Volkswirtschaftliche Fakultät - Digitale Hochschulschriften der LMU

People report much larger willingness to accept (WTA) than willingness to pay (WTP) under a broad range of circumstances. This dissertation tries to answer the question when people will report this gap, how large the difference between the two answers will be and what reasons lie behind this behavior:

We find that uncertainty about the desire to trade a good lies at the heart of the gap measured in experiments. A formal model extending Prospect Theory by “aversion to

risk changes” predicts that the endowment effect increases with uncertainty. Data from our own behavioral experiment confirms the uncertainty hypothesis.

When applied to a different phenomenon, so-called “Preference Reversal”, the model

can predict when different types of the observed reversals occur, closing an explanatory gap that other theories have left open.

This study consists of three empirical essays that analyse the impact of corruption on foreign direct investment, institutions and growth linkages and subjective well-being in transition countries.

After a long downturn, the economies of transition countries have bounced back with strong output growth and stable fiscal and monetary policies. The group ranges from large countries like Russia, with extensive resources to much smaller countries in Central and Eastern Europe. The change of their planned economic systems to market economies can be regarded, as one of the biggest socioeconomic transformations in the human history. This dissertation studies the dynamic transition process equipped with sophisticated econometric techniques to improve on the current empirical literature.

In the first part I employ the structural VAR model of Clarida and Gali (1998) to a sample of transition countries in order to assess the importance of different types of externalities. In particular, I am interested in how much of the variances of output, real effective exchange rate and prices are explained by the three types of shocks before the Euro adoption. In the second part I use a regime switching autoregressive model to determine, whether CEE countries have put emphasis on stabilizing inflation or on output during the last decade of transition. I find that the monetary policy depended on the country specific structure and therefore monetary policy in transition countries before joining the euro had focused more on the output stabilization. This is of particular relevance for their prospective participation in a monetary union, where in contrast, the main focus will be on the union-level price stability. Finally, we estimate error correction model determining the long-run exchange rate elasticity in Russia and summarize my main theoretical and empirical findings.

This thesis addresses theoretical and empirical questions related to network economics. In particular, it analyze network effects and switching costs in the mobile telecommunications industry. The first chapter analyzes competition in a two-period

differentiated-products duopoly in the presence of both switching costs and network effects. They are shown to have opposite implications on the demand side, specially in the first period. While the former reduces demand elasticities, the latter increases them. Increases in marginal network benefits imply lower prices in both periods while the effects of switching costs are ambiguous. However, when network effects are strong, and switching costs are moderate, prices in both periods may be lower than those in a market without network effects and switching costs. This property may be exploited to increase aggregate consumer surplus by instituting a switching tax. The second essay analyzes demand for mobile telecommunications services in Germany in the period from January 1998 to June 2003. During this time, subscriber base grew exponentially by about 700% while prices declined only moderately by about 41%. The estimation results indicate that network effects played a significant role in the diffusion of mobile services in Germany. The third chapter employs multinominal and mixed logit on panel data of British households between the years 1999-2001 to estimate the magnitude of switching costs in mobile telephony. According to the estimation results, consumers of mobile services in the UK face significant switching costs which vary in the magnitude across network operators. The choices of network operators are also explained by observed and unobserved heterogeneity in consumers' tastes. The final essay analyzes the impact of regulation on the development and competitiveness of mobile telecommunications industry across the European Union. Using cross-country panel data, a reduced-form and a structural model are estimated. The estimation results indicate that prices are significantly influenced by the regulatory policy.

This dissertation analyzes the impact of network externalities on R&D competition in an oligopolistic industry. It focuses on the level of R&D investments, the social efficiency of those efforts and the role of networks compatibility. The analysis is taken under different specifications and assumptions to check the robustness of the results. It is concluded that network externalities provide an important incentive to invest in R&D but this incentive is inefficient from a social welfare point of view. These R&D investments represent a powerful mechanism to deter entry, avoid commitment problems, improve market position and affect consumers' expectations in network markets.

This work analyses how taxes determine the activities of multinational enterprises within the EU. Using disaggregated data, it is shown empirically, that different types of foreign direct investment react in different ways to alternative measures of the tax burden. It is shown theoretically, that this result is consistent with tax minimising income shifting activities. Moreover, in a setting of asymmetric capital tax competition, it is shown that income shifting alters the choice of optimal tax rates and that it will not inevitably increase competitive pressure on equilibrium tax rates.

The thesis contains three independent papers. The first examines why women in Ireland had high mortality rates relative to men at the end of the 19th century. The second searches for the determinants of German east-west migration of labour force. The third finally tests empirically the theory of nutritional poverty traps with data of Cote d'Ivoire.