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Showdown in Schönau: A Contest Case Study

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Abstract

This chapter analyzes a referendum campaign as a case study of a contest. The referendum, held in 1996 in the small German town of Schönau, led to the replacement of the conventional electricity supplier by a firm founded by the local environmentalists. We discuss both qualitative aspects (activities, arguments and strategies of the environmentalists, the electricity firm and its local allies) and quantitative aspects (lobbying effectiveness, stakes, effort and success probability). We identify voter groups more inclined to vote one way or the other and factors that contributed to the environmentalists’ victory. Finally, we discuss modeling implications.

The opinions expressed in this paper are entirely the autors’ and do not necessarily reflect the views of the German government. The authors would like to thank the interview partners in Schönau for their cooperation and Andries Nentjes, Till Requate and Bert Schoonbeek for helpful comments.

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Notes

  1. 1.

    Graichen (2003) analyzes the whole conflict.

  2. 2.

    1 DM (Deutsche Mark) = 0.51 Euro.

  3. 3.

    The rule is as follows: a referendum to withdraw a town council decision must be held if within 4 weeks after the decision in question 15 % of the voting population signs a referendum claim. The referendum itself results in the rejection of the town council decision if there is a majority in favour of rejection and this majority comprises at least 30 % of the electorate. The town council is then obliged to act accordingly for three years.

  4. 4.

    For EWS: 4 FWV representatives and two SPD representatives. For KWR: 4 CDU representatives and one SPD representative. The mayor abstained. One FWV representative was not allowed to vote because of his sizeable financial interest in EWS.

  5. 5.

    We shall refer to this group later as Citizens’ Initiative or CI.

  6. 6.

    See www.ews-schoenau.de.

  7. 7.

    In this paper, we take the content of the concession offers as given. This subject is discussed by Graichen et al. (2001), who show that when challenged by environmentalists, the monopolist’s offer will be more environmentally friendly than otherwise. Liston-Heyes (2001) derives similar results.

  8. 8.

    See Long (2013) for an overview and Congleton et al. (2008) for an anthology.

  9. 9.

    For an analysis of the general model, see e.g., Hillman (1989), Baik (1994) and Nti (1999). A logit-function contest is an example of an aggregative game (Cornes and Hartley 2007): A player’s payoff only depends on his own input and the sum of everyone else’s input. Cornes and Hartley (2005, 2012) apply the apparatus of aggregative games to study equilibrium existence, uniqueness and rent dissipation for contests with risk-neutral and risk-averse players, respectively.

  10. 10.

    We assume that the turnout will be so high that the referendum is valid. Herrera and Mattozzi (2010) show how a quorum requirement can actually reduce turnout in a referendum.

  11. 11.

    Note that this formulation does not include all contests. It excludes the perfectly discriminating contest, in which the side that spends the most wins for certain (Hillman and Riley 1989). We exclude the perfectly discriminating contest here, because we do not consider it applicable to a referendum campaign.

  12. 12.

    Other potential functional forms are the difference form (Hirshleifer 1989) and the relative difference form (Beviá and Corchòn 2015).

  13. 13.

    See Che and Gale (1997) for an analysis of budget constraints.

  14. 14.

    See Benito et al. (2014) and Powell (2012) for more recent empirical research and Decheneux et al. (2015) for a survey of experimental research on contests.

  15. 15.

    Referendums have much in common with two-candidate elections (e.g., Hillman and Ursprung 1988; Erikson and Palfrey 2000; Ben-Bassat et al. 2015).

  16. 16.

    The quotes in this paper are English translations of the authorized interview reports (in German). The reports are available from the authors.

  17. 17.

    Campaign leaflets by all three lobby groups were distributed door-to-door.

  18. 18.

    Opening hours were Mondays from 4 to 6, Wednesdays from 10 to 12 and Fridays from 3 to 6.

  19. 19.

    From the figures we have at hand, one can estimate a gross yield of 1 m DM per year. We consider the marginal personnel costs of KWR for Schönau to be negligible, since the Schönau energy consumption covered only 6 % of KWR’s total output. Discounting 1 m DM gained for 20 years at 10 % gives us the stake of 8.5 m DM.

  20. 20.

    We realize it is questionable whether time spent by the members’ children should count as time spent by the environmentalists.

  21. 21.

    According to the Sladeks, a house call could take up to 1½ hours. Wetzel took between 10 min and 2 h, on average at least 20 min, whereas Zuckschwerdt needed 2 to 3 h.

  22. 22.

    Note that Ruch (CI) also considered a high turnout to be working in favour of the energy firm KWR (see Sect. 4.3).

  23. 23.

    As in the 1999 Australian republic referendum (Davidson et al. 2006), the pro-change side made a positive case for change, while the pro-status quo side emphasized the risks of change.

  24. 24.

    As long as it is not of the strict Leontief type.

  25. 25.

    Note that the CSF with the Goliath effect is not homogeneous of degree zero: A doubling of everyone’s effort would not leave p unchanged, indeed it would reduce p. Homogeneity of degree zero is often seen as a desirable property of a CSF (e.g., Skaperdas 1996; Münster 2009).

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Author information

Authors and Affiliations

  1. University of Nottingham, Room C3A Sir Clive Granger Building, University Park, Nottingham, NG7 2RD, UK

    Bouwe R. Dijkstra

  2. Agora Energiewende, Anna-Louisa-Karsch-Straße 2, 10178, Berlin, Germany

    Patrick R. Graichen

Authors
  1. Bouwe R. Dijkstra
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  2. Patrick R. Graichen
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Correspondence to Bouwe R. Dijkstra .

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Editors and Affiliations

  1. Institute of Economics and Econometrics, University of Regensburg, Regensburg, Germany

    Wolfgang Buchholz

  2. Chair for Economics Especially Resource Economics, TU Bergakademie Freiberg, Freiberg, Germany

    Dirk Rübbelke

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Dijkstra, B.R., Graichen, P.R. (2017). Showdown in Schönau: A Contest Case Study. In: Buchholz, W., Rübbelke, D. (eds) The Theory of Externalities and Public Goods. Springer, Cham. https://doi.org/10.1007/978-3-319-49442-5_15

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