a simple model of disinflation and the optimality of doing nothing abstract this paper analyses the optimal monetary policy of a government facing an election whose disinflationary abilities are uncertain under the assumption that reducing inflation is costly because of backward looking contracts it is shown that if the government likes to be in power it can choose to do nothing on the inflation front in order to avoid risking electoral defeat should disinflation prove too costly the costs of inflation reduction are worth bearing if initial inflation is sufficiently high therefore it is possible to observe quick disinflations that however stop short of low inflation

who governs energy the challenges facing global energy governance this article conceptualizes the energy problems facing society from a global governance perspective it argues that a notion of global energy governance taken to mean international collective action efforts undertaken to manage and distribute energy resources and provide energy services offers a meaningful and useful framework for assessing energy related challenges the article begins by exploring the concepts of governance global governance and global energy governance it then examines some of the existing institutions in place to establish and carry out rules and norms governing global energy problems and describes the range of institutional design options available to policymakers it briefly traces the role of a selection of these institutions from inter governmental organizations to summit processes to multilateral development banks to global action networks in responding to energy issues and points out their strengths and weaknesses the article concludes by analyzing how the various approaches to global governance differ in their applicability to addressing the conundrums of global energy problems

theoretical approaches to monetary disinflation abstract during the 1980s many countries adopted tight monetary policies to reduce high inflation rates which were the legacy of the 1970s as inflation threatens to rise at the beginning of this decade this paper provides a survey of the 1980s literature which sought to provide theoretical understandings of how monetary disinflation is achieved four models are presented monetarist neo keynesian new classical and post keynesian each model s explanation of the recession which accompanies the monetary disinflation is outlined as well as possible policy measures to reduce the extent of the recession and to hasten the return to full employment

who formulates renewable energy policy a swedish example a broad participation by stakeholders and an extensive reliance on expert advice are often seen as preconditions for a legitimate and successfully implemented renewable energy policy however we have lacked systematic data for testing this argument this article s contribution is to examine the actors who take part in the making of swedish energy policy with the help of data on the composition of various committees of inquiry over the last twenty years 1988 2009 swedish renewable energy policy is often characterised with words like pioneering and forerunner suggesting that the policy making process in this area engages many different experts and stakeholders our data give only some support to this argument results point to a noteworthy predominance of politicians civil servants and representatives of state agencies within the policy process producers of uranium and fossils based energy have been engaged more often than producers of renewable energy experts have played a prominent role but this is mostly due to the participation of expert bureaucrats rather than of scientists the study suggests that a better understanding of the making of energy policy both in sweden and elsewhere requires greater attention to the networks and role of various state employees

wind power development in sweden global policies and local obstacles abstract recently the swedish government adopted a national planning goal of a yearly wind power generation of 10 twh by 2015 implying a substantial increase from the current 0 6 twh level in this paper we provide an economic assessment of the potential for future wind power investments in sweden in close conjunction with an analysis of the legal attitudinal and policy related uncertainties that face a wind mill investor it is shown that the economics of swedish wind power is negatively affected by a the lack of policy stability b public criticism at the local level and in particular c the legal provisions governing the assessment of the environmental impacts of wind mills and the planning procedures for mill location while national and global energy policies as well as the general public point out wind power as particularly environmentally friendly most of the objections to its expansion at the local level tend to have environmental origins the interests of those who object to wind mill installations gain strong legal protection and the municipal territorial planning monopoly in sweden implies that it is hard to make national energy policy goals heard at the local implementation stage compared to its competitors wind power is the technology that tends to have the most to loose from the risk and uncertainties created by this investment environment the paper identifies and discusses a number of ways in which the national policy interests could be strengthened at the local level we discuss the role of citizen participation as well as solutions within the realms of the legal system moreover since the diffusion of wind power encounters the most strident legal and attitudinal obstacles where it interferes with competing land uses a move offshore appears to be an efficient strategy from the perspective of a wind mill investor a stronger political commitment to wind power expansion in legal provisions as well as in the form of long run stability in policy instrument implementation will probably be necessary to attain the 2015 policy goal

the real but limited influence of expert ideas a number of influential studies in political science argue that important economic policy changes in the rich democracies since the mid 1970s were caused by the introduction of new economic ideas this article claims that while experts exert strong influence over the selection of policy instruments their influence over the formulation of policy objectives is much weaker in the 1970s 1980s and 1990s the predominance of keynesianism in austria and denmark did not lead austrian and danish governments to maintain low unemployment longer than sweden where keynesianism was less strong but it did lead them to regard fiscal policy as an instrument that can be used to control the level of activity in the economy while their swedish counterparts relied instead on exchange rate and monetary policy

on the option to invest in pollution control under a regime of tradable emissions allowances optimal decisions of a firm facing the option of retrofitting its plant to reduce pollution and thereby eliminate the need to purchase emissions allowances are analysed the decision is treated as a real option with the price of pollution permits following a known stochastic process the model is formulated as a set of one dimensional partial differential equations at discrete points in time the firm owner makes optimal decisions about the retrofit including whether to mothball temporarily the model is used to analyse a firm s decision to instal a scrubber as a result of the 1990 u s clean air act jel classification q25 d81 g31 sur la possibilite d investir dans le controle de la pollution dans un regime de permis d emission de pollution echangeables commercialement ce memoire examine les decisions optimales d une entreprise face a la possibilite d adapter ses installations pour reduire la pollution et ce faisant d eliminer le besoin de se procurer des permis d emission de pollution sur le marche le decision est traitee comme une option reelle ou le prix des permis resulte d un processus stochastique connu le modele est formule sous forme d un ensemble d equations differentielles partielles a une dimension a des points discontinus dans le temps le proprietaire de l entreprise prend des decisions optimales de mise a niveau des installations y compris la possibilite de les fermer temporairement le modele est utilise pour analyser une decision d installer un epurateur suite a la mise en place de la loi americaine de 1990 clean air act

sulfur dioxide control by electric utilities what are the gains from trade title iv of the 1990 clean air act amendments caaa established a market for transferable sulfur dioxide so2 emission allowances among electric utilities this market offers firms facing high marginal abatement costs the opportunity to purchase the right to emit so2 from firms with lower costs and this is expected to yield cost savings compared to a command and control approach to environmental regulation this paper uses econometrically estimated marginal abatement cost functions for power plants affected by title iv of the caaa to evaluate the performance of the so2 allowance market specifically we investigate whether the much heralded fall in the cost of abating so2 compared to original estimates can be attributed to allowance trading we demonstrate that for plants that use low sulfur coal to reduce so2 emissions technical change and the fall in prices of low sulfur coal have lowered marginal abatement cost curves by over 50 percent since 1985 the flexibility to take advantage of these chan

carbon prices and fuel switching a quasi experiment in electricity markets within the pennsylvania new jersey maryland electricity market delaware and maryland participate in the regional greenhouse gas initiative rggi but other states do not providing a quasi experimental setting to study the rggi program using a difference in difference framework we find that overall the rggi program led to 6 22 million short tons of co2 reduction per year in delaware and maryland or about 19 10 of the average total potential annual emissions in these two states from 2009 to 2013 counterintuitively however the reduction is mainly achieved through reduction of coal inputs and emission leakage instead of fuel switching from coal to natural gas or from fossil fuel coal and natural gas to non fossil fuel

institutional work and climate change corporate political action in the swedish electricity industry this paper utilises qualitative methods to examine factors that influence corporate political actions cpa linked to climate policy in the swedish electricity industry cpa strategies are examined in connection to two policy instruments the eu emission trading scheme and the swedish electricity certificate scheme these instruments are the main drivers of climate related investments in the sector the study treats cpa as a form of institutional work and examines reasons for companies to seek to maintain disrupt institutions the study finds that cpa is driven primarily by the need to manage external resource dependencies and that where risks are more acute companies are more likely to seek to disrupt regulative institutions however the study also shows that respondents appraisals of policy instruments are based on a convergent set of shared values cognitive institutions that form the basis of cpa and which actors do not seek to disrupt despite resource based risks cpa is thus characterised as a means to transmute cognitively held values and beliefs into regulative institutions the study concludes with implications for policymakers and theory

equilibrium price dynamics of emission permits this article presents a stochastic equilibrium model for environmental markets that allows us to study the characteristic properties of emission permit prices induced by the design of today s cap and trade systems we characterize emission permits as highly nonlinear contingent claims on economy wide emissions and reveal their hybrid nature between investment and consumption assets our model makes predictions about the dynamics and volatility structure of emission permit prices the forward price curve and the implications for option pricing in this market empirical evidence from existing emissions markets shows that the model explains the stylized facts of emission permit prices and related derivatives

cap and trade policy challenges a tale of three markets cap and trade policy instruments have been applied to a number of environmental problems with varying success this article examines cap and trade programs for so2 allowances fishery quotas and water rights design and implementation of cap and trade mechanisms involves challenging policy tradeoffs accommodating equity concerns balancing use levels with resource conditions facilitating transactions accounting for externalities assuring adequate monitoring and documenting welfare gains efficient trading mechanisms are more readily implemented when there is a strong political or legal mandate to cap resource use and trades are perceived as a means to ease adjustment to use limits

the benefits of spatially differentiated regulation the response to acid rain by u s states prior to the acid rain program location is a crucial driver of both the marginal abatement and damage costs of sulfur dioxide emissions by u s coal fired power plants before the start of the acid rain program in 1995 old boilers were subject to emission rate standards set by individual states we investigate how individual states adjusted their sulfur regulation laws in response to acid rain and whether they accounted for differences in marginal abatement costs vulnerability to agricultural damages special industry interests or inter state externalities the welfare gain compared to a uniform reduction in emission rate standards is estimated to be 21 million in 1995 dollars annually

an interim evaluation of sulfur dioxide emissions trading ide iv of the 1990 clean air act amendments established the first large scale long term environmental program to rely on tradable emissions permitscalled allowances in this program to control pollution this program was designed to cut acid rain by reducing sulfur dioxide so2 emissions from electric generating plants to about half their 1980 level beginning in 1995 it is of interest both as a response to an important environmental issue and as a landmark experiment in environmental policy this experiment comes at a particularly important time since emission trading is under serious consideration with strong u s backing for use to deal with global climate change by curbing emissions of carbon dioxide co2 the economic stakes in climate change surpass those in acid rain by several orders of magnitude intergovernmental panel on climate change 1996 this article summarizes the results to date of our ongoing empirical analysis of compliance costs and allowance market performance under the u s acid rain program

wage indexation and time consistency note this note presents a simple model where the decision on the degree of wage indexation is taken by a large agent such as the government the optimal degree of indexing is shown to depend on the variance of real shocks and on the inflations bias of the government due to the incentive to raise employment above the market clearing level wage indexation will be low if real shocks are large and if the government is inflation averse the ability of monetary policy to offset monetary disturbances makes them irrelevant to the determination of the optimal degree of indexing copyright 1994 by ohio state university press

clearing the air the effects of gasoline content regulation on air quality this paper examines the effects of u s gasoline content regulations on groundlevel ozone pollution these regulations are costly and have been shown to fragment gasoline markets and raise prices paid by consumers we provide the first comprehensive empirical estimates of the regulations air quality benefits we exploit the fact that gasoline regulations vary by time and place of introduction using both difference in difference and regression discontinuity designs we show that federal regulations targeting the emissions of volatile organic compounds vocs one of the two main precursors to ozone do not substantially improve air quality this outcome is driven by the response of refiners to the regulation minimizing the cost of abatement involves removing a type of voc from gasoline that is not an important determinant of ozone pollution in california however we show that precisely targeted regulations requiring the removal of vocs particularly prone to forming ozone caused a significant improvement in air quality

sulfur allowance trading and the regional clean air incentives market a comparative design analysis of two major cap and trade permit programs this paper investigates in detail the design parameters of the two mostprominent us cap and trade permit program the us epa sulfur allowancetrading program and the south californian regional clean air incentivesmarket reclaim in contrast to expectations the two programs turn out to be rather different in several important design parameter choices common elements emerge primarily in the existence of an ambitious quantifiedenvironmental target mandatory use of stringent emission monitoring methodsand stiff penalties for non compliance coexisting command and controlregulations the creation of a competitive permit market structure andsome distributional concessions in the initial permit allocation generalizing from these common features we find that provisions to assurepolitical acceptance functional interdependencies and overlapping regulation are the most important influences on the design of applied cap and trade permit programs

environmental crime and punishment empirical evidence from the german penal code u s and e u environmental policy employ criminal sanctions to enforce compliance recent moves toward revising their use are based on little empirical evidence as to their effectiveness this paper exploits a unique dataset to study the deterrent effect of criminal enforcement the dynamic panel data analysis leads to three findings first criminal sanctions do provide the intended deterrent effects second standing trial provides one of the most significant deterrents rather than the probability of conviction or the magnitude of fines third public preferences regarding environmental quality and political economy variables affect reported environmental crime

market design in cap and trade programs permit validity and compliance timing abstract cap and trade programs have considerable heterogeneity in permit validity and compliance timing for example permits have different validities across time e g banking borrowing and seasons and space e g zonal restrictions and compliance timing can be annual in overlapping cycles or in multi year periods we discuss nine prominent cap and trade programs along these dimensions and construct a general model of permit validity and compliance timing we derive sufficient conditions under which abatement is invariant to compliance timing i e compliance timing cannot smooth abatement cost shocks under these conditions i expected compliance costs are invariant ii the variance of compliance costs increases with the delayed compliance iii equilibrium prices may not be unique and iv the delayed compliance equilibrium may rely on degenerate prices not determined by marginal abatement costs we demonstrate the model s broad applicability by illustrating different types of temporal permit validity

the politics of electricity deregulation in sweden the art of acting on multiple arenas this article investigates the deregulation of the swedish electricity industry as a political process discussions about deregulation started in the late 1980s a first step in the process was the corporatization of the swedish state owned utility vattenfall in 1992 the deregulatory process culminated with the new electricity law which entered into force in 1996 we investigate in historical depth how a diverse range of actors contributed to shaping both the new institutional environment and the political discourse the article scrutinizes not only the formal political decision making process and the activities of a variety of ministries boards and agencies but also the processes by which energy companies and other relevant industrial actors influenced the outcome of the regulatory reforms we explicitly focus on activities taking place on both political and business arenas showing that major stakeholders acted on several arenas simultaneously to influence the deregulatory process and that the large power companies were most skilful in doing so we also show that activities on the political and business arenas mutually reinforced each other in shaping the new regulatory framework

seller incentive properties of epa s emission trading auction abstract the new clean air act amendments instruct the environmental protection agency epa to conduct annual sealed bid offer auctions of emission allowances the auction pricing rules are discriminative and sellers with the lowest asking prices receive the highest bids this paper assesses the seller incentives of this auction and demonstrates that the auction rules cause sellers to choose asking prices that under reveal their cost of emission control furthermore increasing the number of sellers intensifies this misrepresentation if the number of buyers remains fixed the epa s rules can therefore generate significantly biased price signals and reduce the efficiency of the allowance trading market

wage indexation employment and inflation price versus productivity indexing is considered in a model of monetary policy with incomplete information and wage bargaining in a perfectly price indexed economy the inflationary bias due to lack of credibility is eliminated however productivity indexing is more appropriate to dampen macroeconomic fluctuations that are caused by real disturbances we show that productivity indexing alone guarantees both price and employment stability provided the government s reputation is good enough and the union s bargaining power is not too strong this reduces the degree of price indexation as the union becomes weaker and the government s reputation improves productivity indexing is desirable with volatile productivity processes and weak unions jel classification e24 e52

the political economy of market based environmental policy the u s acid rain program the u s acid rain program enacted in 1990 gave valuable tradable sulfur dioxide emissions permits called allowances to electric utilities we examine the political economy of this allocation though no senate or house votes were ever taken hypothetical votes suggest that the actual allocation would have beaten plausible alternatives while rent seeking behavior is apparent statistical analysis of differences between actual and benchmark allocations indicates that the legislative process was more complex than simple models suggest the coalition of states that produced and burned high sulfur coal both failed to block acid rain legislation in 1990 and received fewer allowances than in plausible benchmark allocations some of these states may have received additional allowances to cover 1995 99 emissions by giving up allowances in later years and some major coal producing states seem to have focused on benefits for miners and on sustaining demand for high sulfur coal

determinants and costs of current account reversals under heterogeneity and serial correlation using large panel data sets for analysis of determinants and costs of reversals asks for controls of latent heterogeneity among countries this article performs a bayesian analysis which allows for a parsimonious yet flexible handling of country specific heterogeneity via random coefficients and serially correlated errors consideration of persistence within the employed macroeconomic data is important to gauge the impact of explaining variables suggested by theory correctly bayesian specification tests provide evidence in favour of models incorporating heterogeneity and serial correlation the results suggest that costs of reversals are overestimated when country specific heterogeneity is neglected and stress the importance of external variables in explaining current account reversals results are checked for robustness against the underlying reversal definition

the revealed preferences of state epas stringency enforcement and substitution abstract the epa suggests states inspect polluters at least once a year and use sampling and nonsampling inspections equally states face two separate pressures in their attempts to comply with these mandates political and budgetary budgetary considerations arise because inspections are costly while political pressures arise because the stringency of enforcement in part determines the cost abatement this study estimates the relative importance of political and budgetary pressures in the stringency with which the clean water act is enforced the results suggest that inspections determined by budgetary concerns and the stringency of inspections is determined in part by political factors

real balances the exchange rate and indexation real variables in disinflation the paper shows first that real exchange rate appreciation typically reduces but may increase the output costs of disinflation the direct favorable effects of cheaper imports on consumer prices on the prices of imported inputs on wage demands and on the demand for money may be outweighed by the unemployment caused by the trade deficit second the effects of wage indexation on the costs of disinflation are reexamined ex ante indexation speeds up disinflation ex post indexation the type observed in practice automatically increases the real wage at the start of a disinflation and may therefore increase the sacrifice ratio

emissions trading electricity restructuring and investment in pollution abatement this paper analyzes an emissions trading program that was introduced to reduce smog causing pollution from large stationary sources using variation in state level electricity industry restructuring activity i identify the effect of economic regulation on pollution permit market outcomes there are two main findings first deregulated plants in restructured electricity markets were less likely to adopt more capital intensive environmental compliance options as compared to regulated or publicly owned plants second as a consequence of heterogeneity in electricity market regulations a larger share of the permitted pollution is being emitted in states where air quality problems tend to be more severe jel l51 l94 l98 q53 q58 when the us federal government first began regulating major sources of air pollution in the 1960s the conventional approach to meeting air quality standards involved establishing maxi mum emissions rates or technology based standards for regulated stationary sources however economists have long maintained that an emissions permit market could more efficiently coor dinate pollution abatement activities provided a series of assumptions are met over the past few decades market based cap and trade cat approaches to regulating emissions from industrial point sources have become a centerpiece of environmental regulation in the united states in the theoretical first best permit market equilibrium the total social cost of meeting an emis sions cap is minimized each firm chooses a level of pollution abatement such that its marginal cost of reducing pollution is set equal to the social marginal benefit from emissions reduction in practice preexisting distortions in product markets that are subject to cat regulation may interfere with the emissions permit market s ability to operate efficiently this paper studies the effects of electricity market regulation on permit market outcomes in the context of a major us emissions trading program the nox budget program the recent wave of electricity industry restructuring in the united states has resulted in significant interstate variation in economic regulation consequently facilities in the same cat program face very different economic regu lation and investment incentives in their respective electricity markets whereas rate base regu lated plants are guaranteed to earn a rate of return on prudent investments in pollution abatement equipment deregulated plants operating in restructured electricity markets are offered no such

the nordic welfare model providing energy transition a political geography approach to the eu res directive the eu renewable energy strategy res directive requires that each member state obtain 20 of its energy supply from renewable sources by 2020 if fully implemented this implies major changes in institutions infrastructure land use and natural resource flows this study applies a political geography perspective to explore the transition to renewable energy use in the heating and cooling segment of the swedish energy system 1980 2010 the nordic welfare model which developed mainly after the second world war required relatively uniform standardized local and regional authorities functioning as implementation agents for national politics since 1980 the welfare orientation has gradually been complemented by competition politics promoting technological change innovation and entrepreneurship this combination of welfare state organization and competition politics provided the dynamics necessary for energy transition which occurred in a semi public sphere of actors at various geographical scales however our analysis suggest that this was partly an unintended policy outcome since it was based on a welfare model with no significant energy aims our case study suggests that state organization plays a significant role and that the eu res directive implementation will be uneven across europe reflecting various welfare models with different institutional pre requisites for energy transition

the market for sulfur dioxide emissions the 1990 clean air act amendments initiated the first large scale use of the tradable permit approach to pollution control the theoretical case for this approach rests on the assumption of an efficient market for emission rights the authors empirical analysis shows that the emission rights market created by the 1990 amendments had become reasonably efficient by mid 1994 they also show that the auctions specified in the amendments to jump start trading had become a small part of the overall market finally the authors demonstrate that the strategic bidding behavior discussed in the literature has had no effect on market prices copyright 1998 by american economic association

wage indexation and output stability revisited since gray 1976 and fischer 1977 the accepted view is that wage indexation stabilizes output when shocks are nominal and destabilizes output when shocks are real this paper examines this proposition s validity when wage indexation is based on lagged inflation it shows that i in a gray fischer economy with plausible parameters indexing wages to lagged inflation destabilizes output regardless of the type of shocks ii the gray fischer result may be restored if nominal shocks have a strong direct effect on prices given wages iii wage indexation to lagged inflation can be neutral for output stability if monetary policy is accommodative

exploring a pioneering bioenergy system the case of enkoping in sweden in order to contribute to knowledge on how to expand bioenergy this paper examines an example of success from sweden the idea is to identify factors that can explain the difference between success and failure of bioenergy systems in the aftermath of the oil crises in the 1970s the local government in the town of enkoping in sweden was cautioned by the local swedish military regiment to shift towards domestic energy supplies rather than imported fossil fuels during the decades that followed the local energy companies developed a pioneering bioenergy system there are 3 important conditions relevant to explain the success 1 the introduction of the carbon tax in sweden provided market conditions making bioenergy sufficiently competitive with fossil fuels 2 the know how developed by the local energy companies through experimentation and collaboration with research institutions encouraged investments in local opportunities and 3 the formation of partnerships in a regional network of actors including private companies providing biofuels and technology research institutions and local government helped to co ordinate the development of the bioenergy system less

cost minimizing regulation of sulfur emissions regional gains in electric power environmental regulations set maximum allowable rates for sulfur dioxide emissions from electric utilities by ignoring firm differences in marginal abatement costs and preventing emissions trading these standards do not minimize the cost of reducing einissions this paper estimates marginal abatement cost functions for 56 utilities for 1973 79 marginal costs vary substantially across firms due to differences in the price of low and high sulfur fuels and the intensity of regulation the potential savings from a cost minimizing reallocation of abatement resources are estimated for five regions current expenditures are found to be 47 higher than cost minimizing levels i mplementation of the 1970 clean air act amendments relies extensively on technology based emission standards economists long have recognized that these standards can result in an inefficient allocation of pollution control resources engineering based restrictions ignore or oversimplify differences in abatement costs among polluters limited empirical research suggests that current standards result in substantially higher costs as much as ten times higher than a cost minimizing regulatory scheme 2 these studies however are based on engineering estimates of marginal abatement costs the models often assume that all polluters adopt control technologies that are required only for new plants and that have been largely unadopted by polluting firms 3 the impact of changing factor prices on marginal abatement costs typically is ignored the difficulty is that the resulting estimates of the cost of regulation neither adequately reflect the range of control options available to polluters nor take into account how polluters actually have responded to environmen

local implementation for green manufacturing technology diffusion policy in china from the user firms perspectives abstract in recent years china has started to change its growth strategy to a more sustainable model in response to the limits to growth dilemma specifically the national policy advocates to promote the use of green manufacturing technologies through demonstration projects and to incentivize chinese manufacturers to adopt these green technologies that are also encouraged by local governments these green technologies can increase the economic gains of manufacturers by reducing costs on energy consumption and shift away from selling low margin products however the local authorities often encounter obstacles when implementing policies for promoting these technologies among manufacturing firms this paper explores the factors that affect the decision making of user firms throughout the policy implementation process based on the econometric analysis of the survey for china s electric motors upgrading project in guangdong province this study shows that three key factors are helpful in the local government s effort to implement the national project i e manufacturers awareness the understanding of the energy efficiency technology and the long term macroeconomic benefits in addition encouraging the participation of financial institutions is especially useful for local governments to convince small and medium sized firms these findings are beneficial for local implementation of green manufacturing technology diffusion policies in china and have worldwide policy implication as well

population policy through tradable procreation entitlements one of the first tradable rights proposal is boulding s the meaning of the twentieth century london george allen and unwin ltd 1964 dealing with overpopulation we discuss both tradable procreation allowances and exemptions domestically and globally to address underpopulation as well we focus on three effects notably the rights tradability entails that whereas exemptions or expensive enough allowances benefit the poor cheap allowances benefit the rich a natalist policy also worsens the average education level of the next generation whereas population control enhances it also if procreation rights are grandfathered to countries the scheme redistributes further our analysis suggests that procreation entitlements may be efficient in controlling population without being necessarily anti redistributive

a two level dynamic game of carbon emission trading between russia china and annex b countries this paper proposes a computable dynamic game model of the strategic competition between russia and developing countries dcs mainly represented by china on the international market of emission permits created by the kyoto protocol the model uses a formulation of i a demand function for permits from annex b countries and ii marginal abatement costs mac in russia and china provided by two detailed models gemini e3 is a computable general equilibrium model that provides the data to estimate annex b demand for permits and macs in russia poles is a partial equilibrium model that is used to obtain mac curves for china the competitive scenario is compared with a monopoly situation where only russia is allowed to play strategically the impact of allowing dcs to intervene on the international emission trading market is thus assessed

exchange rates and prices an empirical analysis the effects of exchange rates on domestic prices are investigated in the context of a semistructural model of exchange rate determination in which both exchange rates and prices are determined endogenously the author assumes and imposes for the estimation that the exchange rate is cointegrated with its fundamentals the central result of the paper is that exchange rates have relatively small effects on national price levels for the g7 countries the effects are largest for the united kingdom followed by the united states and canada they are strongest when prices are measured by the producer price index copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

fishing quota markets abstract in 1986 new zealand responded to the open access problem by establishing the world s largest individual transferable quota itq system using a 15 year panel dataset from new zealand that covers 33 species and more than 150 markets for fishing quotas we assess trends in market activity price dispersion and the fundamentals determining quota prices we find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased we also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices ecological variability and market interest rates controlling for these factors our results show a greater increase in quota prices for fish stocks that faced significant reductions consistent with increased profitability due to rationalization overall this suggests that these markets are operating reasonably well implying that itqs can be effective instruments for efficient fisheries management

entitling the pollutee liability versus standard under private information this paper considers and compares two different legal means full liability and standard to reduce and to regulate pollution at a local level accounting for private information about benefits and costs the familiar polluter pays principle makes the polluter liable for any damage since the courts lack information about the true damage the pollutee can and presumably will overstate this damage nevertheless voluntary arrangements bypassing the courts exist e g for coasean reasons however such out of court arrangements fail to improve in many cases the inefficient allocation of pollution due to agency costs given these unsatisfactory consequences of the polluter pays principle even after allowing for contracts around the law we propose a modification of standards the pollutee is entitled that a certain standard is satisfied yet can trade this right for financial compensations contracts induced by this legal rule are countervailing the optimal mechanism switches between subsidies and payments and first best efficiency holds at both ends and this characteristic allows such a privatized standard to track the first best quite well and often better than the polluter pays principle this relative ranking under private information is the opposite of the one that holds under uncertainty here liability dominates the standard

the rise and fall of go trading in european renewable energy policy the role of advocacy and policy framing this paper examines policy processes surrounding the rise and fall of the proposed eu wide policy instrument designed to help achieve the eu s renewable energy targets the trading of guarantees of origin go it discusses its origins and examines factors in the policy processes over time leading first to its development and then to its abandonment a first analysis looks at the near term policy making process before and after the proposal on go trading in january 2008 focusing on the european policy making institutions and influences of interest groups and member state governments it then takes a step back and looks over a longer time period at how competing policy frames have shaped the agendas underlying the debate results show how a strong internal market frame acted as a primary driving force in the commission to promote the go trading instrument the rejection of the go trading proposal in the council and parliament can be largely attributed to the lack of a strong lobby in favour of go the accumulated experience with and institutionalisation of national res support policies such as feed in tariffs and growing general political concerns for supply security innovation and competitiveness

hedging in coal contracts under the acid rain program tradable permit schemes introduce uncertainty into the cost of regulatory compliance due to the permits uncertain price regulated firms can hedge this uncertainty through their contracts for fuel procurement data on coal contracts are used to estimate how the option not to be delivered higher sulfur coal is priced results show that under a tradable permit scheme coal prices are reduced for an increase in the sulfur bound controlling for reductions in price due to higher delivered sulfur content jel q48 q53

do transaction costs influence firm trading behaviour in the european emissions trading system this study is one of the first to empirically investigate firm trading behaviour and the importance of permit trading transaction costs such as information costs and search costs in the first phase of the european union s emissions trading system eu ets the signs and significance of our constructed transaction costs proxy variables indicate for a presence of these costs in the initial years of the eu ets in particular this paper shows that ets firms with the smaller number of installations and with less trading experience were less likely to participate in the european emissions trading market and traded the lower quantities of permits furthermore these firms chose to trade permits indirectly via third parties this study also supports the concerns that transaction costs could be excessive for smaller participants and firms operating in the new eu member states

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

testing theories of agency behavior evidence from hydropower project relicensing decisions of the federal energy regulatory commission theories of agency behavior are examined via an application to hydropower project relicensing by the federal energy regulatory commission ferc in the relicensing of each project fish and wildlife agencies submit recommendations to ferc ferc then enters a twostage deliberation process for each recommendation econometric analysis of these decisions covers 933 recommendations made for 72 projects relicensed during 1980 96 a new law the electric consumers protection act substantially altered ferc s decisions while a new administration the clinton administration exerted a mixed effect both events influenced the number of recommendations per project made by the fish and wildlife agencies

are tradable green certificates a cost efficient policy driving technical change or a rent generating machine lessons from sweden 2003 2008 in the european policy debate tradable green certificates tgc have been suggested to be a superior regulatory framework for promoting the diffusion of renewable electricity technologies the purpose of this paper is to assess the performance of the swedish tgc system contributing to the european debate on the suitability of different types of frameworks the expectations of the tgc system were that it would a be effective in terms of increasing the supply of green electricity b do this in a cost effective manner from both a social and a consumer perspective c generate an equitable distribution of costs and benefits and d drive technical change so far it has performed adequately in terms of effectiveness and social cost effectiveness however consumer costs have been substantially higher than expected very large rents are generated and at best it contributes marginally to technical change thus a tgc framework should be selected if the overriding concern is to minimize short term social costs of reaching a certain goal with a high degree of predictability however it cannot be expected to also drive technical change keep consumer costs down and be equitable such trade offs need to be revealed and not obscured by analysts

levelling the playing field the influence of national wind power planning instruments on conflicts of interests in a swedish county slow and complicated wind power planning and permitting procedures have been a large obstacle for wind power diffusion in sweden and other countries this paper complements previous siting oriented literature with a planning perspective on these problems the focus is two national planning instruments implemented in sweden in the early 2000s a national planning target and an appointment of areas of national interest for wind power the paper identifies different types of conflicts of interest related to wind power in addition to the conflict between wind power as a national public interest and various local private interests and analyses the impact of the national planning instruments on the handling of these conflicts in the land use planning process in the county of ostergotland the analysis shows that the planning target actually made local planning officials even more inclined to treat wind power as a private rather than a public interest and that the method used to identify areas of national interest of wind power forced wind power to compete with the combined strengths of all other public interest the planning instruments thus left wind power to fight an uphill battle rather than to meet other interests face to face on a level playing field

exchange rate reform and its inflationary consequences an empirical analysis for china in examining china s exchange rate policy in the reforming years the study finds empirical evidence of its long run inflationary consequences but the effects appear not to be sizable in the short run while changes in the devaluation rate are positively correlated with the increase in the growth rate of inflation the inflation inertia is also modest the moderate inflationary cost of devaluations provides some explanation of the smooth transition of exchange rate policy regime in china and the authorities ability to put more weight on external competitiveness

green electricity policies in the netherlands an analysis of policy decisions over the last decades fundamental changes can be observed in both market conditions and the national policy framework for green electricity in the netherlands the dutch government has regularly intervened in markets demonstrating fundamental shifts in policy and approach this study aims to analyse the developments in renewable energy policy making in the netherlands it assesses changes in the choice of policy instruments and target groups the role of stakeholders and offers explanations behind policy successes and failures dutch green electricity policy over the last decade can be characterised roughly by three phases in the early 1990s the government negotiated voluntary agreements with the energy distribution sector on targets for green electricity sales which were never met in the second half of the 1990s a regulatory energy tax was introduced from which customers of green electricity were exempt this led to a substantial increase in demand which was largely met by green electricity imports and did not lead to additional domestic renewable energy capacity finally a change in policy has taken place recently 2003 shifting the focus from promotion of demand to the promotion of supply through a system of regulated feed in tariffs despite the renewable energy policies growth of the renewable energy market in the netherlands has been small and targets have not been fully met the dutch government has not yet succeeded in substantially reducing market uncertainties and in building confidence among market parties because the policies have not been stable and policy objectives have frequently been partly ambiguous in addition the influence of stakeholders in renewable energy policy making has been small which has the early acceptance and implementation of alternative policies

paying for permanence an economic analysis of epa s cleanup decisions at superfund sites we analyze epa s cleanup decisions at over 100 superfund sites and examine whether and how epa trades off the cost against the permanence of cleanup epa s decisions reveal both a preference for permanent solutions and an aversion to cost for example epa prefers incinerating soils to isolating and containing them in place but not at any price at larger sites epa appears willing to accept additional costs of as much as 40 million to incinerate with regard to environmental equity we find little evidence that epa s cost permanence tradeoff is affected by socioeconomic characteristics in the communities surrounding the sites