Work in Progress

The Impact of Bidding Wars on the Optimal Investment Decisions of Multi-Establishment Firms
Working Paper
with Pierre-Henri Morand

Abstract

This paper studies the competition between regions to attract a firm’s investment. An important takeaway from earlier papers is that such bidding wars can improve welfare by allocating new plants to the regions that value them the most. By explicitly modeling endogenous investment choice as a multi-unit auction, we show that the firm strategically chooses an investment allocation different from the profit-maximising allocation. Specifically, the firm invests more and differentiates the plants, in turn increasing subsidies. Despite these distortions, such a bidding war retains the welfare-maximising properties of simpler models. In addition, it implements the optimal mechanism from the viewpoint of the firm.

Investment in Public Infrastructure and Regional Bidding Wars for Multi-Establishment Firms
with Pierre-Henri Morand

Break-Ups of Municipal Health Centre Federations: Effects on Cost, Efficiency, and Quality of Services
with Mika Kortelainen, Kalevi Luoma, and Antti Moisio

Abstract

Empirical evidence on economies of scale in healthcare is mostly based on the cost effects of hospital mergers. In contrast to earlier studies, this paper approaches the economies of scale issue by analyzing the secessions of Finnish healthcare districts, which are responsible for providing primary health care services to the residents of their member municipalities. We use the difference-in-difference approach to evaluate the impacts of healthcare district secessions on costs, productivity and quality of primary healthcare services in Finland between 1990 and 2003. To address potential non-random or endogenous treatment assignment of secessions, we also utilize propensity score difference-in-difference approach. Our results show that primary healthcare costs have grown considerably faster for the seceded healthcare districts than for the non-seceded ones, while outputs have increased somewhat more for the former than for the latter group. Interestingly, we find the impact of secessions to be insignificant on the productive efficiency of healthcare districts. Our results regarding the impact on quality of primary healthcare services indicate the effects of secessions to be also quite small.

How Does the Pension System Affect Politicians’ Motivations?
with Mickael Melki

Cooperative Behaviour of Minorities and Majorities in a Federal System: Experimental Evidence
with Tjasa Bjedov, Thierry Madies, and David Masclet