overlapping generations and environmental control abstract this paper sets forth a continuous time olg model in order to analyze intertemporal trade offs in the use of environmental resources this theoretical framework proves to be particularly appropriate in examining the externalities arising from consumer heterogeneity and disconnectedness across generations we characterize the trade off between capital accumulation and the environment and derive the conditions for an optimal fiscal policy the role of government intervention is twofold first it has to achieve intergenerational equity compatibly with a time consistent social welfare criterion second it has to correct the intertemporal market failures due to the selfish behavior of each generation

assessing the effects of co2 price caps on electricity investments a real options analysis abstract this paper uses real options modeling to assess the impact of different climate change policy instruments on investment profits and cumulative emissions in the electricity sector even though co 2 price caps or safety valves have been suggested as methods to limit uncertainty emanating from fluctuating prices of co 2 permits that would hurt the industry s profit and thereby also energy security our analysis shows that price caps set at a too low level are detrimental to the adoption of e g modern biomass fired capacity as a replacement for existing coal fired power plants we therefore conduct a series of experiments with different policy scenarios to analyze under which regime emissions are most effectively reduced with respect to co 2 price uncertainty it turns out that even for moderately rising co 2 prices fluctuations frequently lead to investment into carbon capture and storage ccs while investment is often not triggered in the face of deterministic co 2 prices

sustainability policy and environmental policy a theoretical representative agent economy with a depletable resource stock polluting emissions and productive capital is used to contrast environmental policy which internalises externalised environmental values with sustainability policy which achieves some form of intergenerational equity the obvious environmental policy comprises an emissions tax and a resource stock subsidy each equal to the respective external cost or benefit sustainability policy comprises an incentive affecting the choice between consumption and investment and can be a consumption tax capital subsidy or investment subsidy or a combination thereof environmental policy can reduce the strength of the sustainability policy needed more specialised results are derived in a small open economy with no environmental effects on utility

the price of pollution a dual approach to valuing so2 allowances under the 1990 clean air act amendments a market based scheme to reduce u s sulfur dioxide emissions takes effect in 1995 indications are that participation in the market will be light and allowance prices will be lower than was once expected using an output distance function approach for wisconsin coal burning utility plants we estimate the shadow price of so2abatement which should approximate the allowance price the estimated average shadow price is above the prices at which the few observed allowance trades have occurred wisconsin s stringent state so2legislation may explain a portion of this divergence

academic research underlying industrial innovations there has been no systematic study of the characteristics of the universities and academic researchers that seem to have contributed most to industrial innovation nor do we know how such academic research has been funded this paper based on data obtained from sixty six firms in seven major manufacturing industries and from over two hundred academic researchers sheds new light on the sources characteristics and financing of academic research underlying industrial innovation the findings should be of interest to economists concerned with technological change and to policymakers attempting to increase the economic payoff from the nation s academic research copyright 1995 by mit press

directional shadow price estimation of co2 so2 and nox in the united states coal power industry 1990 2010 abstract shadow prices also termed marginal abatement costs provide valuable guidelines to support environmental regulatory policies for co 2 so 2 and no x the key contributors to climate change this paper complements the existing models and describes a directional marginal productivity dmp approach to estimate directional shadow prices dsps which present substitutability among three emissions and are jointly estimated we apply the method to a case study of co 2 so 2 and no x produced by coal power plants operating between 1990 and 2010 in the united states we find that dsp shows 1 1 times the maximal shadow prices estimated in the current literature we conclude that estimating the shadow prices of each by product separately may lead to an overestimation of the marginal productivity and an underestimation of the shadow prices

pollution from the electric power sector in japan and efficient pollution reduction abstract under the scheme of the kyoto protocol there are plans for the efficient reduction of carbon dioxide emissions in the electric power sector nuclear power generation which emits no carbon dioxide in the process of generating electricity has come under scrutiny however this energy produces a new environmental issue the disposal of radioactive waste first we derive shadow prices of carbon dioxide and low level waste as marginal abatement costs in the case of the electric power sector in japan employing a directional output distance function it is found that the shadow prices are us 39 per tonne for carbon dioxide and us 1531 per liter for low level waste secondly we calculate the indirect morishima elasticity between carbon dioxide and low level waste in order to identify their substitutability and it is found that the substitution of low level waste for carbon dioxide is easier than the reverse this result suggests that with the amount of generated electricity fixed carbon dioxide can be substituted more easily by low level waste when the relative price of carbon dioxide increases for example as a result of implementation of a carbon dioxide tax or an emissions trading system

power sector reform and co2 abatement costs in korea abstract the current korean administration is driving change in the power sector by gradually phasing out nuclear power plants expanding the use of renewable energy and imposing restrictions on the operation of coal power plants considering these changes the marginal abatement cost mac curve would provide crucial information to determine an appropriate greenhouse gas reduction target especially for 2030 this study derives the mac curves for the korean power sector in 2030 using a bottom up optimization model with three scenarios based on different carbon pricing schedules in addition the carbon price required to achieve the co2 emission targets in the korean power sector in 2030 are estimated the results show that a carbon price of 135 157 us tco2 would be required to achieve the 2030 emission target for the power sector by comparing the mac curves of three different scenarios we can reiterate the fact that early action regarding climate change mitigation is more effective and efficient than delayed action

the relationships between science technologies and their industrial exploitation an illustration through the myths and realities of the so called european paradox abstract this paper discusses first the properties of scientific and technological knowledge and the institutions supporting its generation and its economic applications the evidence supports the broad interpretation that we call the stanford yale sussex synthesis second such patterns yield important implications with respect to the so called european paradox i e the conjecture that eu countries play a leading global role in terms of top level scientific output but lag behind in the ability of converting this strength into wealth generating innovations some descriptive evidence shows that contrary to the paradox conjecture europe s weaknesses reside both in its system of scientific research and in a relatively weak industry the final part of the paper identifies a few normative implications much less emphasis should be put on various types of networking and much more on policy measures aimed at strengthening both frontier research and european corporate actors

marginal abatement costs of co2 emissions in the thermal power sector a regional empirical analysis from china abstract quantifying marginal abatement costs of co2 emissions are beneficial to estimate mitigation potentials and costs of china s regional thermal power sector based on the panel data of 30 provinces from 2004 to 2013 this study estimates the technical efficiency reduction potential and marginal abatement costs of co2 emissions from the thermal power sector in china using a parametric quadratic directional output distance function a regression analysis is undertaken to identify the factors that drive marginal abatement costs the main results are 1 the mean value of directional output distance function in china s thermal power sector is 0 0449 indicating that inefficient production of chinese thermal power sector accounts for 4 49 co2 emissions could be mitigated by accumulated 1 22 billion ton in the past ten year which is approximate 4 49 of total co2 emissions 2 the national weighted average marginal abatement costs of co2 emissions are 316 51 yuan ton which is far higher than carbon price in the current ets emission trading system pilots in china implying that carbon price does not inflect supply and demand of carbon allowance 3 the regression results show that the marginal abatement costs positively connect with regional power scale namely a 1 increase in power scale will result in a 13 8 increase technology level coal supply and power structure are negatively correlated with marginal abatement costs namely a 1 increase in technology level coal supply and power structure will result respectively in a 30 41 4 38 and 77 7 decrease

environmental tax policy and intergenerational distribution abstract we study the effects of environmental taxation within the context of an overlapping generations model the quality of the environment is modelled as a durable consumption good introduction of the environmental tax harms old existing generations and benefits young existing generations as well as all future generations increasing the tax in a pareto improving manner is easier the higher the pre existing tax the reverse holds if tax policy is decided by majority rule a suitably designed bond policy can be used to redistribute the efficiency gains due to the internalisation of environmental externalities across the generations

optimal tax rules and public sector efficiency with an externality in an overlapping generations model abstract this paper examines optimal tax rules and public sector efficiency integrating them in a second best world with pollution by using an overlapping generations model the second best world is characterized by the comparative statics of green preferences the main results obtained are as follows first the marginal cost of public funds may be reduced by the externalities regardless of the choice of taxes second optimal environmental and non environmental tax rules are additively and directly affected by the dynamic efficiency of capital accumulation per unit labour decal and indirectly by it through the efficiency of the public sector environmental taxes going beyond pigovian ones may be welfare improving if the decal is improved by the environmental tax even optimal non environmental tax rules should additively and directly counter the dynamics of pollution to consider the income effects of the optimal tax system for the future third the additivity property or the principle of targeting does not hold even in the absence of incentive compatibility constraints the essential reasons for this are clarified as follows distortions that should be countered by taxes that is the income effects of the optimal tax system and the decal in this model break the equality between optimal environmental taxes and the externalities measured by governments finally growing environmental concerns may in fact increase pollution the inverse relationship between environmental and labour income taxes may not hold

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

public policies to support basic research what can the rest of the world learn from us theory and practice and what they should not learn the information based theoretical model for public support of basic research developed in the usa at the end of the 1950s has held up well in practice in spite of its neglect of training benefits of necessary investment in research infrastructure and of its consequently limited relevance outside the usa at the same time us practice in basic research has often been misinterpreted as being driven by short term usefulness whereas its key features are massive and pluralistic government funding high academic quality and the ability to invest in the long term development of new often multi disciplinary fields challenges for the future include greater and often ill judged pressures from governments for demonstrable usefulness of the basic research it supports the entirely separate development of direct links to application in bio medical and software fields and more complicated links between basic research and application resulting from the changes in the internationalisation of corporate r d effective policies will depend on better understanding of what makes universities responsive to investments in promising new fields of research and teaching how and why basic fields of great practical usefulness emerge and how basic research requirements are conditioned by a country s level and pattern of economic development bibliometric data could make a considerable contribution if it was more widely recognised that they have informational properties similar to the output of basic research and therefore deserve public support this paper was prepared for the celebration of richard nelson s 70th birthday held in nyc from 13 15 october 2000 comments welcome

a new approach to measuring shadow price reconciling engineering and economic perspectives abstract shadow price is one of the most important pieces of information in environmental decision making two different approaches namely economic and engineering have been applied to obtain the shadow price of undesirable outputs while using different methodological backgrounds and perspectives the current study proposes a new conceptual framework and an economic estimation model to reconcile the shadow price estimates derived via the two approaches we also suggest a new mapping rule that incorporates the concept of abatement level which is a basic element in the engineering approach as a result the proposed model generates continuously changing estimates i e comprising a shadow price curve based on the abatement level we further investigate the determinant factors of shadow price by using second step regression the suggested methodology is used to investigate the shadow price of carbon emissions in south korean electricity generating plants thus yielding relevant policy implications

an empirical analysis of the co2 shadow price in chinese thermal power enterprises abstract this paper estimates the shadow price of co2 and explores its determinants for thermal power enterprises in china using a parametric quadratic directional distance function we evaluate the inefficiency and shadow price of co2 for 124 power enterprises in 2004 applying deterministic and econometric methods a regression analysis is undertaken to examine the factors that drive shadow prices our results indicate that there are large inefficiencies in terms of electricity production and co2 emissions the shadow price is a negative function of firm size age and coal share and is positively correlated with the technology level this correlation between shadow prices and its determinants is not sensitive to changing assumptions regarding directional vectors although such changes do alter the distribution of shadow prices the large variation witnessed in shadow prices across power enterprises argues in favor of market based regulation such as an emissions trading system as opposed to the command and control regulation currently used in china to minimize overall abatement cost

understanding the emergence of open science institutions functionalist economics in historical context this essay exposes the limitations of the logical origins approach that has found favour among economists who seek to understand the workings of institutions in the past present it pursues a different approach applying functionalism in historical context to explain the emergence of the characteristic ethos and institutions of open science the emergence during the late sixteenth and early seventeenth centuries of the idea and practice of open science represented a break from the previously dominant ethos of secrecy in the pursuit of nature s secrets it was a distinctive and vital organizational aspect of the scientific revolution from which crystallized a new set of norms incentives and organizational structures that reinforced scientific researchers commitments to rapid disclosure of new knowledge to understand how this came about it is necessary to examine the economics of patronage and the roles of asymmetric information and reputation in the early modern reorganization of scientific activities the rise of cooperative rivalries in the revelation of new knowledge is seen as a functional response to heightened asymmetric information problems posed for the renaissance system of court patronage of the arts and sciences pre existing informational asymmetries had been exacerbated by increased importance of mathematics and the greater reliance upon sophisticated mathematical techniques in a variety of practical contexts of application analysis of the court patronage system of late renaissance europe within which the new natural philosophers found their support points to the significance of the feudal legacy of fragmented political authority in creating conditions of common agency contracting in substitutes these conditions are shown to have been conducive to more favorable contract terms especially with regard to autonomy and financial support for the agent client members of western europe s nascent scientific communities some lessons may be drawn for contemporary science and technology policy debates in which the open science mode of pursuing knowledge often seems to be viewed a robust concomitant of the power of scientific research techniques whereas it is a fragile cultural legacy of western europe s history upon which rests the ascendancy of modern science as a driver of long term economic growth copyright 2004 oxford university press

the substitutability of nuclear capital for thermal capital and the shadow price in the korean electric power industry as part of ongoing efforts to reduce co2 emissions by increasing the proportion of the energy mix relying on nuclear power it may be useful to substitute nuclear power for thermal power wherever possible thereby substantially reducing the need to use fossil fuels in order to evaluate the contribution of nuclear power to potential co2 reduction this study examines the substitutability of thermal capital and nuclear capital in the korean electric power industry by utilizing the input distance function additionally the unit costs of thermal capital and nuclear capital are compared in terms of their shadow prices which are defined as the opportunity costs inherent to one additional unit of capital increase deriving from a reduction in labor the empirical results presented herein indicate that nuclear capital is readily substituted for thermal capital but the substitutability of thermal capital for nuclear capital is relatively low the shadow price ratio of nuclear capital to thermal capital is estimated to be 15 9 on average showing an upward trend over the years from 1982 to 2010

valuation of marginal co2 abatement options for electric power plants in korea the electricity generation sector in korea is under pressure to mitigate greenhouse gases as directed by the kyoto protocol the principal compliance options for power companies under the cap and trade include the application of direct co2 emission abatement and the procurement of emission allowances the objective of this paper is to provide an analytical framework for assessing the cost effectiveness of these options we attempt to derive the marginal abatement cost for co2 using the output distance function and analyze the relative advantages of emission allowance procurement option as compared to direct abatement option real option approach is adopted to incorporate emission allowance price uncertainty empirical result shows the marginal abatement cost with an average of 14 04 ton co2 for fossil fueled power plants and confirms the existence of substantial cost heterogeneity among plants which is sufficient to achieve trading gains in allowance market the comparison of two options enables us to identify the optimal position of the compliance for each plant sensitivity analyses are also presented with regard to several key parameters including the initial allowance prices and interest rate the result of this paper may help korean power plants to prepare for upcoming regulations targeted toward the reduction of domestic greenhouse gases

the political economy of environmental policy with overlapping generations a two sector overlapping generations model illuminates the intergenerational effects of a tax that protects an environmental stock a traded asset capitalizes the economic returns to future tax induced environmental improvements benefiting the current asset owners the old generation absent a transfer the tax harms the young generation by decreasing their real wage future generations benefit from the tax induced improvement in environmental stock the principal intergenerational conflict arising from the tax is between generations alive at the time society imposes the policy not between generations alive at different times a pareto improving tax can be implemented under various political economy settings

co2 emission abatement cost and its decomposition a directional distance function approach accurately estimating carbon dioxide co2 abatement costs and effectively identifying the factors impacting those costs can improve the applicability and effectiveness of policy implementation this paper proposes a new method to estimate co2 abatement costs cac based on the directional distance function the method theoretically decomposes cac into carbon productivity and output elasticity of substitutions this decomposition can identify the types of cac the method also investigates the effects of development mode selection on cac by selecting different directional vectors following the theoretical discussion an empirical study is presented focusing on high energy consumption firms in the united states u s the results were as follows 1 in sustainable development mode changes in the average cac of all firms were caused both by carbon productivity and output elasticity of substitution carbon productivity dominated cac differences among different firm types 2 in general the amelioration potential of firm technology and environmental management was gradually explored by firms during sample period corresponding environmental regulatory strategies are needed for firms with different cac characteristics 3 firms selecting different development modes will realize significant differences in cac firms in the sustainable development mode had the highest cac levels however this mode was best for achieving a win win between economic benefits and environmental protection

marginal co2 abatement costs findings from alternative shadow price estimates for shanghai industrial sectors abstract shanghai one of the most developed cities in china is implementing a pilot regional carbon emission trading scheme estimating the marginal abatement costs of co2 emissions for the industrial sectors covered in shanghai s emission trading scheme provides the government and participating firms useful information for devising compliance policies this paper employs multiple distance function approaches to estimating the shadow prices of co2 emissions for shanghai industrial sectors our empirical results show that the overall weighted average of shadow price estimates by different approaches ranges between 394 5 and 1906 1 yuan ton which indicates that model choice truly has a significant effect on the shadow price estimation we have also identified a negative relationship between the shadow price of co2 emissions and carbon intensity and the heavy industries with higher carbon intensities tend to have lower shadow prices it has been suggested that shanghai municipal government take various measures to improve its carbon market e g using the marginal abatement costs of participating sectors firms as a criterion in the initial allocation of carbon emission allowances

potential cost savings from internal external co2 emissions trading in the korean electric power industry abstract korea plans to introduce an emissions trading scheme for the controlling greenhouse gas emissions in 2015 using shephard s 1970 output distance function we first estimate the shadow price of co 2 for power generators in the korean fossil fueled electric generation industry then by assuming that each power generator is required to reduce co 2 emissions by one ton we compute the potential cost savings from internal trading among generators within the same plant and from external trading across plants at prevailing market prices the results indicate that on average the generators paid 14 63 to abate one ton of co 2 emissions in 2007 plants realized additional gains through external trading in particular cost savings from trades between different fuel fired plants were substantial

marginal abatement costs of carbon dioxide emissions and its influencing factors a global perspective abstract reducing co 2 emissions has become a major and urgent environmental goal worldwide in this paper we sample the data of 41 regions including 165 countries from 2000 to 2014 and adopt a gravity model to obtain an overview of the global flows of co 2 emissions energy consumption the global economy and capital stock since the beginning of the 21st century we then investigate global technical efficiency reduction potential shadow prices and factors influencing the marginal abatement costs of co 2 emissions based on a quadratic directional output distance function the empirical results show the following 1 the global centres of gravity for co 2 emissions energy consumption and capital stock have accelerated their shift to the asian inland in the 21st century but the global centre of gravity for the economy did not show the same trend 2 global technical inefficiency demonstrates a u shape with a turning point in 2007 average annual total global co 2 emissions could be reduced by 4482 28 mt and the global marginal abatement costs of co 2 emissions are approximately 673 74 697 73 usd t 3 the relationship between economic development and marginal abatement costs is represented by a u shaped curve the world is currently in the climbing phase of this curve implying that controlling co 2 emissions is becoming more costly moreover energy structure industrial structure and co 2 emissions are negatively correlated with marginal abatement costs finally the financial crisis has had a significant effect on marginal abatement costs

on the sources and significance of interindustry differences in technological opportunities abstract the set of technological opportunities in a given industry is one of the fundamental determinants of technical advance in that line of business we examine the concept of technological opportunity and discuss three categories of sources of those opportunities advances in scientific understanding and technique technological advances originating in other industries and in other private and governmental institutions and feedbacks from an industry s own technological advances data from the yale survey on industrial research and development are used to measure the strength of various sources of technological opportunity and to discern interindustry differences in the importance of these sources we find that interindustry differences in the strength and sources of technological opportunities contribute importantly to explanations of cross industry variation in r d intensity and technological advance

overlapping generations or infinitely lived agents intergenerational altruism and the economics of global warming do we need an overlapping generations model for the economics of global warming to answer this question an infinitely lived agent ila approach and an overlapping generations olg model are contrasted ila and olg can be viewed as polar representations of intergenerational altruism with ila an immortal agent acts through his investment savings decisions as trustee on the behalf of the future generations with olg agents need not behave altruistic they simply save during working years and dissave completely during retirement nevertheless ila and olg must not differ in their implication for greenhouse policy greenhouse gas abatement is a straightforward alternative to physical capital formation and even without altruism each age cohort has an incentive to provide current abatement in order to reduce future damages attributable to climate change indeed under reasonable assumptions and parameter values our simulations reveal such an invariance result provided carbon taxes are the only policy tool and tax revenues are recycled through socially mandated rules projections of economic growth climate change and energy consumption are only insignificantly affected by the choice of approach

a deterministic parametric metafrontier luenberger indicator for measuring environmentally sensitive productivity growth a korean fossil fuel power case abstract this paper contributes to the current literature by proposing an alternative parametric metafrontier productivity approach called the deterministic parametric metafrontier luenberger productivity indicator dpmlpi for measuring environmentally sensitive productivity growth incorporating technological heterogeneities the luenberger productivity indicator is constructed based on a quadratic output directional distance function with undesirable outputs and then combined with the deterministic metafrontier to develop dpmlpi the dpmlpi can be decomposed into efficiency change technological change and productivity growth gap the productivity growth gap can be further divided into efficiency change gap and technological change gap the parametric linear programming technique is used to estimate parameters and construct the metafrontier an empirical study for the korean fossil fuel power industry at the plant level is conducted for the 2003 2011 period the results show a 0 15 increase in environmentally sensitive productivity growth which is mainly driven by environmental technological change the oil fired power plants show higher levels than the coal fired ones of environmentally sensitive productivity growth and technological change performance some related policy implications are also proposed for the korean fossil fuel power sector

climate change and the representative agent the artifice of an infinitely lived representative agent iscommonly invoked to balance the present costs and future benefitsof climate stabilization policies since actual economies arepopulated by overlapping generations of finite lived persons this approach begs important questions of welfare aggregation this paper compares the results of representative agent andoverlapping generations models that are numerically calibratedbased on standard assumptions regarding climate economyinteractions under two social choice rules pareto efficiencyand classical utilitarianism the models generate closelysimilar simulation results in the absence of policies toredistribute income between present and future generations efficient rates of carbon dioxide emissions abatement rise from15 to 20 between the years 2000 and 2105 under classicalutilitarianism in contrast optimal control rates rise from 48 to 79 this same period

inside the black box technology and economics economists have long treated technological phenomena as events transpiring inside a black box and on the whole have adhered rather strictly to a self imposed ordinance not to inquire too seriously into what transpires inside that box the purpose of professor rosenberg s work is to break open and examine the contents of the black box in so doing a number of important economic problems be powerfully illuminated the author clearly shows how specific features of individual technologies have shaped a number of variables of great concern to economists the rate of productivity improvement the nature of learning processes underlying technological change itself the speed of technology transfer and the effectiveness of government policies that are intended to influence technologies in particular ways the separate chapters of this book reflect a primary concern with some of the distinctive aspects of industrial technologies in the twentieth century such as the increasing reliance upon science but also the considerable subtlety and complexity of the dialectic between science and technology other concerns include the rapid growth in the development of costs associated with new technologies as well as the difficulty of predicting the eventual performance characteristics of newly emerging technologies

nash marginal abatement cost estimation of air pollutant emissions using the stochastic semi nonparametric frontier abstract emissions trading or cap and trade is a market based approach providing economic incentives for achieving reductions in the emissions of pollutants marginal abatement costs mac also termed shadow prices of air pollution emissions provide valuable guidelines to support environmental regulatory policies for co2 so2 and nox the key contributors to climate change smog and acid rain this study estimates the marginal abatement cost of undesirable outputs with respect to the nash equilibrium on the stochastic semi nonparametric envelopment of data stoned in an imperfectly competitive market considering an endogenous price function of electricity the mixed complementarity problem micp is formulated to identify the nash equilibrium in a production possibility set the proposed model addresses the four issues of mac estimation in the existing literature applying the proposed method to an empirical study of 33 coal fired power plants operating in china in 2013 shows that stoned provides a robust frontier that is not sensitive to the outlier and the proposed interval of mac estimation validates the shadow prices corresponding to the nash equilibrium in an imperfectly competitive market

stabilizing greenhouse gas emissions assessing the intergenerational costs and benefits of the kyoto protocol the costs and benefits current and future generations incur as the result of climate change or an environmental control policy are often confounded with other objectives such as generational discounting or optimal policy design this paper uses a consumption equivalent measure to simulate the loss or gain of consumption independent of these confounding objectives the findings suggest that the costs associated with an emissions stabilization program are relatively large for current generations and continue to increase over the next 100 years the first generation to actually benefit from the stabilization program is born early during the 24th century

the effects of emission permits on growth and the environment we develop an overlapping generations model of growth and the environment in which industrial firms produce environmentally harmful emissions a government controls the emissions by assigning emission quotas to firms and permits could be issued and freely traded as financial instruments across firms on the basis of the quotas we show that an environmental policy that decreases an aggregate number of emission quotas could degenerate economic growth and lower environmental quality in the long run we also show the implications of this result for environmental policy

effects of consumer subsidy on household fuel switching from coal to cleaner fuels a case study for anthracites in korea the korean coal industry is in a transition under low carbon policy through the steady reduction of coal production since consumer subsidy for the consumption of anthracites briquette in low income households caused a distortion in domestic coal market the so called coupon program will be the first target in energy reform policy in order to induce fuel switching from anthracites to alternative clean energy this paper tries to identify various factors that influence households fuel switching decision disutility from briquette consumption is also considered as an important factor using the 2007 census data on briquette consuming households it is found that the coupon program provides an adverse effect to switching fuels to clean energy while the disutility of briquettes is positively associated with the probability of fuel switching however the empirical finding suggests that the policy alone attempting to remove coupon program may fail to switch fuels unless the cost of boiler changes is substantially reduced through the provision of accessible networks to alternative energy sources it indicates that reform policy for consumer subsidy must be understood in line with more comprehensive regional energy plans to resolve energy poverty issue

an overlapping generations model of climate economy interactions a numerically calibrated overlapping generations model of climate change and the world economy is examined in this paper in the absence of intergenerational transfers efficient rates of greenhouse gas emissions abatement rise from 16 in the present to 25 in the long run while mean global temperature increases by 7 40c relative to the preindustrial norm a utilitarian optimum which attaches equal weight to each generation s life cycle utility yields abatement rates that rise from 48 to 89 with a long run temperature increase of 3 40c a second best utilitarian path in which intergenerational transfers are by assumption institutionally infeasible also supports stringent abatement measures i introduction the infinitely lived agent framework pioneered by frank ramsey 1928 has emerged as a central structure in the economics of climate change as characterized by ipcc 1996 working group iii climate change occurs when anthropogenic emissions of greenhouse gases principally carbon dioxide but also chlorofluorocarbons methane nitrous oxide and water vapor contribute to long term increases in mean global temperature potentially disrupting ecological systems and climate dependent production activities the best known study on the economics of this subject is nordhaus 1994 dynamic model of climate and the economy dice which incorporates assumptions regarding the costs and benefits of greenhouse gas emissions in a standard one sector growth model in nordhaus analysis a 50 reduction in greenhouse gas emissions would reduce gross world output by 0 93 a doubling of greenhouse gas concentrations relative to the preindustrial norm which is expected to occur by the middle of the twenty first century would reduce output by

incentive equilibrium in an overlapping generations environmental game we consider two overlapping generations that want to coordinate their strategies of working consuming and controlling pollution since the cooperative solution is not an equilibrium and hence is not a self enforcing contract a mechanism is required to sustain it we show how incentive strategies and the resulting incentive equilibrium could provide such a mechanism we also derive the conditions that ensure the credibility of these strategies

environmental abatement and intergenerational distribution this paper employs an overlapping generations model to explore the impact of public abatement on private investment and the intergenerational distribution of welfare whereas public abatement benefits old generations in terms of non environmental welfare future generations gain most in terms of environmental welfare the overall benefits tend to be smallest for generations born at the time of the unanticipated policy shock public debt policy however can be employed to ensure that welfare gains are distributed more equally across the various generations such a policy implies that natural capital crowds out man made capital

intergenerational altruism and the environment we construct an overlapping generations model of pollution externality in which individuals are altruistically linked to their offspring as in barro 1974 it is shown that steady state consumption may be a decreasing function of the intergenerational degree of altruism despite individuals altruism the competitive equilibrium is not optimal we thus study the social optimum and show that it can be decentralized

the applicability of marginal abatement cost approach a comprehensive review abstract the marginal abatement cost mac methodology is widely used in climate change policies policy makers rely on mac to assess feasible strategies and related costs to achieve emission reduction goals this paper introduces a variety of mac methodologies aiming at solving diverse problems which utilizes various calculable logic thus producing different results and implications this study applies a mind mapping method to capture differentiation of mac methods and systematically classify mac methodologies the applicability path analysis was proposed based on principles such as stakeholder type decision making objectives cost concept strategy mode and information scope our goal is to assess the applicability of different methodologies to reduce misuse by policy makers and to serve as a guide for subsequent research which might prompt and lead to the derivation of more consequential results in future studies the results of this study suggest that the complex method is not always better than the simplified method because policy makers are required to select the appropriate method according to the type of information needed it may even be suggested that mac could be reliable by ranking relative value of options compared with baseline rather than focusing on the absolute value of individual measures

the potential for cost savings in the sulfur dioxide allowance market empirical evidence from florida since the passage of the 1990 clean air act amendments researchers have hastened to appraise the new market for sulfur dioxide so2 emission allowances as the epa s program moves into its second phase some analysts question whether large enough savings are available to induce widespread market participation this study calculates the shadow prices of emission reductions for power plants that serve florida and compares the actions of utility owners to the actions predicted by the shadow prices the evidence suggests that plant owners have not taken full advantage of the opportunities the allowance market has provided to date

irreversibility and uncertainty cause an intergenerational equity efficiency trade off abstract two important policy goals in intergenerational problems are pareto efficiency and sustainability i e intergenerational equity we demonstrate that the pursuit of these goals is subject to an intergenerational equity efficiency trade off our analysis highlights two salient characteristics of intergenerational problems and policy i temporal irreversibility i e the inability to revise one s past actions and ii uncertainty of future consequences of present actions in human environment systems we employ a two non overlapping generations model that combines an intragenerational production decision on the use of circulating capital and a non renewable resource with a negative intergenerational externality as an unforeseen contingency if initially unknown problems become apparent and policy is enacted after irreversible actions were taken policy making faces a fundamental trade off between ex post pareto efficiency and sustainability that is one can achieve either one of these two goals but not both

emissions trading and investment decisions in the power sector a case study in finland abstract organizations which consider investment in or divestment of power production licences capacity within the european community are exposed to the impacts of the european union emission allowance trading scheme eu ets in this paper the consequences of the eu ets on investment decisions are explored in a country specific setting in finland first we review the general mechanisms through which the eu ets influences size timing and cashflows of an investment next we discuss the projected changes in finnish power producers investment environment and examine the financial impacts due to the eu ets on a case investment decision a hypothetical condensing power plant 250 mwe the standard discounted cash flow dcf analysis is extended to take into account the value of two real options the option to wait and the option to alter operating scale in a quantitative investment appraisal the impact of emissions trading not only depends on the expected level of allowance prices but also on their volatility and correlation with electricity and fuel prices the case study shows that the uncertainty regarding the allocation of emission allowances is critical in a quantitative investment appraisal of fossil fuel fired power plants

trading off generations equity discounting and climate change the prevailing literature discusses intergenerational trade offs in climate change predominantly in terms of the ramsey equation relying on the infinitely lived agent model we discuss these trade offs in a continuous time olg framework and relate our results to the infinitely lived agent setting we identify three shortcomings of the latter first underlying normative assumptions about social preferences cannot be deduced unambiguously second the distribution among generations living at the same time cannot be captured third the optimal solution may not be implementable in overlapping generations market economies