The German Basic Law is open for an interpretation that would allow the Constitutional Court to test the normative adequacy of most statutes. If the court does, it could be modelled as the supervisor of the legislator, i.e., of the agent of the people. The model predicts collusion between the...

Despite decades of research on mechanism design and on many practical aspects of cost-benefit analysis, one of the most basic and ubiquitous features of regulation as actually implemented throughout the world has received little theoretical attention: exemptions for small firms. These firms may...

The appraisal of public investments is subject to formal guidelines which often require input prices, such as forecasted energy prices. Using Danish guidelines as a case study, we explore the discounting assumptions in these input prices and find rates ranging from 2.97% to 17.5%, markedly...

This paper uses the Kaldor-Hicks compensation principle to compute the present value (PV) of a non-marginal future event. Three theoretical results stand out: First, decreasing returns to capital create a wedge between the PV of future generations' willingness to pay (WTP) and the PV of their...

This paper makes the case for the systematic appraisal of public sector projects using shadow prices as the signals of social scarcities. In so doing, it attempts to redress the balance between estimating inputs and outputs, central though that task is, and valuing them correctly. The account of...

Uncertainty has an almost negligible impact on project value in the economic standard model. I show that a comprehensive evaluation of uncertainty and uncertainty attitude changes this picture fundamentally. The analysis relies on the discount rate, which is the crucial determinant in balancing...

Should public assets such as infrastructure, education, and the environment earn the same return as private investments? The long-term nature of public investments provides commitment to current preferences, which justifies lower than private returns for time-inconsistent decision markers. An...

The effects of a policy measure often reach the consumer only after one or more intermediatesteps, for instance because the measure lowers the cost of an input for an industry producinga consumer good. This paper is concerned with the question how to measure such indirect effectscorrectly under...