Volume 5, Issue 3

This paper discusses the question of similarity between husband and wife (or, more generally, between the partners of a long-term relationship) from the point of view of economics. Four different economic approaches are presented: Becker’s economics of the family, the theory of exchange, the theory of subjective expected utility and transaction cost economics. It is found that, in general, a considerable degree of similarity is to be expected (especially with regard to education, social status and potential income).

This paper deals with the peculiar discussion around centralization and decentralization in the European Union. It is argued that large parts of this discussion rest on a flawed analogy of the liberal concept of normative individualism on the one hand and the concept of political decentralization in federal multi-layer systems on the other. Based on this flawed analogy an unusual and partly misleading notion of decentralization has widely been used in the discussion of European Integration. As a result, there are a number of misjudgements in some central topics of European Integration. These topics are the question of institutional competition among governments, the effects of fiscal competition on the tax burden of citizens and a future European constitution.

Market failures in the ,,Physician-Patient-Market‘‘, caused by asymmetric information between patients and physicians, is a standard problem of any health system. Frequently, administrative rules defined by the government or private health (doctor) associations dominate the allocation mechanisms of the health system. These administrative rules along with asymmetric information often cause moral hazard problems leading to vast inefficiencies in the ,,Physician-Patient- Market‘‘. Therefore, the discussion of efficient health systems should focus on the problem of compatible incentives within the allocation system of the health sector. Even more, without incentive consistency instruments recently suggested to cure theinefficiency of the German system like ,,Managed Care‘‘, ,,Disease Management‘‘ or ,,Diagnosis Related Groups‘‘ will not be able to improve the efficiency of the health system. Introducing these instruments without a full incentive - compatible allocation system covering all segments of the health system will just shift the problem of asymmetric information and moral hazard to another sub-market of the system, the ,,Health Insurance-Patient-Market‘‘. Therefore, the intention of the paper is to identify the major elements of a suitable incentive - compatible allocation scheme for the health market. Further, we propose an independent evaluation and information institution as a major tool to cure the problem of asymmetric information in the health market.

The German labour market is in dire need of regulatory changes. The Hartz Commission was assigned the task to provide measures for the reform of German labour market policy. This paper, analyses whether the suggestions of the commission promise a substantial improvement of labour market policy with theintended effect of a large decrease in unemployment. To check this, results from theoretical and empirical labour market research are used to create a benchmark. The suggestions of the commission are checked against this benchmark. The result is, however, that the suggested policies of the commission are not well suited to provide a substantial reduction of unemployment. In the final part of the paper, the reason for political failure in this area is analysed as well as the role of commissions.

The main argument commonly put forward against retail price deregulation in Germany’s telecommunications markets is the concern that otherwise the former monopoly supplier may engage in predatory pricing. And even though some game theoretic models show that predation is sometimes possible, this paper argues that predatory pricing will generally not be profitable. However, prices below average cost and even below marginal cost may be part of a profit-maximizing business strategy without any predatory intent. Therefore, it is often difficult in practice to distinguish between predatory, anti-competitive price cuts and normal, competitive pricing policies. Consequently, a regulatory policy which requires incumbents to obtain regulatory authorization for all price cuts is not adequate. Ex-ante regulation of retail prices, as currently practised in many telecommunications markets, is the least satisfying approach. Similarly, the price squeeze tests that have been recently suggested by various European regulators have their limitations, as they tend to be over-inclusive. Instead concerns about predatory pricing in telecommunications should, as is the case in almost all other sectors of the economy, be addressed by ex-post supervision through general competition authorities.

This paper analyses the publication activities of German and Austrian research Institutes in the time period 1989-2000. We find that publication activities in these institutes have increased over time, but that only 49 (of 518) articles were published in ,,Top 30‘‘ Journals. There are also two distinct groups of institutes concerning publication activities. Furthermore, findings indicate that Austrian institutes contributed substantially to publications and show high productivity, but they could not keep up with the increase in the last years.