the ces production function the accounting identity and occam s razor this paper reconsiders the argument that empirical estimations of aggregate production functions may be interpreted merely as statistical artefact the reason is that occam s razor or herbert simon s principle of parsimony suggests that the aggregate production function together with the side equations derived from the usual neoclassical optimizing conditions simply reflect the underlying accounting identity that value added definitionally equals the wage bill plus total profits this argument is illustrated with respect to the empirical evidence presented by arrow chenery minhas and solow review of economics and statistics xliii 225 50 1961 and which led them to derive the constant elasticity of substitution aggregate production function it is shown that their results are more parsimoniously explained with reference to the underlying accounting identity than to any technological relationship

an innovation focused roadmap for a sustainable global photovoltaic industry the solar photovoltaic pv industry has undergone a dramatic evolution over the past decade growing at an average rate of 48 percent per year to a global market size of 31 gw in 2012 and with the price of crystalline silicon pv module as low as 0 72 w in september 2013 to examine this evolution we built a comprehensive dataset from 2000 to 2012 for the pv industries in the united states china japan and germany which we used to develop a model to explain the dynamics among innovation manufacturing and market a two factor learning curve model is constructed to make explicit the effect of innovation from economies of scale the past explosive growth has resulted in an oversupply problem which is undermining the effectiveness of demand pull policies that could otherwise spur innovation to strengthen the industry we find that a policy shift is needed to balance the excitement and focus on market forces with a larger commitment to research and development funding we use this work to form a set of recommendations and a roadmap that will enable a next wave of innovation and thus sustainable growth of the pv industry into a mainstay of the global energy economy

the direction of innovation abstract how do innovation policies affect the direction of research is market based innovation too radical or too incremental we construct a novel and tractable model of the direction of innovation firms pursue inefficient research directions because they race to discover easy yet less valuable projects and because they work on difficult inventions where they can appropriate a larger portion of the social value fixing these inefficiencies requires policy to condition on properties of inventions that could have been discovered but were not policies which do not do so like patents and prizes may fail to encourage firms to research in the efficient direction even if they obtain the optimal quantity of r d

the impact of heterogeneity in purchase timing and price responsiveness on estimates of sticker shock effects the notion that individuals have an internal reference price against which they compare observed prices is well supported by several psychological theories empirically several papers in the marketing literature employing scanner panel data have modeled the impact of reference prices on brand choice via the sticker shock formulation in which consumers evaluate choice alternatives using differences between shelf prices and reference prices most of the studies reported thus far have not accounted for heterogeneity in price response among consumers and have typically imputed reference prices from the shelf prices of brands that a consumer is supposed to have observed on previous purchases in the category since category marketing activity can differentially affect the purchase timing of households we argue that this measure of reference price may follow certain systematic patterns across consumers and when combined with unaccounted for price response heterogeneity may result in a spurious sticker shock effect specifically we show that estimates of sticker shock are biased upward if households that are price sensitive in the brand choice decision are also more responsive to category promotion activity in their purchase timing decision we discuss some general conditions under which the bias occurs and conduct a simulation experiment to confirm our specific hypotheses our simulation results show that changes in purchase timing are a critical determinant of the bias in the sticker shock effect we also show that unaccounted for price response heterogeneity can in itself result in a biased sticker shock parameter however this requires very large differences in price sensitivities across consumers far greater than what is normally observed we develop a hierarchical bayes version of the nested logit model which models heterogeneity via individual level parameters in a continuous random effects framework we estimate the model on scanner panel data from the yogurt and ketchup categories we find in both categories that the 95 probability interval of the posterior distribution of the mean sticker shock coefficient contains the value zero therefore at least for the data used in this study there is no evidence for the sticker shock effect at the aggregate level in contrast the corresponding coefficient from a standard model which ignores this heterogeneity is highly significant and supports the existence of a possibly spurious sticker shock effect consistent with our explanation of the underlying cause of the bias households that are more price sensitive in the choice decision are also found to be more responsive to category promotion activity in their decision to purchase in the category the results highlight the measurement problems associated with imputing reference prices from past prices since the frequency duration and price level of a retailer s promotional program depend on its size and prevalence accurate estimates of the sticker shock effect are essential for formulating optimal promotion strategies an adequate accounting of consumer heterogeneity is critical to this effort

the price elasticity of selective demand a meta analysis of econometric models of sales the author describes a meta analysis of econometric studies that estimated the elasticity of selective sales or market share to price the literature review yielded 367 suitable price elasticities

quantitative study on long term global solar photovoltaic market abstract this paper analyzes the relationship between the declines in solar photovoltaic pv module costs and cumulative production silicon prices supply demand imbalance and the presence of lower cost chinese products in global pv market using learning curve model state of market development and its connection with learning is also examined results indicate that learning effect is best measured when supplementing output with silicon prices in the analysis learning rate lr diminishes over the time periods examined thereby suggesting the declining of progress as market reaches maturity the outcomes from the learning curve analysis are subsequently applied to project future uptake of pv worldwide module and electricity costs till 2035 demand for pv is anticipated to remain robust with cumulative installed capacity worldwide projected to reach 659 gw by 2035 at the same time module cost is estimated to decline from 3 8 w in 2006 to 1 78 w in 2035 a reduction of over 50 relative to 2006 level unit cost of electricity from pv is predicted to be in the range of 0 13 kwh to 0 17 kwh by 2035 for the three scenarios analyzed

investigating household purchase timing decisions a conditional hazard function approach the purchase timing decision is an important component of the dynamics of a household s purchase behavior this decision is influenced by marketing and other variables and the modeling of this dependence has recently received attention in the literature in this paper we build on previous studies and develop a comprehensive stochastic model that incorporates the major factors influencing interpurchase times specifically we use a generalized version of cox s proportional hazard model to test among competing probability distributions for the interpurchase times while incorporating effects due to marketing variables observed household characteristics and unobserved heterogeneity across households the empirical finding from analyzing the iri coffee data suggests that the interpurchase times cannot be adequately described by probability distributions such as exponential erlang 2 or weibull the effects of unobserved heterogeneity are significant and they impact the estimates of the effects of the covariates we also find that a nonparametric procedure for estimating the effects of unobserved heterogeneity provides the best overall fit to the data and yields covariate estimates that are more consistent with prior expectations our model is validated by replicating the substantive empirical findings on an additional product category

estimating a multinomial probit model of brand choice using the method of simulated moments the multinomial probit model of brand choice is theoretically appealing for marketing applications as it is free from the independence of irrelevant alternatives property of the multinomial logit model however difficulties in estimation have restricted its widespread use in marketing this paper presents an application of the method of simulated moments a new methodology that enables easy estimation of probit models with a large number of alternatives in the choice set we describe the theoretical development of the technique and using pseudo simulated data conduct numerical experiments to compare the method with existing techniques for estimating probit models using the scanner panel data on the purchases of catsup we provide an empirical application of the method of simulated moments to the estimation of the parameters of a multinomial probit model estimating the covariance structure associated with the underlying latent variable probit model enables us to identify broad patterns of similarities across alternatives it also enables us to derive a pairwise similarity matrix across choice alternatives which when input into a multi dimensional scaling routine provides us with a graphical representation of competitive structure in the catsup market for completeness we compare the substantive implications for the effects of marketing variables obtained from the multinomial probit model with those obtained from models in the extant marketing literature

an empirical analysis of latitude of price acceptance in consumer package goods scanner panel data analyses for sweetened and unsweetened drink categories with four brands in each support the presence of a region of price insensitivity around a reference price the analyses also suggest that consumers with higher average reference price have a wider latitude of price acceptance consumers with a higher frequency of purchase i e shorter average interpurchase time interval are found to have a narrower latitude of price acceptance because they are more aware of the range of price distributions finally consumers with a higher average brand loyalty have a wider latitude of price acceptance demonstrating greater tolerance of price fluctuations

a comparative analysis of reference price models the effect of reference price on brand choice decisions has been well documented in the literature researchers however have differed in their conceptualizations and therefore in their modeling of reference price in this article we evaluate five alternative models of reference price of which two are stimulus based i e based on information available at the point of purchase and three that are memory based i e based on price history and or other contextual factors we calibrate the models using scanner panel data for peanut butter liquid detergent ground coffee and tissue to account for heterogeneity in model parameters we employ a latent class approach and select the best segmentation scheme for each model the best model of reference price is then selected on the basis of fit and prediction as well as on the basis of parsimony in cases where the fits of the models are not very different in all four categories we find that the best reference price model is a memory based model namely one that is based on the brand s own price history in the liquid detergent category however we find that one of the stimulus based models namely the current price of a previously chosen brand also performs fairly well we discuss the implications of these findings

the quality factor in patent systems this article develops a methodology to compare the quality of examination services in three major patent systems quality is defined as the extent to which patent systems comply with the patentability conditions in a transparent way the methodology consists of a two layer analytical framework encompassing legal standards ls and their operational design od which includes several interdependent components that affect the stringency and transparency of the filtering process the comparison of patent systems in europe japan and the united states shows that their operational designs differ substantially the european system provides higher quality and more expensive examination services than the united states one while the japanese patent system is in an intermediate position the results illustrate that different system designs lead to different outcomes in terms of backlogs patent propensity and the number of dubious patent rights in force in this respect these findings i provide an empirical validation of the conjecture of a vicious cycle linking the quality of examination and demand for patents and ii highlight the need for a multifaceted convergence of patent systems before mutual recognition is put in place the author 2011 published by oxford university press on behalf of associazione icc all rights reserved

finding common ground between ecological economics and post keynesian economics abstract post keynesian economics and ecological economics have in common that they are considered to be heterodox schools of thought aside from that there has not been a strong connection between them previous books on post keynesian economics contain no chapter on environmental or ecological issues this neglect has led leading ecological economists to criticize post keynesians for succumbing to the same growth paradigm as the neoclassical school this paper argues that the two approaches are complementary in the sense that they each have different strong points ecological economics has correctly pointed out that the growth of the global economy may not be welfare improving anymore whereas post keynesians have gained valuable insights into the functioning of the capitalist growth process to determine the feasibility of a synthesis between the two schools the paper compares their approaches to the problems of production consumption and economic dynamics as well as the associated policy recommendations it shows that on a theoretical level the two schools have much in common but their policy conclusions differ with regard to the desirability of further growth the paper concludes that a synthesis of both approaches may lead to a better understanding of how a capitalist economy operates in a natural environment with limits to growth and to better informed policy advice

multiple competing photovoltaic supply chains modeling analyses and policies abstract many large scale photovoltaic pv energy programs have been launched and developed in the world without a thorough sustainable thinking resulting in an on going misalignment between the demand and supply of the pv systems the global pv industry has encountered a serious oversupply problem causing fierce competitions among the pv supply chains and also led to the dumping accusation and anti dumping trade battles between the pv system importing and exporting countries it is critical to develop better policy and business insights to redirect the current business exchanges and the industry policies for the pv supply chain development this paper attempts to examine theoretically and numerically the business dynamics in a multiple pv supply chain system to acquire better insights and propose appropriate industry policy and business strategy directions for both the governments and businesses this study mimics the contemporary pv supply chains with three supply chain game theoretical models examining the equilibrium conditions of the multiple pv supply chains under cournot competition the numerical and sensitivity analyses of the theoretical supply chain models create several valuable findings on the dynamics regarding the economic decisions of the supply chain members in a pure centralized a pure decentralized and a hybrid multiple supply chain system the quantitative analytical results provide a strong support to the contemporary supply chain theory advocating the world of the business competition has altered to supply chains rather than companies several public and business policy directions are proposed it is suggested that the pv supply chain members should find effective means to form partnership and build up their supply chains which would most likely strengthen their competitiveness in their current markets for governments there are opportunities on both the supply side and the demand side of the pv supply chains to regulate or encourage the pv industry to move toward a healthier industrial structure

the politics of renewable energy trade the us china solar dispute abstract the chinese and us governments played significant roles in the development of renewable energy industries seeing them as key growth sectors and crucial to addressing climate change while the us and china cooperated in renewable energy development since 2011 the countries have engaged in a protracted and major trade dispute in the solar photovoltaics industry we propose that the us government s decision to impose and then expand tariffs on a number of chinese solar producers can be explained though a model of coalitional politics drawing on actor centered institutionalism and the advocacy coalition framework we show that a coalition of domestic manufacturers and congressional interests formed a protectionist coalition that utilized us trade law to their advantage in doing so they sidelined a free trade coalition representing the majority of us solar photovoltaic firms the institutional design of us trade law also facilitated the successful application of trade remedies our analysis suggests that the domestic politics of renewable energy trade make trade conflicts a likely outcome leaving limited scope for policy to carefully manage the trade off between protecting parts of manufacturing through tariffs and lowering the cost of renewable energy technologies to mitigate climate change

reference effects of price and promotion on brand choice behavior when consumers are exposed to pricing and promotional activity by frequently purchased packaged goods they may develop expectations that are used as points of reference in evaluating future activi

evaluating the causes of cost reduction in photovoltaic modules abstract photovoltaic pv module costs have declined rapidly over forty years but the reasons remain elusive here we advance a conceptual framework and quantitative method for quantifying the causes of cost changes in a technology and apply it to pv modules our method begins with a cost model that breaks down cost into variables that changed over time cost change equations are then derived to quantify each variable s contribution we distinguish between changes observed in variables of the cost model which we term low level mechanisms of cost reduction and research and development learning by doing and scale economies which we refer to as high level mechanisms we find that increased module efficiency was the leading low level cause of cost reduction in 1980 2012 contributing almost 25 of the decline government funded and private r d was the most important high level mechanism over this period after 2001 however scale economies became a more significant cause of cost reduction approaching r d in importance policies that stimulate market growth have played a key role in enabling pv s cost reduction through privately funded r d and scale economies and to a lesser extent learning by doing the method presented here can be adapted to retrospectively or prospectively study many technologies and performance metrics besides cost

the impact of reference price effects on the profitability of price promotions this paper investigates the impact of reference price effects on retailer price promotions and describes why these effects can make promoting profitable first we analyze the profit impact of reference price effects generated by a single period of promotion the promotion can increase profit if the gain that these effects create in the promotion period outweighs the loss they create in future periods we then describe how retailers can estimate the optimal strategy of recurring promotions that maximizes profits from reference price effects over a time horizon examples of such strategies are presented for a retailer selling a national brand of peanut butter we obtain insights into how promotion prices timing and profits are affected by changes in costs interest rates consumers reactions to reference price effects and error in estimates used in the model the retailer s optimal reaction to a trade deal is also examined this strategy involves a phase of increased promotion activity sandwiched between phases of decreased activity we explain these results using the effects described in the single period model

an empirical analysis of internal and external reference prices using scanner data single source yogurt data are used to examine whether both internal and external reference prices affect purchase decisions internal reference prices are memory resident prices based on actual fair or other price concepts external reference prices are observed stimuli such as regular prices that stores may display along with a sale price for comparability discrete choice models with variables representing the two types of reference prices are estimated and both types of variables are found to have significant effects on purchase probabilities this suggests that consumers may use multiple reference points in evaluating price in purchase decisions in addition a model using an indicator of a sale price discount explains purchase probabilities as well as one that models the actual discount which suggests that consumers may be reacting to the indication of savings rather than to the amount of the discount

how different are the production functions of the european manufacturing sectors new empirical evidence the neo classical model of international trade assumes that the total factor productivity tfp of a sector is common across countries that returns to scale are constant and that the sectoral production of the countries differs by virtue of the factor endowments in this article we consider whether the differences in production can also be explained by the economies of scale in the national industries and by the technological differences across countries to test this hypothesis we estimate three models proposed in harrigan 1999 with data for eight european union eu member states covering the period 1978 to 1992 and analyse how the tfp changes from country to country

correcting for biases when estimating production functions an illusion of the laws of algebra this paper shows that the endogeneity bias that allegedly appears when estimating production functions using value data and which the literature has tried to deal with since the 1940s is simply the result of omitted variable bias due to a poor approximation to an accounting identity this problem has no econometric solution as a result recent attempts to solve the problem by developing new estimators are questioned the only possible way to estimate the technological parameters of the production function is to use physical quantities

optimal policy supports for renewable energy technology development a dynamic programming model abstract policy support has played a significant role in driving the rapid development of renewable energy technologies rets this study constructed a dynamic programming model to derive the optimal policy supports for rets integrating both supply and demand sides the sensitivity of policy performance on the cost and price elasticities of ret diffusion was also analyzed the results show that policy supports could be a main force for ret development in their initial periods in the long run policy makers need to decrease the support level faster than the decrease in ret cost to maintain a high policy efficiency further improving the efficiency of policy is possible considering the influences of technical change on ret development

a tale of two market failures technology and environmental policy abstract market failures associated with environmental pollution interact with market failures associated with the innovation and diffusion of new technologies these combined market failures provide a strong rationale for a portfolio of public policies that foster emissions reduction as well as the development and adoption of environmentally beneficial technology both theory and empirical evidence suggest that the rate and direction of technological advance is influenced by market and regulatory incentives and can be cost effectively harnessed through the use of economic incentive based policy in the presence of weak or nonexistent environmental policies investments in the development and diffusion of new environmentally beneficial technologies are very likely to be less than would be socially desirable positive knowledge and adoption spillovers and information problems can further weaken innovation incentives while environmental technology policy is fraught with difficulties a long term view suggests a strategy of experimenting with policy approaches and systematically evaluating their success

patent quality and research productivity measuring innovation with multiple indicators we analyse the determinants of the decline in research productivity using panel data on manufacturing firms in the us for the period 1980 93 we focus on three factors the level of demand the quality of patents and technological exhaustion we develop an index of patent quality using detailed patent information and show that using multiple indicators substantially reduces the measured variance in quality research productivity at the firm level is inversely related to patent quality and the level of demand as predicted by theory and patent quality is positively associated with the stock market value of firms