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Faculty of Law, Business & Economics

International Economics – Juniorprofessor Christian Fischer-Thöne

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Current Research

My research evolves around the following areas and topics:

  • International Trade
    Global value chains
    Firm trade dynamics
    Institutional reform and trade policy
  • Industrial Organization
    Firm pricing strategies
    Consumer protection

Working papers:

  • Optimal Payment Contracts in Trade Relationships

    Revise and Resubmit, Journal of International Economics

    Abstract. We study a seller's trade credit provision decision in a situation of repeated contracting with incomplete information over the buyer's payment propensity when the enforceability of formal contracts is uncertain. The payment terms of a transaction are selected in an inter-temporal trade-off between improving the quality of information acquisition and mitigating relationship breakdown risks. When contract enforcement institutions are weak, the optimal within-relationship provision dynamics of trade credit can be uniquely determined and depend on the share of patient buyers in the destination market as well as their access to liquidity. We obtain empirical evidence showing that in developing countries the relevance of trade credit in buyers' payment schedules has risen over-proportionally in recent years.

  • Complex Pricing and Consumer-Side Attention (with Alexander Rasch and Tobias Wenzel)

    Abstract. This paper analyzes a market in which two horizontally differentiated firms compete by setting menus of two-part tariffs, and in which some consumers are not informed about the linear per-unit price component. We consider two regulatory interventions that limit firms' ability to price discriminate: (i) diminishing the range of contracts via a reduction in the number of two-part tariffs offered (which prohibits inter-group price discrimination), and (ii) a reduction in tariff complexity via the abolishment of linear fees (which prohibits inter- and intra-group price discrimination). We characterize the effects of these interventions on firm profits and (informed and uninformed) consumer welfare, and identify conditions for the optimal policy. Our results provide insights for the evaluation of recent policy interventions (e.g., the regulation of roaming charges in the EU market).

  • Institutional Reform and Global Value Chains (with Hartmut Egger)

    Abstract. This paper sets up a model of trade, in which two countries with differing levels of technology specialize on the production of subsets of the global value chain. In the open economy equilibrium, the technologically backward country exports intermediates in exchange for imports of a homogeneous consumption good from the technologically advanced country. This vertical specialization pattern gives the two countries access to different instruments for appropriating rents in the open economy. The technologically advanced country can impose an import tariff on intermediates to lower foreign wages and increase national welfare. An import tariff is ineffective for the technologically backward economy, which can instead lower institutional quality and allow its workers to partially expropriate firms and directly consume intermediate goods at a utility discount. In a non-cooperative policy equilibrium, welfare levels of the two countries will fall to their autarky levels. This gives scope for a trade agreement that conditions tariff reductions on institutional quality improvements and is beneficial for both countries. A beneficial trade agreement may not exist if the import tariff has an upper bound.

Work in progress:

  • Relational Contracts and Foreign Direct (Over-)Investment (with Matthias Fahn)

  • Learning in Relational Contracts (with Guillem Roig)

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