long term competition in a dynamic game the cold fish war this article presents a model of credible voluntary collective agreements in a dynamic game these agreements are implicit in collections of history dependent threat strategies i consider the strategies in a game of resource exploitation credibility is represented by perfect equilibrium voluntarism requires at least that all behavior be supported by the threat of collapse of the agreement which would return the players to the memoryless equilibrium collective rationality requires that the agreement be robust to the possibility of mutually beneficial renegotiation i analyze the set of agreements meeting each of these restrictions

the tragedy of the commons in a violent world earlier research has shown that the tragedy of the commons may be resolved by folk theorems for dynamic games in this article we graft on a standard natural resource exploitation game the possibility to appropriate the resource through violent means because conflict emerges endogenously as resources get depleted the threat supporting the cooperative outcome is no longer subgame perfect and thus credible the unique equilibrium is such that players exploit noncooperatively the resource when it is abundant and they revert to conflict when it becomes scarce the players utility is shown to be lower even if conflict wastes no resources

partial international coordination in the great fish war this study extends the great fish war model of levhari and mirman levhari d and mirman l 1980 bell journal of economics 11 322 344 by incorporating a multiple country context into the model and investigates the existence of a partial coordination nash equilibrium first findings of this paper suggest that a partial coordination scheme is sustainable only in limited cases any coalition that has more than two member countries cannot be sustained second the existence and the number of coordinating countries depend critically on the magnitude of the biological and preference parameters finally if the coalition is assumed to be a dominant player there always exist one or two welfare improving sustainable coalitions and the size of the sustainable coalitions depends on the parameters of the problem

common pool politics and inefficient fishery management fisheries management often fails because total allowable catches tacs are set at inefficiently high levels to study why decision makers choose such high tacs we model the annual negotiation on tacs as a dynamic game in discrete time tacs are fixed by majority decision in a council consisting of decision makers who are heterogeneous with respect to their discount rates we show that the optimal feedback strategy for the less patient decision makers will set inefficiently high tacs in markov perfect nash equilibrium a binding commitment to a long term management plan could help solving this problem and lead to a more sustainable fishery management

enlargement and the european geography of the information technology sector the information technology sector in europe comprising the production of computer hardware and software is disproportionately located on the continent s western periphery the vast bulk of computers sold in europe in the 1990s were assembled either in ireland or scotland while ireland also accounted for over 40 per cent of all packaged software and 60 per cent of all business software sold in europe as the sector in both these locations is largely foreign owned the question arises as to whether eu enlargement might impact on the geography of the sector by diverting information technology fdi from the western to the new eastern periphery this issue is explored in the present paper by analysis of five individual sub segments computer assembly and electronic components r d mass market packaged software and the remainder of the software sector the paper deems it likely that computer assembly operations will continue the shift seen in recent years from ireland and scotland to central and eastern europe the production of electronic components such as microchips represents a growing share of activity in most eu locations as well as in the cee countries analysis suggests that this pattern of geographically dispersed growth will resume once the consequences of the collapse of the high tech bubble are played out the distribution of r d activity across europe and globally is also considered unlikely to be much affected by enlargement as for software as long as localisation activities remain important ireland the eu location in which most of this activity is carried out seems set to be able to compete strongly given the attractiveness of its english language environment and other attributes to the young continental europeans upon which this activity relies most software services remain largely non tradable however this sector will grow in the accession states as computer penetration rates converge on the eu average but without displacing activity from the incumbent eu member states for firms already competing in the tradable niche software segment on the other hand enlargement cannot but be beneficial because of its impact on the size of the market into which they sell

rationalizing hyperbolic discounting abstract we show that if agents are uncertain about their discount rates it may be rational for them to discount the distant future hyperbolically rather than exponentially our findings thus may rationalize a common observation in experimental work which indicates that people discount the future at hyperbolic rates we show that under some assumptions uncertainty over hazard rates may lead to non constant discounting but not imply dynamically inconsistent behavior under other assumptions uncertainty over discount rates can lead to dynamically inconsistent behavior like violating planned consumption profiles by bringing consumption forward

global warming and hyperbolic discounting the use of a constant discount rate to study long lived environmental problems such as global warming has two disadvantages the prescribed policy is sensitive to the discount rate and with moderate discount rates large future damages have almost no effect on current decisions time consistent quasi hyperbolic discounting alleviates both of these modeling problems and is a plausible description of how people think about the future we analyze the time consistent markov perfect equilibrium in a general model with a stock pollutant the solution to the linear quadratic specialization illustrates the role of hyperbolic discounting in a model of global warming

tipping points and business as usual in a global commons abstract this paper analyzes a dynamic strategic model of resource extraction from a global commons countries derive benefits from both direct extraction and aggregate conservation of an open access resource each period a country s output depends both on its resource usage and on the global stock of the resource stored within the ecosystem leading examples are ocean fisheries habitat preservation forestry and land carbon biomass the production coefficients on these inputs vary across countries and evolve stochastically over time a business as usual bau equilibrium characterizes each country s resource usage in the absence of an effective international agreement under non concave resource dynamics depletion of the resource in a bau equilibrium may reach a tipping point below which the stock spirals downward toward a steady state of marginal sustainability under the assumptions of the model the tipping points emerge endogenously if the number of extractors exceeds some fixed finite bound the commons always tips regardless of the initial stock we find that countries will accelerate their rates of extraction the closer they are to reaching the low end steady state by contrast in the socially efficient plan the commons never tips if the initial stock is large

long forward and zero coupon rates can never fall in frictionless markets having no arbitrage the asymptotic zero coupon rate never falls the same is true of the long forward rate the long par coupon rate can rise and fall due to forward rate movements at short maturities this article relates the three types of interest rates and formalizes and proves the impossibility results for falling asymptotic rates these results can be tested in a parametric term structure specification that is rich enough to identify a time series of long rates the results show that it is not possible to specify arbitrarily the long forward or zero coupon rate process copyright 1996 by university of chicago press

open loop and feedback models of dynamic oligopoly abstract a simple method of estimating the degree of oligopoly power in dynamic markets using either open loop or feedback subgame perfect strategies is developed new theoretical results are presented for families of oligopoly models differences between discrete time and continuoustime models and open loop and feedback models are demonstrated the effects of increasing the number of firms or adjustment costs are examined

fishermen markets and population diversity fishing impacts biodiversity on multiple levels potentially resulting in unintended feedbacks to the economic performance of the fishery over time for example targeting observable traits within a population can impact genetic diversity and targeting valuable species can impact biodiversity at the ecosystem level the bioeconomic literature however has given little attention to the effect of fishing on population diversity even though population diversity contributes to ecosystem services and estimates of population extinction rates are three orders of magnitude higher than species extinction rates here we develop a stochastic bioeconomic model that links the harvest of multiple salmon populations in a single commercial fishery to the trajectory of population diversity in a salmon stock complex we parameterize our model with biological and economic data from the copper river chinook salmon fishery we show that markets can incentivize the degradation of population diversity reducing infra marginal fishery rents and increasing variability in economic returns we also show that second best management can conserve population diversity and improve welfare furthermore depending on fishermen s time preferences this management strategy is potentially self financing

can violence harm cooperation experimental evidence abstract in this paper we argue that natural resource conservation is jeopardised by the ability of users to resort to violence to appropriate resources when they become scarce we provide evidence from a lab experiment that participants interacting in a dynamic game of common pool resource extraction reduce their cooperation on efficient levels of resource extraction when given the possibility to appropriate the resource at some cost i e through conflict theoretically cooperation is achievable via the threat of punishment strategies which stop being subgame perfect in the presence of conflict accordingly we argue that the observed reduction of cooperation in the game s early stages in the lab is a consequence of participants correctly anticipating the use of appropriation when resources become scarce

minimum information management in fisheries this paper deals with problems of optimal management of common property fisheries it advances the proposition that many fisheries management schemes which are theoretically capable of generating efficiency are actually not practicable owing to their huge informational requirements this applies for instance to management by means of corrective taxes subsidies the paper proceeds to show that there exists under fairly unrestrictive conditions market based management systems that require minimal information for their operation but lead nevertheless to efficiency in common property fisheries one such system is the individual transferable share quota system

equilibrium in a dynamic game of capital accumulation with the overtaking criterion abstract a stationary overtaking equilibrium is constructed for a class of discrete time games of capital accumulation a verification of the equilibrium properties is made using some functional characterization of the overtaking optimality in dynamic programming

fishermen s discount rates in itq systems in this paper the fishermen s planning and investment horizon is investigated using their discount rates it is shown that one might calculate the implicit discount rate in an itq regulated fishery from the available information from the quota market this gives information about how well the system is working in particular discount rates where itq systems are in operation initially were very high before they started to decrease this implies that it take some time to reap the full benefits of an itq system it also gives arguments for not letting itqs be perpetual property rights and hence enables more flexibility in the management system

dynamic mechanism design for a global commons we model dynamic mechanisms for a global commons countries value both consumption and conservation of an open access resource a country s relative value of consumption to conservation is privately observed and evolves stochastically an optimal quota maximizes world welfare subject to being implementable by perfect bayesian equilibria with complete information the optimal quota is first best it allocates more of the resource each period to countries with high consumption value under incomplete information the optimal quota is fully compressed identical countries receive the same quota even as environmental costs and resource needs differ this is true even when private information is negligible

nonlinear strategies in dynamic duopolistic competition with sticky prices abstract we discuss nonlinear strategies in an infinite horizon duopoly game with sticky prices where firms maximize their discounted sum of profit we construct a stationary feedback equilibrium without guessing value functions and feedback strategies that solve the hamilton jacobi equation for this purpose we study the auxiliary equation that is derived from the hamilton jacobi equation we show that the domain of the state space plays an crucial role in characterizing feedback equilibria and discuss several implications of this observation in particular we find that when the upper bound of the state space is not very high previously unknown feedback equilibria emerge

search bargaining money and prices the goal of this paper is to extend existing search theoretic models of fiat money which until now have assumed that the price level is exogenous by explicitly incorporating bilateral bargaining this allows us to determine the price level endogenously and leads to additional insights concerning the role of money for example we find that monetary equilibria are generally inefficient in the sense that output and prices differ from the solution to a social planner s problem although the difference can become small as the discount rate or search friction vanishes we also find that there exist nonstationary inflationary equilibria

search money and prices it is well known that models in which money is used as a medium of exchange to lubricate trading frictions display multiplicity of equilibria i show that the amount of activity varies as the value of money differs across these equilibria when production opportunities involve random fixed costs when money has high value trade is more profitable therefore there will be more agents engaged in trade relative to equilibria in which money has lower value the higher activity equilibria display higher production not only because more is produced and exchanged per transaction but also because more transactions occur per period this diamond style result is obtained without increasing returns in the matching technology

collective reputation and quality firms who sell regional or specialty products often share a collective reputation based on aggregate quality collective reputation can be approached as a dynamic common property resource problem we show that for an experience good without firm traceability individual firms have the incentive to choose quality levels that are sub optimal for the group these results support minimum quality standards trigger strategies are analyzed as an alternative solution to this problem finally the implications of these results are discussed as they relate to the case study of washington apples specialty regional authentic and local food products have become a more important part of consumer purchases in recent years firms have responded by marketing food products that come from specific geographic areas this trend in consumers preferences has led the european union to introduce protected designations of origin labels and protected geographical identification labels which provide protection of food names on a geographical or traditional basis ranging from parmesan cheese to such lesser known items such as galician veal in the united states there are popular state products that carry labels such as washington apples idaho potatoes

aggregation of heterogeneous time preferences we examine an economy whose consumers have different discount factors for utility possibly not exponential we characterize the properties of efficient allocations of resources and of the shadow prices that would decentralize such allocations we show in particular that the representative agent has a decreasing discount rate when as is usually posited all of a group s members have a constant discount rate and decreasing absolute risk aversion preferences we also identify conditions that lead the representative agent to have a rate of impatience that decreases with gross domestic product per capita

a new approach to assessing the technological complexity of different categories of r d with examples from singapore abstract this paper attempts to develop a set of generic questions the answers to which allow any given r d activity to be correctly classified in one or another conventional r d box basic applied development etc such systematic pigeon holing allows latecomer countries to gauge the distance of their r d activity from the world frontier and how policies may be designed to overcome the hurdle that divides applied research and developmental research

a note on uncertainty and rent capture in an itq fishery abstract this note addresses the effect of uncertainty on the expected resource rent the short run quota equilibrium and the methods of rent capture in an individual transferable quota fishery with heterogeneous fishers it presents some new results on the effects of output price uncertainty on the quota demands the short run equilibrium and the possible choice of a method of rent capture

putting foxes in charge of the hen house the political economy of harvest quota regulations this paper considers a dynamic common agency model of natural resource harvest quota regulation in which both conservationists and harvesters vie to influence the regulator s quota allocations as well as the choice of regulator conservationists tend to benefit from the adoption of regulation since the regulator will reduce the aggregate harvest quota relative to the unregulated equilibrium harvesters however only support the adoption of regulation if the regulator places sufficient weight on their welfare because harvester s support of regulation is conditional while conservationist s support of regulation is unconditional harvester s interests tend to be over represented in the truthful markov perfect equilibrium

gradualism in free trade agreements a theoretical justification a notable feature of many recent trade agreements is the gradual rather than immediate reduction of trade barriers in this paper we model trade liberalization as a cooperative relationship that evolves gradually in a non cooperative environment we show that specialization capacity irreversibility and the development of trade partner specific capital increase the benefit of continuing the liberalizing relationship and decrease over time the lowest obtainable self enforcing tariff by increasing the penalty of future defection sunk costs ensure that the self enforcing trading relationship starts slowly but once in progress the level of cooperation continues to improve

stackelberg versus cournot a differential game approach abstract we propose an infinite horizon differential oligopoly game where at each point in time m stackelberg leaders and n m stackelberg followers exploit a common pool renewable resource and sell their harvest in the marketplace at a price that depends on total harvest we derive a feedback generalized stackelberg nash cournot equilibrium a generalization of the feedback stackelberg equilibrium nesting feedback stackelberg and feedback cournot as special cases we proceed with a comparison between the feedback stackelberg and the feedback cournot equilibria and find a number of interesting results in contrast with static oligopoly theory as to the relative efficiency of the two equilibria we show that the cournot equilibrium can be more efficient than the stackelberg equilibrium this holds true in the short run at the steady state and in terms of discounted welfare

gradualism in tax treaties with irreversible foreign direct investment bilateral international tax treaties govern the host country taxation for the vast majority of the world s foreign direct investment fdi of particular interest is the fact that the tax rates used under these treaties are gradually falling although the treaties themselves do not specify any such reductions since there is no outside governing agency to redress treaty violations such reductions must be both mutually beneficial and self enforcing furthermore the optimal tax rates must be less than those initially set otherwise no reductions would be necessary to explain such behavior we model a two country setting with two way capital flows in particular only part of fdi is immediately reversible as the extent of irreversibility increases the likelihood of pareto optimal tax rates obtaining as a self enforcing outcome in the initial period is reduced more modest tax reductions from the non treaty levels are still possible these limited tax reductions generate an increase in bilateral fdi as countries increase the stock of capital in one another further reductions in taxes become self enforcing depending on the extent of irreversibility and asymmetry pareto optimal tax rates may be obtainable in the long run thus the amount of inbound investment a country can attract may be related to the commitment to which its outbound investment binds it this final insight provides an additional rationale for the observed pattern of capital flows in which those countries with the greatest outbound capital flows are also those with the highest inbound flows

a cooperative incentive equilibrium for a resource management problem abstract a two country dynamic game model of whaling is considered it is assumed that the countries have exact information possibly with some time delay about each other s whaling efforts measured by the number of vessels involved in whaling it is shown how to construct equilibrium strategies which are affine in the available information and which when jointly carried out realize a given pareto optimal decision numerical results suggest that some of these strategies are credible i e the countries do believe that the announced strategies will be followed

does history matter only when it matters little the case of city industry location when will an industry subject to agglomeration economies move from an old high cost site to a new low cost site it is argued that history in the form of sunk costs resulting from the operation of many firms at a site creates a first mover disadvantage that can prevent relocation it is demonstrated that developers of industrial parks can partly overcome this inertia through discriminatory pricing of land over time and empirical evidence is provided that they actually engage in such behavior it is also shown that other aspects of developer land sale strategy can be a source of information on the nature of interfirm externalities

international fisheries agreements a game theoretical approach this paper surveys the application of game theory to the economic analysis of international fisheries agreements the relevance of this study comes not only from the existence of a vast literature on the topic but especially from the specific features of these agreements the emphasis of the survey is on coalition games an approach that has become prominent in the fisheries economics literature over the last decade it is shown that coalition games were first applied to international fisheries agreements in the late 1990s addressing cooperative issues under the framework of characteristic function games then progressively this cooperative approach was combined with non cooperative elements such as the stability analysis of the agreements finally partition function games which model coalition formation endogenously were introduced and became the standard approach to study the formation and stability of international fisheries agreements a key message that emerges from this literature strand is that self enforcing cooperative management of internationally shared fish stocks is generally difficult to achieve hence the international legal framework and regulations play a decisive role on ensuring cooperation over the use of these resources

chinese electronics export taiwanese contract manufacturing the win win outcome along the evolving global value chain the ascent of china as the world s top exporter is unusual in its rapidity andhigh tech content with a major portion in process trade by chinese classification forming part of the evolving global value chain with chronology andeconomic analysis applied to notions in frequent business usage but not economicsliterature this study shows the global value chain arose from the microelectronicrevolution known as moore s law evolved under the time tomarketimperative and caused widespread outsourcing in america and europe with final stage production mostly in china by taiwanese contract manufacturers the insight gained may help to assess future trends

time horizon and the discount rate abstract we consider an economy a la lucas 1978 econometrica46 1429 1446 with a risk averse representative agent the exogenous growth rate of the economy follows a random walk we characterize the set of utility functions for which it is efficient to discount more distant cash flows at a lower rate the benchmark result is that when the growth rate is almost surely nonnegative the yield curve is decreasing if and only if relative risk aversion is decreasing with wealth relaxing the assumption on the absence of recession requires more restrictions on preferences such as increasing relative prudence journal of economic literature classification numbers d81 d91 q25 q28

globalization of production insights from the hard disk drive industry abstract rapid change in the geographical location of production raises important questions regarding the welfare development potential and competitive position of different countries and regions this paper explores in detail the geography of economic activity in a specific industry the hard disk drive hdd component of the computer industry firms in the hdd industry are breaking the production system into ever smaller distinct steps and spreading the physical location of these steps around the world firms from the united states dominate the industry our findings suggest that globalization has enabled us firms to sustain their dominant position in the industry preserve employment in the united states and possibly expand it and increase employment worldwide most notably in southeast asia

heterogeneity and lotteries in monetary search models we introduce ex ante heterogeneity into the berentsen molico and wright monetary search model with lotteries we show that their three main results regarding lotteries do not survive this modification of the environment

a review of the stern review on the economics of climate change the stern review calls for immediate decisive action to stabilize greenhouse gases because the benefits of strong early action on climate change outweighs the costs the economic analysis supporting this conclusion consists mostly of two basic strands the first strand is a formal aggregative model that relies for its conclusions primari ly upon imposing a very low discount rate concerning this discount rate aspect i am skeptical of the review s formal analysis but this essay points out that we are actual ly a lot less sure about what interest rate should be used for discounting climate change than is commonly acknowledged the review s second basic strand is a more intuitive argument that it might be very important to avoid possibly large uncertain ties that are difficult to quantify concerning this uncertainty aspect i argue that it might be recast into sound analytical reasoning that might justify some of the review s conclusions the basic issue here is that spending money to slow global warming should perhaps not be conceptualized primarily as being about consump tion smoothing as much as being about how much insurance to buy to offset the small change of a ruinous catastrophe that is difficult to compensate by ordinary savings

a great fish war model with asymmetric players this paper analyzes the coalitional great fish war model under the assumption that players differ in their time preferences and use different discount rates we derive the equilibrium payoffs of this coalitional game and investigate the impact of the asymmetry assumption on the extreme schemes of cooperative and non cooperative equilibria we then proceed to the computation of stable coalitions using time consistent harvest sharing policies for the partial coordination scheme in the case where players are divided into two groups high and low discount rates we find that asymmetry has a significant impact on the way the resource is shared and on the profitability of coalitions we also find that asymmetry is not a sufficient feature to overcome the puzzle of small coalitions

on market activity and the value of money in a random matching monetary economy efficient and inefficient sellers choose between home or market production since inefficient sellers bargain up their prices two equilibria may existnwith high or low market participationn depending on extent of heterogeneity and frictions in equilibrium the presence of inefficient sellers in the market has two opposing effects it raises trading frequencies so it lowers consumption risk but it lowers the value of money raising prices this may reduce trading efficiency equilibria with full and limited participation can coexist when average efficiency is high and agents are patient limited participation is socially preferable

renewable resources and economic sustainability a dynamic analysis with heterogeneous time preferences abstract in recent years there has been increasing interest in the study of economic sustainability and its relationship with natural resources this paper attempts to shed some light on the issue by taking into account the individual variations in time preferences for consumption and resource amenity we characterize the long run steady state analyze its asymptotic stability and explore the transational dynamics from any initial state the welfare implications of the optimal path are also discussed

numerical analysis of non constant pure rate of time preference a model of climate policy abstract when current decisions affect welfare in the far distant future as with climate change the use of a declining pure rate of time preference prtp provides potentially important modeling flexibility the difficulty of analyzing models with non constant prtp limits their application we describe and provide software available online to implement an algorithm to numerically obtain a markov perfect equilibrium for an optimal control problem with non constant prtp we apply this software to a simplified version of the numerical climate change model used in the stern review for our calibration the policy recommendations are less sensitive to the prtp than widely believed

who profits from innovation in global value chains a study of the ipod and notebook pcs in an era when new ideas are brought to the market by global value networks of specialists rather than by one company a key question is who captures the most value from innovation in such a structure and why this paper addresses the question of who benefits from innovation in global value chains by looking at specific computer and electronics products we apply a novel industry studies methodology for measuring the distribution of financial value across the supply chains for two models from apple s ipod family and notebook pc models from lenovo and hewlett packard hp these are all examples of globally innovated products combining technologies from the u s japan and other countries and assembled in china our analysis shows that the gross margins of apple for its high end ipod products are generally higher than those earned by hp and lenovo for notebook pcs although not so high as to be considered supernormal a key reason for the difference is that apple s control of the core software proprietary standards and complementary infrastructure of the ipod enables it to retain greater profits whereas a large share of the pc industry profits are siphoned off to microsoft and intel who control key technical standards consistent with teece 1986 our results confirm the importance of stages of technical evolution appropriability regimes and complementary assets as determinants of profiting from innovation on the other hand we find that manufacturing has become commoditized and is no longer a key to profiting from innovation in final electronic products also contrary to recent suggestions in the literature we find no evidence of a causal link between product and industry architectures instead there is a vast electronics industry architecture that can easily support product level value chain configurations ranging from modular to integrated

an evaluation of the investment environment in international logistics zones a taiwanese manufacturer s perspective abstract with the rapid development of international logistics the role of international logistics zones has become increasingly important this study evaluated the importance of investment environment factors namely political infrastructure cost and market factors for firms intention to invest in international logistics zones a structural equation modeling sem approach was employed to analyze respondents foreign direct investment fdi intention results indicated that market cost and infrastructure factors have a positive effect on firms intention to invest in international logistics zones the influence of political factor on firms investment intention was not supported in this study theoretical and practical implications of the findings for firms foreign direct investment in international logistics zones are discussed

time discounting and the overexploitation of coral reefs the incentive to overexploit a fishery resource is thought to exist if the resource owner s discount rate is sufficiently higher than the biological productivity of the targeted fish stock coral reef fisheries are extensively overexploited worldwide but the discount rates of reef fishers are largely unknown and there is little information about how discount rates relate to the exploitation status of fisheries we address these two research gaps for 48 small scale reef fisheries around the world we use a life history based method to derive fishery level intrinsic growth rates and then apply fisheries economics theory to investigate the compatibility of 2 different discount rates official and private with the exploitation status of reef fisheries we find that official discount rates that are normally used for policy making appear to be too low to fully reflect the short term outlook of reef fishers instead our inferred annual average private discount rate of 107 for fishers may better reflect the general overexploited state of reef fisheries our results indicate that in order to improve the chances of success fisheries policies which affect local fishers may need to be evaluated using private discount rates rather than the currently used official discount rates

farsightedness in a coalitional great fish war we explore the implications of the farsightedness assumption on the conjectures of players in a coalitional great fish war model with symmetric players derived from the seminal model of levhari and mirman bell j econ 11 649 661 1980 the farsightedness assumption for players in a coalitional game acknowledges the fact that a deviation from a single player will lead to the formation of a new coalition structure as the result of possibly successive moves of her rivals in order to improve their payoffs it departs from mainstream game theory in that it relies on the so called rational conjectures as opposed to the traditional nash conjectures formed by players on the behavior of their rivals for values of the biological parameter and the discount factor more plausible than the ones used in the current literature the farsightedness assumption predicts a wide scope for cooperation in non trivial coalitions sustained by credible threats of successive deviations that defeat the shortsighted payoff of any prospective deviator compliance or deterrence of deviations may also be addressed by acknowledging that information on the fish stock or on the catch policies actually implemented may be available only with a delay dynamic farsightedness in that case the requirements are stronger and the sizes and number of possible farsighted stable coalitions are different in the sequential move version which could mimic some characteristics of fishery models the results are not less appealing even if the dominant player or dominant coalition with first move advantage assumption provides a case for cooperation with the traditional nash conjectures

a model of regulated open access resource use abstract this paper develops a model of regulated open access resource exploitation the regulatory model assumes that regulators are goal oriented choosing target harvest levels according to a safe stock concept these harvest quotas are implemented by setting season lengths conditioned on the industry fishing capacity the industry enters until rents are dissipated conditioned on season length regulations harvest levels fishing capacity season length and biomass are determined jointly using parameter estimates from the long regulated north pacific halibut fishery predictions of these variables from the regulated open access model are compared to predictions that arise from the gordon model

strategic resource extraction capital accumulation and overlapping generations abstract the standard resource extraction framework assumes infinitely lived agents and yields an overfishing result for some applications a finite time horizon may be more appropriate a direct extension of the levhari mirman model to overlapping generations yields an extreme overfishing result alternatively we assume young and old specialize and respectively fish and supply capital in this model under some circumstances there may well be under utilization of natural resources however for a given production technology if there are a sufficiently large number of agents overfishing always results

money and prices a model of search and bargaining abstract this paper makes commodities divisible and incorporates bargaining into the search theoretic model of money to determine the purchasing power of money or price it is shown that two monetary equilibria always coexist where fiat money is universally accepted the two equilibria differ in price output welfare and the velocity of money sunspot monetary equilibria exist in which money is universally accepted in all states of the economy multiplicity has novel implications on the effectiveness of currency substitution and exchange market intervention journal of economic literature classification numbers c78 e40

cooperation in the commons with unobservable actions we model a dynamic common property resource game with unobservable actions and non linear stock dependent costs we propose a strategy profile that generates a worst perfect equilibrium in the punishment phase thereby supporting cooperation under the widest set of conditions we show under what set of parameter values for the discount rate resource growth rate harvest price and the number of resource users this strategy supports cooperation in the commons as a subgame perfect equilibrium the strategy profile that we propose which involves harsh punishment after a defection followed by forgiveness is consistent with human behavior observed in experiments and common property resource case studies

who captures value from science based innovation the distribution of benefits from gmr in the hard disk drive industry abstract we analyze the discovery of giant magneto resistance gmr and its development and commercialization by the global disk drive industry to answer the question of who captures the benefits from innovation in a global innovation system we assess the returns to the scientists firms and countries associated with gmr we find that the french and german scientists that discovered gmr and their labs benefited by receiving the nobel prize and small licensing fees the firm that first commercialized the technology ibm captured profits from selling hard disk drives and magnetic heads using gmr other hard disk drive and head manufacturers based in the u s and japan were able to quickly assimilate the technology and catch up with ibm france and germany reaped limited returns due to the lack of domestic firms with the absorptive capacity to commercialize gmr the u s and japan benefited from the success of their firms in commercializing gmr as did other countries which were part of the global value chains of those companies consumers and firms that incorporated hard drives in their products ultimately benefited from cheaper hard drives with greater capacity these findings illustrate the importance of absorptive capacity at the firm and national level in capturing benefits from innovation they also show that the benefits to first mover firms can be short lived in a competitive industry with open transfer of knowledge and limited appropriability regimes finally they show that the location of jobs and wages associated with innovative products depends on the structure of the global value chains of leading firms

existence and properties of equilibria for a dynamic game on productive assets abstract we consider a model in which two agents share access to the same stock of a productive asset and study the implications of non cooperative consumption behavior over time under standard assumptions on the production function we construct infinitely many nash equilibria all of which consist of stationary markovian strategies these equilibria result in overconsumption so that the uniquely determined long run asset stock is too low as compared to the cooperative solution however in the limit as the discount rate becomes sufficiently small the stead states generated by the markovian nash equilibria converge to the efficient steady state journal of economic literatureclassification numbers c73 o41 q22

can negotiations prevent fish wars abstract the standard alternating offer model is extended by integrating it with the levhari and mirman fish war model in order to investigate negotiations over fish quota the disagreement actions are endogenous the interior and linear markov perfect equilibrium mpe results in immediate agreement on an efficient path of fish quota this mpe is not analytically tractable numerical solutions show that patience is a disadvantage in this mpe and small differences in patience lead to large asymmetries in the bargaining outcome

resource rent in individual quota fisheries traditional fisheries management schemes generate incentives for vessels to maximize catch resulting in rent dissipation and overcapacity individual vessel quota management schemes change the incentives to maximize profit and have the potential to generate resource rent and reduce capacity an interesting question is whether it is the changed incentives due to individual quota or the capacity reduction due to transferability of individual quota that is most important in generating rent in this study a cost function approach is used to model and measure rent generated and potential rent in a fishery managed with individual vessel quotas

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

when patience leads to destruction the curious case of individual time preferences and the adoption of destructive fishing gears abstract the use of destructive fishing methods is a serious problem especially for tropical and developing countries due to inter temporal nature of fisheries extraction activities standard economic theory suggests that an individual s time preference can play a major role in determining the gear choice decision based on earlier theoretical work we identify two ways in which individual time preferences can impact the adoption of destructive extraction methods i the conservation effect which posits that patient individuals as indicated by relatively high discount factor are less likely to use destructive extraction methods since they are more likely to account for the loss of future income that is accompanied by using these methods ii the disinvestment effect which argues that patient individuals are more likely to use destructive extraction methods since they have greater investment capability using an agent based model we clarify the conditions under which one of these effects is more dominant than the other one our model suggests that the nature of destructive gear along with the level of social dilemma determines whether patient or impatient individuals relatively lower discount factor are more likely to adopt such a gear additionally agent s beliefs regarding future resource condition and other agent s extraction level can have a major influence in some cases

oligopoly extraction of a common property natural resource the importance of the period of commitment in dynamic games the theory of noncooperative dynamic games has provided an extremely powerful framework for studying many of the classic questions in industrial organization for example questions about resource extraction advertising research and development investment in new capacity and barriers to entry where interactions over time among few firms are involved however an important methodological issue arises when economic competition over time is modeled as a dynamic game the issue is the appropriate formulation of the players strategy spaces

declining discount rates the long and the short of it the last few years have witnessed important advances in our understanding of time preference and social discounting in particular several rationales for the use of time varying social discount rates have emerged these rationales range from the ad hoc to the formal with some founded solely in economic theory while others reflect principles of intergenerational equity while these advances are to be applauded the practitioner is left with a confusing array of rationales and the sense that almost any discount rate can be justified this paper draws together these different strands and provides a critical review of past and present contributions to this literature in addition to this we highlight some of the problems with employing ddrs in the decision making process the most pressing of which may be time inconsistency we clarify their practical implications and potential pitfalls of the more credible rationales and argue that some approaches popular in environmental economics literature are ill conceived finally we illustrate the impact of different approaches by examining global warming and nuclear power investment this includes an application and extension of newell and pizer discounting the benefits of climate change mitigation how much do uncertain rates increase valuations journal of environmental economics and management 46 2003 52 to uk interest rate data

stability and success of regional fisheries management organizations according to international law straddling fish stocks should be managed cooperatively through regional fisheries management organizations rfmos this paper analyzes the stability and success of these organizations through a game in partition function form based on the classical gordon schaefer bioeconomic model results show that the larger the number of fishing states that compete for the fish stock the higher are the relative gains from full cooperation but the lower is the likelihood of large rfmos being stable it is also shown that new entrants increase the incentives of rfmo members to leave and decrease the incentives of non members to join it moreover the success of coalition formation is positively correlated with the degree of cost asymmetry among fishing states and negatively with the overall level of efficiency

indivisibilities lotteries and monetary exchange we introduce lotteries randomized trading into search theoretic models of money in a model with indivisible goods and fiat money we show goods trade with probability 1 and money trades with probability where 1 iff buyers have sufficient bargaining power with divisible goods a nonrandom quantity q trades with probability 1 and again money trades with probability where 1 iff buyers have sufficient bargaining power moreover q never exceeds the efficient quantity not true without lotteries we consider several extensions designed to get commodities as well as money to trade with probability less than 1 and to illuminate the efficiency role of lotteries

south africa s international cost competitiveness and exports in manufacturing abstract the new south african government has embraced globalization with mixed results to date controversies center on south africa s international cost competitiveness and whether south african exports respond to changes in competitiveness we measure competitiveness by relative unit labor costs we find that south african relative unit labor costs declined in the 1990s but are still high relative to other developing countries econometric analysis reveals a strong effect of relative unit labor costs on exports