decarbonizing residential building energy a cost effective approach abstract given the problem of climate change the world economy must eventually switch to carbon neutral energy in this study we present a cost effectiveness approach given a goal of decarbonization the objective is to accomplish this at minimum cost for residential building energy we show that total cost is minimized by equating marginal cost of building energy conserved with marginal cost of obtaining carbon free energy where we express costs of both in dollars per kwh we describe how the cost of solar photovoltaic energy provides an upper bound on the marginal cost of carbon free energy and thus an upper bound on marginal cost of conserved energy one should not necessarily spend more on energy conservation than the cost of photovoltaic energy though there are several caveats a case study from vermont usa illustrates these principles and implementation issues with marginal analysis of energy conservation from a policy perspective the principles presented suggest that either carbon taxes or carbon limits could be used to decarbonize building energy at minimum cost but that approaches using renewable energy subsidies or prescriptive building codes result in greater decarbonization costs to society this suggests that new policy approaches be adopted

time inconsistent preferences and the annuitization decision good news can involve difficult decisions for example winning a lottery jackpot can go along with the decision whether to have the jackpot paid out immediately as a lump sum or as periodic annual payments also when entering retirement most people face the decision whether they want their defined contribution account balance paid as a lump sum or to annuitize that amount the fact that people tend to choose the lump sum even if economic reasons suggest that they should choose the annuity is called the annuity paradox in a large online survey we find that people behave time inconsistent older people have a stronger tendency to choose the lump sum than younger people when they are asked to predict today what to choose when they retire this effect is considerably stronger for participants that answer simple time preference questions inconsistently our findings suggest to think about precommitment devices for the annuitization decision in the retirement case already at the time when the defined benefit plan is started

risk preferences are not time preferences balancing on a budget line comment in a recent experimental study of intertemporal risky decision making andreoni and sprenger 2012 find that subjects exhibit a preference for intertemporal diversification which is inconsistent with discounted expected utility theory it was claimed that their results are also at odds with models involving probability weighting such as rank dependent utility and cumulative prospect theory here we demonstrate however that rank dependent probability weighting explains intertemporal diversification if decision makers care about portfolio risk moreover we provide a unified account of all of andreoni and sprenger s key findings

measuring discounting without measuring utility we introduce a new method to measure the temporal discounting of money unlike preceding methods our method requires neither knowledge nor measurement of utility it is easier to implement clearer to subjects and requires fewer measurements than existing methods

social and political responses to ecological tax reform in europe an introduction to the special issue this paper introduces the special issue on the policies for ecological tax reform assessment of social responses petras project about responses to ecological tax reform etr in europe although etr is widely accepted to be a policy with desirable effects its implementation has been limited by problems of political acceptability the project aimed to address the question of how to make such a policy more acceptable it is the first study to examine in depth the thinking of members of the general public about the etr policies and is also the first international comparative study of the thinking of ordinary business people about etr policies the petras project methodology was based around the use of interviews and focus groups to inform the assessment of social responses to etr policies and the development of improved designs for them a number of issues emerged relating to awareness trust understanding of the purpose visibility incentives regressivity levels of taxation terminology communication about etr and the use of alternative instruments together with these similarities a pattern of differences between the countries can also be seen the final section of this paper introduces the national studies described in the following papers

risk preferences are not time preferences on the elicitation of time preference under conditions of risk comment andreoni and sprenger 2012a b report evidence that distinct utility functions govern choices under certainty and risk i investigate the robustness of this result to the experimental design i find that the effect disappears completely when a multiple price list instrument is used instead of a convex time budget design alternatively the effect is reduced by half when sooner and later payment risks are realized using a single lottery instead of two independent lotteries the result is thus at least partially driven by intertemporal diversification supporting an explanation in terms of concavity of the intertemporal and not only atemporal utility function jel c91 d81 d91

platform competition in two sided markets many if not most markets with network externalities are two sided to succeed platforms in industries such as software portals and media payment systems and the internet must get both sides of the market on board accordingly platforms devote much attention to their business model that is to how they court each side while making money overall this paper builds a model of platform competition with two sided markets it unveils the determinants of price allocation and end user surplus for different governance structures profit maximizing platforms and not for profit joint undertakings and compares the outcomes with those under an integrated monopolist and a ramsey planner jel l5 l82 l86 l96

estimation of turkey s ghg emissions from electricity generation by fuel types as a result of fossil fuel combustion in electricity generation significant amounts of co2 is emitted and the amount of emission differs based on fuel type in turkey a considerable amount of greenhouse gas ghg emission is related to electricity generation and co2 has the highest share among those a number of technical economic and social factors such as economic growth energy consumption types of energy sources seasonality employment and increase in population affect the changes in the emission rates an energy system based on fossil fuels is mainly responsible for high ghg emissions and there are some measures to reduce the emission of ghgs development of renewable energy sources and improvements in energy efficiency are among the most important measures market based mechanisms are among other measures that directly target ghgs considering the fossil fuels in the energy mix using fossil fuels with high heating values and efficient energy conversion technologies means less ghgs organizing training and information programs for raising people s energy awareness encouraging conservation and increasing energy efficiency would have a significant role in reducing ghgs as well this study attempts to estimate the annual co2 emission from electricity generation according to fuel types for the period between 2013 and 2017 electricity generation data according to fuel types were obtained from turkish electricity transmission co teia s 5 year electricity generation capacity projection 2013 2017 according to the estimations turkey s co2 emission values are expected to increase in the forthcoming years additionally estimated revenues from the carbon tax imposed on the electricity generated by fossil fuels were calculated for each year of the projection period this revenue creates a significant economic resource results of this study are expected to guide policy makers in developing energy and environmental policies and contribute to energy diversity studies

public acceptance for environmental taxes self interest environmental and distributional concerns abstract while strongly recommended by economists it has often been politically difficult to impose taxes on externalities there is a substantial literature on public attitudes towards environmental taxes there has however been few comprehensive attempts to understand attitudes towards environmental taxes the main research question in this paper is which factors influence support for fuel taxation we propose a model of attitudes towards fuel taxation and test this model as well as more specific hypotheses using data from a representative survey of the adult norwegian population our results suggest that support for fuel taxation is best predicted by beliefs about environmental consequences followed by beliefs about consequences to others beliefs about consequences to self self interest is the factor that explains the least variation in support for fuel taxation the academically interesting result that support cannot be well explained without capturing a broad range of motivational factors is also highly policy relevant it implies that there is no magic formula for increasing public support for environmental taxes there are however some issues which can be addressed trust in how well the government spends the revenue and the perception that taxation does very little to change behaviour and thus to reduce environmental problems

green taxes in a post paris world are millions of nays inevitable turning the paris agreement s greenhouse gas emissions pledges into domestic policies is the next challenge for governments we address the question of the acceptability of cost effective climate policy in a real voting setting first we analyze voting behavior in a large ballot on energy taxes rejected in switzerland in 2015 by more than 2 million people energy taxes were aimed at completely replacing the current value added tax we examine the determinants of voting and find that distributional and competitiveness concerns reduced the acceptability of energy taxes along with the perception of ineffectiveness most people would have preferred tax revenues to be allocated for environmental purposes second at the same time of the ballot we tested the acceptability of alternative designs of a carbon tax with a choice experiment survey on a representative sample of the swiss population survey respondents are informed about environmental distributional and competitiveness effects of each carbon tax design these impacts are estimated with a computable general equilibrium model this original setting generates a series of novel results providing information on the expected environmental effectiveness of carbon taxes reduces the demand for environmental earmarking making distributional effects salient generates an important demand for progressive designs e g social cushioning or recycling via lump sum transfers the case of lump sum recycling is particularly striking it is sufficient to show its desirable distributional properties to make it one of the most preferred designs which corresponds to a completely novel result in the literature we show that providing detailed information on the functioning of environmental taxes may contribute to close both the gap between acceptability ex ante and ex post and the gap between economists prescriptions and the preferences of the general public

realizing the gains from electronic payments costs pricing and payment choice the growth of electronic payments can substantially reduce the social cost of a country s payment system we provide an estimate of the potential savings in social cost and determine the responsiveness of payment users when relative prices are used to speed up the substitution of electronic for paper based payments while some countries norway japan have encouraged their banking systems to establish explicit prices to promote electronic payments others the united states have not for the first time ever survey data are available to permit estimation of a model of payment choice from which own price cross price and payment substitution elasticities are derived the data which are semiannual panel data concern the use of three methods for making retail payments in norway cash withdrawals at atms writing a check or using a debit card at the point of sale our finding that payment users are quite sensitive to relative prices that reflect the relatively lower cost of electronic payments is generalizable both production techniques and consumer needs for payment instruments are very similar across developed countries even though instrument usage differs

memory and discounting theory and evidence abstract heterogeneous memory capacity is largely neglected in the economics literature although it may have profound economic implications adopting the concept of memory utility proposed by gilboa postlewaite and samuelson 2016 we explore the relationship between memory capacity and individual discounting behavior by building a simple two period model and comparing its predictions with experimental data both theoretical and experimental evidence confirm that memory capacity and discount rates are positively correlated

carbon pricing revenues could close infrastructure access gaps introducing a price on greenhouse gas emissions would not only contribute to reducing the risk of dangerous anthropogenic climate change but would also generate substantial public revenues some of these revenues could be used to cover investment needs for infrastructure providing access to water sanitation electricity telecommunications and transport in this way emission pricing could promote sustainable socio economic development by safeguarding the stability of natural systems which constitute the material basis of economies while at the same time providing public goods that are essential for human well being for a scenario that is consistent with limiting global warming to below 2 c we find that domestic carbon pricing without redistribution of revenues across countries has substantial potential to close existing access gaps for water sanitation electricity and telecommunication however for the majority of countries carbon pricing revenues would not be sufficient to pave all unpaved roads and for most countries in sub saharan africa they would be insufficient to provide universal access to all types of infrastructure except water if some fraction of the global revenues of carbon pricing is redistributed e g via the green climate fund more ambitious infrastructure access goals could be achieved in developing countries our paper also bears relevance for the design of climate finance mechanisms as it suggests that supporting carbon pricing policies instead of project based finance might not only permit cost efficient emission reductions but also leverage public revenues to promote human development goals

time delay complexity and support for taxation people often experience the benefits of taxation over time we design an intertemporal market experiment with negative externalities to examine how delaying the benefits of taxation affects support for taxes we find that when negative externalities occur immediately people learn to adopt pigouvian taxes which are aimed at reducing negative externalities and restoring market efficiency by contrast when negative externalities are delayed people are less receptive to taxation this effect persists over time our data reveal that the strong negative delay effect can be explained in large part by narrow bracketing and the increased perceived complexity of the environment rather than by time discounting per se we argue and demonstrate that increasing the transparency of intertemporal tradeoffs can effectively promote support for taxation

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

environmental and wider implications of political impediments to environmental tax reform abstract the most common notion of environmental tax reform etr is the use of the revenue from environmental taxes to reduce distortionary labour taxes the petras project 1 has shown that there are a number of social and political impediments to implementing such reform this paper firstly outlines some of the environmental and economic implications of environmental taxes generally it goes on to explore three broad approaches to etr based on the allocation of the tax revenues and explores the environmental and economic implications of each approach and the likelihood of political and social acceptance particular attention is paid to reducing regressive impacts and impacts on competitiveness it is concluded that some combination of earmarking a proportion of revenues to environmental projects and diverting rest to reduce labour taxes is probably the best approach in light of the results of the project the balance should depend upon local labour market and macroeconomic conditions the extent to which environmental projects are already funded and the extent of government failure i e the problems of resource allocation that occur as a result of government intervention in markets funding should only be provided to environmental projects if it can be shown that in themselves they are economically efficient in addition it is most important that a proportion of the funds be used to ameliorate any regressive impacts it is also important to bear in mind that hypothecation or recycling of revenue is not the same as a tax shift which is a reform of the entire system so some of these approaches may take away from the integrity of etr the paper concludes with some of the initiatives that are likely to be necessary to facilitate social and political acceptance of this approach to etr

earmarking conservation further inquiry on scope effects in stated preference methods applied to nature based tourism abstract the way people assign value to nature conservation policies has important implications for management choices economic valuation surveys are affected by individual behavioural patterns that are not exhaustively explained by traditional sources of bias such as embedding flagship species fixed budget commodity misspecification and warm glows through a contingent valuation study of alpine wildlife we use an external scope test to evaluate the difference in willingness to pay among tourists for conservation policies targeted either to the ibex alone or to the four ungulates populating the gran paradiso national park in northwest italy ibex red deer roe deer chamois we find that park users are willing to contribute significantly more to policies protecting one of the four ungulates than all four of them a result that we argue should be ascribed to pure aversion to less specific policy objectives i e to a preference for punctual earmarking of resources devoted to conservation

chicken and egg competition among intermediation service providers we analyze a model of imperfect price competition between intermediation service providers we insist on features that are relevant for informational intermediation via the internet the presence of indirect network externalities the possibility of using the nonexclusive services of several intermediaries and the widespread practice of price discrimination based on users identity and on usage efficient market structures emerge in equilibrium as well as some specific form of inefficient structures intermediaries have incentives to propose non exclusive services as this moderates competition and allows them to exert market power we analyze in detail the pricing and business strategies followed by intermediation services providers copyright 2003 by the rand corporation

competitiveness and exemptions from environmental taxes in europe a number of european countries have introduced a variety of environmental taxes a common characteristic of their implementation is the inclusion of exemptions and tax relief in particular for some sectors of manufacturing industry this paper analyses the pattern and motivation of exemptions as they have developed in western european countries making clear the difference between the nominal and effective tax rates once the exemptions have been taken into account the principal motivation for exemptions relates to concern about competitiveness while particular environmentally intensive sectors may have some grounds for concern even these might be able to achieve cost effective environmental improvements such that their competitive position is not over disadvantaged while for an economy structured like the uk s an environmental tax plus rebate scheme sometimes called an ecological tax reform would be likely to yield benefits in terms of competitiveness the exemptions usually run counter to the environmental economic logic of using environmental taxes to internalise social costs and give economic signals that are based on the full costs of production and they are likely to increase the costs of achieving a given level of emission reduction with little justification for them also on the grounds of competitiveness it would therefore be undesirable on both economic and environmental grounds for them to remain a feature of the implementation of environmental taxes in the future

carbon pricing and energy efficiency improvement why to miss the interaction for developing economies an illustrative cge based application to the pakistan case abstract carbon energy taxes and energy efficiency improvement are studied well in the recent years for their potential adverse impacts on economy especially for lost production and international competitiveness and rebound effects however little attention has been paid to investigate them jointly which can not only prevent fall of energy services cost and thereby rebound effect but reduce the associated macroeconomic costs this study thus employs a 20 sector cge model to explore separately the impacts of carbon tax and its coordinated implementation with energy efficiency improvement on the pakistan economy the country underwent enormous pressure of energy security issues as well as climate change fallouts in the last couple of years and can be regarded as a suitable candidate for energy environmental conservation policies to be considered at a broader context with more concrete efforts the simulation results show that the impact of carbon tax on gdp is negative but resulting reductions in pollutant emissions are relatively high moreover the gdp is expected to grow comparatively positive when analyzed with improvements in energy efficiency with even higher decline in energy consumption demand and so emissions this simultaneous economic and environmental improvement would thus have positive implications regarding sustainable development of the country

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

a just and efficient reduction of resource throughput to optimum abstract resource throughput in the economy e g of energy or materials must be progressively reduced by at least one order of magnitude to achieve an optimal level although this would solve the resource distribution conflict between the generations it would also aggravate the resource distribution conflict between persons of the same generation it is shown here that a solution to these two conflicts and efficient resource allocation are only possible if resource certificates are distributed to consumers free of charge and traded between them this paper builds on and integrates ideas developed in h daly s daly h e 1992 allocation distribution and scale towards an economics that is efficient just and sustainable ecological economics 6 185 193 article on allocation distribution and scale adding insights from the ecological footprint concept to propose a mechanism for facilitating intergenerational equity and drastically reducing resource throughput basically the mechanism involves rationing throughput equitably internalizing environmental and social externalities and substituting labour for resource use this can be achieved almost without a drop in prosperity both unemployment and dependence on scarce resources decline

convex time budgets and individual discount rates in the long run the purpose of this study is to use experimental data to estimate individual discount rates and test for hyperbolic discounting over a long time horizon to do this we employ the convex time budget experimental approach with cash payments over a 20 year time horizon to date there are few experimental studies that explore discount rates beyond a 1 year time horizon previous experimental studies that focus on short time horizons find high discount rates which may not be applicable to decisions that affect outcomes in the distant future our findings are quite similar to the average rate of 4 9 found by grijalva et al environ resour econ 59 39 63 2014 who similarly use a 20 year time horizon but use the multiple price list elicitation method along with payment via government savings bonds we find annual discounts rates in the range of 1 9 5 5 depending on the specific model used we also find evidence for declining discount rates and that this hyperbolic pattern of behavior is related to the confidence subjects have in receiving distant future payments

a competitive carbon emissions scheme with hybrid fiscal incentives the evidence from a taxi industry abstract as two major approaches to reduce carbon emissions command and control instruments and market based carbon trading systems have their own weaknesses our paper first proposes a type of endogenous equilibrium methodology to dynamically derive the industrial carbon emissions standards at the equilibrium the sum of all carbon assets and liabilities is zero in the considered industry moreover the standards fall over time with low carbon technological advance most importantly combining pigou s and coase s ideas we construct a fiscal instrument accounting for both carbon taxes and allowances based on the dynamically improved emissions standards and carbon trading prices this no revenue for government method implements a self operated ecology for carbon trading market finally considering the waterloo recession of carbon prices we introduce an adjustment factor into the model which generates a negative feedback mechanism with carbon prices to support our idea we present the application to beijing taxi industry in detail and raise relative policy implications based on the evidence

incomplete market demand tests for kreps porteus selden preferences abstract what does utility maximization subject to a budget constraint imply for intertemporal choice under uncertainty assuming consumers face a two period consumption portfolio problem where asset markets are incomplete we address this question following both the standard local infinitesimal and finite data approaches to focus on the separate roles of time and risk preferences individuals maximize kps kreps porteus selden preferences the consumption portfolio problem is decomposed into a one period portfolio problem and a two period certainty consumption saving problem we derive demand restrictions which are necessary and sufficient for portfolio choices and certainty intertemporal consumption to have been generated by maximization respectively of a one period expected utility representation and a certainty representation of time preferences conditions are provided for recovering the building block time and risk preference utilities for the finite data case we derive a set of linear inequalities that are necessary and sufficient for observations to be consistent with the maximization of kps utility

norwegian emissions of co 2 1987 1994 several countries have introduced taxes on fossil fuels with the aim of reducing atmospheric emissions partly because of local environmental goals so2 nox and partly to participate in a global effort to reduce emissions of greenhouse gases many macroeconomic studies based on both global and national models have been made of how emissions can be reduced with the help of taxes and the consequent reduction in gdp following the introduction of such taxes norway has had a co2 tax for five years thereby providing a unique opportunity to evaluate the effects of this tax on emissions the paper provides a counterfactual analysis of energy consumption and emissions if no co2 taxes had been introduced compared with the actual situation in which such taxes exist the effect of a co2 tax on oil consumption and thus co2 emissions is studied on the basis of partial economic models for various sectors of the norwegian economy the study indicates that the co2 tax has had an impact on co2 emissions in norway

strotz meets allais diminishing impatience and the certainty effect abstract decision makers tend to exhibit a higher degree of impatience when considering a delay to an immediate reward than when contemplating an identical delay to an equal future reward this work argues that diminishing impatience originates from the distinction between the certain present and the risky future a simple functional representation of preferences exhibiting time inconsistency when the future is uncertain is derived experimental evidence which is inconsistent with other formulations that account for diminishing impatience supports the proposed approach the new theory uncovers a tight relation between diminishing impatience and well known behavioral regularities in choice under risk and uncertainty jel d12 d81

comment on risk preferences are not time preferences separating risk and time preference andreoni and sprenger 2012a b observe that utility functions are distinct for risk and time preferences and show that their findings are consistent with a preference for certainty we revisit this question in an enriched experimental setting in which subjects make intertemporal decisions under different risk conditions the observed choice behavior supports a separation between risk attitude and intertemporal substitution rather than a preference for certainty we further show that several models including epstein and zin 1989 chew and epstein 1990 and halevy 2008 exhibit such a separation and can account for the overall experimental findings jel c91 d81 d91 risk and time preferences are the cornerstones of economic analyses regarding risk preference expected utility eu has been the predominant theory in which the curvature of the utility index captures risk attitude regarding time preference discounted utility is the most widely used model in which the curvature of the utility index captures intertemporal substitution when risk and time are intertwined integrating the two theories yields discounted expected utility deu which evaluates a contingent consumption plan c c c 3 as follows

bertrand competition under network externalities abstract two firms engage in price competition to attract buyers located on a network the value of the good of either firm to any buyer depends on the number of neighbors on the network who adopt the same good when the size of externalities increases linearly with the number of adoptions we identify the set of pricing strategies that are consistent with an equilibrium in which one of the firms monopolizes the market the set includes marginal cost mc pricing as well as bipartition pricing which offers discounts to some buyers and charges markups to others we show that mc pricing fails to be an equilibrium under non linear externalities in a general network but identify conditions for an equilibrium with bipartition pricing to be robust against perturbations in the externalities from linearity the analysis is applied to platform competition in a two sided market under local and approximately linear externalities

heavily skewed pricing in two sided markets a common feature in two sided markets is the prevalence of heavily skewed pricing strategies in which price markups are much higher on one side of the market than the other we show that maximal skewed pricing is profit maximizing under constant elasticity of demand the most elastic side of the market is used to generate maximum demand by providing it with platform services at the lowest possible price full participation of the high elasticity low price side of the market attracts the other side as this side is less price elastic the platform is able to extract high prices

the political economy of environmental regulation towards a unifying framework there are several theories that attempt to explain various aspects of environmental policy building on insights from this theoretical work and recent advances in our understanding of instrument performance this paper constructs a more complete theory of environmental regulation there are two primary contributions of this research the first is to provide more satisfactory explanations for a number of observed patterns of environmental policy for example there is as yet no satisfactory theory about the emergence of incentive based mechanisms such as marketable permits and effluent fees the second contribution of this paper is to develop a parsimonious framework for understanding many important aspects of environmental policy this framework suggests the outputs of environmental policy emerge from a struggle between key interest groups

time preference and real investment abstract this paper studies the investment timing problem of an entrepreneur with a non tradable real option with undiversifiable risk we find that the time preference can have a significant impact on the risk attitude toward the idiosyncratic risk which results from the wealth effect on the implied option value if the agent is impatient patient an increase in idiosyncratic volatility increases decreases the agent s value and delays hastens investment this finding suggests several important implications and empirical predictions for investment decisions in private firms and public firms with concentrated ownership

the role of budgetary information in the preference for externality correcting subsidies over taxes a lab experiment on public support the potential of taxes to correct environmental externalities has long been recognized among economists yet this welfare enhancing policy commonly faces strong opposition by citizens conversely externality correcting subsidies frequently enjoy high public support we conduct a lab experiment to explore public support for pigouvian taxes and subsidies in an experimental market with a negative externality participants vote on the introduction of pigouvian taxes and subsidies under full or reduced information concerning how the tax revenues will be spent and the subsidy paid for theoretically the two instruments should produce identical outcomes however we find substantially greater support for subsidies than for taxes this can partially be explained by the participants expectation that the subsidy will increase their own payoffs more than a tax but not because it is expected to be more effective in changing behavior furthermore we find that with greater uncertainty the preference for subsidies is even stronger a result which is consistent with loss aversion

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

tradeable carbon permit auctions how and why to auction not grandfather abstract an auction of carbon permits is the best way to achieve domestic carbon caps designed to limit global climate change to minimize administrative costs permits would be required at the level of oil refineries natural gas pipe lines natural gas liquid sellers and coal processing plants to maximize liquidity in secondary markets permits would be fully tradable and bankable the government would conduct quarterly auctions a standard ascending clock auction in which price is gradually raised until there is no excess demand would provide reliable price discovery an auction is preferred to grandfathering giving companies permits based on historical output or emissions because it allows reduced tax distortions provides more flexibility in distribution of costs provides greater incentives for innovation and reduces the need for politically contentious arguments over the allocation of rents

instrument choice and stranded assets in the transition to clean capital abstract this paper compares the impact of different climate mitigation policies mandates feebates performance standards and carbon pricing in a ramsey model with clean and polluting capital irreversible investment and a climate constraint these policy instruments imply different transitions to the same balanced growth path the optimal carbon price minimizes the discounted social cost of the transition to clean capital but may prompt premature retirement of existing polluting capacities and significant private costs in the form of stranded assets second best mandates and feebates affect new investment decisions without providing incentives to under use existing polluting equipment these instruments lead to higher discounted social costs but smoother abatement costs and do not result in premature retirement or stranded assets a phased in carbon price can avoid premature retirement but still result in stranded assets that is in a drop of wealth for the owners of polluting capital we discuss a potential trade off between the political feasibility and cost effectiveness of climate mitigation policies

a rural myth sources and implications of the perceived unfairness of carbon taxes in rural communities abstract since british columbia s carbon tax was implemented in 2008 local interest groups and municipal politicians have claimed that the tax places an unfair burden on rural communities we investigate the sources of this perception of unfairness and its implications for policymaking we examine the distributive effects of british columbia s carbon tax using a computable general equilibrium model of the canadian economy we find that the rural population would indeed have experienced a disproportionate burden had the carbon tax been introduced without redistributive measures but that the revenue recycling program introduced in parallel with the tax was sufficient to balance the inequity hence the northern and rural homeowner benefit program a transfer program introduced later in response to public protests was unnecessary additionally analysis of polling data shows that the new program failed to increase support for the carbon tax in rural communities despite making these households better off on average than households in large urban centers we therefore conclude that this ongoing opposition is based on a rural myth policymakers should carefully investigate distributive impacts of carbon policies and address evidential inequities yet before overcompensating groups that still feel disadvantaged policymakers should address the myth of unfairness at its source

a future for carbon taxes abstract carbon taxes have been frequently advocated as a cost effective instrument for reducing emissions however in the practice of environmental policies only six countries have implemented taxes based on the carbon content of the energy products in this paper we evaluate carbon taxes with regard to their competitiveness distributional and environmental impacts the evidence shows that carbon taxes may be an interesting policy option and that their main negative impacts may be compensated through the design of the tax and the use of the generated fiscal revenues

a choice experiment on fuel taxation and earmarking in norway abstract pigouvian taxes are efficient but unpopular among voters and hence often politically infeasible earmarking of revenues has been widely reported to increase public support for taxes but earmarking is generally not the most efficient use of the revenues this trade off between efficiency and political feasibility is the motivation for our primary research objective to quantify the effect of earmarking on support for fuel tax rises our secondary research objective is to investigate why earmarking increases support using data from a representative sample of the norwegian voter population n 1147 we estimate models of voter preferences for fuel taxes using logistic regression models our results show that in the absence of earmarking the majority of voters would like to reduce fuel taxes but earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases garnering a majority for increases of up to 15 above present levels further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax and hence its legitimacy as an environmental rather than a fiscal policy instrument

when can carbon abatement policies increase welfare the fundamental role of distorted factor markets abstract this paper employs analytical and numerical models to assess the welfare effects of a revenue neutral carbon tax and nonauctioned carbon emissions permits taking into account preexisting tax distortions in factor markets the presence of preexisting taxes significantly raises the general equilibrium costs of both policies this cost increase is much greater under emissions permits since this policy does not generate revenues to reduce distortionary taxes under our central estimates emissions permits cannot increase welfare unless environmental damages exceed about 18 per ton of carbon in contrast an appropriately scaled carbon tax is welfare improving so long as environmental damages are positive

reflections on the double dividend debate we survey the history of carbon taxation the range of market based instruments mbis of environmental control and the state of the double dividend debate in order to suggest directions for future research into mbis returning mbi revenues as lower distortionary taxes rather than as lump sums raises aggregate welfare but we favour mbis which raise little or no revenue for reasons of political acceptability to interest groups at the same time the overall case for any environmental improvement is weaker because of general equilibrium interactions with prior distortionary taxes research seems most necessary on quantifying the efficiency benefits of market control of heterogeneous polluters the benefits of environmental improvement the tax interaction effect and the various information costs of an mbi all on a case by case basis for different pollutants and places

public preferences for carbon tax attributes the impacts of climate change are already visible throughout the world recognizing the threats posed by climate change the durban platform the 17th session of the conference of parties cop 17 underscores that the global nature of climate change calls for the widest possible cooperation and ambitious action by all countries a crucial starting point for the design of effective and publicly acceptable policies is to explore public preferences for climate policy instruments using a choice experiment this study investigates public preferences for carbon tax attributes in a developing country context the results account for heterogeneity in preferences and show that turkish people prefer a carbon tax with a progressive cost distribution rather than one with a regressive cost distribution the private cost has a negative effect on the probability of choosing the tax earmarking carbon tax revenues increases the public acceptability of the tax moreover there is a preference for a carbon tax that promotes public awareness of climate change

two sided markets a progress report the paper provides a road map to the burgeoning literature on two sided markets and presents new results it identifies two sided markets with markets in which the structure and not only the level of prices charged by platforms matters the failure of the coase theorem is necessary but not sufficient for two sidedness the paper builds a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality and obtains new results on the mix of membership and usage charges when price setting or bargaining determine payments between end users

optimal environmental taxation in the presence of other taxes general equilibrium analyses this paper examines the optimal setting of environmental taxes in economies where other distortionary taxes are present we employ analytical and numerical models to explore the degree to which in a second best economy optimal environmental tax rates differ from the rates implied by the pigovian principle according to which the optimal tax rate equals the marginal environmental damages both models indicate contrary to what several analysts have suggested that the optimal tax rate on emissions of a given pollutant is generally less than the rate supported by the pigovian principle moreover the optimal rate is lower the larger are the distortions posed by ordinary taxes numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre existing taxes this abstract was borrowed from another version of this item

developments in non expected utility theory the hunt for a descriptive theory of choice under risk this article reviews recent developments in the economic theory of individual decision making under risk since the 1950s it has been known that individual choices violate the standard model of expected utility in predictable ways considerable research effort has now been devoted to the project of developing a superior descriptive model following an overview of non expected utility theories which distinguishes between conventional and non conventional approaches the paper seeks to assess these alternative models in terms of empirical success using laboratory and field data and theoretical usefulness the closing sections reflect on some new directions emerging in this literature

the demand for earmarking results from a focus group study abstract environmental taxes might be efficient but plans to impose new taxes are often met with fierce public resistance in order to design environmental taxes that are both efficient and acceptable to the public so that they can be politically feasible it is important to understand public attitudes towards environmental taxes we conduct a focus group study in norway to extend the current knowledge on this issue we find less general resistance to taxation as a policy instrument and seemingly more trust in government than what has been reported in similar studies from other countries the participants are however very skeptical and do not see the point of using the revenues from an environmental tax to reduce other taxes such as the payroll tax instead they express a very strong preference for earmarking the revenues for environmental purposes they also call for more information about environmental taxes in particular on how the revenues are spent providing more information including what the revenues are spent on irrespective of whether they are earmarked or not would seem to provide a relatively cheap and possibly effective way to increase the public acceptability of new or increased environmental taxes

norwegian emissions of co2 1987 1994 a study of some effects of the co2 tax several countries have introduced taxes on fossil fuels with the aim of reducing atmospheric emissions partly because of local environmental goals so2 nox and partly to participate in a global effort to reduce emissions of greenhouse gases many macroeconomic studies based on both global and national models have been made of how emissions can be reduced with the help of taxes and the consequent reduction in gdp following the introduction of such taxes norway has had a co2 tax for five years thereby providing a unique opportunity to evaluate the effects of this tax on emissions the paper provides a counterfactual analysis of energy consumption and emissions if no co2 taxes had been introduced compared with the actual situation in which such taxes exist the effect of a co2 tax on oil consumption and thus co2 emissions is studied on the basis of partial economic models for various sectors of the norwegian economy the study indicates that the co2 tax has had an impact on co2 emissions in norway

do you not like pigou or do you not understand him tax aversion and revenue recycling in the lab tax aversion reduces the likelihood that price rationing can be a politically viable tool for environmental protection we examine the case of the classic pigouvian tax to control a negative externality and consider how recycling the revenues labeling of the tax and information about its purpose affects the support for taxation we test the support for taxation within a single price market experiment in which purchases by some buyers impose external costs on others observing behavior consistent with tax aversion we also find that recycling the revenues to more narrowly targeted groups seems to increase support for taxation in the absence of narrow revenue recycling labeling a pigouvian instrument as a tax may significantly lower the likelihood of voter support

violence and risk preference experimental evidence from afghanistan comment in this comment on callen et al 2014 i revisit recent evidence uncovering a preference for certainty in violation of dominant normative and descriptive theories of decision making under risk i show that the empirical findings are potentially confounded by systematic noise i then develop choice lists that allow me to disentangle these different explanations experimental results obtained with these lists reject explanations based on a preference for certainty in favor of explanations based on random choice from a theoretical point of view the levels of risk aversion detected in the choice list involving certainty can be accounted for by prospect theory through reference dependence activated by salient outcomes

incentives at the counter an empirical analysis of surcharging card payments and payment behaviour in the netherlands in card payment systems no surcharge rules prohibit merchants from charging consumers extra for card payments however such rules are prohibited in the netherlands dutch retailers are allowed to surcharge consumers for debit card use this setting permits an empirical analysis of the impact of surcharging card payments on merchant acceptance and consumer payment choice based on consumer and retailer survey data our analysis shows that surcharging steers consumers away from using debit cards towards cash half of the observed difference in debit card payment shares across retailers can be explained by this surcharge effect removing debit card surcharges may induce cost savings of more than eur 50 million in the long run

three variants on the allais example three variants on the famous allais example were administered to student subjects two variants involved small changes in the example yet greatly diminished the qualitative behavior known as the allais paradox the third variant is almost a direct test of daniel kahneman and amos tversky s certainty effect against mark machina s fanning out hypothesis the results favor the certainty effect over the fanning out hypothesis for at least the case of straight line indifference curves copyright 1989 by american economic association

risk preferences are not time preferences risk and time are intertwined the present is known while the future is inherently risky this is problematic when studying time prefer ences since uncontrolled risk can generate apparently present biased behavior we systematically manipulate risk in an intertemporal choice experiment discounted expected utility performs well with risk but when certainty is added common ratio predictions fail sharply the data cannot be explained by prospect theory hyperbolic discounting or preferences for resolution of uncertainty but seem consistent with a direct preference for certainty the data suggest strongly a difference between risk and time preferences jel c91 d81 d91 understanding individual decision making under risk and over time are two foundations of economic analysis 1 in both areas there has been research to suggest that standard models of expected utility eu and exponential discounting are flawed or incomplete regarding time experimental research has uncovered evidence of a present bias or hyperbolic discounting frederick loewenstein and o donoghue 2002 regarding risk there are number of well documented departures from eu such as the allais 1953 common consequence and common ratio paradoxes an organizing principle behind expected utility violations is that they seem to arise as so called boundary effects where certainty and uncertainty are combined camerer 1992 harless and camerer 1994 and starmer 2000 indicate that violations of expected utility are notably less prevalent when all choices are uncertain this observation is especially interesting when considering decisions about risk taking over time in particular certainty and uncertainty are combined in intertemporal decisions the present is known and certain while the future is inherently risky this observation is problematic if one intends to study time preference in isolation from

the welfare effects and the distributive impact of carbon taxation on italian households in this work the welfare effects and the distributive impact on italian households of the italian carbon tax are calculated the carbon tax has been introduced in italy at the beginning of 1999 asking for smooth increases over a number of years in the prices of most fossil fuels its welfare effects have been calculated using true cost of living index numbers and the compensating variation the parameters have been obtained through estimation of a complete almost ideal demand system using households data from 1985 to 1996 the welfare loss turns out to be quite substantial and affects italian households in a non negligible way but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of carbon taxation as the effect becomes bigger as we move up the income distribution this evidence might encourage the use of carbon taxes at least in the transport sector as cost effective instruments of environmental policy especially after the ratification of the kyoto protocol on climate change

risk preferences are not time preferences reply can the well known experimental phenomenon of present bias in intertemporal choice be confounded with the risks associated with receiving payment can measurements of risk preferences be used to represent desires for smoothness in intertemporal payments in our two 2012 papers in this journal we explored these two questions and found the answer to the first to be yes and the second to be no we feel the three papers inspired by our work and published here underscore these arguments and point to interesting new possibilities for modeling and measuring risk over time jel c91 d81 d91

armstrong meets rochet tirole on the equivalence of different pricing structures in two sided markets abstract we formally show that lump sum participation fees and per interaction fees charged by a monopoly platform in a two sided market are not interchangeable in the presence of price distortions such as ad valorem taxes

carbon taxes with exemptions in an open economy a general equilibrium analysis of the german tax initiative abstract sectoral exemptions from environmental regulation are applied in many countries to avoid adverse adjustment effects in specific industries the problem with exemptions is that they can make environmental policy more costly our paper analyzes the welfare costs of exemptions in environmental policy together with the issue of unilateral carbon taxes in an open economy several countries within the eu have introduced or contemplated unilateral taxes to reduce anthropogenic co2emissions taxes which are unilaterally imposed in an open economy can have significant impacts on production and employment of energy and export intensive industries to save jobs by maintaining international competitiveness most co2taxation schemes include exemptions for energy and export intensive industries as a compromise between environmental objectives and employment in these sectors this paper shows that such compromises are costly as the tax base narrows the dead weight loss increases our calculations illustrate this point in the framework of a static general equilibrium model for west germany calibrated to 1990 data we evaluate the excess costs of exemptions as a means of saving jobs in specific industries relative to an alternative instrument a uniform carbon tax cum wage subsidy which achieves an identical level of national emissions and employment at a fraction of the cost