The micro-economic theory of public economics is currently concentrated on information and incentive structures. These structures are determined by the allocation of control rights. Specific research on these allocations is the purpose of the public-economics project of SFB 303.
First, we deal with the allocation of control rights by privatization, regulation, and public procurement. From the methodological point of view we concentrate on the paradigm of incomplete contracts. If public enterprises are sold to some private investor, typically there are many unverifiable relevant variables on which the contract cannot be conditioned. Moreover, the interplay between restructuring and privatization reveals a Williamson-typehold-up problem, because the restructuring investments are firm-specific. The paradigm of incomplete contracts also is very relevant in the explanation of public procurement, where renegotiations quite often occur and where relationship-specific R&D-investments precede the final procurement decision. Finally, we are interested in price regulation under asymmetric information, embedding the Laffont-Tirole theory of regulation into the general framework on the Boiteux model. (We also have started to develop theories of regulation under incomplete contracting.)
Second, we investigate the allocation of fiscal control rights in the EU context, taking into account the mobility of labor and/or capital. We are interested in the influence of migration on the national distributions of income, on the national old-age pension systems and on national unemployment policies. Under the assumption of free labor mobility the immigration of young workers can serve as a policy instrument to control the population growth. We examine the optimal immigration policy and compare it with the result of democratic decisions on the level of immigration. Of particular interest in this context is the international competition for immigration. In addition, we focus on the possibility of decentralized redistributive policies under free migration. We focus on the influence of tax competition, geographical relations, and on constitutional designs of the redistributive processes. Furthermore, we analyze the impacts of migration on the international labor markets. In particular, the wage levels - which may be pushed by trade unions - have other impacts in a closed economy than in an open economy with free labor migration.
08.09.2000, © Webmaster