Stefan Lutz

• PhD Economics
• Professor at Media University of Applied Sciences

Empirical evidence on the benefits of international ownership for small and medium‐sized enterprises (SMEs) financial performance is either not available for most African and Middle Eastern countries or presents mixed results. In this paper, we investigate this further by examining the effects of ownership structure on firm performance, using finan...

Empirical evidence suggests that lack of access to financing is a major constraint to performance of female-owned firms in most countries. Firm performance, financing structure, and constraints have been well explored in the case of firms in developed economies but remain understudied in the case of firms in developing countries, especially in Afri...

This paper aims at filling existing research by examining the impact of corporate governance and ownership structure on firm performance using cross-sectional data from companies in the MENA region for the years 2009-2013. The results indicate that higher ownership concentration is associated with higher returns. Furthermore, firms with higher inte...

Empirical evidence suggests that lack of access to financing is a major constraint to performance by female-owned firms in most countries. Firm performance, financing structure, and constraints have been well explored for firms in developed economies but this is not the case for firms in developing economies, especially in Africa and the Middle-Eas...

Empirical evidence suggests that lack of access to financing is a major constraint to performance by female-owned firms in most countries. Firm performance, financing structure, and constraints have been well explored for firms in developed economies but this is not the case for firms in developing economies, especially in Africa and the Middle-Eas...

Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for th...

International taxation rules for multi-national enterprises (MNEs) prescribe that international prices for goods and services between different subsidiaries – and therefore incomes of these subsidiaries - must be comparable to those set between independent international firms for the purpose of taxation. These rules also prescribe that risk should...

The paper studies duopolistic competition when firms face fixed quality-dependent costs of production and one of the two firms targets (at least in the long run) welfare maximization. We show that mixed oligopoly is in general socially desirable compared with a private duopoly regardless of the type of competition in the short run and the equilibri...

Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intellectual property (IP) and IP commands a return that increases overall profits of the firm. This hypothesis is investigated for the North American automotive supplier indus...

Important determinants of multinational firms’ choice of location include, besides resource cost and infrastructure, the taxation regime through its effects on international pricing and profits. This paper investigates the effects of tax rates on firms’ profits and financing decisions by analyzing a panel of several hundred thousand European firms...

Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intellectual property (IP) and IP commands a return that increases overall profits of the firm. This hypothesis is investigated for the North American automotive supplier indus...

In a model of vertical product differentiation, duopolistic firms face qualitydependent costs and compete in quality and price in two segmented markets. Minimum quality standards, set according to the principle of Mutual Recognition, can be used to increase welfare. The results of the one-shot game suggest that standards achieve initial convergence...

Valuing a multi-national enterprise (MNE) using the discounted cash flow method (DCF) requires the joint determination of the market value of its equity (MVE) together with the equity risk premium (ERP) the firm should earn, since the latter is part of the discount rate used in the calculation of the MVE. This paper presents a theoretical derivatio...

Important determinants of multinational firms’ choice of location include, besides resource cost and infrastructure, the taxation regime through its effects on international pricing and profits. This paper investigates the effects of tax rates on firms’ profits and financing decisions by analyzing a panel of several hundred thousand European...

The CAPM implies that investors require equity risk premia when choosing risky investments and therefore demand higher returns to equity invested if higher risk is present. This should apply to investments in independent enterprises and multi-national enterprises alike. This hypothesis is investigated by analyzing a panel of 407,000 European firms...

Important determinants of multinational firms’ choice of location include, besides resource cost and infrastructure, the taxation regime through its effects on international pricing and profits. This paper investigates the effects of tax rates on firms’ profits and financing decisions by analyzing a panel of several hundred thousand European firms...

The CAPM implies that investors require equity risk premia when choosing risky investments and therefore demand higher returns to equity invested if higher risk is present. This should apply to investments in independent enterprises and multi-national enterprises alike. This hypothesis is investigated by analyzing a panel of 407,000 European firms...

Valuing a firm using the discounted cash flow method (DCF) requires the joint determination of the market value of its equity (MVE) together with the equity risk premium (ERP) the firm should earn, since the latter is part of the discount rate used in the calculation of the MVE. This paper presents a theoretical derivation of how MVE and ERP can be...

Valuing a firm using the discounted cash flow method (DCF) requires the joint determination of the market value of its equity (MVE) together with the equity risk premium (ERP) the firm should earn, since the latter is part of the discount rate used in the calculation of the MVE. This paper presents a theoretical derivation of how MVE and ERP can be...

A private and a public firm face fixed quality-dependent costs of production and compete first in quality and then either in prices or in quantities. In the long run, the public firm targets welfare maximization, whereas the private firm maximizes profits. In the short run, both firms compete in prices or quantities to maximize profits. Mixed compe...

We present a model of vertical product differentiation and exit where a domestic and a foreign firm face fixed setup costs and quality-dependent costs of production and compete in quality and price in the domestic market. Quality-dependent costs are quadratic in qualities, but independent of the quantities produced. The domestic government may impo...

A private and a public firm face fixed quality-dependent costs of production and compete first in quality and then either in prices or in quantities. In the long run the public firm targets welfare maximization whereas the private firm maximizes profits. In the short run both firms compete in prices or quantities to maximize profits. Mixed competit...

International taxation rules for multi-national enterprises (MNEs) prescribe that international prices for goods and services between different subsidiaries – and therefore incomes of these subsidiaries - must be comparable to those set between independent international firms for the purpose of taxation. These rules also prescribe that risk should...

private and a public firm face fixed quality-dependent costs of production and compete first in quality and then either in prices or in quantities. In the long run the public firm targets welfare maximization whereas the private firm maximizes profits. In the short run both firms compete in prices or quantities to maximize profits. Mixed competitio...

Since price discrimination and selling below cost arise in the normal course of business and are usually legal for home firms, countering these practices by foreign firms provides a very weak rationale for antidumping duties. If antidumping duties were to provide a systematic defense against predation by foreign firms, however, a strong ''fair-trad...

As the largest economy within the EU, Germany hosts a number of multinational enterprises that conduct an increasing number of cross-border migrations of business functions. New German guidelines (Verwaltungsgrundsätze Funktionsverlagerung) concentrate on the object of a migration - the transfer package - and its profit potential. When determining...

In this paper, we use monthly data from Tunisia for the period 1972-1998 and explore the short-run causality and long-run relationship between official and black-market exchange rates (U.S. dollar/Tunisian dinar). The econometric results indicate that the two exchange rates are cointegrated, implying a stable long-run relationship between them. Fur...

Since price discrimination and selling below cost arise in the normal course of business and are usually legal for home firms, countering these practices by foreign firms provides a very weak rationale for antidumping duties. If antidumping duties were to provide a systematic defense against predation by foreign firms, however, a strong fair-trade...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

We study the influence of minimum quality standards in a two-region partial-equilibrium model of vertical product differentiation and trade. Three alternative standard setting arrangements are considered: Full Harmonization, National Treatment and Mutual Recognition. The analysis integrates the choice of a particular standard setting alternative by...

We present a model of vertical product differentiation and exit where a domestic and a foreign firm face fixed setup costs and quality-dependent costs of production and compete in quality and price in the domestic market. Quality-dependent costs are quadratic in qualities, but independent of the quantities produced. The domestic government may impo...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent-policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, costs, market size and income. In the presence of such asymmetries, national industries will either be market leaders or be lagging behind...

Investigating the effects of privatization in transition countries is the focus of a large body of current research. Generally, privatization stimulates private sector development, attracts foreign direct investment, fosters competition and contributes to the formation of stock markets. In addition, privatization may improve individual enterprises'...

We investigate the effects of regional and industrywide foreign presence and foreign direct investment (FDI) on the export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996-2000. Foreign presence through FDI may have negative competition effects on domestic firms' performance; at the same time, domestic firms' producti...

This paper analyzes the possible effects of a customs union between Ukraine and the European Union. The GTAP multi-country simulation model of Purdue University’s Center for Global Trade Analysis is applied. The welfare measure evaluated is the change in equivalent variation (EV). As all incomes in the model accrue to a representative household, EV...

Export subsidies per se may benefit a particular industry or economic sector, but they often do not improve the overall welfare of the country applying them. Nevertheless, benefits to specific sectors of an economy, such as agriculture in the EU or the US, continue to provide powerful motives for continued application of these policies. Due to curr...

As a rule, quotas and VERs harm consumers by restricting market supply while raising prices. At the same time, they generally tend to raise prices and profits of both the domestic firms and the foreign, quota-constraint firms. This is the case, since the quota acts as a facilitating device for collusion between the domestic and foreign supplier. Fo...

We report on a two-stage experiment in which i) we first elicit the social network within a section of undergraduate students and ii) we then measure their altruistic attitudes by means of a standard Dictator game. We observe that more socially integrated subjects are also more altruistic, as betweenness centrality and reciprocal degree are positiv...

Galbraith has developed an original theory on public utilities, that is analyzed and compared with other theories. In the present-day context, with an influential discourse against State intervention, we ask if the arguments of Galbraith are outdated and we show that they are always useful to the opponents to neolibe-ralism.

We present a simple general equilibrium model where one industry is oligopolistic and vertically differentiated. The manufacturing of products of a higher quality requires the employment of a larger amount of skilled labour. Given an underlying skills distribution, the model determines profits, wages and aggregate income and welfare. Results show t...

We investigate the effects of regional and industry–wide foreign presence and foreign direct investment (FDI) on export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996–2000. Foreign presence through FDI may have negative competition effects on domestic firms’ performance while, at the same time, domestic firms’ produ...

Using panel data from 39 countries, this paper examines the effects of financial deepening and openness to trade and foreign capital (FDI) on rural-urban inequality in Africa. Four estimations were performed–OLS pooled cross-section, GLS pooled cross-section, fixedeffects model and an adjusted fixed-effects specification with regional dummy terms....

I present a model of vertical product differentiation and exit where a domestic and a foreign firm face fixed setup costs and quality-dependent costs of production and compete in quality and price in the domestic market. Quality-dependent costs are quadratic in qualities, but independent of the quantities produced. The domestic government may impos...

A quota on foreign competition generally leads to quality upgrading (downgrading) of the low-quality (high-quality) firm, an increase in average quality, a reduction of quality differentiation, and a reduction of domestic consumer surplus, irrespective of whether the foreign firm produces higher or lower quality. Effects of a quota on industry prof...

During the nineties, Europe became a major recipient of FDIs but Italian regions have been largely excluded from this process. Was it due to their characteristics, or were Italian regions “doomed” by a negative country effect? In this paper we address this issue by estimating the determinants of multinational firms’ location choices in 52 EU region...

All countries are eager to attract as much foreign direct investments (FDI) as possible. At the same time FDI may have not only positive, but also negative economic effects for receiving countries. Positive effects are associated with technology transfer, efficient allocation of resources, and training of domestic workers. However, the entry of for...

Using panel data from 39 countries, this paper examines the effects of financial deepening and openness to trade and foreign capital (FDI) on rural-urban inequality in Africa. Four estimations were performed–OLS pooled cross-section, GLS pooled cross-section, fixedeffects model and an adjusted fixed-effects specification with regional dummy terms....

Using cross-sectional time series data from a large group of African countries, we examine the effects of income, institutions and social capital—with emphasis on the latter—on literacy and life expectancy. The empirical results confirm that income has a positive contribution. We also show that an improvement in institutions has positive influence...

Using cross-sectional time series data from a large group of African countries, we examine the effects of income, institutions and social capital—with emphasis on the latter—on literacy and life expectancy. The empirical results confirm that income has a positive contribution. We also show that an improvement in institutions has positive influence...

Models of vertical product differentiation allow for the analysis of international trade in the presence of country asymmetries in terms of product qualities, technology, costs, market size, and income. In the presence of such asymmetries, national industries will either be market leaders or be lagging behind in the international market place in te...

In a model of vertical product differentiation, duopolistic firms face quality-dependent costs and compete in quality and price in two segmented markets. Minimum quality standards, set according to the principle of Mutual Recognition, can be used to increase welfare. The results of the one-shot game suggest that standards achieve initial convergenc...

Even though the introduction of the Euro did not necessitate tax harmonization per se, it is expected to lead to increasingly harmonized taxation in practice. This harmonization process will mainly take the form of negotiations on the level of EMU, where political recommendations will be formulated. In addition, individual nations will be under inc...

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, costs, market size, and income. In the presence of such asymmetries, national industries will either be market leaders or be lagging behind...

This paper introduces a symmetric zoning regulation into a spatial Cournot competition model and analyzes how this intervention affects equilibrium locations and social welfare. It is shown that firms will locate separately at the two endpoints of a wide enough zoning enacted in the middle area of a linear market. This location pattern implies that...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

In 1991, Scotland paid 50.75 million pounds for Motorola to locate a mobile-phone factory employing 3,000 people. In the late 1980s, Toyota was offered an incentive package worth 125--147 million dollars in present value for a plant expected to employ 3,000 workers. Other empirical studies have found positive effects of foreign direct investment (F...

The ongoing discussion of U.S.-Japanese trade relations suggests that national differences such as in the institutional environment may be relevant for assessing international trade policies. However, economic trade theory often assumes countries to be organized around common notions of complete markets. This paper compares two alternative modes of...

A quota on foreign competition will generally lead to quality-upgrading (downgrading) of the low-quality (high-quality) firm, an increase in average quality, a reduction of quality differentiation, and a reduction of domestic consumer surplus, irrespective of whether the foreign firm produces higher or lower quality. Effects of a quota on industry...

In many markets, governments set minimum quality standards while some sellers compete on the basis of quality by exceeding them. Such quality leadership strategies often win public acclaim, especially when they involve environmental attributes. Using a duopoly model of vertical product differentiation, we show that if the high-quality firm can comm...

In a model of vertical product differentiation, duopolistic firms face quality-dependent costs and compete in quality and price in two segmented markets. Minimum quality standards, set uniformly or according to the principle of Mutual Recognition, can be used to increase welfare. The analysis includes entry deterrence by the choice of a particular...

I study the influence of minimum quality standards in a partial-equilibrium model of vertical product differentiation and trade in which duopolistic firms face quality-dependent costs and compete in quality and price in two segmented markets. Three alternative standard setting arrangements are Full Harmonization, National Treatment and Mutual Recog...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

The effect of labour costs on industry profits, employment and labour income is at the heart of the current European debate on industry competitiveness. High wages paid in European countries such as Germany are generally considered harmful for industry profitability. Though, high wages appear also to be associated with high labour skills and then w...

In many markets governments set minimum quality standards while some sellers choose to compete on the basis of quality by exceeding them. Such ‘high-quality’ strategies often win public acclaim, especially when ‘environmental friendliness’ is the dimension along which firms are differentiated. We analyse this phenomenon using a duopoly model of ver...

The answer to the question in the title is yes for the case of ad-valorem taxes, a foreign industry that produces a vertically differentiated good of higher quality, and costs that take the form of qualitydependent fixed costs for both the foreign and domestic firm. The domestic industry loses profits due to the foreign industry's lowering of produ...

In the short run, efficient financial intermediaries with small initial wealth endowments may not have a sufficient stake in the market to persuade the market of their reliability. This paper demonstrates that the most efficient information producer may emerge as a credible intermediary in the long run. The presence of an informational technology o...

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, costs, market size and income. In the presence of such asymmetries, national industries will either be market leaders or be lagging behind...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, costs, market size, and income. In the presence of such asymmetries, national industries will either be market leaders or be lagging behind...

We present the simulations of fiscal adjustment policies to the Maastricht criteria in the European economies based on a rational-expectations model of the G7 economies. We find that an effort to achieve the fiscal criteria inflicts pronounced recessions on the European economies. Furthermore, the fiscal and the inflation criteria lack consistency....

This dissertation explores the influences of minimum quality standards and of the threat of entry in a vertical product differentiation model. In the first chapter, I study the influence of minimum quality standards in a partial-equilibrium model of vertical product differentiation and trade in which duopolistic firms face quality-dependent costs a...

In a model of vertical product differentiation, duopolistic firms face quality-dependent costs and compete on quality and price in two segmented markets. Minimum quality standards, set according to the principle of Mutual Recognition, can be used to increase welfare. The results of the one-shot game suggest that standards achieve initial convergenc...

In a model of vertical product differentiation, duopolistic firms face quality-dependent costs and compete on quality and price in two segmented markets. Minimum quality standards, set uniformly or according to the principle of mutual recognition, can be used to increase welfare. The analysis includes entry deterrence by the choice of a particular...

I study the influence of minimum quality standards in a partial-equilibrium model of vertical product differentiation and trade in which duopolistic firms face quality-dependent costs and compete in quality and price in two segmented markets. Three alternative standard setting arrangements are Full Harmonization, National Treatment and Mutual Recog...

The chapter presents a broad picture of the European automotive industry and seeks to determine how competitive it is internationally and which are the sources of its competitiveness. Competitiveness is defined as the ability of an industrial sector to defend and/or gain market share in open, international markets by relying on price and/or the qua...

A quota at the free-trade level on foreign competition will generally lead to quality-upgrading of the low-quality firm, downgrading of the high-quality firm, an increase in average quality, and a reduction of domestic consumer surplus, irrespective of whether the foreign firm produces higher or lower quality. Effects of such a quota on industry pr...

Recent waves of corporate mergers have sparked new interest in economic analyses of the preconditions and consequences of increasing market concentration. Traditionally, microeconomic models analyzing the effects of mergers compare the outcome of a fixed number of mergers of some firms in the market with the status quo ante. This paper methodologic...

We present the results of simulating fiscal adjustment to the Maastricht criteria in the European economies. Simulations are based on a rational-expectations model of the G7 economies. We find that an effort to achieve the fiscal criteria inflicts pronounced recessions on the European economies, is incompatible with a return to fixed exchange rates...

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, cost, market size and income. In the presence of such asymmetries, national industries will either be market leaders or lagging behind in t...

In this paper we investigate the effects of region and industrywide spillovers from foreign direct investment (FDI) on the volumes of export of Ukrainian manufacturing firms, using (name of the data set) panel data from 1996-2000. Economic theory suggests that FDI has direct and indirect effects on firm’s performance. Our analysis focuses on the in...

The ongoing discussion of U.S.-Japanese trade relations suggests that national differences such as in the institutional environment may be relevant for assessing international trade policies. However, economic trade theory often assumes countries to be organized around common notions of complete markets. This paper compares two alternative modes of...