renewable and non renewable energy growth emissions linkages review of emerging trends with policy implications abstract this study is an extension of the previous studies which focused mainly on energy growth nexus but fails to consider the carbon emission implication of this relationship the methodology of the study permits a comprehensive and comparative analysis of existing studies on renewable and non renewable energy growth emission nexus in order to draw some implications for policy and research the survey revealed the extent of the spread of studies across issues time and geographical space countries and regions it also disclosed the range of methodological approaches adopted to analyse the issues over time and the frequency of their use it unravelled the varied findings across countries and regions given the diverse methods employed and specific features of the economies analysed arising from the literature survey this study highlights the existing gaps in the literature and new direction for policy and research the general policy implication of the findings of this study is that pollution effect of energy growth nexus should be taken into consideration in policy formulation for sustainable development further the design of regional and global policies should recognise the fact that energy growth emission linkages varied across countries even in the same region some new direction for research on renewable and non renewable energy growth emission linkages pointed out in this survey includes the following future research on energy growth nexus without considering the pollution impact may not contribute so much to the literature studies should investigate the substitution complementary effects of the energy varieties on growth emission nexus while new methodological contributions are imperative

optimal dynamic pricing of inventories with stochastic demand over finite horizons in many industries managers face the problem of selling a given stock of items by a deadline we investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm s objective is to maximize expected revenues examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry which markets space such as seats on airline flights cabins on vacation cruises and rooms in hotels that become worthless if not sold by a specific time we formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity resp price as a function of the stock level and the length of the horizon for a particular exponential family of demand functions we find the optimal pricing policy in closed form for general demand functions we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity finally we extend our results to the case where demand is compound poisson only a finite number of prices is allowed the demand rate is time varying holding costs are incurred and cash flows are discounted the initial stock is a decision variable and reordering overbooking and random cancellations are allowed

using a policy mix for pollution control a review of economic literature this article provides a review of economic studies analyzing the use of multiple policies a socalled policy mix to cope with single pollution problems to guide and structure the review an analytical framework is developed and applied the framework integrates transaction costs into the analysis of pollution problems and policies to overcome them moreover it understands a pollution externality not only as a market failure but more generally as the failure of private governance structures based on this insight two rationales for using a policy mix are identified first a policy mix may help to correct for multiple reinforcing failures of private governance structures such as pollution externalities and technological spillovers second a policy mix can be employed if the implementation of single first best policies brings about high transaction costs e g when marginal pollution damages are heterogeneous or polluters are unlikely to comply with the policy for each rationale the relevant literature is presented based on the review avenues for future research are identified

the socially optimal recycling rate evidence from japan this paper estimates the average social cost of municipal waste management as a function of the recycling rate social costs include all municipal costs and revenues costs to recycling households to prepare materials estimated with an original method external disposal costs and external recycling benefits results suggest average social costs are minimized with recycling rates well below observed and mandated levels in japan cost minimizing municipalities are estimated to recycle less than the optimal rate these results are robust to changes in the components of social costs indicating that japan and perhaps other developed countries may be setting inefficiently high recycling goals

economic efficiency effects of alternative policies for reducing waste disposal abstract reducing the amount of municipal solid waste that is disposed of has become an important policy goal previous research argued that a virgin material tax offered an efficient method of meeting this goal and it continues to be considered as a policy option today this paper demonstrates however that a virgin material tax is not an efficient method of reducing waste but that an alternative policy a combined disposal tax and reuse subsidy is the combined disposal tax and reuse subsidy is theoretically consistent with unit based household charges for waste disposal but may have advantages in some situations

scrap prices waste and recycling policy this study examines the effect of waste and recycling policy on scrap prices and the importance of scrap price feedbacks as a determinant of policy costs price effects and direct and indirect channels of waste reduction are decomposed for deposit refund advance disposal fee and recycling subsidies scrap price feedbacks decrease the cost of advance disposal fees increase the cost of recycling subsidies and have an ambiguous effect on the cost of deposit refund simulation analysis finds that scrap price feedbacks substantially affect the costs of the policies and alter the ranking of instruments jel q53 q58

environmental federalism and environmental liability abstract environmental federalism considers what level of government should optimally regulate pollution this paper addresses this question for accidental pollution which government regulates through the ex post liability regimes of either negligence or strict liability we find that decentralizing the choice between these regimes does not in general induce the socially optimal outcome when firms can pay all damages all regions may choose negligence and impose an overly strict standard of due care when firms may be bankrupted by damages all regions may choose strict liability which induces too little care in addition asymmetric equilibria are possible in which some regions choose negligence others strict liability combining negligence with a pigovian tax or strict liability with a bonding requirement can align regional authorities incentives with those of a central government

nash equilibria in models of fiscal competition abstract this paper analyzes nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition small number nash equilibria in which tax rates are the strategic variables are shown not to coincide with nash equilibria in which public expenditure levels are the strategic variables

a survey on risk averse and robust revenue management abstract many industries use revenue management to balance uncertain stochastic demand and inflexible capacity popular examples include airlines hotels car rentals retailing and manufacturing the classical revenue management approaches considered in theory and practice are based on two assumptions first demand as the only uncertain variable follows a known distribution and second risk neutrality justifies the maximization of expected revenue recently two related streams of literature emerged that do not need these assumptions research on risk averse revenue management acknowledges that in practice many decision makers are risk averse research on robust revenue management focuses worst case scenarios without a known demand distribution which is especially relevant for new and extremely unstable businesses this paper motivates the consideration of risk averse and robust revenue management we briefly introduce revenue managements two main methods capacity control and dynamic pricing in the classical risk neutral setting then we provide an exhaustive review of the literature on risk averse and robust capacity control and dynamic pricing in doing so the relevant decision criteria are briefly introduced finally possible avenues for future research are outlined

endogenous market structures in international trade natura facit saltum abstract almost all of the large literature on international trade with imperfect competition assumes exogenous market structures the purpose of this paper is to develop a simple model that generates alternative market structures as nash equilibria for different parameterizations of the basic model equilibrium market structure is a function of the underlying technology familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases small tax policy changes can produce large welfare effects as the equilibrium market structure shifts implying discontinuous jumps in prices quantities and profits

a literature survey on energy growth nexus abstract this paper provides a survey of the recent progress in the literature of energy consumption economic growth and electricity consumption economic growth causality nexus the survey highlights that most empirical studies focus on either testing the role of energy electricity in stimulating economic growth or examining the direction of causality between these two variables although the positive role of energy on growth has become a stylized fact there are some methodological reservations about the results from these empirical studies a general observation from these studies is that the literature produced conflicting results and there is no consensus neither on the existence nor on the direction of causality between energy consumption electricity consumption and economic growth as a policy implication to avoid from conflicting and unreliable results the authors may use the autoregressive distributed lags bounds test two regime threshold co integration models panel data approach and multivariate models including new variables such as real gross fixed capital formation labor force carbon dioxide emissions population exchange rates interest rates etc thus the authors should focus more on the new approaches and perspectives rather than by employing usual methods based on a set of common variables for different countries and different intervals of time

equilibrium pollution taxes in open economies with imperfect competition abstract this paper argues that imperfect competition in global markets creates a strategic interaction between governments that can lead to the inefficient distortion of pollution taxes this distortion can be decomposed into a rent capture effect and a pollution shifting effect the rent capture effect lowers equilibrium taxes as each country attempts to gain a competitive advantage over its trading partner and thereby capture foreign rent through net exports the pollution shifting effect raises equilibrium taxes as each country attempts to transfer production and its associated pollution to the other country this effect vanishes if pollution is perfectly transboundary because shifted pollution causes as much damage to the domestic environment as does domestic pollution the net effect on symmetric equilibrium taxes is negative except in the special case of perfect competition with no transboundary pollution in this case the two effects are mutually offsetting and the nash equilibrium is efficient when pollution is at least partially transboundary there also arises the usual transboundary externality and this reinforces the negative net strategic effect giving rise to equilibrium taxes that are lower than what is globally efficient

a theory of interregional tax competition a general equilibrium model is constructed to study tax competition where local governments compete for capital by holding down property tax rates and public expenditure levels an exact definition of tax competition is provided and both the existence and nonexistence of tax competition are shown to be theoretically possible it is argued however that tax competition must occur under empirically reasonable conditions inefficiency in public production is also explicitly modeled the amount of capital used to produce a given level of public service output is shown to be greater than that which is required to minimize costs evaluated at the prices facing private firms

an economic analysis of household waste management abstract this paper provides a comprehensive model of household waste management policy incorporating the possibility of waste reduction effort by the firm and the household and of illegal waste disposal by the household when household waste reduction effort is insignificant the first best optimum can be achieved using various combinations of environmental tax on the firm and waste collection charge on the household however when household waste reduction effort is significant the first best optimum is not achievable and explicit monitoring of illegal waste disposal is needed rendering a simple pigouvian tax sub optimal this paper solves for the second best optimal policy and provides some comparative statics of the optimal policy

dynamic pricing of inventory capacity with infrequent price changes we consider a problem of dynamically pricing a single product sold by a monopolist over a short time period if demand characteristics change throughout the period it becomes attractive for the company to adjust price continuously to respond to such changes i e price discriminate intertemporally however in practice there is typically a limit on the number of times the price can be adjusted due to the high costs associated with frequent price changes if that is the case instead of a continuous pricing rule the company might want to establish a piece wise constant pricing policy in order to limit the number of price adjustments such a pricing policy which involves optimal choice of prices and timing of price changes is the focus of this paper we analyze the pricing problem with a limited number of price changes in a dynamic deterministic environment in which demand depends on the current price and time and there is a capacity inventory constraint that may be set optimally ahead of the selling season the arrival rate can evolve in time arbitrarily allowing us to model situations in which prices decrease increase or neither we consider several plausible scenarios where pricing and or timing of price changes are endogenized various notions of complementarity single crossing property supermodularity and total positivity are explored to derive structural results conditions sufficient for the uniqueness of the solution and the monotonicity of prices throughout the sales period furthermore we characterize the impact of the capacity constraint on the optimal prices and the timing of price changes and provide several other comparative statics results additional insights are obtained directly from the solutions of various special cases

competition in regional environmental policies when plant locations are endogenous abstract a two region model is presented in which an imperfectly competitive firm produces a good with increasing returns at the plant level production of the good causes local pollution the firm decides whether to maintain plants in both regions serve both regions from a single plant or shut down if the disutility of pollution is high enough the two regions will compete by increasing their environmental taxes standards until the polluting firm is driven from the market alternatively if the disutility from pollution is not as great the regions will usually compete by undercutting each other s pollution tax rates

environmental standards and cournot duopoly a stability analysis in this paper the dynamic effects of public environmental policies are investigated in a cournot duopoly with both heterogeneous and homogeneous expectations in a context of limited rationality it is shown that the increase in upper limits to emissions always tends to destabilise markets and generate a chaotic market dynamics in both cases the policy implication of this result is that the use of environmental policies may favour market stability it is also shown that higher costs of abatement technology entail a higher likelihood of stability loss although in the heterogeneous expectations case also a decrease in costs may destabilise

on the dynamics of recycling and natural resources we study the dynamic impact of recycling through its effect on the production set of the economy and its relationship with natural resources the contribution of renewable and recyclable resources for sustainability is studied although in the short run recycling may alleviate resource scarcity in the long run it is not enough to compensate for the exhaustibility of non renewable resources and the possibility of obtaining non decreasing output paths crucially depends on the extent to which production rests on renewable resources furthermore recycling interacts with natural resource growth surprisingly not always favoring sustainability the production and recycling function is a generalization of the traditional production function providing an integrated view of regular production and recycling and representing the production set of the economy when a recycling technology is available

efficient climate policy with internationally mobile firms a major concern in the design of an incomplete climate agreement is thatfirms that use fossil fuels intensively may respond to emission regulationsby relocating their plants from cooperating to non cooperating countries this paper analyses how the cooperating countries might deal with the issueof firm delocation through emission taxes trade provisions and alocalisation subsidy to mobile firms it is shown that firms should not beinduced to stay in the cooperating countries by lowering emission taxesbelow the pigouvian tax rate incentives to stay should be given partlythrough trade provisions and partly through a localisation subsidy a secondbest solution without localisation subsidies is also discussed in thatcase the efficient emission tax is lower than the pigouvian tax rate finally the paper discusses the implications of the first best and thesecond best policy regimes for the pattern of firm localisation

border adjustments supplementing nationally determined carbon pricing as agreed on in the paris agreement each country determines its own contribution to combat climate change on a voluntary basis there is no mechanism to force a country to comply with its own nationally determined contributions this bottom up approach builds on unilateral actions and yields a kind of carbon pricing which is not necessarily identical across countries as a consequence these nationally determined climate policies have drawbacks in terms of carbon leakage and loss of competitiveness for firms producing in high carbon price countries to reduce these negative effects border adjustments bas may be appropriate subsequent to more stringent environmental regulation we model a three stage game involving carbon price competition in the first stage the introduction of bas in the second stage and oligopolistic competition between firms in the third stage strategic trade theory suggests that the qualitative results about the optimal ba policy may vary with the underlying type of competition namely bertrand and cournot competition however our results are similar for both types of competition we conclude that bas are suitable for supporting a more stringent environmental policy moreover we find that anticipation of the implementation of bas in the second stage yields higher average carbon prices in the first stage since high carbon price countries increase their carbon prices whereas the other countries partially offset

converting technology to mitigate environmental damage there are many situations where policy makers would like to induce firms to make a major discrete conversion in production technology to help the environment this paper examines how heterogeneity in the operating condition of firms plant and equipment which cannot be observed by policy makers can affect the choice between incentives to encourage conversion to a cleaner technology by relating different conditions of firms plant and equipment to production costs extent of environmental damage and cost of conversion to a cleaner technology we show when a perfectly discriminating incentive to encourage conversion is not feasible in addition we show that firms with plant and equipment in better condition will convert their technology to mitigate their environmental damage and firms with plant and equipment in poorer condition will not this and a series of additional results lead to conditions under which an administratively simple uniform lump sum incentive to switch to cleaner technology is preferable to one based on output these results and conditions extend to cases where there are network externalities in conversion and where there is strategic timing in firms choice of when to convert

garbage recycling and illicit burning or dumping abstract with garbage and recycling as the only two disposal options we confirm prior results that the optimal curbside fee for garbage collection equals the direct resource cost plus external environment cost when illicit burning or dumping is a third disposal option that cannot be taxed directly the optimal curbside tax on garbage changes sign the optimal fee structure is a deposit refund system a tax on all output plus a rebate on proper disposal through either recycling or garbage collection the output tax helps achieve the first best allocation even though it affects the choice between consumption and untaxed leisure

revaluing the hierarchy of paper recycling this article revalues the hierarchy of paper waste management policies in a dynamic general equilibrium model incineration material recycling and the distinction between non renewable fossil fuels and renewable forest assets are incorporated by comparing the first order conditions from the command optimum with the conditions from the market model it is discovered that the unregulated market fails to create an optimal resource allocation to see how the market behaves in absence of environmental policy compared to the first best solution a numerical model is used pigouvian taxes and subsidies are derived to correct for the externalities

property rights protest and the siting of hazardous waste facilities ture since that time no major hwf has been sited anywhere in the united states the epa had anticipated that local opposition would make finding these sites an exceptionally difficult task their pessimism was well founded and if anything understated according to the hazardous waste counsultant s latest state by state review the outlook for siting hwfs in the future is even more bleak than in the past due in large part to what they term a worsening of the emotional atmosphere surrounding siting efforts this failure to site any new hwf has come about in spite of assurances by government and company officials that new facilities built according to the present standards would pose negligible risks to the local residents attempts have been made to break the deadlock by instituting extensive public participation procedures establishing state siting boards with the power to overrule local decision makers and requiring facility owners to compensate local governments for safety services the latter provided in this paper we argue that the ambiguous nature of the present property rights governing the siting of hwfs is an important cause of the stalemate we offer a new approach to siting which recognizes the de facto property rights assumed by local communities we propose a political market via a referendum

an empirical investigation of the pollution haven effect with strategic environment and trade policy abstract using a new dataset on the stringency and enforcement of environmental policy this study is the first to find robust confirmation of a pollution haven effect in a cross country context by accounting for strategically determined environment trade and intellectual property right ipr policies a simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics it is found that for the top 20th percentile of countries in terms of growth in u s multinational affiliate value added as much as 8 6 of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy the results are robust to a number of identification tests weak iv tests and third country spatial effects further evidence is found that relatively footloose industries are more likely to be affected by environmental policy than more traditionally dirty industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set

optimal fiscal policy for a state or local government abstract state and local government services are enjoyed by and taxes borne by two groups residents and non residents this paper addresses the question if state and local governments maximize their residents welfare and cannot distinguish between individual residents and non residents but know the aggregate characteristics of the two groups what set of taxes subsidies and public goods should they choose some of the results obtained are i even when all commodities are taxable and equity is ignored the existence of non resident consumption makes uniform taxation non optimal ii in some cases whether a commodity should be taxed or subsidized is independent of its own price elasticity iii central cities may be subsidized by suburban residents and iv the ability of state and local governments to redistribute is inversely proportional to the openness of the economy

upstream pollution downstream waste disposal and the design of comprehensive environmental policies abstract many policymakers are shifting their focus from media specific pollution problems to product specific life cycle environmental problems in this paper we develop a model of production and consumption that incorporates life cycle externalities and use it to solve for alternative policies to achieve a social optimum in general we find that no single instrument can solve multiple problems contrary to what some observers have suggested however we find that there are alternative ways of reaching the social optimum we also discover that an integrated approach to policy appears to be important no matter what policy options are adopted and finally we find that there is only a limited role for so called product life cycle assessments

interjurisdictional capital mobility fiscal externality and a corrective subsidy abstract recent studies emphasize that local property taxation may result in inefficiently small amounts of local public spending this paper shows that the inefficiency can be traced to a fiscal externality when one jurisdiction increases its taxes it causes a flow of capital to other jurisdictions that increases their tax revenues the inefficiency can be corrected with a subsidy that internalizes the externality key empirical parameters determining the magnitude of the externality are identified illustrative calculations indicate that subsidy rates on the order of 40 might be required to achieve efficiency

a comparison of public policies for lead recycling policies that encourage recycling may be used to reduce environmental costs from waste disposal because direct restrictions on disposal are difficult to enforce four recycling policies have been advanced i taxes on the use of virgin materials ii deposit refund programs iii subsidies to recycled material production and iv recycled content standards in this article i analyze the structure of these policies and their cost effectiveness in achieving reductions in disposal i then examine the policies in the empirical context of the recycling of lead from automobile batteries in order to calculate the effects of recycling programs i estimate the elasticities for primary and secondary lead supply and demand my results suggest that price based policy mechanisms can be successful in increasing lead recovery and that the difference in efficiency between the four approaches is similar

on the second best policy of household s waste recycling this study analyzes the second best household s waste recycling policy if we assume the first best economy with no illegal disposal or transaction costs then unit pricing an advance disposal fee and a recycling subsidy are required in order to achieve the social optimum such that both the sum of unit pricing and an advance disposal fee and the sum of unit pricing and a recycling subsidy are equal to the marginal disposal cost furthermore the first best outcome can also be obtained by a producer take back requirement system in the real economy however various factors prevent the first best optimal outcome in this study we consider two factors one being the transaction cost associated with a recycling subsidy or refund and the other being illegal disposal by the consumer if a recycling subsidy or a deposit refund system is adopted a transaction cost associated with it will be generated alternatively if unit pricing is adopted some of the consumed goods may be disposed of illegally we show the complete trade off between unit pricing and a recycling subsidy in other words we can not adopt unit pricing and a recycling subsidy simultaneously as a result there are three candidates for the second best policy unit pricing with an advance disposal fee a deposit refund system and a producer take back requirement system which of these three policies is the second best policy will depend on the relative magnitude of the price of a recycled good and the marginal transaction cost associated with a recycling subsidy or the refund in a deposit refund system generally if the price of a recycled good is positive and the marginal transaction cost is relatively high unit pricing with an advance disposal fee is the second best policy however where the price of a recycled good is negative and the marginal transaction cost is relatively high a producer take back requirement system is the second best policy further where the marginal transaction cost is relatively low a deposit refund system is the second best policy regardless of whether the price of a recycled good is positive or negative

does international harmonization of environmental policy instruments make economic sense harmonization of the instruments used in environmental policy has beenconsidered necessary to guarantee fair competition in internationalmarkets we examine the economic costs of harmonizing paper recyclingstandards in countries where the urgency of the waste disposal problemsdiffer using data of seven european countries we estimate thetechnologically feasible input combinations of pulp and waste paper forpaper production short term effects of two environmental policy measures minimum content requirement and utilization rate target are analyzed bytranslating the two administrative instruments into taxes and subsidies weshow that the shadow costs of the harmonization vary considerably betweencountries the difference in the domestic availability of waste may explainthe variation and a modification of the policy measures to incorporate thisaspect is suggested

a note on the causal relationship between energy and gdp in taiwan abstract this paper re examines the causality between energy consumption and gdp by using updated taiwan data for the period 1954 1997 as a secondary contribution we investigate the causal relationship between gdp and the aggregate as well as several disaggregate categories of energy consumption including coal oil natural gas and electricity applying granger s technique we find bidirectional causality between total energy consumption and gdp we find further that different directions of cause exist between gdp and various kinds of energy consumption

the impact of selected abatement strategies on transnational pollution the terms of trade and factor rewards a general equilibrium approach abstract widespread publicity of international conflict over transfrontier pollutants such as acid deposition and the november 1986 chemical spill in the rhine river has increased the public s awareness of the need to devise abatement strategies appropriate for transnational pollution this article develops a general equilibrium approach for analyzing the economic impacts of selected abatement strategies the model includes internationally mobile goods capital and pollution flows and flexible output and factor prices the general equilibrium approach provides policymakers with important information which is usually not revealed by a partial equilibrium approach that is demonstrated by applying the model to the north american acid deposition issue

international spillovers and water quality in rivers do countries free ride transboundary spillovers may degrade environmental quality if countries free ride this paper examines the extent of such degradation in water quality in international rivers using data from river monitoring stations in the un s global emissions monitoring system gems it compares pollution levels in international and domestic rivers the results suggest that free riding may substantially increase pollution in international rivers but the estimates are sensitive to the inclusion of country effects this abstract was borrowed from another version of this item

oil consumption and output what causes what bootstrap panel causality for 49 countries abstract this study examines the growth conservation neutrality and feedback hypotheses for 49 countries during the period from 1970 to 2010 using panel causality analysis this technique accounts for both dependence and heterogeneity across the countries the results provide evidence as to the direction of causality between oil consumption and output and are consistent with the neutrality hypothesis for 24 countries the growth hypothesis for 5 countries the conservation hypothesis for 13 countries and the feedback hypothesis for 7 countries the findings provide important policy implications for the 49 countries under study

recovery decisions of a producer in a legislative disposal fee environment the main objectives of the environmental legislation originating from extended producer responsibility epr principle are to lead producers to undertake recovery initiatives for their end of use products and to promote environmentally desirable product design it is still controversial whether current implementations of epr principle are effective in attaining these objectives this study seeks to answer the following questions 1 what is the impact of epr legislation on the product recovery decisions of producers 2 how do the redesign opportunities i e design for disassembly affect the willingness of producers for product recovery 3 how do the investment needs to start recovery practices and the reluctance of producers to allocate sufficient funds for this purpose affect the optimal recovery decisions we use stylized economic models to represent the implementation in practice and solving our models we obtain closed form and numerical solutions that help us to see the impact of various parameters on the optimal decisions of a producer our findings indicate that redesign opportunities encourage producers for more recovery however the reluctance of producers to cover the initial investments may substantially reduce the effectiveness of the legislation and the recovery amounts

energy consumption and economic growth nexus in portugal italy greece spain and turkey an ardl bounds test approach 1965 2009 abstract the paper examines the nexus between primary energy consumption and growth in portugal italy greece spain and turkey pigst with annual time series data from 1965 to 2009 pigst are southern european economies which have experienced several episodes that make them of particular interest to the study of periods of economic expansion and stagnation an ardl bounds test approach is a suitable technique to examine energy growth nexus within the context of countries with both sporadic shocks outliers and permanent shocks structural breaks empirical results suggest bidirectional causality between energy and growth in both the long run and short run supporting the feedback hypothesis the results reveal themselves to be robust to panel framework an energy conservation policy will reduce gdp growth while a saving phenomenon is observed since one additional unit of product requires less than one unit of energy

are mergers beneficial to consumers evidence from the market for bank deposits the general conclusion of the empirical literature is that in market consolidation generates adverse price changes harming consumers previous studies however look only at the short run pricing impact of consolidation ignoring effects that take longer to materialize using a database that includes detailed information on the deposit rates of individual banks in local markets for different categories of depositors we investigate the long run price effects of mergers we find strong evidence that although consolidation does generate adverse price changes these are temporary in the long run efficiency gains dominate over the market power effect leading to more favorable prices for consumers jel g21 g34 l1

product design and efficient management of recycling and waste treatment abstract using a general equilibrium model where material is first extracted then used for producing a consumption good recycled and finally treated to reduce environmental damage we study efficiency restoring policies when one or more of the constituent markets are inactive the material is modeled as being embodied in the output and forms an important aspect of green product design if all markets for embodied material per unit output fail and if recycling benefit exceeds environmental damage the policy instruments needed for green design are a tax on the consumption good supply and a subsidy on the demand for material input

one without the other behavioural and incentive policies for household waste management this paper provides a review of economic studies that analyses the use of multiple policies to cope with waste management problems we discuss the factors that influence selective sorting behaviour and the most appropriate policies for their promotion based on the works analysed our survey shows the original features of waste as an environmental problem requiring regulation the traditional approach in which decisions respond to rational behaviour particularly cost savings has some limits although not all public policies seem justified we argue that there might be a need for specific policies to promote recycling preferably based on the provision of information to consumers or on behavioural instruments indeed personal factors specific to each individual such as emotions and the influence of social interaction should be taken into account in the development of public policies we review the literature related to different rationales and identify some avenues for future research

greenhouse gas emissions waste and recycling policy abstract this paper examines least cost policies for waste reduction incorporating upstream greenhouse gas externalities associated with the production of consumption goods from various materials in particular we decompose the effect of deposit refund advance disposal fees and recycling subsidies on upstream greenhouse gas emissions we find that the benefits of reducing greenhouse gas emissions are of the same order as or larger than the benefits of reducing solid waste disposal implying larger optimal total waste reduction than previous studies furthermore the least cost intervention levels will be material specific and vary substantially across materials finally despite the reductions in emissions implied by increased recycling rates direct recycling subsidies are more costly and generate less emissions reductions than a deposit refund or advance disposal fee

a note on environmental federalism interpreting some contradictory results abstract this paper reconciles some conflicting interpretations of recent literature on interjurisdictional environmental regulatory competition 6 7 present a model in which competition to attract investment by lowering environmental standards leads to a pareto optimal equilibrium 3 and 4 describe a model in which such competition can result in a suboptimal nash equilibrium while it would be possible to draw opposite policy implications from the two models regarding the appropriate degree of environmental federalism such a conclusion would be incorrect this paper reconciles the different results by showing that they depend in large part on monopoly profits and tax exporting not the nature of the pollution externality or environmental federalism

efficient implementation of collective extended producer responsibility legislation extended producer responsibility epr is a policy tool that holds producers financially responsible for the post use collection recycling and disposal of their products many epr implementations are collective a large collection and recycling network crn handles multiple producers products in order to benefit from scale and scope economies the total cost is then allocated to producers based on metrics such as their return shares by weight such weight based proportional allocation mechanisms are criticized in practice for not taking into account the heterogeneity in the costs imposed by different producers products the consequence is cost allocations that impose higher costs on certain producer groups than they can achieve independently this may lead some producers to break away from collective systems resulting in fragmented systems with higher total cost yet cost efficiency is a key legislative and producer concern to address this concern this paper develops cost allocation mechanisms that

environmental policy in majoritarian systems abstract this paper sheds new light on the determination of environmental tax policies in majoritarian federal electoral systems such as the u s and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental taxes in the absence of majority bias the socially preferred policy would be federal district level taxation which accounts both for cross boundary pollution and differences in industry concentration across districts in majoritarian systems however where the legislature consists of geographically distinct electoral districts the majority party at the national or state level favors home districts depending on the location of polluting industries and the associated damages the majority party may therefore impose sub optimally high or low pollution taxes due to a majority bias majority bias can influence the social welfare ranking of alternative environmental tax policies in some cases majority bias may make decentralized or federal uniform taxation the preferred solution

dynamic seemingly unrelated cointegrating regressions we propose the parametric dynamic seemingly unrelated regression dsur estimator for simultaneous estimation of multiple cointegrating regressions dsur is efficient when the equilibrium errors are correlated across equations and is applicable for panel cointegration estimation in environments where the cross section is small relative to the available time series we study the asymptotic and small sample properties of the dsur estimator for both heterogeneous and homogeneous cointegrating vectors we then apply the method to analyse two long standing problems in international economics our first application revisits the estimation of long run correlations between national investment and national saving our second application revisits the question of whether the forward exchange rate is an unbiased predictor of the future spot rate

maximizing revenues of perishable assets with a risk factor this article presents a risk sensitive pricing model to maximize sales revenue of perishable commodities with fixed capacity and finite sales horizon the model assumes a pair of predetermined prices and the poisson demand process whose intensity is a decreasing function of price when optimizing the expected revenue management takes business risk into account by adding a penalty or premium to the objective function we solve the continuous time model with the exact solution in closed form we further analyze the influence of risk attitude on optimal policies

the effect of bottle laws on income new empirical results eleven us states have bottle laws deposit refund programs that combine a consumption tax with a recycling rebate when states set the bottle deposit low enough it becomes a tax on high wage earners for whom the opportunity cost of their time prevents them from returning containers for their deposit however this bottle deposit will still be high enough that harvesting recyclables provides employment for low wage earners using individual data on observed cash recycling behavior this paper shows that an unintended consequence of bottle laws is that they have the potential to increase the incomes of very low wage workers

commodity tax competition between member states of a federation equilibrium and efficiency we first describe regional market equilibria whereupon consumers of each region allocate their purchases of private goods between domestic and nondomestic ones according to the structure of relative prices taxes and transportation costs next regional optimal tax levels and public good quantities are derived the tax of the other region being held constant fiscal competition arises from the ability of one region in choosing its tax to alter the tax base of the other

the magnitude of menu costs direct evidence from large u s supermarket chains we use store level data to document the exact process of changing prices and to directly measure menu costs at five multistore supermarket chains we show that changing prices in these establishments is a complex process requiring dozens of steps and a nontrivial amount of resources the menu costs average 105 887 year per store comprising 0 70 percent of revenues 35 2 percent of net margins and 0 52 price change these menu costs may be forming a barrier to price changes specifically 1 a supermarket chain facing higher menu costs due to item pricing laws that require a separate price tag on each item changes prices two and one half times less frequently than the other four chains 2 within this chain the prices of products exempt from the law are changed over three times more frequently than the products subject to the law in principle fixed costs of changing prices can be observed and measured in practice such costs take disparate forms in different firms and we have no data on their magnitude so the theory can be tested at best indirectly at worst not at all alan blinder 1991 p 90

multi period pricing in the presence of competition and social influence abstract this paper examines single and dynamic pricing policies of two competing firms over two periods in the presence of social influence assuming two firms adopt the same pricing policy we find that under either pricing policy firm profits always decrease with the degree of social influence firms prefer dynamic pricing policy when social influence is either relatively weak or sufficiently strong for firms under dynamic pricing policy to set zero prices in the first period otherwise single pricing policy is more preferable the conclusions are similar when the market size varies over periods except that dynamic pricing policy is always more profitable if the market size in period 2 is sufficiently large we have further compared the two pricing policies with posted pricing policy the results show that dynamic pricing policy dominates when social influence is relatively weak while posted pricing policy dominates when social influence is sufficiently strong because of the synergy between social influence and the reference price effect finally when each firm freely chooses either single or dynamic pricing policy we find that if the degree of social influence is relatively small two asymmetric equilibria exist where two firms adopt different pricing policies if the degree of social influence is very large however the unique equilibrium is both firms adopting dynamic pricing policy these findings provide important implications for firms to make more informed pricing decisions in an increasingly competitive environment with strong social influence

extended producer responsibility instruments and innovation in eco design an exploration through a simulation model abstract this paper presents an agent based simulation model that models both economical and physical relations between firms recyclers and consumers this framework allows an investigation into the connection between physical environmental variables waste flows virgin material flows and economic decisions of agents in the product chain i e firms innovation strategies consumers choices and development of recycling activities the paper highlights the value of using agent based modeling as an operational tool to investigate the effect of waste prevention policy on economic and technological decisions of agents we focus on three types of extended producer responsibility epr instruments which are recycling fees tax subsidy and norms the simulation results show that the impact of each instrument depends on the policy design in particular on the level of stringency and on the reward system which is implemented we show that only tax subsidy systems and stringent norms can lead to radical innovations and to significant changes in product designs in the case of tax subsidy the impact relies more on an innovation effect while in the case of norm it mainly relies on a selection effect

optimal property taxation in the presence of interregional capital mobility abstract a single region s optimal property tax policy is examined in a model with interregional capital mobility in this model property taxation is used to finance local public expenditures different tax rates may be imposed on property used to produce goods which are traded between regions and property used to produce nontraded goods e g residential property the key determinants of the difference between the optimal tax rates are identified and it is argued that there exists a bias towards relatively low tax rates on property used to produce traded goods the role of labor mobility is also investigated

environmental regulation of households an empirical review of economic and psychological factors abstract the literature on sustainable consumption and environmental regulation of household behavior is dominated by conceptual and normative approaches as a result many suggestions lack a firm empirical basis to overcome this deficiency econometric studies in three areas of environmentally relevant activities of households are reviewed residential use of energy generation of solid waste and recycling and residential use of water next to price and income elasticities attention is devoted to individual socio economic features and psychological factors such as attitudes knowledge perceptions and values potential psychological determinants and related insights are further examined by discussing a range of representative and illustrative statistical psychological studies of environmental behavior one important general finding is that there are very few empirical studies that systematically combine socio economic and psychological determinants a range of insights for environmental policy is derived and research recommendations are offered

var as a risk measure for multiperiod static inventory models abstract this paper explores the possibility to use value at risk var in the context of inventory management var is being used more and more in financial management as a natural measure of the risk taken with a given position in the framework of inventory management it can work as well after having built a decision model where the choice concerns the quantity to be ordered to face a random demand in order to optimize the expected result an expected cost to be minimized or an expected profit to be maximized the model explores the probability distribution of the result both via analytical methods and via simulation methods the analytical exploration of this problem has originated a general method to deduce from inequalities for distribution functions which are based on the expected value related tail inequalities which are particularly useful for var problems where only one tail is involved

product servicing for lifespan extension and sustainable consumption an optimization approach abstract sustainable consumption has been defined as the consumption of goods and services that meet basic needs and quality of life without jeopardizing the needs of future generations oecd 2002 lifespan extension of durable products underpins sustainable consumption this paper describes a novel approach to extend product lifespans by using product servicing that conceptualizes the interactions of a producer a policy maker and multiple consumer segments having different price demand relationships we propose a multi period mathematical optimization model that maximizes the producer s profit while optimizing the prices of different servicing options production quantities and inventory levels a computational study elicits several insights about how the optimal production or alternatively consumption quantities are affected by the introduction of product servicing and the effects of various product characteristics and government incentive or penalty levels on producer s profitability and on product servicing decisions we conclude that quantitative optimization models are useful for evaluating the impacts of different regulatory policies assessing the benefits of offering product servicing options and investing in design for durability and serviceability

list pricing versus dynamic pricing impact on the revenue risk abstract we consider the problem of a firm selling multiple products that consume a single resource over a finite time period the amount of the resource is exogenously fixed we analyze the difference between a dynamic pricing policy and a list price capacity control policy the dynamic pricing policy adjusts prices steadily resolving the underlying problem every time step whereas the list pricing policy sets static prices once but controls the capacity by allowing or preventing product sales as steady price changes are often costly or unachievable in practice we investigate the question of how much riskier it is to apply a list pricing policy rather than a dynamic pricing policy we conduct several numerical experiments and compare expected revenue standard deviation and conditional value at risk between the pricing policies the differences between the policies show that list pricing can be a useful strategy when dynamic pricing is costly or impractical

efficient waste management policies and strategic behavior with open borders during the last decade waste management has been characterized by two main trends the growth of international trade of waste materials and the introduction of extended producer responsibility epr as a policy instrument in this paper a two country stylized model with imperfect competition in the recycling market is used to address two research questions first how do epr recycling targets interact with other policy instruments such as taxes on recycling residues and excise duties second how does strategic behavior of national policy makers influences the use of policy instruments the model demonstrates that a combination of epr with other instruments is needed to achieve the first best outcome when governments do not coordinate policies across borders strategic behavior may lead to a race to the bottom for taxes on recycling residues conversely strategic behavior may lead to a counter intuitive race to the top for excise duties and epr recycling targets it is shown that these instruments are not only used to stimulate waste prevention but also to extract rents from foreign recyclers

environmental policy when market structure and plant locations are endogenous abstract a two region two firm model is developed in which firms choose the number and the regional locations of their plants both firms pollute and market structure is endogenous to environmental policy there are increasing returns at the plant level imperfect competition between the home and the foreign firm and transport costs between the two markets at critical levels of environmental policy variables small policy changes cause large discrete jumps in a region s pollution and welfare as a firm closes or opens a plant or shifts production to from a foreign branch plant the implications for optimal environmental policy differ significantly from those suggested by traditional pigouvian marginal analysis

dynamic efficiency of extended producer responsibility instruments in a simulation model of industrial dynamics this article presents an original approach to the impact of extended producer responsibility instruments for waste prevention upon firms innovative strategies and market structure our analysis is based on a stylised framework of waste prevention developed by brouillat in this framework products are modelled as multi characteristic technologies whose evolution depends on firms innovation strategies and on the interactions with consumers and postconsumption activities recycling this stylised framework has been adapted to explore the impact of waste prevention instruments upon industrial dynamics and more particularly upon firms innovative strategies and upon the evolution of products characteristics and market structure we focus on two types of policy instruments recycling fees and norms for each instrument we will consider different policy designs in order to study their effects on industrial dynamics the main contribution of this article is to show how this type of simulation model can be used to explore the impact of waste prevention policy instruments on the technological evolution of products on innovation strategy and on the evolution of firms market shares the introduction of policy instruments in a simulation agent based model of industrial dynamics enables us to analyse more thoroughly how different policy designs can modify the dynamics of the system and more particularly how the incentives and the constraints linked to the policy instruments under consideration shape market selection copyright 2012 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

can downstream waste disposal policies encourage upstream design for environment design for environment takes place when firms explicitly incorporate environmental issues in their product design and manufacturing decisions joseph fiksel 1996 to reduce waste associated with consumer products for example firms can reduce product weight including the amount of packaging that comes with a product and make products easier and less costly to recycle the latter can be accomplished by changing the type of material used in a product avoiding mixing of materials in a single product coding and labeling when different materials are used and designing for ease of disassembly u s congress office of technology assessment 1992 fiksel 1996 an important debate centers around the question of whether design for environment dfe needs to be explicitly targeted using policy instruments focused upstream on producers or whether downstream instruments send sufficient signals back upstream one important downstream instrument is a disposal fee i e charging households a price per pound per bag or per can for their trash many observers feel that downstream instruments do not send appropriate signals back upstream some economists and others have suggested on the other hand that disposal fees can in theory send signals upstream to producers karen palmer and walls 1998 we find that disposal fees provide incentives for efficient dfe only when there is a fully functioning recycling market i e only when recyclers pay households a price for each of their recyclable items and that price varies with the degree of product recyclability in the real world transactions costs of paying households for each individual item recycled would be prohibitively high in a more realistic setting in which households may place some items in a recycling bin but are not paid for doing so a disposal fee by itself will not yield a social optimum it encourages households to place items in the bin but all items allowed in the bin are of equal value to the household i e there is no reason to prefer an easily recyclable aluminum can to a difficult to recycle plastic milk jug this means that there is no signal to producers to make products more recyclable if the government can set product taxes that vary with product recyclability the social optimum can be restored but this option is not practicable 2 we argue that the infeasibility of i paying households for recycling and ii taxing products according to their recyclability means that a first best outcome is no longer attainable instead we set up a constrained second best optimum and solve for policy instruments that achieve this outcome we find that a disposal school of economics and finance victoria university of wellington wellington new zealand walls is also a university fellow with resources for the future washington dc the helpful comments of karen palmer don fullerton and hilary sigman are greatlv appreciated 1 manufacturer take back requirements such as germany s well known packaging take back law were developed at least in part as a way to encourage dfe see www oecd org env epr index htm for updates from a series of oecd workshops held in 1997 1999 on the broader topic of extended producer responsibility in practice individual german producers do not actually take back their own products at end of life they have formed a consortium that arranges to collect members waste from households marked with a green dot and recycle it we do not address take back mandates in this paper 2 in calcott and walls 1999 we derive these taxes don fullerton and wenbo wu 1998 show that a direct subsidy to recyclability combined with other instruments can yield a social optimum this subsidy depends on production function parameters thus if firms differ the subsidy would vary across firms more i mportantly observing and measuring recyclability to determine subsidy payments would be virtually impossible

the two part instrument in a second best world abstract standard pigovian tax theory has been extended in two directions first many polluting activities are difficult to tax because they are not market transactions and so recent papers have shown that the same effects can be achieved by use of a two part instrument 2pi a tax on output or income and a subsidy for clean alternatives to pollution it is a generalization of a deposit refund system drs second a different literature concerns the second best pollution tax in the presence of other tax distortions here we combine the two extensions by looking at the second best 2pi when government needs revenue is the deposit larger and the rebate smaller we find explicit solutions for each tax and subsidy in a general equilibrium model with other tax distortions and we compare these to the rates in a first best model the tax subsidy combination is explained in terms of a tax effect an environmental effect and a revenue effect the model allows for flexible interpretation to show various applications of the 2pi we also discuss important caveats

short and long run effects between oil consumption and economic growth in china this paper examines both the equilibrium relationship and the predictability between oil consumption and economic growth in china time series variables are employed in empirical tests cointegration tests suggest that these two variables tend to move together in the long run in addition granger causality tests indicate that oil consumption could be a useful factor that forecasts changes in the economy in the short run as well as in the long run the oil consumption is found to have great effects on the economy this is because the enormous use of oil in sectors like the industry may have directly pushed the economy however this finding would probably stimulate faster growth in oil consumption and so should be concerned with care conversely economic growth could be used as a predictive factor forecasting oil consumption only in the long run economic growth appears to have small effects on oil use this could be attributed largely to china s energy consumption structure coal constitutes most of the energy consumption and thus the considerable demand for energy resulting from rapid economic growth could be mostly explained by the mass use of coal

a multiproduct dynamic pricing problem and its applications to network yield management a firm has inventories of a set of components that are used to produce a set of products there is a finite horizon over which the firm can sell its products demand for each product is a stochastic point process with an intensity that is a function of the vector of prices for the products and the time at which these prices are offered the problem is to price the finished products so as to maximize total expected revenue over the finite sales horizon an upper bound on the optimal expected revenue is established by analyzing a deterministic version of the problem the solution to the deterministic problem suggests two heuristics for the stochastic problem that are shown to be asymptotically optimal as the expected sales volume tends to infinity several applications of the model to network yield management are given numerical examples illustrate both the range of problems that can be modeled under this framework and the effectiveness of the proposed heuristics the results provide several fundamental insights into the performance of yield management systems

does garbage pricing increase the immoral disposal of household waste abstractsome empirical studies have attempted to clarify the mechanism of illegal dumping by examining the degree to which per bag pricing plays a role however previous research on the behaviour of avoiding paying a charge for waste collection has tended to neglect so called immoral disposal which is less risky than illegal dumping because there is no legal penalty in this study we define immoral disposal as the dumping of waste in a manner that is immoral but not illegal to detect the existence of immoral disposal we apply a spatial econometric approach namely an extended panel spatial durbin model to identify the actual spillover effect of garbage pricing in neighbouring municipalities on immoral disposal from the total waste a major finding of this study is that immoral disposal exists in unit based pricing two tiered pricing and fixed pricing

feed in subsidies taxation and inefficient entry we study energy markets with dirty production and lumpy entry costs of clean production renewables for intermediate entry costs markets yield inefficient production and inefficient entry a mix of three popular regulatory instruments polluter taxation feed in subsidies for renewables and consumption taxation cannot correct these market failures for larger entry costs the instruments are imperfect because they affect marginal incentives whereas entry is a lumpy fixed cost problem whenever the first best is implementable feed in subsidies and consumption taxes are redundant the second best requires feed in subsidies or consumption taxes in addition to a pollution tax and overshoots first best levels given production levels the instruments do not affect the regulator s budget

firm location and city size reduced productivity advantages as a factor in the decline of manufacturing in urban areas abstract this paper develops a model of firm location and city size that arrives at theoretical conclusions that differ from those of other authors comparative statics results suggest that changes in national wage levels and productivity levels create no determinate dis advantage for large cities relative to small ones as sites for manufacturing activity increased wage and reduced productivity premiums of large cities however result in unambiguous disadvantages statistical analysis indicates that the productivity advantages of large cities have declined in as many as eight two digit manufacturing industries that provide more than one third of metropolitan production worker employment

are asean countries havens for japanese pollution intensive industry in an era of closer worldwide economic integration the role that environmental regulations play in shaping a country s comparative advantage is greater than ever this has led to fears that dirty firms will relocate from developed to developing countries where environmental regulations may be less stringent the so called pollution haven hypothesis to date however there is little support for the existence of pollution havens despite anecdotal evidence and the theoretical predictions in this paper we employ a unique industry level dataset for japan and examine whether japanese industries have relocated production to their asean neighbours in response to the relative stringency of japanese environmental regulations not only do we find no evidence for pollution haven consistent behaviour but also some indication that the complex relationship between the characteristics of japanese dirty industries and environmental regulations may actually have reduced japanese outward fdi to the philippines

tax competition in imperfectly competitive markets abstract the literature on strategic trade policy has shown that in imperfectly competitive markets governments have an incentive to subsidize exports of their own firms yet the consequence of the departure from laissez faire is a wasteful subsidy race in contrast this paper shows that even in imperfectly competitive markets there is a strong tendency for laissez faire to prevail the driving force is the firms willingness to exploit tax or subsidy differentials by relocating production a small tax differential induces firms to change their place of production the change in market structure has a negligible effect on the oligopoly equilibrium but a non negligible impact on government revenues when tax policy is non discriminatory governments gain lose by attracting all firms when production is taxed subsidized hence laissez faire is the only equilibrium since from the point of view of the two producing countries laissez faire nondiscrimination pareto dominates the intervention equilibrium discrimination nondiscrimination is a simple device to result in a mutual beneficial outcome

optimal policies for solid waste disposal taxes subsidies and standards abstract pricing trash collection and disposal services can be politically unpopular and may lead to increased illegal disposal of trash several studies have shown that deposit refund systems can act like disposal charges without the illegal disposal problem and thus can generate an optimal amount of solid waste disposal we assess the efficiency implications of an alternative policy currently in use in some states in the u s and considered at the federal level recycled content standards these are requirements that a certain fraction of total material use in production be comprised of secondary materials we find that such standards by themselves cannot generate the optimal amount of disposal but must be combined with additional taxes on both the final product and other inputs to production moreover the information requirements for setting the optimal standards and accompanying taxes are high the deposit refund approach would be preferred in most cases

reconsideration of an advance disposal fee policy for end of life durable goods abstract this paper analyzes the optimal waste disposal policy for durable goods the existing literature does not differentiate between durable and non durable goods and concludes that the social optimum can be attained by either a disposal fee df policy or an advance disposal fee adf policy in an economy without transaction costs this study shows however that in such an economy the first best policy is not an adf policy but a df policy adoption of an adf policy results in excessive consumption and disposal compared to the social optimum in addition under an adf policy the lifetime of durable goods is shorter than the social optimum if we take transaction costs into account we must consider the second best policy an adf policy can be considered as second best in some situations since it has some transaction cost advantages over other policies an adf policy can be second best either if net disposal cost is relatively low or if repair cost is relatively high

a continuous time dynamic pricing model knowing the competitor s pricing strategy abstract in this paper we consider a dynamic pricing model for a firm knowing that a competitor adopts a static pricing strategy we establish a continuous time model to analyze the effect of dynamic pricing on the improvement in expected revenue in the duopoly we assume that customers arrive to purchase tickets in accordance with a geometric brownian motion we derive an explicit closed form expression for an optimal pricing policy to maximize the expected revenue it is shown that when the competitor adopts a static pricing policy dynamic pricing is not always effective in terms of maximizing expected revenue compared to a fixed pricing strategy moreover we show that the size of the reduction in the expected revenue depends on the competitor s pricing strategy numerical results are presented to illustrate the dynamic pricing policy