Volume 66, Issue 1

The high school diploma (Abitur) constitutes a formal qualification for the university education of German students. The positive development of the final grades is subject of a controversial discussion in recent years. Critics talk about grade inflation. In this paper a two-step procedure is used in order to examine this phenomenon. First, the analysis of exam results in 21 school subjects (in ten German states) reveals positive significant grade trends. Afterwards the exam results are brought into connection with the results of different competence tests and the rate of premature withdrawal from studies. Notwithstanding certain indications, grade inflation for the German school system cannot be proven finally. At least, the relevance of the Abitur as certificate of suitability for higher education should be questioned. Therefore students′ ability tests are recommended as relevant part of the selection process in order to choose the most suitable applicants.

The article analyzes the inherent risks of paternalistic economic policies associated with the newly established economic sub-disciplines of behavioral economics, happiness economics and economic psychology. While the authors in general welcome these sub-disciplines for enriching and critically evaluating mainstream economics - especially their criticism of the Homo oeconomicus ‘heuristics’ is of great value contributing to a more realistic idea of man -, the derived implications and recommended lessons for economic policy should be received with concern and thus be subjected to a critical constitutional politico-economic review. The article also shows that the new economic sub-disciplines are not necessarily accompanied by a paternalistic style of politics; traditional, constitutional-political recommendations can also be derived from the (new) ‘normative economics’: The happiness economics approach by Frey et al., for example, not only avoids the inherent risks of a paternalistic state, it also stands (more) in the Kantian and constitutional economics traditions taking the autonomy and (citizen) sovereignty of people, human dignity and (the protection of) human rights seriously. It thus seems to be better suited for a modern version of Ordnungspolitik.

The first part of the paper describes concepts and consequences of public finance in the past such as Roman governance, medieval feudalism, political anarchy, German cameralism and French mercantilism. These concepts are then confronted with actual concepts of public finance such as British optimal taxation and public choice. The former considers the welfare costs of taxation, but ignores the opportunity costs of competing projects. The latter integrates both, welfare economics and opportunity costs in the constitutional concept of a citizens′ tax.

It is suggested that Hayek′s ideas about knowledge are the focus of his theory of society. This approach to Hayek′s theory implies the opportunity that one may discuss the falsifiability of Hayek′s theory, as one should according to Popper′s approach to scientific research. According to Hayek, knowledge is a broad concept. There is theoretical and practical knowledge, explicit and implicit knowledge. Some knowledge is local. Other knowledge is valid irrespective of time and locality. Essential to Hayek′s view is the claim that knowledge cannot be centralized, that only individual freedom and decentralized decision-making permit the exploitation and accumulation of knowledge. In Hayek′s view, the relationship between implicit and explicit knowledge is similar to the relationship between tradition and law. He prefers finding the law, being guided by tradition and precedents as in the common law, to legislation which may easily result in too much government. One may argue in favor of Hayek′s theory that attempts to centralize knowledge and decision-making, or reductions of economic freedom, always decreased human well-being and economic growth. This is true for the ‚great leap forward‘ in China. The analysis of partitioned or formerly partitioned societies leads to a similar finding. Econometric studies of the effects of economic freedom also underline its beneficial effects. As Hayek recognized, economic freedom does not only benefit the free, but also those who still suffer from a lack of freedom. The advantages of backwardness which are robust in econometric studies are interpreted from this perspective as an external effect of Western liberty. Finally, the issue of anomalies in Hayek′s theory is discussed.

With the Lisbon Treaty a right of withdrawal has been incorporated into the EU law for the first time. This paper examines what consequences the planned British referendum on EU withdrawal may have for the EU. In addition to the direct effects on trade and FDI there would be a strong impact on the balance of power and the internal stability of the EU. As the euro crisis is identified as a possible driving force for a British exit, a solid solution for the euro zone is necessary to keep a country like UK in the EU. Sticking to an unchanged euro zone may endanger the stability of the entire EU and thus lead to a turning point in the European integration process.

The intention of the present paper is to investigate and evaluate rule transfers in the European company taxation from an evolutionary-economic perspective. In the literature total competition respectively „harmonisation from below“ and total harmonisation respectively „harmonisation from above“ seem to stand irreconcilably against each other while a middle way of minimal harmonisation in a common economic and monetary area is largely neglected. In contrast it shall be asked here if not a certain diversity of taxation is realistic instead of harmonisation from above. If the answer is yes, then it is worth considering for the European company taxes a political compromise between competition and harmonisation in order to confront tax obstacles in the single market.

The paper describes the main pillars of the European Banking Union (EBU) and discusses its economic justification from the viewpoint of banking theory. The following aspects stand central: Avoidance of regulatory arbitrage, conflicts of interest between the monetary policy and the regulatory unit within ECB, credibility problems of bank resolution schemes, and adverse incentives of deposit insurance guarantees. The paper reviews the literature on banking regulation and scrutinizes the existing EBU-rules. It also asks what rules are missing to enhance the stability of the banking sector in Europe.

This paper considers the proposed European Banking Union (EBU) as part of the institutional economic system of the European Union, in particular with regard to its relationship with the European central bank (ECB). Taking into account the fact that the EU administrations′ attitudes towards economic institutions tend to favour the French tradition of economic interventionism, this contribution considers the likely consequences for the operation of the EBU and its economic implications. This institutional economic analysis of the proposed plans for the EBU aims to contribute to Uwe Vollmer′s evaluation of the EBU proposals discussed in the article ‘Stairway to Heaven oder Highway to Hell’ earlier in this volume.

YouTube was established ten years ago and was integrated by Google in the following year. Since then, YouTube has developed into a multisided platform with remarkable importance for the entertainment industry. We show that YouTube provides an environment for new innovative markets to prosper, which may be changed if public authorities regulate Google.

This paper proposes a new and more economically motivated definition of search neutrality. To deliver relevant results for each query a search engine has to choose from a large range of potential hits and rank results in a certain order. In the course of doing so, a search engine has to apply a set of relevance criteria, which is necessarily shaped by its own judgements. Therefore calls for „objective“ or „fair“ search results seem to be illusionary and misled. As we see an analogy between Internet search and the editorial selection process in media outlets, we define search neutrality negatively in terms of a media bias. According to our proposed definition, non-neutral search results differ systematically, sustainably and intentionally from user preferences in order to generate additional profit for the search provider.

While for a long time, processes of economic interchange have been characterised by the transfer of ownership of goods, sharing and collective consumption of existing resources gain in importance. This phenomenon is nowadays referred to as Sharing Economy. First of all, the paper presents an overview of the existing literature, pointing out characteristics and types as well as effects of the Sharing Economy. Subsequently, those claimed effects are critically reviewed. The essential findings are, firstly, the main advantages claimed, such as the reduction of asymmetric information or a higher utilisation of existing resources, are basically derived from the general technical progress and not from the sharing of goods and services. Secondly, entrepreneurial behaviour in the Sharing Economy shows no substantial differences in comparison with the Standard Economy. Rather there are found similarities to the theory of two- or multi-sided markets. Thirdly, the success and the claimed advantages of the Sharing Economy basically result from the non-compliance with the existing regulation. This, however, can be regarded as a violating of the principles of fair competition.

Dominant or apparently dominant internet platform increasingly become subject to both antitrust investigations and further-reaching political calls for regulation. While Google is currently in the focus of the discussion, the next candidate is already on the horizon - the ubiquitous online trading platform Amazon. Competitors and suppliers but also famous economists like Paul Krugman unite in criticizing Amazon′s market power and alleged abuse of it. In this paper, we collect the multitude of allegations against Amazon and categorize them according to types of potential anticompetitive conduct or types of market failure. We provide an economic analysis of these allegations based upon economic theory as well as publicly available information and data. As one of our main results, we find that the most severe allegations against Amazon do not hold from an economic perspective and, consequently, do not warrant regulation or other drastic interventions (like breaking the company up). However, several areas of conduct, in particular, the use of best price clauses and the (anti-) competitive interplay of Amazon and the major publishers in the e-book market require competition policy action. The standard antitrust instruments, enriched with modern economic theory, should suffice to disincentivize the identified anticompetitive conduct for now.