can poorly informed regulators hinder competition this paper considers an entry deterrence game in which environmental policy is set without perfectly observing the incumbent firm s costs we investigate if regulators who can have an informational advantage relative to the potential entrant support entry deterring practices the paper demonstrates that while entry deterring equilibria only emerge under restrictive conditions when the regulator is perfectly informed these equilibria arise under larger settings as he becomes uninformed furthermore we show that the regulator is willing to support the incumbent s entry deterring practices regardless of his degree of information if entry costs are sufficiently high however when entry costs are lower the regulator only sustains this type of practices if he is poorly informed

the regulation of non point source pollution and risk preferences an experimental approach many environmental problems notably arising from agriculture can be classified as non point source pollution problems in this paper we present results of an experimental study on the performance of three mechanisms designed to deal with such problems collective fining random fining and a tax subsidy scheme we find that the fining schemes induce under abatement a feature being enforced with experience we further elicit the participants risk attitude and show that the performance of collective fining is not affected by the subjects risk preferences under a system based on random fining the performance of the mechanism worsens in the presence of risk seeking subjects however coordination on over abatement under the tax subsidy can be alleviated if subjects are risk averse c 2011 elsevier b v all rights reserved

cooperation against theft a test of incentives for water management in tunisia water theft carried out by manipulating water meters constrains volumetric pricing in semi arid regions cooperative management can reduce theft and improve incentives for efficient water use by inducing peer monitoring using a theoretical model we show that theft is more likely when prices are high punishments are weak and cooperatives are large we also show how cooperative membership and punishment levels are determined endogenously by constraints on monitoring we test the model on data from tunisia for the years 2001 2003 relying on instruments that proxy for unobservable monitoring costs the results confirm that well designed incentives can reduce theft and that constraints on monitoring costs affect institutional design

input versus emission taxes environmental taxes in a mass balance and transaction costs perspective the standard policy recommendation to limit pollution is to use taxes or tradeable quotas on emissions a general emphasis on emissions does not however take proper account of the characteristics of the material flow through the economy an analysis of the relationships between transaction costs and features of this flow shows that it may be less costly to tax inputs into the economy the paper focuses on the advantages of a mass flow perspective in environmental economics the trade off between the precision of an environmental regulation and its implementation costs and develops criteria for choosing between input and emission related instruments

moral hazard in risk averse teams holmstrom 1982 has shown that a non budget balancing contract induces a team of risk neutral agents to choose the first best effort levels this is not generally true when agents are risk averse furthermore a massacre contract which punishes all but one agent when the outcome is low can attain the first best over a wider range of parameters than any other budget balancing contract

policy for the adoption of new environmental monitoring technologies to manage stock externalities abstract with the development of modern information technologies relying on nanotechnologies and remote sensing a number of systems can be envisaged that allow for monitoring of the negative externalities generated by producers consumers or travelers road pricing schemes or individual emission meters for automobiles are two examples we analyze a dynamic model of stock pollution when the regulator has incomplete information on emissions generated by heterogeneous agents our contribution is to explicitly study a decentralized policy for adoption of monitoring equipment over time we determine the second best tax rates the pattern of monitoring technology adoption and identify conditions for the voluntary diffusion of monitoring technologies over time simulations show the welfare gains compared to alternative policies

examining crop price effects on production decision and resource allocation an ex ante approach this article examines the output price effects on the us crop production employing an ex ante approach to the differential systems of input demand and output supply the estimation results of the

nonpoint pollution control inducing first best outcomes through the use of threats abstract this paper develops an economic model to analyze the use of a policy that combines a voluntary approach to controlling nonpoint source pollution with a background threat of an ambient tax if the voluntary approach is unsuccessful in meeting a pre specified environmental goal we show that such a policy can be designed to induce cost minimizing abatement without actually imposing the tax because the threat of imposition of the tax is sufficient to induce voluntary compliance thus the combined policy approach can not only be more effective in protecting environmental quality than a pure voluntary approach but can also be less costly than a pure ambient tax approach however whether the cost minimizing choices are a unique equilibrium or not depends on the design of the tax policy and whether or not it can be applied retroactively all results still hold if the background threat takes the form of a reducing in government subsidies

budget balancing incentive mechanisms abstract a p xepapadeas j environ econom management20 113 26 1991 developed a pollution abatement incentive mechanism that both reduces the information requirements of a regulator and is budget balancing drawing only on the social gains from pollution abatement to encourage firm compliance this paper demonstrates that contrary to xepapadeas the budget balancing system of random penalties cannot be used to induce compliance with the regulator s objectives if firms are risk neutral however the mechanism can be successfully applied if firms are sufficiently risk averse e rasmusen rand j econom 18 428 435 1987

combining results of different models the case of a levy on the dutch nitrogen surplus economic instruments such as levies are considered by the dutch government for reducing the harmful effects of the production and application of manure to analyse these levies a framework which makes it possible to combine and to choose among different types of research is developed the results are integrated along the line of the marginal abatement cost curve the problems related to integrating different types of research are taken into account the method developed allows every farmer to react to a levy differently a levy turns out to be more effective to reduce the nitrogen surplus on farm level in the pig fattening sector when compared to the pig breeding sector but even a levy of 2 guilders kg of nitrogen does not remove the total manure surplus in the pig sector and results in large profit losses further research is needed to underpin the empirical input required by the model

wage rigidity and job creation recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations we use worker level data from the cps to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions the wage of new hires unlike the aggregate wage is volatile and responds almost one to one to changes in labor productivity we conclude that there is little evidence for wage rigidity in the data

environmental regulation by private contest abstract it is widely expected that the recent trend in the us eu and elsewhere towards an increased role for private agents and agencies in the formulation and enforcement of environmental regulation will continue if environmental regulation is to be privatised in this way it is natural to ask how far the activities of environmental groups on whose shoulders much of the responsibility for defending the environment is likely to fall should be subsidised or taxed in this paper we identify the trade offs involved and characterise the optimal subsidy tax the analysis is argued to have significant implications for how governments should think about the way in which fiscal law treats environmental ngo s

market based systems for reducing chemical use in agriculture in the united states this study uses a computable general equilibrium cge model of the u s economy to estimate the economic effects of agricultural fertilizer and pesticide input reductions on individual farm sectors and on the economy as a whole the costs of reducing agricultural chemicals using a market based approach and a command and control approach are compared the real cost to society of restrictng fertilizer and pesticide use by 20 percent across all uses is estimated to be 2 3 billion a market based approach that would provide incentives to reduce chemical use in the most cost efficient manner would be about 10 percent less costly

on the utility premium of friedman and savage we re examine the utility premium of friedman savage friedman milton and savage leonard j the utility analysis of choices involving risk journal of political economy 56 1948 pp 279 304 this measure is useful in understanding risky choices for instance its reaction to an increased wealth equates to a precautionary demand for saving we also analyze its two components c 2009 published by elsevier b v

pattern formation spatial externalities and regulation in coupled economic ecological systems abstract we study the management of ecosystems in which interacting state variables that are affected by management decisions diffuse in space we study pattern formation first in a setting where economic agents maximize myopic profits and ignore spillovers onto agents at other sites and second in the context of a social planner who internalizes these spillovers we compare patterns under these two institutions and study how the differences in the patterns generated by these two institutions impact the design of regulatory schemes to internalize the externalities at the same time we introduce new methods based on fourier series type decompositions that enable us to turn an intractable infinite dimensional optimal control problem into a countable number of finite dimensional optimal control problems as far as we know these methods are new to the economics literature our theory is applied to the management and regulation of a semi arid system

environmental consciousness and moral hazard in international agreements to protect the environment abstract a group of countries that can potentially commit to cooperation to protect the environment are identified as environmentally conscious countries conditions are examined under which they can provide self financing side payments too a second group of less environmentally conscious countries so that the two groups form a global or partial stable coalition that agrees to reduce emissions a mechanism that detects cheating is also developed in order to induce the desired emissions even when the emissions level of an individual country cannot be observed by the rest of the participating countries

voluntary threat approaches to reduce ambient water pollution this article considers the regulation of nonpoint source water pollution through the use of a voluntary threat approach which allows a polluter group to meet a standard voluntarily but imposes an ambient tax upon noncompliance in particular we develop an endogenous voluntary threat approach that can be parameterized to induce compliance as a unique subgame perfect nash equilibrium and eliminate zero abatement equilibria experimental evidence on the proposed approach as well as the exogenous approach of segerson and wu 2006 suggests that the severity of the threatened tax and the opportunity for communication are critical in determining policy outcomes

performance of the ambient tax does the nature of the damage matter the ambient tax is often considered as an efficient instrument to achieve a first best outcome of ambient pollution when the regulator cannot observe individual emissions or when monitoring costs are prohibitive while this view is supported to a large extent by experimental findings there remains several hurdles that hinder the implementation of the ambient tax in the field one of these hurdles is the nature of the damage experimental findings suggest that the efficiency of the ambient tax is higher under external damage i e if ambient pollution affects non polluters spraggon in j public econ 84 427 456 2002 than under internal damage i e if ambient pollution affects polluters themselves cochard et al in environ resour econ 30 393 422 2005 but this result rests on very different experimental settings therefore we designed a new experiment that allows to compare external and internal damage within a common setting our main finding is that the ambient tax is equally efficient under internal and external damage

correlated uncertainty and policy instrument choice abstract for two decades environmental economists have generally maintained that benefit uncertainty is irrelevant for choosing between price and quantity instruments but that cost uncertainty matters with the identity of the efficient instrument depending upon the relative slopes of the marginal benefit and cost functions but in the presence of simultaneous correlated uncertainty such policy instrument recommendations may be inappropriate with plausible values of relevant parameters the conventional identification of a price instrument will be reversed to favor instead a quantity instrument the opposite reversal from the choice of a quantity instrument to a price instrument seems less likely to occur

the excess sensitivity of layoffs and quits to demand excessive layoffs in bad times and excessive quits in good times both stem from the same weakness in practical employment arrangements the specific nature of worker firm relations creates a situat

voluntary agreements as an environmental policy instrument evaluation criteria abstract as the resource to voluntary action grows wider a question must be held on the factors that influence the performance of a voluntary agreement as an environmental policy instrument our goal in this paper is to answer that question outlining the main variables that make a voluntary agreement simultaneously efficient effective and just using several articles on the subject of voluntary action under the themes of economic regulation and of contracts under asymmetric information as well as available reports on the portuguese and european experience on the use of voluntary agreements we will undertake this objective following three steps i we begin by underlining the main factors that justify the private and public option for voluntary action ii we then present an analysis of the co regulation process under the requirements of the three e criteria efficiency effectiveness and equity iii finally we conclude by presenting an evaluation table that summarises the elements that we found to be the most important for the performance of the voluntary action in each one of those criteria

administrative costs and instrument choice for stochastic non point source pollutants this paper extends the empiricalanalysis of non point source pollution to thecase where the pollutant is stochastic andalternative regulatory instruments havedifferent administrative costs it also appliesa method of stochastic programming whereemissions are log normally distributed forthe kennet catchment in south west england werank a range of policies in terms of abatementcosts alone and total costs abatement andadministrative costs on the basis ofabatement costs alone a uniform emission taxis the cost minimising policy but on the basisof total cost a nitrogen input tax is theleast cost policy furthermore the policyranking based on total costs changes as thereliability standard increases

dynamic fertilizer nutrient demands for corn a cointegrated and error correcting system past studies of the demand for fertilizer have typically been based on static models which assume that adjustments toward equilibrium are instantaneous this article builds on past studies by developing a dynamic model of nutrient demands of corn unit root and cointegration tests demonstrate that fertilizer demands of corn are dynamic therefore statistically correct estimates can be obtained using a dynamic model a set of error correction models for nitrogen phosphate and potash use in corn production are estimated results provide strong statistical evidence that nutrient demands of corn are price inelastic both in the short and the long run

the externalities problem of transboundary and persistent pollution abstract this paper deals with implementing the efficient allocation of transboundary and persistent pollution in particular we adapt varian s compensation mechanism varian a solution to the problem of externalities when agents are well informed amer econ rev 85 1994 1278 1293 to cover situations in which pollutants extend to neighboring regions and their effects persist over time the main contribution of this paper is the design of a mechanism that implements in subgame perfect equilibrium the efficient pollution levels in this context

reputation and the control of pollution this paper investigates the effectiveness of reputation in inducing a polluting firm to self regulate its emissions when consumers have imperfect information in particular we ask to what extent must consumers reward and punish the firm before it chooses self regulation as its dominant strategy we find that if payoffs in the stage game are such that both the consumer and the polluting firm have beliefs that are consistent with each others behaviors then the firm has a positive probability of playing clean in each period of a finite game further we find that a weak reward punishment scheme may have an adverse effect on the environment and that there are both environmental and welfare gains associated with strengthening the scheme

agricultural runoff as a nonpoint externality a theoretical development the purpose of this paper is to develop and explore a theory dealing with an important facet of agricultural runoff problems agricultural runoff is a nonpoint externality with notable implications for both research and policy a nonpoint externality exists whenever the externality contributions of individual economic agents cannot be practically measured by direct monitoring without monitoring regulations on emissions cannot be enforced and charges or subsidies cannot be assessed thus policies which are usually suggested for pollution abatement are not available there is great need for a theoretical base that can adequately capture these facts such a theory yields some important implications even before specific empirical applications the economic problem of agricultural runoff can be separated into three distinct categories first the sediment nutrients and chemicals removed by runoff represent a loss of resources to the individual farmer these costs are borne privately by farmers second if the discount rate of the individual farmer is greater than the social discount rate or if the farmer has a planning horizon which is shorter than society s the farmer will mine the soil resource at a rate which is more depletive than is socially optimal this is a temporal externality a third category involves the conservation of mass physical resources lost by the individual farm must appear elsewhere in the environment in sufficient quantities these resources are pollutants since water is the primary transport media for these resources it is water that is polluted by soil nutrients and agricultural chemicals this spatial externality has been the focus of much research here we intend to develop a theory for these issues to employ it to suggest a revised research methodology and to provide some important conclusions about alternative runoff policies only two of the three categories of agricultural runoff problems involve externalities and only the spatial externality is considered here

alternative approaches to comparative nth degree risk aversion this paper extends the three main approaches to comparative risk aversion the risk premium approach and the probability premium approach of pratt 1964 risk aversion in the small and in the large

a competitive model of worker replacement and wage rigidity we adapt the models of menzio and moen 2010 and snell and thomas 2010 to consider a labor market in which firms can commit to wage contracts but cannot commit not to replace incumbent workers workers are risk averse so that there exists an incentive for firms to smooth wages real wages respond in a highly nonlinear manner to shocks exhibiting downward rigidity and magnifying the response of unemployment to negative shocks we also consider layoffs and show that for a range of shocks labor hoarding occurs while wages are cut we argue these features are consistent with recent evidence jel e32 j41

the probability premium a graphical representation we illustrate that pratt s probability premium can be given a simple graphical representation allowing a direct comparison to the equivalent but more prevalent concept of risk premium under expected utility we also show that the probability premium s graphical representation under the dual theory mimics that of the risk premium under expected utility

the effects of pricing policies on water conservation and drainage a general model of adoption of input conserving technologies by competitive firms is introduced using drip irrigation as an example an environmental regulation such as a drainage effluent charge is shown to influence adoption early adopters are likely to be producers with less efficient fixed assets land of low quality or antiquated capital higher input costs higher water prices or greater depth to groundwater and in more environmentally sensitive regions simulations show that drainage regulations can be expected to play a major role in adoption of more efficient irrigation technologies in california thus conservation may be a key to solving resource scarcity problems and reducing external environmental costs

efficiency of nonpoint source pollution instruments an experimental study in nonpoint source pollution problems the regulator does not observe each polluter s individual emission which prevents him from using the conventional policy instruments therefore new instruments have been designed to regulate this type of pollution in an experiment we compare the efficiency of some of these instruments an input based tax an ambient tax subsidy an ambient tax and a group fine we assume that polluters themselves are affected by environmental damages a control session without any regulation is also carried out in order to study the status quo situation our experimental data show that the input tax and the ambient tax are very efficient and reliable and the group fine is fairly efficient and reliable these instruments improve social welfare with respect to the status quo on the contrary the ambient tax subsidy decreases social welfare with respect to the status quo and its effect is very unreliable

the regulation of environmental innovations abstract we offer mechanisms to regulate environmental r d projects that are intertemporal and indivisible and involve high monitoring cost screening and contracting the r d performer are based solely on the project completion time when the project duration is ex ante uncertain to all parties including the performing firm the mechanism is formulated in terms of a completion time limit the mechanism extends to other intertemporal public projects as well as to principal agent settings with dynamic agent s tasks

nitrogen land substitution in corn production a reconciliation of aggregate and firm level evidence in this paper we seek to reconcile low farm level substitution elasticity between nitrogen fertilizer and land with larger industry level values for the corn sector this is accomplished with a micro simulation model which identifies twenty three heterogeneous groups of corn farmers based on survey data for indiana after controlling for soil quality slope crop rotation and natural nitrogen sources considerable variation in fertilizer application rates remains model simulations indicate that the estimated substitution elasticity at the state level 1 15 is consistent with very low farm level substitutability the difference is attributable to compositional changes in the wake of relative price shocks these compositional effects are potentially very important but they are ignored in most policy analyses

the social costs of second best policies evidence from agricultural ghg mitigation abstract this paper investigates the social costs of second best agricultural greenhouse gas ghg mitigation policies adjustments along the land use and input intensity margins are represented within a regionalized optimization model of california crop production calibrated to economic and agronomic information second best policies relying on spatially aggregated ghg emission factors lead to small abatement efficiency losses while policies targeting a single ghg lead to moderate losses in contrast policies targeting a single input entail large abatement efficiency losses which nonetheless can be reduced by combining instruments

the effect of implicit contracts on the movement of wages over the business cycle evidence from micro data in this paper we address the question of whether wages are affected by labor market conditions in a manner more consistent with a contract approach than with a standard spot market model from a simple implicit contract model we derive implications about the links between wages and past labor market conditions using individual data from the current population survey and the panel study of income dynamics we find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility

sustainable farm income in the presence of soil erosion an agricultural hartwick rule soil erosion is a physical and economic problem of natural capital degradation even along an intertemporally efficient trajectory one can have in a loss of soil fertility and a continuous decline of agricultural net revenue moreover soil erosion is a major source of surface water pollution in rural areas erosion control is thus a challenge for sustainable resource management and internalizing external effects to sustain the level of farm income an agricultural hartwick rule is proposed which addresses both on farm and off farm effects of soil erosion first it requires the investment of the soil rents into alternative capital second additional measures are required to comply with an ambient quality target a charge subsidy scheme proves the most adequate from a perspective of cost effectiveness and sustainability if effluent charge revenues are earmarked to subsidize cropland retirement at the watershed scale in combination with the investment of soil rents this enables to maintain the level of farm income constant over time while respecting the ambient quality target altogether this fulfills the requirements of efficiency and sustainability 2003 elsevier science b v all rights reserved

ambient taxes under m dimensional choice sets heterogeneous expectations and risk aversion we consider the design of ambient taxes forrisk neutral and risk averse polluters whenpolluters and the regulatory agency haveasymmetric information about environmentalrelationships and probabilities associatedwith random events unlike prior work we showthat under these conditions optimal ambienttaxes must be firm specific and accompaniedby additional incentives to influencepolluters choices of abatement techniques

the indirect land use impacts of united states biofuel policies the importance of acreage yield and bilateral trade responses recent work has highlighted agricultural land conversion as a significant debit in the greenhouse gas accounting of ethanol as an alternative fuel this work has at the same time sparked considerable debate on the role of crop yield growth as a means of avoiding rapid land conversion we examine the agricultural land use impacts of mandate driven ethanol demand increases in the united states in a formal economic equilibrium framework which allows us to examine the importance of yield price relationships we find that the standard assumption of trend yield growth is likely restrictive for analysis of equilibrium response to significant demand increases for fuel feedstocks furthermore we identify both the acreage response and bilateral trade specification of a multi country model as important sources of variability in terms of parametric uncertainty in predicting global land use change from the biofuels boom

a model of industrial pollution in a stochastic environment abstract standard models of pollution abatement assume that pollution accumulation occurs in a deterministic pattern as a by product of the production process governmental intervention often occurs in the form of taxation or mandatory abatement controls to reduce inefficiency caused by incomplete markets in this paper we assume that the accumulation effect of pollution may be stochastic due for instance to the random absorption capacity of the ecosystem furthermore we assume that the level of pollution may vary with input use as well as output level we proceed to analyze properties of a policy for efficient social management of competitive firms which generate pollution

prudence probability premium abstract prudence probability premium is defined in the risk apportionment model eeckhoudt and schlesinger 2006 for an increase in downside risk we show sufficient conditions for comparing the probability premiums between two individuals when the apportioned risk is small and large

adverse selection and pigou taxes it id assumed that firms have different technologies and that an environment protection agency knows which technologies exist but not which is used by which firms neither the emissions of individual firms nor their total emissions are observable the output of each individual firm however can be monitored without cost based on this information tax schemes are constructed which induce firms to produce the socially efficient output quantities conditions about cost functions are derived which ensure the existence of tax schemes which yield first best solutions

a theory of anticipated utility abstract a new theory of cardinal utility with an associated set of axioms is presented it is a generalization of the von neumann morgenstern expected utility theory which permits the analysis of phenomena associated with the distortion of subjective probability

nonpoint source pollution taxes and excessive tax burden if a regulator is unable to measure firms individual emissions an ambient tax can be used to achieve the socially desired level of pollution with this tax each firm pays a unit tax on aggregate emissions in order for the tax to be effective firms must recognize that their decisions affect aggregate emissions when firms behave strategically with respect to the tax setting regulator under plausible circumstances their tax burden is lower under an ambient tax relative to the tax which charges firms on the basis of individual emissions firms may prefer the case where the regulator is unable to observe individual firm emissions even if this asymmetric information causes the regulator to tax each firm on the basis of aggregate emissions

the regulation of non point source pollution under imperfect and asymmetric information abstract this paper develops a bayesian framework for discussing the role of information in the design of non point source pollution control mechanisms an ambient concentration tax is examined allowing for spatial transport among multiple zones imposition of the tax requires costly measurement of concentrations in selected zones and the selection of zones for measurement must be undertaken without perfect information regarding several parameters of the problem potentially crucial information issues discussed include a the impact of asymmetric priors regarding fate and transport b the cost of measuring ambient concentration and c the optimal acquisition of information regarding fate and transport

welfare impacts of alternative public policies for agricultural pollution control in an open economy a general equilibrium framework a general equilibrium approach is used to evaluate the welfare impacts of alternative policies for reducing agricultural pollution in an open economy with preexisting distortions caused by income taxes and agricultural subsidies the policies examined here include the removal of distortionary agricultural subsidies we find that even though these distortions are small compared to others in the economy removing them and imposing nitrogen reduction subsidies and or output taxes can enhance welfare and reduce nitrogen pollution thereby leading to a substantial double dividend the relative efficiency of the alternative policies examined here depends on the level of the nitrogen reduction target copyright 2008 oxford university press

risk aversion in quiggin and yaari s rank order model of choice under uncertainty this paper studies the rank dependent model of choice under uncertainty proposed by j quiggin in 1982 and elaborated by m e yaari in 1984 first a rigorous axiomatic foundation for the model is provided a very close analogy with expected utility theory is drawn permitting a considerably simplified treatment risk aversion and its measurement are then studied two characterizations one weaker and one stronger are presented in addition to the one considered by yaari lastly risk aversion and other properties of th model are related to empirically observed departures from expected utility maximizing behavior copyright 1987 by royal economic society

environmental policy under imperfect information incentives and moral hazard abstract when net emissions of individual polluters cannot be efficiently monitored then emissions charges controls on emissions levels or subsidies for emissions reduction are not effective as environmental policy instruments this paper proposes instruments that can be applied in such limited information situations these instruments take the form of contracts between a pollution control agency and individual polluters the contracts include a combination of fines and subsidies that induces dischargers to follow optimal environmental policies in the absence of individual monitoring

spatial heterogeneity and the choice of instruments to control nonpoint pollution because it is difficult to monitor emissions and to implement differentialtaxes and standards uniform taxes and standards on agricultural chemicaluse are often proposed and used to control nonpoint source pollution thisarticle analyzes the relative efficiency of these uniform instruments in thepresence of spatial heterogeneity we show that the relative slopes of themarginal pollution cost and marginal profit of chemical use are only one ofthe factors that affect the relative efficiency other factors includecorrelation between marginal pollution costs and marginal profits and theslope and variability of marginal profits in addition a uniform tax mayresult in some farmers not using the chemical and a uniform standard mayhave no effect on low input land we show empirically that the presence ofcorner solutions can reverse a conventional finding of tax or standardsuperiority based on the relative slop rule

incentives precision technology and environmental protection abstract this paper calls for a reevaluation of the pollution problem in order to devise efficient strategies for its control it contends that a fundamental cause of pollution is inefficiency in input use during the production process this inefficiency manifests itself as input waste and polluting residues precision technologies can increase the effectiveness of inputs used in production and reduce pollution generation despite their potential economic and ecological benefits adoption of precision technologies has been slow this paper presents a conceptual framework to identify and analyze the specific factors that affect their diffusion among microunits these include various heterogeneous characteristics of microunits prices which do not reflect the relevant scarcities due to distortionary regulatory policies and lack of institutional mechanisms for efficient allocation of inputs and outputs it rationalizes the observed variations in the appropriate choice of technology across microunits and argues for the need to broaden the range of incentive based instruments for environmental protection beyond pollution taxes

effectiveness of environmental regulations under imperfect enforcement and the firm s avoidance behavior this paper explicitly defines enforcement quality and develops a model by incorporating enforcement quality and the firm s avoidance behavior the results indicate that the effectiveness of environmental regulations is likely to depend upon the level of enforcement quality as well as upon the nature of the firm s avoidance behavior policy instruments may become incompatible under certain circumstances enforcement quality should be properly targeted to enhance functional harmonization between instruments the condition under which emission tax is more effective under imperfect enforcement than under complete enforcement is also identified

a damage based tax mechanism for regulation of non point emissions in a recent paper segerson 1988 proposed a novel incentive mechanism for stochastic non point emissions based on ambient pollution concentrations in nature for specification of the mechanism when the damage function is nonlinear the regulator must know polluters cost and emission functions the mechanism also gives incentives to form coalitions among polluters which if they are formed render the mechanism inefficient in this paper we propose a revised mechanism which eliminates the need for knowledge of polluters cost and emission functions and reduces the probability of coalition forming a standards and pricing version of the revised mechanism with both properties mentioned is also developed

ambient based pollution mechanisms a comparison of homogeneous and heterogeneous groups of emitters abstract over the last two decades ambient based tax mechanisms have been offered as a potential solution to the problem of nonpoint source water pollution previous theoretical analyses suggest that the performance of ambient based tax mechanisms does not depend on firm characteristics such as size whilst policy discussions advocate that such mechanisms are best suited for regulating relatively homogeneous firms using controlled laboratory experiments we provide empirical evidence that the distribution of firm sizes does have a significant impact on observed group decision making and further that heterogeneity has the potential to generate both some relatively desirable outcomes as well as some outcomes that are not attractive these results suggest that richer theoretical models that capture important strategic interactions and social preferences are needed to better describe laboratory behavior and by extension behavior in potential policy settings

regulation of non point emissions a variance based mechanism non point emission problems such as pesticide nitrate and phosphorus pollution of lakes and ground water are often characterised by a small number of polluters convex damage functions and stochastic emissions some regulatory mechanisms proposed in the literature for stochastic non point emissions implement the optimal abatement vector in dominant strategies ensuring that non nash conjectures cannot be rationalized however specification of these mechanisms requires firm level information and differentiated rates when the damage function is convex other mechanisms eliminate the need for firm level information and rate differentiation but only implement optimum in nash strategies where non nash conjectures that cause equilibrium to stray from optimum can be rationalized in this paper we propose a mechanism which eliminates the need for firm level information and rate differentiation while retaining implementation in dominant strategies

risk aversion in the theory of expected utility with rank dependent probabilities expected utility with rank dependent probability theory is a model of decision making under risk where the preference relations on the set of probability distributions is represented by the mathematical expectation of a utility function with respect to a transformation of the probability distributions on the set of outcomes this paper defines based on g teaux differentiability measures of risk aversion for such preferences which characterize the relation more risk averse and applies these measures to the analysis of unconditional and conditional portfolio choice problems

substituting one risk increase for another a method for measuring risk aversion abstract this paper defines the rate of substitution of one stochastic change to a random variable for another it then focuses on the case where one of these changes is an nth degree risk increase and the other is an mth degree risk increase where n m 1 the paper shows that the rate of substitution for these two risk increases can be used to provide a broader definition and two additional characterizations of the nth degree ross more risk averse partial order the implications for local intensity measures of nth degree risk aversion are also examined the analysis organizes the existing results as well as generates new ones

ambient taxes when polluters have multiple choices economic research on environmental policy design has largely been concerned with the merits of emissions based economic incentives e g emissions charges emissions reduction subsidies transferable discharge permits ambient based tax subsidy schemes have drawn considerable interest in nonpoint pollution literature as alternatives to emissions based instruments expanding especially on segerson s seminal article this article examines the optimal design and budget balancing properties of ambient tax subsidy schemes under more realistic assumptions about the dimensions of firms choice sets than prior research

assessment of korean customers willingness to pay with rps abstract to increase the use of renewable energy the korean government will introduce the renewable portfolio standard rps in 2012 the rps places responsibility for extra renewable energy costs on the consumers and allows price competition among different renewable sources accordingly this study analyzes through the contingent valuation cv the willingness of korean households to pay more for electricity generated by wind photovoltaic pv and hydropower our empirical results show that although the willingness to pay or wtp was highest for wind power and lowest for hydropower the differences in wtp among the renewable sources were statistically insignificant this suggests that korean consumers prefer a renewable portfolio that minimizes power supply costs the average wtp for all three energy types was krw 1562 7 usd 1 350 per month per household which was approximately 3 7 of the average monthly electricity bill in 2010 this amount represents only 58 2 of what the korean government allocated in its budget to the new and renewable energy dissemination program in 2010 thus our results imply that the promotion of the new and renewable energy dissemination program may be difficult only with the wtp for electricity generated from renewable sources specifically the mean wtp will not support the set aside dissemination capacity for pv after 2014

job selection and wages over the business cycle we consider a model with on the job search where current wages depend only on current aggregate labor market conditions and idiosyncratic match specic productivities we show theoretically that the model replicates the ndings in bils 1985 and beaudry and dinardo 1991 on the history dependence in wages we develop a method to measure match qualities in the data and show empirically that various variables summarizing past aggregate labor market conditions have explanatory power for current wages only because they are correlated with match qualities they lose any predictive power once match qualities are accounted for

the entry deterring effects of inflexible regulation this paper investigates the signalling role of tax policy in promoting or hindering the ability of a monopolist to practise entry deterrence we show that environmental policy can facilitate the incumbent firm s concealment of information from potential entrants thus deterring entry and yet entail welfare improvements furthermore we demonstrate that entry deterrence is more likely to arise when environmental regulation cannot be rapidly revised across time if market conditions change inflexible regimes than when regulatory agencies can adjust environmental policy over time les effets de dissuasion de l entree d une reglementation inflexible ce texte examine le role de signalisation d une politique fiscale qui promeut ou reduit l habilete d un monopole a pratiquer la dissuasion de l entree de concurrents on montre qu une politique environnementale peut faciliter la dissimulation d information par la firme en place vis a vis les concurrents potentiels et donc les dissuader d entrer et pourtant engendrer des ameliorations de bien etre de plus on montre que la dissuasion de l entree est davantage susceptible d emerger quand la reglementation environnementale ne peut pas etre revisee rapidement dans le temps si les conditions de marche se modifient regimes inflexibles que quand les agences de reglementation environnementales peuvent ajuster la politiques dans le temps

insider bargaining power starting wages and involuntary unemployment recent analyses of wage bargaining has emphasized the distinction between insiders and outsiders yet one typically assumes that insiders and recently hired outsiders are paid the same wage we con

when does environmental regulation facilitate entry deterring practices abstract this paper evaluates the welfare benefits of introducing environmental regulation in a market that is subject to the threat of entry we consider complete and incomplete information settings where potential entrants use the regulator s tax policy and the incumbent s output decisions in order to infer the incumbent s cost structure when the regulator is absent we show that firms entry deterring practices increase pollution relative to complete information hence under certain conditions environmental regulation becomes more beneficial in incomplete than in complete information contexts our results therefore identify under which cases an under or over estimation of the welfare benefits of environmental regulation arises from ignoring the information setting in which firms interact we also examine how this estimation error increases as firms become more symmetric in their production costs

implementing the efficient allocation of pollution we provide simple mechanisms to implement the efficient allocation of pollution first assuming complete information across firms and then allowing for incomplete information both mechanisms operate by inducing firms to monitor one another using firms reports to determine pollution allotments and transfers the complete information mechanism determines a firm s transfer according to a linear pollution price set by other firms both mechanisms can be modified to be budget balanced in and out of equilibrium the complete information mechanism implements the efficient allocation even when firms are allowed to use mixed strategies under a single crossing condition the same holds for the incomplete information mechanism this abstract was borrowed from another version of this item

limits to environmental bonds abstract bonds have recently been promoted as an alternative tool to control environmental damages particularly in those instances when the innovative activities of a firm have uncertain future impacts under this mechanism a firm would post a bond ex ante forfeiting all or a portion of the bond if its activities harmed environmental resources while the benefits of bonds have been developed there has been little systematic effort to explore their limitations in contrast the labor literature has extensively studied the limits of bonds as a mechanism to prevent worker shirking using insights from this parallel problem this paper explores the limits to environmental bonds focusing on the problems of moral hazard liquidity constraints and legal restrictions each limit offers a challenge to the success of environmental bonds we explore the use of bonds in surface mining and agricultural nonpoint pollution as motivating examples we also consider how other incentive schemes suggested by the labor literature might prove useful in the context of environmental management we consider the labor mechanisms of efficiency wages increasing wage profiles trust funds and rank order tournaments

long term crop productivity response and its interaction with cereal markets and energy prices abstract crop yields are endogenous as long as economic agents adjust to permanent changes in expected prices the literature however does not offer a definitive value of how much yield would change in response to sustained price changes to fill the gap we use available scientific findings and data to estimate yield elasticities that enable agricultural commodity and food policy analysis using a world market model with short to long run yield response we show the impacts of sustained energy price shocks on global cereal supply and demand the results highlight substantial differences in quantity and price effects depending on the yield elasticities these results demonstrate the need to recognize yield response when assessing impacts of energy prices or biofuel production on food uses or more generally on food security in the face of income and population growth evolving dietary patterns climate change implications or other long run pressures

research issues in nonpoint pollution control research on nonpoint pollution control instruments has focused primarily on incentives applied either to production inputs that affect nonpoint pollution or to ambient pollution concentrations both approaches may in theory yield an efficient solution however input based incentives will generally have to be second best to make implementation practical design issues include which inputs to monitor and the rates to apply to them the limited research indicates that second best input based incentives can be effective in adjusting input use in environmentally desirable ways alternatively ambient based incentives have theoretical appeal because efficient policy design appears to be less complex than for input based incentives these incentives have no track record nor close analogues that demonstrate potential effectiveness however research on how households and firms might react in response to ambient based incentives is needed before these instruments can be seriously considered

asymmetric information and uncertainty the usefulness of logbooks as a regulation measure abstract in many fisheries managed by quota systems fishermen are required to keep a logbook containing information about catches no well functioning enforcement system is set up in connection with the logbooks since the purpose is to assist biologists in making stock assessments in this paper we consider a case where three market failures a stock externality problem a stock uncertainty problem and problems with measuring individual catches arise simultaneously it is shown that a stock tax and a tax on voluntary self reported catches may solve these three problems by taxing voluntary self reported catches we make use of logbook information it is shown using an analytic model that it will be in the interest of risk averse fishermen to report part of their catch voluntarily even without an enforcement policy in addition it is shown that the tax structure can secure optimal expected individual catches and empirical simulations show that the tax payment is relatively low thus the tax system may be useful in practical fisheries management

the utility premium of friedman and savage comparative risk aversion and comparative prudence we show that the utility premium of friedman and savage can be used to explain comparative risk aversion and comparative prudence more precisely we show that the greater the risk aversion measure the greater a risk s utility premium normalized by the marginal utility and that the greater the prudence measure the greater the utility premium for disaggregating a certain loss of wealth and a zero mean risk normalized by the utility function s second derivative

collective versus random fining an experimental study on controlling ambient pollution this paper presents an experimental study oftwo different pollution compliance games collective vis a vis random fining as ameans to regulate non pointpollution using samples from both costa ricancoffee mill managers and costa rican students we find that the two games perform equivalentlybut although they lead to efficient outcomesthrough nash play in the majority of cases theobserved frequency of nash play is lower thantheoretically predicted moreover we rejectthe hypothesis that managers and studentsbehave equally off the equilibrium managerstend to over abate whereas students tend tounder abate this result suggests theimportance of considering subject pooldifferences in the evaluation of environmentalpolicies by means of experiments particularlyif those policies involve certain forms ofmanagement decisions

on repeated moral hazard with discounting in this paper we analyze optimal contracts in an infinitely repeated agency model in which both the principal and agent discount the future we show that there is a stationary representation of the optimal contract when the agent s conditional discounted expected utility is used as a state variable this representation reduces the multi period problem to a static variational problem which can be analyzed using standard variational techniques this reduction is used to obtain several properties of the contract

agri environmental schemes adverse selection information structure and delegation this work analyzes alternative designs of agri environmental schemes and how different incentive mechanisms impact on their overall efficiency it focuses on spatial targeting and delegation in an asymmetric information context first the optimal contract under adverse selection is modeled this model underlines the trade off between information rents and allocative efficiency the impact of spatial targeting is then addressed disaggregated information structures increase the optimal efforts asked of the farmers it may also involve higher information rents and may reduce the net contributions of some farmers finally the consequences of delegating authority within the principal agent relationship are investigated the results illustrate that spatial targeting and delegation when combined have asymmetric impacts on farmers payoffs

observability and choice of instrument mix in the control of externalities abstract in controlling environmental externalities pigouvian taxes are an appropriate instrument when individual emissions can be monitored while ambient taxes are deemed appropriate to control non point source pollution when the ambient pollution but not individual emissions can be monitored this paper shows that under uncertainty the efficient regulatory scheme for non point source pollution is a mix of pigouvian and ambient taxes the pigouvian fees are imposed on emissions revealed by the polluting firms in exchange for a lower ambient tax thus a non point source case can be gradually transformed into a point source case