To connect or not to connect? A tale of network access

switchboard

If I call your Vodafone mobile from my Orange mobile, who should pay the cost of termination incurred by Vodafone? You, me, Orange or Vodafone? For that matter, which has the better business model – Europe with a “caller pays” system, or the US with an “everyone pays” system? Sjaak Hurkens and Angel L. López analyze an oligopoly of telecom networks to show how termination charges play a role in off-network usage and whether efficiency and profitability are achieved with current business models.

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How to measure conflict?

conflict

If 1000 people were killed in conflict India, a country with a population of more than 1.2 billion inhabitants, would this have the same impact on the country as a whole as 1000 victims in Nicaragua, a country of 6 million inhabitants? The intuitive answer might be no, but this is exactly what most of the conflict literature is doing. Hannes Mueller makes a case for rethinking the approach of using a threshold of an absolute number of battle victims.

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Financial bubbles exist

bubbles

In the economy we observe stock price booms and busts. How do these cycles come about, could there be a way of smoothing them and, in that case, should we? Klaus Adam, Johannes Beutel, and Albert Marcet show that a very simple model of stock prices can explain very well the stock price volatility found in the data assuming that investors do not understand perfectly well how prices are formed.

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The culture of effort and the US-EU divide in labour market and firm-level outcomes

Barcelona GSE research on VoxEU.org by Alessandra Bonfiglioli and Gino Gancia

Differences in labour market and firm statistics between the US and Europe are easy to dismiss as cultural. This column applies an equilibrium model of worker screening and effort to cross-country data, showing that a large chunk of observed differences can be explained by the strategic interaction between firm and worker strategies. Evidence suggests that the US is in a high-screening, high-effort equilibrium, while southern Europe is in the complementary equilibrium. Perhaps culture is more economic than we might assume.

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