linking permit markets multilaterally we formally study the determinants magnitude and distribution of efficiency gains generated in multilateral linkages between permit markets we provide two novel decomposition results for these gains characterize individual preferences over linking groups and show that our results are largely unaltered with strategic domestic emissions cap selection or when banking and borrowing are allowed using the paris agreement pledges and power sector emissions data of five countries which all use or considered using both emissions trading and linking we quantify the efficiency gains we find that the computed gains can be sizable and are split roughly equally between effort and risk sharing

permit trading merely an efficiency neutral redistribution away from climate change victims in this paper we present a climate policy game with international emissions trading where governments first select their amounts of emissions permits these permits are transferred to firms and then traded competitively on an international market compared with a game without trading we find that the potential efficiency gains from permit trading which have been identified in other studies are totally undone if governments also employ a tax or subsidy on domestic emissions the only effect of permit trading in this case is a redistribution of income away from those most affected by climate change

implicit contracts moral hazard and unemployment this paper considers a firm whose marginal revenue product of labor is a random variable we derive the form of an optimal long term contract between workers and the firm under the assumption that labor s marginal product is observed by the firm but not by the workers we show that the existence of asymmetric information causes unemployment to be greater than in a situation where information about labor s marginal product is public or where employment is determined in spot markets in particular unemployment can occur when the marginal product of labor exceeds the reservation wage

the licensing of patents under asymmetric information abstract this paper seeks to explain the use of royalty payments rather than fixed fees in the licensing of patents by the presence of asymmetric information the licensee is assumed to know the value of the patent and makes a single offer of a contract to the licensor it is shown that there is a unique equillibrium satisfying cho and kreps intuitive criterion qualitative properties of the equilibrium contract are derived by considering a continuum of types

bargaining and reputation an experiment on bargaining in the presence of behavioural types we conduct a series of laboratory experiments to understand what role commitment and reputation play in bargaining the experiments implement the abreu and gul 2000 bargaining model that demonstrates how introducing behavioral types which are obstinate in their demands creates incentives for all players to build reputations for being hard bargainers the data are qualitatively consistent with the theory as subjects mimic induced types furthermore we find evidence for the presence of complementary types whose initial demands acquiesce to induced behavioural demands however there are quantitative deviations from the theory subjects make aggressive demands too often and participate in longer conflicts before reaching agreements overall the results suggest that the abreu and gul 2000 model can be used to gain insights to bargaining behavior particularly in environments where the process underlying obstinate play is well established

will markets direct investments under the kyoto protocol lessons from the activities implemented jointly pilots under the kyoto protocol countries can meet treaty obligations by investing in projects that reduce or sequester greenhouse gases elsewhere prior to ratification treaty participants agreed to launch country based pilot projects referred to collectively as activities implemented jointly aij to test novel aspects of the project related provisions relying on a ten year history of projects we investigate the determinants of aij investment our findings suggest that review agency preferences related to national political objectives and possibly deeper cultural ties influenced project selection and limited the number of aij projects bilateral ties also appear to have affected investment decisions directly possibly because of related transaction costs the results suggest an investment process different from the assumptions that underlie well known estimates of cost savings related to the protocol s flexibility mechanisms we conclude that if approaches developed under the aij programs to approve projects are retained the scale of investment under kyoto s flexibility provisions and their cost savings will be less than what is generally anticipated and the pattern of investment less driven by abatement costs

bargaining with two sided incomplete information an infinite horizon model with alternating offers this paper examines an infinite horizon bargaining model incorporating five features two sided incomplete information with potentially information revealing strategies an infinite horizon uncertainty concerning the potential gains from trade an illumination of interesting qualitative bargaining issues and plausible free from arbitrarily specified out of equilibrium conjectures equilibria these features motivated in the paper have powerful implications a nash equilibrium exists and is generically both unique and sequential comparative static implications of variations in the game s specifications are developed we find that natural indications of bargaining strength emerge from the model and establish the intuitive result that an increase in a player s relative bargaining strength makes that player more likely to capture the gains from bargaining

analyzing the kyoto protocol under the marrakesh accords economic efficiency and environmental effectiveness abstract this article evaluates the environmental effectiveness and economic implications of the kyoto protocol kp after the bonn agreement and the marrakesh accords we will break it down into several components that correspond with major steps in the international process pre cop 6 version of the kp with unrestricted international emissions trading but without sinks withdrawal of the usa and decisions on sinks in bonn and marrakesh the marrakesh accords bring annex i emissions in 2010 without the usa at 0 5 under base year levels this corresponds to nearly 2 above the 1990 levels the us withdrawal has by far the greatest impact in reducing the environmental effectiveness of the kp whereas the impact of the decision on sinks is comparatively small the us withdrawal also substantially reduces the permit demand and permit prices will drop dramatically hot air becomes increasingly dominant and may threaten the viability of the kyoto mechanisms km especially in lower baseline business as usual bau scenarios therefore banking of hot air is of absolute importance to improve the environmental effectiveness of the protocol at moderately higher costs while enhancing the development of a viable emission trading market a strategy of curtailing and banking permit supply is also in the interest of the dominant seller russia

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes

monitoring moral hazard asymmetric information and risk sharing in procurement contracting this article characterizes the optimal procurement contract for a monopsonistic purchaser who contracts with a risk averse supplier with private information about his costs and who contributes an unobservable effort the costs incurred by the supplier may be uncertain and the purchaser has access to a monitor of costs that may be subject to noise that complicates risk sharing the purchaser prefers to respond to the observability problem with afixed price contract and to respond to the private information problem with a cost plus contract with uncertain costs and a perfect monitor the optimal contract relieves the supplier of some risk and the purchaser prefers that the effort of the supplier be subsidized with deterministic costs and a noisy monitor the optimal contract places risk on the supplier and the purchaser may prefer that the effort of the supplier be taxed procurement of goods and services is an important form of economic exchange that is often characterized by bargaining and contracting rather than by exchange in a competitive market the procurement setting analyzed here corresponds to the case in which the purchaser is a monopsonist who contracts with a single supplier as in the case of the department of defense contracting for the delivery of a military system in such a setting a principalagent model may be a reasonable representation of the relationship between the purchaser and the supplier and the economics of the procurement arrangement is then captured in the contract when the item procured is standardized the relevant information is likely to be common knowledge and risk may be minimal in such a case a fixed price contract may satisfactorily resolve the purchaser s contracting problem in contrast the model considered here is intended to represent the procurement of a nonstandardized item about which information is incomplete costs are uncertain and observability of supplier costs by the purchaser is limited procurement thus is complicated by the conjunction of adverse selection risk sharing and moral hazard problems

the market for tradable ghg permits under the kyoto protocol a survey of model studies abstract this paper gathers results from 25 models of the market for tradable greenhouse gas ghg emission permits under the kyoto protocol due to diverging projections of emissions growth and different modeling approaches the model results differ substantially the average market volume is approximately 17 and 33 billion usd under global trading and annex b trading respectively including non carbon ghg lowers compliance costs and permit prices in the absence of the us permit demand roughly equals hot air from the former soviet union these countries can increase their revenues from selling permits by restricting supply which raises the permit price

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

bargaining and reputation the paper develops a reputation based theory of bargaining the idea is to investigate and highlight the influence of bargaining postures on bargaining outcomes a complete information bargaining model a la rubinstein is amended to accommodate irrational types who are obstinate and indeed for tractability assumed to be completely inflexible in their offers and demands a strong independence of procedures result is derived after initial postures have been adopted the bargaining outcome is independent of the fine details of the bargaining protocol so long as both players have the opportunity to make offers frequently the latter analysis yields a unique continuous time limit with a war of attrition structure in the continuous time game equilibrium is unique and entails delay consequently inefficiency the equilibrium outcome reflects the combined influence of the rates of time preference of the players and the ex ante probabilities of different irrational types as the probability of irrationality goes to zero delay and inefficiency disappear furthermore if there is a rich set of types for both agents the limit equilibrium payoffs are inversely proportional to their rates of time preference

an evolutionary model of bargaining abstract individuals from two populations of bargainers are randomly matched to play the nash demand game they make their demands by choosing best replies based on an incomplete knowledge of the precedents and occasionally they choose randomly there is no common knowledge over the long run typically one division will be observed almost all of the time this stochastically stable division is close to the nash solution when all agents in the same population are alike when the populations are heterogeneous a generalization of the nash solution results if there is some mixing between the two populations the stable division is fifty fifty journal of economic literature classification number c78

the clean development mechanism in a world carbon market this paper discusses the role of the clean development mechanism cdm on the market for carbon quotas and countries commitments to reduce their carbon emission levels we show that the cdm contributes to an efficient funding of clean technology investments in least developed countries however the cdm is not neutral on the global level of carbon emissions as it entices countries to raise their emission caps the cdm may also make inappropriate the inclusion of any country that takes no emission abatement commitment it can even make inefficient a country s decision to commit to an emission target

transnational markets for sustainable development governance the case of redd summary transnational sustainable development that is sustainable development policy initiatives involving actors in multiple countries often involves donor sponsorship of sustainable development projects similar to matching markets like venture capital employment searches or college admissions these transaction systems also known as matching markets can be seen in a variety of phenomena in transnational development governance including private aid public private sustainable development projects and transnational polycentric governance initiatives in this paper we utilize the matching market framework to develop a new approach to addressing an important question in development studies how do donors understood as donor agencies funds and foundations and firms choose which projects to support beginning with the observation that matching markets in sustainable development governance are heavily constrained by transaction costs in the absence of formal institutions that lower costs of searching monitoring and communicating with potential partners we hypothesize that both donors and project participants are motivated to utilize strategies to lower transaction costs of making connections which results in selection of projects based on the presence of transnational brokers or familiar partners or as part of a strategy of spatial specialization conceptualizing the choices made in this matching market as an affiliation network connecting donors to sponsored projects we utilize exponential random graph models of 91 funders support of 195 reducing emissions from deforestation redd and sustainable forest management pilot projects undertaken between 1989 and june 2012 to test the effects of transaction costs on donors choices of projects to sponsor we find that brokerage prior collaboration with the donor in question and spatial specialization all contribute to the ability of project proponents to attract funder support often outperforming relevant project characteristics such as carbon density and accessibility these findings suggest tensions between local scale project implementation and the transnational search for resource support observed qualitatively in the development studies literature can have significant effects on the overall structure of transnational collaboration on sustainable development

observations on cooperation we study environments in which agents are randomly matched to play a prisoner s dilemma and each player observes a few of the partner s past actions against previous opponents we depart from the existing related literature by allowing a small fraction of the population to be commitment types the presence of committed agents destabilizes previously proposed mechanisms for sustaining cooperation we present a novel intuitive combination of strategies that sustains cooperation in various environments moreover we show that under an additional assumption of stationarity this combination of strategies is essentially the unique mechanism to support full cooperation and it is robust to various perturbations finally we extend the results to a setup in which agents also observe actions played by past opponents against the current partner and we characterize which observation structure is optimal for sustaining cooperation

optimal nonuniform prices we consider optimal nonuniform pricing schedules where the price depends upon the amount purchased such schedules are regularly used by public utilities and other services welfare optimal nonuniform prices are related to the theory of optimal uniform prices developed by ramsey we characterize situations in which upward or downward discontinuities in pricing schedules are optimal our results are applicable to a number of related problems including optimal taxation insurance and incentives economic theory has confined most of its attention to markets with uniform prices in which the price per unit charged is invariant to the level of a customer s purchases this focus is warranted when goods are resellable since any attempt to charge nonuniform prices could be circumvented by reselling amongst customers but when goods are not resellable nonuniform prices are not only possible but common public utilities have declining block pricing with lower unit charges for large levels of consumption many agencies providing services including communications transportation even education use two part pricing with a fixed entry or retainer charge and a further charge per unit consumption nonuniform price schedules can be expected to be ever more common as services become a larger fraction of total output the increasing prevalence of nonuniform pricing policies have made them the focus of recent public and economic attention oi 1971 feldstein 1972 and ng and weisser 1974 have examined optimal two part pricing policies leland and meyer 1976 examine block pricing and show by example that optimal welfare policies may require nonuniform prices if zero profit constraints are binding in this paper we consider arbitrary nonuniform pricing policies using variational techniques two part and block pricing schedules are of course special cases of the environment we consider the work most closely related to our examination is the seminal paper by spence 1978 and subsequent analysis by roberts 1979 spence however does not pay explicit attention to the key role played by constraints on optimal pricing schedules roberts considers upward price discontinuities which lead to bunching of consumers at a given level of consumption but not downward price discontinuities which lead to regions in which no consumer chooses to consume gaps bunching or gaps may appear in the optimal price schedule even when underlying demand and cost functions are smooth and well behaved the prevalence of discontinuous pricing schedules e g the block pricing structures of public utilities argues that these questions are of practical as well as theoretical interest

voluntarily separable repeated prisoner s dilemma ordinary repeated games do not apply to real societies where one can cheat and run away from partners we formulate a model of endogenous relationships which one can unilaterally end and start with a randomly assigned new partner with no information flow focusing on two person two action prisoner s dilemma we show that the endogenous duration of partnerships gives rise to a significantly dierent evolutionary stability structure from the ordinary evolutionary games monomorphic equilibria require initial trust building while a polymorphic equilibrium includes early cooperators than any strategy in monomorphic equilibria and is thus more ecient this

incentive contracting with asymmetric and imperfect precontractual knowledge abstract the pareto optimal contract between principal and risk neutral agent is analyzed for the case in which the agent s information is initially imperfect but better than that of the principal in contrast to the case where precontractual information is symmetric the final contract between principal and agent will not always guarantee an efficient outcome however in contrast to the case where the agent s information is initially perfect the agent may be unable to command rents from his superior information and the outcome will always be efficient the conditions under which efficient or inefficient outcomes are guaranteed differ qualitatively according to whether the random stete of nature follows a continuous or a discrete distribution journal of economic literature classification numbers 022 026 611

wind farm investment risks under uncertain cdm benefit in china abstract china has set an ambitious target to increase its wind power capacity by 35 gw from 2007 to 2020 the country s hunger for clean power provides great opportunities for wind energy investors however risks from china s uncertain electricity market regulation and an uncertain energy policy framework mainly due to uncertain clean development mechanism cdm benefits prevent foreign investors from investing in china s wind energy the objectives of this paper are to 1 quantify wind energy investment risk premiums in an uncertain international energy policy context and 2 evaluate the impact of uncertain cdm benefits on the net present values of wind power projects with four scenarios this study simulates possible prices of certified emissions reductions cers from wind power projects project net present values npvs have been calculated the project risk premiums are drawn from different and uncertain cer prices our key findings show that uncertain cdm benefits will significantly affect the project npvs this paper concludes that the chinese government needs revising its tariff incentives most likely by introducing fixed feed in tariffs fits and re examining its cdm granting policy and its wind project tax rates to facilitate wind power development and enable china to achieve its wind energy target

international emissions trading with endogenous allowance choices abstract this paper compares endogenous choices of tradable and non tradable emission allowances by non cooperative countries i find that the cost savings of trading do not necessarily lead to less pollution in particular environmentally more concerned countries usually choose less allowances if these are tradable but this may be offset by the choice of more allowances on the side of environmentally less concerned countries moreover if the establishment of a trading system requires the unanimous approval of all countries there may be no agreement on trading even if it were to lead to less pollution overall conversely a trading system may find unanimous approval even if it induces more pollution

employment with asymmetric information in an economy without informational and other distortions entrepreneurs and workers can write labor contracts that support a pareto optimal allocation of resources this paper is an attempt to characterize contracts when enterpreneurs are better informed about the state of nature than are their workers asymmetric information generally results in a suboptimal allocation of both risk and worker effort in particular if consumption and leisure are perfect substitutes employment will be less than fully pareto optimal in all but the most favorable states of nature

rational actors tit for tat types and the evolution of cooperation abstract evolutionary models in economics have often been criticized for failing to allow for rational maximizing behavior the present paper represents a step toward correcting this deficiency by introducing rational actors into an evolutionary model of the finitely repeated prisoners dilemma at the same time the model endogenizes the uncertainty postulated in the classic model of kreps et al 1982 thus explaining cooperation by rational actors in the finitely repeated prisoners dilemma a testable implication of the model is that the level of voluntary cooperation in a society will be relatively high where geographical mobility is relatively low

limited liability contracts between principal and agent abstract the optimal strategy of the principal is examined in an environment where there are ex post limitations on the maximum penalty that can be imposed on a riskneutral agent contrary to the case in which such limitations are not imposed it is in the principal s interest to deliberately forego the opportunity to induce socially efficient behavior and to instead design a contract that induces the agent to realize an efficient outcome only in the most productive state of nature and perhaps in certain very unproductive states the properties of the contract are examined in detail

the economics of the cdm levy revenue potential tax incidence and distortionary effects a levy on the clean development mechanism and other carbon trading schemes is a potential source of finance for climate change adaptation an adaptation levy of 2 is currently imposed on all cdm transactions which could raise around 500 million between now and 2012 this paper analyses the scope for raising further adaptation finance from the cdm the economic costs deadweight loss of such a measure and the incidence of the levy that is the economic burden the levy would impose on the buyers and sellers of credits we find that a levy of 2 could raise up to 2 billion a year in 2020 if there are no restrictions on demand this could rise to 10 billion for a 10 tax restrictions on credit demand called supplementarity limits the requirement that most emission abatement should happen domestically curtail trade volumes and consequently tax revenues they also alter the economic impact of the cdm levy without supplementarity restrictions sellers developing countries bear two thirds of the cost of the tax if there are supplementarity limits they can pass on the tax burden to buyers developed countries more or less in full without supplementarity restrictions the distortionary effect of the levy its deadweight loss rises sharply with the tax rate with them the deadweight loss is close to zero

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

probationary contracts in agencies with bilateral asymmetric information this paper examines a two period principal and agent model where the agent s ability level is not observable to the principal and revealed to the agent only after the contract is signed the value of the agent s output to the principal is affected by the agent s collegiality which is unknown to the agent but is observed by the principal in these circumstances with risk neutral agents the principal prefers a probationary scheme with second period rehiring based on satisfactory first period performance multiple equilibria results from this problem however the refinements literature provides a resolution to the multiplicity under certain conditions the agent is rehired for sufficiently high first period output the superior agent will work harder in the first period than under recontracting and the inferior type agent will work less hard the probationary scheme is shown to be pareto superior to standard recontracting

evolutionary stability in a reputational model of bargaining a large and growing literature on reputation in games builds on the insight that the possibility of one or more players being boundedly rational can have significant effects on equilibrium behavior this literature leaves unexplained the presence of behavioral players in the first place as well as the particular forms of irrationality assumed and the population shares of the various types in this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior this cost may be arbitrarily small within the context of a reputational model of bargaining we show that evolutionary stability necessitates the presence of behavioral players it also places significant joint restrictions on the set of behavioral types that can coexist their respective population shares and the long run population share of rational players

transitional restricted linkage between emissions trading schemes linkages between emissions trading systems are deemed an important element of the future climate policy landscape they are however difficult to agree and remain few and far between temporary restrictions on permit trading have potential to facilitate and gradually approach unrestricted full linkage we compare the relative merits of several link restrictions in this respect namely quantitative transfer limits border taxes on transfers exchange and discount rates and unilateral linkage to this end we develop a simple model to have a unifying framework which in conjunction with lessons we draw from real world experiences serves as a basis for a broader policy oriented discussion while quantitative restrictions seem to be the natural route to full linkage they can lead to uncertain distributional effects and weaken price signals these aspects are mitigated under a border permit tax but this policy seems harder to implement exchange rates have potential to adjust for programmes stringencies and raise ambition over time but can be challenging to select as experience corroborates unilateral linkage can be a convenient approach

international emissions trading good or bad abstract using a non cooperative climate policy game applied in the literature we find that an agreement with international emissions trading leads to increased emissions and reduced efficiency

carbon market risks and rewards firm perceptions of cdm investment decisions in brazil and india the carbon market experiences of brazil and india represent policy success stories under several criteria a careful evaluation however reveals challenges to market development that should be addressed in order to make the rollout of a post 2012 cdm more effective we conducted firm level interviews covering 82 cdm plants in the sugar and cement sectors in brazil and india focusing on how individual managers understood the potential benefits and risks of undertaking clean development mechanism cdm investments our results indicate that the cdm operates in a far more complex way in practice than that of simply adding a marginal increment to a project s internal rate of return our results indicate the following first although anticipated revenue played a central role in most managers decisions to pursue cdm investments there was no standard practice to account for financial benefits of cdm investments second some managers identified non financial reputational factors as their primary motivation for pursuing cdm projects and third under fluctuating regulatory regimes with real immediate costs and uncertain cdm revenue managers favored projects that often did not require carbon revenue to be viable the post 2012 cdm architecture can benefit from incorporating these insights and in particular reassess goals for strict additionality and mechanisms for achieving it

transaction costs institutional rigidities and the size of the clean development mechanism transaction costs and institutional rigidities will reduce the attractiveness of the kyoto protocol flexibility mechanisms compared to domestic greenhouse gas abatement options the clean development mechanism cdm in particular is likely to entail considerable costs of baseline development project registration verification and certification the activities implemented jointly pilot phase and the prototype carbon fund programme give indications about these costs there is evidence that projects with high implementation costs have high transaction costs as well moreover cdm projects have to be approved by host country institutions and so far only a small share of host countries has been able to set up these institutions several of the larger host countries intend to only approve projects if the market price is above a certain threshold some governments will also levy fees to finance costs of approval bodies we assess these issues using a quantitative model of the kyoto protocol permit market we conclude that while changes in demand from annex b countries remain the crucial factor the size of the cdm will depend to a significant degree on transaction costs and institutional barriers in host countries

audience costs and reputation in crisis bargaining in crisis bargaining literature it is conventional wisdom that the ability of generating higher audience costs is an advantage for a leader of a state however empirical studies show that democratic states use this mechanism only occasionally this paper formally shows that higher audience costs may be good or bad depending on 1 the benefit cost ratio of the crisis 2 initial probability of resolve and 3 how fast states generate audience costs with time in particular if the value of the prize over the cost of attacking is low or the initial probability of resolve is high enough then having greater ability to generate audience costs may undermine democratic states diplomatic success

reputational bargaining and deadlines i highlight how reputational concerns provide a natural explanation for deadline effects the high frequency of deals prior to a deadline in bargaining rational agents imitate the demands of obstinate behavioral types and engage in brinkmanship in the face of uncertainty about the deadline s arrival i also identify how surplus is divided when the prior probability of behavioral types is vanishingly small if behavioral types are committed to fixed demands outcomes converge to the nash bargaining solution regardless of agents respective impatience if behavioral types can adopt more complex demand strategies outcomes converge to the solution of an alternating offers game without behavioral types for the deadline environment

is trade in permits good for the environment we analyze the impact of trade in emission permits on environmental policy when countries trade a differentiated good pollution is always higher with tradable permits as compared to the case where permits are not internationally tradable if pollution is a pure global public bad i e the marginal damage from transboundary pollution is the same as that from local pollution the permit price under trade equals the domestic marginal damage from own emissions if pollution is not a pure global public bad i e the marginal damage from transboundary pollution is less than that from local pollution trade results in a permit price lower than the domestic marginal damage from own emissions pollution is higher under trade relative to autarky regardless of the nature of transboundary pollution the permit price equivalent pollution tax is lower and pollution is higher with internationally tradable permits than with nontradable permits

the design of supply contracts as a problem of delegation we consider the design of a supply contract as a problem of delegation in a buying firm in general the agent who acts on behalf of a principal in the firm cannot be assumed to transform her information in probability estimates like the principal would do possessing the same information in the investigated case of incomplete information the design of contracts is affected by the beliefs about characteristics of the supplier therefore it is important to analyze in which way the expected profit depends on these probabilities in order to find the principal s optimal instruction the best instruction is determined by a trade off between the costs due to the time the principal spends on dealing with the problem and formulating the instructions and the costs due to a suboptimal menu of contracts offered by the agent

a renegotiation proof mechanism for a principal agent model with moral hazard and adverse selection in this article i shall analyze a principal agent model with moral hazard and adverse selection i show that for a large class of environments communication has no value to the principal and that he cannot do better than to average over the different types of agents this observation is then used to derive a renegotiation proof mechanism

biodiesel value chain and access to energy in ethiopia policies and business prospects abstract similar to many net oil importing sub sahara african countries ethiopia s economy is rural and as it stands today it is far from being a fossil fuel based economy instead the economy is largely powered by traditional burning of solid biomass despite its small share in the overall energy supply 7 imported fuel absorbs half of ethiopia s foreign currency earnings the common justifications behind the development of biofuels such as energy source diversification foreign currency saving rural poverty alleviation through employment and technology transfers were all appealing for ethiopian policy advisers in 2007 mostly influenced by the global discourse ethiopia launched a biofuel expansion strategy and a massive ad hoc investment promotion of two biodiesel crops castor and jatropha in this paper we synthesize the various biodiesel development initiatives and modes of production and point out at the gaps in policy formulation and project implementation evaluating the prospect and constraints for biodiesel production in ethiopia we conclude that most of the prerequisites for a viable biodiesel industry still need to be met we identify key areas and priorities to further strengthen the development of the biodiesel sector