We consider the hold-up problem between a foreign direct investor and the government(s) in a host country with weak governmental structure and lack of power to commit. Using Nash threats, we show that an efficient investment level can be sustained for a sufficiently high discount factor and ask...

Consider a committee that in the past has made a promise not to confiscate the profits from a foreign investor. After the investment has taken place, there is a material benefit if the committee decides to default on the earlier promise. But there are also some small moral costs for those who...

What is the strategic role of membership in an intergovernmental group with unanimity requirements if the group negotiates with an external player in a setting with incomplete information? Being in such a group has a strategic effect compared to negotiating as a stand-alone player and reduces...

This paper studies corporate tax competition if it is costly to learn some of the elements that determine the effective tax burden. Search cost may, but need not, eliminate the tax competition pressure. The outcome depends on the boundaries of tax rate and tax base choices. Search cost can...

Recent decades have seen almost unprecedented economic growth in income per capita around the world. Yet this extraordinary overall performance masks a wide variation in growth rates across different countries, with persistent underdevelopment in some parts of the world. This disparity...

This paper studies the current crisis in the German pension system and discusses the various reform proposals.

It can be advantageous for an 'office motivated' party "A" to spend effort to make it public that a group of voters will lose from party "A"'s policy proposal. Such effort is called inverse campaigning. The inverse campaigning equilibria are described for the case where the two parties can...

For patriotic citizens, living in their native country is intrinsically preferable compared to living in the diaspora. In this paper, we analyze the implications of such a patriotic lock-in in a world with international migration and redistributive taxation. In a formal model of redistribution...

We study the effects of patriotism on tax compliance. If individuals feel a (random) patriotic warm glow from honest tax compliance, this has implications for optimal auditing and tax compliance. A higher expected warm glow reduces the government's optimal audit probability and yields higher tax...

Um die öffentliche Verschuldung in Deutschland tatsächlich zurückzuführen, ist eine grundsätzliche Neuordnung der Bund-Länder-Finanzbeziehungen nötig. Nach Meinung von Jörg-Uwe Hahn, FDP Hessen und Mitglied der Föderalismuskommission II, bedarf es, neben eines möglichst strikten...