brazilian energy efficiency and energy substitution a road to cleaner national energy system abstract recognizing the need to increase energy efficiency across various sectors of the economy the brazilian government through the national energy efficiency plan adopted in 2011 seeks to avoid 30 million tons of co2 emissions through a reduction in electricity consumption of about 10 by 2030 notwithstanding we believe that a complete realization of such initiative will be dependent on the level of substitutability between different production factors and fuel types using the translog production function method this paper first provides insight on the economic impact of both factor and fuel inputs in brazil most importantly we examine the possibility of substitution among capital labor petroleum and electricity the ridge regression technique was used to estimate the parameters after our data depicted the existence of multicollinearity our results show that capital and labor are positively linked to output however petroleum and electricity contribute negatively to economic output in brazil of which corruption is a plausible reason again all variable inputs are substitutes with their relative technological progress depicting features of convergence this implies that brazil can achieve a cleaner energy system without much challenges due to the possibility of switching from greenhouse gas ghg emitting petroleum to a cleaner energy electricity our findings also highlight the importance of policies that advance merger of enterprises and renewable energy use

earnings rents and competition in the airline labor market transformation of the airline labor market continues long after deregulation airline wages changed little immediately following deregulation implying either the absence of regulatory rents or maintenance of product market power and union strength analysis for 1973 1997 however indicates that prior to recent gains the relative earnings of air transport workers decreased markedly during the latter half of the 1980s and early 1990s some of the earnings advantage of airline workers represents returns to occupational skills and worker specific quality labor rents are attributable largely to union bargaining power which in turn is constrained by the financial health of carriers

energy substitution effect on transport sector of pakistan a trans log production function approach abstract transport sector of pakistan is one of the highest fossil fuel consumption and carbon dioxide co2 emission sector as a key user of fossil fuel energy pakistan s transport sector has created many problems i e noise air pollution co2 emissions and environmental problem in this study trans log production function model for pakistan s transport sector is established and input factors of labor capital and energy consumption are comprised the output elasticity of an individual input elasticity between a pair of factors and elasticity of substitution between input factors are analyzed to manage the multicollinearity issue ridge regression is applied at different values of k from 1991 to 2018 the outcomes show that output elasticities and a pair of input factor s elasticities are increasing the elasticities of substitutions between labor energy consumption and capital energy consumption show higher outcomes because of the more elevated amount of substitution elasticities the substitution elasticity between labor and capital starts from 0 9797 to 0 9326 with slightly decreasing trend the outcomes suggest that maximum output can be achieved by increasing capital and energy technologies by allocating the maximum capital in the transport industry energy saving technologies substitution between energy and capital and substitution among capital labor can enhance environmental protection in the above s view function the present study estimates the level of energy saving and co2 emissions reduction under the different scenarios from 2015 to 2018 the policy suggestions of the results are given below

economies of traffic density in the deregulated airline industry this article estimates a structural model of competition among hub and spoke airlines in order to measure the strength of economies of traffic density on individual route segments we find that economies of density were strong during the sample period fourth quarter 1985 stronger than previous estimates by douglas caves laurits christensen and michael tretheway derived from traditional cost function methods we also find that the airlines competitive behavior was far from collusive in the markets under study markets requiring a connection at a hub airport our structural model also provides plausible estimates of demand elasticities we use our estimates to provide a cost based rationale for the major changes in the structure of the industry following deregulation for example the increase in airport and industry wide concentration and the increase in competition at the city pair market level and to simulate the effects of a merger of airlines that share a hub

estimates of inter fuel substitution possibilities in chinese chemical industry abstract the chemical sector is a key driver of china s remarkable growth record and accounts for about 10 of the country s gdp this has made the industry energy intensive and consequently a major contributor to greenhouse gas emissions ghg and other pollutants this study has attempted to investigate the potential for inter fuel substitution between coal oil natural gas and electricity in chinese chemical sector by employing a translog production and cost function ridge regression procedure was adopted to estimate the parameters of the function estimation results show that all energy inputs are substitutes in addition the study produces evidence that the significant role of coal in the chinese chemical fuel mix converges over time albeit slowly these results suggest that price based policies coupled with capital subsidy programs can be adopted to redirect technology use towards cleaner energy sources like electricity and natural gas hence retaining the ability to fuel the chemical sector while also mitigating ghg emissions notwithstanding one must understand that the extent to which substituting electricity for coal will be effective depends on the extent to which coal or oil is used in generating electricity the findings of this study provide general insights and underscore the importance of chinese government policies that focus on installed capacity of renewable electricity energy intensity targets as well as merger of enterprises

inter factor inter fuel substitution carbon intensity and energy related co2 reduction empirical evidence from china carbon dioxide co2 reduction which is the central issue in addressing global warming depends on the extent that clean energy can substitute for co2 emitting coal and non energy factors can substitute for energy factor the purposes of this paper are to empirically investigate inter factor inter fuel substitution in china and to evaluate the determinants of china s energy related carbon intensity as well as mitigation effects of carbon tax considering china s rapid increase in energy consumption and the slow adjustment in substitution the two stage estimation method and the dynamic error correction mechanism are employed in this study the empirical results suggest substitutability among different types of energy sources as well as substitutability among energy labor and capital the magnitude of cross price elasticities indicates that the substitutions are inelastic which limits the scope of the chinese government to implement substitution strategy aiming at energy conservation and environmental management china s carbon intensity declined during 1985 2012 most of which can be attributed to labor substitution and energy price increase however carbon intensive technology being embodied in china s capital investment energy consuming equipment has contributed to the increase in carbon intensity a carbon tax of rmb 50 tonne could reduce 332 9 million tonnes co2 emissions on the basis of 2012 in addition if ignoring the feedback between inter factor inter fuel substitutions co2 mitigation potential would be underestimated

a dynamic game of airline network competition hub and spoke networks and entry deterrence article in a hub and spoke network the profit function of an airline is supermodular with respect to the airline s own entry decisions for different city pairs this source of complementarity implies that a hub and spoke network can be an effective strategy for deterring the entry of competitors this paper presents an empirical dynamic game of airline network competition that incorporates this entry deterrence motive for using hub and spoke networks we summarize the results of the estimation of the model with special attention to empirical evidence regarding the entry deterrence motive

airport presence as product differentiation there is now widespread recognition that an airline s operation at a given airport greatly affects its competitive position on routes flown out of that airport see m levine 1987 s borenstein 1989 s morrison and c winston 1989 and myself 1989 among many others airlines typically defend any competitive advantage as stemming from the lower costs and better service that are said to be generated by hub and spoke route systems airline critics typically respond that airlines gain market power by dominating individual airports both views are at least plausible huband spoke transportation networks reduce the number of round trips necessary to carry a given number of passengers on a given set of itineraries while increasing the number of passenger miles flown if there are sufficient economies of scale in plane size then the advantages of hubbing can overcome the disadvantage in passenger miles resulting in lower total costs by pooling passengers with different ultimate destinations a hubbed system can also offer more frequent flights than would be economically feasible under a nonstop system it also appears however that airlines gain other advantages from a large presence at an airport incumbent airlines are the major source of financing for many airports and therefore gain a large degree of bureaucratic control over airport operations this control may enable them to block the entry or expansion of rivals airlines with a large presence in a given city also gain advantages from frequent flyer plans and nonlinear travel agent commission schedules see again levine and others if the bureaucratic and marketing advantages of airport presence are sufficient to prevent most attempts at entry then incumbents may gain the ability to exercise traditional market power by restricting output and driving up prices this paper argues that both simple costreducing and naive market power stories are inappropriate for the airline industry i present a model in which consumers are willing to pay a premium for the services of the dominant airline this premium may be related to a number of factors including flight frequency frequent flier miles and travel agent commission overrides this model has the advantage of treating oligopoly product differentiation in an explicit way of treating price as an endogenous variable and of allowing for airport presence to affect both costs and demand

the determinants of aggregate energy use in west germany factor substitution technological change and trade this paper examines the determinants of production related energy use in west germany over the period 1976 1994 the approach is to estimate a system of share equations for energy capital low skilled labor high skilled labor and materials in the west german production sector taking account of biased technological change and increasing trade orientation while technological change is found to be energy saving increased openness is energy using i e tends to increase the energy share factor substitution biased technological change and trade contribute to the year to year volatility of energy intensity in the proportion 66 30 4 the results are robust across several specifications examined

does competition reduce price dispersion new evidence from the airline industry we analyze the effects of competition on price dispersion in the airline industry using panel data from 1993 q1 through 2006 q3 competition has a negative effect on price dispersion in line with the textbook treatment of price discrimination this effect is pronounced for routes with consumers characterized by relatively heterogeneous elasticities of demand on routes with a homogeneous customer base the effects of competition on price dispersion are smaller our results contrast with those of borenstein and rose who found that price dispersion increases with competition we reconcile the different results by showing that the cross sectional estimator suffers from omitted variable bias

fleetwood on causal holism clarification and critique fleetwood 2002 cambridge journal of economics vol 26 no 1 27 45 provided a critical evaluation of causal holism boylan and o gorman 1995 ekonomia vol 1 no 2 9 21 from the perspective of critical realism for fleetwood there are three fundamental areas of disagreement namely the differential approaches to unobservable entities description and explanation in this paper the authors dispute fleetwood s analysis of causal holism in all these areas to contextualise and clarify their disagreements with fleetwood the authors examine the most significant differences between the two methodological frameworks they argue that notwithstanding their shared criticism of mainstream economics critical realism and causal holism remain methodologically incompatible copyright 2006 oxford university press

ghanaian energy economy inter production factors and energy substitution abstract industries in ghana depend highly on petroleum to fuel their operations which has brought immerse environmental threat from greenhouse emission gas ghg this study tried to investigate potential substitutability of factor inputs and fuel inputs among capital labor petroleum and electricity in ghana by adopting the translog production and cost function approach we used ridge regression technique to estimate the parameters after our data show possibility of multicollinearity our result shows that all inputs are substitutes with their relative technological progress also showing evidence of convergence this suggests that redirecting resources into the improvement of technology towards cleaner energy production like electricity will be a success over time and this will mean that the fueling of the economy will be done in a cleaner environment and mitigating mitigate co2 emissions as well the improvement of electricity production and the promotion of its use require government policies that will enable industries to adjust to the switch from one input to the other through capital subsidies and tax rebates also energy labor and capital energy being substitutes in our findings suggest that removal of all energy subsidies will reduce the use of energy and increase capital and labor intensiveness input switch by industries will promote merger of smaller firms with bigger firms that have cost advantage during the switch period and requires a clear government merger control policies in a nutshell our findings provide an insight into policies to promote the use of renewable energy energy intensity and merger policies

competition privatisation and productive efficiency evidence from the airline industry we use data from the airline industry to examine the extent to which the costs of airline operations are affected by rents accruing to workers and the extent to which these rents depend inter alia upon the degree of competition in the industry our empirical results based on a panel of twelve european and seven major united states airlines confirm that state ownership substantially increases rents to labour while the effects of competition are more subtle and ambiguous airline profits tend to be associated with higher rents to employees the gains from further privatisation and liberalisation may be quite large does competition have significant effects on productive as well as allocative efficiency convincing empirical answers to this question have been hard to find for two reasons first data of the quality required for robust estimation of productive efficiency are only rarely available secondly there is frequently no convincing standard against which the efficiency of an industry or a firm may be compared since when the degree of competition varies many other things such as technology network structures and firm sizes typically vary as well these problems do not automatically make comparison impossible but they compound the need for high quality data one industry which is likely to be well suited to investigating questions of this kind is the international airline industry the industry contains a large number of firms thus ensuring at least enough potential competition to make questions about the effects of competition interesting but the scope for these firms to compete with one another has been influenced to varying degrees over the years by different national and international regulatory regimes in particular deregulation of the united states industry in 1978 provided a kind of natural experiment that has led not only to comparisons of the before and after variety but also to comparisons between the united states industry and that of other global regions notably europe such comparisons are far from straightforward but they are facilitated by the fact that the technology of civil aviation is more or less internationally standardised and by the relatively high quality of available data in the industry

exploring the green total factor productivity of china s metallurgical industry under carbon tax a perspective on factor substitution abstract the characteristics of high emissions and high energy consumption in metallurgical industry have brought great challenges to the green and low carbon transition in china as a low carbon economic instrument carbon tax is generally considered to be an effective way to reduce co2 emissions through raising energy cost but whether it will promote the green total factor productivity gtfp of china s metallurgical industry is still unanswered under this background this paper uses provincial panel data over years 2000 2015 to investigate the impact of carbon taxation on gtfp of metallurgical industry from the perspective of inter fuel and inter factor substitution the lock in mechanism is also incorporated in the three stage estimation model to better reflect the asymmetric price response of factors and fuels the results reveal that the slow marketization process of energy price and the rigid demand for energy in china s metallurgical industry hinder the substitution effect of energy the implementation of carbon tax has limited effect on energy saving and co2 reduction in the metallurgical industry of china and levying a carbon tax has a negative effect on gtfp during the research period therefore the government should not achieve co2 reduction targets at the expense of green economic growth gtfp is suggested to be considered in future assessment criteria in the process of transforming to low carbon economy

deregulating european airlines deregulating european airlines francis mcgowan and paul seabright one of the industries with the greatest potential to benefit from the single european market is civil aviation which has been highly regulated by european governments the deregulation of civil aviation in the us since the late 1970s has provided valuable evidence about the nature of the airline industry and its response to the liberalization of conditions of entry by new carriers we examine the us experience and look at the changing regulatory framework for the european industry we also consider the main sources of market failure in air transport the lessons of the us experience are threefold first deregulation can in principle produce major gains to consumers without damaging the long run profitability of carriers by reducing the high costs of operation of european airlines second congestion problems especially the availability of landing slots at airports need to be managed effectively to prevent incumbent carriers squeezing out new entrants we recommend a system of slot auctions to achieve this third in spite of relatively low sunk costs of entry to the industry there remain significant opportunities for the exercise of market power by incumbent carriers deregulation of entry needs therefore to be supplemented by a vigorous competition policy especially with regard to the approval of mergers

localized market power in the u s airline industry this paper tests whether the observed dominance of most city pair markets and airports in the u s domestic airline industry by single carriers confers any pricing power on the dominan t firms the results of fixed effects estimation indicate that airport dominance by a carrier does confer upon it substantial pricing power whereas dominance at the route level seems to confer no such pricing power additionally the authors find a positive yet small correlation between both route concentration and price and airport concentration and price the quantitative importance of airport dominance reveals that the most promising direction for public polic y aimed at improving the industry s performance is to ensure equal acc ess to sunk airport facilities copyright 1993 by mit press

rent sharing in the european airline industry abstract to the extent that product market competition affects managerial incentives to control costs price cost margins offer a poor guide to the evaluation of market power we propose a method to evaluate simultaneously both market power and its pass through on cost we focus on rent sharing between unions and management as a mechanism through which costs are endogenised we develop and estimate a structural model of competition where wages are endogenously determined in the first stage with a price setting market game following in the second stage this structural model is then estimated using data for 8 european airlines from 1976 1990 we find a strong support for the hypothesis that lax competition induces extensive rent sharing through excessive wages

energy substitution efficiency and the effects of carbon taxation evidence from china s building construction industry as buildings are constructed to be more energy efficient and environmental friendly the building construction industry which is a basic and leading industry of the national economy development has become one of the key sectors for energy conservation and emission reduction in china this paper aims at quantifying both inter factor and inter energy substitution for china s building construction industry and investigate the main driving forces behind energy efficiency changes as well as the co2 abatement effect of a uniform carbon tax in this sector the model is established employing provincial pooled data over 2003 2012 in china by regions hence results between different regions are compared the main findings indicate that i energy and non energy are substitutes whereas individual energy inputs are complementary in china s building construction industry the substitution effect varies across regions due to different factor endowments and marketization levels ii energy price increase and construction scale expansion leads to energy efficiency improvement while substitution and technology present negative influences on energy efficiency iii approximately 3 of the co2 emissions in china s building construction industry can be reduced by carbon taxation based on the integrated own and cross price elasticities of each energy

spatial multiproduct pricing empirical evidence on intra european duopoly airline markets this paper estimates a model of spatial multiproduct duopoly pricing when the location patterns differ across markets the theoretical model suggests that the neighbouring configuration yields less competitive nash prices than the interlaced configuration i apply this model to data for intra european duopoly airline markets the empirical results support the theoretical model since i find that fares are higher on intra european markets that exhibit neighbouring configurations in the time domain this result suggests that price competition is reduced when each airline operates on a specific segment of the timetable e g the first 12 hours of the day clearly this result has several implications for policy makers and or airport authorities in charge of awarding slots

substitution possibilities and determinants of energy intensity for china abstract this paper measures technological change factor demand and inter factor and inter fuel substitutability measures for china we use individual fuel price data and a two stage approach to estimate total factor cost functions and fuel share equations both inter factor and inter fuel substitution elasticities are calculated and the change in energy intensity is decomposed into its driving forces the results suggest that energy is substitutable for capital regionally and for labor nationally capital substitutes for energy more easily than labor does energy intensity changes vary by region but the major drivers seem to be budget effect and the adoption of energy intensive technologies which might be embodied in high level energy using exports and sectors capital investment and even old technique and equipment imports whether the trend in rising energy intensity continues will be significant for china and the rest of the world

the evolution of u s airline competition studies by academic economists were a significant force in the movement towards deregulation of the domestic airline industry in the early 1970s levine 1965 jordan 1970 keeler 1972 douglas and miller 1974 during the critical 1977 78 period in which deregulation was imposed first de facto by the civil aeronautics board cab and then de jure by congress the chairman and vice chairman of the cab were economists for the 14 years since deregulation economists have continued intensive study of the industry in part because of the unusual availability of reliable firm and transaction level data and in part because of the rare opportunity to observe an industry as it evolves from strict economic regulation to fairly unimpeded competition and strategic behavior the simplest prediction of economists about airline deregulation and one of the few on which nearly all economists agreed was that deregulation would improve consumer welfare in comparison to continued price and entry regulation fourteen years later nearly all economists still agree on this though the degree of enthusiasm for the deregulation outcome varies considerably there was substantial disagreement among economists about the market structure that would result because studies of scale economies in the airline industry had concluded that none existed beyond the scale of the smaller major airlines of the 1970s caves 1962 eads et al 1969 many economists argued that deregulation would result in more than the 11 major airlines that existed at the time of deregulation others predicted that only a few or possibly only one airline would survive at a large scale two noted university of chicago economists sam peltzman and lester telser made a bet in 1979 on whether

air travel choices in multi airport markets abstract we study how air travel consumers departing from a multi airport region trade off across airport and airline supply characteristics we empirically investigate this trade off by estimating a weighted conditional logit model of airport airline choice using survey data on travels departing from one of three san francisco bay area airports and arriving at one of four airports in greater los angeles in october 1995 non price characteristics like airport access time airport delay flight frequency the availability of particular airport airline combinations and early arrival times are found to strongly affect choice probabilities we calculate marginal effects and counterfactual scenarios to compare the values of these characteristics among each other and across traveler type in order to examine the robustness of the conditional logit model we estimate a mixed logit model and find that the results are similar we attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers thus controlling for two important sources of consumer heterogeneity we consider the implications of our empirical findings on vertical integration between airlines and airports on the effectiveness of airport dominance and on the competitive effect of entry by low cost carriers

can market oriented economic reforms contribute to energy efficiency improvement evidence from china since china accelerated its market oriented economic reforms at the end of 1992 its energy intensity has declined 3 6 annually over 1993 2005 however its energy intensity declined 4 2 annually during its first reform period 1979 1992 therefore can we conclude that the accelerated marketization since the end of 1992 has made no contribution to its energy efficiency improvement in order to answer this challenging question we examine the changes of energy own price elasticity as well as the elasticities of substitution between energy and non energy capital and labor in china during the periods of 1979 1992 and 1993 2003 generally in transition or developing economies holding the technology and output level fixed if the energy own price elasticity algebraic value declines or the substitution elasticity between factors rises they will contribute to energy efficiency improvement our empirical study finds that 1 during 1979 1992 the energy own price elasticity is positive 0 285 and capital energy labor energy are both morishima complementary which indicates a distorted energy price and inefficient allocation and 2 during 1993 2003 the own price elasticity for energy is negative 1 236 and capital energy and labor energy are both morishima substitute all factor demands become more elastic and all elasticities of substitution increase the implication is that the accelerated marketization contributes substantially to energy efficiency improvement since 1993 c 2006 elsevier ltd all rights reserved

axiomatization and formalism in economics in this paper we address a number of issues in the historiography and methodology of the formalization of economics in the twentieth century we argue that debreu s approach to formalism pursuing his bourbakist programme was based on hilbert s version of finitism the latter project attempted to retain its place in cantor s paradise and in so doing bequeathed serious methodological consequences there was however at the turn of the twentieth century an alternative version of finitism available that provided by poincare which if adopted by economics would have led to a radically different approach to economic theorizing and modelling we argue that these reflections must be embedded in an alternative larger methodological framework copyright 2007 the authors journal compilation 2007 blackwell publishing ltd

testing static oligopoly models conduct and cost in the sugar industry 1890 1914 we explore the widespread methodology of using demand information to infer market conduct and unobserved cost components under the hypothesis of static oligopoly behavior direct measures of marginal cost and conduct indicating small market power serve as benchmarks the more competitive models yield better cost estimates the best cost estimates occur when conduct is estimated as a free parameter which in turn only slightly underestimates our direct measure it also tracks the decline in market power accompanying the industry s structural changes the methodology is largely validated although partial cost information can improve its predictive power conclusions are robust to demand function

a nested ces approach to capital energy substitution abstract this paper uses the nested constant elasticity of substitution ces production function to estimate elasticities of substitution between capital labour energy and materials over the 1971 1976 period around the initial energy crisis elasticities are estimated for each of the two digit sic industries within us manufacturing using more disaggregate four digit sic data the nested ces function makes it possible to distinguish between engineering and economic elasticities of substitution capital and energy are estimated to be slight engineering substitutes and economic complements labour energy and materials are estimated economic substitutes

panel data estimates of the production function and product and labor market imperfections summary consistent with two models of imperfect competition in the labor market the efficient bargaining model and the monopsony model we provide two extensions of a microeconomic version of hall s framework for estimating price cost margins we show that both product and labor market imperfections generate a wedge between factor elasticities in the production function and their corresponding shares in revenue which can be characterized by a joint market imperfections parameter using an unbalanced panel of 10 646 french firms in 38 manufacturing industries over the period 1978 2001 we can classify these industries into six different regimes depending on the type of competition in the product and the labor market by far the most predominant regime is one of imperfect competition in the product market and efficient bargaining in the labor market ic eb followed by a regime of imperfect competition in the product market and perfect competition or right to manage bargaining in the labor market ic pr and by a regime of perfect competition in the product market and monopsony in the labor market pc mo for each of these three predominant regimes we assess within regime firm differences in the estimated average price cost mark up and rent sharing or labor supply elasticity parameters following the swamy methodology to determine the degree of true firm dispersion to assess the plausibility of our findings in the case of the dominant regime ic eb we also relate our industry and firm level estimates of price cost mark up and extent of rent sharing to industry characteristics and firm specific variables respectively copyright 2011 john wiley sons ltd

liberalizing european airlines cost and factor productivity evidence abstract european countries do not all share the same view concerning the benefits of increased competition among airlines in europe to explain this difference in attitudes the paper presents evidence on differences in costs and global factor productivity between the main european national flag carriers the data reveal a clear distinction between the main european and north atlantic routes unit costs per passenger kilometer are lower in north atlantic routes and unit profits are higher in european routes the first result reflects the economies of scale due to higher distances and traffic density on north atlantic routes the second result is an indication of the lower level of competition between airlines in europe finally tornqvist factor productivity growth indexes 1981 1986 show that the initial gap which existed between these productivity measures at the beginning of the period is shrinking this suggests that the european airline industry is currently in a more favorable situation to support more competition

barriers to entry in the airline industry a multidimensional regression discontinuity analysis of air 21 abstract we investigate the success of legislation aimed at increasing competition at highly concentrated u s airports mainly by forcing these airports to increase the availability of scarce facilities we use a multidimensional regression discontinuity approach to exploit a sharp discontinuity in the law s implementation and identify its effects we find that fares decrease by 13 4 20 2 in markets with one both end point s covered approximately half of the decline is driven by the entry of low cost carriers we find little evidence that the fare declines were accompanied by a diminished quality of service and passenger volumes increased which suggests the legislation improved consumer welfare

concentration potential entry and performance in the airline industry airline markets do not satisfy the theoretical conditions for perfect contestability and theory does not indicate which deviations from perfect contestibilty significantly affect performance thus the effect of potential entry on performance in airline markets is explored empirically the best model for explaining fares is found to be one in which the measure of market concentration takes into account not only the number and size distribution of incumbents but also the number of potential entrants not significantly disadvantaged due to economies of scale and scope the hypothesis that all city pair markets are perfectly contestable is rejected coauthors are richard l johnson andrew s joskow gregory j werden and michael a williams copyright 1989 by blackwell publishing ltd

energy substitution effect on transport sector of pakistan based on trans log production function abstract transport sector because of the growing industrialization and urbanization of pakistan is one of fastest growing sector in terms of output energy consumption and co 2 emission its current performance and future outlook has the potential to leave behind problems related to the global issues of energy security and environmental sustainability the extents to which energy and non energy inputs are substitutable are the core issue in planning and designing of energy policies for this purpose we establish a trans log production function for pakistan transport sector and the input factors capital labor and energy are included output elasticities of each factor and the substitution elasticities between these factors have been estimated and analyzed for the sample period of 1980 2013 the results show higher output elasticity and that all pairs of factor inputs are substitutes because of the higher level of substitution elasticities the results suggest that by allocating more capital in the transport sector the relevant energy saving technology could be promoted thereby realizing the substitution between capital and energy and reduction of co 2 emission as a result it further suggest that by continuous upgrading of the capital substitution between energy and labor can also be achieved and the transition of pakistan transport sector from labor intensive to capital intensive can be realized

entry and competitive structure in deregulated airline markets an event study analysis of people express this paper proposes an alternative approach to the study of competitive structure in deregulated airline markets that avoids some of the weaknesses of previous studies this approach uses reactions of incumbent airlines stock prices to announcements of entry by people express to shed light on competitive structure these stock reactions reveal significant route specific profits or sunk costs and also provide evidence on the degree of competitive localization present in the industry the conclusions emerging from this analysis are corroborated by an examination of price sales quantity and schedule changes that followed people express entry

structural optimization and carbon taxation in china s commercial sector abstract given china s economic transformation and upgrading process the green development of commercial sector is more and more important based on the trans log cost function this paper calculates the inter factor and inter fuel substitution effects in china s commercial sector from 1980 to 2016 besides the paper further analyzes the driving factors of the dynamic changes in energy intensity and the impact of carbon taxation in china s commercial sector the main conclusions are as follows 1 capital labor and energy in china s commercial sector negatively correlate with their prices and the self price elasticities of energy labor and capital decline in turn 2 the relationship between labor and capital is substitutional and the same relationship is found when after considering labor and energy and that between energy and capital is complementary 3 demand for energy sources negatively correlates with their prices and there exist complementary relationships between energy sources 4 technical effects and substitution effects can effectively promote the decline of energy intensity in china s commercial sector 5 implementing a 50 rmb tonne carbon taxation will lead to 5 50 energy savings and 6 21 co2 reduction

estimating the rebound effect in us manufacturing energy consumption abstract the energy price shocks of the 1970s are usually assumed to have increased the search for new energy saving technologies where eventual gains in energy efficiencies will reduce the real per unit price of energy services and hence the consumption of energy will rise and partially offset the initial reduction in the usage of energy sources this is the rebound effect which is estimated for the us manufacturing sector using time series data applying the dynamic ols method dols when allowing for asymmetric price effects the rebound effect is found to be approximately 24 for the us manufacturing sector

airline network rivalry in this paper the effects of the strategic interaction between deregulated airlines on their network choice are analyzed the authors examine whether switching from a linear to a hub spoke network confers a strategic advantage because it saves costs and improves service quality they find that if hubbing lowers total cost which includes both airline and passenger inconvenience costs the pursuit of strategic advantages usually intensifies the extent of hubbing even if hubbing raises total cost it might be pursued by the airline either because hubbing is a dominant strategy in an oligopolistic setting or because hubbing will be useful in deterring entry

airline code share alliances and their competitive effects abstract code share alliances have become a prominent feature in the competitive landscape of the airline industry however policy makers are extremely hesitant to approve proposed code share alliances when the potential partners route networks have significant overlap the main concern is that an alliance may facilitate price collusion on partners overlapping routes this article shows how policy makers can use a structural econometric framework to quantify the competitive effects of proposed code share alliances where potential alliance partners compete on overlapping routes in the prealliance industry as an example i apply the econometric model to the delta continental northwest alliance this proposed alliance was initially greeted with skepticism by the u s department of transportation owing to the potential partners unprecedented level of route network overlap for the markets considered in my analyses it appears as though the ultimate approval of the alliance by policy makers was justified

domestic airline alliances and consumer welfare this article investigates the consumer welfare consequences of the recent code share agreement between continental airlines and northwest airlines we develop a discrete choice model based on individual flight characteristics this structural model recognizes that consumers i may have heterogeneous preferences for flight attributes and ii may face different prices for the same flight the empirical methodology also deals with the measurement error problem stemming from the absence of consumer level data on prices the estimation results suggest that whereas the code share agreement did not impact consumers significantly on average it increased the average surplus of connecting passengers but decreased the average surplus of nonstop passengers interestingly the magnitude of our welfare results may be attributed in large part to changes in product characteristics other than prices

dynamic oligopoly behaviour in the airline industry abstract this paper examines the dynamic interaction between united airlines and american airlines on a set of duopoly routes we estimate quarterly conduct parameters or conjectural variations and test constant behaviour bertrand cournot and collusive models we also test two regimeswitching models derived from the green porter price war model one based on reversion to bertrand behaviour during price wars the other on reversion to cournot behaviour the three constant behaviour models are all rejected the regime switching models can both describe the data but the cournot based version is preferred

estimation of a model of entry in the airline industry this paper considers the effect of an airline s scale of operation at an airport on the profitability of routes flown out of that airport the empirical methodology uses the entry decisions of airlines as indicators of underlying profitability the results extend the empirical literature on airport presence by providing a new set of estimates of the determinants of city pair profitability these estimates imply that city pair profits increase in airport presence and decrease rapidly in the number of entering firms the literature on empirical models of oligopoly entry is also extended via a focus on the role of differences between firms

wages and product market power this paper analyses time series on some 800 british manufacturing companies to address various questions concerning the role of insiders and market power in wage determination the following are the most important results first product market power has a positive impact on wages this impact is enhanced in large firms but is not influenced by union status second while firm specific factors influence wages the size of these effects is not influenced by union status firm size or product market power however product market power reduces the generally strong negative effect of unemployment on wages finally there is no robust evidence of insider power at work in wage setting irrespective of product market position

the capital energy substitutability debate a new look over the last twenty years many studies have been made of the elasticity of substitution between capital and labor the reported estimates are highly variable and reveal an apparent dichotomy between cross sectional and time series studies the former suggest that capital and energy are substitutes while the latter suggest the converse all these studies reported allen partial elasticities of substitution we suggest that the morishima elasticity may be a more useful measure for the issues of concern to capital energy substitution we calculate the morishima elasticities from parameters estimated in a selection of earlier studies and find no excessive variability nor any evidence of the time series cross section dichotomy capital and energy are morishima substitutes copyright 1995 by mit press

managerial incentives and product market competition are imperfectly competitive leibenstein 1966 claims that there may be a substantial amount of x inefficiency where x inefficiency measures the degree to which actual profits depart from the maximum of profits that could be obtained if all operations in the firm were carried out at minimal costs he offers empirical evidence from case studies showing that the welfare loss due to organizational slack is of an order of magnitude bigger than the welfare loss due to monopolistic price distortions on imperfectly competitive markets these results support the common presumption that increasing competition reduces organizational and in particular managerial slack however this early literature does not offer a theoretical explanation for the link between competition and managerial incentives in particular it ignores the fact that managerial incentives can be affected by the design of an incentive scheme in this paper i derive the optimal incentive scheme for a manager as a function of the competitiveness of the environment in which his firm operates the basic impact of increased competition is that it reduces the profits of a firm this has two effects in the model first if a firm has high costs then the reduction of profits may be sufficient to render the firm unprofitable so the probability that it has to be liquidated goes up this unambiguously induces the manager of the firm to work harder for a cost reduction in order to avoid liquidation and to keep his job second the reduction in profits may affect

value of an additional firm in monopolistic competition the paper develops a model of monopolistic competition in which the satisfaction levels consumers get from products are independently and identically distributed potential substitution among products then generates demand curves through the mechanism of order statistics the value of extra variety can be calculated directly pareto lognormal and beta distributions are investigated using numerical integration some but not all cases support the argument that the optimal number of firms exceeds the equilibrium number

engineering and econometric interpretations of energy capital complementarity comment in a recent paper in this review ernst berndt and david wood provide a useful clarification of gross and net complementarity pointing out that energy and capital can be gross substitutes in a production subfunction and yet net complements in the aggregate production function using this theoretical proposition they attempt to reconcile the econometric findings of energy capital complementarity with other studies finding energy capital substitutability their reconciliation rests on the finding that those studies finding energy capital substitutability considered only capital k labor l and energy e by omitting materials m one obtains only a gross elasticity the net elasticity which allows for the additional substitution between the kle aggregate and m can indicate energy capital complementarity in fact klem studies generally find energy and capital complementarity the purpose of this comment is to question whether the net and the gross elasticity distinction provides such a reconciliation among the econometric results i agree that this explanation tends to reduce the disparity between the original berndt wood elasticity estimate and griffin gregory yet three independent sources of evidence suggest that the omission of m is not a sufficient explanation and probably not even a major explanation for the disparity of findings first the difference between the gross elasticity in a kle submodel and the net elasticity in a klem model depends critically on the elasticity of substitution between m and kle let us adopt the berndt wood notation and consider their mathematical example which demonstrates the possibility of gross capital energy substitutability as in the griffin gregory study with net capital energy complementarity

how does the implementation of the policy of electricity substitution influence green economic growth in china abstract to promote the level of electrification reduce environmental pollution and achieve the goal of clean energy usage and green economic growth in china the national development and reform commission and other eight departments jointly issued and implemented the policy of electricity substitution in 2016 electricity substitution aims to replace traditional fossil fuels such as coal and fuel oil with clean electric energy in different fields e g industry transportation and construction and deal with the pollutants at power generation however we still need to find out the exact impact of the policy of electricity substitution on energy saving and emission reduction in this paper we estimate the economically feasible increment of electricity demand according to different classifications in electricity substitution technology furthermore based on the input output model we discuss the relative influence of the policy of lectricity substitution the main conclusions are first the policy of electricity substitution alone is not adequate to reduce the dependence on fossil energy and environmental pollution under china s current power generation structure we should also increase the use of renewable energy second the power sector plays a leading role in stimulating economic output and the increasing electricity consumption due to the policy of electricity substitution can boost the green development of china s economy

pricing and performance in monopoly airline markets since the airline deregulation act of 1978 ada much has been learned about the performance characteristics of airline markets functioning free of governmental control contrary to the initial expectations of many airline markets do not appear to conform well to the contestable markets model numerous empirical studies of the industry have concluded that performance depends on the level of actual competition a result incompatible with perfect contestability 2 in a perfectly contestable

capital stock labor energy substitution and production efficiency study for china abstract this study estimates the elasticities of substitution for china from 1953 to 2006 by the two level constant elasticity of substitution ces production function with three factor inputs capital stock labor and energy a technological change rate and non constant returns to scale are under considered all possible combinations and two other subdivided periods are carried out respectively and their technological change rates elasticities of substitution and returns to scale are found this study also provides an analysis of production efficiency by using marginal productivity of specific factor input according to the estimated results and distinguishes the marginal productivities deriving from the three different combinations it suggests that the decision makers of china need to consider the effects of different factor inputs on gdp growth

airline mergers airport dominance and market power effects of northwestrepublic and twaozark mergers on fares at minneapolisst paul and st louis

output elasticities and inter factor substitution empirical evidence from the transportation sector of shanghai abstract as a major consumer of fossil fuels the transportation sector in shanghai presents a wide range of problems including air pollution noise and traffic congestion this study aims to explore the energy substitution effect based on a trans log production function to evaluate the contribution of each input factor to sectoral output and reveal the substitution possibilities between capital labor and energy to deal with a multicollinearity problem we adopt ridge regression to obtain the coefficient of each variable under the appropriate penalty value the bootstrap method is used for making statistical inferences and the 95 confidence interval is obtained with 1000 bootstrap samples the empirical results demonstrate the following 1 the output elasticities of capital 0 13 0 15 labor 0 24 0 25 and energy 0 43 0 48 are positive and show an increasing trend over the study period 2 the substitution elasticity between labor and energy is the highest among the input factors around 1 0095 with a slight decreasing trend 3 the substitution elasticity between energy and capital ranges from 1 0018 to 1 0021 and the substitution elasticity between capital and labor is infinitely close to 1

impact of factor price distortions on energy efficiency evidence from provincial level panel data in china abstract the marketization of energy price is not only an important part of factor pricing reforms but also decisive for energy efficiency improvement thus this study aims to measure factor price distortions and estimate their impact on energy efficiency based on an empirical analysis of 30 provinces of china during 2004 2013 using the stochastic frontier analysis framework results yielded three important findings 1 technical efficiency was the highest in eastern china which still remains low at around 0 7980 followed by central china and western china and there were growing gaps among the above areas 2 capital price was relatively high while energy price was relatively low compared with labor price and the relative allocative efficiency of energy got worse over time 3 energy efficiency loss among the three regions showed convergence trends policy implications are summarized as follows 1 measures such as adjusting energy consumption structure and improving production technology and management levels can reverse the trend of declining technical efficiency 2 the process of energy price marketization needs to be accelerated 3 it is necessary to expand the depth and breadth of regional technology diffusion and break the barriers of technology transfer among regions in china

hubs and high fares dominance and market power in the u s airline industry this article estimates the importance of route and airport dominance in determining the degree of market power exercised by an airline the results indicate that an airline s share of passengers on a route and at the endpoint airports significantly influences its ability to mark up price above cost the high markups of a dominant airline however do not create much of an umbrella effect from which carriers with smaller operations in the same markets can benefit the article suggests a number of possible explanations for this asymmetry

energy conservation in china s light industry sector evidence from inter factor and inter fuel substitution following the impressive economic achievements in the past decades china is faced with energy and environmental challenges to carry out more effective and targeted energy policies the heterogeneities of different industrial sectors are of great importance the energy consumption of china s light industry in 2012 was 316 million tons of coal equivalents which is about the energy consumption of south korea the paper explored the substitution relationships between various input factors and fuel sources and showed that electricity price reform is crucial for energy conservation in china s light industry then the dynamics of energy intensity change is examined by decomposing energy intensity into budget effect substitution effect output effect and technology advance effect the result revealed that the substitution effect between input factors is a key driving force however technology progress seems to contribute very little for future energy policy alternatives promoting the implementation of new conservation technology and electricity price reform may be effective measures

capital energy substitution evidence from a panel of irish manufacturing firms abstract we use a translog cost function to model production in the irish manufacturing sector over the period from 1991 to 2009 we estimate both own and cross price elasticities and morishima elasticities of substitution between capital labour materials and energy we find that capital and energy are substitutes in the production process across all firms we find that a 1 rise in the price of energy is associated with an increase of 0 04 in the demand for capital the morishima elasticities which reflect the technological substitution potential indicate that a 1 increase in the price of energy causes the capital energy input ratio to increase by 1 5 the demand for capital in energy intensive firms is more responsive to increases in energy prices while it is less responsive in foreign owned firms we also observe a sharp decline in firms responsiveness in the first half of the sample period

delving into liberia s energy economy technical change inter factor and inter fuel substitution abstract the industrial energy mix of liberia is dominated by petroleum products this has generated serious environmental problems contributing immensely to co 2 emissions and other pollutants in the country this study has attempted to investigate the potential for inter factor and inter fuel substitution between capital labor petroleum and electricity in liberia by employing a translog production and cost function approach ridge regression procedure has been adopted to estimate the parameters of the function due to multicollinearity in the data estimation results show that all inputs are substitutes these suggest that price based policies coupled with capital subsidy programs can be adopted to redirect technology use towards cleaner energy sources like electricity hence retaining the ability to fuel the economy while also mitigating greenhouse gas ghg emissions substitution between energy and labor and energy and capital implies that removal of price ceilings on energy in liberia would tend to reduce energy use and increase capital and labor intensiveness notwithstanding the study seems to show no evidence of convergence in relative technological progress of the four inputs implying that petroleum will continue to play a dominant role in the energy consumption mix of liberian industry while labor investment will continue to outweigh capital inputs finally the findings of this study provide general insights and underscore the importance of policies that focus on installed capacity of renewable electricity energy intensity targets as well as merger of enterprises

capacity and product market competition measuring market power in a puppy dog industry abstract in this paper we specify and estimate a structural model which accounts for competition in two variables capacity and prices the model has a two stage setup in the first stage firms make capacity decisions followed by a product differentiated price setting game in the second stage since costs are endogenized through the first stage this has important implications for the measurement of market power in the product market in particular simpler one stage specifications would result in a bias in the measurement of market power which can be linked to the taxonomy for two stage games given in fudenberg and tirole 1984 fudenberg d tirole j 1984 the fat cat effect the puppy dog ploy and the lean and hungry look american economic review paper and proceedings 74 361 366 we then estimate this model demand cost short and long run and conduct for the european airline industry using data for the period of 1976 1990 we perform a number of specification tests and reject a simple one stage specification in favor of our two stage set up in particular we find that some degree of market power in the product market exists however market conduct in the two stage set up is significantly less collusive than in the more widely employed one stage specification which is consistent with the direction of bias in puppy dog games this illustrates that collusiveness of firms market conduct in the product market is significantly overestimated whenever capacity competition is not accounted for

endogenous costs and price cost margins an application to the european airline industry this paper allows for endogenous costs in the estimation of price cost margins in particular we estimate price cost margins when firms bargain over wages we extent the standard two equation set up demand and first order condition in the product market to include a third equation which is derived from bargaining over wages in this way price cost margins are determined by wages and vice versa we implement the model using data for eight european airlines from 1976 1994 and show that the treatment of endogenous costs has important implications for the measurement of price cost margins and the assessment of market power our main result is that observed prices in europe are virtually identical to monopoly prices even though observed margins are consistent with nash behavior apparently costs had been inflated to the point that the european consumers were faced with a de facto monopoly prices

asymmetric substitutability between energy and capital evidence from the manufacturing sectors in 10 oecd countries abstract this paper investigates the substitutability between energy and capital in the manufacturing sectors of ten oecd countries since 1980 by applying a cost function approach that has been widely used to analyze industrial energy demand first we attempt to determine the source of the disagreement in the literature on the substitutability between energy and capital and reach a conclusion regarding the substitutability between energy and capital dividing energy and capital into sub inputs we analyze their substitutability the empirical results indicate that fuel tends to complement capital in most countries whereas electricity and capital are substitutes thus this study confirms that heterogeneity in energy sources is a primary component of the systematic variation in the substitutability between energy and capital second we examine asymmetric substitutability between energy and capital by estimating the morishima elasticity of substitution the estimates of the morishima elasticity of substitution demonstrate that the substitution of energy for capital has dominated the substitution of capital for energy this asymmetric substitutability is natural from the producer perspective because capital costs are much greater than energy costs in most countries these results imply that the adoption of energy saving technologies has not been induced in response to increased energy prices

price and expenditure elasticities of residential energy demand during urbanization an empirical analysis based on the household level survey data in china abstract urbanization one of the most obvious characteristics of economic growth in china has an apparent lock in effect on residential energy consumption pattern it is expected that residential sector would become a major force that drives china s energy consumption after urbanization process we estimate price and expenditure elasticities of residential energy demand using data from china s residential energy consumption survey crecs that covers households at different income levels and from different regional and social groups empirical results from the almost ideal demand system model are in accordance with the basic expectations the demands for electricity natural gas and transport fuels are inelastic in the residential sector due to the unreasonable pricing mechanism we further investigate the sensitivities of different income groups to prices of the three types of energy policy simulations indicate that rationalizing energy pricing mechanism is an important guarantee for energy sustainable development during urbanization finally we put forward suggestions on energy pricing reform in the residential sector based on characteristics of china s undergoing urbanization process and the current energy consumption situations

living by the golden rule multimarket contact in the u s airline industry this paper examines empirically the effects of multimarket contact on pricing in the u s airline industry the analysis of the time series and cross sectional variability of airline fares in the 1000 largest domestic city pair routes reveals the presence of statistically significant and quantitatively important multimarket effects fares are higher in city pair markets served by carriers with extensive interroute contacts these findings are consistent with the claims of industry experts that airlines live by the golden rule i e that they refrain from initiating aggressive pricing actions in a given route for fear of what their competitors might do in other jointly contested routes during his testimony mr steven b elkins senior director of marketing systems development for northwest airlines cited an example in which northwest lowered fares on night flights that were flying with empty seats in a number of routes from minneapolis and upper midwest cities to various west coast cities he said that continental airlines swiftly responded by cutting prices in important northwest markets mr elkins s memo advises northwest pricing analysts we will live by the golden rule in his testimony he explained that the golden rule in that context was that i did not want my pricing analyst initiating actions in another carrier s market like chicago for fear of what that other carrier might do to retaliate wall street journal october 9 1990 p b1

analysis of energy efficiency and energy savings potential in china s provincial industrial sectors abstract because industrial sectors in china are energy intensive improving energy efficiency and promoting energy savings in these sectors are of great importance for the further sustainable development of china s economy using a proposed meta frontier data envelopment analysis dea this paper analyzes the total factor energy efficiency and energy savings potential in china s provincial industrial sectors for the years 2000 2014 from three perspectives namely the technology gap management and scale the results indicate that 1 driven by technological progress energy efficiency during the sample period was greatly improved though the expansion of technology gaps between regions and the decline in scale efficiency represented two significant handicaps 2 the current energy efficiency in china s industrial sectors remains extremely low indicating that there is considerable potential for energy efficiency improvement and energy savings and 3 the sources of energy inefficiency and energy savings potential in china s industrial sectors exhibit spatially distinct characteristics accordingly it is determined that most of china s eastern provinces should focus on improving scale and management efficiency whereas most of its central and western provinces should concentrate on three factors narrowing the regional technology gap improving management efficiency and optimizing the industrial scale

the effects of competition on executive behavior economists presume that competition spurs a firm to be more efficient by forcing it to reduce its agency problems this article investigates this presumption it finds that the effects of competition on executive behavior can be decomposed into four effects each of which is of potentially ambiguous sign theory thus offers no definitive defense of this presumption this article also derives sets of conditions under which increased competition has the presumed effect of reducing agency problems in some sets important conditions are that increased competition reduce the executive s expected income and that agency goods e g shirking be normal goods for the executive the article shows that an increase in the shareholder bargaining strength can both reduce the agency problem and make it more sensitive to competition

competition in european aviation pricing policy and market structure the purpose of this paper is to analyze the impact of liberal bilateral agreements on some european air routes in terms of price competition and market structure the author proposes a model that explains firms behavior and shows that after the liberalization firms exploit their cost advantages and differentiate their products more but market structure still depends on access to airport facilities and other ancillary services controlled by the flag carriers these results differ from american evidence in that the author finds that the effect of airport presence on prices through lower costs more than offsets the effect through higher perceived quality copyright 1995 by blackwell publishing ltd

factor and fuel substitution in china s iron steel industry evidence and policy implications climate change which is induced from energy consumption and co2 emissions has got people s attention hence many strategies and ways are being adopted to mitigate co2 emissions energy substitution is crucial to the promotion of energy conservation and co2 emissions reduction the purpose of this paper is to estimate both inter factor and inter fuel substitution in china s iron steel industry during the period 1985 2011 empirical results show several conclusions for china s iron steel industry 1 own price elasticity of energy is negative so increase in energy price will reduce energy input 2 energy and capital and energy and labor are substitutes and the substitution in energy capital is relatively stronger 3 though coal oil and electricity are also substitutes the substitution effect is not so obvious because of pricing distortions in china the driving forces of energy efficiency change are further discussed and the results show that technology progress is the key factor determining energy intensity therefore market oriented reforms in terms of energy prices improvement in energy substitution including inter factor and inter fuel substation and promotion of energy saving technologies are important means for ensuring future energy conservation and co2 emissions reduction practices in china s iron steel sector

boylan and o gorman s causal holism a critical realist evaluation boylan and o gorman have recently elaborated an interesting new perspective called causal holism which attempts to go beyond developments in rhetoric and realism the aim of this paper is to evaluate causal holism from the perspective of critical realism emphasis is placed primarily on three areas of disagreement differential approaches to unobservable entities description and explanation although areas of agreement are also considered the conclusion gives a sketch of what a critical realist causal holist view of economics might look like