Uwe Walz

Convertible securities and optimal exit decisions in venture capital finance

We study the interaction between exit decisions and contract design in venture capital finance. One of the main characteristics of venture capital funds is that they need to divest their holdings in the portfolio firms after a limited period of time. However, venture capitalists and entrepreneurs often have diverging interests with respect to different exit solutions (e.g., IPOs or trade sales). We show that with convertible securities, the ex-ante agreed optimal exit policy can be implemented. Thereby, we give an explanation for the widespread use of convertible securities in venture capital finance.

Transport costs, intermediate goods, and localized growth

This paper presents a dynamic, two-region general equilibrium model in which inter-regional production and trade patterns are endogenously determined. Localized growth stems from geographical concentration of an industrial sector exhibiting permanent productivity increases. Geographical concentration is due to the interaction of the size of local markets and local competition in the differentiated input industry. Regional factor endowment with an immobile factor is decisive for long-run specialization, trade and growth patterns between regions if large endowment differences prevail. With equally-sized regions, multiple equilibria exist. Furthermore, the paper finds that integration might lead to increasing regional concentration of production and growth.

Why do rich countries prefer free trade over free migration? The role of the modern welfare state

According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers.

Is free trade in the interest of exporting countries when there is ecological dumping

Abstract Given conditions of oligopolistic competition, the coordinated ban of direct export-promoting policies (e.g. in the EU or by GATT) increases the income of exporting countries. However, in the presence of environmental distortions, free trade can lead to ecological dumping in exporting countries. The question arises if free trade is still in the interest of exporting countries. We show that welfare-maximizing governments of exporting countries prefer free trade even if countries subsidize their local industries indirectly via ecological dumping. The existence of further national policy instruments does not make free trade agreements obsolete.

Innovation, Foreign Direct Investment and Growth

Direct foreign investment is incorporated in a dynamic general equilibrium model with endogenous technological change. In contrast to recent endogenous growth approaches, the author allows for geographical separation of the innovation and production of newly developed goods. Firms acquire specific knowledge through R&D investment in the more developed country and use their specific asset to establish a production plant in the low-cost country. Foreign direct investment is accompanied by interregional spillovers of knowledge from the more to the less advanced country. The author derives a steady-state equilibrium with active innovation and production activities in the high-technology sector in both countries. Furthermore, the implications of factor flow liberalization as well as of industrial policies are investigated. Copyright 1997 by The London School of Economics and Political Science

Dynamics of Regional Integration

Introduction: The Issues Objectives and Method Organization.- Empirical Observations: European Regions Technology, Geography, and Growth Summary.- Literature Overview: Static Models Growth and International Integration.- Growth and Economic Geography: The Basic Elements A Two-Country Model Short-Run Equilibrium The Steady-State Physical Capital Appendix Summary.- Deeper Regional Integration: Liberalization in a Two-Country Setting Regional Integration as Partial Liberalization Regional and Harmonized Policies Summary.- Enlarging the Integration Bloc: Integrating a Lagging Country Integrating a Developed Country Leapfrogging through Integration Summary.- General Summary.

Does an enlargement of a common market stimulate growth and convergence

Abstract We address the effects of a step-wise enlargement of a common market from two to three countries by using a three-country endogenous growth model. We show that integration of a third, technologically lagging country via trade liberalization causes a reallocation of resources which stimulates overall growth. Liberalizing trade with the third country leads to income convergence between the two established countries. Furthermore, we look at the impact of a liberalization of factor markets.

Dynamic Effects of Economic Integration: A Survey

This review article discusses recent models investigating the long-run effects of economic integration. Using endogenous growth approaches this literature looks at the channels through which integration policies (trade liberalization, liberalization of factor mobility, free flow of technological knowledge, etc.) might change the long-run growth rates and specialization patterns of countries involved. We distinguish between international integration, referring to the integration of a country in the world economy, and regional integration, i.e., the formation of regional integration blocs.

Erlösquellen und preismodelle für den business-to-consumer-bereich im internet

This article discusses revenue sources and pricing models for business-to-consumer electronic commerce. We outline why revenue sources and pricing models should be separated, how pricing models can contribute to strategic and tactic goals and which pricing models the Internet facilitates mostly. Thereby, we discuss the different forms of price discrimination and the possibilities of interactive pricing models.

Growth and Deeper Regional Integration in a Three-Country Model

An endogenous growth model of three countries is used to investigate the dynamic effects of deeper economic integration between two countries in the presence of an outside world. The paper looks at the long-run effects of inner-union trade liberalization, the unions external trade policy, and of the relaxation of the inner-union barriers to migration. It is shown that regional integration via inner-union trade liberalization can lead very well to a decline of the steady-state growth rates. Copyright 1997 by Blackwell Publishing Ltd.