Rudolf Kerschbamer

Theoretically Robust But Empirically Invalid? An Experimental Investigation into Tax Equivalence

The idea that the final distribution of the tax burden (economic incidence) does not depend on the initial distribution of tax liabilities (statutory incidence) is referred to as the Liability Side Equivalence principle. This paper tests this principle in the laboratory and finds that subjects who actually have to pay the tax carry a higher tax burden. It is argued that this violation of Liability Side Equivalence is due to the fact that a change in the distribution of tax liabilities induces a shift in behaviorally relevant social norms. This shift, in turn, affects the impact of the tax. Our results explain some striking empirical observations and have important theoretical and practical implications.(This abstract was borrowed from another version of this item.)

Voluntary contributions when the public good is not necessarily normal

We argue that there are interesting examples of privately provided public goods that do not satisfy the assumption of strict normality, and reconsider voluntary-contribution games in a more general framework. We show that, in general, (1) equalizing transfers between individuals with identical tastes can increase total supply of the public good, and (2) more of the public good can be supplied if agents move sequentially rather than simultaneously. These results are in sharp contrast to earlier conclusions derived in the literature under the assumption of strict normality.

Optimal Control of Upstream Pollution Under Asymmetric Information

This paper derives optimal bribes to reduce upstream transfrontieremissions in the presence of asymmetric information on the pollutersconcern for the environment. In a model in which the starting point forthe negotiations on emission reduction is a Cournot-Nash equilibrium, itis shown that transfers from the victim induce the polluting country toexaggerate its concern for the environment. As a consequence, in thesecond best solution, abatement of all but the least caring type isdistorted downward and optimal bribes may be such that more caring typesturn them down. These results are in sharp contrast to earlier policyproposals derived for a non-equilibrium starting point. They indicatethat under asymmetric information the binding incentive problem is toprevent the polluting country from claiming not to care about theenvironment and that optimal bribes from the victim should be restrictedto sufficiently environmentally concerned polluters. Copyright Kluwer Academic Publishers 2001

Information Revelation via Takeovers in Correlated Environments

This paper studies the informational content of takeover bids in correlated environments and provides an explanation for the empirical result that industry rivals of takeover targets exhibit positive share-price reactions on the announcement of a bid.