and contribution system may lead to the adoption of those measures to stimulate domestic consumption, domestic output growth and rotation speed of capital, reducing the budget deficit, uncontrolled growth of prices, inflation and unemployment, in a word of imbalances in economic life. To assess the impact of VAT on the chain was started from two hypotheses : rethinking the VAT quota level on the chain and determine and regularization of the VAT, by entitling the right to the users of agricultural production to deduct VAT from the price paid to individual producers (associated )namely calculating VAT from 100 price paid.The results are concretized in: increasing revenues (about 2.4 billion / year), reducing the public institutions spending on goods and services bearing VAT by 20% (about 200 million Euro/ year), reduction of VAT refunds from the budget, reducing the gap between theoretical and potential VAT collected from 42% (49.5%) to 24%, by increasing the collection from 58% (50.5 %) to 76 %, concentration collecting VAT chargeable (76,22 %) from merchants and diminishing the amount of payment by the economic operators on channel.
    Keywords: VAT, chain, VAT quota, tax evasion, state budget
    JEL: Q14 Q18
    Date: 2013–11–21
  5. By: William E. Kovacic, Petros C. Mavroidis, Damien J. Neven (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: The objective of this paper is to discuss and compare the role that different constituencies play in US and EU procedures for merger control. We describe the main constituencies (both internal and external) involved in merger control in both jurisdictions and discuss how a typical merger case would be handled under these procedures. At each stage, we consider how the procedure unfolds, which parties are involved, and how they can affect the procedure. Our discussion reveals a very different ecology. EU and US procedures differ in terms of their basic design and in terms of the procedures that are naturally associated with these alternative designs. On the one hand, there is a single investigator and decision maker operating under a symmetric mandate in the EU and on the other hand, an investigation and settlement operating under the threat of a court decision in case of challenge only in the US. The EU has developed numerous procedures and has granted extensive rights to the parties in the context of these procedures in order to provide some guarantee that the Commission’s role as investigator and decision maker at first instance is not abused. By contrast, the US procedures appear to be rather informal, the balance in the investigation and evaluation of the merger being provided by the credible threat of a court decision. With a strong federal government that has extensive competences for regulation, merger control on competition grounds is subject to the additional public interest test of regulators in the US. Such additional control is weak in the EU, which has more limited competences for regulation. In addition, both the executive and the legislative powers are more fully developed at the federal level in the US. Both the executive power and the legislative seem to be in position to wield greater influence on enforcement in the US than is the case in the EU.
    JEL: K21 K40 K4
    Date: 2014–01–31
  6. By: Gazeley, Ian (University of Sussex); Newell, Andrew T. (University of Sussex); Reynolds, Kevin (University of Sussex); Searle, Rebecca (University of Sussex)
    Abstract: We re-explore Able-Smith and Townsend's landmark study of poverty in early post WW2 Britain. They found a large increase in poverty between 1953-4 and 1960, a period of relatively strong economic growth. Our re-examination is a first exploitation of the newly-digitised Board of Trade Household Expenditure Survey data set for 1953/4. Able-Smith and Townsend used only a small part of this data source. We find that Able-Smith and Townsend substantially over-estimated the rise in absolute poverty and also substantially under-estimated the rise in relative poverty. Their and our findings on poverty reflect a large rise inequality in the distribution of expenditure among British households. This rise is related to a rise in the preponderance of pensioner households, who, for instance, account for all the poor households in the 1961 Family Expenditure survey.
    Keywords: poverty, inequality 1950s, Britain
    JEL: N34 I32 J12
    Date: 2014–01

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