No 124. Financial Liberalization and the Relationship-Specificity of Exports. Fabrice Defever, Jens Suedekum

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1 No 124 Financial Liberalization and the Relationship-Specificity of Exports Fabrice Defever, Jens Suedekum December 2013

2 IMPRINT DICE DISCUSSION PAPER Published by düsseldorf university press (dup) on behalf of Heinrich Heine Universität Düsseldorf, Faculty of Economics, Düsseldorf Institute for Competition Economics (DICE), Universitätsstraße 1, Düsseldorf, Germany Editor: Prof. Dr. Hans Theo Normann Düsseldorf Institute for Competition Economics (DICE) Phone: +49(0) , e mail: normann@dice.hhu.de DICE DISCUSSION PAPER All rights reserved. Düsseldorf, Germany, 2013 ISSN (online) ISBN The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors own opinions and do not necessarily reflect those of the editor.

3 FINANCIAL LIBERALIZATION AND THE RELATIONSHIP SPECIFICITY OF EXPORTS * Fabrice Defever a Jens Suedekum b Abstract We investigate the causal impact of equity market s on sectoral export performance across 91 countries ( ). The increased availability of external finance has boosted trade of industries that intensively use relationship specific inputs, and lowered exports of industries using standardized inputs. December 2013 Keywords: JEL class.: Financial, credit constraints, relationship specificity, international trade F14, F36, G20 *) We thank Pierre Daniel Sarte, Juan Carluccio, and Michaela Trax for very useful comments and discussions on earlier drafts. All errors and shortcomings are solely our responsibility. Part of this research was completed while Defever was visiting the University of Duisburg Essen. We thank this institution for its hospitality. We are also grateful to the DAAD for providing the financial support of this research visit. a ) Fabrice Defever, University of Nottingham and Centre for Economic Performance, LSE, CESifo Fabrice.Defever@nottingham.ac.uk b ) corresponding author: Jens Suedekum, Mercator School of Management, University of Duisburg Essen, CESifo and IZA. Address: Lotharstrasse 65, Duisburg, Germany. Phone: +49/203/ jens.suedekum@uni due.de

4 1. Introduction The quality of domestic institutions plays a key role in shaping a country s pattern of comparative advantage. Recent research has, in particular, identified two major institutional characteristics that matter for trade: i) the quality of contract enforcement as it affects the capability to specialize in relationship specific industries (Nunn, 2007), and ii) the development of the financial system, as credit constraints may prevent firms from investing in R&D or market entry costs, which in turn can negatively affect their export performance (Manova 2008; Antràs and Caballero 2009). Little is known, however, about how trade is affected by the interaction of those aspects. We investigate the impact of equity market s in the period on sectoral export performance across 91 countries. Our focus is on the differential impact of those s on industries with a varying degree of relationship specificity. Following the classification by Nunn (2007), we think of a specific industry as one where detailed contractual arrangements and unique investments of input suppliers and final goods producers are required, giving rise to hold up and renegotiation issues. The recent theoretical literature (Carluccio and Fally, 2012; Antràs, Desai and Foley, 2009), has shown that credit constraints may impede specialization in complex, relationship specific industries. Possible mechanisms can be that firms are reluctant to source from, or to invest in, financially weak countries as they anticipate opportunistic behavior of their partners who face financial frictions; or because non standard inputs require higher upfront investments which are more difficult to finance in such countries. The available evidence on the link between financial development and the relationshipspecificity of exports is mostly cross sectional, however, which makes it difficult to establish a causal effect of finance. Our contribution is to address those issues from a dynamic perspective, by exploiting the drastic changes in domestic financial systems that came with the equity market s. We build on the approach by Manova (2008) who shows that these episodes can be regarded as an exogenous shock to the availability of external capital in the respective country, and do not capture simultaneous trade policy reforms or other institutional changes. While Manova (2008) focuses on the effect of on the export performance of sectors with different financial dependence, we extend that approach by evaluating the importance of relationship specificity at the industry level. 1

5 We obtain two main findings. First, the financial s have disproportionally boosted exports of industries with a higher degree of relationship specificity. Our panel results are thus consistent with previous cross sectional evidence (Carluccio and Fally 2012), and therefore support the view that financial frictions have a negative causal effect on the probability of specialization in complex industries. Second, even though trade volumes have increased on average after, our findings suggests that reforms of financial institutions generate winners and losers: Most sectors have higher, but some sectors have lower export volumes after. The industries relationship specificity contributes more than external finance dependence to the understanding of this sectoral variation. 2. Data The main data set for this study is from Manova (2008). 1 It combines export flows for 27 (3 digit ISIC) industries and 91 countries over the period with country level data on financial s, and sector level data on financial vulnerability. The main variable capturing the event of is a dummy that is zero in all years before, and one in all years after the official equity market opening. 39 countries opened their domestic capital market to foreign equity flows during the observation period, while 16 countries liberalized prior to 1980 and 36 never liberalized. 2 To classify sectoral financial vulnerability, Manova (2008) computes two variables: i) the external finance dependence as measured by the average ratio of capital expenditures minus cash flow to capital expenditures for the median firm in each industry in the US, and ii) asset tangibility, defined as the share of net property, plant and equipment in total book value assets for the median US firm in that industry. To this data set, we merge the 3 digit ISIC sector level information derived from Nunn (2007) which builds on the Rauch (1999) classification and input output linkages in the US in There, the relationship specificity of an industry is measured by the average fraction of inputs which are not bought and sold on an organized exchange 1 The data are available under 2 We also use three alternative measures, namely: ii) a similar dummy referring to the first sign of an upcoming, iii) an index that is zero before, and ranges between zero and one in all years after the official, where the index value captures the reform intensity, and iv) an analogous index for the first sign of. As further control variables we also use her country level data on GDP and factor endowments. For all details about these data, see Manova (2008). 3 The data are available under 0. Below we also report several robustness checks related to this measure of relationship specificity. 2

6 market and for which no international reference price exists. This index is available for all 27 sectors included in Manova (2008). Table 1 provides some descriptive statistics and correlations between the sectoral variables used in our study. Table 1: a) Descriptive statistics of the sectoral variables (N=27) Mean Std. Dev. Median 10 th perc. 90 th perc. Min Max Relationship specificity External finance dependence Asset tangibility b) Correlation table between sectoral variables (N=27) Relationship specificity Relationship specificity 1 External finance dependence External finance dependence 0.399** 1 Asset tangibility Asset tangibility 0.665*** ***, **, *, indicate significance at the 1%, 5%, and 10% level. The data show that machinery or scientific equipment are among the most, and tobacco and non ferrous metals are among the least specific industries. Furthermore, more specific industries tend to rely more on external finance, although there are also some exceptions (e.g., leather products), and they tend to have lower asset tangibility. 3. Estimation We investigate the differential impact of financial on sectoral exports by estimating the following panel specification that is similar as in Manova (2008): X GDP Lib Lib Spec Lib FinDep cit 0 1 ct 0 ct 1 ct i 2 ct i Lib AssetTang Y 3 ct i 1 cit c i t cit (1) X cit is the (log) export volume of industry i in country c and year t. GDP ct is c s (log) gross domestic product, Ycit are further time varying control variables, and the s are country, industry and time fixed effects. Lib ct is the dummy. the external finance dependence, AssetTang the asset tangibility, and i FinDepi is Spec i the degree of relationship specificity in sector i. In all regressions we cluster the standard errors at the country level. 3

7 Our focus is on the interaction terms. Manova (2008) has only included 2 and. 3 We introduce 1, which is identified from the variation of equity market openness across countries over time, and the variation of relationship specificity across industries. 1 thus estimates the comparative advantage of financially more open countries in industries with a higher degree of specificity. The three variables Spec i, FinDep i and AssetTang i have been centered around their respective mean, so that 0 can be interpreted as the predicted increase of exports after for an industry with mean values of those characteristics. This rescaling has no impact on the estimates (or standard errors) of the interaction terms 1, 2 and 3. 4 Notice further that the direct effects of are captured by the industry fixed effect i Spec i, FinDep i and AssetTang i on X cit 4. Main results Table 2 shows our main results. In the first column, we replicate Manova s (2008) main finding (see column 3 of her Table 2). Conditional on GDP, general time trends, and timeinvariant characteristics captured by the country and industry fixed effects, she finds a disproportionally large effect of on the exports of sectors with higher external finance dependence ( 2 0. In the second column we introduce 1 instead of 2, in the third column we jointly consider 1 and 2, and in the fourth column we also add 3, i.e., the interaction with respect to asset tangibility. We consistently estimate a strongly positive and highly significant coefficient That is, has disproportionally boosted exports of more relationship specific industries. Furthermore, we find that the interaction term 2 remains positive and significant (see column 3), although it becomes substantially smaller than in column 1. The interaction term 3 is not significant, however, once we control for relationship specificity. These findings are important to set our results into perspective to Manova (2008). First, we find that financial seems to generate winning and losing sectors. Our results in column 3 imply that the export volume is predicted to rise after ( 0 1 Spec 2 FinDep 0 ) in 20 out of 27 industries, with values i i 4 Without the centering of the sectoral characteristics, β0 would have captured the effect of for a hypothetical industry where Speci, FinDepi and AssetTangi are all equal to zero. As can be seen from Table 1, such a sector does not exist as Speci, and AssetTangi are always larger than zero in the data. 5 We also test for the joint significance of β0+β1. The last row reports the Wald Chi Square test and the respective p value. As can be seen, the two terms are also jointly significant. An alternative Wald test for the hypothesis β0=β1=0 yields very similar results. 4

8 ranging up to 123% in the Scientific equipment sector. Exports are negatively affected, however, in 7 cases with changes as large as 51% in the petroleum refineries. The impact of financial development on trade is therefore economically substantial and strongly heterogeneous across sectors. An intuition may be that the general increase in the availability of external capital in the economy induces tougher selection and reallocation of credit, so that some sectors even end up exporting less than before. Table 2: Estimation results Official Liberalization Dummy First Sign Liberalization Dummy Official Liberalization Intensity First Sign Liberalization Intensity Liberalization (β0) 0.333*** 0.333*** 0.332*** 0.332*** 0.318*** 0.742*** 0.845*** (0.089) (0.089) (0.089) (0.089) (0.088) (0.206) (0.213) Liberalization 1.892*** 1.548*** 1.979*** 1.993*** 2.971*** 3.018*** relationship specificity (β1) (0.242) (0.233) (0.319) (0.319) (0.357) (0.360) Liberalization external 0.946*** 0.557*** 0.466*** 0.536*** 0.482*** 0.508*** finance dependance (β2) (0.132) (0.120) (0.121) (0.127) (0.166) (0.173) Liberalization *** 2.182*** asset tangibility (β3) (0.592) (0.591) (0.748) (0.749) GDP (α1) 0.872*** 0.869*** 0.870*** 0.870*** 0.891*** 1.006*** 1.002*** (0.268) (0.268) (0.268) (0.268) (0.270) (0.263) (0.263) Controls Exporter, year and sector F. E. R squared # observations 39,568 39,568 39,568 39,568 39,568 39,568 39,568 # exporters Joint significance test Wald test on β 0 + β1 Prob > F The dependent variable is the log of exports to the world by 3-digit ISIC sector, The official and first sign dummies and intensities, external finance dependence, and asset tangibility are defined as in Manova (2008). Relationship specificity is defined as in Nunn (2007) as the fraction of inputs neither bought nor sold on an exchange market nor reference priced, using the conservative classification by Rauch (1999). All sectoral variables have been centred around their respective mean. GDP is the log of the exporter's GDP. All regressions include a constant term, exporter, year and sector fixed effects, and cluster errors at the exporter level. Standard-errors reported in parentheses. ***, **, *, indicate significance at the 1%, 5%, and 10% level. Further comparing our results with Manova (2008), her main conclusion is supported by our analysis insofar, as we also find that the export volume tends to increase more in sectors with higher external finance dependence. However, our results suggest that the differential relationship specificity across industries is considerably more important when it comes to explaining the sectoral variation in the effect of on trade. 5

9 Table 3: Predicted changes in sectoral export volumes Financial Dependence (FinDepi) 10th percentile ( 0.393) Median ( 0.034) 90th percentile (0.514) Relationship specificity (Speci) 10th percentile ( 0.264) Median (0.002) 90th percentile (0.308) Table reports the predicted change in export volume for different values of FinDepi and Speci (values of the centered variables are reported in parentheses), using the estimated coefficients β0, β1 and β2 from Table 1, column 3. Prediction is computed as β0 + β1 Speci + β2 FinDepi To show this more specifically, Table 3 reports the predicted changes in export volumes for different percentiles of FinDep i and Spec i. Suppose FinDep i is hypothetically held fixed at its median value (so that the centered variable becomes = 0.034), while Spec i varies from the 10 th percentile ( 0.264) to the 90 th percentile (0.308). The predicted export changes then range from 9.6% to +78.9%, thus spanning around 90 percentage points. By contrast, holding Spec i fixed at the median (0.002), predicted export changes only vary by about 50 percentage points (from 11.6% to 62.1%) when raising FinDep i from the 10 th to the 90 th percentile. 5. Robustness checks Columns 5 7 of Table 2 show that our baseline results remain robust when using the first sign of dummy or the indicators of reform intensity instead of the official dummy. This is important, because a causal interpretation of the results requires that the equity market openings provide an exogenous shock to the availability of external capital, and do not capture other institutional changes that have occurred because countries anticipated future financial deregulations. Those concerns about possible anticipation effects are allayed. TABLE 4 HERE Table 4 provides three further robustness checks. First, in columns 1 4 we control for traditional sources of comparative advantage, namely the countries (time varying) 6

10 factor endowments with physical capital, human capital, and natural resources, and interactions of those with (time invariant) factor intensities across industries. 6 In line with factor proportions theory of international trade, we find that countries tend to export goods that intensively use their abundant factor. Importantly, our main result remains robust: the coefficient 1 0 is highly significant, regardless of how the s are conceptualized. Second, in columns 5 8 we repeat the exercise, but now focus on those countries that actually liberalized their equity markets during the observation period. Thereby our coefficients are now only identified from such countries where export flows can be observed both before and after a financial deregulation. Our main results remain qualitatively unchanged when focusing on this subsample of switchers, the only exception being in column 6. Third, in columns 9 12 we follow Manova s (2008) event study approach and use a fixed effect ci for every country industry pair instead of separate fixed effects c and i in eq. (1). This setup takes into account that there may have been pair specific unobserved differences driving export performance parallel to a event. It is considerably more demanding than the specification in (1), since identification now purely comes from within country changes in trade over time, thus attributing the key role to the time variation. The results show that, unlike 2 and 3 which now turn insignificant, our main coefficient 1 0 remains robust, column 10 being the only exception. The event study thus corroborates our earlier finding that financial s disproportionally boost exports of more specific industries, although the quantitative magnitudes are now somewhat smaller than before. 7 Finally, we have also conducted robustness checks with respect to Nunn s (2007) measure of relationship specificity. In particular, for the share of inputs not sold on an exchange market, Rauch (1999) provides a conservative and a liberal definition. Furthermore, he also suggests that the information on the reference prices may be omitted when computing the sectoral index of specificity, which is then only computed as the share of inputs not bought or sold on organized exchange market (in a 6 Factor endowments are not available in all cases. This is why the number of observations drops from 91 to 70 countries in columns 1 4, and why we cannot include all 39 but only 33 switching countries in columns 5 8. For the event study setup in columns 9 12, we return to the sample of 70 countries. 7 We have also reproduced Table 2 using pair specific fixed effects ηci instead of ηc and ηi. Our main result remains: β1 > 0 robustly holds, and using these coefficients to build an analogue to Table 3, our results still suggest that specificity adds more than finance dependence to the understanding how affects sectoral export volumes. 7

11 conservative or a liberal definition). The results reported so far refer to the conservative definition, and use the information on the reference prices. As a robustness check, we have reproduced Table 2 also for the three alternative measures of relationship specificity. The detailed results are omitted for brevity, but it turns out that our main results are robust throughout. That is, 1 0 holds in all specifications, with statistical significance at the 1% level in all cases. Results also remain robust (with statistical significance in the vast majority of cases) when reproducing Table 4, that is, when adding factor endowments as controls, when focusing only on the switchers, or when conducting the event study analysis. 6. Conclusions The longitudinal design of our study identifies the causal effect of financial on sectoral export performance. Our panel and event study results show that those equity market openings have disproportionally boosted exports of industries with a higher degree of relationship specificity. Furthermore, our results indicate that exports of relatively standardized sectors are negatively affected by financial s. The differential relationship specificity across industries is more important than the differential reliance on external capital when it comes to explaining the sectoral variation in the effect of on trade. Literature Antràs, P. and R. Caballero (2009), "Trade and Capital Flows: A Financial Frictions Perspective", Journal of Political Economy 117, Antràs, P., Desai, M. and F. Foley (2009), "Multinational Firms, FDI Flows and Imperfect Capital Markets", Quarterly Journal of Economics 124, Carluccio, J. and T. Fally (2012), "Global Sourcing under Incomplete Capital Markets", Review of Economics and Statistics 94, Manova, K. (2008), "Credit Constraints, Equity Market Liberalizations and International Trade", Journal of International Economics 76, Nunn, N. (2007), "Relationship Specificity, Incomplete Contracts, and the Pattern of Trade", Quarterly Journal of Economics 122, Rauch, J. (1999), Networks versus Markets in International Trade, Journal of International Economics 48,

12 Table 4: Robustness checks Official dummy First sign dummy Official intensity First sign intensity Official dummy First sign dummy Official intensity First sign intensity Official dummy First sign dummy Official intensity (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Controlling for factor endowments All countries Switchers only Event study setup Liberalization (β0) 0.308*** 0.309*** 0.544** 0.649*** *** 0.291*** 0.487** 0.585** (0.094) (0.098) (0.207) (0.234) (0.065) (0.078) (0.212) (0.258) (0.100) (0.104) (0.207) (0.236) Liberalization 2.150*** 2.133*** 3.273*** 3.358*** 0.705* *** 3.053*** 0.491* ** 1.146** relationship specificity (0.369) (0.378) (0.433) (0.440) (0.373) (0.404) (0.658) (0.891) (0.278) (0.283) (0.488) (0.507) (β1) Liberalization external 0.365** 0.400** 0.407** 0.426** 0.294* 0.285* finance dependence (β2) (0.148) (0.155) (0.190) (0.197) (0.145) (0.140) (0.451) (0.336) (0.112) (0.118) (0.219) (0.250) Liberalization * 1.484** asset tangibility (β3) (0.632) (0.618) (0.929) (0.938) (0.643) (0.657) (1.303) (1.640) (0.375) (0.389) (0.601) (0.640) First sign intensity GDP (α1) * 0.953* 1.052* 0.985* * (0.333) (0.337) (0.343) (0.344) (0.561) (0.551) (0.557) (0.542) (0.354) (0.357) (0.363) (0.363) K/L (0.306) (0.302) (0.318) (0.314) (0.585) (0.579) (0.584) (0.570) (0.442) (0.433) (0.452) (0.444) H/L * (0.534) (0.543) (0.557) (0.562) (0.879) (0.885) (0.881) (0.873) (0.883) (0.916) (0.922) (0.944) N/L (0.519) (0.514) (0.522) (0.513) (1.431) (1.434) (1.457) (1.460) (0.592) (0.587) (0.597) (0.589) K/L K intensity 2.352** 2.484** 2.782** 2.947*** 3.012* 3.641** 3.868** 4.155** (0.945) (0.947) (1.064) (1.091) (1.519) (1.579) (1.645) (1.749) (2.638) (2.603) (2.631) (2.586) H/L H intensity 0.830** 0.841*** 0.812** 0.811** * * 1.009* (0.315) (0.313) (0.318) (0.318) (0.680) (0.675) (0.674) (0.656) (0.561) (0.572) (0.573) (0.581) N/L N intensity 0.110* ** 0.128** *** 1.262*** 1.422*** 1.411*** (0.061) (0.060) (0.063) (0.063) (0.076) (0.077) (0.076) (0.079) (0.295) (0.295) (0.302) (0.300) Controls Country, industry and year fixed effects Fixed effects for country*industry pairs, year fixed effect R squared # observations 31,971 31,971 31,971 31,971 15,800 15,314 15,800 15,314 31,971 31,971 31,971 31,971 # countries Joint significance test Wald test on β 0 + β1 Prob > F The dependent variable is the log of exports to the world by 3-digit ISIC sector, See Manova (2008) and legend to Table 2 for definitions. All sectoral variables have been centred around their respective mean. Regressions 1-8 include a constant term, country, year and industry fixed effects. Regressions 9-12 include a constant term, year fixed effects and fixed effects for country*industry pairs. In regressions 1-4 and 9-12 we include all 70 countries for which factor endowments data is available. In regressions 5-8 we include only those 33 out of 70 countries where the respective indicator changed from zero to a positive value during the observation period. Standard errors are clustered at the country level and are reported in parentheses. ***, **, *, indicate significance at the 1%, 5%, and 10% level. 1

13 PREVIOUS DISCUSSION PAPERS 124 Defever, Fabrice and Suedekum, Jens, Financial Liberalization and the Relationship- Specificity of Exports, December Bauernschuster, Stefan, Falck, Oliver, Heblich, Stephan and Suedekum, Jens, Why Are Educated and Risk-Loving Persons More Mobile Across Regions?, December Hottenrott, Hanna and Lopes-Bento, Cindy, Quantity or Quality? Knowledge Alliances and their Effects on Patenting, December Hottenrott, Hanna and Lopes-Bento, Cindy, (International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes, December Giesen, Kristian and Suedekum, Jens, City Age and City Size, November Trax, Michaela, Brunow, Stephan and Suedekum, Jens, Cultural Diversity and Plant- Level Productivity, November Manasakis, Constantine and Vlassis, Minas, Downstream Mode of Competition With Upstream Market Power, November Sapi, Geza and Suleymanova, Irina, Consumer Flexibility, Data Quality and Targeted Pricing, November Hinloopen, Jeroen, Müller, Wieland and Normann, Hans-Theo, Output Commitment Through Product Bundling: Experimental Evidence, November Forthcoming in: European Economic Review. 115 Baumann, Florian, Denter, Philipp and Friehe Tim, Hide or Show? Endogenous Observability of Private Precautions Against Crime When Property Value is Private Information, November Fan, Ying, Kühn, Kai-Uwe and Lafontaine, Francine, Financial Constraints and Moral Hazard: The Case of Franchising, November Aguzzoni, Luca, Argentesi, Elena, Buccirossi, Paolo, Ciari, Lorenzo, Duso, Tomaso, Tognoni, Massimo and Vitale, Cristiana, They Played the Merger Game: A Retrospective Analysis in the UK Videogames Market, October Myrseth, Kristian Ove R., Riener, Gerhard and Wollbrant, Conny, Tangible Temptation in the Social Dilemma: Cash, Cooperation, and Self-Control, October Hasnas, Irina, Lambertini, Luca and Palestini, Arsen, Open Innovation in a Dynamic Cournot Duopoly, October Baumann, Florian and Friehe, Tim, Competitive Pressure and Corporate Crime, September Böckers, Veit, Haucap, Justus and Heimeshoff, Ulrich, Benefits of an Integrated European Electricity Market, September 2013.

14 108 Normann, Hans-Theo and Tan, Elaine S., Effects of Different Cartel Policies: Evidence from the German Power-Cable Industry, September Forthcoming in: Industrial and Corporate Change. 107 Haucap, Justus, Heimeshoff, Ulrich, Klein, Gordon J., Rickert, Dennis and Wey, Christian, Bargaining Power in Manufacturer-Retailer Relationships, September Baumann, Florian and Friehe, Tim, Design Standards and Technology Adoption: Welfare Effects of Increasing Environmental Fines when the Number of Firms is Endogenous, September Jeitschko, Thomas D., NYSE Changing Hands: Antitrust and Attempted Acquisitions of an Erstwhile Monopoly, August Böckers, Veit, Giessing, Leonie and Rösch, Jürgen, The Green Game Changer: An Empirical Assessment of the Effects of Wind and Solar Power on the Merit Order, August Haucap, Justus and Muck, Johannes, What Drives the Relevance and Reputation of Economics Journals? An Update from a Survey among Economists, August Jovanovic, Dragan and Wey, Christian, Passive Partial Ownership, Sneaky Takeovers, and Merger Control, August Haucap, Justus, Heimeshoff, Ulrich, Klein, Gordon J., Rickert, Dennis and Wey, Christian, Inter-Format Competition Among Retailers The Role of Private Label Products in Market Delineation, August Normann, Hans-Theo, Requate, Till and Waichman, Israel, Do Short-Term Laboratory Experiments Provide Valid Descriptions of Long-Term Economic Interactions? A Study of Cournot Markets, July Forthcoming in: Experimental Economics. 99 Dertwinkel-Kalt, Markus, Haucap, Justus and Wey, Christian, Input Price Discrimination (Bans), Entry and Welfare, June Aguzzoni, Luca, Argentesi, Elena, Ciari, Lorenzo, Duso, Tomaso and Tognoni, Massimo, Ex-post Merger Evaluation in the UK Retail Market for Books, June Caprice, Stéphane and von Schlippenbach, Vanessa, One-Stop Shopping as a Cause of Slotting Fees: A Rent-Shifting Mechanism, May Published in: Journal of Economics and Management Strategy, 22 (2013), pp Wenzel, Tobias, Independent Service Operators in ATM Markets, June Forthcoming in: Scottish Journal of Political Economy. 95 Coublucq, Daniel, Econometric Analysis of Productivity with Measurement Error: Empirical Application to the US Railroad Industry, June Coublucq, Daniel, Demand Estimation with Selection Bias: A Dynamic Game Approach with an Application to the US Railroad Industry, June Baumann, Florian and Friehe, Tim, Status Concerns as a Motive for Crime?, April Jeitschko, Thomas D. and Zhang, Nanyun, Adverse Effects of Patent Pooling on Product Development and Commercialization, April 2013.

15 91 Baumann, Florian and Friehe, Tim, Private Protection Against Crime when Property Value is Private Information, April Published in: International Review of Law and Economics, 35 (2013), pp Baumann, Florian and Friehe, Tim, Cheap Talk About the Detection Probability, April Forthcoming in: International Game Theory Review. 89 Pagel, Beatrice and Wey, Christian, How to Counter Union Power? Equilibrium Mergers in International Oligopoly, April Jovanovic, Dragan, Mergers, Managerial Incentives, and Efficiencies, April Heimeshoff, Ulrich and Klein Gordon J., Bargaining Power and Local Heroes, March Bertschek, Irene, Cerquera, Daniel and Klein, Gordon J., More Bits More Bucks? Measuring the Impact of Broadband Internet on Firm Performance, February Forthcoming in: Information Economics and Policy. 85 Rasch, Alexander and Wenzel, Tobias, Piracy in a Two-Sided Software Market, February Published in: Journal of Economic Behavior & Organization, 88 (2013), pp Bataille, Marc and Steinmetz, Alexander, Intermodal Competition on Some Routes in Transportation Networks: The Case of Inter Urban Buses and Railways, January Haucap, Justus and Heimeshoff, Ulrich, Google, Facebook, Amazon, ebay: Is the Internet Driving Competition or Market Monopolization?, January Forthcoming in: International Economics and Economic Policy. 82 Regner, Tobias and Riener, Gerhard, Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment, December Dertwinkel-Kalt, Markus and Wey, Christian, The Effects of Remedies on Merger Activity in Oligopoly, December Baumann, Florian and Friehe, Tim, Optimal Damages Multipliers in Oligopolistic Markets, December Duso, Tomaso, Röller, Lars-Hendrik and Seldeslachts, Jo, Collusion through Joint R&D: An Empirical Assessment, December Forthcoming in: The Review of Economics and Statistics. 78 Baumann, Florian and Heine, Klaus, Innovation, Tort Law, and Competition, December Forthcoming in: Journal of Institutional and Theoretical Economics. 77 Coenen, Michael and Jovanovic, Dragan, Investment Behavior in a Constrained Dictator Game, November Gu, Yiquan and Wenzel, Tobias, Strategic Obfuscation and Consumer Protection Policy in Financial Markets: Theory and Experimental Evidence, November Forthcoming in: Journal of Industrial Economics under the title Strategic Obfuscation and Consumer Protection Policy.

16 75 Haucap, Justus, Heimeshoff, Ulrich and Jovanovic, Dragan, Competition in Germany s Minute Reserve Power Market: An Econometric Analysis, November Forthcoming in: The Energy Journal. 74 Normann, Hans-Theo, Rösch, Jürgen and Schultz, Luis Manuel, Do Buyer Groups Facilitate Collusion?, November Riener, Gerhard and Wiederhold, Simon, Heterogeneous Treatment Effects in Groups, November Berlemann, Michael and Haucap, Justus, Which Factors Drive the Decision to Boycott and Opt Out of Research Rankings? A Note, November Muck, Johannes and Heimeshoff, Ulrich, First Mover Advantages in Mobile Telecommunications: Evidence from OECD Countries, October Karaçuka, Mehmet, Çatik, A. Nazif and Haucap, Justus, Consumer Choice and Local Network Effects in Mobile Telecommunications in Turkey, October Published in: Telecommunications Policy, 37 (2013), pp Clemens, Georg and Rau, Holger A., Rebels without a Clue? Experimental Evidence on Partial Cartels, April 2013 (First Version October 2012). 68 Regner, Tobias and Riener, Gerhard, Motivational Cherry Picking, September Fonseca, Miguel A. and Normann, Hans-Theo, Excess Capacity and Pricing in Bertrand-Edgeworth Markets: Experimental Evidence, September Published in: Journal of Institutional and Theoretical Economics, 169 (2013), pp Riener, Gerhard and Wiederhold, Simon, Team Building and Hidden Costs of Control, September Fonseca, Miguel A. and Normann, Hans-Theo, Explicit vs. Tacit Collusion The Impact of Communication in Oligopoly Experiments, August Published in: European Economic Review, 56 (2012), pp Jovanovic, Dragan and Wey, Christian, An Equilibrium Analysis of Efficiency Gains from Mergers, July Dewenter, Ralf, Jaschinski, Thomas and Kuchinke, Björn A., Hospital Market Concentration and Discrimination of Patients, July Von Schlippenbach, Vanessa and Teichmann, Isabel, The Strategic Use of Private Quality Standards in Food Supply Chains, May Published in: American Journal of Agricultural Economics, 94 (2012), pp Sapi, Geza, Bargaining, Vertical Mergers and Entry, July Jentzsch, Nicola, Sapi, Geza and Suleymanova, Irina, Targeted Pricing and Customer Data Sharing Among Rivals, July Published in: International Journal of Industrial Organization, 31 (2013), pp Lambarraa, Fatima and Riener, Gerhard, On the Norms of Charitable Giving in Islam: A Field Experiment, June Duso, Tomaso, Gugler, Klaus and Szücs, Florian, An Empirical Assessment of the 2004 EU Merger Policy Reform, June Published in: Economic Journal, 123 (2013), F596-F619.

17 57 Dewenter, Ralf and Heimeshoff, Ulrich, More Ads, More Revs? Is there a Media Bias in the Likelihood to be Reviewed?, June Böckers, Veit, Heimeshoff, Ulrich and Müller Andrea, Pull-Forward Effects in the German Car Scrappage Scheme: A Time Series Approach, June Kellner, Christian and Riener, Gerhard, The Effect of Ambiguity Aversion on Reward Scheme Choice, June De Silva, Dakshina G., Kosmopoulou, Georgia, Pagel, Beatrice and Peeters, Ronald, The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs, June Published in: Review of Industrial Organization, 41 (2013), pp Benndorf, Volker and Rau, Holger A., Competition in the Workplace: An Experimental Investigation, May Haucap, Justus and Klein, Gordon J., How Regulation Affects Network and Service Quality in Related Markets, May Published in: Economics Letters, 117 (2012), pp Dewenter, Ralf and Heimeshoff, Ulrich, Less Pain at the Pump? The Effects of Regulatory Interventions in Retail Gasoline Markets, May Böckers, Veit and Heimeshoff, Ulrich, The Extent of European Power Markets, April Barth, Anne-Kathrin and Heimeshoff, Ulrich, How Large is the Magnitude of Fixed- Mobile Call Substitution? - Empirical Evidence from 16 European Countries, April Herr, Annika and Suppliet, Moritz, Pharmaceutical Prices under Regulation: Tiered Co-payments and Reference Pricing in Germany, April Haucap, Justus and Müller, Hans Christian, The Effects of Gasoline Price Regulations: Experimental Evidence, April Stühmeier, Torben, Roaming and Investments in the Mobile Internet Market, March Published in: Telecommunications Policy, 36 (2012), pp Graf, Julia, The Effects of Rebate Contracts on the Health Care System, March 2012, Forthcoming in: The European Journal of Health Economics. 44 Pagel, Beatrice and Wey, Christian, Unionization Structures in International Oligopoly, February Published in: Labour: Review of Labour Economics and Industrial Relations, 27 (2013), pp Gu, Yiquan and Wenzel, Tobias, Price-Dependent Demand in Spatial Models, January Published in: B. E. Journal of Economic Analysis & Policy, 12 (2012), Article Barth, Anne-Kathrin and Heimeshoff, Ulrich, Does the Growth of Mobile Markets Cause the Demise of Fixed Networks? Evidence from the European Union, January Stühmeier, Torben and Wenzel, Tobias, Regulating Advertising in the Presence of Public Service Broadcasting, January Published in: Review of Network Economics, 11/2 (2012), Article 1.

18 40 Müller, Hans Christian, Forecast Errors in Undisclosed Management Sales Forecasts: The Disappearance of the Overoptimism Bias, December Gu, Yiquan and Wenzel, Tobias, Transparency, Entry, and Productivity, November Published in: Economics Letters, 115 (2012), pp Christin, Clémence, Entry Deterrence Through Cooperative R&D Over-Investment, November Published in: Louvain Economic Review, 79/2 (2013), pp Haucap, Justus, Herr, Annika and Frank, Björn, In Vino Veritas: Theory and Evidence on Social Drinking, November The theoretical part of this paper is forthcoming as: Haucap/Herr, A Note on Social Drinking: In Vino Veritas, European Journal of Law and Economics, and the empirical part is forthcoming as: Frank/Haucap/Herr, Social Drinking Versus Administering Alcohol, Economic Inquiry. 36 Barth, Anne-Kathrin and Graf, Julia, Irrationality Rings! Experimental Evidence on Mobile Tariff Choices, November Jeitschko, Thomas D. and Normann, Hans-Theo, Signaling in Deterministic and Stochastic Settings, November Published in: Journal of Economic Behavior and Organization, 82 (2012), pp Christin, Cémence, Nicolai, Jean-Philippe and Pouyet, Jerome, The Role of Abatement Technologies for Allocating Free Allowances, October Keser, Claudia, Suleymanova, Irina and Wey, Christian, Technology Adoption in Markets with Network Effects: Theory and Experimental Evidence, October Published in: Information Economics and Policy, 24 (2012), pp Çatik, A. Nazif and Karaçuka, Mehmet, The Bank Lending Channel in Turkey: Has it Changed after the Low Inflation Regime?, September Published in: Applied Economics Letters, 19 (2012), pp Hauck, Achim, Neyer, Ulrike and Vieten, Thomas, Reestablishing Stability and Avoiding a Credit Crunch: Comparing Different Bad Bank Schemes, August Suleymanova, Irina and Wey, Christian, Bertrand Competition in Markets with Network Effects and Switching Costs, August Published in: B. E. Journal of Economic Analysis & Policy, 11 (2011), Article Stühmeier, Torben, Access Regulation with Asymmetric Termination Costs, July Published in: Journal of Regulatory Economics, 43 (2013), pp Dewenter, Ralf, Haucap, Justus and Wenzel, Tobias, On File Sharing with Indirect Network Effects Between Concert Ticket Sales and Music Recordings, July Published in: Journal of Media Economics, 25 (2012), pp Von Schlippenbach, Vanessa and Wey, Christian, One-Stop Shopping Behavior, Buyer Power, and Upstream Merger Incentives, June Balsmeier, Benjamin, Buchwald, Achim and Peters, Heiko, Outside Board Memberships of CEOs: Expertise or Entrenchment?, June Clougherty, Joseph A. and Duso, Tomaso, Using Rival Effects to Identify Synergies and Improve Merger Typologies, June Published in: Strategic Organization, 9 (2011), pp

19 24 Heinz, Matthias, Juranek, Steffen and Rau, Holger A., Do Women Behave More Reciprocally than Men? Gender Differences in Real Effort Dictator Games, June Published in: Journal of Economic Behavior and Organization, 83 (2012), pp Sapi, Geza and Suleymanova, Irina, Technology Licensing by Advertising Supported Media Platforms: An Application to Internet Search Engines, June Published in: B. E. Journal of Economic Analysis & Policy, 11 (2011), Article Buccirossi, Paolo, Ciari, Lorenzo, Duso, Tomaso, Spagnolo Giancarlo and Vitale, Cristiana, Competition Policy and Productivity Growth: An Empirical Assessment, May Published in: The Review of Economics and Statistics, 95 (2013), pp Karaçuka, Mehmet and Çatik, A. Nazif, A Spatial Approach to Measure Productivity Spillovers of Foreign Affiliated Firms in Turkish Manufacturing Industries, May Published in: The Journal of Developing Areas, 46 (2012), pp Çatik, A. Nazif and Karaçuka, Mehmet, A Comparative Analysis of Alternative Univariate Time Series Models in Forecasting Turkish Inflation, May Published in: Journal of Business Economics and Management, 13 (2012), pp Normann, Hans-Theo and Wallace, Brian, The Impact of the Termination Rule on Cooperation in a Prisoner s Dilemma Experiment, May Published in: International Journal of Game Theory, 41 (2012), pp Baake, Pio and von Schlippenbach, Vanessa, Distortions in Vertical Relations, April Published in: Journal of Economics, 103 (2011), pp Haucap, Justus and Schwalbe, Ulrich, Economic Principles of State Aid Control, April Forthcoming in: F. Montag & F. J. Säcker (eds.), European State Aid Law: Article by Article Commentary, Beck: München Haucap, Justus and Heimeshoff, Ulrich, Consumer Behavior towards On-net/Off-net Price Differentiation, January Published in: Telecommunication Policy, 35 (2011), pp Duso, Tomaso, Gugler, Klaus and Yurtoglu, Burcin B., How Effective is European Merger Control? January Published in: European Economic Review, 55 (2011), pp Haigner, Stefan D., Jenewein, Stefan, Müller, Hans Christian and Wakolbinger, Florian, The First shall be Last: Serial Position Effects in the Case Contestants evaluate Each Other, December Published in: Economics Bulletin, 30 (2010), pp Suleymanova, Irina and Wey, Christian, On the Role of Consumer Expectations in Markets with Network Effects, November Published in: Journal of Economics, 105 (2012), pp Haucap, Justus, Heimeshoff, Ulrich and Karaçuka, Mehmet, Competition in the Turkish Mobile Telecommunications Market: Price Elasticities and Network Substitution, November Published in: Telecommunications Policy, 35 (2011), pp Dewenter, Ralf, Haucap, Justus and Wenzel, Tobias, Semi-Collusion in Media Markets, November Published in: International Review of Law and Economics, 31 (2011), pp

20 10 Dewenter, Ralf and Kruse, Jörn, Calling Party Pays or Receiving Party Pays? The Diffusion of Mobile Telephony with Endogenous Regulation, October Published in: Information Economics and Policy, 23 (2011), pp Hauck, Achim and Neyer, Ulrike, The Euro Area Interbank Market and the Liquidity Management of the Eurosystem in the Financial Crisis, September Haucap, Justus, Heimeshoff, Ulrich and Schultz, Luis Manuel, Legal and Illegal Cartels in Germany between 1958 and 2004, September Published in: H. J. Ramser & M. Stadler (eds.), Marktmacht. Wirtschaftswissenschaftliches Seminar Ottobeuren, Volume 39, Mohr Siebeck: Tübingen 2010, pp Herr, Annika, Quality and Welfare in a Mixed Duopoly with Regulated Prices: The Case of a Public and a Private Hospital, September Published in: German Economic Review, 12 (2011), pp Blanco, Mariana, Engelmann, Dirk and Normann, Hans-Theo, A Within-Subject Analysis of Other-Regarding Preferences, September Published in: Games and Economic Behavior, 72 (2011), pp Normann, Hans-Theo, Vertical Mergers, Foreclosure and Raising Rivals Costs Experimental Evidence, September Published in: The Journal of Industrial Economics, 59 (2011), pp Gu, Yiquan and Wenzel, Tobias, Transparency, Price-Dependent Demand and Product Variety, September Published in: Economics Letters, 110 (2011), pp Wenzel, Tobias, Deregulation of Shopping Hours: The Impact on Independent Retailers and Chain Stores, September Published in: Scandinavian Journal of Economics, 113 (2011), pp Stühmeier, Torben and Wenzel, Tobias, Getting Beer During Commercials: Adverse Effects of Ad-Avoidance, September Published in: Information Economics and Policy, 23 (2011), pp Inderst, Roman and Wey, Christian, Countervailing Power and Dynamic Efficiency, September Published in: Journal of the European Economic Association, 9 (2011), pp