optimal management of renewable resources with growing demand and stock externalities abstract in an equilibrium framework optimal management of renewable resources in the presence of growing demand or externalities leads to steady states that differ from those characterized by rate of interest equals rate of change in growth plus rate of change in prices measures to reach an optimum with externalities other than direct controls are found to be critically mediated by the costs of harvesting

the housing market impacts of shale gas development using data from pennsylvania and an array of empirical techniques to control for confounding factors we recover hedonic estimates of property value impacts from nearby shale gas development that vary with water source well productivity and visibility results indicate large negative impacts on nearby groundwater dependent homes while piped water dependent homes exhibit smaller positive impacts suggesting benefits from lease payments results have implications for the debate over regulation of shale gas development jel l71 q35 q53 r31 technological improvements in the extraction of oil and natural gas from unconventional sources have transformed communities and landscapes and brought debate and controversy in the policy arena shale gas plays underlying the populated northeastern united states were thought to be uneconomical less than ten years ago but now contribute a major share of us gas supply 1 natural gas has been hailed as a bridge to energy independence and a clean future because of its domestic sourcing and compared with coal and petroleum derivatives its smaller carbon footprint and reduced emissions of other pollutants e g particulates sulfur dioxide car

eco labeling in commercial office markets do leed and energy star offices obtain multiple premiums this paper investigates the effect of eco labeling on rental rates sale prices and occupancy rates the consensus emerging from previous studies appears to be that investors in and occupiers of eco labeled buildings obtain a bundle of benefits related to lower operating costs reputation benefits and productivity higher in this study a hedonic model is used to test whether the presence of an eco label has a significantly positive effect on rental rates sale prices and occupancy rates of commercial office buildings in the us the results suggest that office buildings with energy star or leed eco labels obtain rental premia of approximately 3 5 dual certification produces an additive effect with rental premia estimated at 9 respective sale price premia for energy star and leed labeled office buildings are 18 and 25 the sale price premium for dual certification is estimated at 28 29 an occupancy premium could not be confirmed for leed labeled office buildings and only a small positive occupancy premium was found for energy star

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

private values of risk tradeoffs at superfund sites housing market evidence on learning about risk this paper incorporates a bayesian learning model into a hedonic framework to estimate the value that residents place on avoiding cancer risks from hazardous waste sites we show that residents are

valuing nuclear energy risk evidence from the impact of the fukushima crisis on u s house prices abstract behavioral economics suggests that individuals overweight recent unexpected and or rare events when updating beliefs this study investigates the effect of such an event the fukushima nuclear crisis in 2011 on the learning process of a local environmental risk by evaluating how perceptions of the risk of a nuclear accident are capitalized into house prices near nuclear power plants npps in the u s our results provide new evidence on the dynamics of the effect spatially the impact was concentrated in a 4 km radius around npps and temporally it peaked a half year later and dissipated one year after the crisis

dynamic game results of the acquisition of new technology open and closed loop nash strategies are derived and analyzed for a differential game in which two competing firms choose prices and productive capacity where new technology reduces a firm s unit operating cost using an open loop strategy a firm makes an irreversible commitment to a future course of action for example a contract with a labor union may force a firm to commit to maintaining its entire workforce regardless of its competitor s future realized behavior in contrast using a closed loop strategy a firm s decisions evolve over time continuously responding to the competitor s behavior the dynamic nash strategies obtained for the closed loop model exhibit a more restricted acquisition of new technology and a greater reduction of existing capacity relative to the open loop solutions in addition the dynamic nash price to be charged for output is higher in the closed as opposed to open loop competitive environment numerical solutions are presented to demonstrate that if both firms apply the closed loop approach each will earn higher profits than if one or both firms choose an open loop strategy

privately operated water utilities municipal price negotiation and estimation of residential water demand the case of france this paper addresses the issue of price negotiation between a municipality and a private water utility operator and its implications for residential water demand estimation we use appropriate econometric procedures to estimate a water demand equation on a panel of french municipalities we find evidence that negotiated water price depends on municipality s characteristics causing endogeneity of price in the demand equation the impact of average household income housing and system features such as metering is investigated both on municipal consumption and price estimated price and income elasticities are significant and close to previous household level studies

environmental quality competition and eco labeling abstract a three stage game of investment environmental quality provision and price competition is developed to study the impact of green technology investment eco labeling in a duopoly model of vertical product differentiation the firms incentives to invest in green technologies depend on their relative cost structure when firms are identical with respect to fixed costs both firms will always invest but if one firm is more efficient in investing then the other firm may or may not invest depending on the level of unit cost of investment quality competition will be tighter when the low quality firm is more efficient and looser when the high quality firm is more efficient in investing socially optimal investment for both firms is always positive but lower than in the duopoly solution in the absence of environmental externalities the quality dispersion chosen by profit maximizing firms may be too high or too low while environmental externalities increase the possibility low quality dispersion that is too low within the market solution finally and importantly ecolabeling can be used as a means of reducing excessive investment and increasing environmental quality that is too low

toward a political theory of the emergence of environmental incentive regulation this article makes some steps toward a formal political economy of environmental policy economists quasi unanimous preference for sophisticated incentive regulation is reconsidered we recast the question of instrument choice in the general mechanism design literature within an incomplete contract approach to political economy we show why constitutional constraints on the instruments of environmental policy may be desirable even though they appear inefficient from a standard economic viewpoint their justification lies in the limitations they impose on the politicians ability to distribute rents insights are provided on the emergence of incentive mechanisms in environmental regulation

catastrophic natural disasters and economic growth this paper examines the short and long run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies the counterfactual of the cases studied is assessed by constructing synthetic control groups taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event it is found that only extremely large disasters have a negative effect on output both in the short and long run however this result appears in two events where radical political revolutions followed the natural disasters once these political changes are controlled for even extremely large disasters do not display any significant effect on economic growth it is also found that smaller but still very large natural disasters have no discernible effect on output

studying optimal paternalism illustrated by a model of sin taxes the classical economic approach to policy analysis assumes that people always respond optimally to the costs and benefits of their available choices a great deal of evidence suggests however that in some contexts people make errors that lead them not to behave in their own best interests economic policy prescriptions might change once we recognize that humans are humanly rational rather than superhumanly rational and in particular it may be fruitful for economists to study the possible advantages of paternalistic policies that help people make better choices we propose an approach for studying optimal paternalism that follows naturally from standard assumptions and methods of economic theory write down assumptions about the distribution of rational and irrational types of agents about the available policy instruments and about the government s information about agents and then investigate which policies achieve the most efficient outcomes in other words economists ought to treat the analysis of optimal paternalism as a mechanism design problem when some agents might be boundedly rational this approach has many advantages first and foremost by explicitly addressing when and how people do and don t pursue their own best interests economists will be better able to contribute to policy debates to contribute to debates over regulating private financial decisions we must study whether financial decisions are based on fallacious statistical reasoning and whether self control problems lead people to borrow too heavily to contribute to debates over teenage smoking we must study whether teenagers become smokers against their long run best interest economists will and should be ignored if we continue to insist that it is axiomatic that constantly trading stocks or accumulating consumer debt or becoming a heroin addict must be optimal for the people doing these things merely because they have chosen to do it a second advantage of our approach is that it forces us to look for the best feasible policy our

imagined risks and cost benefit analysis everyone recognizes substantial discrepancies between the public s rankings of hazards and those of the experts for example experts at the environmental protection agency think that hazardous waste sites pose mediumto low risks to the public while indoor air pollution poses a high risk yet public perceptions have driven policy to focus on hazardous waste sites rather than on indoor air quality stephen breyer 1993 pp 19 20 whose beliefs should determine government policy when the public s beliefs differ from those of the experts the problem evaporates if the public perhaps recognizing its inability to deal with complex technical issues entrusts risk assessment to the government and its experts but what if the public perhaps distrusting government and experts is unwilling to leave risk assessment to the experts paul portney 1992 p 131 posed a version of this whose beliefs question succinctly in his fable trouble in happyville

tax incidence when individuals are time inconsistent the case of cigarette excise taxes abstract one of the most cogent criticisms of excise taxes is their regressivity with lower income groups spending a much larger share of their income on goods such as cigarettes than do higher income groups we argue that traditional quantity based measures of incidence are only appropriate under a very restrictive time consistent model of consumption of sin goods a model that is much more consistent with existing evidence on smoking decisions is a time inconsistent formulation where excise taxes on cigarettes serve a self control function that is valued by smokers who would like to quit but cannot this self control function benefits lower income groups more since they have a significantly higher price sensitivity of smoking calibrations show that as a result cigarette taxes are much less regressive than previously assumed and are even progressive for a wide variety of parameter values

estimating the peace dividend the impact of violence on house prices in northern ireland this article exploits data on the pattern of violence across regions and over time to estimate the impact of the peace process in northern ireland on house prices after establishing a negative correlation between killings and house prices we estimate the parameters of a markov switching model with conflict and peace as latent states we use the model to estimate the size of the peace dividend as captured in house price changes jel d74 r23 r31 conflict in ireland has a long history even after the republic of ireland was created as an independent state in 1920 the status of the mainly protestant north remained contested from the late 1960s a violent conflict flared up which claimed around 3 500 lives only more than two decades later from 1993 onwards emerged a peace process which while initially fragile culminated in a cessation of violence and a return to devolved government by 2007 the conflict was a major source of social and economic dislocation but as peace took hold this has begun to be repaired this paper assesses the impact of peace by using variation in violence within northern ireland to study one important economic aspect of the peace process and the dividend that it brought to residents of northern ireland the impact on house prices houses are assets whose prices reflect the present and future expected attrac tiveness of living in an area even during the height of the conflict in northern ireland violence was not uniform for example belfast the capital city of the province of northern ireland was particularly hard hit looking for economic consequences of the peace process we would therefore expect benefits to be concentrated among areas where violence was most prevalent we exploit within region variability in violence and house prices over time having such variation is rare in studies of the economic consequences of conflict our specific measure of violence is conflict related deaths these have been well documented by sutton 1994 and the conflict archive on the

do environmental right to know laws affect markets capitalization of information in the toxic release inventory abstract this paper investigates how information contained in the u s environmental protection agency s toxic release inventory tri program one of the largest environmental right to know programs affects prices in the housing market i use a strengthening of the reporting requirements for the chemical lead in 2001 as exogenous variation to test for housing price changes near existing firms who must now report using a difference in differences specification i find that listing an existing firm in the toxic release inventory lowers housing prices up to 11 within approximately 1 mile the results suggest that housing market participants do capitalize into prices at least some information conveyed by the tri program

differential game models in management science abstract this paper reviews a number of differential games applications to management science and operations research problems published with a few exceptions during the last decade the purpose of the article is to provide the reader with an up to date account of the state of the art within this field after having stated in an introduction the general differential games framework as well as some conceptual problems we proceed to review the models which have been divided into the following functional areas investment consumption and employment production inventories and maintenance marketing advertising pricing and rd bargaining natural resources and pollution the survey concludes with some remarks on applicability solvability and directions for future research

unemployed but optimistic optimal insurance design with biased beliefs biased perceptions of risks change the perceived value of insurance and the per ceived returns to avoiding these risks i show empirically that unemployed workers overestimate how quickly they will nd work but underestimate the return to their search eorts i analyze the consequences for the optimal design of unemployment insurance with biased beliefs contracts equalizing the marginal smoothing ben e t and the moral hazard cost of insurance are suboptimal social and private insurance diverge a paternalistic social planner corrects the moral hazard cost for the distortion in the insured s eort choice while private insurers focus on the perceived rather than the true smoothing bene ts when unemployed workers are optimistic privatizing unemployment insurance may result in ine ciently low or rapidly decreasing unemployment bene ts

reexamining the empirical evidence for an environmental kuznets curve this paper uses an updated and revised panel data set on ambient air pollution in cities worldwide to examine the robustness of the evidence for the existence of an inverted u shaped relationship between national income and pollution we test the sensitivity of the pollution income relationship to functional forms to additional covariates and to changes in the nations cities and years sampled we find that the results are highly sensitive to these changes and conclude that there is little empirical support for an inverted u shaped relationship between several important air pollutants and national income in these data

behavioral environmental economics promises and challenges environmental issues provide a rich ground for identifying the existence and consequences of human limitations in this paper we present a growing literature lying at the interface between behavioral and environmental economics this literature identifies alternative solutions to traditional economic instruments in environmental domains that often work imperfectly but it also faces a set of challenges including the difficulty of computing welfare effects and the identification of a robust environmental policy based on context dependent socio psychological effects we illustrate our critical discussion with two behavioral schemes that have been widely implemented green nudges and corporate environmental responsibility

which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities abstract the hedonic property value model is among our foremost tools for evaluating the economic consequences of policies that target the supply of local public goods environmental services and urban amenities we design a theoretically consistent and empirically realistic monte carlo study of whether omitted variables seriously undermine the method s ability to accurately identify economic values our results suggest that large gains in accuracy can be realized by moving from the standard linear specifications for the price function to a more flexible framework that uses a combination of spatial fixed effects quasi experimental identification and temporal controls for housing market adjustment

regulation in happyville how does risk perception affect risk regulation happyville is a society in which citizens wrongly believe that the drinking water supply is contaminated we discuss conditions under which a benevolent director of environment protection would invest in a water cleanup technology this holds if the director is populist namely if he maximises social welfare based on citizens pessimistic beliefs more surprisingly investment in the water cleanup technology may occur if the director is paternalistic in the sense that he maximises social welfare based on his own beliefs the reason is that he must take into account citizens responses to regulation

spring cleaning rural water impacts valuation and property rights institutions the brief summarizes the spring cleaning rural water impacts valuation and property rights institutions the first two rounds of spring protection occurred in january april 2005 and august november 2005 the author measure health impacts of spring protection an investment that improves source water quality the author also estimate households valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water which limits incentives for private investment spring infrastructure investments reduce fecal contamination by 66 percent but household water quality improves less due to recontamination child diarrhea falls by one quarter travel cost based revealed preference estimates of households valuations are much smaller than both stated preference valuations and health planners valuations and are consistent with models in which the demand for health is highly income elastic the author estimate that private property norms would generate little additional investment while imposing large static costs due to above marginal cost pricing private property will function better at higher income levels or underwater scarcity and alternative institutions could yield pareto improvements

who cares about environmental stigmas and does it matter a latent segmentation analysis of stated preferences for real estate this article uses latent segmentation analysis to estimate the benefits of contaminant cleanup in waukegan harbor illinois survey responses to attitudinal and perception questions provide significant information about the existence of distinct preference groups by comparison the predictive usefulness of demographic covariates is unclear the expected aggregate willingness to pay of waukegan homeowners for full cleanup is approximately equivalent to a 20 increase in the market value of homes the aggregate estimate is little affected by the identification of preference clusters

a simple model for merit good arguments abstract in this paper we examine a way of representing merit goods by allowing governments to apply a specific form of correction to consumers preferences the model builds upon an approach to the analysis of taste and quality change due to fisher and shell we look at the first best allocation of resources where this is done we also consider second best policies in which the government must charge the same price to all consumers of the merit good and when optimal lump sum transfers are not available

terrorism and attitudes towards minorities the effect of the theo van gogh murder on house prices in amsterdam abstract does fundamentalist islamic terrorism have an effect on the general attitudes towards muslim minorities we use the murder of theo van gogh as an event study to address this question specifically we use the hedonic market model and test for an effect on listed house prices in neighborhoods where more than 25 of the people belong to an ethnic minority from a muslim country type i relative to the other neighborhoods house prices in type i neighborhoods decreased in 10 months by about 3 with a widening gap over time our results are robust to several adjustments including using synthetic control groups finally we find evidence that segregation increased people belonging to the muslim minority were more likely to buy and less likely to sell a house in a type i neighborhood after the murder than before

an economic model of the meat paradox abstract many individuals have empathetic feelings towards animals but frequently consume meat we investigate this meat paradox using insights from the literature on motivated reasoning in moral dilemmata we develop a model where individuals form self serving beliefs about the suffering of animals caused by meat consumption in order to alleviate the guilt associated with their dietary choices the model predicts that the price of meat has a causal effect on individuals beliefs high prices foster realism by lowering the returns to self deception which magnifies the price elasticity of meat consumption the model also predicts a positive relationship between individuals taste for meat and their propensity to engage in self deception a causal effect of aggregate consumption on individual beliefs and the coexistence of equilibria of collective realism and collective denial

ecolabeling consumers preferences and taxation abstract ecolabeling is a means of reducing the information gap between consumers and producers we study the implication of ecolabeling a supposedly green good for a consumer s allocation of income between a dirty and the supposedly green good in the model the role of the ecolabel is to help product differentiation to give reliable information and to reduce informational asymmetries we show that a conscious consumer someone with a stronger green attitude or quality concerns demands more ecolabeled goods price oriented consumers demand fewer ecolabeled goods a subsidy resp tax on the price of the ecolabeled resp dirty good leads to a larger consumption of the ecolabeled resp dirty good whereas it may increase or decrease the demand for the dirty resp ecolabeled good depending on whether the consumer views both goods as gross substitutes or complements we then use a cross individual dataset of 22 568 consumers and show that the demand for ecolabeled goods increases strongly with the consciousness of the consumer but decreases for price oriented consumers ecolabel oriented consumers feel more informed more conscious consumers prefer a subsidy on green goods and a tax on dirty goods price oriented consumers do not care about the green subsidy but would vote against a tax on the dirty goods

turnpikes and detours in the renewable resource exploitation under price shocks abstract the maximum natural growth rate of the resource necessitates anticipative growth on the optimal path if the price increase is rapid enough if the price path satisfies certain smoothness conditions then the myopic rule is optimal we derive the length of the required forecasting horizon and the value of the forecasts in price shock situations clarifying the concepts of the forecasting and the planning horizon we introduce a new stochastic version of the model and reduce it to series of deterministic models analogously to the dasgupta heal model on new technology a numerical example of finnish forests is provided

an economic analysis of forest taxation s impact on optimal rotation age because of the tax cutting mood of the general public current interest in forest taxation by legislators is high many states including washington oregon california montana north carolina georgia arkansas and texas have either recently revised or are considering changing their forest taxation laws the response from academicians however is mixed many articles by forest taxation specialists klemperer 1974 1976 1977a 1977b olson and haney 1980 pasour and holley 1976 sutherland and tedder 1979 tedder and sutherland 1979 and the published proceedings of a forest taxation symposium haney and gunter 1978 have appeared in recent years yet general tax economists have largely ignored the problem of forest property taxation as evidenced by aaron s recent study of property taxes in which forest taxation is not even mentioned 1975 at present a rigorous analysis of the impact of forest taxation on the optimal management of timber has yet to appear in the literature because of the profound influence of forest taxation on many state and local economies and on forest productivity it is important that the impact of the various taxation schemes be well understood during the process of revising the forest taxation laws this paper examines the economic impact of various forest taxation schemes on the optimal rotation age under the assumptions of both tax capitalization and tax shifting general tax economists should find taxation of forest property of interest for two reasons first commercial forest land in private ownership comprises more than 15 of the nation s total land area williams 1974 second the results of forest taxation studies apply readily to taxation of renewable resources in general currently the major types of taxes that can be imposed on a forest property may be divided into annual property taxes and harvest taxes the former include the unmodified property tax and the site value tax every year the unmodified property tax takes a percentage of the value of the land plus the value of the trees and the site value tax takes a percentage of the value of the land only still a third type of property tax called the timber tax takes a percentage of the value of the trees only every year although this tax is rarely used it is included in this study because of its theoretical importance harvest taxes include yield taxes and severance taxes at the time of harvest the yield tax takes a percentage of the stumpage value of timber and the severance tax imposes a charge per unit of timber volume harvested past studies of forest taxation have

political consumerism and public policy good complements against market failures political consumerism has become over the past years an ever growing phenomenon by which citizens express through their consumption their political environmental and ethical opinions this paper discusses political consumerism from an economic science perspective focusing on the link between political consumerism and public policies it wonders to what extent political consumerism may represent an effective and fair instrument against market failures overall it seems that it would be better to consider it as a complement to conventional public policies

credence goods efficient labelling policies and regulatory enforcement we analyse the optimality of information revelation of hidden attributes of credence goods via alternative labelling procedures when consumers are heterogeneous in their willingness to pay for the hidden attribute producers can either self label their products or have them certified by a third party the government can impose self or third party labelling requirements on either the green or the brown producers our benchmark model develops a condition that links the optimal imposition of third party labelling to the relative market share of each type of the good under complete information we extend our analysis to incorporate asymmetric information and cheating by the producers when corrupt producers can affix spurious labels the government needs to supplement the labelling policy with costly monitoring activities we find that mandatory self labelling schemes generally dominate mandatory third party labelling unless the market share effect greatly exceeds the incentive to cheat effect

an embarrassment of riches confronting omitted variable bias and multiscale capitalization in hedonic price models abstract many researchers have addressed concerns of omitted variable bias in hedonic price models through the use of spatial fixed effects we argue that this approach does not consider the biases introduced by effects that overlap the zone of capitalization for nonmarket goods we show this bias can dominate the usual omitted variable bias using data on developer provided open space we control for multiscale capitalization and omitted variables simultaneously by extending the hausman taylor estimator where the panel component of the estimator is defined over repeated transactions within neighborhoods rather than the traditional definition following a unique cross sectional unit through time

democracy and environmental quality we develop and estimate an econometric model of the relationship between several local and global air pollutants and economic development while allowing for critical aspects of the socio political economic regime of a state we obtain empirical support for our hypothesis that democracy and its associated freedoms provide the conduit through which agents can exercise their preferences for environmental quality more effectively than under an autocratic regime thus leading to decreased concentrations or emissions of pollution however additional factors such as income inequality age distribution education and urbanization may mitigate or exacerbate the net effect of the type of political regime on pollution depending on the underlying societal preferences and the weights assigned to those preferences by the state

stigmatized asset value is it temporary or long term stigma is a negative attribute of real estate acquired by environmental contamination and reflected in its value elliot jones 1996 using a model of neighborhood turnover with external economies we show that both temporary stigma and long term stigma are possible equilibrium outcomes after the discovery and cleanup of a hazardous waste site the existence and duration of stigma are examined using hedonic price techniques with data from housing sales prices in dallas county texas we find that results depend critically on distance from the hazardous waste site neighborhood turnover due to changes in the level of poverty also appears likely

the economics of eco labeling standards costs and prices abstract the existing eco label landscape is fragmented because of the presence of numerous labels with different standards and is a pre competitive environment for firms to play in with many unanswered questions different standards eco labels are built around have different effects on credibility and legitimacy costs and benefits and ability to achieve sustainability goals of eco labeling focusing on eco label standards and using a hotelling type horizontal differentiation model we identify standards specific issues for and characterize primary barriers to eco labeling some of the major findings are as follows 1 more rigorous environmental standards enforced by higher integrity labels do not necessarily translate into higher selling prices 2 higher prices commanded by labeled products do not guarantee that a firm will derive higher profits from eco labeling 3 auditing fees paid per product unit being inspected for ensuring compliance with an eco label standard rather than participation fees paid up front is the primary de facto barrier to business involvement in eco labeling and 4 customers willingness to pay price premiums for eco labeled products is not a sufficient condition to generate a premium in the market

determinants of demand for green products an application to eco label demand for fish in europe abstract in this paper we confront the theoretical motivations of the consumption of eco friendly products and the factors influencing the european perceptions regarding the fact that fish caught using an environmentally friendly technique may carry a special label we take advantage of the recent integration of non economic elements in the microeconomic analysis of consumers behavior in order to highlight the factors leading to their demand for green products thanks to an original european survey on seafood product carried out on more than 5000 consumers we test the influence of intrinsic motivation information localization and socio economic factors on the demand for an eco label for fish our results show a significant connection between the desire for eco labeling and seafood features especially the freshness of the fish the geographical origin of the fish and the wild vs farmed origin of the fish moreover we prove the major role played by the fish price we also demonstrate that the ecological issue regarding fisheries is highly connected to consumer information intrinsic motivation and socio economic status the typical green fish consumer is a young woman well educated well informed on the state of marine resources and not very trusting of the regulation of the fisheries consumers who are aware of the importance of marine resource preservation have the same profile

food labeling and eco friendly consumption experimental evidence from a belgian supermarket using an incentive compatible framed field experiment we investigate whether consumers food consumption is more eco friendly when the information about a product s environmental impact is more easily accessible through an online survey we identify a food label that is perceived to be the most easily accessible for assessing a product s eco friendliness among six alternatives these alternatives vary on multiple dimensions including whether a standardized score of the overall environmental impact is added this new food label is subsequently tested in an experimental food market embedded in a belgian supermarket we find that the presence of the new label that was preselected in the online survey leads to more eco friendly food consumption relative to either the label currently used in the supermarket or the label that contains the raw information of the environmental impact in our experimental food market the use of an easy to interpret but comprehensive environmental information label increases the overall eco friendliness of our subjects food consumption by about 5 3 relative to the default label used in current markets

social stigma and asset value recent attempts by economists to identify and quantify the effect of social stigma on asset value have often been stymied by confounding mechanisms i use the unique circumstances surrounding the 1999 columbine shooting to estimate the effect of social stigma on asset value using a difference in differences model with property fixed effects i find the immediate effect of stigma from the columbine shooting is 5 7 of a property s value after one year this implies a 13 million loss from property sales in the year 2000 alone the results are robust to numerous specifications and synthetic control placebo tests this suggests that social stigma plays a role in consumer preferences

estimates of the impact of crime risk on property values from megan s laws abstract we estimate the willingness to pay for reductions in crime risk using the location and move in dates of sex offenders we find significant effects of sex offenders locations that are geographically localized house prices within 0 1 miles of a sex offender fall by 4 percent on average we then use this finding to estimate the costs to victims of sexual offenses and find costs of over 1 million per victim far greater than previous estimates however we cannot reject the alternative hypotheses that individuals overestimate risks posed by offenders or that living near an offender poses significant costs exclusive of crime risk jel k42 r23 r31

measuring the property value effects of local land use and preservation referenda this paper examines a massachusetts policy that encourages communities to raise money through referenda for preservation and affordable housing i use difference indifferences fixed effects and quantile regression to compare home prices before and after such referenda in two towns i include covariates representing existing land uses zoning and historic resources to estimate the value of these amenities standard regression techniques indicate weak effects of the referenda while the estimated coefficients on land use and historic preservation confirm that preservation has a positive effect on property values the quantile regression sheds light on some heterogeneity that goes unnoticed in standard regression results

are risk regulators rational evidence from hazardous waste cleanup decisions a large literature in economics and social science focuses on how people reason about risks reactions of individuals to risk frequently depart from behavior predicted by full information variants of expected utility theory risk regulators are human and are subject to political pressures that are reflective of people s attitudes toward risk as a result the public policies they espouse may reflect errors in judgment about risk many biases stem from misperceptions of risk individuals overestimate small probabilities overestimate the risks associated with highly publicized dangers and have preferences over the manner not just the magnitude in which risks arise environmental risks associated with hazardous waste sites may be particularly prone to such errors since they involve small risks that are highly publicized indeed the general public ranks hazardous waste sites as the leading environmental risk a growing literature also analyzes how the decisions of risk regulators depart from choices predicted in a standard benefit cost framework as roger g noll and james e krier 1990 point out since regulators are both human and political their decisions may reflect risk biases regulators may exhibit these biases as individuals and because their constituents will express regulatory demands based on risk perceptions risk regulators may take into account the identity of the parties exposed to risk the level of scrutiny by interest groups the nature of congressional representation of affected constituents and the degree of political activity by potentially exposed individuals 3 errors in risk perceptions and risk decisions cause individuals to diverge from expected utility maximization similar errors by policy makers and the influence of risk politics cause regulators to diverge from social welfare maximization this paper examines decisions made by federal and state regulators at hazardous waste sites addressed by the superfund program to determine how their decisions diverge from those predicted by expected utility theory and benefitcost analysis we analyze whether risk perceptions and politics influence two decisions central to the how clean is clean debate at superfund sites the selection of chemical cleanup targets and the expenditure of remediation funds at these contaminated sites we also explore the interactive influence of risk perception factors and political demands previous research on the regulation of chemical risks in standard setting indicates that decisions reflect evidence of risk biases and responsiveness to political factors in assessing the determinants of the epa s decision to cancel pesticide registration maureen l cropper et al 1992 found that the epa was more likely to cancel a pesticide in instances featuring higher risks to the maximally exposed individual user lower benefits associated with continued use of the pesticide higher values of intervention by environmental groups mea viscusi harvard law school harvard university cambridge ma 02138 hamilton sanford institute of public policy duke university durham nc 27708 we have benefited from the comments from two referees and the excellent research assistance of jason bell kristen blann jahn hakes and robert malme research support was provided under cooperative agreement no cr 823604 01 from the u s environmental protection agency office of policy planning and evaluation dr alan carlin and dr suzanne giannini spohn served as contract officers all views and errors expressed are our own l see u s environmental protection agency epa 1987 for a report on this survey evidence 2 this theme is also articulated in richard j zeckhauser and viscusi 1990 noll 1989 provides a more general assessment of the interaction between political concerns and regulatory policy which is a central theme of this paper 3political factors have long played a prominent role in local hazardous waste policies see among others linda cohen 1981 howard kunreuther and douglas easterling 1990 1992 and kunreuther and rajeev gowda 1990

evidence of the effects of water quality on residential land prices we use hedonic techniques to show that water quality has a significant effect on property values along the chesapeake bay we calculate the potential benefits from an illustrative but limited water quality improvement and we calculate an upper bound to the benefits from a more widespread improvement many environmental hedonic studies have almost entirely ignored the potential for omitted variables bias the possibility that pollution sources in addition to emitting undesirable substances are likely to be unpleasant neighbors we discuss the implications of this oversight and we provide an application that addresses this potential problem o 2000 acadcmic prcss

unlocking amenities estimating public good complementarity abstract public goods may exhibit complementarities that are essential for determining their individual value our results indicate that improving safety near parks can turn them from public bads to goods ignoring complementarities may lead to i undervaluing the potential value of public goods ii overestimating heterogeneity in preferences and iii understating the value of public goods to minority households recent reductions in crime have unlocked almost 7 billion in property value in chicago new york and philadelphia still two fifths of the potential value of park proximity 10 billion remains locked in

the value of disease prevention vs treatment we present an integrated valuation model for diseases that are life threatening the model extends the standard one period value per statistical life model to three health prospects healthy ill and dead we derive willingness to pay values for prevention efforts that reduce a disease s incidence rate as well as for treatments that lower the corresponding health deterioration and mortality rates we find that the demand value of prevention always exceeds that of treatment people often overweight small risks and underweight large ones we use the rank dependent utility framework to explore how the demand for prevention and treatment alters when people evaluate probabilities in a non linear manner for incidence and mortality rates associated with common types of cancers the inverse s shaped probability weighting found in experimental studies leads to a significant increase in the demand values of both treatment and prevention

optimal pricing and advertising policies for new product oligopoly models in this paper our previous work on monopoly and oligopoly new product models is extended by the addition of pricing as well as advertising control variables these models contain bass s demand growth model and the vidale wolfe and ozga advertising models as well as the production learning curve model and an exponential demand function the problem of characterizing an optimal pricing and advertising policy over time is an important question in the field of marketing as well as in the areas of business policy and competitive economics these questions are particularly important during the introductory period of a new product when the effects of the learning curve phenomenon and market saturation are most pronounced we consider first the monopoly case with linear advertising cost exponential demand and three different pricing rules the optimal variable pricing the instantaneous marginal pricing and the optimal constant pricing rules several theoretical results are established for these rules including the facts that the instantaneous marginal pricing rule is a myopic version of the optimal pricing rule and the optimal constant pricing rule is a weighted average over time of the instantaneous marginal pricing rule another surprising result is that after the market is at least half saturated a pulse of advertising must be preceded by a significant drop in price numerical solutions of a number of examples are discussed oligopolistic models are analyzed as nonzero sum differential games in the rest of the paper the state and adjoint equations are easy to write down but impossible to solve in closed form hence we describe how to reformulate these models as discrete differential games and give a numerical algorithm for finding open loop nash solutions the latter was used to solve three triopoly models in each case it was found that optimal prices and advertising rates start high and steadily decline

residential property price differentials of waste plants evidence from beijing china as a primary source of urban pollution waste plants release toxic gases and polluted waste water that can cause great harm to human health and contaminate water resources the adverse impact of wa

attitudes toward catastrophe in light of climate change and other global threats policy commentators sometimes urge that society should be more concerned about catastrophes this paper reflects on what society s attitude toward low probability high impact events is or should be we first argue that catastrophe risk can be conceived of as a spread in the distribution of losses based on this conception we review studies from decision sciences psychology and behavioral economics that explore people s attitudes toward various social risks contray to popular belief we find more evidence against than in favor of catastrophe aversion the preference for a mean preserving contraction of the loss distribution and discuss a number of possible behavioral explanations next we turn to social choice theory and examine how various social welfare functions handle catastrophe risk we explain why catastrophe aversion may be in conflict with equity concerns and other regarding preferences finally we discuss current approaches to evaluate and regulate catastrophe risk

ex post welfare economics and the theory of merit goods in recent years a number of papers have questioned the extension of the main theorems of welfare economics to a world of uncertainty stemming from the work of arrow 1953 and debreu 1959 the arrow debreu extension is based on the idea that consumer preferences may be defined on state contingent commodities as a special but important case these preferences may be represented by von neumann morgenstern utilities with this interpretation of the commodity space the main theorems of weltare economics remain valid in a world of uncertainty a competitive equilibrium is a pareto optimum a pareto optimum can be sustained as a competitive equilibrium and the diagnosis of the causes of market failure remains as before there are several reasons why one may feel uneasy about this construction a good deal of attention has been paid to the assumption of universality of markets necessary to establish the connection between equilibrium and optimum on a deeper level perhaps are the doubts that one may have about the criterion of welfare or efficiency first should social welfare be a function of individuals expected utilities or should the appropriate concept be that of expected welfare second if probability beliefs are not identical across individuals whose probabilities if any should be used for welfare evaluation in the next section we review some concepts and results in the recent literature on ex post welfare economics and in section ii it is argued that this literature can provide the foundations for a more satisfactory theory of merit goods a concept originally introduced by musgrave 1959 this idea is applied in section iii to a model with a complete set of markets in the arrow debreu sense and in sections iv and v to an incomplete markets model which provides the most natural framework for the study of merit goods various remarks on further aspects of the problem are collected in the concluding section of the paper

the effect of legalizing retail marijuana on housing values evidence from colorado does legalizing retail marijuana generate more benefits than costs this paper provides a first step toward addressing that question by measuring the benefits and costs that are capitalized into housing values we exploit the time series and cross sectional variations in the adoption of colorado s municipality retail marijuana laws rmls and examine the effect on housing values with a difference in differences strategy our estimates show that the legalization leads to an average 6 increase in housing values indicating that the capitalized benefits outweigh the costs in addition we find suggestive evidence that this relatively large housing value appreciation is likely due to rmls inducing strong housing demand while having no discernible effect on housing supply finally we show that the effect of rmls is heterogeneous across locations and property types jel k20 r28

green markets eco certification and equilibrium fraud abstract consumers voluntarily pay significant price premiums to acquire unobservable environmental attributes in green markets this paper considers the performance of eco certification policy under circumstances where consumers cannot discern environmental attributes in goods but are able to form rational expectations regarding the extent of illicit activities in the green market the main results are i fraud is less prevalent in green markets when entry barriers limit the number of firms ii conventional environmental policies on polluting techniques increase the incidence of fraud and can even preclude the use of non polluting techniques which would otherwise emerge in green markets iii voluntary eco certification policies can decrease fraud increase output and raise profits per firm and iv in cases where the socially optimal resource allocation can be supported the optimal policy involves negative unit certification fees positive fixed certification fees and is revenue generating for the certifying agent

oligopoly models for optimal advertising when production costs obey a learning curve business policy questions frequently involve competitive encounters among several different firms oligopoly theory in economics was devised to answer similar questions but its results so far are largely confined to cases of monopoly one firm duopoly two firms and many firms wheat farmers the cases with n firms where 3 n 10 are of great interest to business policy but are rarely treated in the economics literature because of their extreme difficulty the natural mathematical model for studying such questions is the theory of differential games originally devised by r isaacs isaacs r 1975 differential games robert e krieger publishing co huntington new york originally published by john wiley sons new york 1965 for pursuer evader games later it was extended by j case case j h 1979 economics and the competitive process new york university press new york to nonzero sum differential games for application to questions of economic competition the problem of characterizing an optimal advertising policy over time is an important question in the field of marketing it is especially important during the period of the introduction of a new product and it is also during this time that the production learning curve phenomenon is most pronounced in this paper we study oligopoly models which combine elements of bass s demand growth model bass f m 1969 a new product growth model for consumer durables management sci 15 january 215 227 the vidale wolfe vidale m l h b wolfe 1957 an operations research study of sales response to advertising oper res 5 370 381 and ozga ozga s 1960 imperfect markets through lack of knowledge quart j econom 74 29 52 advertising models with linear or quadratic costs and the production learning curve hirschmann w p 1964 profit from the learning curve harvard bus rev 42 january february 125 139 the boston consulting group 1972 perspectives on experience the boston consulting group boston in the monopoly case n 1 the optimal advertising function is derived by applying green s theorem in the duopoly n 2 and triopoly n 3 cases we use discrete differential game models and find nash equilibrium solutions in each of these models the form of the optimal policy is easy to find but because of the complicated nature of the resulting differential equations closed form solutions for the optimal state and control trajectories are impossible to find hence we use a computer to compute these optimal trajectories and plot them for various parameter settings because 13n parameters must be chosen to define a model with n players a complete search of the parameter space is clearly impossible we content ourselves in this paper with presenting computer plots of four different interesting encounters of the triopoly model our methods can be extended to work just as well for competitive encounters among n players where 1 n 10 we believe that in this paper we have opened up the way to studying oligopoly theory with a small number of participants and under widely varying conditions although the lack of closed form solutions may disappoint some readers we feel that the easy availability of graphical solutions is a more than adequate substitute

environmental labeling and incomplete consumer information in laboratory markets abstract survey evidence suggests that consumers care about the environment and are willing to pay a higher price for a product that generates less environmental harm we induce buyer preferences over quality in a laboratory posted offer market to study sellers incentives to offer products of differing quality buyers are unaware of the product quality before purchase as is often the case for goods with differing environmental quality we first document the market failure that arises from incomplete information when no signaling or reputations are possible we then study various treatments that could remedy this failure seller reputations and unverified cheap talk signals sometimes increase the number of higher valued green goods the only reliable way to improve product quality in the experiment however is to use a third party that charges a fee to certify product quality claims

investment and harvest strategies of the finnish forest sector under different forest tax policies a differential game approach with computer based decision aid abstract this study deals with the simultaneous solution of the investment harvest and taxation problems of the finnish forest sector these strategic questions involve competitive and contradictory interests among forestry the forest industry and society we build a computer based decision aid to support a decision maker who wants to analyze the consequences of different forest tax policies it is essential to this computational approach that only minor mathematical manipulations are needed to produce equilibrium open loop nash harvest and investment strategies moreover as a differential game approach it allows us to study the tax incidence we solve our model under three alternative tax policies lump sum unit and yield taxes

quality standards versus nutritional taxes health and welfare impacts with strategic firms the goal of this paper is to better understand firms strategic reactions to nutritional policies targeting food quality improvements and to derive optimal policies we propose a model of product differentiation taking into account the taste and health characteristics of products we study how two firms react to alternative policies an mqs policy linear taxation of the two goods on the market and taxation of the low quality good the mqs and the taxation of the low quality product are the preferred options by a social planner if taste is moderately important the mqs policy is chosen by a populist and a paternalist social planner if taste is a major component of choice the populist planner chooses to tax the low quality product whereas the paternalist planner prefers the mqs policy finally for a paternalist social planner an mqs based policy always allows for higher levels of welfare than an information policy alone