Dissertations submitted to the Hertie School
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12/2022
This thesis discusses the role of the economic incentives and policies required to build energy systems that are compatible with achieving the goal of net-zero carbon emissions. I try to look beyond the techno-centric solutions that focus on new electricity generation technologies to explore how the way we consume and supply energy may be changed to facilitate the energy transition. The first paper of this cumulative thesis identifies packages of demand-side policy interventions in household energy consumption that can deliver an immediate reduction in carbon emissions. The second paper quantifies the relationship between electricity demand and prices in electricity markets using an instrumental variable approach. This relationship can provide the basis for designing policies that use electricity demand as a tool for integrating high shares of renewable energy in the power system. Following the theme of renewable energy integration, the third paper looks at the policies for influencing electricity demand from agricultural consumers in developing countries to increase the share of solar and wind while lowering the associated integration costs. And the last paper focuses on the need for policy instruments that determine the spatial allocation of renewable energy. The four papers together highlight that using the right economic incentives and policies, we can foster flexibility in both energy demand and supply that reduces the reliance on technological innovation and revolution for achieving the transformation to a low carbon energy system.
11/2022
This dissertation examines recent contestation surrounding the status of emerging economies in international trade politics. In particular, it looks at the ways in which the rise of Brazil, India and China – the BICs – has shaped special rights for developing countries at the World Trade Organization (WTO). The primary focus of the thesis is the WTO’s principle of Special and Differential Treatment (SDT), which provides developing countries with exemptions from certain liberalization commitments, implementation flexibilities, and pledges of technical assistance. At the WTO, access to such special rights is based on individual members’ selfdeclaration as developing countries. However, as the BICs have risen, the ‘North’- ‘South’ binary that underpins SDT has become less clear. The continued use of a legal norm based on the strict bifurcation of WTO members into sets of developed and developing countries has thus been called into question, most notably by the United States.
At the outset, the dissertation develops a conceptual framework for delineating the different ideal typical pathways along which special and differential treatment can develop. An overall process of fragmentation is then outlined, characterized by the unmaking of special rights for developing countries, in parallel to the resilience of differential treatment for the smaller sub-group of Least Developed Countries (LDCs). The thesis continues by examining the contestation at the heart of these processes more closely. In doing so, it sets up a novel theoretical framework to analyse the potential adaptation strategies that emerging economies can adopt in response to contestation of their special rights. Significant strategic variation amongst the BICs comes to the fore in a series of case studies, as well as two chapters on China’s strong defence of its developing country status and Brazil’s recalibration of its (previously held) Southern leadership role. The thesis closes with an in-depth case study of negotiations on intellectual property rights. While the divergence of emerging economy positions and the fragmentation of SDT have marked the WTO era, the final chapter shows that in areas where BICs unity is still possible – such as on LDC rights – normative erosion is slowed.
10/2022
This cumulative dissertation advances management scholarship by studying the novel phenomenon of Blockchain organizing. Blockchain is an emerging technology that facilitates the maintenance of data across networks of computers, as opposed to more traditional central servers. These distributed data maintenance capabilities may have wide-ranging consequences. Ever since Blockchain’s inception in 2008, a discourse identifying this technology as an enabler of radically new and decentralized modes of collective and societal coordination has gained traction. “Blockchain organizing” refers to practices in which such Blockchain technology artefacts are being developed, implemented, and/or utilized by organizations.
Studying these practices presents a unique opportunity to further management scholarship; particularly subjective time research following the neo-institutional tradition. Blockchain is not only an emerging technology associated with significant future expectations, but further a meta-organizational technology whose very raison d'être is the transformation of entrenched organizational structures. When organizational actors develop, implement, and/or utilize Blockchain technology, bureaucratic ways of organizing that have been established in the past and continue to be legitimized in the present may become reevaluated in light of bold visions for an organizational and societal future that looks radically different.
The dissertation at hand utilizes this Blockchain context as an exemplary case to develop theory on how transformative future visions and expectations associated with emerging technologies may become instantiated within the present, and conceptualizes this phenomenon as “present-future convergence”. Developed based on a field-level pilot study that led to an 18-month ethnographic engagement with one Blockchain start-up, the three papers gathered in the dissertation utilize an interpretivist approach to explain how present-future convergence is rooted in conjoined processes of intra- and inter-subjective temporal experience. Furthermore, the papers highlight the counterintuitive consequences that present-future convergence may have for processes of technological, organizational, and societal change. In doing so, the dissertation opens promising research avenues at the intersection of temporality, performativity, and sociomateriality, and contributes to scholarly understanding of Blockchain organizing.
Practically speaking, the dissertation helps answer the question of how actors may “pull” the future into the present to realize transformative future visions like those associated with emerging technologies.
09/2022
Employment Trajectories of Women with a Migration Background in Germany: A Life Course Perspective
(2022)
The aim of this dissertation is to study the employment behaviour of women with a migration background from a life course perspective. Data for the analyses come from the German Socio-Economic Panel and the German Microcensus. The first paper studies the entrance into employment of immigrant women who arrived in Germany while childless between 1990 and 2016. The main findings show that women who moved as marriage migrants were highly likely to have a child shortly after their arrival. Having a child before they enter the labour market strongly delays the participation of migrant women in remunerated work. In the German context, marriage migration is most common among women who are third country nationals, and have comparatively low levels of labour market capital upon arrival. The second paper studies the employment trajectories of women who immigrated from Central and Eastern Europe after the fall of the Iron Curtain. By distinguishing the trajectories of women who came from similar female employment contexts, but who arrived through different migration channels (ethnic Germans vs. third country nationals), the paper sheds light on the selection mechanisms of the different legal entry modes, and the post-migration adaptation patterns associated with them. The third paper looks at the early life employment participation trajectories of women of the second migrant generation who were born in Germany. It shows that women who follow early family formation trajectories are also less likely to participate in the labour market early in life. Early family formation is found to be most common among second-generation migrant women with parents of Turkish origin. The three papers together illustrate the strong relationship between migrant women’s (non)-employment behaviour and the onset family formation. From a migration policy perspective, the findings show the selective effects of migration channels. From a social and labour market policy perspective, the results allude to the importance of childcare access, and the need for activation policies tailored to mothers with a migration background.
08/2022
Governments use regulation to affect the behavior of market participants such that welfare is maximized. Good regulation in the electricity sector aims to achieve an affordable, sustainable, and secure supply of electricity. However, the energy transition fundamentally changes the way electrical energy is produced and consumed. Consequently, market rules and regulatory interventions need to be adjusted to cope with these new political targets, technological innovations, and societal trends.
This cumulative dissertation contributes to the academic literature on regulatory incentives in the electricity sector with four scientific articles. At the core of this dissertation are incentives for participants of the electricity market that result from the market design and other regulatory interventions. I study how such incentives can be designed to minimize the cost of expanding and operating the transmission network. The transmission system is confronted with several new challenges resulting from the energy transition, including an increasing distance between generators and consumers, power flows that quickly change over time, and declining share of dispatchable generators that complicates frequency stability.
The first three articles of this dissertation study incentives for market participants to account for the cost of operating and expanding the transmission network in their investment and dispatch decisions. The first article introduces a conceptual framework for categorizing and analyzing locational signals that result from the market design and from other regulatory interventions. It classifies, quantifies, and discusses locational instruments in twelve jurisdictions. It finds that all reviewed systems apply regulatory locational instruments, and many systems even combine multiple instruments. Only few instruments result in economic incentives that are strong enough to affect investment decisions. The second article focuses on one key market design: nodal pricing. It identifies and assesses the main arguments against the concept of nodal pricing based on the experience made in US power markets. It shows that most of the perceived drawbacks of the concept in the European debate are misconceived and can be sufficiently addressed as it is done in systems that already implemented a nodal market. The third article studies the long-run effects of optimal administratively determined locational signals. To do so, it introduces a complementary power market model. Applying the model to a sample case study reveals characteristics of such signals and highlights their potential welfare gains.
The fourth article is dedicated to the balancing mechanism, which maintains the grid frequency by balancing the feed-in of electricity into the network and its withdrawal. This is another source of cost that arise in the transmission system. The article analyses the economic incentives resulting from the design of the balancing mechanism. It quantifies the price response of balancing responsible parties to the imbalance price and finds a significant effect. This finding is politically delicate because such a price responsiveness is forbidden by the regulator.
With these four articles, the dissertation provides insights how the regulator can affect the behavior of market participants through economic incentives, which is of interest for researchers and policy makers alike. It adds to the literature by proposing new frameworks and models, and by drawing from experiences in other jurisdictions. Thereby, it contributes to adapting the regulation of the power sector in times of the energy transition.
07/2022
Society increasingly calls on business, in particular multinational companies, to contribute to solving global challenges such as poverty, hunger, or the recent pandemic. Many companies and industries have responded positively to these expectations and use a broad set of efforts to work toward objectives such as the United Nations Sustainable Development Goals. However, research has frequently pointed out that that there is limited evidence for multinational companies being effective to this end, as they have to overcome many internal and external hurdles in tackling such development challenges. Thus, uncertainty remains with regard to how multinational companies can become instrumental in addressing the persistent and global problems we associate with sustainable development.
This cumulative dissertation explores this question by studying how the multinational pharmaceutical industry has acted upon the challenge of insufficient access to medicines, vaccines, and other health products in low- and middle-income countries. By analyzing how two companies have tried to integrate access objectives into their business, the first empirical paper brings to surface two types of integration efforts that differently enable companies to make progress on the access challenge. It also highlights the strategizing needed for each type of integration to overcome internal and external challenges. The remaining two papers look at the pharmaceutical industry’s contributions to the Kenyan response to non-communicable diseases as a case of the growing scale and scope of involvement of multinational companies on the local level. One paper shows that local development actors perceive this as a challenging and risky phenomenon and lays out why and how they engage with companies as development agents regardless. By studying the Kenyan case, the final piece looks more closely at how governance structures may help to ensure that industry-led public health initiatives contribute to development objectives.
Together, these papers contribute to management research by showcasing different pathways through which companies can become instrumental in making progress on development challenges: an internal pathway of integrating social objectives into the business as well as an external pathway of steering corporate initiatives through local actors and governance structures. Finally, it also informs debates in global health research by adding often neglected firm- and country-level perspectives on the growing role of business in global health.
06/2022
In electricity systems, supply traditionally follows demand. Consequently, economists have focused on analyzing supply while assuming perfectly inelastic demand. Demand flexibility, if at all, occurred in deterministic patterns, such as during peak and off-peak periods, incentivized by static time-of-use tariffs. Nowadays, the role of electricity demand is changing fundamentally: growing shares of fluctuating wind and solar energy require flexibility in a larger quantity and on a stochastic basis; increasing loads of electric vehicles, heat pumps, and hydrogen electrolyzers could provide flexibility through battery, thermal, and gas storage; and the introduction of smart meters enables dynamic real-time tariffs and an automated response of distributed loads.
This cumulative dissertation contributes to the economic understanding of flexible electricity demand with five scientific articles. Article 1 starts with reviewing the role of electrification in decarbonization scenarios for heating and road transport in Germany. The article finds that decarbonization drives electrification, leading to an increase in electricity demand by a factor of roughly two. Direct and indirect electrification options are contrasted with respect to their distinct flexibility potential.
Articles 2 and 3 explore the implications of decentralized electric heat pumps and centralized electrolytic hydrogen, respectively, for the market value of renewables. Both use the same numerical electricity market model. Article 2 finds that the volatility of the heat pump’s electricity demand challenges the electricity system, which becomes apparent in increasing load cost. A flexible operation of heat pumps may reduce this challenge, but potential benefits for the market value of wind energy are minor. By contrast, Article 3 shows that hydrogen electrolyzers have the potential to stabilize renewable market values at high renewable market shares effectively and permanently, because additional renewable supply can trigger investment in additional hydrogen electrolyzers with additional demand.
Articles 4 and 5 investigate the flexibility of the current electricity demand using econometric models with instrumental variables. Article 4 reveals that, at an hourly temporal resolution, the aggregated electricity demand in Germany is indeed price-elastic; it decreases by 70 MW for every € 1 per MWh increase in the day-ahead wholesale price. Article 5 finds that demand is also price-responsive in the very short term: the demand for imbalance energy responds to the imbalance price—despite the legal obligation in Germany to minimize imbalances independent of prices.
05/2022
This dissertation studies the mechanisms through which the Paris Agreement proposes to limit global greenhouse gas emissions, and the prospects for these mechanisms to succeed in doing so. In particular it focuses on the Paris Agreement’s pledge and review structure, taking a cumulative approach comprising three distinct research papers studying the Agreement from different perspectives.
In the first paper I systematically map the literature studying the Agreement and synthesize existing insights on whether or not it will be effective. I find mixed evidence. Potential drivers of effectiveness, such as the Agreement’s transparency provisions, are often qualified by concrete barriers, with the information submitted thus far lacking in quality and comparability. Although the literature provides ample recommendations for overcoming such barriers, the success of the Agreement is found to ultimately depend on national ambition. As such, the Paris Agreement’s most promising features are found to lie in its facilitation of norm-diffusion and learning.
In the second paper I use systematic evidence synthesis methods to review existing literature studying five comparable review mechanisms in the human rights, trade, finance and labour regimes. I identify six common factors that influence the performance of these review mechanisms. Using these as benchmarks to assess the Paris Agreement’s review mechanisms I find that the Agreement incorporates many of these features. However, two major shortcomings remain, namely the lack of an assessment of the adequacy of national climate policies, and a lack of capacities to effectively carry out the review process. Combined with existing political constraints, these shortcomings suggest that that the Paris Agreement alone is unlikely to be effective.
In the third paper I develop a novel framework for assessing states’ nationally determined contribution formulation process based on the state capacities and policy design literatures. I apply the framework to the cases of Brazil, South Africa, India and China. I find that these countries engage imperfectly with the pledge and review structure of the Paris Agreement. They lack systematic processes for formulating their nationally determined contributions, and their international pledges remain detached from domestic climate policy considerations.
04/2022
Authoritarian Regimes and Financial Crises: Explaining Autocratic Regime Survival and Collapse
(2022)
The common notion that financial crises pose serious threats to autocratic regime stability has been challenged over the last decades both on theoretical and empirical grounds by the extensive number of authoritarian regimes that seem to be absolutely impervious to financial and economic shocks. So, why do financial crises only sometimes lead to autocratic regime collapse? What mechanisms do (de)stabilize authoritarian regimes during financial crises? And under what conditions is autocratic regime breakdown likely to happen?
This dissertation addresses these questions by bringing together insights from the democratization, comparative autocracy, and political economy strands of research. It argues that the relationship between financial crises and autocratic regime breakdown is highly conditional, and depends on a complex interplay of economic and political factors. In three standalone papers, this dissertation scrutinizes the entire process of crises induced autocratic regime instability and regime collapse, and examines the effects of different economic and political factors on the probability of autocratic regime survival and collapse during specific types of financial crises.
The key findings of this dissertation demonstrate that the destabilizing effects of financial crises may vary by crisis type, that in response to financial crises, policymakers in autocracies can implement crisis policies that prolong authoritarian rule, and that institutions by which autocracies govern may immunize them from political risks during financial crises, or, by contrast, may precipitate elite defection and regime collapse.
Overall, this dissertation provides many new theoretical and empirical insights into the sources of autocratic regime survival and breakdown during financial crises. It also provides one more evidence that economic and political problems do not exist in isolation from one another, rather they are linked together in complex networks of weirdly tangled cause-effects relationships, which we do not yet fully understand.
03/2022
The rise of automated decision-making systems has been extraordinary in the last few years, both in terms of scale and scope of operation. This is especially true in the field of fintech, where robo financial advisors have gained prominence with their claim to “democratise” finance, with their low operating costs, multi-tasking abilities and potential for mass adoption. This series of three research papers is focused on demystifying algorithmic explainability in the field of fintech, by diving deep into both theoretical and practical aspects of the phenomenon, and contextualising the discussion to India.
The first paper explores the trade-off that emerges between performance and explainability for robo financial advisors, through a detailed review of available literature that allowed comparisons between relevant processes adopted around the world, and interviews with various stakeholders within India to understand the evolving domestic situation. The paper finds that it is not quite a question of if ADS will play a significant role in India’s financial services sector but more a question of when that will happen. The second paper operationalises algorithmic explainability in the particular context of risk profiling done by robo financial advisory applications. Here, an approach towards developing a ‘RegTech’ tool is outlined, which can explain the robo advisor’s decision-making, using machine learning models to recognise and reconstruct different levels of explanations. Finally, the third paper evaluates the effectiveness of user-centric explanations in conveying the decision-making logic of complex algorithmic systems in fintech. The paper demonstrates the usefulness of such explanations from the perspectives of both novice and seasoned investors, and goes on to differentiate between white- and black-box explanations.
In sum, this three-paper series, using a range of tools and approaches, examines in detail the under-appreciated regulatory and operational challenges that emerge during the use of algorithms in the field of fintech, and explores ways to resolve them. While the first paper looks at the present and future of AI in Indian fintech, the second paper develops a tool to explain a robo advisor’s decisionmaking, and the third finds factors that determine users’ comprehension and confidence in such systems. The results of these three approaches in the three papers become vital when seen in the context of the rapid rise of artificial intelligence across products, services and industries globally. If humans are to work alongside machines in this changing world, explainability becomes an important aspect to consider for companies, regulators and users alike, in order for humans to trust the algorithmic systems in place and improve outcomes — in this case, financial outcomes — for all.