it s the weather stupid individual participation in collective may day demonstrations we investigate the possible explanations for variations in aggregate levels of participation in large scale political demonstrations a simple public choice inspired model is applied to data derived from the annual may day demonstrations of the danish labor movement and socialist parties taking place in copenhagen in the period 1980 2011 the most important explanatory variables are variations in the weather conditions and consumer confidence while political and socio economic conditions exhibit no robust effects as such accidental or non political factors may be much more important for collective political action than usually acknowledged and possibly make changes in aggregate levels of political support seem erratic and unpredictable

self enforcing arrangements in african political economy abstract self enforcing arrangements are crucial to the study of african political econmy the weakness of formal governance in much of africa makes understanding informal institutions of cooperation particularly important i consider the application of self enforcing arrangements like those described by the ostroms to the problems of violence and social heterogeneity that plague africa

using a policy mix for pollution control a review of economic literature this article provides a review of economic studies analyzing the use of multiple policies a socalled policy mix to cope with single pollution problems to guide and structure the review an analytical framework is developed and applied the framework integrates transaction costs into the analysis of pollution problems and policies to overcome them moreover it understands a pollution externality not only as a market failure but more generally as the failure of private governance structures based on this insight two rationales for using a policy mix are identified first a policy mix may help to correct for multiple reinforcing failures of private governance structures such as pollution externalities and technological spillovers second a policy mix can be employed if the implementation of single first best policies brings about high transaction costs e g when marginal pollution damages are heterogeneous or polluters are unlikely to comply with the policy for each rationale the relevant literature is presented based on the review avenues for future research are identified

the political economy of trade institutions of protection d omestic support for a liberal commercial policy in the u s rests on a commonly accepted set of rules and norms these rules and norms best characterized as a defense of free and fair trade arise from two different traditions the first originated as a political reaction to high trade barriers preceding the great depression central decision makers took as a lesson from the depression period that short term political forces should not determine the level of state intervention into the market the second to protect against unfair trade emanates from a long history of state support for industries that claim foreign producers are pursuing unfair predatory practices established in statute before the depression these rules did not fundamentally change in the postwar period together these decision rules are used to interpret american trade protectionism

non monetary incentives and opportunistic behavior evidence from a laboratory public good game this study reports data from a laboratory experiment that investigates the incentive effect of three distinct social communication schemes on free riding behavior we use performance based approval and disapproval ratings and a linear public good game to address the above issues the treatments vary in terms of subjects opportunities to anonymously assign 1 only the approval ratings to other group members 2 only the disapproval ratings to other group members and 3 either the approval or the disapproval ratings to other group members but not both to the same group member after they play a standard linear public good game despite the nash prediction of zero individual contribution in all three treatments the data show that the disapproval points generate significantly higher contribution than the approval points the treatment in which subjects could communicate either the approval or the disapproval points produces the highest level of contribution we discuss the implications that these findings may have for efficient design of organizations jel d03 h41 c72 c92

real sources of european currency policy sectoral interests and european monetary integration in the thirty years before economic and monetary union was achieved european currency policies varied widely among countries and over time in this article i argue that the sectoral impact of regional exchange rate arrangements in particular their expected real effects on european trade and investment exerted a powerful influence on the course of european monetary integration the principal benefit of fixing european exchange rates was facilitation of cross border trade and investment within the european union eu the principal cost of fixed rates was the loss of national governments ability to use currency policy to improve their producers competitive position empirical results indeed indicate that a stronger and more stable currency was associated with greater importance of manufactured exports to the eu s hard currency core while depreciations were associated with an increase in the net import competition faced by the country s producers this suggests a powerful impact of real factors related to trade and investment and of private interests concerned about these factors in determining national currency policies

taxing variable cost environmental regulation as industrial policy abstract conventional wisdom has it that a country that enacts strict environmental regulations will place its firms at a competitive disadvantage this view has been challenged recently some commentators argue that stricter regulation will enhance domestic competitiveness strict regulations induce innovation we evaluate this argument in a strategic trade model in very special cases a strengthening of regulation may result in a shift of profits from foreign to domestic firms this is not a general result however environmental regulation should of course be imposed to control externalities but it is unlikely that it will serve to generate industrial advantage

understanding international trade policies an emerging synthesis the international trade problems of the 1980s stimulated an expansion of scholarship on trade policies by economists and political scientists at least four distinct theoretical perspectives weave their way through recent literature that concentrates on the united states emphasizing market conditions policy beliefs and values national political institutions and global structures respectively new studies in each of these traditions advance beyond the work of their predecessors but none of the perspectives has yet proved adequate as a single unifying vehicle nevertheless we can also see clear movement toward a synthesis with single works blending insights from several traditions thus the books under review do not all fall neatly into the familiar exclusive categories of economics or political science the emerging synthesis needs strengthening in several ways including the development of conditioning hypotheses that will reduce remaining apparent confusions

consequences of lower oil prices and stranded assets for russia s sustainable fiscal stance abstract despite substantial oil and gas revenue russia s fiscal stance is unsustainable under our benchmark assumptions the permanent income rule requires a permanent tightening of the fiscal stance by 4 6 points of gdp delaying it by a decade implies that the fiscal stance needs to be tightened by a further 0 9 point this benchmark optimal policy ensures that depletion of oil and gas wealth is matched by an equal increase in above ground financial wealth its merits are highlighted by comparing it with the tougher alternative of the bird in hand rule and with projecting the current fiscal stance if oil and gas revenue rises by a half due to higher prices or more discoveries the fiscal stance needs to be tightened by only 3 2 points of gdp however if a large chunk of oil and gas has to be kept in the soil to meet international agreements to keep global warming below 2 c the permanent transfer drops to 2 0 of gdp and the fiscal stance needs to be tightened by 5 5 points of gdp

trusting behavior in a repeated investment game we compare a seven period repeated investment game to the one shot investment game on an average in the repeated game player a the trustor sends more and player b the trustee returns a larger percentage than in the one shot game both the amount sent and the percentage returned increase up to period 5 and drop sharply thereafter the reciprocity hypothesis for b players behavior is compatible with the first five periods but in the two end periods most b players behaved strategically by not returning the reciprocity hypothesis for a players behavior is compatible for all periods of the game

the political obstacles to greater exchange rate flexibility in china summary an undervalued currency has arguably helped china pursue an east asian style export led model of development spurring economic growth and job creation recently however the undervalued exchange rate has exposed china to a raft of growing major financial and economic vulnerabilities including an overheating of the domestic economy and renewed financial sector difficulties despite these risks chinese leaders have refused to significantly revalue the renminbi suggesting that political objectives are taking precedence over economic optimality i aim to glean insight into such political explanations by building upon present theories in political economy

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

was privateering plunder efficient abstract this paper argues that when contracts between enemies are enforceable and transaction costs are low plunderers and their victims benefit from trade that facilitates the former s ability to plunder the latter coasean plunder contracts transform part of plunder s social costs into private benefits for plunderers and their victims a significant portion of the wealth that plunder would otherwise destroy is preserved instead the result is more efficient plunder to investigate our hypothesis we consider maritime marauding in the 18th and 19th centuries privateers developed a system of ransom and parole founded on coasean plunder contracts with victim merchantmen

size and distribution of incomes as determinants of social welfare abstract the paper is concerned with the relationship between the inequality of income distributions and the social welfare they imply starting point is an ordering of income distributions in terms of inequality based on explicit value judgments about the trade off between size and distribution of incomes an ordering in terms of social welfare is derived the welfare functions representing this ordering allow a size distribution split up it is shown that the procedure can be reversed this ordinal approach is considerably more flexible and less arbitrary than most methods proposed in the literature

extortion in the laboratory in a laboratory experiment we study a finitely repeated game t 15 under complete information in each round p demands tribute cash transfer from a a complies or refuses and after refusals p may punish a in equilibrium payoff maximization p does not punish and a refuses any positive demand in the experiment p punishes increasingly often and increasingly severely as she gains experience most as comply with p s demands the observations are compatible with linear spite in a finite mixture model the types of p and a in the subject pool are characterized an a that is resistant to extortion declines all demands is very rare and hence the threat of punishment in general is effective but all as either ignore actual punishment or react negatively to it they accept to pay tribute but they are resistant to piecemeal expropriation

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

building political consensus and distributing resources a trade off or a compatible choice in recent years the rationale of most welfare programs has been the subject of intense political debate not only in the united states but also in european countries e g germany sweden and france with well established welfare systems new global economic challenges and grim demographic trends present political leaders and workers with the difficult task of balancing government budgets while maintaining elaborate welfare programs the prevailing opinion is that welfare has a negative impact on economic growth because of the disincentives it creates for the working population nevertheless social scientists have often overlooked the political ramifications of welfare spending and its impacts on a country s income distribution in this article we argue that the level of welfare spending is fundamentally a political decision and therefore conditional on the sociopolitical and demographic structures prevailing within a country

innovations and the economics of new technology spreading within and across users gaps and way forward r d subsidies are often considered the main policy tool to stimulate the competitiveness and the innovativeness of firms this is especially true for innovations designed to produce greener products or cleaner and more energy efficient technologies however a consistent literature has now shown that even when a clean or a cost reducing technology is ready available in the market its spreading within intra or across inter households or firms takes several years and in some cases decades therefore it is not only important to generate innovations via investments in r d but it is also important that such innovations are adopted and used by firms this paper briefly illustrates the main theoretical approaches to the analysis of the factors leading to inter firm diffusion and emphasise the existing gap led by the paucity of literature on intra firm diffusion a final section briefly discusses some methodological issues surrounding the diffusion of consumer non durable technologies within and across households and how ad hoc models can be used to test the validity of environmental policies

financial interdependence and the state international monetary relations at century s end as the twentieth century draws to a close one can find sharply contrasting views among leading scholars on almost every key issue in positive international political economy how strong are international as opposed to domestic influences on policy how important are issues of national security high politics versus economic considerations low politics what role do institutions international and domestic play in influencing and constraining the behavior of governments why is international cooperation rare but not unheard of the list goes on and on

side payments versus security cards domestic bargaining tactics in international economic negotiations the literature on international economic cooperation has devoted relatively little attention to domestic bargaining tactics and their determinants recent scholarship has tended to stress the utility and frequency of side payments while discounting other prominent bargaining tactics and a broader understanding of tactical choice this article argues that policymakers choose among domestic bargaining tactics to garner support when faced with situations in which other government officials or societal interest groups block the ratification of international economic agreements focusing on offers of side payments and attempts at issue redefinition the article s findings suggest that differences in domestic resistance to proposals of material compensation and in external security threat may explain choices between those tactics in domestic bargaining

group utility in the micro motivation of collective action the case of membership in the aarp abstract the fundamental assumption of human rationality in neo classical economic analysis is the maximization of individual utility as economic analyses are being widely used in political science under the broad rubric of public choice one cannot escape the logical inconsistency between theory and reality arising from the free rider problem in the preference for collective goods recent literature argues that a way out of this dilemma is to recognize the existence of motivations other than self interest this paper demonstrates the need to enlarge the assumption of economic rationality by explicitly taking into account the factors of group utility with the help of survey data on the preference for membership in the american association of retired people aarp this study adds to the mounting empirical evidence for the fact that for a proper understanding of collective action the existence of a collective identity should be recognized

rational choice and rebellious collective action a basic problem for a rational choice theory of rebellious collective action is to explain why average citizens would participate in such behavior since they have nothing to gain they will receive benefits of successful rebellion in terms of public goods regardless of whether they take part or not but much to lose rebellious behavior may be quite costly according to the conventional private interest or by product theory the incentive to participate must come from the expectation of receiving selective benefits but since average citizens in a general case cannot expect substantial private material rewards the relevant selective benefits must be psychological in nature in contrast to the model of private interest theory a public goods model is proposed stipulating that the value of rebellion in terms of public goods can be a relevant incentive for participation using data from surveys conducted in new york city and hamburg west germany we investigate the relationship between participation in rebellious political behavior and measures of the incentives of public goods and private interest the results do not support predictions of the private interest model in regard to nonmaterial selective incentives hypotheses of the public goods model are supported

supplying trade reform political institutions and liberalization in middle income presidential democracies correcting the relative lack of attention to the supply side of trade policy this article addresses how political institutions channel societal demands for protection i hypothesize that strong presidents with significant legislative powers and strong party leaders empowered through electoral rules that rein in the personal vote can help overcome protectionist biases these arguments compare with two institutional alternatives first that protectionism should decrease as electoral district size grows because elections become more proportional and second that the collective action problems in fragmented party systems thwart trade reform i evaluate these hypotheses empirically using pooled time series cross sectional data involving 18 developing countries from 1971 to 1997 i find that delegation to presidents and party leaders is significantly related to trade liberalization and some evidence suggests that the effective number of parties and the size of electoral districts may also influence levels of protectionism

electricity in europe exiting fossil fuels there are many options for generating electricity with low carbon emissions and the elec trification of heat and transport can decarbonize energy use across the economy this places the power sector at the forefront of any move away from fossil fuels even though fossil fuelled generators are more dependable and flexible than nuclear reactors or intermittent renewables and vital for the second by second balancing of supply and demand renewables tend to supplement rather than replace fos sil capacity although output from fossil fuelled stations will fall and some will have to retire to avoid depressing wholesale power prices at times of low demand and high renewable output prices can turn negative but electricity storage long distance interconnection and flexible demand may develop to absorb any excess generation simulations for great britain show that while coal may be eliminated from the mix within a decade natural gas has a long term role in stations with or without carbon cap ture and storage depending on its cost and the price of carbon

carbon trading in the policy mix the kyoto protocol is stimulating the development of emissions trading schemes at the national and international levels these are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements leading to complex problems of policy interaction but the topic of policy interaction remains under researched this paper aims to improve understanding of such interactions by examining the conditions under which a cap and trade scheme for carbon dioxide emissions may usefully coexist with carbon energy taxes support mechanisms for renewable electricity and policies to promote energy efficiency the paper argues that each of these instrument combinations may be acceptable provided they contribute to either improving the static or dynamic efficiency of the trading scheme or delivering other valued policy objectives but since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions the objectives and trade offs within the policy mix must be explicit

the impact of income on the taste for revolt the question of how the level of development affects revolutionary support in society is of fundamental importance one approach to provide an answer has been to study the relationship between actual civil conflict and income at the national level this article takes a different approach it uses microdata sets based on surveys of revolutionary support across one quarter of a million people and identifies how the responses vary with their incomes we find that a rise in gdp of us 1 600 per capita in 2001 values decreases the chances of supporting revolt by 2 4 percentage points which represents a 41 drop in the proportion of people wanting a revolution for a person who jumps from the bottom to top income quartile within their country the probability declines by a similar amount the results are robust to controlling for country and year effects country specific time trends and take account of the potential endogeneity of gdp

the distribution of income in a despotic society a distribution of income between rulers and subjects can be derived as an equilibrium of violence rather than from considerations of marginal products of owned factors of production society is organized in ranks and the occupants of each rank are provided with incomes just sufficient that obedience is preferable to rebellion to incorporate such considerations into a model it is necessary to recognize phenomena that are normally excluded from economic analysis combat the mortality rate from natural causes and from violence as a component of the utility function and a rudimentary technology of control

the impact of environmental policy instruments on innovation a review of energy and automotive industry studies various types of policy instruments have been implemented to reduce local and global emissions but the impact on innovation of different instruments has received less attention this paper reviews empirical studies of the innovation impact of four main types of policy instruments in two high emitting sectors the conclusions are threefold 1 policy plays a key role for the development and diffusion of environmental innovation in the studied sectors 2 different types of instruments promote different types of innovations general economic instruments has primarily encouraged incremental innovation general regulatory instruments has enforced improvements based on modular innovation and technology specific instruments appears to have been needed to support the development and deployment of radically new technologies 3 all types of policy instruments face challenges in design and implementation understanding the selection impact of the chosen instruments implementing increasing stringency levels committing to an appropriate scale and safeguarding policy stability

twenty first century the century of coal co2 prices to curb coal demand the paper investigates how a carbon price could halt the comeback of coal which started in the early 2000s since the year 2000 coal has provided roughly 40 per cent of global primary energy growth the success of coal in the primary energy mix is due to the fact that it is abundant cheap and most often a domestic resource however global coal reserves if burnt would surpass the remaining carbon budget for a 2 c target by a factor of two the paper shows that a carbon price of 25 100 usd per tonne of co2 would be needed to phase out coal in the power sector depending on the technology and the world region even when assuming significant technological progress

an evaluation of does economic inequality breed political conflict studies contradictory findings that economic inequality may have a positive negative or no impact on political conflict are a puzzle for conflict studies three approaches have been used t o explain the inconsistent findings of the ei pc economic inequality political conflict nexus statistical modeling formal modeling and theory building because analysts have tended to possess different research skills these three approaches have been employed in isolation from one another singly however all three approaches have proved deficient and are unlikely to solve the ei pc puzzle the most fruitful approach is to combine the assumptions of the theory builders and the deductive approach of the formal modelers with the various empirical tests of the statistical modelers such an approach to the ei pc puzzle produces a crucial test of the deprived actor and rational actor theories of conflict the approach is also our best hope for solving the other long standing puzzles in conflict studies

societal preferences partisan agents and monetary policy outcomes if different producer groups have divergent interests concerning macroeconomic policies how do societal preferences translate into state policy outcomes i develop and test a party as agent framework for understanding the importance of societal preferences with regard to monetary policy under capital mobility following the principal agent model political parties function as agents for different societal principals rightist parties tend to represent internationally oriented business groups with preferences for monetary convergence while leftist parties do the same for domestically oriented groups preferring monetary autonomy under capital mobility i present statistical evidence showing that oecd leftist governments have been associated with more monetary autonomy and currency variability than their rightist counterparts even after controlling for basic economic indicators such as inflation the statistical evidence also shows that societal group size tends not to explain either autonomous monetary policy choices or exchangerate stability thus even large and wealthy societal groups may be unable to obtain their preferred policy outcome when their respective partisan agents do not hold government power

the political economy of nontariff barriers a cross national analysis nontariff barriers to trade are most pervasive when deteriorating macroeconomic conditions give rise to demands for protection by pressure groups when countries are sufficiently large to give policymakers incentives to impose protection and when domestic institutions enhance the ability of public officials to act on these incentives statistical results based on a sample of advanced industrial countries during the 1980s support the argument that the incidence of nontariff barriers tends to be greatest when the preferences of pressure groups and policymakers converge more attention should be devoted to the interaction between societal and statist factors in cross national studies of trade policy

fossil fuel producers under threat oil and gas producers face three threats prolonged low oil and gas prices tightening of climate policy and a tough budget on cumulative carbon emissions and technological innovation producing cheap substitutes for oil and gas these threats pose real risks of putting oil and gas producers out of business they lead to the problem of stranded assets and a significant downward valuation of oil and gas producers this calls for divesting from and shorting coal oil and gas the economies of oil and gas rich countries are typically in a deplorable state since they did not use their past windfalls to build up buffers and invest in a diversified economy more rapacious depletion of their oil and gas reserves will not help after the crash in oil and gas prices these countries are facing serious problems and it is difficult to see how they will cope with the outlined threats

regulation by prices quantities or both a review of instrument choice choosing appropriate policy instruments is an important part of successful regulation once objectives are agreed and suitable targets adopted policy makers can employ command and control regulation and or economic instruments and choose between fixing a price or a quantity this paper examines the relative advantages of price quantity and hybrid instruments according to their efficiency under uncertainty the trade off between credible commitment and flexibility implementation international considerations and political economy various illustrations of the theory are provided with two detailed applications to climate change and transport policy specifically congestion and safety pricing

the cumulative carbon budget and its implications the cumulative impact of carbon dioxide co2 emissions on climate has potentially profound economic and policy implications it implies that the long term climate change mitigation challenge should be reframed as a stock problem while the overwhelming majority of climate policies continue to focus on the flow of co2 into the atmosphere in 2030 or 2050 an obstacle however to the use of a cumulative carbon budget in policy is uncertainty in the size of this budget consistent with any specific temperature based goal such as limiting warming to 2 c this arises from uncertainty in the climate response to co2 emissions which is relatively tractable and uncertainty in future warming due to non co2 drivers which is less so we argue these uncertainties are best addressed through policies that recognize the need to reduce net global co2 emissions to zero to stabilize global temperatures but adapt automatically to evolving climate change adaptive policies would fit well within the paris agreement under the un framework convention on climate change

an arrgh chy the law and economics of pirate organization this article investigates the internal governance institutions of violent criminal enterprise by examining the law economics and organization of pirates to effectively organize their banditry pirates required mechanisms to prevent internal predation minimize crew conflict and maximize piratical profit pirates devised two institutions for this purpose first i analyze the system of piratical checks and balances crews used to constrain captain predation second i examine how pirates used democratic constitutions to minimize conflict and create piratical law and order pirate governance created sufficient order and cooperation to make pirates one of the most sophisticated and successful criminal organizations in history

income inequality regime repressiveness and political violence death rate from political violence is postulated to vary cross nationally as a positively accelerated time lagged function of income inequality and as a nonmonotonic inverted u function of regime repressiveness the former hypothesis is consistent with approaches to the explanation of collective political violence that emphasize the general concept of discontent or more specifically relative deprivation the latter hypothesis is consistent with a political process version of the resource mobilization approach in the context of a multivariate model estimated across two decades 1958 67 and 1968 77 support is found for the inequality hypothesis support also is foundfor the regime repressiveness hypothesis in the decade 1968 77 for which the index of regime repressiveness is available the u curve effect of regime repressiveness appears to have stronger impact on variation in rates of deadly political violence than the positively accelerated effect of income inequality

linking conflict to inequality and polarization in this paper we study a behavioral model of conflict that provides a basis for choosing certain indices of dispersion as indicators for conflict we show that a suitable monotone transform of the equilibrium level of conflict can be proxied by a linear function of the gini coefficient the herfindahl hirschman fractionalization index and a specific measure of polarization due to esteban and ray jel classification d74 d31

ethnicity and conflict an empirical study this paper examines the impact of ethnic divisions on conict the empirical specication is informed by a theoretical model of conict esteban and ray 2011 in which equilibrium conict is related to just three distributional indices of diversity ethnic polarization ethnic fractionalization and a greenberg gini index constructed across ethnic groups our empirical ndings verify that these distributional measures are signicant correlates of conict the underlying theory permits us to use these results to make inferences about the relative importance of public goods in conict as well as the extent of within group cohesion in conictual activity these eects are further strengthened as we introduce country specic measures of group cohesion and the relative importance of public goods and combine them with the distributional measures exactly as specied by the theory

the east european revolution of 1989 is it surprising that we were surprised many aspects of the east european revolution are controversial but on one point everyone agrees it caught the world by surprise even local dissidents were stunned by the sudden turn of events we will never know how many east europeans did foresee the explosion of 1989 but at each step accounts painted a picture of nations united in amazement to my knowledge only one study addresses the issue systematically four months after the breaching of the berlin wall the allensbach institute asked a broad sample of east germans a year ago did you expect such a peaceful revolution only 5 percent answered yes though 18 percent responded yes but not that fast fully 76 percent admitted to being totally surprised these figures are all the more remarkable given the i knew it would happen fallacy the human tendency to exaggerate foreknowledge baruch fischhoff and ruth beyth 1975 yet in hindsight the revolution appears as inevitable in each of the six countries the leadership was despised economic promises remained unfulfilled and basic freedoms existed only on paper more importantly winds of change in the soviet union were making soviet intervention increasingly unlikely but if the revolution was indeed inevitable why was it not foreseen what kept us from noticing signs that now after the fact are so plainly visible i preference falsification and revolutionary bandwagons

can ccs and net enable the continued use of fossil carbon fuels after cop21 carbon capture and storage ccs does not generate energy ccs applied to fossil and modern bio carbon fuels and feedstocks removes environmentally damaging co2 emissions cop21 stipulated a maximum 2 c 1 5 c global warming from 2050 in perpetuity both ccs and negative emission technology net are now required to manage the carbon stock in earth s atmosphere and oceans all components of ccs are operationally proven secure at the industrial scale fifteen ccs projects operate globally seven are under construction ccs systems increase electricity prices to about 100 mwhr ccs on industry is cheaper and storage costs minimal 5 20 tonne ccs reduces whole economy costs of carbon transition by 2 5 times policies of capex subsidy oversupplied emissions certificates weak carbon pricing and weak emissions standards have all failed to develop large cost ccs mega projects new carbon certificates could link the extraction of carbon to an obligation to store a percentage of emissions certificates connect ccs and net pathways to secure carbon storage for the public good

trust in large organizations several authors suggest that trust is an important determinant of cooperation between strangers in a society and therefore of performance of social institutions we argue that trust should be particularly important for the performance of large organizations in a cross section of countries evidence on government performance participation in civic and professional societies importance of large firms and the performance of social institutions more generally supports this hypothesis moreover trust is lower in countries with dominant hierarchical religions which may have deterred networks of cooperation trust hold up remarkably well on a cross section of countries this abstract was borrowed from another version of this item

energy the environment and innovation in this paper we review the theoretical and empirical literature on the role of policies in stimulating innovation that is designed to produce greener and more energy efficient technologies first we review the theoretical literature on the role of purely environmental policies in inducing firms to undertake environmental innovation the conclusion is that for a wide range of policies and in a wide range of circumstances one cannot prove that these policies necessarily induce greater innovation we then consider the empirical evidence which suggests that the effect of these policies is weak but that the largest effects come in the long run when through learning by doing firms better understand the scope and potential for new energy efficient technologies finally we consider the design of both environmental and technology policies and show that the interaction of these policies is complex and warrants considerable further research copyright 2002 oxford university press

the economics of organized crime and optimal law enforcement this article extends the optimal law enforcement literature to organized crime i model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion as long as extortion is a costless transfer from individuals to the criminal organization not only the existence of extortion is social welfare improving because it makes engaging in a criminal offense less attractive but it also allows the government to reduce expenditures on law enforcement when extortion is costly because the criminal organization resorts to threats and violence the existence of extortion is social welfare diminishing and may lead to higher expenditures on law enforcement

the impact of goods and capital market integration on european monetary politics members of the european union eu have long attempted to unify their monetary policies whether by fixing exchange rates or moving toward a single currency the success of these attempts has varied over time and among eu member states this article argues that the degree to which a country is integrated into eu trade and finance has a major impact on its willingness to make the sacrifices necessary to pursue monetary integration especially stability against europe s anchor currency the deutsche mark dm higher levels of intra european trade and investment increase the desirability of stabilizing exchange rates between european countries statistical evidence indicates that greater integration of goods and capital markets is associated with greater success in fixing national exchange rates against the dm this implies that pressures for monetary integration will continue but will vary among countries along with the degree to which they are economically linked to european trade and investment

pirational choice the economics of infamous pirate practices abstract this paper investigates the economics of infamous pirate practices two closely related economic theories the theory of signaling and the theory of reputation building explain these practices first i examine the pirate flag jolly roger which pirates used to signal their identity as unconstrained outlaws enabling them to take prizes without costly conflict second i consider how pirates combined heinous torture public displays of madness and published advertisement of their fiendishness to establish a reputation that prevented costly captive behaviors pirates infamous practices reduced their criminal enterprise s costs and increased its revenues enhancing the profitability of life on the account

public goods and political institutions trade and monetary policy processes in the united states basic analytic premises are an issue in contemporary debates about the u s foreign economic policy process in dispute are the power structures alleged to govern the formation of american trade and international monetary policy thus the literature supports both of these assumptions the distribution of power is skewed towards private actors in the issue area generally the distribution of power varies according to issue area within the camp of issue specific power structures as i shall discuss in more detail support can be found for almost any assumption about the distribution of power prevailing in the language of current debate between state and society

rulers and the ruled patterned inequality and the onset of mass political violence the theory of patterned inequality between rulers and ruled provides a valuable analytic approach to the relationship between inequality and political violence under conditions of a bifurcated pattern of inequality the probability of political violence is likely to be greater than under a more generalized inequality typically measured by the gini index a strong systematic relationship between patterned inequality in latin american landholdings and deaths from political violence was discovered using the exponential distribution as a model for the lower portion of the land distribution and the log exponential for the upper this degree of association was far stronger than that found between the gini index of land inequality in latin america and deaths from political violence evidence supporting the theory was also found in an analysis of middle eastern landholdings

the future of fossil fuels is it the end contrary to the assumptions underlying many of current energy and climate policies the prices of fossil fuels have fallen and may remain at the new normal levels in the medium term iran and iraq have considerable potential to increase their outputs and the new shale technologies will gradually globalize longer term new technologies in electricity generation storage and smart demand side technologies together with electric cars and the shift towards digitalization and new electricity based technologies in manufacturing will increase demand for electricity but not fossil fuels these new and emerging technologies rather than international agreements and the promotion of current generation renewables will probably bring fossil fuel dominance to a gradual close to facilitate decarbonization energy policy should be directed at enhancing r d and next generation renewables instead of supporting existing ones

are we fracked the impact of falling gas prices and the implications for coal to gas switching and carbon emissions we discuss the environmental implications of the dramatic drop in the price of natural gas following the us shale gas boom due to the rise of modern hydraulic fracturing in the first part of the paper we argue that the ensuing drop in the price of natural gas has an ambiguous effect on global carbon emissions because of three countervailing effects coal to gas switching in the us electric power sector an increase in the relative cost of us renewable energy sources and an increase in us coal exports our position is that without a meaningful cap the shale gas boom is likely to increase global emissions and the period during which natural gas is used as a bridge fuel to clean energy should be limited in the second part of the paper we review recent environmental policies for the us electric power sector that have contributed to reducing carbon emissions and discuss the complex economics of the newly introduced clean power plan although the availability of cheap natural gas has been factored in us environmental policy and has helped electricity generators to achieve compliance with various rules and regulations it should not derail policy from its long run objective which is the transition to a less fossil fuel dependent economy

trust but verify monitoring inspection costs and opportunism under limited observability abstract is feedback on trustworthiness necessary for the functioning of economic relationships in many real world economic environments such feedback can at best be acquired through costly monitoring raising questions of how trust and efficiency can be maintained in the lab we conduct a modified finite horizon binary trust game in which we vary the observability of the trustee s actions in the baseline condition trustors can perfectly observe their trustee s actions we compare this to a condition in which that actions are unobservable and three conditions in which they must be actively monitored at zero low or high cost respectively counter intuitively differences in observability do not lead to significant differences in trust and efficiency but the levels are supported by very different information structures while trustors monitored every action under zero observation costs most of trusting actions were blind trustors did not learn whether their trust was honored or not under costly monitoring even under complete unobservability almost half of the available surplus was realized there are distributive impacts however the gains from trust favor trustees under the more adverse informational conditions the behavioral patterns are consistent with the fact that trustors beliefs about their trustee s conduct are almost invariant across conditions

bankers alliances and economic policy patterns evidence from mexico and brazil this article suggests an organizational or institutional explanation of economic policy patterns which differs significantly from state or society centered explanations and those based on international factors bankers alliances defined as interest coalitions of public and private financiers play an important role in shaping economic policy the stronger the bankers alliance the more likely that long run economic policy patterns will feature orthodox policies such as tight monetary policy and limited government intervention in financial or foreign exchange markets the historical organization of state economic agencies and of capital create national environments more or less conducive to formation of strong bankers alliances the three key variables center on a the timing and actors involved in central bank formation b the relationship between the central bank and other state economic policy making agencies and c the extent of conglomeration between industrial and financial enterprises a

collective action with uncertain payoffs coordination public signals and punishment dilemmas how can one analyze collective action in protests or revolutions when individuals are uncertain about the relative payoffs of the status quo and revolution we model a calculus of protest of individuals who must either submit to the status quo or support revolt based only on personal information about their payoffs in deciding whether to revolt the citizen must infer both the benefit of successful revolution and the likely actions of other citizens we characterize conditions under which payoff uncertainty overturns conventional wisdom a when a citizen is too willing to revolt he reduces the incentives of others to revolt b less accurate information about the value of revolution can make revolt more likely c public signals from other citizens can reduce the likelihood of revolt d harsher punishment can increase the incidence of punishment and e the incidence of protest can be positively correlated with that of repression

inequality and political violence revisited in their 1987 article in this review muller and seligson used logged ordinary least squares lols to estimate the effect of income inequality on cross national levels of deaths by political violence t y wang challenges the robustness of the main conclusion and argues for the application of a maximum likelihood approach the exponential poisson regression epr model rather than lols he concludes that the widely used lols approach yields misleading conclusions when applied to event count data dixon muller and seligson replicate previous work using both lols and epr approaches and conclude that in most but not all respects the two approaches yield similar results supporting the effect of inequality when the specifications are identical they also argue in response to concerns expressed by brockett 1992 that the inequality results are robust when account is taken systematically of the best information on underreporting of deaths

inequality and insurgency maldistribution of land in agrarian societies is commonly thought to be an important precondition of mass political violence and revolution others argue that because of the difficulty of mobilizing rural populations for political protest land maldistribution is irrelevant except as part of an inegalitarian distribution of income nationwide these rival inequality hypotheses have significant implications with respect to the kinds of reforms likely to reduce the potential for insurgency in a society they are tested using the most comprehensive cross national compilation of data currently available on land inequality landlessness and income inequality support is found for the argument that attributes the greater causal import to income inequality moreover the effect of income inequality on political violence is found to hold in the context of a causal model that takes into account the repressiveness of the regime governmental acts of coercion intensity of separatism and level of economic development

the dynamics of the revenue maximization market share trade off saudi arabia s oil policy in the 2014 15 price fall given its highly undiversified economic base maximizing revenues will always rank highly in saudi arabia s output decision however this objective needs to be balanced against another maintaining its share in key markets and maximizing long term revenue given the massive size of saudi arabia s reserves the trade off between these two objectives tends to change over time depending on market conditions the nature of the shock and the behaviour of other producers saudi arabia s oil policy is hence not constant we argue that the advent of us shale has made the calculus of the trade off more uncertain complicating saudi arabia s output decision using a simple game we show that under uncertainty it is always safer for the kingdom to assume that the shale oil supply is highly elastic and thus decide not to cut output but as saudi arabia learns more about this new source of supply its policy could adapt accordingly the fact that saudi arabia s oil policy could change as the trade off between revenue maximization and market share evolves and as new information to the market arrives will keep the market second guessing and will continue to shape market expectations and to influence market outcomes jel q48 government policy d43 oligopoly and other forms of market imperfection q41 demand and supply prices d81 criteria for decision making under risk and uncertainty q02 commodity markets

implications of an economic theory of conflict hindu muslim violence in india we model intergroup conflict driven by economic changes within groups we show that if group incomes are low increasing group incomes raises violence against that group and lowers violence generated by it we then apply the model to data on hindu muslim violence in india our main result is that an increase in per capita muslim expenditures generates a large and significant increase in future religious conflict an increase in hindu expenditures has a negative or no effect these findings speak to the origins of hindu muslim violence in post independence india

rational choice and the dynamics of collective political action evaluating alternative models with panel data been hampered by the inability to use perceptions of the costs and benefits of participation at a given time to predict behavior that necessarily occurred in the past and by ambiguities associated with analyzing behavioral intentions instead of actual participation using panel data collected on a national sample in west germany between 1987 and 1989 we show that variables from a collective interest model measured in 1987 individuals dissatisfaction with the provision of collective goods beliefs that group actions can be successful and beliefs in the importance of their own participation predict subsequent participation in collective protest activities variables corresponding to the private selective incentives associated with protest are found to be less relevant furthermore we find that engaging in protest changes many of the perceptions that influence future participation we discuss the implications for theories of political mobilization p erhaps no area in mass political behavior research is beset with such serious methodological difficulties as the study of participation in political protest and other unconventional activities some of the problems such as finding and eliciting truthful responses from the limited number of individuals who engage in these types of behaviors can and have been remedied through better sampling and more sensitive interviewing methods in national and local probability surveys a more fundamental problem however is that unlike voting or campaign participation unconventional behavior does not occur during fixed periods and hence researchers typically cannot plan a study in advance of the specific activities they may wish to analyze this means that almost all previous surveybased research on protest and unconventional political action is prone to what green and shapiro 1994 85 term the pedestrian methodological defect of predicting past behavior from information gathered at the survey s current time this error would be less consequential for causal

towards a new complexity economics for sustainability some of the most important and urgent topics requiring economic analysis and policy advice are the problems of climate change and environmental sustainability and what can be done to alter corporate and individual behaviour to deal with these issues neoclassical economists tend to focus on market solutions such as carbon trading drawing on ideas of perfect rationality of actors and the appropriateness of marginal analysis to link such policies to the whole range of potential actions from legislative and regulatory to changing individual behaviours requires the economy and society to be analysed in its full complexity recognising that marginal analysis can be not just irrelevant but positively harmful when the need is for systemic shifts in economic and social trajectories this article draws upon a seminar series on complexity economics to consider how heterodox economic analysis can be brought to bear on the issue of the environment to develop a realistic policy agenda for change copyright oxford university press

individual participation in collective racial violence a rational choice synthesis existing rational choice treatments of collective violence have consistently discounted the role of the public goods component of the individual s decision calculus about whether or not to participate in such acts by assuming free rider effects with respect to the public goods these theories are unable to account for the initial inception of violence or for the later nonlooting behaviors that constitute aspects of a riot and indeed are preconditions for the inception of looting the only riot behavior for which these theories can offer any explanation five dimensions of discrimination are defined in rational choice terms and their elimination or reduction is defined as the creation of a public good i use existing theories of individual contributions to the provision of public goods to demonstrate that free rider effects need not be assumed and that the inception of a riot and later nonlooting riot behaviors can best be explained as individual contributions to the provision of the public goods represented by the elimination of the several forms of discrimination

views of economic inequality in latin america the authors assess the factors that affect judgments about the fairness of the distribution of wealth with pooled public opinion data from latinobarometro surveys conducted in 1997 2001 and 2002

domestic adjustment to international shocks in japan and the united states economic interdependence complicates domestic policymaking by interposing the decisions of foreigners in the loop that links policy instrument settings to economic outcomes nowhere was this vulnerability to external decisions demonstrated more forcefully even for the world s major economies than by the energy supply shocks of 1973 and 1979 the oil shocks posed challenges that offer unusual insight into the way nations choose policies their severity forced a policy response their unpredictable timing and at least in 1973 unprecedented nature ruled out conventional formulas and brought to the fore explicit policy trade offs this article seeks to explain how policymakers in the world s two major economies responded to these external shocks the analysis successively employs three vantage points system society and state in tracing the sources of domestic adjustment policies it focuses specifically on the extent to which policies accommodated or extinguished each shock s inflationary impulses and on the coherence and consistency with which the executive in each government formulated and pursued particular policy goals a comparison of these four cases illustrates the strengths and weaknesses of increasingly detailed theoretical frameworks for explaining policy choice although the research does not contradict the depiction of the united states and japan in terms of state strength it does underscore the importance of looking beyond formal institutional arrangements to consider how elite policy preferences ambitions and capacities can define the way constraints influence policy

an experimental study of the repeated trust game with incomplete information in the trust game first player 1 decides between non cooperation or trust in reciprocity only in the latter case player 2 chooses between exploiting or rewarding player 1 in our computerized experiment player 2 can be always rewarding implemented as a robot strategy or decide opportunistically to allow for reputation formation this base game is played repeatedly learning can be analyzed since participants play successively several repeated games with changing partners participants can explicitly rely on mixed strategies which allows testing the qualitative and quantitative aspects of reputation equilibria also at an individual level

the spontaneous evolution of commercial law jeremy bentham contended that property and state made law are born and must die together before the state s law there was no property take away the law all property ceases 4 309 most economists have taken this argument to heart clearly some system of defining and then protecting and enforcing property rights property law and rules of exchange contract law is needed for a market system to develop but does the state have to develop and enforce property and contract law one purpose of the following presentation is to demonstrate that the commercial sector is completely capable of establishing and enforcing its own laws a second purpose is to illustrate that modern commercial law is in fact largely made by the merchant community despite governmental efforts to take over provision of such law commerce is an evolving process of interaction and reciprocity which is simultaneously facilitated by and leads to an evolving system of commercial law carl menger 17 proposed that the origin formulation and the ultimate process of all social institutions including law is essentially the same as the spontaneous order adam smith 20 described for markets markets guided by smith s invisible hand coordinate interactions and so does customary law 6 7 these systems develop because perhaps through a process of trial and error it is found that the actions they are intended to coordinate are performed more effectively under one institutional arrangement or process than under another the more effective institutions and practices replace the less effective in the case of customary commercial law traditions and practice evolve to produce the observed spontaneous order as hayek explained however while smith s and menger s insights are firmly established in economics the study of jurisprudence has been almost completely unaffected by their arguments 9 101 one reason of course is that the invisible hand explanation for the emergence of market order is highly plausible because there is an obvious mechanism the mechanics of individual but interrelated market prices which provides the necessary coordination we call the price system the mechanism of evolution for a legal order is much less obvious thus the legal positivist view which holds that law is the product of deliberate design has a strong following among economists another major purpose of this discussion of commercial law therefore is to demonstrate that the rules of property and contract necessary for a market economy which most economists and legal scholars feel must be imposed have evolved without the

conflict war and redistribution this article analyzes the circumstances under which conflict leads to the outbreak of war using a formal model which incorporates both the redistribution of resources as an alternative to war and imperfect information countries act as rational agents concerned with both consumption and the public bad of a war in the first period both countries can either consume or build arms whereas in the second period there can be either the threat or the use of force to reallocate resources if both countries are fully informed then there will be no war but rather a voluntary redistribution of resources in a situation of asymmetric information however in which one country is fully informed and the other is not a war can occur if the uninformed country uses a separating equilibrium strategy precommitting itself to a positive probability of war in order to prevent bluffing by the informed country

rational choice round robin and rebellion an institutional solution to the problems of revolution abstract two collective action problems plague successful revolution on the one hand would be revolutionaries confront a participation problem whereby no rationally self interested individual has an incentive to participate in rebellion on the other hand individuals face a first mover problem whereby no rationally self interested individual has an incentive to lead rebellion this paper argues that 18th century merchant sailors who confronted these problems devised a novel institution to facilitate maritime revolution and assist them in overthrowing abusive captains this institution was called a round robin round robins helped overcome both the participation and first mover problems by aligning the interests of individual sailors desiring mutiny and restructuring the payoffs of leading versus following maritime rebellion

endogenous spillovers and the performance of research joint ventures we present a model of r d with endogenous spillovers and demonstrate that noncooperation can produce maximal spillovers the only other noncooperative outcome is minimal spillovers when noncooperation achieves maximal spillovers so does an rjv whereas minimal noncooperative spillovers imply partial but not necessarily maximal spillovers by an rjv partial rjv spillovers are chosen for anti competitive reasons and an rjv may also close a lab for anti competitive reasons the possibility of anti competitive outcomes is precluded in the existing literature on rjvs which focuses on symmetric outcomes our model predicts when anti competitive behaviour by an rjv arises

income inequality and the taste for revolution abstract although property rights are the cornerstone of market economies throughout history existing claims have been frequently overturned by revolutions one unsettled question is whether income inequality affects the likelihood of revolt this paper takes an approach different from previous studies by introducing data derived from two surveys of revolutionary preferences across a quarter million randomly sampled individuals more people are found to have a preference for revolt when inequality in their nation is high a 1 standard deviation increase in the gini coefficient explains up to 38 percent of the standard deviation in revolutionary support the results hold after controlling for a set of personal characteristics and country and year fixed effects since higher levels of income are found to have a negative impact on the taste for revolt the results suggest that either going for growth or implementing policies that reduce inequality can buy off those individuals with revolutionary preferences

health and population patterns as indicators of income inequality describes an empirically and theoretically based surrogate measure of income inequality resulting from work with existing cross national aggregate data on health income and population patterns discusses the derivation of that measure and its similarity to conventional data on income distribution the analysis put forth is based on the simple notion that the impact of additonal income on individual behavior is different at different income levels this can occur either through a declining marginal impact of expenditures in meeting a particular goal or else when rising incomes cause a shift in goals as previous goals have been met in instances in which the impact of income on individual decisions is nonlinear the average outcome depends on the distribution of income among individuals as well as the mean income level the determinants of health care and of fertility are discussed in the context of their relationship to income distribution and to other control variables the relationships are stated mathematically and the equations manipulated such that income inequality can be predicted by the level of health in a society or by the level of fertility the accuracy of these new measures is discussed and it is concluded that for less developed countries and times where direct measures of income inequality are lacking this provides a good surrogate measure of inequality the limitations of the method are discussed