Using a natural experiment from Germany, we show that temporary placebased subsidies generate persistent effects on economic density. We identify employment and capital formation as main channels for higher income per square kilometer. As the spatial regression discontinuity design allows us to...

In this paper we provide a political game where agents decide whether to become legislators or politicians. Legislators determine the political institutions constraining politicians\' behavior and politicians compete for gaining the power to make decisions about the level of the public good. We...

Authorities often lack information for efficient regulation of the commons. This paper derives a criterion comparing prices versus tradable quantities in terms of expected welfare, given uncertainty, optimal policy and endogenous cost structure. I show that one cannot determine which regulatory...

The marginal cost of public funds (MCF) is substantial in generous welfare state countries according to Kleven and Kreiner (2006). Their main estimate for the Danish economy exceeds 2 mainly because taxation distorts labor force participation. Adjustments in social transfers which alleviate such...

We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are rationally internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government....

In addition to his role as a consumer pursuing his own interests, an individual may also regard himself as an ethical observer, judging matters from society's point of view. It is not clear which of these possibly conflicting roles respondents in contingent valuation studies take on. This leads...

In most applied cost-benefit analyses, individual willingness to pay is aggregated without using explicit welfare weights. This can be justified by postulating a utilitarian social welfare function, along with the assumption of equal marginal utility of income for all individuals. However, since...

The formation of peer groups with social norms for private contributions to a public good is analyzed in an n-player two stage game. First people choose a peer group, then they choose whether to contribute. The first choice is made through a learning process represented by evolutionary dynamics,...

In this paper, we present an economic model of moral motivation. Consumers prefer regarding themselves as socially responsible individuals. Voluntary contributions to public goods are motivated by this preference. The self-image as socially responsible is determined by a comparison of one's...

It is sometimes claimed that individuals' contributions to public goods are not motivated by economic costs and benefits alone, but that people also have a moral or norm-based motivation. A number of studies indicate that such moral or norm-based motivation might be crowded out, or crowded in,...