carbon tax and opec s rents under a ceiling constraint we study the markov perfect nash equilibrium mpne of a game between oil importing countries who seek to maintain the atmospheric carbon concentration under a given ceiling and oil exporting countries the oil importing countries set a carbon tax and the oil exporting countries control the producer price we obtain implicit feedback rules and explicit non linear time paths of extraction carbon tax and producer price consumers are always able to reap some share of the scarcity and monopoly rents whereas producers partially pre empt the carbon tax only if the marginal damage under the ceiling is small we compare the mpne to the efficient open loop and cartel without tax equilibria

second best carbon taxation in the global economy the green paradox and carbon leakage revisited acceleration of global warming resulting from a future carbon tax is large if the price elasticities of oil demand are large and that of oil supply is small the fall in the world interest rate weakens this weak green paradox effect especially if intertemporal substitution is weak still social damages from greenhouse gases drop if the fall in oil supply and cumulative emissions is strong enough if the current carbon tax is set too low the second best future carbon tax is set below the first best too to mitigate adverse green paradox effects unilateral second best optimal carbon taxes exceed the first best taxes due to an import tariff component the intertemporal terms of trade effects of the future carbon tax increase current and future tariffs and those of the current tax lower the current tariff finally carbon leakage and globally altruistic and unilateral second best optimal carbon taxes if non kyoto oil importers price carbon too low are analysed in a three country model of the global economy

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

pigouvian taxation of energy for flow and stock externalities and strategic noncompetitive energy pricing abstract the literature on energy and carbon taxes is by and large concerned about the derivation of globally efficient strategies in contrast this paper considers the dynamic interactions between cartelized energy suppliers and a consumers government that collectively taxes energy carriers for pigouvian motives two different kinds of external costs are associated with energy consumption flow e g acid rain and stock externalities e g global warming the dynamic interactions between a consumers government and a producers cartel are modeled as a differential game with a subgame perfect nash equilibrium in linear and nonlinear markov strategies the major implications are that the nonlinear solutions are pareto inferior to the linear strategies and energy suppliers may preempt energy taxation and thereby may raise the price at front however this effect diminishes over time because the producers price declines while taxes increase

cycles in nonrenewable resource prices with pollution and learning by doing we study how environmental regulation in the form of a cap on aggregate emissions from a fossil fuel e g coal interacts with the arrival of a clean substitute e g solar energy the cost of the substitute is assumed to decrease with cumulative use because of learning by doing we show that optimal energy prices may initially increase because of pollution regulation but fall due to learning and rise again because of scarcity of the resource finally falling after transition to the clean substitute thus nonrenewable resource prices may exhibit cyclical behavior even in a purely deterministic setting

dynamic environmental policy with strategic firms prices versus quantities abstract environmental regulators often have imperfect information about regulated firms abatement costs in this paper we compare taxes and emissions permits in a dynamic setting in which firms behave strategically the regulator updates policy over time based upon previous aggregate industry performance assuming that firms are not strategic we find that strategic firms facing an emissions tax have an incentive to overabate in order to obtain a lower tax in the future firms that trade emissions permits have a strategic incentive to reveal an artificially high permit price to obtain more permits in the future whether permits or taxes are preferred from a welfare standpoint depends upon how permit prices are determined taxes generate higher welfare when the low cost firm sets the permit price but permits generate higher welfare when the high cost firm sets the permit price

energy prices and carbon taxes under uncertainty about global warming this paper extends the strategic interactions between producers of fossil fuels concerned about their profits and a taxing government concerned about the consumers welfare for uncertainty global warming follows an ito process stochasticity requires to differentiate between reversible and irreversible emissions in contrast to the deterministic version the unconstrained reversible case allows for a closed form solution but not the more realistic and constrained case nevertheless interesting analytical properties e g about when to stop emissions implicit conservation due to monopolistic supply are derived and complemented by a numerical example

carbon taxation opec and the end of oil abstract i develop a differential game between an oil cartel and an importer investing in research and development r d to reduce the cost of a green substitute to oil in equilibrium the cartel is forced to deter the substitute which thus imposes a price ceiling falling over time credible carbon taxes are below the pigovian level implying the importer cannot internalise the full pollution externality much less capture resource rents without carbon pricing the importer curtails long run pollution using a costly r d programme normatively climate policy will be more expensive if relying on green r d programmes only

employer search training and vacancy duration we develop a model of optimal employer search strategy when information about match quality is endogenous the model is tested using four data sets two of which have not previously been used as theory predicts we find that when filling positions requiring more training employers search more intensively and extensively employers also search more extensively when hiring workers with more education and with prior experience these findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants factors that influence employer search also affect the duration of a vacancy

can carbon tax eat opec s rents abstract we consider the optimal emission tax for a stock pollutant when the pollutant flow is also regulated by a resource exporting cartel we consolidate clarify and generalize a set of previous results to obtain clear isolation of the pigouvian and trade policy components of the tax because of the trade policy component the tax can shift more rents from the cartel than the pollution causes damage related costs this leads to the possibility that the pollution problem accompanied by the coordination of taxation can bring about net benefits at the expense of the cartel

the impact of informal networks on quit behavior sector disaggregation the change in the level effect accounts for only 0 35 0 41 percentage point of the 2 24 percentage point deceleration in labor productivity growth between the 1948 65 and 1973 78 periods the aggregate rate and level effects are not very sensitive to the degree of disaggregation 12versus 60 sector although some large level effects are evident within and across major industrial divisions they often cancel out in the aggregate however the level effect from the shift out of farming is quantitatively large and is close to the aggregate level effect using either 12 sector or 60 sector disaggregation although one can approximate the aggregate level effect by looking only at that for agriculture one should note that other fairly large level effects exist both within and across major industrial divisions other than agriculture

the grey paradox how fossil fuel owners can benefit from carbon taxation abstract this paper considers the distributional impact of optimal carbon taxation on fossil fuel owners a carbon emitting exhaustible resource competes with a dirtier abundant resource and a clean backstop a time dependent carbon tax is set to optimally use these resources under a cap constraint over co 2 atmospheric concentration as the cap is tightened the dirtier resource becomes less competitive compared to the exhaustible resource the competition effect but the timing and duration of extraction of the exhaustible resource is modified the timing effect we provide analytical expressions of these effects and determine conditions over size of reserves pollution contents extraction costs and demand elasticity such that the exhaustible resource owners profits increase as the ceiling is tightened calibrations for the transport and power sectors suggest that the profits of conventional oil and natural gas owners increase compared to a baseline without regulation for plausible carbon ceiling values

do friends and relatives really help in getting a good job informal contacts are extensively used by both firms and workers to find jobs and fill vacancies the common wisdom in the economic literature is that jobs created through this channel are of better quality and pay higher wages than jobs created through formal methods this paper explores the empirical evidence for european countries using the european community household panel echp and discovers a large cross country as well as cross industry variation in the wage differentials between jobs found through informal and formal methods across countries and industries wage premiums and wage penalties to finding jobs through personal contacts are equally frequent this paper argues that such variation can be explained by looking at firms recruitment strategies in labour markets where employers invest largely in formal recruitment activities matches created through this channel are likely to be of average better quality than those created through informal networks a simple theoretical model is used to show that employers invest more in recruitment for high productivity jobs and for positions that require considerable training the empirical predictions of the theory are successfully tested using industry level data on recruitment costs

air passenger duties as strategic tourism taxation abstract there has been a recent debate on the rationale and economic impacts of air passenger duties apds linked to puzzling empirical results on this topic we argue that an approach from strategic tourism taxation can improve our understanding of these results apd set by origin countries of tourists can be viewed as an instrument for extracting economic rents that would otherwise be retained by tourism destinations a theoretical model of strategic taxation between an origin and two destinations is developed to illustrate this idea we find that countries strategies may end up with winners and losers or with all parties facing welfare losses the game outcome depends on countries market shares of profits and the substitutability between tourism services provided by different destinations the findings suggest that the economic impacts of apds recently evaluated in the literature might be biased because of the omission of other countries potential tax reactions

optimal pricing of environmental and natural resource use with stock externalities abstract underlying some of the most pressing environmental problems are the interlinked resource and environmental stock externalities with threshold effects using a simple dynamic model it is shown how in the face of such externalities the static market based policy instruments such as pigouvian taxes should be modified it is shown that even if for an initial period there is going to be no pollution stock damage the optimal policy still requires that abatement begins immediately and at increasing rates simulation of the model for the case of fossil fuel burning and the consequent global warming shows that the optimal carbon tax and therefore the optimal control strategy is particularly sensitive to changes in the marginal abatement cost and the level of fossil fuel demand policy simulations contrast the optimal control policy with and estimate the welfare losses from alternative policies deriving from arbitrary tax paths the latter include i a no tax policy ii a constant carbon tax rate iii the european community s proposed carbon tax path and iv a delayed optimal tax path

leviathan governments and carbon taxes costs and potential benefits abstract this paper addresses positive aspects of the global warming debate that so far has been concerned by and large with normative issues the paper considers a consumers government that appreciates tax revenues as such leviathan in addition to conventional measures of welfare i e carbon taxes serve the dual purpose of correcting for externalities here global warming or more generally a stock externality from energy use and of raising revenues this government faces either a competitive or a perfectly cartelized supply the major findings are 1 i consumers may benefit from a leviathan government that appropriates some of the monopoly rent by deterring preemption to some extent 2 ii the leviathan motive raises initial taxes and thereby lowers initial emissions but increases the long run stock externality in a play with linear strategies 3 iii there exists a continuum of equilibria in nonlinear markov strategies which are however pareto inefficient compared with the linear strategies 4 iv but in case of a binding resource constraint nonlinear strategies are the only feasible ones

partial enclosure of the commons abstract we examine the efficiency distributional and environmental consequences of assigning spatial property rights to part of a spatially connected natural resource while the remainder is competed for by an open access fringe we refer to this as partial enclosure of the commons we obtain sharp analytical results regarding partial enclosure of the commons including 1 while second best it typically improves welfare relative to no property rights 2 all resource users can be made better off 3 positive rents arise in the open access area and 4 the resource maintains higher stocks under spatial heterogeneity we also characterize spatial regions that are ideal candidates for partial enclosure typically society should seek to enclose those patches with high environmental productivity and high self retention but whether high economic productivity promotes or relegates a patch may depend on one s objective

optimal fossil fuel taxation with backstop technologies and tenure risk abstract the paper derives the global welfare optimizing time path for a tax on fossil fuels causing a negative stock externality climate change under increasing marginal extraction cost and in the presence of an unlimited backstop resource causing no externality in a basic competitive case the optimal tax equals the pigou rate equivalent to the present discounted value of marginal damage costs we consider two separate types of tenure insecurity for resource owners and their impact on the tax implementing the optimal policy when insecure control is with respect to future ownership to the resource competitive extraction is higher than otherwise and the efficiency implementing tax exceeds the pigou rate when tenure insecurity instead implies possible expropriation holdup of investment in extraction capacity it deters extraction and the optimal tax is lower than the pigou rate

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

extension of the portfolio allocation model to surplus majority governments a fuzzy approach scholars have long studied the conditions under which the cabinet making process will result in minority surplus majority or minimum winning governing coalitions in parliamentary systems since riker a good number of these attempts have been based on rational choice assumptions among formal approaches in this vein laver and shepsle s making and breaking governments cabinets and legislatures in parliamentary governments 1996 portfolio allocation model argues that parties centrally located in policy space have a greater potential for being part of any governing coalition and that parties located at the issue by issue median have a high likelihood of forming a minority government however the model predicts that surplus majority coalitions will only form when the number of salient policy dimensions in the political system is greater than two we incorporate fuzzy set theory in the portfolio allocation model permitting us to model ambiguity in parties policy preferences the reformulated model accounts for the formation of surplus majority coalitions in two dimensional policy space we illustrate the model s conclusions with a case study of the 1996 surplus majority coalition in the lithuanian seimas

carbon leakage the green paradox and perfect future markets policies of lowering carbon demand may aggravate instead of alleviate climate change green paradox in a two period three country general equilibrium model with finite endowment of fossil fuel one country enforces an emissions cap in the first or second periods when that cap is tightened the extent of carbon leakage depends on the interaction of various parameters and elasticities conditions for the green paradox are specified all determinants of carbon leakage resulting from tightening the first period cap work in the opposite direction when the second period cap is tightened tightening the second period cap does not necessarily lead to the green paradox

global warming prices versus quantities from a strategic point of view abstract this paper investigates how the choices of the instruments affect the interactions in a stock externality game global warming between cartelized fossil fuel suppliers and consumers more precisely the paper studies the equilibria in markov strategies in a dynamic game with each player choosing either the quantity or the price strategy including short run first mover advantages indeed opec and its opponent iea have tried both instruments in the past and play currently in quantities given such a non competitive setting both players should prefer the price instrument therefore both players are expected to switch back to price and tax policies if global warming will be treated effectively

substitution between biofuels and fossil fuels is there a green paradox we show that i subsidies for renewable energy policies with the intention of encouraging substitution away from fossil fuels may accentuate climate change damages by hastening fossil fuel extraction and that ii the opposite result holds under some specified conditions we focus on the case of subsidies for renewable resources produced under increasing marginal costs and assume that both the renewable resources and the fossil fuels are currently in use such subsidies have a direct effect and an indirect effect working in opposite directions the direct effect is the reduction in demand for fossil fuels at any given price the indirect effect is the reduction in the current equilibrium price for fossil fuels which tends to increase the amount of fossil fuels demanded whether the sum of the two effects will actually result in an earlier or later date of exhaustion of the stock of fossil fuels depends on the curvature of the demand curve for energy and of the supply curve for the renewable substitute

strategic climate policy with offsets and incomplete abatement carbon taxes versus cap and trade abstract this paper provides a first analysis of a policy bloc of fossil fuel importers which implements an optimal climate policy faces a non policy fringe of other fuel importers and an exporter bloc and purchases offset from the fringe we compare a carbon tax and a cap and trade scheme for the policy bloc in either case accompanied by an efficient offset mechanism for reducing emissions in the fringe the policy bloc is shown to prefer a tax over a cap since only a tax reduces the fuel export price and by more when the policy bloc is larger offsets are also more favorable to the policy bloc under a tax than under a cap the optimal offset price under a carbon tax is below the tax rate while under a cap and free quota trading the offset price must equal the quota price the domestic carbon and offset prices are both higher under a tax than under a cap when the policy bloc is small when the policy bloc is larger the offset price can be higher under a cap fringe countries gain by mitigation in the policy bloc more under a carbon tax since the fuel import price is lower

strategic pigouvian taxation stock externalities and polluting non renewable resources este trabajo propone una extension del modelo de wirl y dockner 1995 disenado para analizar la interdependencia bilateral a largo plazo entre un cartel exportador de un recurso y una coalicion de paises importadores en primer lugar se incorporan los efectos agotamiento al analisis de las propiedades intertemporales de un impuesto pigouviano en segundo lugar se calculan los equilibrios feedback de stackelberg los resultados muestran que la dinamica del impuesto depende criticamente del nivel del dano medioambiental marginal ademas tambien demuestran que el impuesto definido por el equilibrio de nash perfecto de markov es un impuesto pigouviano neutral en el sentido que solo corrige la ineficiencia causada por la externalidad del stock sin embargo para el equilibrio feedback de stackelberg el impuesto es ventajoso para los paises importadores ya que la imposicion pigouviana estrategica reduce el poder de mercado del cartel

old boy networks as screening mechanisms this paper studies a fulfilled expectations equilibrium in situations in which intermediaries provide personal opinions on the likelihood of success of personnel projects or investments each referee must recommend some candidates from a group of people about whom he has private information the employer uses the recommendations to choose the workers using his expectations about the quality of the recommended and the nonrecommended applicants although the referees use their information strategically the competition among them produces optimal use of the information in the sense that employers make the same choices in equilibrium as they would if they had the same information as the referees

global warming with green and brown consumers in this paper i investigate how much green polluters mitigate the familiar dynamic tragedy of the commons global warming green consumers feel penalized pain for any consumption in excess of the social optimum this can arise for example from kant s categorical moral imperative interplays among and between green and brown consumers are investigated as differential games green preferences the heterogeneity of consumers and the irreversibility of emissions lead to discontinuous strategies associated with these are a number of non trivial and even puzzling features e g the possibility of another green paradox

trade with polluting nonrenewable resources abstract the paper considers nonrenewable resource extraction in a situation where the resource buyers have formed a government which applies emission taxation for slowing pollution accumulation and the sellers are competitive or a resource cartel the noncompetitive situation is studied as a stackelberg differential game which the cartel leads it is first assumed that extraction costs do not depend on the resource stock level and that the pollution stock does not decay in the time consistent and markov perfect equilibrium the sellers monopoly power vanishes asymptotically the sellers market power reduces the buyers emission tax at each point in time in the stackelberg equilibrium the emission tax is below the marginal present value of pollution damage if pollution decays and extraction costs depend on the resource stock level buyers have monopsony power and the ability of sellers to receive emission tax revenues is weakened when the rate of pollution decay is high the producer price falls below the pareto optimal level

a noncooperative theory of legislative coalitions this noncooperative theory is based on a model that incorporates an institutional structure that reflects the sequential process of agenda formation and voting in a legislature that has the task of allocating particularistic benefits among legislative districts the theory is intended to identify the incentives for the formation of proposal coordinating coalitions as a function of characteristics of the political system and the rules that govern agenda formation coalition proposals allocate all the benefits to their districts and whenever the coalition has discipline or controls the chair it will be of minimal winning size when proposals are governed by a closed rule when coalition discipline is absent and the chair is neutral the coalition will be comprised of approximately 70 of the legislature a legislative rule that allows amendments may result in larger coalitions coalition composition is also considered

explaining government preferences for institutional change in eu foreign and security policy some member states of the european union eu want a supranational foreign and security policy while other member states oppose any significant limitation of national sovereignty in this domain what explains this variation answering this question could help us to better understand not only the trajectory of european unification but also the conditions and prospects of consensual political integration in other regional contexts and territorial scales the main research traditions in international relations theory suggest different explanations i examine the roles of relative power capabilities foreign policy interests europeanized identities and domestic multilevel governance in determining the preferences of the fifteen eu member governments concerning the institutional depth of their foreign and security policy cooperation i find that power capabilities and collective identities have a significant influence but the effect of ideas about the nature and locus of sovereignty as reflected in the domestic constitution of each country is particularly remarkable a previous version of this article was presented at the 4th ecpr pan european international relations conference canterbury 8 10 september 2001 for their valuable comments i would like to thank filippo andreatta daniele archibugi simone borra nicola dunbar fabio franchino alkuin kolliker leonardo morlino angelo panebianco eiko thielemann ben tonra the editors of io and three anonymous reviewers i am responsible for any mistakes

the exploitation of fossil fuels under the threat of global warming and carbon taxes a dynamic game approach this paper considers efficient and monopolistic extraction of non renewable energy resources when the resource consumption leads simultaneously to a stock externality global warming the case of monopolistic supply leads to a dynamic game between cartelised producers and a consumers government for this game we compute linear markov perfect strategies that are characterized by preemption of the tax at the wellhead when compared with the open loop solution unfortunately the general asymmetric two state variable model does not allow for an explicit analytical solution therefore a simplified version with one state variable neglecting depreciation of the stock of the pollutant is studied and a numerical example is presented it turns out that the simplified and analytically solved framework provides a good approximation of the initial phase of the transient behaviour but not of the long run