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Publications - Journal Articles

Open list in Research Information System


Human-induced climate change: the impact of land-use change

T. Gries, M. Redlin, J.E. Ugarte, Theoretical and Applied Climatology (2018)


New Evidence on Employment Effects of Informal Care Provision in Europe

I.W. Kolodziej, A.R. Reichert, H. Schmitz, Health services research (2018)

Outcome Equivalence in School Choice with Reciprocal Preferences

C. Haake, N. Stroh-Maraun, Economics Letters (2018), pp. 39 - 41


We show that the Boston school choice mechanism (BM), the student proposing deferred acceptance algorithm (DA) and the top trading cycles algorithm (TTC) generate the same outcome when the colleges’ priorities are modified according to students’ preferences in a “first preferences first” manner. This outcome coincides with the BM outcome under original priorities. As a result, the DA and TTC mechanism that are non-manipulable under original priorities become vulnerable to strategic behavior.

Price competition and the Bertrand model: The paradox of the German mobile discount market

D. Kaimann, B. Hoyer, Applied Economics Letters (2018)


We investigate the degree of price competition among telecommunication firms. Underlying a Bertrand model of price competition, we empirically model pricing behaviour in an oligopoly. We analyse panel data of individual pricing information of mobile phone contracts offered between 2011 and 2017. We provide empirical evidence that price differences as well as reputational effects serve as a signal to buyers and significantly affect market demand. Additionally, we find that brands lead to an increase in demand and thus are able to generate spillover effects even after price increase.


Pirates – The Young and the Jobless: The Effect of Youth Bulges and Youth Labor Market Integration on Maritime Piracy

T. Gries, M. Redlin, Defence and Peace Economics (2017), pp. 1-15


The effects of competition on medical service provision

J. Brosig-Koch, B. Hehenkamp, J. Kokot, Health Economics (2017), pp. 6-20


We explore how competition between physicians affects medical service provision. Previous research has shown that, without competition, physicians deviate from patient‐optimal treatment under payment systems like capitation and fee‐for‐service. Although competition might reduce these distortions, physicians usually interact with each other repeatedly over time and only a fraction of patients switches providers at all. Both patterns might prevent competition to work in the desired direction. To analyze the behavioral effects of competition, we develop a theoretical benchmark that is then tested in a controlled laboratory experiment. Experimental conditions vary physician payment and patient characteristics. Real patients benefit from provision decisions made in the experiment. Our results reveal that, in line with the theoretical prediction, introducing competition can reduce overprovision and underprovision, respectively. The observed effects depend on patient characteristics and the payment system, though. Tacit collusion is observed and particularly pronounced with fee‐for‐service payment, but it appears to be less frequent than in related experimental research on price competition.

Technology diffusion, international integration and participation in developing economies - a review of major concepts and findings

T. Gries, R. Grundmann, I. Palnau, M. Redlin, International Economics and Economic Policy (2017), pp. 215-253


Preemptive Repression: Deterrence, Backfiring, Iron Fists and Velvet Gloves

K. De Jaegher, B. Hoyer, Journal of Conflict Resolution (2017)


We present a game-theoretic model of the repression–dissent nexus, focusing on preemptive repression. A small group of instigating dissidents triggers a protest if each dissident participates. The dissidents face random checks by security forces, and when an individual dissident is caught while preparing to participate, he or she is prevented from doing so. Each dissident can invest in countermeasures, which make checks ineffective. For large benefits of protest, higher preemptive repression in the form of a higher number of checks has a deterrence effect and makes dissidents less prone to invest in countermeasures, decreasing the probability of protest. For small benefits of protest, higher preemptive repression instead has a backfiring effect. Both myopic and farsighted governments avoid the backfiring effect by setting low levels of preemptive repression (velvet-glove strategy). However, only a farsighted government is able to exploit the deterrence effect by maintaining a high level of preemptive repression (iron-fist strategy).

Innovations, growth and participation in advanced economies - a review of major concepts and findings

T. Gries, R. Grundmann, I. Palnau, M. Redlin, International Economics and Economic Policy (2017), pp. 293-351


Slow Booms and Deep Busts: 160 Years of Business Cycles in Spain

T. Gries, M. Fritz, Y. Feng, Review of Economics (2017), pp. 153-166

On the interdependence of ambulatory and hospital care in the German health system

T. Büyükdurmus, T. Kopetsch, H. Schmitz, H. Tauchmann, Health economics review (2017), pp. 2

Informal Care and Long-term Labor Market Outcomes

H. Schmitz, M. Westphal, Journal of Health Economics 56, 1-18 (2017)

Economic Retirement Age and Lifelong Learning - a theoretical model with heterogeneous labor and biased technical change

T. Gries, S. Jungblut, '. Krieger, H. Meyer, German Economic Review (2017)


Strategic Network Disruption and Defense

B. Hoyer, K. De Jaegher, Journal of Public Economic Theory (2016), pp. 802-830


We study a game between a network designer, who uses costly links to connect nodes in a network, and a network disruptor who tries to disrupt the resulting network as much as possible by deleting either nodes or links. For low linking costs networks with all nodes in symmetric positions are a best response of the designer under both link deletion and node deletion. For high linking costs the designer builds a star network under link deletion, but for node deletion excludes some nodes from the network to build a smaller but stronger network. For intermediate linking costs the designer again builds a symmetric network under node deletion but a star‐like network with weak spots under link deletion.

Towards an Economic Theory of Destabilization War, Peace Economics and Peace Science

T. Gries, C. Haake, Peace Economics and Peace Science (2016), pp. 377-384

Quantile treatment effects of job loss on health

V. Schiele, H. Schmitz, Journal of Health Economics (2016), pp. 59--69

Competition of Intermediaries in a Differentiated Duopoly

S. Brangewitz, J. Manegold, Theoretical Economics Letters (2016), pp. 1341-1362


By-product mutualism and the ambiguous effects of harsher environments – A game-theoretic model

K. De Jaegher, B. Hoyer, Journal of Theoretical Biology (2016), pp. 82-97


We construct two-player two-strategy game-theoretic models of by-product mutualism, where our focus lies on the way in which the probability of cooperation among players is affected by the degree of adversity facing the players. In our first model, cooperation consists of the production of a public good, and adversity is linked to the degree of complementarity of the players׳ efforts in producing the public good. In our second model, cooperation consists of the defense of a public, and/or a private good with by-product benefits, and adversity is measured by the number of random attacks (e.g., by a predator) facing the players. In both of these models, our analysis confirms the existence of the so-called boomerang effect, which states that in a harsh environment, the individual player has few incentives to unilaterally defect in a situation of joint cooperation. Focusing on such an effect in isolation leads to the "common-enemy" hypothesis that a larger degree of adversity increases the probability of cooperation. Yet, we also find that a sucker effect may simultaneously exist, which says that in a harsh environment, the individual player has few incentives to unilaterally cooperate in a situation of joint defection. Looked at in isolation, the sucker effect leads to the competing hypothesis that a larger degree of adversity decreases the probability of cooperation. Our analysis predicts circumstances in which the "common enemy" hypothesis prevails, and circumstances in which the competing hypothesis prevails.

Determinants of regional variation in health expenditures in Germany

D. Göpffarth, T. Kopetsch, H. Schmitz, Health economics (2016), pp. 801--815

Sustainability of coalitional equilibria within repeated tax competition

S. Brangewitz, S. Brockhoff, European Journal of Political Economy (2016), pp. 1-23


Towards an Economic Theory of Destabilization War

T. Gries, C. Haake, Peace Economics, Peace Science and Public Policy (2016)


Public reporting and the quality of care of German nursing homes

A. Herr, T. Nguyen, H. Schmitz, Health Policy (2016), pp. 1162--1170

Explaining inter-provincial migration in China

T. Gries, M.. Kraft, M. Simon, Papers in Regional Science (2016), pp. 709-731


Changes of China’s agri-food exports to Germany caused by its accession to WTO and the 2008 financial crisis

T. Gries, Y. Feng, Z. Guo, China Agricultural Economic Review (2015), pp. 262-279

Short-and medium-term effects of informal care provision on female caregivers’ health

H. Schmitz, M. Westphal, Journal of health economics (2015), pp. 174--185

Playing the Lottery or Dressing Up? A Model of Firm-Level Heterogeneity and the Decision to Export

T. Gries, W. Naudé, N. Bilkic, The Quarterly Review of Economics and Finance (2015), pp. 1-17

Reanalyzing Zero Returns to Education in Germany

D.A. Kamhöfer, H. Schmitz, Journal of Applied Econometrics (2015), pp. 912-919



Household Savings and Productive Capital Formation in Rural Vietnam: Insurance vs. Social Network

T. Gries, H.V. Dung, Modern Economy (2014)

Robust equilibria in location games

B. Buechel, N. Roehl, European Journal of Operational Research (2014), pp. 505-517


Too Much of a Good Thing? Welfare Consequences of Market Transparency

Y. Gu, B. Hehenkamp, Journal of Institutional and Theoretical Economics JITE (2014), pp. 225-248


This paper studies welfare consequences of consumer-side market transparency with endogenous entry of firms. Different from most studies, we consider the unique symmetric entry equilibrium, which is in mixed strategies. We identify two effects of market transparency on welfare: a competition effect and a novel market-structure effect. We show, surprisingly, that for almost all demand functions the negative market-structure effect eventually dominates the positive competition effect as the market becomes increasingly transparent. Consumer-side market transparency can therefore be socially excessive even without collusion. The only exception among commonly used demand functions is the set of constant demand functions.

Collective action and the common enemy effect

K. De Jaegher, B. Hoyer, Defence and Peace Economics (2014), pp. 644-664


How is collective defence by players affected when they face a threat from an intelligent attacker rather than a natural threat? This paper analyses this question using a game-theoretic model. Facing an intelligent attacker has an effect if players move first and visibly set their defence strategies, thereby exposing any players who do not defend, and if the attacker is, moreover, not able to commit to a random attack. Depending on the parameters of the game, the presence of an intelligent attacker either increases the probability that players jointly defend (where such joint defence either does or does not constitute a utilitarian optimum), or decreases the probability that players jointly defend (even though joint defence is a utilitarian optimum).

A Crook is a Crook … But is He Still a Crook Abroad? On the Effect of Immigration on Destination-Country Corruption

E. Dimant, T. Krieger, M. Redlin, German Economic Review (2014), pp. 464-489


Competitive outcomes and the inner core of NTU market games

S. Brangewitz, J. Gamp, Economic Theory (2014), pp. 529-554


Trade and fertility in the developing world: the impact of trade and trade structure

T. Gries, R. Grundmann, Journal of Population Economics (2014), pp. 1165-1186

Broke, ill, and obese: is there an effect of household debt on health?

M. Keese, H. Schmitz, Review of Income and Wealth (2014), pp. 525--541

Regional variation in the utilisation of ambulatory services in Germany

T. Kopetsch, H. Schmitz, Health economics (2014), pp. 1481--1492

Oppressive governments, dependence on the USA, and anti-American terrorism

T. Gries, D. Meierrieks, M. Redlin, Oxford Economic Papers (2014), pp. 83-103


Testing the relationship between income inequality and life expectancy: A simple correction for the aggregation effect when using aggregated data

T. Mayrhofer, H. Schmitz, Journal of Population Economics (2014), pp. 841--856


Health and the double burden of full-time work and informal care provision—Evidence from administrative data

H. Schmitz, M.A. Stroka, Labour Economics (2013), pp. 305--322

Unsustainable Sovereign Debt - Is the Euro Crisis only the Tip of the Iceberg?

T. Gries, N. Bilkic, B. Carerras Painter, International Economics and Economic Policy (2013), pp. 1 - 45

Global Asymmetries and their Implications for Climate and Industrial Policies, in: Pathways to Industrialization in the Twenty-First Century - New Challenges and Emerging Paradigms

T. Gries, Oxford University Press (2013), pp. 293-323

Do banking crises cause terrorism?

T. Gries, D. Meierrieks, Economics Letters (2013), pp. 321-324

Asymmetric Nash bargaining solutions and competitive payoffs

S. Brangewitz, J. Gamp, Economics Letters (2013), pp. 224-227



Stay in school or start working?- The human capital investment decision under uncertainty and irreversibility

T. Gries, N.. Bilkic, Labour Economics (2012), pp. 706 - 717

On the institutional design of burden sharing when financing external border enforcement in the EU

C. Haake, T. Krieger, S. Minter, International Economics and Economic Policy (2012), pp. 583-612


Negotiating Transfer Prices

C. Haake, J.T. Martini, Group Decision and Negotiation (2012), pp. 657-680


More health care utilization with more insurance coverage? Evidence from a latent class model with German data

H. Schmitz, Applied Economics (2012), pp. 4455--4468

Causality Between Terrorism and Economic Growth

T. Gries, D. Meierrieks, Journal of Peace Research (2012), pp. 91 - 104


SME Performance in Transition Economies: The Financial Regulation and Firm Level Corruption Nexus

T. Gries, A. Wieneke, Journal of Comparative Economics (2011), pp. 221 - 229

Causal Linkages Between Domestic Terrorism and Economic Growth

T. Gries, T. Krieger, D. Meierrieks, Defence and Peace Economics (2011), pp. 493 - 508

Why are the unemployed in worse health? The causal effect of unemployment on health

H. Schmitz, Labour Economics (2011), pp. 71--78

Profit efficiency and ownership of German hospitals

A. Herr, H. Schmitz, B. Augurzky, Health Economics (2011), pp. 660--674

Entrepreneurship and Human Development - A Capability Approach.

T. Gries, W. Naudé, Journal of Public Economics (2011), pp. 216 - 224

Income Determination and Income Discrimination in Shenzhen

T. Gries, S. Gravemeyer, J. Xue, Urban Studies (2011), pp. 1457-1475

What determines influenza vaccination take-up of elderly Europeans?

H. Schmitz, A. Wübker, Health Economics (2011), pp. 1281--1297

Financial Deepening, Trade Openness and Economic Growth in Latin America and the Caribbean

T. Gries, M. Kraft, D. Meierrieks, Applied Economics (2011), pp. 4729 - 4739

Direct evidence of risk aversion as a source of advantageous selection in health insurance

H. Schmitz, Economics Letters (2011), pp. 180--182

Proportionality and the power of unequal parties

D. Dimitrov, C. Haake, International Journal of Economic Theory (2011), pp. 189-200



Entrepreneurship and Structural Economic Transformation

T. Gries, W. Naudé, Small Business Economics (2010), pp. 13 - 29

International integration and the determinants of regional development in China

T. Gries, M. Redlin, Economic Change and Restructuring (2010), pp. 149-177


Practice budgets and the patient mix of physicians-Evaluating the effects of remuneration system reforms on physician behaviour in Germany

H. Schmitz, Journal of Health Economics (2010)


China's provincial disparities and the determinants of provincial inequality

T. Gries, M. Redlin, Journal of Chinese Economic and Business Studies (2009), pp. 259-281


Explaining Regional Export Performance in a Developing Country: The Role of Geography and Relative Factor Endowments

T. Gries, W. Naudé, Regional Studies (2009), pp. 967-979

Linkages between Financial Deepening, Trade Openness and Economic Development: Causality Evidence from Sub-Saharan Africa

T. Gries, M. Kraft, D. Meierrieks, World Development (2009), pp. 1849-1860

The Optimal Distance to Port for Exporting Firms

T. Gries, W. Naudé, Journal of Regional Science (2009), pp. 513-528

Entrepreneurship and regional economic growth: towards a general theory of start-ups, Innovation

T. Gries, W. Naudé, The European Journal of Social Science Research (2009), pp. 309-328


C. Haake, International Game Theory Review (2009), pp. 15-32



Regional Determinants of Entrepreneurial Start-Ups in a Developing Country

T. Gries, W. Naudé, E. Wood, A. Meintjes, Entrepreneurship & Regional Development (2008), pp. 111-124

Two support results for the Kalai–Smorodinsky solution in small object division markets

C. Haake, Mathematical Social Sciences (2008), pp. 177-187


Trade and Endogenous Formation of Regions in a Developing Country

T. Gries, W. Naudé, Review of Developing Economics (2008), pp. 248-275

Monotonicity and Nash implementation in matching markets with contracts

C. Haake, B. Klaus, Economic Theory (2008), pp. 393-410


Stability and Nash implementation in matching markets with couples

C. Haake, B. Klaus, Theory and Decision (2008), pp. 537-554


On Maskin monotonicity of solution based social choice rules

C. Haake, W. Trockel, Review of Economic Design (2008), pp. 17-25


Comments on: Transversality of the Shapley value

C. Haake, TOP (2008), pp. 48-50



Stable governments and the semistrict core

D. Dimitrov, C. Haake, Games and Economic Behavior (2007), pp. 460-475


Employment Effects of International Factor Mobility - A Theoretical Approach with Heterogenous Labor

T. Gries, S. Jungblut, Journal of Economic Integration (2007), pp. 339-368

The Shapley value of phylogenetic trees

C. Haake, A. Kashiwada, F.E. Su, Journal of Mathematical Biology (2007), pp. 479-497


A note on the paradox of smaller coalitions

D. Dimitrov, C. Haake, Social Choice and Welfare (2007), pp. 571-579



Bundling in exchange markets with indivisible goods

C. Haake, B. Klaus, D. Dimitrov, Economics Letters (2006), pp. 106-110

Government versus Opposition: Who Should be Who in the 16th German Bundestag?

D. Dimitrov, C. Haake, Journal of Economics (2006), pp. 115-128



Trading bargaining weights

C. Haake, U. Ervig, Journal of Mathematical Economics (2005), pp. 983-993


Interbank market frictions, international banks and growth

T. Gries, >. Sievert, A. Wieneke, International Economics and Economic Policy (2004), pp. 157-171

): Anreizkompatibilität als zentrales Element eines neu gestalteten Gesundheitsmarktes

T. Gries, D. Langeleh, Perspektiven der Wirtschaftspolitik (2004), pp. 293-311


Falling-behind, and the Role of FDIs - a Model of Endogenous Growth and Development

T. Gries, South African Journal of Economics (2002), pp. 273-281


Catching-up and Structural Change

T. Gries, S. Jungblut, Economia Internationale (1997), pp. 3-24


Endogenous Growth and R&D Models - A Critical Appraisal of Recent Developments

T. Gries, C. Hentschel, B. Wigger, Jahrbücher für Nationalökonomie und Statistik (1994), pp. 64-84


The Dynamics of Upgrading or how to catch-up

T. Gries, B. Wigger, Economia Internationale (1993), pp. 3-13

Open list in Research Information System

Publications - Working Papers, Reports, Monographys

Open list in Research Information System


Thoughts on Social Design

W. Trockel, C. Haake, in: Future of Economic Design, 2018

The Influence of Bribery and Relative Reciprocity on a Physician's Prescription Decision - An Experiment

V. Hilleringmann, CIE Working Paper Series, 2018


Focusing on a physician's relationship to a briber and a patient, this experiment analyzes the influence of a bribe on a physician's treatment decision. We conduct a partner treatment, in which briber and physician play together for the whole experiment and a stranger treament, where briber and physician are re-matched every period. With the help of the two treatments, we vary the relative reciprocity between the physician and the two other actors, briber and patient. Additionally we use a follow up questionnaire to measure the behavioral motivation of the participants. We find that reciprocity leads to bribery relationships: In the partner treatment physicians act corruptly more often. Just the variation of the relative reciprocity between the treatments shows differences in the behavior of the subjects. Differences in the participants' preferences deliver no explanation for their behavior in our experiment.

Feedback Pareto weights in cooperative NTU differential games

S. Hoof, 2018


This note deals with agreeability in nontransferable utility (NTU) differential games. We introduce state feedback Pareto weights to enrich the set of efficient cooperative solutions. The framework is particularly useful if constant weights fail to support agreeability, but cooperation is desired nonetheless. The concept is applied to an adverting differential game.

On unification of solutions to the bargaining problem

C. Haake, C. Qin, 2018


We establish axioms under which a bargaining solution can be found by the maximization of the CES function and is unique up to specification of the distribution and elasticity parameters. This solution is referred to as the CES solution which includes the NASH and egalitarian solutions as special cases. Next, we consider a normalization of the CES function and establish axioms, under which a bargaining solution can be found by the maximization of the normalized CES and is unique up to the specifications of the distribution and its substitution parameters. We refer to this solution as the normalized CES solution, which includes the Nash and Kalai-Smorodinsky solutions as special cases. Our paper contributes to bargaining theory by establishing unified characterizations of existing as well as a great variety of new bargaining solutions.


Network Formation and Disruption - An Experiment: Are efficient networks too complex?

A.E. Endres, S. Brangewitz, B. Djawadi, B. Hoyer, Universität Paderborn, 2017


We experimentally study the emergence of networks under a known external threat. To be more specific, we deal with the question if subjects in the role of a strategic Designer are able to form safe and efficient networks while facing a strategic Adversary who is going to attack their networks. This investigation relates theoretical predictions by Dziubinski and Goyal (2013) to actual observed behaviour. Varying the costs for protecting nodes, we designed and tested two treatments with different predictions for the equilibrium network. Furthermore, the influence of the subjects' farsightedness on their decision-making process was elicited and analysed. We find that while subjects are able to build safe networks in both treatments, equilibrium networks are only built in one of the two treatments. In the other treatment, predominantly safe networks are built but they are not efficient. Additionally, we find that farsightedness --as measured in our experiment - has no influence on whether subjects are able to build safe or efficient networks.

Thoughts on Social Design

C. Haake, W. Trockel, Universität Paderborn, 2017

Thoughts on Social Design

W. Trockel, C. Haake, 2017

Maintaining vs. Milking Good Reputation when Customer Feedback is Inaccurate

S. Brangewitz, B. Djawadi, R. Fahr, C. Haake, Universität Paderborn, 2017

Location Choice and Quality Competition in Mixed Hospital Markets

B. Hehenkamp, O. Kaarboe, Universität Paderborn, 2017

Evolutionary Equilibrium in Stochastic Contests - Entry, Effort, and Overdissipation

Y. Gu, B. Hehenkamp, W. Leininger, Universität Paderborn, 2017


Stackelberg Competition among Intermediaries in a Differentiated Duopoly with Product Innovation

J. Manegold, 2016


On an intermediate goods market we consider vertical and horizontal product differentiation and analyze the impact of simultaneous competition for resources and the demand of customers on the market outcome. Asymmetries between intermediaries may arise due to distinct product qualities as well as by reasons of different production technologies. The intermediaries compete on the output market by choosing production quantities sequentially and for the supplies of a monopolistic input supplier on the input market. It turns out that there exist differences in product quality and productivities such that an intermediary being the Stackelberg leader has no incentive to procure inputs, whereas in the role of the Stackelberg follower will participate in the market. Moreover, we find that given an intermediary is more competitive, his equilibrium output quantity is higher when being the leader than when being the follower. Interestingly, if the intermediary is less competitive and goods are complements, there may exist asymmetries such that an intermediary being in the position of the Stackelberg follower offers higher output quantities in equilibrium than when being in the position of the Stackelberg leader.

Identifying the preferences and heterogeneity of consumer groups in multiplayer video games

D. Kaimann, N. Stroh-Maraun, J. Cox, 2016


Video games are high-involvement products with multiplatform and multiplayer characteristics, which aim to enhance consumer utility by providing opportunities for ‘playful consumption’. However, relatively little research has previously been undertaken into preferences for playful consumption, particularly in the context of multiplayer video games. This study addresses this deficiency in the literature through the analysis of data from a popular online game that includes historic behavioral data for 7 million consumers participating in 868,000 unique game rounds. Our analysis of these data identify the behavioral preferences of consumers in order to identify the factors associated with variations in consumer participation and engagement. We show that consumers value opportunities for score enhancement, with a preference for combat rather than non-combat actions. However, our findings also suggest that consumers value variety and heterogeneity as part of the experience, suffering disutility from factors such as the absence of particular player-roles or vehicle use within a given round. Our results represent the first such evidence on ‘in-game’ consumer preferences and the optimization of the video gaming experience, which has important implications for player matching, utility and willingness to pay for additional content.

Do talented women shy away from competition?

B. Hoyer, T. van Huizen, L. Keijzer, T. Rezai Khavas, S. Rosenkranz, 2016


We study the willingness to compete in a cognitive task among an entire cohort of fresh man business and economics students. Combining data from a lab-in-thefield experiment with university admissions data, we trace the gender gap in competitiveness at different levels of high school performance. Our results confirm that, on average, men choose to compete more often. The gender gap disappears, however, among students with above average high school performance. Female high school top performers are equally competitive as their male counterparts. In fact, the overall gender gap is entirely driven by the group of female high school underperformers who shied away from competition, even when they performed well in our task. Overall, our findings suggest that high school grades are more than just a signal of cognitive abilities, because they seem to influence the receivers selfperception of his or her performance in a competitive environment involved in later on in life.


Strategic Formation of Customer Relationship Networks

S. Brangewitz, C. Haake, P. Möhlmeier, Universität Paderborn, 2015


We analyze the stability of networks when two intermediaries strategically form costly links to customers. We interpret these links as customer relationships that enable trade to sell a product. Equilibrium prices and equilibrium quantities on the output as well as on the input market are determined endogenously for a given network of customer relationships. We investigate in how far the substitutability of the intermediaries' products and the costs of link formation influence the intermediaries' equilibrium profits and thus have an impact on the incentives to strategically form relationships to customers. For networks with three customers we characterize locally stable networks, in particular existence is guaranteed for any degree of substitutability. Moreover for the special cases of perfect complements, independent products and perfect substitutes, local stability coincides with the stronger concept of Nash stability. Additionally, for networks with n customers we analyze stability regions for selected networks and determine their limits when n goes to infinity. It turns out that the shape of the stability regions for those networks does not significantly change compared to a setting with a small number of customers.

The Generalized Nash Bargaining Solution for Intrafirm Transfer Pricing

S. Brangewitz, C. Haake, Center for International Economics Working Paper No. 64, 2015

Note on the Common Enemy Effect under Strategic Network Formation and Disruption

B. Hoyer, H. Haller, Virginia Polytechnic Institute and State University, Department of Economics., 2015


Social psychology studies the "common enemy effect", the phenomenon that members of a group work together when they face an opponent, although they otherwise have little in common. An interesting scenario is the formation of an information network where group members individually sponsor costly links. Suppose that ceteris paribus, an outsider appears who aims to disrupt the information flow within the network by deleting some of the links. The question is how the group responds to this common enemy. We address this question for the homogeneous connections model of strategic network formation, with two-way flow of information and without information decay. For sufficiently low linkage costs, the external threat can lead to a more connected network, a positive common enemy effect. For very high but not prohibitively high linkage costs, the equilibrium network can be minimally connected and efficient in the absence of the external threat whereas it is always empty and inefficient in the presence of the external threat, a negative common enemy effect.


Quality Choices and Reputation Systems in Online Markets - An Experimental Study

S. Brangewitz, B. Mir Djawadi, R. Fahr, C. Haake, 2014


Republished as CIE Working Paper 2017-08

Maritime Piracy: Socio-Economic, Political, and Institutional Determinants

T. Gries, M. Redlin, Paderborn University, CIE Center for International Economics, 2014

Quality Choices and Reputation Systems in Online Markets - An Experimental Study

S. Brangewitz, B. Djawadi, R. Fahr, C. Haake, Universität Paderborn, 2014


In internet transactions where customers and service providers often interact once and anonymously, a reputation system is particularly important to reduce information asymmetries about product quality. In this study we experimentally examine the impact of the customers' evaluation abilities on strategic quality choices of a service provider. Our study is motivated by a simple theoretical model where short-lived customers are asked to evaluate the observed quality of the service provider's product by providing ratings to a reputation system. A reputation profile informs about the ratings of the last three sales. This profile gives new customers an indicator for the quality they have to expect and determines the sales price of the product. From the theoretical model we derive that the service provider's dichotomous quality decisions are independent of the reputation profile and depend only on the probabilities of receiving positive and negative ratings when providing low or high quality. However, when mapping our theoretical model to an experimental design we find that subjects in the role of the service provider deviate from optimal behavior and choose actions which are conditional on the current reputation profile. In addition, increasing the probability of a negative rating and decreasing the probability of a positive rating both do not affect strategic quality choices.

A Crook is a Crook ... But is He Still a Crook Abroad? On the Effect of Immigration on Destination-Country Corruption

E. Dimant, T. Krieger, M. Redlin, Center for Economic Studies and Ifo Institute (CESifo), Munich, 2014


A crook is a crook ... but is he still a crook abroad? On the effect of immigration on destination-country corruption

E. Dimant, T.. Krieger, M. Redlin, Wilfried-Guth-Stiftungsprofessur für Ordnungs- und Wettbewerbspolitik, Universität Freiburg, 2013

Cooperative Transfer Price Negotiations under Incomplete Information

S. Brangewitz, C. Haake, Universität Paderborn, 2013


In this paper, we analyze a model in which two divisions negotiate over an intrarm transfer price for an intermediate product. Formally, we consider bargaining problems under incomplete information, since the upstream division's (seller's) costs and downstream division's (buyer's) revenues are supposed to be private information. Assuming two possible types for buyer and seller each, we rst establish that the bargaining problem is regular, regardless whether incentive and/or eciency constraints are imposed. This allows us to apply the generalized Nash bargaining solution to determine transfer payments and transfer probabilities. Furthermore, we derive general properties of this solution for the transfer pricing problem and compare the model developed here with the existing literature for negotiated transfer pricing under incomplete information. In particular, we focus on the models presented in Wagenhofer (1994).

A Crook is a Crook … But is He Still a Crook Abroad? - On the Effect of Immigration on Destination-Country Corruption

E. Dimant, T. Krieger, M. Redlin, Paderborn University, CIE Center for International Economics, 2013


Network Disruption and the Common Enemy Effect

B. Hoyer, K. De Jaegher, 2012


The phenomenon that groups or people work together when they face an opponent, although they have little in common otherwise, has been termed the "common enemy effect". We study a model of network formation, where players can use links to build a network, knowing that they are facing a common enemy who can disrupt the links within the network, and whose goal it is to minimize the sum of the benefits of the network. We find that introducing a common enemy can lead to the formation of stable and efficient networks as well as fragmented networks and the empty network.


Trade Openness and Economic Growth: A Panel Causality Analysis

T. Gries, M. Redlin, Paderborn University, CIE Center for International Economics, 2011, pp. 24


Short-run and Long-run Dynamics of Growth,Inequality and Poverty in the Developing World

T. Gries, M. Redlin, Paderborn University, CIE Center for International Economics, 2010, pp. 21


China’s provincial disparities and the determinants of provincial inequality

T. Gries, M. Redlin, Paderborn University, CIE Center for International Economics, 2008, pp. 45

International integration and regional development in China

T. Gries, M. Redlin, WIDER Research Papers, United Nations University (UNU), 2008, pp. 37


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