The dissertation explores the effect of limited contractual commitment on the form of contracts and studies its welfare implications. The main focus is on foundations of incomplete contracts. The thesis studies to what extent incompleteness of contracts can be linked to contract renegotiation. Particular emphasis is put onto explaining the absence of a contract from a relationship. Chapter 1 reviews the literature on contract renegotiation and incomplete contracting. Chapter 2 is based on a version of the hold-up problem. It shows that contracts that are vulnerable to renegotiation cannot provide better investment incentives than no contract. The main driving force is that investment, although beneficial from a total surplus point of view, has an ambivalent effect on the investing party's payoff. It increases the benefit of an efficient action and decreases the benefit of an inefficient action. An example is investment into human capital, such as additional job training. It increases personal satisfaction in a challenging job but may also increase the frustration from a job that consists only of repetitive tasks. If an exact job description is not feasible ex-ante and if the non-investing party has all the bargaining power ex-post, contracts cannot compensate for the cost of investment. Chapter 3 formalizes the intuition that contracting involves a cost because a contract constitutes a less flexible status quo for ex-post bargaining than no contract. For this, asymmetric information is introduced. With asymmetric information contracting is potentially costly because an inefficient outcome is not necessarily undone by an ex-post bargain. For example, during the renegotiation of the contract between General Motors and Fisher Body, the latter adopted a cost intensive production technology in order to convince its partner to renege on the former agreement. In the model of this chapter, parties weigh the benefit of a contract against lost flexibility. If these effects are similar, no contract is written. The possibility that a contract might be strictly dominated by no contract is explored in chapters 4 and 5. Such a strict dominance result is interesting because it is a more forceful advocate for the incomplete contract assumption. Chapter 4 contains a version of the durable good monopoly model with no discounting but costly contracting. These could be writing or legal costs. Early contracting is less costly than late contracting which highlights the idea that bargaining at a deadline is more costly. But also, early contracting suffers from the ratchet effect because it releases information. The main result says that the costs of the ratchet effect outweigh the cost savings, even if initial contracting costs are of order of magnitude smaller than late contracting costs. The seller strictly prefers to offer no contract. In chapter 5, a sequential screening model endogenizes the fixed contracting cost. The buyer is privately informed about one part of the good's value but ignores the second part, which is revealed later. Early contracting is beneficial because it suffers less from asymmetric information than does late contracting. Nevertheless, if uncertainty with respect to the first variable is greater than uncertainty with respect to the second variable, the seller cannot take advantage of this fact and he strictly prefers to wait. Moreover, if this is not the case, contracts are partially incomplete because they are not conditioned on the second variable. Finally, the thesis reports the new effect that all contracts are renegotiated in equilibrium. This is in contrast to the renegotiation proofness principle, which states that in models of contracting with renegotiation one can restrict attention to renegotiation proof contracts.

Yes / We derive the optimal investment timing and real option value for a facility with price and quantity uncertainty, where there might be a government subsidy proportional to production quantity. Where the subsidy is proportional to the multiplication of the price and quantity, dimensionality can be reduced. Alternatively, we provide quasi-analytical solutions for different quantity subsidy arrangements: permanent (policy is certain); retractable; suddenly permanent; and suddenly retractable. Whether policy uncertainty acts as a disincentive for early investment depends on the type of subsidy arrangement. The greatest incentive for early investment is an actual retractable subsidy, a ‘flighty bird in hand’.

This thesis analyzes investment incentives of strategic firms in industries where either demand is uncertain, or the good produced is economically non-storable and demand fluctuates. In those industries, investment is a long run decision, whereas production has to be adjusted short-run. Prominent examples are recently liberalized utilities such as the electricity sector. Regulated monopolies have been replaced by a small number of competing firms, which often are considered to behave strategically in order to exercise market power. Whereas the regulatory regimes prior to liberalization induced generous (over-)investment choices, we observe increasing unease of experts and policy makers regarding investment incentives in liberalized electricity markets. The first three chapters of this thesis (part one) analyze total capacity choice of strategic firms prior to producing for the spot market. We first determine the equilibrium of the market game. In the remainder of the first part we analyze the interdependency of enhanced spot market competition and firms overall capacity choice. We first analyze the impact of complete elimination of market power at the spot market giving rise to marginal cost pricing. We then consider the impact of price caps at the spot market. And finally we study the impact of reduced market power at the spot markets due to forward contracting. In the second part of the thesis firms can invest into several technologies. This allows them to determine not only their total capacity but also it's precise composition. In the absence of strategic interaction, for a single regulated firm, this has already been thoroughly analyzed in the so called peak load pricing literature, which has been widely applied for electricity markets prior to liberalization. In order to accommodate for the completely changed situation after liberalization, however, we extend this framework to the case of strategically interacting firms. Based on data of the German electricity market, we then illustrate and empirically quantify our theoretical results. We determine firms’ investment choices for different market structures and quantify the impact of spot market interventions on investment decisions and welfare. This allows us to quantify the potential for the exercise of market power, in the long run, when firms’ investment decisions are taken into account.

The main topic of this diploma thesis is Unemployment in the region Most and the ways how to solve this problem. The theoretical part of the diploma thesis explains, what is the unemployment, what are its causes and shows the real numbers of the unemployment in our country and in the World. The second portion assesses the theory of active policy of employment in the Czech republic in its form of investment incentives. The practical portion assesses the region Most, that suffers from long term the highest rate of unemployment and explains the historical and present causes of this situation. Next there is a detailed analysis of the companies in the region Most, which got the investment incentives, and assesses their gain for the reduction of unemployment. The central part of this thesis is about a company EUROPAHAUS GROUP, Ltd. and a description of the procedure of getting its investment incentives.

Thesis supervisor: B Ravikumar. Includes bibliographic references (p. 132-135).

The aim of this thesis is to investigate the structure and the effectiveness of the investment incentive system in Turkey. The theoretical definition and the economic and social targets of incentives, and the direction, problems and the effectiveness of the investment incentive system are investigated. This study finds that the most prominent target of investment incentives is to alleviate the unemployment problem in Turkey. The regional investment incentives seem to be successful in the western part of the country to some extent. The investment incentive system does not seem to be successful in directing the investment to underdeveloped regions of the country. The investment incentive system has no strong effects on directing the sectoral distribution of investments.

A major goal of the EU Commission in the area of direct taxation is the introduction of a common consolidated corporate tax base (CCCTB) in Europe. While hardly discussed in the literature, such a system would limit national discretion over tax depreciation. In a sample of up to 47 countries, we find that the probability of a tax reform that improves the depreciation allowances increases, if the macroeconomic situation is weak. This suggests that changes in depreciation allowances are used as a fiscal instrument for stabilization. A common consolidated tax base deprives national governments from implementing investment incentives via accelerated depreciation. This paper discusses the possible implementation of a hybrid system that combines features of formula apportionment and separate accounting. Such a hybrid system may substantially mitigate transfer pricing problems and other tax planning issues, whilst preserving national discretion over depreciation allowances. / Series: WU International Taxation Research Paper Series

The diploma thesis evaluates an approach of the Czech Republic in the reutilization of brownfields, particularly since 2005, when the significant steps in this field were realized. Specific activities performed in this field, mainly basic documents and instruments for regeneration and reutilization of brownfields, are described and evaluated in this diploma thesis. The analytical part is concerned with the approach of the Central Bohemia Region to reutilization of brownfields. It is described in detail, which steps are taken by region in these questions. The approach of particular municipalities in region is evaluated as well. The approach of these authorities is analyzed on the basis of evaluation of questionnaires and subsequently processed by means of SWOT analysis.

The policy of investment incentives is applied in majority of countries all over the world. This popularity is in contradiction with rare academic analyses of this phenomenon and those few existing are not reflected by the actual policy. This work intends to partially fill the first gap and is devoted to estimation of fiscal impact of the policy and also its effects on employment. It contains a proposal of cost-benefit calculation and its application in Czech Republic. The necessary condition for any application of this method, one needs to assess causal impact of such policy on investment and also indirect effects in the labour market. Comparison of investment behavior of supported firms and firms from control group (chosen by matching estimator) shows that the extra investment generated (or maybe only accelerated) was at most 30% of contracted amounts. Indirect effects in labour market are estimated via dynamic model of employment using Heckman's treatment of selection. Inquireies show that linkage effects dominate the crowding out effects, signalling that domestic firms on average benefit from the presence of their foreign conterparts. Turning to supported vs. nonsupported firms, this effect diminishes. For estimation of various scenarios of fiscal and employment effects I use results from econometric estimates of this work as well as the other works from Czech environment. The unitary fiscal cost of one job created is several hundred tousand CZK and therefore the net cost has to be confronted with other potencial benefits of policy. With respect to fact that majority of firms resides and operates in Czech Republic prior the incentive award, technological transfer or other positive effects do not find much support in my findings. This indicates that the arguments for the provision of this policy in Czech economy are not valid (any more).

This diploma thesis deals with investment incentives and their effect on the economy of Ireland in historical and contemporary context. The introduction focuses on the general issue of foreign direct investment and investment incentives. After the summary of geographic and socioeconomic characteristics of the state the work describes an economic development of Ireland from 17 century to the present, especially the important historical events and their influence on the Irish economy. In the main part of this thesis, which is focused on the Irish investment incentives, are listed the general factors of the Irish economy in the form of so-called comparative advantages (high mobility and high skills of workforce, low labor costs) including specific benefits for U.S. investors (culture similarity, no language barrier, favorable geographic location, quality infrastructure) and economic and political measures in the field of direct investment, that Ireland has implemented to attract foreign investors (building of modern telecommunications infrastructure, the international experience of workforce and the establishing of organizations to promote foreign direct investment). Next the work analyses development of investment incentives from the beginning of their application in the 70th of the 20th century through the industrial "boom" in the 90th of the 20th century to the present, focusing on those of them that were key for the development of the Irish economy (taxes on income, efficient infrastructure, a flexible labor market, etc.). Consequently, there is a given forecast of Ireland in the coming years. There is evaluated the impact of investment incentives on the development of the Irish economy and outlined the direction in which the incentives in Ireland will take in the near future.