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WZB Bridging Project

The bridging project "Against Elites, Against Outsiders: Sources of Democracy Critique, Immigration Critique, and Right-Wing Populism” (short: DIR) links the research units “Migration, Integration, Transnationalization” (Director: Ruud Koopmans) and “Democracy and Democratization” (Director: Wolfgang Merkel).

We study firm conduct in environments in which firms have market power, both theoretically and empirically.  The empirical research focuses on understanding firm behavior in specific industries such as telecommunication, airline industry, semiconductor industry, publishing, and others.  Methodologically, the determinants of firms’ choices are identified through structural or semi-structural modeling.  Theoretical work investigates firms’ conduct in the presence of incomplete information about market fundamentals or imperfect information about rivals’ behavior.  We also investigate whether so-called behavioral approaches to consumer choices are helpful in understanding firms’ pricing decisions.

The observed large number of mergers and alliances – both at the national and international level – highlights their importance as social phenomena.  Mergers may be necessary to reap the benefits of economies of scale.  On the other hand, however, increased concentration may prevent the benefits of competition and even innovation.  But merger motives are more numerous and more diverse, as the periodical occurrence of merger waves show.  Also, the merging process and its consequences are not completely understood: mergers often fail.  Our research covers a wide range of both theoretical and empirical topics. In particular, the following issues are being investigated by CIG:

This research aims at incorporating the political environment in the process of policy making such as regulation and competition policy.  The normative effects of these policies on market outcomes have been widely analyzed, both theoretically and empirically.  To understand their impact on market outcomes, however, it is important to consider the underlying forces that determine how they are chosen, such as institutions, the electoral process, and lobbying.  It therefore requires simultaneously endogenizing the determinants and the effects of the political decision making processes.  This is achieved by combing industrial organization analysis with aspects of political economy.  In particular, there are currently four areas that are being investigated within this approach:

The increased importance of understanding the institutional environment — i.e., political, economic & bureaucratic institutions — has been highlighted by a few developments: first, institutional arrangements appear to explain variation in cross-national economic efficiency; second, the economic implications of domestic institutional arrangements are no longer contained within a nation.  In short, the rapid internationalization of markets has enhanced the merit of factoring any relationship between institutions and international competition.  Accordingly, the political-economic research in this project aims to understand how variations in the cross-national institutional environment impact economic outcomes, and to analyze the two-way relationship between domestic institutional arran