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Publication records

ESMT Working Paper

Regional state aid control in Europe: A legal and economic assessment

ESMT Working Paper No. 15-05
Hans W. Friederiszick, Massimo Merola (2015)
Subject(s)
Economics, politics and business environment
Keyword(s)
Regional development policy, investment subsidies, European state aid control, competition law and economics
This paper provides a legal and economic analysis of the European rules for regional state aid according to Article 107 (1) and (3) TFEU. It summarizes the historical evolution and the trends of regional aid rules and describes the economic rationale behind them. The main principles are discussed with reference to recent academic research, leading cases and the State Aid Modernization initiative (“SAM”). The current rules for the assessment of compatibility as laid down in the general block exemption and the regional aid guidelines 2014 are critically reviewed in light of these principles.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
62
ISSN (Print)
1866–3494
ESMT Working Paper

Fund flows inducing mispricing of risk in competitive financial markets

ESMT Working Paper No. 15-04
Axel Stahmer (2015)
Subject(s)
Finance, accounting and corporate governance
Keyword(s)
Asset pricing, mutual funds, flow of funds, mispricing, misallocation of capital, overinvestment, underinvestment, investment decision, implied probabilites
JEL Code(s)
D53, D80, G01, G02, G11, G12, G20
This paper studies the effect of new fund flows on investment behavior and the resulting equilibrium price of risk. The small fund industry model shows equilibria with overinvestment in unprofitable and underinvestment in profitable investment opportunities. The large fund industry model derives market prices for risk and analyzes the resulting price distortions in equilibrium. New flow of funds to the asset management industry lead to inefficient investment decisions, mispricing of risk, and distortion of market implied probabilities. Furthermore, the paper provides an explanation for partial market failure and trade among identical asset managers without assuming heterogeneous beliefs.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
39
ISSN (Print)
1866–3494
Working Paper

Economics of payment cards

Konkurrensverket Working Paper No. 2015:1
Özlem Bedre-Defolie, Linda Gratz (2015)
Subject(s)
Economics, politics and business environment
Keyword(s)
Payment card networks, interchange fees, two-sided markets
JEL Code(s)
L11, G21, L42, L51, K21
Pages
34
ESMT Working Paper

What do patent-based measures tell us about product commercialization? Evidence from the pharmaceutical industry

ESMT Working Paper No. 14-01 (R1)
Stefan Wagner, Simon Wakeman (2015)
Subject(s)
Entrepreneurship; Technology, R&D management
Keyword(s)
Patent indicators, patent system, product commercialization, pharmaceutical industry, drug development
Patent-based measures are frequently used as indicators in empirical research on innovation and technological change. Currently, there is little evidence as to what extent patent-based indicators relate to product market outcomes. Using a unique dataset that links outcomes from product commercialization in the pharmaceutical industry with detailed patent data, we relate patent-based indicators that capture either an invention’s value or the uncertainty surrounding the patenting process to the outcomes of the product development process. Our findings suggest that the speed of commercialization increases with value but reduces with uncertainty. Using a variety of alternative indicators we derive implications for the use and the proper interpretation of individual measures. Moreover, our study has broader implications as it highlights the detrimental effect of uncertainty on the speed of innovation.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
44
ISSN (Print)
1866–3494
ESMT Working Paper

Hedge fund flows and performance streaks: How investors weigh information

ESMT Working Paper No. 15-01
Guillermo Baquero, Marno Verbeek (2015)
Subject(s)
Finance, accounting and corporate governance
Keyword(s)
Hedge funds, money flows, extrapolative expectations, law of small numbers, performance streaks, relative weights, smart money
JEL Code(s)
G11, G12, G14, G23
We examine the relative weights hedge fund investors attach to past information in the fund selection process. The weighting scheme appears inconsistent with econometric forecasting models that predict fund returns, alphas or Sharpe ratios. In particular, investor flows are highly sensitive to performance streaks despite their limited predictive power regarding fund performance. Further, allocations based on forecast models’ out-of-sample predictions beat investor allocations by a significant margin, which suggests that the latter are suboptimal and reflect overreaction to certain types of information. Our findings do not support the notion that sophisticated investors have superior information or superior information processing abilities.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
92
ISSN (Print)
1866–3494
Working Paper

Defaults and donations: Evidence from a field experiment

CESifo Working Paper Series No. 5118
Steffen Altmann, Armin Falk, Paul Heidhues, Rajshri Jayaraman (2014)
Subject(s)
Economics, politics and business environment
Keyword(s)
Default options, charitable giving, online platforms, field experiment
JEL Code(s)
C93, D03, D64
The updated versions are available at SSRN.
ESMT Working Paper

A price concentration study on European mobile telecom markets: Limitations and insights

ESMT Working Paper No. 14-07
Pauline Affeldt, Rainer Nitsche (2014)
Subject(s)
Economics, politics and business environment
Keyword(s)
Price concentration study, mobile, wireless, merger control, efficiencies
Price concentration studies investigate the relationship between market concentration and price levels. They are increasingly used in the mobile telecom industry. This paper provides a detailed account of the limitations of such studies. In addition, it proposes a specific approach in order to account for quality differences across countries, which are likely important when explaining price differences. When applying our approach to European mobile telecom markets from 2003 to 2012, we find that there is no positive relationship between concentration and prices and some indications that the relationship may be negative.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
28
ISSN (Print)
1866–3494
ESMT Working Paper

Two birds, one stone? Positive mood makes products seem less useful for multiple-goal pursuit

ESMT Working Paper No. 14-06
Anastasiya Pocheptsova, Francine Espinoza Petersen, Jordan Etkin (2014)
Subject(s)
Marketing
Keyword(s)
Goals, product evaluation, positive mood
Negotiating the pursuit of multiple goals often requires making difficult trade-offs between goals. In these situations, consumers can benefit from using products that help them pursue several goals at the same time. But do consumers always prefer these multipurpose products? We propose that consumers’ incidental mood state alters perceptions of products in a multiple-goals context. Four studies demonstrate that being in a positive mood amplifies perceptions of differences between multiple conflicting goals. As a consequence, consumers are less likely to evaluate multipurpose products as being able to serve multiple distinct goals simultaneously. We conclude by discussing implications of these findings for marketers of multipurpose products.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
28
ISSN (Print)
1866–3494
ESMT Working Paper

Contracting in medical equipment maintenance services: An empirical investigation

ESMT Working Paper No. 14-05
Tian Chan, Francis de Véricourt, Omar Besbes (2014)
Subject(s)
Product and operations management
Keyword(s)
Maintenance repair, service contracting, co-production, empirical operations management, service chain value, healthcare industry
Equipment manufacturers offer different types of maintenance service plans (MSPs) that delineate payment structures between equipment operators and maintenance service providers. These MSPs allocate risks differently and thus induce different kinds of incentives. A fundamental question, therefore, is how such structures impact service performance and the service chain value. We answer empirically this question. Our study is based on a unique panel data covering the sales and service records of over 700 diagnostic medical body scanners. By exploiting the presence of a standard warranty period, we overcome the key challenge of isolating the incentive effects of MSPs on service performance from the confounding effects of adverse selection. We found that moving an operator from a basic pay-per-service plan to a fixed-fee full-protection plan leads to both a reduction in reliability and an increase in service costs. We further show that the increase in cost is driven by both the operator and the service provider. Our results point to the presence of losses in service chain value in the maintenance of medical equipment, and provide the first evidence that a basic pay-per-service plan, where the risk of equipment failure is borne by the operator, can actually improve performance and costs.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
32
ISSN (Print)
1866–3494
ESMT Working Paper

Designing luxury experience

ESMT Working Paper No. 14-04
Vadim Grigorian, Francine Espinoza Petersen (2014)
Subject(s)
Marketing
Keyword(s)
Brand management, luxury brands, luxury marketing, emotions, customer experience, experience design, luxury consumption
In luxury brand management, experiences are essential. However, most of what we know about designing customer experiences originates from work developed with and/or for mass brands. Luxury brands are conceptually different and require a specific approach to brand management. Using a grounded theory approach, we present a framework consisting of seven principles to design luxury experience. Our research suggests that to create a true luxury experience brands should go beyond traditional frameworks of brand management. By compiling best practices and the commonalities amongst the interviewed companies’ most successful efforts to create a luxury experience, the framework can help brands to implement a “trading-up” strategy: Luxury brands can enhance their desirability by offering a true luxury experience and non-luxury brands can adopt principles of luxury experience and become life-style brands.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Pages
24
ISSN (Print)
1866–3494