factor demand technical change and inter fuel substitution in africa abstract the translog production function has been widely used in applied production analysis due to its flexibility and superiority over other functional forms this study develops a translog production function for a group of african countries the random effects model is estimated using generalized least squares estimator the main findings are first output in africa is driven by a more intensive use of petroleum and electricity and to a lesser extent capital labor and coal relative to technological progress second african production technology exhibits increasing returns to scale suggesting a path towards market entry barriers third technical change is scale biased and factor augmenting albeit very slow fourth all energy inputs are substitutes indicating africa s potential to proportionally switch towards cleaner fuels without adversely affecting economic growth finally and perhaps more generally the study reinforces the assertion that imposing restrictions like homotheticity homogeneity or separability on the production technology is unrealistic and should rather be a testable hypothesis within any applied analysis in view of the documented findings relevant implications for africa are discussed

capital malleability emission leakage and the cost of partial climate policies general equilibrium analysis of the european union emission trading system computable general equilibrium cge models are the premier analytical platform for assessing the economic impacts of climate change mitigation but these models tend to treat physical capital as malleable capable of reallocation among sectors over the time period for which equilibrium is solved because the extent to which capital adjustment costs might dampen reallocation is not well understood there is concern that cge assessments understate the true costs of greenhouse gas ghg reduction policies this paper uses a multi region multi sector cge model to investigate cap and trade schemes such as the european union emission trading system which cover a subset of the economy elucidating the effects of capital malleability on ghg abatement the potential for emission leakage from abating to non abating sectors and the impacts on welfare to simplify the complex interactions being simulated within the cge model that analysis is complemented with an analytical model a partial climate policy results in negative internal carbon leakage with emissions declining not only in capped sectors but also in non regulated ones this result is stronger when capital is intersectorally mobile interestingly in partial climate policy settings capital malleability can amplify or attenuate welfare losses depending on the attributes of the economy

substitution in the electric power industry an interregional comparison in the eastern us abstract the electric power industry is restructuring as regulations move from states to regional and national levels estimates of regional fuel and input substitution are essential for practitioners and policy makers this paper estimates substitution under static and dynamic scenarios examining changes in technology and total factor productivity from 2001 to 2008 two stage estimation reveals regional characteristics and underlying elements in fuel and factor choice processes substitution varies widely depending on the region coal technology capital investment and r d activities

price determination in the eu ets market theory and econometric analysis with market fundamentals abstract we investigate the price determination of the european union emission allowance eua of the european union emissions trading scheme eu ets we postulate an uncertain permit price and risk averse firms which have the possibility to hedge in the forward market the firms produce final goods abate their emissions and trade permits in the permit market the dependence of the equilibrium permit price on exogenous variables is studied in a permit market model we test our theoretical findings with empirical data from 2005 to 2010 in the eu ets market we use daily forward prices of eua as our dependent variable we use several econometric models with multiple stationary time series to discover that there is a strong relationship between the fundamentals such as german electricity prices and gas and coal prices with the price of eua we find that the eua forward price depends on fundamentals especially on the price of electricity as well as on the gas coal difference in a statistically significant way

the role of air and water residuals for steam electric power generation the decade of the sixties saw increasing concern over the progressive deterioration in environmental quality and in the early seventies major federal legislation established air and water pollution control strategies at the time these laws were enacted information on the costs and benefits of pollution control programs was limited today nearly two decades after the first expressions of concern there remain few neoclassical models of productions that explicitly incorporate residuals as by products of production activities most of the available information on the costs of pollution control policies is based on engineering cost analyses of model plants as a rule these studies estimate costs by considering the increments to production costs associated with adding specific types of capital equipment to reduce emissions to specified levels they often do not consider the full menu of responses possible in meeting a given emission standard equally important they are relevant only for the model plant which formed the basis for the cost calculations the purpose of this paper is to present the results of a neoclassical analysis of the role of a variety of residuals that generally comprise the major air and water emissions of steam generating electric plants our analysis distinguishes plants by vintage of equipment and treats generating capital as a quasi fixed factor thus the results provide a description of the features of the ex post production technology it should of course be acknowledged that a neoclassical production model is an approximate summary of the engineering features of the underlying technology the value of the approach to describing production activities ultimately depends on its ability to authentically describe the features of that technology recent experimental evidence by kopp and smith 25 suggests that neoclassical cost models which ignore constraints on industrial effluents may provide seriously misleading descriptions of the features of the underlying production processes steam electric generating

relative deprivation and internal migration in the united states a comparison of black and white men while the link between geographic and social mobility has long been a cornerstone of sociological approaches to migration recent research has cast doubt on the economic returns to internal u s migration moreover important racial disparities in migration patterns remain poorly understood drawing on data from the 2000 census the author reappraises the link between migration and social mobility by taking relative deprivation into consideration she examines the association between migration disaggregated by region of origin and destination and absolute and relative earnings and occupational prestige separately by race findings lend new insight into the theoretical and stratification implications of growing racial disparities in migration patterns while both blacks and whites who move north south generally average lower absolute incomes than their stationary northern peers they enjoy significantly higher relative social positions moreover the relative gains to migration are substantially large

the effect of deregulation on us fossil fuel substitution in the generation of electricity abstract fossil fuels produce the majority of electricity in the us with coal being by far the most popular fuel used in the past regulation in the natural gas market in the form of well head price controls and under the boiler fuel use restrictions distorted fuel use away from natural gas more recently with deregulation in the natural gas industry these restrictions have been repealed which has changed fuel use patterns to measure the short run fuel use response from regulatory and other market changes we estimate interfuel substitution using two flexible functional forms the translog and the logit on monthly data from 1991 to 1993 in both models we find coal demand has the least elastic price response while gas and oil demand have the highest both models also suggest there is substitution across fuels in the short run but the patterns and magnitudes vary from comparisons with earlier studies fuel use price response is also found to vary across market conditions and regulatory regime

on the economic architecture of the workplace repercussions of social comparisons among heterogeneous workers we analyze the impact on a firm s profits and optimal wage rates and on the distribution of workers earnings when workers compare their earnings with those of coworkers we consider a low productivity worker who receives lower wage earnings than a high productivity worker when the low productivity worker derives dis utility not only from his own effort but also from comparing his earnings with those of the high productivity worker his response to the sensing of relative deprivation is to increase the optimal level of effort consequently the firm s profits are higher its wage rates remain unchanged and the distribution of earnings is compressed

estimates of inter fuel substitution possibilities in chinese chemical industry abstract the chemical sector is a key driver of china s remarkable growth record and accounts for about 10 of the country s gdp this has made the industry energy intensive and consequently a major contributor to greenhouse gas emissions ghg and other pollutants this study has attempted to investigate the potential for inter fuel substitution between coal oil natural gas and electricity in chinese chemical sector by employing a translog production and cost function ridge regression procedure was adopted to estimate the parameters of the function estimation results show that all energy inputs are substitutes in addition the study produces evidence that the significant role of coal in the chinese chemical fuel mix converges over time albeit slowly these results suggest that price based policies coupled with capital subsidy programs can be adopted to redirect technology use towards cleaner energy sources like electricity and natural gas hence retaining the ability to fuel the chemical sector while also mitigating ghg emissions notwithstanding one must understand that the extent to which substituting electricity for coal will be effective depends on the extent to which coal or oil is used in generating electricity the findings of this study provide general insights and underscore the importance of chinese government policies that focus on installed capacity of renewable electricity energy intensity targets as well as merger of enterprises

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

the relationship between spot and contract gas prices in europe abstract following deregulations in the european gas market spot trading of natural gas has been established in the uk belgium and the netherlands while long term contracts remain the dominant pricing process in continental europe in this paper we investigate the degree of market integration between the three spot markets the contract gas price in germany and the oil price the results indicate a highly integrated market and there is no evidence of an independent price determination process for natural gas

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

the rise and fall of german hard coal subsidies abstract beginning with the coal crisis of 1958 the survival of the german hard coal mining sector has been heavily dependent on subsidies for several decades these subsidies are a complex system of almost 60 different measures often with conflicting objectives annual financial support for this subsidy system grew from 0 6 billion in 1958 to 7 5 billion in 1989 with the majority of the funding financed outside the public budget by a special fund based on the coal penny kohlepfennig in 1995 the abolishment of the coal penny in connection with budget constraints led to a significant subsidy decrease to 3 5 billion a recent agreement between the federal government and the mining state of north rhine westphalia in 2003 however seems to have fixed german hard coal subsidies at the 2 billion level for the time after 2012

what are the key drivers of mac curves a partial equilibrium modelling approach for the uk marginal abatement cost mac curves are widely used for the assessment of costs related to co2 emissions reduction in environmental economics as well as domestic and international climate policy several meta analyses and model comparisons have previously been performed that aim to identify the causes for the wide range of mac curves most of these concentrate on general equilibrium models with a focus on aspects such as specific model type and technology learning while other important aspects remain almost unconsidered including the availability of abatement technologies and level of discount rates this paper addresses the influence of several key parameters on mac curves for the united kingdom and the year 2030 a technology rich energy system model uk markal is used to derive the mac curves the results of this study show that mac curves are robust even to extreme fossil fuel price changes while uncertainty around the choice of the discount rate the availability of key abatement technologies and the demand level were singled out as the most important influencing factors by using a different model type and studying a wider range of influencing factors this paper contributes to the debate on the sensitivity of mac curves

driving forces and barriers in the development and implementation of coal to liquids ctl technologies in germany abstract because of a growing global energy demand and rising oil prices coal abundant nations such as china and the united states are pursuing the application of technologies which could replace crude oil imports by converting coal to synthetic hydrocarbon fuels so called coal to liquids ctl technologies the case of ctl is well suited to analyse techno economic resources related policy driven and actor related parameters which are affecting the market prospects of a technology that eases energy security constraints but is hardly compatible with a progressive climate policy this paper concentrates on germany as an example the european union eu s largest member state with considerable coal reserves it shows that in germany and the eu ctl is facing rather unfavourable market conditions as high costs and ambitious climate targets offset its energy security advantage

estimating the marginal abatement cost curve of co2 emissions in china provincial panel data analysis abstract this paper estimates the marginal abatement cost curve macc of co2 emissions in china based on a provincial panel for the period of 2001 2010 the provincial marginal abatement cost mac of co2 emissions is estimated using a parameterized directional output distance function four types of model specifications are applied to fit the mac carbon intensity pairs the optimal specification controlling for various covariates is identified econometrically a scenario simulation of china s 40 45 carbon intensity reduction based on our macc is illustrated our simulation results show that china would incur a 559 623 yuan t roughly 51 57 increase in marginal abatement cost to achieve a corresponding 40 45 reduction in carbon intensity compared to its 2005 level

is coal desulphurisation worthwhile evidence from the market abstract the paper develops a forward looking way to estimate the economic benefits of research and development on coal desulphurisation the methodology makes use of survey based techniques pioneered in environmental economics the empirical results illustrate the difficulty of configuring desulphurised coal to meet the requirements of existing electricity generating plants in addition to estimating the returns to investment in coal desulphurisation the contributions of the paper are in extending survey based valuation to meet the needs of r d investors for intelligence about the prospective value of their investments and using robust estimation techniques to reduce the influence of outliers

coal restructuring in spain continuity and uncertainty abstract the policies of coal energy are currently undergoing a significant change at the european community level energy concerns are dominated by environmental commitments that seem to demand coal s disappearance the countries that for years have supplied the european energy market with this resource have confronted their future challenges in differing ways the history of the energy sector in spain has been marked by important changes and coal has been a key factor in this process membership in the european union has constituted a clear transition for a historically subsidized and protected sector that now faces an uncertain role in the national energy market the aim of this paper is to offer an overview and analysis of the mechanisms that have been implemented in the energy sector the first part analyzes the rationalization policies that preceded spanish entry into the eu giving a detailed description of the complex programs designed by the government to help mining companies the second part analyzes later systems aimed at helping the coal industry that were implemented after the eu imposed new criteria and objectives these systems led to the so called mixed model of rationalization this model which is completely different from that implemented in other member states is based on maintaining a system of subsidies that discriminate between public and private companies the third part examines the objectives of the current system and the plans projected for the future in the context of the eu s adoption of an energy strategy that seeks to reconcile a self sufficient energy supply with adherence to environmental commitments

windfall profits in the power sector during phase iii of the eu ets interplay and effects of renewables and carbon prices abstract since power utilities were originally grandfathered into the eu ets by way of a free allocation of carbon emission allowances eua the issue of windfall profits accruing to producers with carbon intensive generation portfolios has been the subject of critical analysis one of the chief aims of the switch to a predominantly auction based allocation system at the onset of phase iii of the eu ets was to negate the incidence of windfall profits the following analysis examines the merits of this policy aim drawing on economic theory of power markets a linear optimisation model covering the electricity market of the eu member states is deployed to investigate this question scenarios reflecting developments over a medium term horizon 10 years are developed with which carbon prices are endogenously determined their effects on the contribution margins of producers in the member states are subsequently evaluated the overall findings indicate that the incidence of windfall profits in the power sector remains prevalent in the overwhelming majority of eu countries the analysis suggests that the carbon intensiveness of the respective generation fleet is not the deciding factor as to whether producers earn windfall profits but rather the fundamental generation structure of the power plant fleet the results raise questions about the capacity of the current eu ets regime to provide the desired decarbonising effect on power producers generation portfolios in european power markets

interfuel substitution in us electricity generation ongoing changes in the us electricity market include restructuring and increased competition with this unfettering of the market the fuel choice in generation is expected to become more flexible and responsive to investigate this hypothesis studies of us electricity fuel choices over the last three decades are summarized and the most recent analysis is provided on a market very different from the one on which earlier studies were done modern data handling techniques allow the consideration of the most comprehensive database including 185 utilities on monthly data for 1993 this paper finds fuel choice to show a considerable amount of price responsiveness the amount of responsiveness is sensitive to the fuel substitution possibilities within the utility and the amount of responsiveness seems to have increased recently for oil and natural gas

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

social comparison and effort provision evidence from a field experiment social comparison has potentially far reaching consequences in many economic domains we conducted a field experiment to examine how social comparison affects workers effort provision if their own wage or that of a co worker is cut workers were assigned to groups of two performed identical individual tasks and received the same performance independent hourly wage cutting both group members wages caused a decrease in performance but when only one group member s wage was cut the affected workers decreased their performance more than twice as much as when both workers wages were cut this finding indicates that social comparison among workers affects effort provision because the only difference between the two wage cut treatments is the other group member s wage level in contrast workers whose wage was not cut but who witnessed their group member s pay being cut displayed no change in performance relative to the baseline treatment in which both workers wages remained unchanged this indicates that social comparison exerts asymmetric effects on effort jel c93 j33 m53

substitution between clean and dirty energy inputs a macroeconomic perspective in macroeconomic models the elasticity of substitution between clean and dirty energy inputs within the energy aggregate is a central parameter in assessing the necessary conditions for long run green growth using new sectoral data in a panel of 26 countries we formulate specifications of nested constant elasticity of substitution production functions that allow estimating this parameter for the first time we present evidence that it significantly exceeds unity a favorable condition for promoting green growth

quantifying co2 abatement costs in the power sector co2 cap and trade mechanisms and co2 emission taxes are becoming increasingly widespread to assess the impact of a co2 price marginal abatement cost curves maccs are a commonly used tool by policy makers providing a direct graphical link between a co2 price and the expected abatement however such maccs can suffer from issues related to robustness and granularity this paper focuses on the relation between a co2 emission cost and co2 emission reductions in the power sector the authors present a new methodology that improves the understanding of the relation between a co2 cost and co2 abatement the methodology is based on the insight that co2 emissions in the power sector are driven by the composition of the conventional power portfolio the residual load and the generation costs of the conventional units the methodology addresses both the robustness issue and the granularity issue related to maccs the methodology is based on a bottom up approach starting from engineering knowledge of the power sector it offers policy makers a new tool to assess co2 abatement options the methodology is applied to the central western european power system and illustrates possible interaction effects between e g fuel switching and renewables deployment

a dynamic analysis of interfuel substitution for swedish heating plants abstract this paper estimates a dynamic model of interfuel substitution for swedish heating plants we use the cost share linear logit model developed by considine and mount considine t j mount t d 1984 the use of linear logit models for dynamic input demand systems review of economics and statistics 66 434 443 all estimated own price elasticities are negative and all cross price elasticities are positive the estimated dynamic adjustment rate parameter is small however increasing with the size of the plant and time indicating fast adjustments in the fuel mix when changing relative fuel prices the estimated model is used to illustrate the effects of two different policy changes

quasi fixed inputs in u s and japanese manufacturing a generalized leontief restricted cost function approach in this paper a generalized leontief variable cost function is develope d which permits analytical derivation of steady state levels of quasi fixed inputs and capacity output and does not require specification of a numeraire input this framework is then used to evaluate the fa ctor demand patterns of japanese and u s manufacturing based on bot h one quasi fixed capital input and two quasi fixed capital and la bor input specifications and both static and dynamic optimization t he findings provide evidence of considerable flexibility of demand re sponses in japan which may have contributed to japan s relatively st rong economic performance in the volatile 1970s copyright 1988 by mit press

relative poverty as a determinant of migration evidence from poland we explore the relationship between aggregate relative poverty and migration we draw upon polish regional data and use a measure of aggregate relative poverty that is functionally related to the gini coefficient we find that the gini coefficient and migration are positively correlated holding the population s per capita income constant

modeling and explaining the dynamics of european union allowance prices at high frequency in this paper we model the adjustment process of european union allowance eua prices to the releases of announcements at high frequency controlling for intraday periodicity volatility clustering and volatility persistence we find that the high frequency eua price dynamics are very well captured by a fractionally integrated asymmetric power garch process the decisions of the european commission on second national allocation plans have a strong and immediate impact on eua prices on the other hand our results suggest that eua prices are only weakly connected to indicators about the future economic development as well as the current economic activity

migration for degrading work as an escape from humiliation this paper develops a model of voluntary migration into degrading work the essence of the model is a tension between two bads that which arises from being relatively deprived at home and that which arises from engaging in humiliating work away from home balancing between these two bads can give rise to an explicit voluntary choice to engage in humiliating work the paper identifies conditions under which a migrant will choose to engage in degrading work rather than being forced into it to work abroad as a prostitute say rather than on a farm the paper delineates the possible equilibria and finds that greater relative deprivation will make it more likely that the equilibrium outcome will be engagement in prostitution it is shown that under well specified conditions every individual will work as a prostitute yet every individual would be better off working on a farm put differently when specific conditions are satisfied there is a possibility of a coordination failure if individuals believe that everyone else will choose to be a prostitute this belief will be self fulfilling in this case all the individuals choose to engage in prostitution which renders each of them worse off the paper discusses various policy implications it is shown that a policy intervention a crackdown on migrants engagement in prostitution if implemented strictly can increase everyone s welfare but when the policy is implemented loosely cracking down on prostitution will only reduce individuals welfare without reducing their engagement in prostitution

the effect of sulfur regulations on the u s electric power industry a generalized cost approach abstract this paper estimates the effects of sulfur dioxide emission regulations on the us electric power industry during the 1975 1990 period by utilizing a generalized cost function along with shadow input prices in the presence of various regulations including those intended to control sulfur dioxide emissions firms will likely fail to minimize production costs the null hypothesis of cost minimization is rejected implying that the use of a neoclassical cost function is inappropriate for this study a comparison of the results obtained by estimating a generalized cost function and those obtained with a neoclassical cost function reveals that the use of a neoclassical restriction brings an underestimation of the average percentage increase in cost by 1 1 percentage points

regional differences in nuclear and fossil fuel generation of electricity previous research on electric gen eration costs has mainly relied on economy wide data this study disaggregates a broad sample into regions known to have marked differences in fossil fuel availability climate regulatory ef fects and other variables we find differences exist in generation costs among the studied re gions and nuclear power using estimates of scale economies and other measures we also find smaller minimum efficient size fossil fuel firms than previous studies based on recent cost information this study provides insights into several industry structure issues such as capac ity expansion competition input costs environ mental policy and transmission access jel q42

electric utilities fuel use and responsiveness to fuel prices this research tests the impact of changes in fuel price to explain fuel use by electric utilities we employ a three stage least squares model that explains changes in fuel use as a function of changes in three fuel prices this model is repeated across sub samples of data aggregated at the plant level and operating holding company level we expect that plants and holding companies reduce fuel use when fuel prices rise several fuel substitution effects within and across plants and holding companies are demonstrated as well as several frictions at the plant level higher prices of natural gas lead to less natural gas consumption less coal consumption and more fuel oil consumption at the operating holding company level results demonstrate the inelasticity of coal use and the increases of natural gas in response to higher coal prices subsamples demonstrate heterogeneity of results across different plants results emphasize that technological market and regulatory frictions may hinder the performance of energy policies

migration when social preferences are ordinal steady state population distribution and social welfare this paper adds three dimensions to the received literature it models migration when the individuals preferences regarding their relative incomes are ordinal it works out the resulting spatial steady state distribution of the individuals and it shows that the aggregate of the individuals migration choices in the spatial steady state distribution sums to the social optimum this finding does not apply when the individuals preferences regarding their relative incomes are cardinal we highlight the importance of the assumption about the nature of the individuals social preferences whether ordinal or cardinal to studying and predicting their migration behaviour and to elucidating the consequences of that behaviour for social welfare

economy wide effects of international and russia s climate policies abstract the objectives of this paper are to analyse the economy wide effects of international climate policy on the russian economy as well as the effects of russia s climate policy on european economies our analysis is based on a general equilibrium model that includes inertias such as imperfect sectoral labour mobility and vintage capital and has a detailed depiction of the power generation sector we found that international climate policy could reduce russia s private welfare by 1 8 annually due to lower revenues from exports of fossil fuels at the sectoral level russia could gain a comparative advantage in producing energy intensive commodities and hence russia s producers of those commodities increase their production and export supplies this could result in a carbon leakage in russia eliminating implicit subsidies on domestic consumption of gas and petroleum products could reduce russia s private welfare loss by 0 6 points and eliminate the carbon leakage nevertheless eliminating implicit subsidies on gas and petroleum products might not be sufficient to achieve the pledged emission reductions by 2030 moreover this leads to an undesirable increase in coal consumption and therefore some additional climate policy such as a carbon tax or an emission trading system might be required we also found that russia s climate policy could have positive but moderate effects on the european economies in particular countries such as lithuania slovakia and hungary benefit due to decreased export prices for gas crude oil and petroleum products from russia

economies of scale and factor substitution in electricity supply industry a case study of south australia abstract the results support the view that there are cost advantages in retaining etsa s monopoly position the existing economies of scale and the high degree of substitutability between energy and capital imply that a rise in energy prices may not affect the cost of production significantly provided other factor costs do not rise at the same rate and provided demand for electricity grows further it has been observed that improvement in load factor can significantly reduce cost

the use of linear logit models for dynamic input demand systems this paper demonstrates that a linear logit model with appropriate constraints can be used to specify a system of cost share equations that satisfy neoclassical economic conditions unlike many other flexible functional forms the logistic function is particularly well suited for incorporating dynamic adjustment mechanisms the empirical results suggest that the use of static models overstates short run own price elasticities and understates the corresponding long run price effects

co2 abatement from renewables in the german electricity sector does a co2 price help abstract the overlapping impact of the emission trading system ets and renewable energy re deployment targets creates a classic case of interaction effects whereas the price interaction is widely recognized and has been thoroughly discussed the effect of an overlapping instrument on the abatement attributable to an instrument has gained little attention this paper estimates the actual reduction in demand for european union allowances that has occurred due to re deployment focusing on the german electricity sector for the five years 2006 through 2010 based on a unit commitment model we estimate that co 2 emissions from the german electricity sector are reduced by 35 to 60 mtons or 10 to 18 of what estimated emissions would have been without any re policy but with the co 2 price remaining in place at the observed level furthermore we find that the abatement attributable to re injections is greater in the presence of an allowance price than otherwise the same holds for the ets effect in presence of re injection this interaction effect is consistently positive for the german electricity system at least for the considered years and on the order of 0 5 to 1 5 of emissions

combining bottom up and top down abstract we motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions the complementarity format permits an energy economy model to combine technological detail of a bottom up energy system with a second best characterization of the over all economy our primary objective is pedagogic we first lay out the complementarity features of economic equilibrium and demonstrate how we can integrate bottom up activity analysis into a top down representation of the broader economy we then provide a stylized numerical example of an integrated model within both static and dynamic settings finally we present illustrative applications to three themes figuring prominently on the energy policy agenda of many industrialized countries nuclear phase out green quotas and environmental tax reforms

endogenous selection of comparison groups human capital formation and tax policy this paper considers a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups skill levels are viewed as occupational groups and moving up the skill ladder by acquiring additional human capital which in itself is rewarding leads to a shift in the individual s inclination to compare himself with a different and on average better paid comparison group which in itself is penalizing the paper sheds new light on the dynamics of human capital formation and suggests novel policy interventions to encourage human capital formation in the aggregate and at the same time reduce inter group income inequality

the standard error of regressions statistical significance as used in economics has weak theoretical justification in particular it merges statistical and substantive significance the 182 papers using regression analysis in the american economic review in the 1980s were tested against 19 criteria for the accepted use of statistical significance most some three quarters of the papers did poorly likewise textbooks in econometrics do not distinguish statistical and economic significance statistical significance should not be the focus of empirical economics

fuel switching and climate and energy policies in the european power generation sector a generalized leontief model abstract the purpose of this paper is to analyze a the role and the nature of price induced switching behavior between fossil fuels i e coal oil and natural gas in the western european power sector as well as b the fuel choice impacts of a number of public policies implemented in this sector during the last 20 years the analysis is conducted within a generalized leontief cost function framework and employs pooled data across eight countries over the time period 1978 2004 we present short run own and cross price elasticities of fossil fuel demand and assess the impacts of a set of government policies implemented over this time period the empirical results show evidence of notable short run interfuel substitution between oil and gas and particularly in countries where fossil fuels are used extensively for both base and peak load purposes these findings support the notion that ex post fossil fuel substitution takes place in dual and multi fired plants by switching load between different single fuel fired plants as well as through the conversion of power plants to be able to burn alternate fuels the results also illustrate that different public policies i e removal of coal subsidies electricity market liberalization etc have had profound impacts on fossil fuel choices and have in particular favored power generation gas use at the expense of coal finally the paper makes use of the empirical results to simulate the fuel switching impacts of different carbon prices within the european emissions trading scheme eu ets

capital vintage time trends and technical change in the electric power industry beginning with tinbergen in 1942 economists have employed a time trend in cost or production functions to represent the rate at which new technology is introduced into the production unit in sufficiently flexible models of the production process the time trend may be used to obtain estimates of the rate as well as direction of technical change the use of the time trend is generally defended on pragmatic grounds as no theoretical justification exists for assuming that new technology is introduced at a steady rate that is independent of a firm s investment in r d education capital of a more recent vintage etc in recent years alternatives to the traditional time trend have been sought to represent the rate at which new technology is introduced research in this area has been concentrated in the telecommunications industry where the stock of r d or the percentage of calls completed by direct dialing or modern switching facilities have been employed as technological indices by nadiri and schankerman 32 denny et al 14 and christensen et al 7 the latter two studies indicate that explicit technological indices provide a better representation of the pace of innovation than the time trend this conclusion must remain tentative however as it is not possible to determine what is the true direction of technical change in these studies this shortcoming is overcome in a recent study by kopp and smith 24 who compare the performance of time trends and explicit technological indices in a study using pseudo data generated by process analysis models their results unambiguously support the use of technologically explicit indicators of technical change and indicate that the use of a time trend may not provide a consistent estimate of the direction of technical change this study does not however shed any light on the ability of a time trend to accurately reflect the rate of technical change the purpose of this study is to investigate the effects of alternative technological indices on the estimated rate and direction of technical change in the electric power industry the performance of a time trend is compared with that of a vintage index computed as the average age of a firm s steam generating capacity this latter index is consistent with the notion that new technology is embodied in newly constructed capital an assumption sup

firing the furnace an econometric analysis of utilities fuel choice abstract this paper attempts to estimate how the fuel mix of german electricity producers does react to fuel price changes the empirical analysis is based on panel data 1968 1998 of major utilities two different aspects of fuel choice are distinguished at the one hand the construction of usually fuel specific capacities for electric power generation i e investment decisions that determine the fuel mix in the long run at the other fuel use conditional on existing generation capacities i e short run inter fuel substitution according to the results from panel unit root tests both the econometric models which describe these two aspects are specified in changes rather than levels the partly discrete nature of investment decisions is taken into account by constructing a discrete model of capacity adjustment our estimation results suggest that the fuel mix of electric utilities is price inelastic either if long term investment or short term inter fuel substitution is considered finally the empirical results are used to predict the potential impacts of co 2 emissions trading on fuel choice in the german electric power industry

a theory of inalienable property rights why do democratic societies often impose legal restrictions that render various assets or entitlements inalienable to the individual the explanation proposed here is that these constraints arise as an institutional response against financial markets that in a sense work too well that is i demonstrate how a well functioning financial market can potentially work against a social policy designed to ensure a basic minimum standard of living for all types of individuals inalienable property rights and debt constraints emerge as a natural institutional response to the improvident tendencies of some members of society when a majority of individuals share a common distaste for neighborhood squalor

gas generation and wind power a review of unlikely allies in the united kingdom and ireland no single solution currently exists to achieve the utopian desire of zero fossil fuel electricity generation until such time it is evident that the energy mix will contain a large variation in stochastic and intermittent sources of renewable energy such as wind power the increasing prominence of wind power in pursuit of legally binding european energy targets enables policy makers and conventional generating companies to plan for the unique challenges such a natural resource presents this drive for wind has been highly beneficial in terms of security of energy supply and reducing greenhouse gas emissions however it has created an unusual ally in natural gas this paper outlines the suitability and challenges faced by gas generating units in their utilisation as key assets for renewable energy integration and the transition to a low carbon future the single electricity market of the republic of ireland and northern ireland and the british electricity transmission trading agreement market are the backdrop to this analysis both of these energy markets have a reliance on gas generation matching the proliferation of wind power the unlikely and mostly ignored relationship between natural gas generation and wind power due to policy decisions and market forces is the necessity of gas to act as a bridging fuel this review finds gas generation to be crucially important to the continued growth of renewable energy additionally it is suggested that power market design should adequately reward the flexibility required to securely operate a power system with high penetrations of renewable energy which in most cases is provided by gas generation

brown backstops versus the green paradox abstract anticipated climate policies are ineffective when fossil fuel owners respond by shifting supply intertemporally the green paradox this mechanism relies crucially on the exhaustibility of fossil fuels we analyze the effect of anticipated climate policies on emissions in a simple model with two fossil fuels one scarce and dirty e g oil the other abundant and dirtier e g coal we derive conditions for a green orthodox anticipated climate policies may reduce current emissions the model can also be used to analyze spatial carbon leakage calibrations suggest that intertemporal carbon leakage from 0 to 8 is a relatively minor concern

the economics of fuel choice at us electric utilities abstract this paper compares and contrasts results obtained from estimating fossil fuel cost shares in the generation of electricity in the usa from two models one national and one regional while the national model provides acceptable first order results correct signs and magnitudes of critical parameters it is the regional model that reveals the underlying economics of this fuel choice problem results which hold consistently across regions and across fuels are more plausible than those which are found to be special cases in each region of the country or for each fuel type

heterogeneous effects of regulation on the efficiency of the electricity industry across european union countries abstract this paper focuses on the relationship between the stringency of regulation oecd indicators and total factor productivity tfp growth in the electricity sectors of 19 european union countries for the period 1994 2007 both the oecd regulatory indicator and the tfp growth index have been decomposed in order to bring to light a complex picture of interrelations in which the negative impact of the overall regulation on productivity is the result of opposite forces estimation results tell us that only the stringency of entry regulation significantly reduces technological change whereas vertical integration exhibits a negative and significant impact only on the catching up process pure efficiency change lastly we found an interesting result concerning the explanatory variables of the scale efficiency change in this case only public ownership matters in other terms high levels of public in the structure ownership of electric companies guarantee improvements in reaching the optimal scale of production these heterogeneous effects are also confirmed when we use a different measure of efficiency that is the distance of the actual from the optimal reserve margin

heterogeneous impacts of regulatory policy stringency on the eu electricity industry a bayesian shrinkage dynamic analysis abstract environmental and technical efficiency in the electricity sector is a major focus of regulatory policies aimed at hastening greenhouse gas reduction and lowering energy prices for final consumers understanding the impact of market and environmental regulations on efficiency is crucial for the design and choice of policy packages at the national level the productivity response to regulations depends on unobserved country specific factors that current empirical analyses have not modelled in this framework we analyse the regulation effects on efficiency in the electricity sector for a panel of european union countries we explicitly consider the effects of the environmental regulation along with the market regulation our estimation strategy uses the bayesian shrinkage estimator which can deal with the bias aggregation problem and cross country heterogeneity it allows us to identify the different transmission channels through which regulatory policy is implemented the results highlight divergent behaviours at the country level the direct impacts of the market and environmental regulatory policies on productivity are negative around 2 7 and 2 3 respectively but the countries vary in the degree to which they are able to compensate these negative effects

relative deprivation and migration preferences in this letter we overcome the existing shortages with respect to the assignment of individuals to reference groups and are the first to show that individual aversion to relative deprivation plays a decisive role in shaping migration preferences

a theory of migration as a response to occupational stigma a theory is developed of labor migration that is prompted by a desire to avoid social humiliation in a general equilibrium framework it is shown that as long as migration can reduce humiliation sufficiently migration will occur even between two identical economies migration increases the number of individuals who choose to perform degrading jobs and consequently migration lowers the price of the good produced in the sector that is associated with low social status moreover the greater an individual s aversion to performing degrading jobs the more likely it is that he will experience a welfare gain when the economy opens up

fossil fuel flexibility in west european power generation and the impact of system load factors this paper analyzes short run interfuel substitution in west european power generation and the impact of system load factors on fossil fuel choice the problems are studied within a restricted translog cost share model the paper concludes that interfuel substitution in existing power plants is substantial especially that between oil and gas this is consistent with the notion that short run fuel substitution takes place in dual or multi fired plants by switching load between different single fired plants and by some conversions of power plants to be able to burn alternate fuels the empirical investigation also indicates that the system load factor is a notable determinant of fossil fuel choices in west europe and the paper ends with an assessment of the fuel consequences of some load management schemes in the region

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

the importance of relative performance feedback information evidence from a natural experiment using high school students we study the effect of providing relative performance feedback information on performance under piece rate incentives a natural experiment that took place in a high school offers an unusual opportunity to test this effect in a real effort setting for one year only students received information that allowed them to know whether they were above below the class average as well as the distance from this average we exploit a rich panel data set and find that the provision of this information led to an increase of 5 in students grades moreover the effect was significant for the whole distribution however once the information was removed the effect disappeared to rule out the concern that the effect may be driven by teachers within the school we verify our results using national level exams externally graded for the same students and the effect remains

hard coal subsidies a never ending story abstract in germany hard coal has been subsidized for almost half a century despite the declining significance of hard coal production for the domestic labor market the subsidies have continued to increase until the middle of the last decade reaching a peak at 6 7 billion in 1996 while these subsidies have been continually shrinking since then settling at 2 7 billion in 2005 it is very likely that hard coal support will be extended in germany well into the next decade and even beyond this article questions the main arguments raised by the proponents of hard coal subsidization in germany and other eu countries most importantly in addition to the drain these subsidies impose on public budgets substantial opportunity costs are implied leading funds away from alternative more beneficial public investments from a social welfare perspective we therefore recommend the rapid abolition of these subsidies not only in germany where in real terms the accumulated amount of subsidies has now far exceeded 165 billion but also all across europe

elasticity of substitution and technical efficiency evidence from the us electricity generation abstractthe implications of national or regional energy policies for technical efficiency and environmental outcomes in electricity generation depend on fossil fuel input substitution this study u

optimal fuel mix in chp plants under a stochastic permit price risk neutrality versus risk aversion abstract this paper studies the optimal fuel mix of a chp producer under emission permit price risk the producer s multi fuel plant uses two co2 intensive fuels and one clean fuel using a mean variance framework we develop three models the models are divided into spot models risk neutral and risk averse cases and a forward model risk averse case we derive the effects of price risk on optimal fuel use an increase in price risk can in fact increase the use of co2 intensive fuel in the spot model in the forward model the production and financial decisions are separate we also evaluate the risk bearing behavior of seven finnish chp producers we found that risk neutrality describes behavior better than risk aversion

migration incentives migration types the role of relative deprivation the authors explore the role of relative deprivation versus absolute income as an incentive for migration in developing countries in section i of this paper we outline the relative deprivation model of migration and present an illustration of the divergent policy implications of a relative deprivation model versus an absolute income model an attempt is made to identify distinct empirical implications of relative and absolute income motives for migrating in section ii a migration decision model is estimated and is used to explore absolute and relative income motives for internal and international migration in a sample of rural mexican households as well as to test the extent to which discontinuity in labour markets shapes the choice of migrant destination in section iii we present our conclusions excerpt