Working Papers 2000–2009 (WP528–WP816)

We survey the literature on social networks by putting together the economics, sociological and physics/applied mathematics approaches, showing their similarities and differences. We expose, in partic…

The make-or-buy decision is analyzed in a simple framework combining contractual incompleteness with the existence of imperfect but contractible performance measures. Contractual incompleteness gives…

Using the concept of market-distribution functions, we derive general optimality conditions for discriminatory divisible-good auctions, which are also applicable to Bertrand games and non-linear prici…

We study the effect of taxation on entrepreneurship, taking into account both the amount of entry and the quality of new ventures. We show that even with risk neutral agents and no tax evasion progres…

The supply function equilibrium provides a game-theoretic model of strategic bidding in oligopolistic wholesale electricity auctions. This paper presents an intuitive account of current understanding…

Studies of mortgage approvals find that minority borrowers are more likely to be denied loans, even when background variables such as current-year income are held constant. This article demonstrates t…

Political and legal institutions affect the extent to which the real exchange rates of oil-exporting countries co-move with the oil price. In a simple theoretical model, strong institutions insulate r…

After a severe crisis in the early 1990s, the Swedish economy experienced a boom in productivity growth. Economists have presented three explanations for the fast productivity growth in 1995–2004: mar…

The Industrial Institute of Economic and Social Research (IUI) was founded in 1939. In less than ten years, IUI grew from a small survey bureau to a leading research institute focused on microeconomic…

What explains the world-wide trend of pro-entrepreneurial policies? We study entrepreneurial policy in a lobbying model taking into account the conflict of interest between entrepreneurs and incumbent…

Twins-based estimates of the return to schooling feature prominently in the labor economics literature. The validity of such estimates hinges critically on the assumption that within-pair variation in…

We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from asse…

Public policy is currently shifting from SME policy towards entrepreneurship policy, which supports entrepreneurship without directing attention to quantitative goals and specific firms or employment…

Recent research has documented that competent-looking political candidates do better in U.S. elections and that babyfaced individuals are generally perceived to be less competent than maturefaced indi…

Cognitive dissonance theory predicts that the act of voting makes people more positive toward the party or candidate they have voted for. Following Mullainathan and Washington (2009), I test this pred…

In this paper we use newly compiled top income share data to estimate common breaks and trends across countries over the twentieth century. By using the most re-cent structural breaks techniques, our…

Does tax policy affect the rate of self-employment in a modern welfare state? This question is analyzed empirically based on Swedish data for the entire post-war period. Available tax data indicate th…

We develop a theory of commercialization mode (entry or sale) of entrepreneurial inventions into oligopoly, and show that an invention of higher quality is more likely to be sold (or licensed) to an i…

We use a survey to identify a consumer bias with regard to different sources of debt-financing. Less salient debt may generate psychological benefits. This should be weighed against the possible econo…

Can educational institutions explain occupational choice between wage employment and entrepreneurship? This paper follows Lazear's (2005) Jack-of-all-trades hypothesis according to which an individual…

Since July 2007 the world economy has experienced a severe financial crisis originating in the U.S. housing market. The crisis has subsequently spread to the financial sectors in European and Asian ec…

The paper estimates the causal effect of trade liberalisation on aggregate productivity through mechanisms related to firm selection. The construction of a bridge in 2000 across the Öresund Strait lin…

We use data from the military enlistment for a large representative sample of Swedish men to assess the importance of cognitive and noncognitive ability for labor market outcomes. The measure of nonco…

This paper discusses allocation of burden of proof in environmental disputes in the WTO system. Besides laying down the natural principles that (i) the complainant carries the burden to (ii) make a pr…

This paper analyzes effects of stronger patent rights on R&D and innovation. It presents a model where the scope of a patent affects an entrant firm's technology choice and thereby the amount of w…

This paper examines the role of the burden of proof (BoP) in National Treatment (NT) disputes under trade agreements. In the situation under study, imports may cause environmental damage, in which cas…

This paper introduces a market size dependent firm entry cost into the Melitz (2003) model. This is a relatively small generalisation, which preserves the analytical solvability of the model. Neverthe…

Media firms sometimes allow consumers to pay to remove advertisements from an advertisement-based product. We formally examine an ad-based monopolist's incentives to introduce this option. When decidi…

In most wholesale electricity markets generators must submit step-function offers of supply to a uniform price auction, and the market is cleared at the price of the most expensive offer needed to mee…

This paper characterizes the Nash equilibrium in a pay-as-bid (discriminatory), divisible-good, procurement auction. Demand by the auctioneer is uncertain as in the supply function equilibrium model.…

We identify pertinent institutions governing the structure of payoffs with regard to female career progression. Drawing on recent insights in behavioral economics, we hypothesize that interactions bet…

In this paper I attempt to replicate for Sweden the Corrado, Hulten and Sichel (2006) and Marrano and Haskel (2006) working papers on spending on intangible assets in the US and the UK. Based on their…

The make-or-buy decision is analyzed in a three-layer principal-management-agent model. There is a cost-saving/quality tradeoff in effort provision. The principal chooses between employing an in-house…

We construct a model where incumbents can either acquire basic innovations from entrepreneurs, or wait and acquire developed innovations from entrepreneurial firms supported by venture capitalists. We…

Exploiting the exogenous variation in user fees caused by a Swedish childcare reform, we are able to identify the causal effect of childcare costs on fertility in a context in which childcare enrollme…

We use Swedish matched employer-employee data to analyze the impact of multinational activity and foreign acquisitions on the relative demand for different job tasks. We contribute to the literature b…

Traditional methods for evaluating corporate credit risk rarely consider the impact of the macro economy on corporate value and performance. We argue that lenders and management can obtain valuable in…

Teachers are increasingly being drawn from the lower parts of the general ability distribution, but it is not clear how this affects student achievement. We track the position of entering teachers in…

It is often assumed that recent success in the high-technology software industry will lead India's development. However, evidence suggest that basic manufacturing industry is stagnant. This paper prop…

We propose a model of investments prior to corporate ownership changes. We derive conditions under which the selling of a firm triggers overinvestment by both the seller and the buyer prior to the ass…

In this paper we construct a model in which entrepreneurial innovations are sold into oligopolistic industries and where adverse selection problems between entrepreneurs, venture capitalists and incum…

This paper presents new evidence on intergenerational mobility in the top of the income and earnings distribution. Using a large dataset of matched father-son pairs in Sweden, we find that intergenera…

Swedish minimum wages are not regulated by law, but subject to bargaining between employers and trade unions and form part of collective agreements. This paper provides an overview of the Swedish mini…

The International Award for Entrepreneurship and Small Business Research was instituted in 1996, and it is now firmly established as the leading Prize for outstanding research contributions in the are…

We review the recent empirical research concerning market power on the Nordic wholesale market for electricity, Nord Pool. There is no evidence of blatant and systematic exploitation of system level m…

We analyze how the entry mode of Foreign Direct Investments (FDI) affects affiliate R&D activities. Using unique affiliate level data for Swedish multinational firms, we first present empirical ev…

We present and test a theory of prospective and retrospective pocketbook voting. Focusing on two large reforms in Sweden, we establish a causal chain from policies to sizeable individual gains and los…

A significant body of research has sought to examine claims that developing countries are under-represented as complainants, and/or over-represented as respondents in the WTO dispute settlement system…

The process of globalization encompasses economic and financial integration. Abolition of capital controls and dismantling of barriers of different kinds are important ingredients of the process that…

In this paper we empirically test the role of firm-specific financial characteristics as drivers of international investment and production. We hypothesize that financial strength generates advantages…

This paper reconsiders the predominant typology pioneered by Baumol (1990) among productive, unproductive and destructive entrepreneurship. It is shown that the foundation of Baumol’s classificatory s…

In this paper, we use a sample of almost 30,000 Swedish mono- and dizygotic twins to study the heritability of financial risk-taking. Following a major pension reform in the year 2000, virtually all S…

A large literature has studied the effect of displacement on labor market outcomes in general, but none has evaluated how the displaced manage as self-employed. This paper studies how the survival of…

We develop a simple yet realistic model of income insurance, where the individual’s ability and willingness to work is treated as a continuous variable. In this framework, income insurance not only pr…

In a recent paper, García-Mainar and Montuenga-Gómez (2005) apply the generalized IV model of Hausman and Taylor to estimate education returns of wage earners and the self-employed in Portugal and in…

Recent research has highlighted the role of institutions in channeling entrepreneurs into activities with positive or negative effects on overall productivity. Embedding central elements from these th…

Israel M. Kirzner is the 2006 winner of The International Award for Entrepreneurship and Small Business Research (the FSF-Nutek Award). In this Prize Lecture he argues that a number of those who have…

I apply a survival model to a detailed dataset of Swedish patents to estimate how different factors affect the likelihood of patent renewal. Since the owners know more about the patents than potential…

While the importance of institutions for explaining cross-country income differences is widely recognized, comparatively little is known about the origins of economic institutions. One strand of the l…

High-growth firms (HGFs) are critical for net job creation and economic growth. We analyze HGFs using the theory of competence blocs, linking firm growth to property rights and the interaction of comp…

Forward sales is a credible commitment to aggressive spot market bidding, and it mitigates producers’ market power in electricity markets. Still it can be profitable for a producer to make such a comm…

We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business center to work and to interact with othe…

This article attempts a formal analysis of the connection between the differentiated property tax rates within urban areas and urban spatial pattern in U.S. cities. We first develop a duocentric-city…

Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the…

We propose a spatial search-matching model where both job creation and job destruction are endogenous. Workers are ex ante identical but not ex post since their job can be hit by a technological shock…

This is a game-theoretic analysis of the link between regime type and international conflict. The democratic electorate can credibly punish the leader for bad conflict outcomes, whereas the autocratic…

A wide range of services provided by the public sector are credence goods, i.e., services for which the producer has private information whether a certain treatment is needed or not. This paper studie…

We study the effect of political polarization on government spending and redistribution using the dispersion of self-reported political preferences as our measure of polarization. Politically polarize…

Private firms may not have efficient incentives to allow third-party producers to access their platform or develop extensions for their products. Based on a two-sided market model, I discuss two reaso…

This paper reports results from an experiment studying how fines, leniency programs and reward schemes for whistleblowers affect cartel formation and prices. Antitrust without leniency reduces cartel…

This paper studies an industry in which firms can choose to provide open or closed platforms. Open platforms, as opposed to closed, are extendable so third-party producers can develop extensions for t…

Macroeconomic fluctuations affect corporations’ performance through demand and cost conditions. Incentive effects of performance-based compensation schemes for management may be weakened or biased by…

In this paper it is argued that the restructuring following the stiffer competition stemming from increased global integration will trigger a race between countries to attract inward foreign direct in…

We provide a model that explains the following empirical observations: i) private ownership is more efficient than public ownership, ii) privatizations are associated with increases in efficiency and…

We provide facts showing that in service markets: (i) restrictions on foreign direct investment (FDI) are under reform, (ii) cross-border Mergers & Acquisitions dominate as the entry mode of FDI,…

Rapid price decreases for ICT-products in the 1990s have been largely attributed to the introduction of hedonic price indexes. Would hedonic price indexing also have large effects on measured price an…

The purpose of this paper is to report some initial findings based on the WTO Dispute Settlement Data Set (Ver. 2.0) that the authors have compiled for the World Bank. The data set contains approximat…

Trading nations exchange tariff concessions in the context of trade liberalizing rounds. Tariffs, nonetheless, are not the only instrument affecting the value of a concession. Domestic instruments aff…

We argue that mainstream FDI theory underplays financial motivations for interna-tional investment, and suggest several possible channels for a distinct cost-of-capital effect on FDI. Using a sample o…

This paper presents a survey of the literature on property rights and economic growth. It discusses different theoretical mechanisms that relate property rights to economic development. Lack of protec…

I develop a model of public sector contracting based on the multitask framework by Holmström and Milgrom (1991). In this model, an agent can put effort into increasing the quality of a service or redu…

This paper models the interaction between individuals' identity choices and redistribution. Both redistributive polices and identity choices are endogenous, and there might be multiple equilibria. The…

Theories of taste-based discrimination predict that competitive pressures will drive discriminatory behavior out of the market. Using detailed matched employer-employee data, we analyze how firm takeo…

It is often claimed that small and young firms account for a disproportionately large share of net employment growth. We conduct a meta analysis of the empirical evidence regarding whether net employm…

Taxation theory rarely takes entrepreneurship into consideration. We discuss how this omission affects conclusions derived from standard models of capital taxation when applied to entrepreneurial inco…

It is useful to distinguish between exogenous and endogenous factors behind contemporary and expected future problems for the welfare state. This paper tries to identify major problems of both types a…

It has been alleged since its inception that the WTO Dispute Settlement (DS) mechanism is biased against developing countries, as manifested in e.g. allegedly too low rates of dispute initiation. To s…

I use Swedish establishment-level panel data to test Bertola and Rogerson’s (1997) hypothesis of a positive relation between the degree of wage compression and job reallocation. Results indicate that…

We examine a relatively neglected aspect of intergenerational transmission of economic standing, namely culturally determined status markers and their valuation in the marriage market. We take nobilit…

We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to cont…

Intellectual property rights and competition policy are intimately related. In this paper I survey the economic literature analyzing the interaction between intellectual property law and competition l…

Does the average level of sickness absence in a neighborhood affect individual sickness absence through social interaction on the neighborhood level? To answer this question, we consider evidence of l…

The publication of János Kornai’s memoirs, By Force of Thought, provides an excellent opportunity to remind ourselves of Kornai’s great contributions to economic research. This paper discusses both hi…

This paper examines the effect of FDI on job creation in the Chinese manufacturing sector. As one of the world’s largest recipients of FDI, China has arguably benefited from foreign multinational ente…

We study the development of wealth concentration in Sweden over 130 years, from the beginning of industrialization until present day. Our series are based on a wide array of new evidence from estate-…

This paper studies determinants of income inequality using a newly assembled panel of 16 countries over the entire twentieth century. We focus on three groups of income earners: the rich (P99-100), th…

The goal of this paper is twofold: First, to develop an estimable model of legislative politics in the US Congress, second, to provide a greater understanding of the objectives behind the New Deal. In…

This paper analyzes economic-social interaction in China in connection with the country’s change of economic system. I define an economic system in terms of a multidimensional vector of broad institut…

In their merger control, EU and the US have considered symmetric size distribution (cost structure) of firms to be a factor potentially leading to collusion. We show that forbidding mergers leading to…

We extend the literature on exclusive dealing, which assumes that entry can occur only by installing new capacity, by allowing the incumbent and the potential entrant to merge. This uncovers new effec…