energy price disparity and public welfare abstract the differences in the price of energy to economic sectors are linked to a number of system parameters and to public welfare there are large disparities in energy prices within states when comparing residential and industrial prices although neoclassical economics predicts one price in markets the large disparities between the two sectors across states negatively affects the efficiency of resource allocation creates subsidies for those getting the cheap energy and results in unequal access to energy these in turn lead to inefficient partitioning of energy between products and waste higher pollution leakage of wealth and poorer energy use efficiency i e high energy intensity states with large energy price disparities between sectors have statistically higher poverty lower incomes more pollution and use more energy but with less efficiency higher energy price disparities also result in higher throughput per unit of output thus reducing the chances for sustainability and lower public welfare

modified ecological footprint accounting and analysis based on embodied exergy a case study of the chinese society 1981 2001 abstract the resource consumption of the chinese society from 1981 to 2001 is investigated by ecological footprint ef as an aggregate indicator based on the theory of ecological thermodynamics a modified calculation of ecological footprint termed as embodied exergy ecological footprint eeef in contrast to the conventional one is performed and related overall trends of the chinese society 1981 2001 are analyzed the annual policy for the individual sector is described in detail corresponding to the ef and eeef components comparison of the conventional ef and the eeef based on different views of ecological production is outlined the ef intensity and eeef intensity are also presented to depict the resource consumption level corresponding to unit economic output finally eeef is suggested to serve as a modified indicator of ef towards illustrating the productions of the resource environment population and thereby reflecting the ecological overshoot of the general ecological system

economy environment interactions in the long run a neo austrian approach abstract this paper describes a neo austrian approach to the long run interactions between invention innovation and technical progress on the one hand and resource use and pollution on the other this approach is used to construct a formal model which simulates output capital accumulation pollution emission pollution abatement etc for a simple model economy we begin by reviewing the role and conceptualisation of time in economic modelling we then move on to outline neo austrian capital theory as an alternative to the conventional approach we note the implications of the neo austrian approach for modelling resource use and pollution and a simulation model is constructed embodying the neo austrian approach to the time structure of production the two possible ways the model can be interpreted are then explored results from the simulation model are presented and assessed finally plans for future work with this approach are described

democratising the global economy by ecologicalising economics the example of global warming abstract the aim of this paper is to show that continued reliance on an unreconstructed neo classical economic model for human progress is largely responsible for an economic development path which is both unsustainable and undemocratic using the topical issue of global warming as an illustration it is argued that the ecological isation of the economics discipline challenges the foundations of this strategy and promises among other benefits a more democratic global economic organisation the data analysed in this paper suggest that the damage of global warming is directly attributable to economic activity the benefits of economic growth go to the economically articulate and the disbenefits in terms of environmental damage are borne by the economically inarticulate mainstream economics gives no answer to and becomes a method for evading this moral problem the data also show that huge increases in energy efficiency are required if a basically unchanged world economic system is to be sustainable nevertheless the predominant goal of development policy is to ignore the problem of scale and to promote an economic model of urbanised development in the developing countries which carries the implication and the promise that the rates of resource consumption typical in developed countries can be achieved globally an alternative development model is presented which includes the recognition that in ecological terms developed countries are in debt to developing countries largely because of the way in which economic growth is measured gross of externalised social and environmental costs a method is suggested for calculating part of this ecological debt for individual countries thus going some way towards quantifying the extent of the distortions in the current global political economy and the unsustainability of the present economic order

energy as a factor of production and entropy as a pollution indicator in macroeconomic modelling abstract fluctuating energy prices and the environment s limited capacity for absorbing pollution constitute significant uncertainties for future industrial evolution solving a set of differential equations and using the simplex algorithm in linear programming we look into the questions how changing energy inputs and prices have affected industrial growth in the past and how the energy system can be optimized so that pollution becomes minimum in the future we obtain production functions which depend linearly on energy and exponentially on the ratios of labor capital and energy capital they describe well the growth of output in west germany and the u s a during the last two decades and the responses to theenergy price explosions energy conservation was an important response element the most optimistic possible savings of primary energy by heat exchangers heat pumps and cogeneration at the present fixed energy demand profiles are computed to be 54 in the netherlands 36 in west germany and 59 in japan a pollution indicator entropy production is proposed and incorporated in a model of enviromental constraints on industrial growth

annual versus lifetime income redistribution by social security abstract in this study we compare the redistributive impact of the dutch social security on an annual basis with the lifetime redistributive impact the analysis confirms the theoretical notion that the lifetime impact is smaller than the annual incidence studies suggest this holds especially for old age pensions and social assistance and to a lesser extent the disability state pension we also find that for the netherlands the younger the cohort is the larger the difference however employee insurances do not necessarily imply a smaller redistributive impact on a lifetime basis the results are of course affected by the discount rate used and the assumptions with respect to economic growth the discount rate generally appears to be negatively correlated with the redistributive impact whereas the effect of growth is less straightforward

agent compensation and the limits of bonding agents in positions of trust may engage in malfeasance which is difficult to detect this paper develops a model in which employers seek to control malfeasance by paying wages contingent on imperfect monitoring and agents may be required to pay entry fees or post bonds we conclude that entry fees which exceed agents assets are ineffective in controlling malfeasance as a result conditions exist in which it is optimal to pay agents more than their opportunity cost such conditions lead to an excess supply of applicants and allow employers to engage in discrimination at zero cost to themselves

energy aesthetics and knowledge in complex economic systems it is argued that the fact that economic systems are dissipative structures must be taken fully into account in economics if we are to understand the nature of the economic ecological interface and how to deal with emergent environmental problems such as global warming such problems are a product of economic growth which is widely accepted to be the outcome of the acquisition and application of knowledge drawing upon disparate literatures within and outside economics it is argued that economic growth should be more properly viewed as the outcome of a co evolutionary process that involves the autocatalytic interaction of new knowledge and access of increasing amounts of free energy to do increasingly specialized forms of work specifically the relevance of the energy hypothesis associated with erwin schrodinger and more recently revived by eric schneider and his collaborators is assessed this hypothesis states that all dissipative structures have as their primary objective the reduction of accessible free energy gradients it is concluded that such a hypothesis cannot be rejected in the context of economic behaviour and that this opens up an important research agenda for economists

the complementarity between environmental and economic risk an empirical analysis abstract the complementary relationship of economic and environmental risks is empirically demonstrated by using an emissions to jobs ratio e j the ratio is derived from epa s toxic release inventory and census bureau employment data relationships among economic indicators environmental indicators energy use indicators and e j ratio are found to be significant economic indicators include disposable income unemployment rate and poverty level while environmental indicators are green s total index and policy and conditions index energy indicators are per capita energy use and a state s total energy use per job a multivariate analysis shows that poor environmental conditions weak environmental policies and higher e j ratios are all inversely related to indicators of economic welfare

a distributional analysis of the fairtax plan annual and lifetime income considerations dissatisfaction with the current federal tax system is fostering serious interest in the fairtax plan which would replace most of the federal taxes with a national retail sales tax the fairtax is promoted as being progressive but there is considerable skepticism of this claim we examine the distributional effects of the fairtax as well as the current system it intends to replace under both annual income and lifetime income approaches global measures of progressivity suggest that the current federal tax system is progressive while the fairtax is regressive our results are also robust to different assumptions used for estimation

political and economic inequality and the environment abstract this paper analyzes and tests the hypothesis that political and economic equality result in lower levels of environmental degradation based on formal statements of the argument put forward by boyce r 1994 ecological economics 11 169 178 i show that equality may or may not be necessary to minimize degradation under some plausible conditions greater inequality may even be conducive to lower degradation actual results depend primarily on the intersection between the distribution of preferences across groups and the institutional rules two cross national empirical tests tend to support the contention that distributional issues do not systematically explain variations in environmental quality the results reinforce the conclusion that assumptions about the structure of preferences and workings of social choice institutions ignore complex interactions which influence the relationship between degradation and equality

a reexamination of the role of thermodynamics for environmental economics abstract as the discussion about the role of thermodynamics in environmental economics has not led to a conclusion yet a more fundamental approach seems to be necessary which also takes into consideration the relationship between economics and the natural sciences in general to this end value theory is chosen as a starting point because it is the centerpiece of every economic theory it is shown that neoclassical environmental economics suffers from serious deficiencies because of its value concept heedlessly copied from classical mechanics thermodynamics can be expected to be helpful to redress these defects because the economy can be thought of as a dissipative structure dependent on its environment the obvious way to integrate thermodynamics consists in the formulation of thermodynamic constraints to complement neoclassical environmental economics but this approach remains unsatisfactory because the neoclassical mechanical hardcore is incompatible with the entropy law and its implications evidently the neoclassical paradigm and its value concept have to be given up but the alternative of the energy theory of value must be rejected because its determinism cannot be reconciled with the richness of human behaviour as thermodynamic analogies offer no solution either there is a dilemma between the necessity and the apparent impossibility of adequately integrating thermodynamic concepts it turns out that a normative inconsistency is responsible which is due to the demand for intergenerational justice therefore the integration of thermodynamics into environmental economics hinges on a meta economic value decision if sustainability is adopted as the guiding principle the insights of thermodynamics call for a macro economic environmental policy setting absolute limits to the economy but this macro policy is incompatible with neoclassical economics so that a social reconstruction of economics based on a social theory of value becomes necessary in sum thermodynamics is important for environmental economics besides fulfilling a general heuristic function it also fulfils a decisive conceptual and an analytical function insofar as it helps to justify sustainability and to operationalize macro economic environmental policy

tax incidence analysis of developing countries an alternative view misleading conclusions can be drawn from studies of tax incidence that ignore the special features of developing countries incorporating these features can sometimes reverse the incidence pattern of taxes relative to what is often taken to be conventional wisdom even where patterns are not reversed quantitative differences can be substantial the newer views of incidence have implications for tax restructuring options being considered in several developing countries the proposed restructuring may appear to lead only to a more regressive tax system because of improper incidence analysis copyright 1991 by oxford university press

the redistribution of income in canada this original study challenges the widely held belief that government policies to redistribute income have made canada a more egalitarian state the author bases his conclusions on extensive documentation of the real effect of changes in taxes transfers and government expenditures

the marginal cost of redistribution lifetime and annual perspectives approximately 40 of federal government expenditures are spent on redistributing income from high income households to low income households 20 293 changing income redistribution policies causes distortions which affect the efficiency of resource allocation costs caused by these distortions are an important consideration in determining redistribution policies and practices previous studies such as browning and johnson 5 looked at the marginal cost of redistribution using annual income data however as is shown in this article using annual rather than lifetime income data greatly understates the marginal cost of redistribution the time period is an important consideration when calculating the marginal cost of redistribution over a lifetime a person may be a young student expecting a higher future income be retired having had a higher income in the past be changing jobs or recently divorced lifetime income includes these age and transitory differences in earnings and thus if we are concerned about the cost of decreasing inequality lifetime income is more accurate also the relevant time period partly depends on the capability of households to even out income fluctuations by spreading income from good to bad times upper income groups find it easier to spread income by borrowing or waiting until income rises again while lower income groups find it more difficult to borrow or wait if we are measuring the number of people in poverty and poor people find it difficult to spread income from good to bad periods the relevant period of time may be about a week but using a week for upper income groups would be misleading as many would appear poor but not face the difficulties of the poor if most people can average their income then the annual distribution of income is more appropriate than weekly however because of the above mentioned age and transitory differences in income annual income may also be misleading people are affected differently in different years by the tax transfer system in some years a person may receive transfers and in others pay taxes since households live their lives rather than a single year under the tax transfer system well being is more accurately described on a lifetime basis lifetime income gives a more accurate picture of households chances in life and of the degree of economic inequality in this article the annual and lifetime marginal costs of redistribution are calculated by a simulation that uses a lifetime dynamic labor supply model a linear income tax type of redistri

self enforcing contracts shirking and life cycle incentives he labor market is a rich and complicated place when a worker takes a job he expects to earn a wage but will also care about rates of wage growth fringe benefits levels of risk retirement practices pensions promotion and layoff rules seniority rights and grievance procedures in return the worker must give up some time but he is also asked to upgrade his skills train other workers provide effort and ideas and defer to authority in questions of how his time is spent great changes are occurring in the way labor market institutions such as these are modelled central to the new approach is the concept of a self enforcing implicit contract this is the latest in a series of variations on the ideas of azariadis 1975 baily 1974 and gordon 1974 and is one of the more exciting new developments in the theory of labor markets this essay will outline this approach and evaluate some of its accomplishments the ideas will be presented in the context of an incentive model that is of some independent interest the model was introduced by becker and stigler 1974 and was extended by lazear 1979 to account for wage growth and mandatory retirement in these papers the workers retire at a fixed age lending the name life cycle incentives to the approach more recently shapiro and stiglitz 1984 have used a version without a fixed retirement date to account for unemployment this version is often called the shirking model these models have generated some controversy but much of it can be resolved when the models are presented in the framework of self enforcing contracts in fact this simple incentive model can do even more it can provide a rationale for competitive hierarchies where firms place their workers in competition with

on the life cycle metaphor where ecology and economics diverge abstract there is an attractive analogy between nature and industry based on the similarity of natural functions and certain industrial activities for instance animals ingest eat and digest food finally there are metabolic wastes firms are analogous to organisms in several respects insofar as they consume material resources process digest them and produce output products and excrete wastes firms like organisms also compete with each other for resources curiously enough one of the apparent differences between natural and man made systems is actually not one like the industrial system the natural system does not recycle everything however there are at least four real and important differences between the biosphere ecology and the technosphere economy first there is no primary producer in the economic system analogous to what photosynthesizers play in the biosphere inputs to the economy are mostly natural resources capital services and labor second in the economic system output is a heterogeneous mix of manufactured products and services labor in economics is an input but not an output the economic system recycles much less than the ecological system but utilizes a far greater suite of elements in the biosphere there are no products as such growth is tantamount to accumulation of embodied solar exergy in the form of cellulose sugars lipids and proteins the biosphere produces only wastes and more of itself plus dead matter third in the biosphere there are no markets there is no medium of exchange like money and there is nothing analogous to paid labor exchanges are involuntary i e by predation parasitism or theft fourth evolution in nature is driven by differentiation by random mutations of the genome and darwinian selection based on reproductive success in economics differentiation is based on discovery invention and innovation by intelligent economic agents and selection is based on competition at the individual or firm level either way the economic system is not closely analogous to an ecosystem attempts to use ecological concepts in an economic context are often misleading and unjustified the paper discusses the implications of the eco eco mismatch for resource accounting and life cycle analysis

income redistribution and local tax progressivity a reconsideration this paper investigates and clarifies the relation between global tax progressivity as measured by musgrave and thin s effective progression and pointwise local progression as measured by the elasticity of after tax income with respect to pre tax income residual progression liu s 1985 vigorous defence of the global measure of effective progression is shown to rest upon an erroneous proposition of jakobsson 1976 a counter example is presented demonstrating that the link between residual progression and lorenz domination is much weaker than the work of liu and jakobsson suggests redistribution des revenus et mesure ponctuelle de la progressivite de l imp6t un re examen ce memoire examine et clarifie les rapports entre la progressivite globale de l impot telle que mesuree par l indice de progression effective de musgrave et thin et la progressivite ponctuelle de l imp6t telle que mesuree par l elasticite du revenu apres impot par rapport au revenu avant impot la progression residuelle on montre que la vigoureuse defense de liu 1985 de la mesure globale de progression effective est batie sur une proposition erronnee de jakobsson 1976 un exemple montre bien que le lien entre la progression residuelle et la domination au sens de lorenz est bien plus faible que ne le suggerent les travaux de liu et jakobsson

gibrat s law and diversification this article presents an analysis of the growth patterns of the worldwide top 200 firms in the pharmaceutical industry a test of the gibrat s law of proportionate effect is performed and we find in line with previous literature a violation concerning the variance of growth using disaggregated data on sub markets we are however able to show that this violation can be completely accounted for by a diversification effect namely a scale relation between the number of sub markets in which a firm is active and its size to interpret these findings we propose a stochastic branching model of firm diversification consistent with a notion of cumulative corporate competences

domestic fuel expenditure an analysis of three national surveys abstract this paper analyses the fuel expenditure data in three surveys looking particularly at the importance of household income multivariate data analysis techniques show that household size the size and type of accomodation and the presence of central heating are more direct influences on fuel expenditure than income changes in income have little independent effect on fuel expenditure once the size of the house size of household and heating system are determined

power distribution the environment and public health a state level analysis abstract this paper examines relationships among power distribution the environment and public health by means of a cross sectional analysis of the 50 us states a measure of inter state variations in power distribution is derived from data on voter participation tax fairness medicaid access and educational attainment we develop and estimate a recursive model linking the distribution of power to environmental policy environmental stress and public health the results support the hypothesis that greater power inequality leads to weaker environmental policies which in turn lead to greater environmental degradation and to adverse public health outcomes

the shading and distancing of commerce when internalization is not enough abstract a political economy of degradation and of sustainability should account not only for the full range of production costs but the sources of those costs it should consider how the pursuit of wealth can deliberately or not lead to uncounted costs and unaccountable actors this article explores the conditions of cost generation and externalization especially those that are largely unintended and inadvertent it shows how the pursuit of wealth the expansion of markets the mobility of capital and the entanglements of production processes can lead to the unwitting generation and displacement of costs it analyzes competitive business strategy and patterns of production and consumption for their contribution to such costs business strategy and state policy tend to create a never ending search for frontiers however simulated and however unecological they may be the costs generated in those frontiers are a function of shading that is obscuring of costs and distancing the separation of production and consumption decisions both of which impede ecological and social feedback and create cognitive institutional and ethical lags between initial benefits and eventual full costs as distance increases along dimensions of geography culture bargaining power or agency negative feedback loops are severed stakeholders expand while decision making contracts environmental problems are displaced and shading and cost externalization increase the likelihood of sustainable resource use increases as distance is lowered as institutions locate decision authority in those who receive negative ecological feedback and who have the capacity and incentives to act on that feedback and as the burden of proof for economic interventions shifts to the interveners

lifetime versus annual tax and transfer progressivity sweden 1968 2009 in this paper we analyze the evolution of tax and transfer progressivity in sweden over both annual and lifetime horizons using a rich micro panel covering the period 1968 2009 we calculate tax rates over a cohort s entire working life cycle our main finding is that taxes are considerably less progressive over the lifetime than in any single year social insurance transfers to transitory low income earners account for most of this result we offer a number of robustness checks of the measurement of lifetime incomes and progressivity but none of them changes our overall findings

inequality and poverty economists tend to be quite egalitarian in their evaluation of social issues according to one survey 71 percent of american economists believe the distribution of income in the united states should be more equal and 81 percent feel that redistribution of income is a legitimate role for government support for these positions is even stronger among economists with academic affiliations and stronger still among economists with elite academic affiliations of course as economists we also have a healthy regard for economic efficiency we are concerned with the size of the economic pie as well as with its distribution borrowing from the title of alan blinder s recent book 1 economists can be characterized as having hard heads and soft hearts hardheaded in our emphasis on efficiency and soft hearted in our concern with equality the hard headed soft hearted approach is familiar to economists who argue that it is reasonable to sacrifice a bit of efficiency in return for greater equality in principle this position seems unobjectionable but i intend to argue that we may have gone too far in attempting to promote economic equality through government policies in taking this position i run the risk of being labeled hard hearted and perhaps soft headed as well an important part of my argument however is based on distinguishing between economic inequality within the large nonpoor part of the population and the poverty that afflicts a small portiop of our population i fav9r a role for government in helping the truly needy but i will attempt to show that extending that role to permit redistribution among the general population is often counterproductive

economy and environment a theoretical essay on the interdependence of economic and environmental systems preface notation guide 1 introduction part i the physical economy environment system 2 closed physical systems a model 3 structure and time in the physical system 4 technological change and the environmental constraints to physical growth part ii the economic system 5 the price system 6 prices property and the environment 7 economic conflict and environmental change part iii environmental strategies in an evolutionary economy environment system 8 time uncertainty and external effects 9 the market solution 10 the stationary state 11 conclusions references index

toward consilience between biology and economics the contribution of ecological economics abstract during its ten year history ecological economics has made a real difference in the way economists look at the natural world and in the way biologists look at the economy in this survey article we examine the contributions to the journal in terms of e o wilson s concept of consilience that is his argument that the methods and assumptions of any field of study should be consistent with the known and accepted facts in other disciplines in particular we examine the contributions of ecological economics to reconciling the economic theory of the consumer and producer with biophysical reality

from microscopic to macroscopic theories entropic aspects of ecological and economic processes abstract the paper discusses the relevance of thermodynamics and related theories to ecological economics it is argued that it is not useful to apply the entropy term directly to economic processes physical entropy terms defined on a microscopic level for isolated systems are quite far from economic and ecological reality only theories that deal with the development of open systems far from thermodynamics equilibrium provide the important link between entropy and evolution towards higher complexity major new impulses for ecological economics come especially from evolutionary ecological theories these quite recent theoretical approaches incorporate the knowledge of far from equilibrium thermodynamics and explain dynamic changes in ecosystems on a macroscopic level from a thermodynamic perspective thermodynamic approaches provide a heuristic base for the analysis of economy environment interactions important implications of these approaches concern time irreversibility ecological efficiency and the interdependencies of environmental problems and evolution

optimal tax rates and tax design during systemic reform abstract budgets in eastern europe are under strain as taxes are reformed and receipts fall should expenditure be maintained or should personal taxes be cut this paper asks how optimal tax rates might respond to a transition in which the government becomes less averse to inequality but the inequality in skills increases these are roughly offsetting and less important than falling enterprise revenue and the decline in the efficiency of personal taxation both of which cause a sharp fall in optimal transfers tax design consists of balancing the diffeiing inefficiencies of incompleteness in indirect tax coverage against evasion prone direct taxes

why northern income growth is not the solution to southern poverty abstract decreasing southern poverty is arguably today s main goal of economic development the two main views on how this can be achieved are not compatible the traditional view held by most economists and development agencies is not working well the traditional view is that rich northern high consumption societies should consume yet more in order to help the south by providing larger markets this paper outlines the alternative view that the north should stabilize its resource consumption and reduce its damage to global life support systems any higher consumption must come from productivity improvements rather than from increased throughput growth if natural resources were infinite then growth would be unreservedly good since resources are finite more northern growth inevitably means less room for southern growth for example the north has consumed much global sink capacity by its co 2 and cfc emissions productivity improvements must replace throughput growth as the path of progress for the north and eventually for the south as well

entropy structure and organisational change abstract the paper sets out a basis for rigorous thermodynamic characterisation of structural change and of organisational interdependencies between economic and environmental processes many attempts have been made to exploit entropy as a generic explanatory variable it has widely been proposed that entropy is a measure of the level of dis order of a system of how mixed up things are then as organisation is often thought synonymous with some notion of order it has been a small step to propose that increasing organisation is the converse of increasing entropy another suggestion has been that social system structure and change can be explained in terms of a tendency towards maximum entropy production the lotka principle of maximum energy dissipation all these notions must be rejected the putative entropy order connection has its inspiration in boltzmann s probabilistic interpretation of thermodynamic entropy as a measure of microscopic disorder this order principle is simply not applicable under conditions far from thermodynamic equilibrium prigogine conditions which prevail for all important economic and ecological processes under such conditions the relationship between entropy production and changes in structure or organisation is multi faceted and situation specific attempts to account for the specificity of societal activities in terms of a generic scalar measure of organisation or dissipation are largely after the fact and in no way do away with the need for analysis of institutional and ethical dimensions of human action in their own right when properly allied to institutional analysis however the far from equilibrium thermodynamics furnishes a rich impetus for a coevolutionary perspective in ecological economics with promise of incisive treatments of in particular issues of system environment codependency and of the time in determinacies of economy environmental change

distributional impacts of carbon pricing a general equilibrium approach with micro data for households article i nfo many policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices a complete analysis requires taking both effects into account the impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups it is also affected by precise formulation of the policy how is the revenue from carbon pricing distributed as well as the treatment of other government policies e g the treatment of transfer payments what is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups in this paper we incorporate 15 588 households from the u s consumer and expenditure survey data as individual agents in a comparative static general equilibrium framework these households are represented within the mit usrep model a detailed general equilibrium model of the u s economy in particular we categorize households by full household income factor income as well as transfer income and apply various measures of lifetime income to distinguish households that are temporarily low income e g retired households drawing down their financial assets from permanently low income households we also provide detailed within group distributional measures of burden impacts from various policy scenarios

taxes subsidies and insurance as drivers of united states coastal development abstract ever increasing coastal populations in the united states and worldwide are putting growing quantities of people and property at risk due to coastal disasters at the same time poorly planned development policies and practices erode the natural capital of coastal regions eliminating existing landscape protection from intense wind and waves government tax subsidy and insurance policies can encourage or discourage particular forms of development in the u s there is no consistent set of incentives or disincentives for coastal development and many programs have ambiguous or contradictory goals federal programs are highly fragmented being administered by a variety of government agencies state and local governments can also implement policies to improve coastal disaster protection but often fail to do so in other cases state and local policies designed for local economic growth work against the goals of federal policy increasing flood damage risk while relying on federal aid once disaster does strike these programs frequently lead to perverse subsidies where economically inefficient policies degrade natural capital and foster economic inequality in this study we evaluate the existing tax subsidy and insurance structures that led to coastal development patterns on the u s gulf coast over the last sixty years and propose alternative policies that could create a more sustainable just economically efficient and storm adaptive region

grazing the commons an empirical analysis of externalities subsidies and sustainability abstract an empirical means of measuring externalities in the fifty states of the us is presented and the relationship between externalities subsidies and sustainability is investigated firms seeking to maximize profits create externalities thus securing implicit internal subsidies the subsidies are generally supported by those less well off and the socioeconomic energy and environmental indicators of the public sector worsen as externalities and subsidies increase implicit subsidies due to externalities in pollution control energy consumption and taxes are quantified the amount of subsidy is calculated by state and statistically compared to socioeconomic energy environmental and economic variables poverty unemployment and income disparity are found to increase significantly while income economic development attractiveness energy efficiency and environmental quality decline with increasing externalization across states an empirical method of operationalizing sustainability is presented and the relationship of sustainability to subsidies is investigated and found to be significant and negative recommendations are presented for minimizing the effects of externalities

the economics of house heating further findings abstract this paper applies the consumption model developed in scott 1 to a further set of data the findings cast fresh light on the relationship between insulation and energy consumption in houses the main finding being that once houses have been insulated to a certain standard further insulation does not significantly affect energy consumption estimates of income elasticity and the effect of household size are also presented

partitioning of resources in production an empirical analysis abstract industrial economies ingest materials energy and information to produce goods and services and excrete wastes and emissions wastes can be minimized and the relative amounts of resources which go into goods and services as opposed to waste are essential to clean production and to the sustainability of the production system a regression model based on empirical data is presented that provides a partition coefficient expressing the ratio of energy or material resources invested in goods to energy going to waste partition coefficients are developed for five countries and are shown to be related to gdp energy and material consumption and energy and waste intensities higher partition coefficients mean higher productivity and lower energy waste and material intensities in addition energy use capita and pollution capita is lower the price of energy to the industrial sector is related to the partition coefficient the policy implications are that partitioning of resources to goods should be maximized and waste minimized for economic as well as environmental reasons

diverging trends in aggregate and firm volatility this note documents the diverging trends in volatility of the growth rate of sales at the aggregate and firm levels we establish that the upward trend in firm volatility is not simply driven by a compositional bias in the sample studied we argue that this new fact brings into question the proposed explanations for the decline in aggregate volatility and that given the symmetry of the diverging trends at the micro and macro levels a common explanation is likely we conclude by describing one such theory

linking material and energy flow analyses and social theory the paper explores the potential of habermas theory of communicative action to alter the social reflexivity of material and energy flow analysis with his social macro theory habermas has provided an alternative critical justification for social theory that can be distinguished from economic libertarianism and from political liberalism implicitly most flow approaches draw from these theoretical traditions rather than from discourse theory there are several types of material and energy flow analyses while these concepts basically share a system theoretical view they lack a specific interdisciplinary perspective that ties the fundamental insight of flows to disciplinary scientific development instead of simply expanding micro models to the social macro dimension social theory suggests infusing the very notion of flows to the progress of disciplines with regard to the functional integration of society material and energy flow analyses can rely on the paradigm of ecological economics and at the same time progress the debate between strong and weak sustainability within the paradigm however placing economics at the centre of their functional analyses may still ignore the broader social integration of society depending on their pre analytic outline of research and the methods used

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

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

the role of intergenerational transfers in aggregate capital accumulation this paper uses historical u s data to directly estimate the contribution of intergenerational transfers to aggregate capital accumulation the evidence presented indicates that intergenerational transfers account for the vast majority of aggregate u s capital formation only a negligible fraction of actual capital accumulation can be traced to life cycle or hump savings a major difference between this study and previous investigations of this issue is the use of more accurate longitudinal age earnings and age consumption profiles these profiles are simply too flat to generate substantial life cycle savings this paper suggests the importance of and need for substantially greater research and data collection on intergenerational transfers life cycle models of savings that emphasize savings for retirement as the dominant form of capital accumulation should give way to models that illuminate the determinants of intergenerational transfers

the short run residential demand for electricity the model of short run residential demand for electricity combines price schedule information obtained from the federal energy regulatory commission with household specific data from the 1972 73 consumer expenditure survey to determine the household s level of electricity consumption and relate it to the household s demographic profile and appliance stock the overall short run price elasticity estimate of 0 550 supports existing findings that short run residential electricity demand is price inelastic however the variation in elasticities across end use categories suggests that the overall response is made up of a complex set of responses that vary substantially and significantly across appliances this implies that it may be more efficient to tailor conservation policies to the stock configuration of the population 17 references 6 tables

firm growth and laplace distribution the importance of large jumps abstract recent empirical studies have shown that firm growth rate distribution is not gaussian but closely follows a laplace distribution this robust feature of the growth rate distribution challenges existing models based on gibrat s model because it predicts a gaussian distribution first we analyze more than 100 000 japanese firms and empirically show that the laplace shape can be observed for the japanese firms then by using the theory of stochastic processes we theoretically show that the absence of jumps causes the discrepancy between gibrat s model and the laplace shape in particular based on the laplace shape and the law of proportionate effect we show that the firm growth process is a jump process in other words firm growth cannot be explained by the consequence of many small shocks but is determined by a few large jumps the widely observed laplace distribution reflects this jump property of firm growth dynamics

self organization and sustainability energetics of evolution and implications for ecological economics abstract in the 1920s alfred lotka suggested that evolution results both in an increasing total energy flow through the biosphere and in increasing energy efficiency of biological processes later authors attempted to generalize lotka s conjectures and to transform them into general evolutionary laws these laws are derived from the laws of thermodynamics and it is frequently argued that they also apply to the development of economic systems in the present paper an alternative interpretation of the lotka principles is suggested which starts from the self organization of dissipative structures self organization concepts from ecological and evolutionary economics are integrated on this basis energetic regularities in evolutionary processes are interpreted as emergent properties of competitive self organization given the close relationship between energy dissipation in economic processes and various environmental problems thermodynamic effects of economic evolution are of practical policy relevance the evolutionary perspective taken here implies that policy measures toward sustainable development will primarily have to affect the kinds of innovative behavior triggered in competitive processes

a flexible assurance bonding system for improved environmental management abstract current methods of regulating activities that are known or suspected to be environmentally danaging are not working well they induce legal confrontation obfuscation and government intrusion into the inner workings of firms they tend to suppress technical and social innovation aimed at long term solutions they do not mesh well with the market signals that firms use to make decisions this paper discusses some of the underlying reasons for this problem and outlines a flexible environmental assurance bonding system designed to incorporate environmental criteria and uncertainty into the market system and to induce positive environmental technological innovation in addition to direct charges for known environmental damages an assurance bond equal to the current best estimate of the largest potential future environmental damages would be levied and kept in an interest bearing escrow account the bond plus a portion of the interest would be returned if and only if the firm could prove that the suspected damages had not occured or would not occur if damages did occur the bond would be used to rehabilitate or repair the environment and to compensate injured parties by requiring the users of environmental resources to post a bond adequate to cover potential future environmental damages with the possibility for refunds the burden of proof is shifted from the public to the resource user and a strong economic incentive is provided to research the true costs of environmentally innovative activities and to develop innovative cost effective pollution control technologies

entropy law and exhaustion of natural resources is nicholas georgescu roegen s paradigm defensible abstract i examine whether the entropy law dictates absolute limits to growth i distinguish the entropy law proper diffusion without coherent work from its application the carnot cycle diffusion with coherent work while the entropy law pertains to mechanistic systems the carnot cycle is the result of purposeful agency since the economic process is carried out by purposeful agency to generate coherent work it is not governed by the entropy law rather it resembles the carnot cycle resources hence cannot be defined objectively a la the entropy law resources can only be defined relative to the purposeful agency thus the prognosticators of doom like georgescu roegen cannot be bolstered by the entropy law

demand for energy and insulation abstract the consumer s problem of choosing an optimal level of energy consumption and insulation is modelled as a two stage optimization problem the choice of energy consumption given the level of insulation is posed as a periodic control problem the solution to which is written as a function of the insulation level choice of the insulation level is then a standard scalar optimization problem the method permits construction of theoretically sound demand functions the model implies a unique value for the consumer s tradeoff between comfort and expense and a range of values for his discount rate

a regulatory framework for a policy of sustainability lessons from the neo liberal school abstract in this paper targets institutions and policy measures for describing and implementing sustainable development are evaluated in terms of their conformity with the economic framework of a market system from the viewpoint of neo liberal economic thinking as conceived by the german freiburg school of economists a general set of criteria is developed it includes issues of operationalization and legitimation of goals as well as institutional and instrumental issues on this basis general rules for designing an ecological framework guaranteeing the greatest possible degree of conformity with a market system are derived the concrete application of these rules leads to recommendations for a policy of sustainability with respect to the setting of goals the establishment of institutions as well as the use of appropriate instruments

lorenz domination and global tax progressivity the paper clarifies the concept of global progressivity as opposed to pointwise progressivity and proposes a summary measure for global progressivity on the basis of lorenz domination as a ranking criterion for income distributions by extending the work of musgrave and thin 1948 and jakobsson 1976 other ad hoc summary measures for global progressivity are evaluated from both a positive and a normative viewpoint domination selon le critere de lorenz et progressivite globale de la fiscalite ce memoire clarifie le concept de progressivite globale par opposition au concept de progressivite ponctuelle et propose une mesure sommaire de progressivite globale fondee sur la domination selon le critere de lorenz ce critere pour la comparaison de distributions de revenus est developpe en prolongeant certains travaux de musgrave et thin 1948 et de jakobsson 1976 l auteur examine aussi de fa on critique d autres mesures sommaires de progressivite globale dans une optique normative et positive

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

the taxation of the poor this paper uses microsimulation modeling to estimate the annual burden offederal state and local taxes on the poor in two states we find that in 1988 the average burden of taxation on poorfamilies and individuals was 15 3 percent in massachusetts and 18 percent in new york as most of the burden is due to state and local taxes federal tax reform had only a minor impact on the overall tax burdens faced by the poor though the analysis is for two state we argue that the basic results are applicable for most other states given the high incidence of persistent poverty among those who are poor in any given year we argue that annual burdens provide a good indication of long run burden for a significant proportion of the poor

income inequality and pollution a reassessment of the environmental kuznets curve abstract improvements in some measures of air and water quality can accompany rising per capita income as illustrated by the so called environmental kuznets curve for pollution variables which show such a relationship we hypothesize that a more equitable distribution of power contributes to these outcomes by enhancing the influence on policy of those who bear the costs of pollution relative to the influence of those who benefit from pollution generating activities an empirical analysis of international variations in seven indicators of air and water quality supports this hypothesis literacy political rights and civil liberties are found to have particularly strong effects on environmental quality in low income countries

growth volatility and size a firm level study abstract this paper provides a systematic cross country investigation of the relation between a firm s growth volatility and its size for the first time the analysis is carried out using comparable and representative sets of data sourced by official business registers of an important number of countries we show that there exists a robust negative relation between growth volatility and size with an average elasticity equal to 0 18 we check the robustness of this result against a number of potential sources of bias and in particular with respect to sectoral disaggregation and against the inclusion of firm age our result is consistent with the idea that independently from specific country characteristics there exists a common underlying mechanism driving the elasticity between size and growth volatility we then propose two mechanisms able to explain our result and we conclude discussing its relevance with respect to the recent literature on granularity

some calculations of lifetime tax incidence this paper reports a set of lifetime tax incidence calculations using a life cycle simulation model for canada due to davies 1979a 1982 a repeatedly stated qualification to annual calculations in the empirical tax incidence literature is that it would be more satisfactory to make calculations on a lifetime basis even though it is acknowledged that lifetime tax incidence could well differ from annual it is widely believed that data and other difficulties make such calculations next to impossible indeed the widespread acceptance of the data problems of lifetime calculations seems also to have inhibited speculation about how lifetime tax incidence might differ from annual as a result redistributive tax policy judgments continue to be based on annual incidence calculations in spite of the reservations many have about their usefulness our paper is intended to reorient discussion towards lifetime tax incidence by providing some initial null hypotheses about the shape of lifetime tax profiles our main finding is that under the standard competitive assumptions common in the incidence literature lifetime and annual incidence calculations both produce mild progression in tax rates across household deciles ignoring the bottom decile in the annual calculation while the income tax is less progressive in lifetime than in annual calculations other taxes are for the most part less regressive also lifetime incidence calculations are much more robust to alternative shifting assumptions than annual calculations in the lifetime context key distributions such as earnings transfer payments and consumption are less heavily concentrated in particular percentiles of the population than is true in annual data as a result changing the allocative series for any particular tax does not have the large effect on incidence results found in annual calculations each component of the tax system is allocated to households grouped by lifetime income using particular distributive series following a procedure similar to that employed in annual incidence calculations for example richard musgrave et al 1974 joseph pechman and benjamin okner 1974 edgar browning and william johnson 1979 w irwin gillespie 1980 in the process we are able to compare lifetime and annual incidence calculations using the same data set in both lifetime and annual calculations we allocate five groups of taxes among households using distributive series which come partly from the 1971 statistics canada survey of consumer finances scf and partly from our life cycle simulation model the scf data are used to construct synthetic longitudinal lifetime profiles of earnings and transfer payments for a sample of 500 households the latter are assigned inheritances by simulating patterns of mortality and bequest these data are then used in the life cycle model to generate lifetime consumption profiles and bequests the earnings transfer and inheritance data plus the model output provide the distributive series on which alternative incidence calculations are based while the incidence calculations presented in this paper use canadian data results would likely be similar for the united states

the second law the fourth law recycling and limits to growth abstract despite counter examples in nature it has been argued that total recycling is impossible for an industrial society as a consequence of the second law of thermodynamics in this paper it is shown that there is no such limitation however it is also shown that there must be a large stockpile of inactive materials as well as an exogenous source of exergy e g from the sun for a stable steady state recycling system to function the paper also discusses briefly some of the implications for economic growth

a model of individual household temperature demand and energy related welfare changes using satiety abstract a model of the utility maximizing household is developed in which data on satiety levels for indoor temperature can be used along with budget constraint parameters and actual temperature choices to estimate parameters of the utility function using the utility parameters equivalent variations in income can be estimated to measure welfare effects of policy and price changes that effect home heating all of these operations can be performed at the individual household level and for any member of a popular class of utility function forms the required data are easy to obtain although they typically are not collected in household surveys

indivisible toxic torts the economics of joint and several liability cost effective or efficient pollution control has traditionally devoted most of its attention to analyzing the effects of legislative or regulatory policy instruments such as emission taxes or marketable emission permits recent contributions have expanded this focus to include the effects of monitoring and enforcement policies 2 with a few noteworthy exceptions 3 however the role of the court system in general and liability law in particular have not received analytical attention among environmental economists in proportion to their importance in resource allocation

energy diversity and development in economic systems an empirical analysis abstract as economic systems develop over time they tend to become more complex with more structure and greater throughputs assuming favorable conditions energy use increases as more economic sectors develop and more channels for flow are opened economic diversity as measured by the number of economic sectors using energy and the equatability of flows between them generally increases as diversity increases the efficiency of generating outputs with a given amount of energy also increases development capacity the product of system energy throughput and diversity of flows is a measure of the potential system output and is calculated for selected countries capacity changes over time are shown to relate to changes in economic output in selected countries two distinct development strategies become evident one which promotes energy use and one which emphasizes diversity and the sustainability of each is examined while most countries utilize a mix of the two developing countries generally rely more on increasing energy use to increase output while developed countries tend to become more diverse as a means of increasing outputs sustainability is enhanced by strategies which promote diversity and resource use efficiency in economic systems

invariances and diversities in the evolution of manufacturing industries this work explores and compares some basic properties of corporate growth process at both aggregate manufacturing level and disaggregated sectoral levels using an extensive dataset on italian manufacturing firms we investigate which properties of firm growth dynamics are robust under disaggregation we compare the results obtained with three different definitions of firm size namely total sales number of employees and value added our analysis suggests that while different sectors are characterized by significant differences in firm size distributions in the degrees of concentration and in the autoregressive structure of the growth processes there are also regularities which hold across all of them such as the approximate unit root nature of the growth process and the power exponential shape of the growth rates density together these stylized facts suggest challenging puzzles on the drivers of corporate growth and the resulting industrial structures