Does it make us unhappier when we compare our consumptionwith that of the Joneses or our own past achievements? This paper tries ananswer by bringing together two disparate literatures: the macro (growth)theory on habit formation and the applied literature related to the Easterlinparadox. Using...

When the centre-left government came into power in Germany in 1998, a core promise of the new Chancellor, Schroeder, was to reduce the lack of jobs and to increase welfare. Facing persistently increasing unemployment rates from then on, the government finally launched “Hartz IV” in 2004; the...

Until 2004, German long-term unemployed received a tax-financed benefit (Arbeitslosenhilfe)which exceeded social assistance for the disabled (Sozialhilfe). This has beenchanged by the recent reform known as “Hartz IV”: Effective from 2005, long-termunemployed on the one hand (who are no more...

Schumpeter’s and Hayek’s view of market coordination as being not aboutefficiency, but about endogenous change and never-ending discovery has beenincreasingly recognized even by the mainstream of economics. Underlying this view isthe notion of creative learning agents who bring about...

Significant amount of vertical technology transfer occurs betweendeveloped and developing country firms, yet the literature on intellectual propertyrights did not pay much attention to this aspect...

In a successive Cournot oligopoly, we show the welfare effects of entry inthe final goods market with no scale economies but with cost difference between thefirms. If the input market is very concentrated, entry in the final goods market alwaysincreases welfare. If the input market is moderately...

Armchair evidence shows that many industries are made of a few big commercial ormanufacturing firms, which are able to affect the market outcome, and of a myriad of smallfamily-run businesses with very few employees, each of which has a negligible impact on themarket. Examples can be found in...

We show the effects of Bertrand and Cournot competition on R&D investmentand social welfare in a duopoly with R&D competition where success in R&D isprobabilistic. We show that R&D investments are higher under Bertrand (Cournot)competition when R&D productivities are sufficiently low (high), and...

It is usually believed that innovation increases profits of the firms and alsosocial welfare. In a duopoly model with product innovation, we show that both thesebelieve may go wrong. We show that if the cost of innovation is not very large,prisoner’s dilemma occurs under product innovation,...

This paper considers welfare effects of entry when the incumbent firmbehaves like a Stackelberg leader in the product market. In contrast to previous work(Klemperer, 1988, Journal of Industrial Economics), we show that entry may alwaysincrease welfare. Using general demand function, we show the...