regional bias in new firm formation in the uk whittington r c 1984 regional bias in new firm formation in the uk reg studies 18 253 256 theories explaining regional differences in new firm formation rates are tested and refining previous theory a model is constructed the major influences on new firm formation rates are found to be the regional proportions of manual workers and home ownership and the change in the rate of regional unemployment in the preceding year new firm formation rates are measured by new vat registrations the implications of these results for government small firm policy are discussed

supply versus demand side policies in the presence of carbon leakage and the green paradox we consider a climate coalition that seeks to reduce global emissions in the presence of carbon leakage and resource exhaustibility we show that a credible announcement of future unilateral supply side policies delays foreign emissions and we derive the optimal combination of consumer taxes and producer taxes when we consider leakages from free riders both within periods and across periods the tax shares generally differ over time a decline in the present value of the social cost of carbon over time supports a time path where the consumers tax share of the total carbon tax also declines over time we illustrate our findings with a numerical model

the cross country implications of alternative climate policies abstract because of worldwide growing concerns about global climate change great interest has been expressed in the potential of alternative climate policies to reduce global carbon emissions in this paper we compare cross country implications of alternative climate policies including unilateral and multilateral climate policies our main findings are as follows firstly there are large differences in cross country effects of alternative unilateral climate policies when the same given carbon emission reductions are achieved in each abating country respectively meanwhile cross border externalities undermine efficiency of unilateral climate policies secondly there are significant differences in cross country implications of alternative multilateral climate policies when the same global emission reductions are allocated in several different ways among abating countries thirdly it is difficult to reach a stable global climate treaty since any abating country has the incentive to argue for small carbon emission reductions finally multilateral climate policies can reduce the negative impacts of cross border externalities but cannot cure all cross border externalities looking ahead it will be a great policy challenge for the world to reduce carbon emissions in a cost effective way

trade in fossil fuel deposits for preservation and strategic action abstract in the world economy with interdependent markets for fossil fuel deposits and extracted fossil fuel some coalition of countries may fight climate change by purchasing and preserving fossil fuel deposits which would be exploited otherwise assuming that deposits are traded on a market with a uniform price we find that the outcome is efficient if the coalition is a price taker in both markets but inefficient if it acts strategically in the deposit market but not in the fuel market or acts strategically in both markets the latter result demonstrates that harstad s 2012 theorem 1 efficiency despite strategic action result is not robust with respect to changes in the concepts of the deposit market and market or bargaining power in a simplified parametric version of the game a strategically acting coalition buys fewer deposits consumes more fuel and puts up with higher climate damage than in first best

should we be worried about the green paradox announcement effects of the acid rain program this paper presents the first empirical test of the green paradox hypothesis according to which well intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses we use the introduction of the acid rain program in the u s as a case study the theory predicts that owners of coal deposits expecting future sales to decline would supply more of their resource between the announcement of the acid rain program and its implementation moreover the incentive to increase supply would be stronger for owners of high sulfur coal this would all else equal induce an increase in sulfur dioxide emissions using data on prices heat input and sulfur content of coal delivered to u s power plants we find strong evidence of a price decrease and of an increase in the sulfur premium some indication that the amount of coal used might have increased and no evidence of fuel switching towards higher sulfur coal overall our evidence suggests that while the mechanism indicated by the theory might be at work market conditions and concurrent regulation largely prevented a green paradox from arising these results have implications for the design of climate policies

bottom up world climate policies preserving fossil fuel deposits vs capping fuel consumption the policy of purchasing fossil fuel deposits for preservation is an alternative to the demand side climate policies that predominate in practice and in professional studies this paper analyzes the deposit purchase approach and compares it to the standard demand side policy in a model with international trade and non cooperative governments that account for the effects of their policies on equilibrium prices we investigate how the two regimes differ with respect to their equilibrium allocations and in particular with respect to the countries mitigation effort and welfare if countries are symmetric mitigation is stronger in the demand side than in the supply side regime and the transition from the latter to the former is welfare enhancing for all countries if countries have different endowments of deposits in a two country economy the country with higher extraction costs does not purchase deposits for preservation and the country with lower extraction costs is better off with the supply side than with the demand side policy finally we consider the case of combined policies and find surprisingly that no equilibrium in pure strategies exists when heterogeneous countries apply both policy instruments politiques climatiques mondiales ascendantes preservation des gisements de combustibles fossiles par opposition a la limitation de la consommation de carburant la politique d achat de gisements de combustibles fossiles aux fins de preservation represente une alternative aux politiques climatiques axees sur la demande predominant a la fois dans la pratique mais aussi dans les etudes professionnelles cet article analyse l approche fondee sur l achat de gisements et la compare a la politique standard axee sur la demande dans un modele de commerce international et de gouvernements non cooperatifs prenant en compte les effets de leurs politiques sur les prix d equilibre nous avons recherche en quoi les deux regimes differaient relativement a leur repartition de l equilibre et notamment relativement a l effort d attenuation et a la protection sociale si les pays sont symetriques l attenuation est plus prononcee dans un systeme axe sur la demande comparativement a un systeme axe sur l offre et la transition du second au premier systeme permet d ameliorer la protection sociale pour tous les pays dans une economie a deux pays differemment dotes en matiere de gisements le pays ayant les couts d extraction les plus eleves n achete pas de gisements a des fins de preservation tandis que le pays ayant les couts d extraction les moins eleves se retrouve en meilleure posture dans une politique axee sur l offre plutot que sur la demande pour terminer nous examinons le cas des politiques combinees et etonnamment nous constatons qu il n existe aucun equilibre en matiere de strategies pures lorsque des pays heterogenes appliquent les deux moyens d action

incomplete international cooperation to reduce co2 emissions alternative policies abstract as a first step toward a global treaty to control co2 emissions individual countries contemplate unilateral reductions in their fuel use such actions if significant would reduce world market fuel prices thereby stimulating fuel use elsewhere and causing problems for exporting countries possibly jeopardizing this policy initiative among the policy alternatives for mitigating the price effects of reduced demand reduced fuel consumption combined with buying or leasing fuel deposits to achieve a reduced supply is discussed in particular this policy which at first seems prohibitively costly is shown to dominate the original policy approach under a fairly wide set of circumstances

the principal agent relationship with an informed principal the case of private values we analyze the principal agent relationship when the principal has private information as a three stage noncooperative game contract proposal acceptance refusal and contract execution we assume that the information does not directly affect the agent s payoff private values equilibrium exists and is generically locally unique moreover it is pareto optimal for the different types of principal the principal generically does strictly better than when the agent knows her information equilibrium allocations are the walrasian equilibria of an economy where the traders are different types of principal and exchange the slack on the agent s individual rationality and incentive compatibility constraints

environmental management policy under international carbon leakage this article studies environmental management policy when two fossil fuel consuming countries noncooperatively regulate greenhouse gas emissions through emission taxes or quotas the presence of carbon leakage caused by fuel price changes affects the tax quota equivalence we explore each country s incentive to choose a policy instrument in a two stage policy choice game and find subgame perfect nash equilibria this sheds new light on the questions of which policy instrument is more stringent and of why adopted instruments could be different among countries in particular our result suggests a reason why developing countries tend to employ emission taxes whereas developed countries tend to adopt quotas

mechanism design by an informed principal private values with transferable utility we provide a solution to the informed principal problem in the independent private values setting with monetary transfers the principal s private information creates signaling considerations that may distort the implemented allocation we show that there is no distortion all principal types implement an allocation that is optimal for the principal ex ante before he she learns his her type as an application we consider settings with linear utility for bilateral exchange in which the principal is one of the traders the solution is a combination of a participation fee a buy out option for the principal and a resale stage with posted prices

the triple inefficiency of uncoordinated environmental policies when pollution is transboundary and there is international trade a domestic inefficiency may arise in addition to the well known inefficiencies at the international level more precisely there will be a nash equilibrium in which each country chooses a policy that gives it lower welfare than would otherwise be possible given the emission levels of all countries however there will also be a nash equilibrium in which each country chooses tradable emission quotas as its policy instrument to achieve its desired level of emissions in this nash equilibrium welfare in each country is maximised given the emission levels of all countries

the price of advice we develop a model of consulting advising where the role of the consultant is to reveal signals to her client that refine the client s original private estimate of the profitability of a project although the client can perfectly observe and evaluate these signals the consultant may only be able to do the same imperfectly or not at all this captures the idea that the expert may not fully understand the impact of her advice on the client we characterize the optimal contract between the consultant and her client it is a menu consisting of pairs of transfers specifying payments between the two parties in case the project is undertaken by the client and in case it is not the main result of the article is that in the optimal mechanism the consultant obtains the same profit as though she could perfectly observe and evaluate the impact of the signals whose release she controls on the client s profit estimate

supply side climate policy on the role of exploration and asymmetric information in the world economy with interdependent markets for fossil fuel deposits and extracted fossil fuel a coalition of countries may fight climate change by purchasing fossil fuel deposits for preservation harstad j polit econ 120 77 115 2012 has shown that the coalition s supply side climate policy implements the first best the present paper focuses on the role exploration and asymmetric information with respect to climate damage plays for the efficiency of unilateral supply side climate policy under the assumption of non strategic exploration and truthful reporting of climate damage the deposit policy turns out to be efficient if exploration is used strategically or the coalition misreports its climate damage however the deposit policy becomes inefficient

informed principal problem with moral hazard risk neutrality and no limited liability abstract we consider a principal agent moral hazard problem with risk neutral parties and no limited liability in which the principal has private information the principal s private information creates signaling considerations that may distort the implemented outcome these distortions can explain e g efficiency wages beaudry 1994 and muted incentives inderst 2001 we show that in a large class of environments these distortions vanish if the principal is allowed to offer sufficiently rich contracts

on countervailing incentives abstract this paper extends and unifies previous work on optimal contracts under countervailing incentives shedding light in particular on the relation between countervailing incentives and pooling inflexible rules our main result is that the nature of the optimal contract depends crucially on whether the agent s utility is quasiconcave or quasiconvex in the private parameter the optimal contract is separated in the former case and it may entail pooling in the latter case journal of economic literature classification number d82

entrepreneurship and regional development some conceptual issues o farrell p n 1986 entrepreneurship and regional development some conceptual issues reg studies 20 565 574 this paper attempts to clarify and improve understanding of the concept of entrepreneurship in national and regional development the nature of entrepreneurship is discussed and it is shown that the entrepreneur and the capitalist are conceptually distinct that it is useful to differentiate between the entrepreneurial and managerial functions and that the essence of the concept is the initiation of entrepreneurial acts when the individual is behaving in an innovative way under uncertainty the distinction between entrepreneurship and arbitrage is briefly clarified and the relationship between entrepreneurship and large organizations is discussed our understanding of spatial variations in entrepreneurial behaviour is currently insufficient for the purpose of explanation and policy prescription

new firms and rural industrialization in east anglia gould a and keeble d 1984 new firms and rural industrialization in east anglia reg studies 18 189 201 the paper analyses key aspects of the formation of new independent manufacturing firms in east anglia between 1971 and 1981 special attention is paid to trends in formation rates over time to the spatial bias of new firm origins towards both rural areas and the cambridge region and to the location character and impact of high technology new firms original findings include the contention that spatial variations chiefly reflect variation in the occupational structure of the resident workforce together with industrial mix plant size and previous industrial immigration some implications for government policy to new firms are discussed

buy coal a case for supply side environmental policy free riding is at the core of environmental problems if a climate coalition reduces its emissions world prices change and nonparticipants typically emit more they may also extract the dirtiest type of fossil fuel and invest too little in green technology the coalition s second best policy distorts trade and is not time consistent however suppose that the countries can trade the rights to exploit fossil fuel deposits as soon as the market clears the above mentioned problems vanish and the first best is implemented in short the coalition s best policy is to simply buy foreign deposits and conserve them

the supply side of co2 with country heterogeneity several recent articles have analyzed climate policy paying explicit attention to the fact that carbon resources are non renewable in most of this body of literature the economy is treated as a single unit and in the context of climate policy it seems reasonable to interpret this as the whole world however carbon taxes and other climate policies differ substantially across countries with such heterogeneity the effects on the emission paths of changes in taxes costs and subsidies might be very different from what is found for a hypothetical world of identical countries

emissions trading of global and local pollutants pollution havens and free riding abstract in the presence of local sulfur and global carbon pollutants we examine the pollution haven hypothesis and free riding behavior under domestic emissions trading poorer southern countries become pollution havens when free trade opens up whenever sulfur damage functions are linear or when sulfur levels in equilibrium are not higher in the south with global trading of carbon permits the pollution haven effect emerges in equilibrium whenever the convex sulfur damage functions are nonlinear countries that do not participate in a global protocol designed to reduce carbon emissions enjoy double benefits stemming from free riding and cleaner local environments

participation constraints in adverse selection models abstract this paper characterizes the optimal contract offered by an uninformed principal to an informed agent when the latter s reservation utility depends on his type the informational rent is nonmonotonic so that interior types may have a vanishing rent or be excluded from trade the paper identifies conditions for the optimal contract to be separating to be nonstochastic and to induce full participation it also discusses the nature of the solution when bunching occurs the results are applied to nonlinear pricing under price cap regulation and bypass competition and to competition in nonlinear pricing journal of economic literature classification numbers d82 d42 d23 d78 l51 l15

optimal border policies for invasive species under asymmetric information this paper analyzes the problem faced by a border protection agency if endogenous exporter abatement activities affect invasive species risk allowing for unobservable differences in abatement cost we show how the optimal inspection penalty regime differs from the symmetric information case departing from previous literature we allow for technical assistance a policy instrument specifically permitted and commonly employed under article 9 of the world trade organization sanitary and phytosanitary agreement we find the information asymmetry can make it optimal for the importing country to provide technical assistance grants for exporter risk abatement even if it would otherwise be inefficient further we show that fungibility of technical assistance with inputs in other sectors of the exporting economy affects the qualitative nature of optimal policy if technical assistance has no outside value in the exporter s country optimal policy is characterized by a menu of contracts balancing higher tariffs with lower penalties for being caught with an invasive if technical assistance can be used in other sectors of the exporter s economy it can introduce countervailing incentives making a uniform tariff penalty combination optimal

self enforcing environmental agreements and trade in fossil energy deposits abstract the literature on self enforcing environmental agreements sieas focuses on de mand side emission reduction policies to our knowledge harstad 2012 is the only study on sieas in which countries purchase fossil energy deposits to prevent their exploitation he finds that for any coalition size there exists a small subset of parameters different for each size such that the coalition of that size is stable however the comparison of harstad s results with the prevailing demand side siea analyses is hampered by major differences in the structure of the respective game models this paper develops a game model with a deposit market and deposit purchases for preservation that is in line with some demand side siea literature it turns out that either no coalition is stable or the grand coalition is the only stable coalition we compare the outcome of our model not only with harstad s model but also with eichner and pethig s 2015 model of the formation of sieas in which climate policy takes the form of demand side emissions taxes

informed principal and countervailing incentives it has been shown by maskin and tirole 1990 proposition 11 that with quasi linear preferences and private values an informed principal neither gains nor loses if her private information is revealed before contracting takes place the note shows that this result may not hold when the agent faces countervailing incentives

understanding the competitive process a guide to effective intervention in the small firms sector abstract the paper describes a project undertaken within the economic and social research council s competitiveness of british industry research programme the aim of the project was to assist agencies who intervene in a local economy to try to help individual small firms guidance currently available to such agencies was considered to lack an adequate theoretical basis in relation to either the choice of firms who should be granted assistance or the form of assistance which might be given in particular there is a lack of recognition that there is scope for management strategy among smaller firms affecting the way they compete in the market place and having a clear bearing on their revealed performance from a study of 100 small firms located in telford new town criteria were derived for classifying the competitive stance of small firms this was identified as the key to the potential performance of the small firm the extent to which it reveals a potential for future growth can determine whether a firm is or not a suitable candidate for assistance and the strengths and weakness in an individual firm s stance can determine the most suitable form of assistance to give the survey and analysis exercise leading to the identification of components of competitive stance are described and the classification of firms into a range of stance types then the usefulness of the competitive stance classification as a guide to selection of firms and choice of form of assistance is considered

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

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

a distributional argument for supply side climate policies this paper presents a distributional argument for the use of supply side climate policies whereby carbon emissions are controlled through i depletion quotas or ii permanent confiscation of a fraction of the in situ carbon stocks the modeling considers intertemporal competitive equilibria in the cobb douglas version of the dasgupta heal solow stiglitz model of capital accumulation and costless resource extraction it is shown how policies i and ii preserve the functional distribution of income between capital owners and resource owners compared to the case where no climate policy is needed while suggested demand side policies do not such observations are of interest as avoiding functional redistribution may facilitate climate change negotiations the paper discusses policy implications of the analysis outside the simplified setting of the stylized model

buy coal and act strategically on the fuel market abstract a coalition of given size fights climate change by a policy of purchasing fossil fuel deposits and it seeks to manipulate the fuel price in its favor assuming that non signatories are price takers in the fuel market harstad 2012 designs a policy of trading deposits that attains efficiency despite the coalition s option to act strategically in the fuel market the deposit transactions constituting that policy include the trade of deposits which the non signatories would have exploited and the coalition will exploit the present paper shows that in a proper subset of economies a simpler policy is also efficient that consists of deposit purchases for preservation only in these economies the coalition is unable to raise its welfare above the level in the benchmark case of fuel price taking in the economies where the efficient policy requires deposit transactions for exploitation the coalition is better off and the non signatories are worse off than in case of price taking

countervailing incentives in agency problems abstract we analyze countervailing incentives in agency problem countervailing incentives exist when the agent has an incentive to understate his private information for some of its realizations and to overstate it for others when countervailing incentives arise pooling generally characterizes the equilibrium contract furthermore performance is distorted both above and below efficient levels in addition the agent s rents generally increase with the realization of his private information over some ranges and decrease over other ranges we demonstate that the creation of countervailing incentives can enhance aggregate welfare

coordination and externalities abstract we analyze the gains of coordinating decisions in a regulatory framework in which agents are sovereign and tax inducements are socially costly we consider a general multi agent situation with externalities among agents incomplete information and type dependent reservation utilities when the regulator optimally leaves informational rents to the most efficient agents centralized coordination reduces global activity coordination induces more activity when the principal optimally leaves rents to the most inefficient agents last if we impose budget balance our mechanism can also be interpreted as the optimal auction of a public good with congestion externalities journal of economic literatureclassification numbers d62 d82 l51

flattening the carbon extraction path in unilateral cost effective action internalizing the global negative externality of carbon emissions requires the flattening of the extraction path of world fossil energy resources world carbon emissions we consider governments with sign unconstrained emission taxes at their disposal and seeking to prevent world emissions from exceeding some binding aggregate emission ceiling in the medium term such a ceiling policy can be carried out either in full cooperation or by a sub global climate coalition unilateral action has to cope with carbon leakage and high costs which makes a strong case for choosing a policy that implements the ceiling in a cost effective way in a two country two period general equilibrium model with a non renewable fossil energy resource we characterize the unilateral cost effective ceiling policy and compare it with its fully cooperative counterpart we show that with full cooperation there exists a cost effective ceiling policy in which only first period emissions are taxed at a rate that is uniform across countries in contrast the cost effective ceiling policy of a sub global climate coalition is characterized by emission regulation in both periods the share of the total stock of energy resources owned by the sub global climate coalition turns out to be a decisive determinant of the sign and magnitude of unilateral cost effective taxes

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had