Volume 3, Issue 1

It is often said that the parliament should represent the opinions found in the population and that the government should be held accountable for its political program. It is shown in the paper that these two functions rely on two different basic models of democracy which are not fully compatible with each other: the model of a pure representative democracy and the model of a pure two party competition. Unaccountable governments, voter alienation, strategic voting, and governmental instability are shown to be consequences of this institutional mix. These problems may be avoided with reforms towards one or the other basic model.

In this paper, the economic structure of illegal markets with special reference to the markets for illegal drugs and arms is analyzed. Analytical tools of System Dynamics are employed to emphasize the dynamic aspects of these markets. The results of our analysis enable us to evaluate state intervention in the illegal markets for drugs and arms. It seems possible to mitigate the drugs problem by supplying drugs to heavily addicted people on the basis of health care measures. However, a similar policy seems not to exist for the illegal arms trade. This shows that each illegal market requires a deeper understanding before it can be fought effectively.

The German compensation program for former forced labourers in WWII is jointly financed by the German federation and a voluntarily constituted industry fund. The fund requested all German firms to join, regardless of age and role in the war. We explore the motives behind whether or not firms named in the top 500 joined the fund. In contrast to the public rhetoric which placed an emphasis on moral motives, we find that the most significant cause for a firm's decision to join was its export share, and thus its vulnerability to class-action suits and boycott threats. ß

This paper analyzes the effectiveness of the foreign exchange market interventions of the European Central Bank (ECB) by studying the information policy of the ECB and examining whether the ECB relied on a specific transmission channel to influence exchange rates. Against the background of a discussion of the transmission channels through which foreign exchange market interventions of central banks may affect exchange rates, we are led to the conclusion that the information policy of the ECB was not in line with the assumptions underlying the transmission channels discussed in the theoretical literature. We argue that this finding could provide a possible explanation for the ineffectiveness of the ECB's foreign exchange market intervention in the fall of 2000.

Network effects, economies of scope as well as irreversibilities and subadditive cost functions are characteristics of public passenger transport systems. The proposal of a user club shows that a collective requirement to act can be covered even without state regulations. The club bears the responsibility for a sufficient public transport supply, which local jurisdictions can supplement by their own means. In a public tendering, the club confers the actual supply planning to the management company, which in turn chooses qualified bidders for the carrying out of the public transport services. The different problems of long-run irreversible investments (railway system), an appropriate structure of transport fares to prevent a cherry-picking by outsiders, the stability of the club as well as the role of the state are treated separately.

Cost-benefit analysis of environmental projects often requires economic valuation procedures that are time-consuming and costly. Therefore, the wish to short-cut these procedures comes naturally, e.g. using the so-called „benefit transfer“. This method enables the researcher to use results from previous studies to calculate expected benefits of a planned project. In this paper we discuss the chances and limits of this approach from theoretical and empirical points of view. Starting from the welfare theoretical fundamentals of economic valuation we show that the road to any empirical measure is already marked by various assumptions. Taking a detailed look at the techniques of benefit transfers the paper arrives at recommendations for future benefit transfer studies.

This paper outlines the tax reliefs and the investment incentives for partnerships that can be expected from the current tax reform in Germany. We therefore compare the enacted law with concepts that have been submitted by the socalled „Bruehler Commission“. After a brief description of the different alternatives our analysis continues with the calculation and evaluation of average and marginal tax rates for selected income groups. As a result it is argued that the alternative proposals lead to unequally distributed tax reliefs between different income groups and generate weaker investment incentives. Thus we support the enacted law.