http://repub.eur.nl/res/concept/jel-H32/ Recent publications classified by JEL Code H32 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/7577/ 2006-03-10T00:00:00Z Bearing the legacy from central-planned system, the tax system in local China still lacks transparency and, in many cases, the liabilities of firms, especially those with extensive influences, are subject to negotiation despite the new tax-reform 1994. Applying Hirschman’s Exit-Voice theory, we construct a game model of interplay between firm and local government, in terms of exit and voice for preferential tax treatments, thereby revealing dynamics of these two options under rational entrepreneurship of economizing transaction cost. Suggested by the model, exit not only induces firm to opt for voice, it also underpins firm’s voice that forces local government to compromise. Particularly, when holding private information of exit cost, firm is able to mimic behaviors of those with high mobility so as to boost the effectiveness of voice. The empirical cases fully illustrate such rational entrepreneurship of exit plus voice to profit from local preferential policy. Zhu, Z. Hendrikse, G.W.J. Krug, B. http://repub.eur.nl/res/pub/818/ 2003-09-03T00:00:00Z The levying of VAT in countries of the European Union creates significant distortions for local authorities in their decision-making on public provision and contracting out of public services. In several EU-countries, a refund of VAT to local governments eliminates this effect. Therefore, these schemes facilitate contracting out by local governments. In European countries with a refund scheme for the VAT costs of local governments or other ways to solve this distortion, contracting out refuse collection is relatively high compared to countries without. Moreover, the design of the scheme may have an effect on the tax rates of the included government sectors. A closed system financed by local governments only will lead to an increase of local tax rates. Wassenaar, M.C. Gradus, R.H.J.M. http://repub.eur.nl/res/pub/11496/ 2003-01-01T00:00:00Z Customs are generally perceived as a time-consuming impediment to international trade. However, few studies have empirically examined the determinants and the impact of this type of government-imposed transaction costs. This paper analyses the role of firm size as a determinant of customs-related transaction costs, as well as the effect of firm size on the relationship between these costs and the international trade intensity of firms. The results of this study indicate that customs-related transaction costs repress international trade activities of firms, even at low levels of these costs. The paper identifies transaction-related economies of scale, simplified customs procedures and advanced information and communication technology as main determinants of customs-related transaction costs. It is shown that when these factors are taken into account, firm size has no effect on customs-related transaction costs. Policy implications are considered for firm strategy and public policy. Verwaal, E. Donkers, A.C.D. http://repub.eur.nl/res/pub/78/ 2001-02-26T00:00:00Z The costs of paperwork and delays needed to clear international customs are generally perceived as a time-consuming impediment to international trade. However, few studies have empirically examined the determinants and the impact of this type of government-imposed transaction costs. This paper analyses the role of firm size as a determinant of customs-related transaction costs, as well as the effect of firm size on the relationship between these costs and the international trade intensity of firms. We submit that economies of scale should be related to the size of the activities the firm is specialised in, and not directly linked to the size of a firm per se. The results of this study indicate that customs-related transaction costs repress international trade activities of firms, even at low levels of these costs. The paper identifies transaction-related economies of scale, simplified customs procedures and advanced information and communication technology as main determinants of customs-related transaction costs. When these factors are taken into account, firm size has no effect on customs-related transaction costs. Policy implications are considered for firm strategy and public policy. Verwaal, E. Donkers, A.C.D. http://repub.eur.nl/res/pub/283/ 2000-12-01T00:00:00Z The paper describes the emergence of entrepreneurship in Shanxi province based on fieldwork in the last 6 years. Employing institutional and evolutionary economics shows that both the kind of firms that emerge and the individual behaviour of entrepreneurs reflect a systematic response to the situational constraint all would-be entrepreneurs face, namely a high level of uncertainty and weak institutions. In this situation to establish firms with a weak organisational identity allows to flexibly respond to new opportunities, while a strong reputation for accountability of the owners and managers is needed to get long term business relations started. As the Shanxi sample shows accountability can be achieved by a mix of reviving old economic institutions, hijacking social organisations, and building new business practices. To the extent that old institutions, social organisations and business practices do not spread equally across China, different forms of firms and different forms of entrepreneurship can be expected within China. In short, local cultures matter. Krug, B. http://repub.eur.nl/res/pub/59/ 2000-12-01T00:00:00Z The Chinese economy has developed rapidly despite two major constraints: ill-functioning markets and a socialist past, both of which caused an environment of unenforceable contracts. In this situation the need to pool resources and to govern relational risk was paramount to the development of a private sector. While modern organisation (transaction cost-) theory can explain why and to which extent entrepreneurship in China is based on collective agents, an analysis of the (local) political market is needed to explain why China's villages provide the much needed (and valuable) public goods in form of property rights protection and contractual security. Decentralisation and jurisdictional competition facilitate the writing of a new "common law" as well as the "discovery" of new forms of collective action. Krug, B. http://repub.eur.nl/res/pub/6952/ 2000-05-21T00:00:00Z This paper analyses the national tax treatment of interest expenditures of multinational enterprises in a non- cooperative world. It is shown that the international tax system generally leads to distortions in the capital decisions of multinational firms. In contrast to the existing literature on the tax treatment of the expenditures of multinationals, it is found that the form and size of distortions can differ per country depending on the stake a country has in the multinational. Furthermore, internationalisation of the firm's operations and ownership is demonstrated to lead to less generous interest deduction rules of individual countries and in the limit may result in no deduction allowance at all. Ossokina, I.V. Vollebergh, H.R.J.