transfers to sustain dynamic core theoretic cooperation in international stock pollutant control international environmental agreements aiming at correcting negative externalities generated by transboundary pollution are difficult to achieve for many reasons important obstacles arise from asymmetry in costs and benefits and instability may occur due to the fact that coalitions of countries may attempt to do better for themselves outside of any proposed agreement in a static context it has already been shown that it is possible to achieve stability in the sense of the core of a co operative game by means of appropriately defined transfers between the countries involved however the transboundary pollution problems that are most important are caused by accumulated pollutants so that a dynamic analysis is required this paper provides a transfer scheme that yields a core property in a dynamic context the possibility of computing such transfers numerically is discussed

the neoclassical advent american economics at the dawn of the 20th century for the u s economy the last quarter of the 19th century brought the closing of the western frontier agricultural hardship in the south the rise of large corporations and trusts and the emergence of a serious labor movement the fledgling american economics profession struggled to document and prescribe for the confounding mix of industrialization urbanization and rural crisis in 1900 the relatively small community of serious economic researchers focused on applied issues in public policy and industrial organization the prominent institutionalist school strongly influenced by the almost millennial theories of the social gospel movement emphasized the inequities of the emerging economy and looked forward to a new more cooperative system of production on the eve of the 20th century john bates clark published in 1899 the distribution of wealth a theory of wages interest and profit with this volume neoclassicism matured into a major intellectual force within american economic thought with clark as its defining figure clark s analytical approach and his normative purposes hardly went unchallenged moreover the great majority of economists in the united states continued to work in the institutionalist vein up to world war ii nevertheless by viewing the american neoclassical advent in the context of its own time we can gain a deeper understanding of both american economics at the turn of the 20th century and the early character of the school that came to dominate our discipline

an alternative approach to housing market segmentation using hedonic price data abstract much empirical research has been devoted to housing market segmentation and the implications for the application of the hedonic price model market segmentation is demonstrated empirically in j urban econ 3 2 146 166 1976 j urban econ 7 1 102 108 1980 rev econ statist 66 3 404 406 1974 there appears to be theoretical evidence j pol econ 82 1 34 55 1974 that such empirical efforts may have been less than adequate unfortunately the empirical applications of rosen s model j environ econ manag 5 81 102 1978 j urban econ 5 3 357 369 1978 do not seem to effectively account for the complexity of the factors which cause multiple equilibria market segmentation this paper demonstrates empirically that market segments can be defined along more dimensions than hitherto have been included in any analysis

trade s dynamic solutions to transboundary pollution abstract this study develops a differential game to examine the effects of trade liberalization on transboundary water pollution water pollution is due to wastewater emissions from countries in a shared waterway along the u s mexico border with available data of pollution abatement costs public health damages and trade benefits noncooperative and cooperative games are examined with changes in trade policy and public health damages results show trade liberalization leads mexico to curtail pollution in both games cooperation and trade liberalization limit emissions from both countries and curtail strategic behavior of the united states from mexico s pollution control efforts in the noncooperative game

semi nonparametric distribution free dichotomous choice contingent valuation abstract we apply a semi nonparametric distribution free estimator for binary discrete response data to the estimation of a dichotomous choice contingent valuation model using this estimator mean and median compensating and equivalent variation can be consistently estimated without making nontheoretically motivated assumptions on consumer preferences the approach is illustrated using a contingent valuation survey of willingness to pay for reduction of risk of premature death due to exposure to hazardous waste we find that a conventional parametric estimator and the proposed estimator give similar estimates of unconditional wtp but that conditional on explanatory variables the estimates are quite different

measuring the cost of shelter for homeowners theoretical and empirical considerations recent economic developments have aroused substantial interest in the treatment in the consumer price index cpi of the cost of shelter for homeowners from december 1977 when the latest version of the cpi was introduced until december 1980 the all items cpi increased at an average annual rate of 11 6 while the homeownership component increased at an average annual rate of 16 2 relative to all of the other goods and services in the cpi the homeownership component has increased by 17 5 over the same time period if the relative price of homeownership had remained constant the growth rate of the cpi would have been reduced to 10 1 the question which has been raised is whether the rapid relative increase in the homeownership component which has had such an important impact on the cpi truly reflects changes in the cost of shelter this question is not only important but difficult encompassing many subsidiary questions and auxiliary issues the purposes of this paper are threefold 1 to outline briefly a conceptual framework for the cpi which leads to a straightforward specification of what the shelter component of the cpi should measure 2 to evaluate the theoretical properties of alternative procedures designed to approximate this measurement objective and 3 present empirical evidence on the operational difficulties involved in pursuing a new approach to shelter cost measurement two main conclusions are reached first on both theoretical and empirical grounds a rental equivalence approach to measuring shelter costs for owner occupants is preferred second an estimated rental equivalence measure has grown more slowly over at least the past six years than the official cpi homeownership component given the way in which the cpi is used to escalate both private and public expenditures these results demonstrate that the choice of measurement technique has important distributional implications

trade liberalization and the environment in the pacific basin coordinated approaches to mexican trade and environment policy in this paper we analyze the environmental implications of growth and opening up of trade in mexico based on an empirical economywide model in particular we study how tradeoffs between growth and environmental objectives can be minimized by using targeted policies on pollution emissions in coordination with outward oriented trade strategies most economywide studies of trade and environment linkages rely on effluent intensities associated with output and do not allow for substitution between nonpolluting factors labor and capital and polluting intermediate consumption such as chemicals or energy lee and roland holst by contrast pollution emissions in the present model are linked to using polluting inputs rather than directly to output levels we also embed this analysis in a dynamic framework to take account of exogenous components of factor supply and productivity growth over the twenty year period 1990 to 2010 the analysis is presented in three stages first pollution abatement policies are considered alone and their effects on growth sectoral allocation and trade are evaluated the next step is to consider trade liberalization alone trade distortions in place before the nafta and uruguay round accords are removed progressively over time and results calibrate the expansionary effects of trade liberalization as well as its environmental implications these include win win cases such as in the fertilizer sector as well as intensified environmental degradation arising from the transportation sector in a third and last scenario we combine environmental and trade policies and show how they interact these results indicate that the combination of policies generally can mitigate the undesirable effects of each set of policies alone such as trade induced pollution growth and the real contractionary effects of environmental policy thus it appears that more liberal and outward oriented trade policy can coexist with more rigorous attention to environmental values the trade and environment debate has

house prices and the provision of local public services capitalization under school choice programs abstract while the theoretical public finance literature argues that house prices should be influenced by the demand for local public services there is little direct evidence concerning changes in house prices when these services are altered previous empirical studies have relied on cross sectional identification of the relationship between house prices and variables that may proxy for the perceived quality of local public services this paper instead examines a policy change the adoption of a public school choice program to identify the capitalization effects associated with the diminished importance of school district boundaries using data from inter district choice in minnesota i find that residential properties appreciate significantly in school districts where students are able to transfer to preferred school districts whereas residential property values decline in districts that accept transfer students these general equilibrium effects also influence school districts local property tax revenues mitigating the incentive for schools to improve in order to attract or retain students

estimating local welfare generated by an nfl team under credible threat of relocation this study offers the opportunity to examine the welfare contribution of the minnesota vikings to minnesota households in the context of a credible threat of team relocation we find the credibility of the threat of relocation is essential to providing unbiased estimates of welfare this study utilizes contingent valuation methodology cvm and a random utility model rum to analyze minnesotans decision making mechanisms for supporting a new stadium initiative while previous studies have attempted to measure the welfare associated with a sports franchise we develop and discuss bias that may be imparted to estimates when the researcher fails to calculate a choke price further we develop an unbiased approach to identify welfare when respondents perceive a risk of losing the franchise the range of welfare contribution by the vikings to households in minnesota is 445 3 million to 1 571 3 million according to a 95 confidence interval based on our study

bidding models of housing markets abstract the bid rent model which is the standard bidding model of housing markets fails to take account of three important characteristics of the bidding process that operates in these markets the prices of houses are established through sequential bidding so that sellers do not necessarily accept the highest bids that might be made for their houses ignorance of the market may lead potential buyers to make bids that are either higher or lower than the ones they would make if they had complete information and the distribution of bids for a house is truncated at the seller s asking price this paper describes a bidding model that incorporates these characteristics of housing markets the new model and the standard model are estimated econometrically and tested against one another using data from the baltimore maryland area the test results indicate strong rejection of the standard model it is concluded that the new model provides a better description of the operation of housing markets than does the standard model

sports jobs and taxes the economic impact of sports teams and stadiums this book examines the economic impact of new stadiums or a sports franchise on the local economy it explores such general issues as the appropriate method for measuring economic benefits and costs the source of the bargaining power of teams in obtaining subsidies from local government the local politics of attracting and retaining teams the relationship between sports and local employment and the importance of stadium design in influencing the economic effects of a facility the book also contains case studies of major league sports facilities in baltimore chicago cincinnati cleveland indianapolis san francisco and the twin cities and of minor league baseball stadiums and spring training facilities the primary conclusions are the sports teams and stadiums are not a source of local economic growth and employment the size of the net subsidy exceeds the financial benefit of a new stadium and cities are probably willing to subsidize sports teams because of the intense popularity of sports among a substantial proportion of voters and businesses and the leverage that teams enjoy from the monopoly position of professional sports leagues

divergence in alternative hicksian welfare measures the case of revealed preference for public amenities this paper investigates the divergence between the two hicksian welfare measures of non traded amenity improvement associated with housing first the hicksian surplus measures for amenity changes are analytically developed based on explicit specification of utility structures a hedonic two stage approach is then applied to empirically show that for quantity changes in contrast to hypothetical markets divergence in real market is small the paper also analytically develops expressions for the income and substitution effects and empirically shows that for a given income effect the greater the substitution effect the smaller the divergence between the two measures copyright 2002 john wiley sons ltd

biophysical causality and environmental preference elicitation evaluating the validity of welfare analysis over intermediate outcomes stated preference scenarios often describe outcomes to be valued in terms of intermediate biophysical processes or ecosystem services with indirect utility effects rather than in terms of final directly welfare relevant consequences this article evaluates whether valid welfare estimates can emerge from this practice we begin with a theoretical model demonstrating conditions under which stated preference scenarios that include intermediate outcomes will elicit welfare estimates identical to those from parallel scenarios that include associated final outcomes i e convergent validity will hold the model demonstrates that a necessary condition for convergent validity is the ability of respondents to correctly predict biophysical production functions linking intermediate to final outcomes hypotheses from the theoretical model are then evaluated empirically using an application of choice experiments to migratory fish restoration in the u s state of rhode island empirical results are mixed but generally reject convergent validity welfare estimates are not robust to the use of an intermediate outcome in lieu of a related final outcome in stated preference scenarios as predicted by theory results of the analysis suggest that greater attention should be given to the reliability of welfare estimation when final outcomes cannot be quantified

the acid rain differential game this paper considers an acid rain differential game countries emit sulphur which is partly transferred to other countries depositions above critical loads ultimately destroy the soil countries face a trade off between the costs of emission reductions and the damage to the soil due to the depletion of the acid buffers because of the transboundary externalities the outcome will depend on whether the countries cooperate or not this paper presents the cooperative outcome and the open loop and markov perfect nash equilibria of the acid rain differential game it will be shown that the depositions always converge to the critical loads but the steady state levels of the buffer stocks differ the theory is used to analyse the acid rain differential game for sulphur between great britain and ireland finally some results are given for the whole of europe

international pollution control cooperative versus noncooperative strategies abstract international pollution control involving two neighboring countries is modeled as a simple two player dynamic game each country produces a good that is consumed by domestic households production of each consumption good results in emissions of pollutants households in each country derive utility from the consumption of the domestically produced good but incur costs through the total stock of pollution stock externality in this setting we characterize cooperative as well as noncooperative pollution control strategies of the governments of the two countries that maximize the discounted stream of net benefits of a representative consumer it turns out that when the governments are restricted to use linear strategies noncooperative behavior results in overall losses for both countries if on the contrary governments use nonlinear markov perfect strategies and the discount rate is small enough a pareto efficient steady state pollution stock can be supported as a differentiable subgame perfect equilibrium thus the emergence of first best solutions cooperative outcomes does not require any institutional arrangements threats retaliation etc but can be brought about through the use of nonlinear markov perfect equilibrium strategies

transboundary pollution in the black sea comparison of institutional arrangements this paper analyses the transboundary pollution between romania and ukraine coastal states along the black sea and studies the welfare consequences of institutional arrangements for controlling this problem to achieve this goal we use a dynamic and strategic framework we compare in terms of total welfare for two countries a first best case with three different institutional arrangements the non cooperative game of countries the uniform emission policy and the constant emission policy as proposed by the black sea commission our findings indicate that the non cooperative game provides a better level of total welfare than the other rules

pigouvian taxation of energy for flow and stock externalities and strategic noncompetitive energy pricing abstract the literature on energy and carbon taxes is by and large concerned about the derivation of globally efficient strategies in contrast this paper considers the dynamic interactions between cartelized energy suppliers and a consumers government that collectively taxes energy carriers for pigouvian motives two different kinds of external costs are associated with energy consumption flow e g acid rain and stock externalities e g global warming the dynamic interactions between a consumers government and a producers cartel are modeled as a differential game with a subgame perfect nash equilibrium in linear and nonlinear markov strategies the major implications are that the nonlinear solutions are pareto inferior to the linear strategies and energy suppliers may preempt energy taxation and thereby may raise the price at front however this effect diminishes over time because the producers price declines while taxes increase

reference dependent preferences team relocations and major league expansion abstract professional sports teams receive large subsidies some in excess of 500 million from local governments for the construction of new facilities these subsidies cannot be explained by tangible economic benefits and estimates of the value of intangible benefits also fall short of typical subsidies in this paper we incorporate fans reference dependent preferences into a model of the bargaining between local governments and teams the model predicts that teams use relocation threats to exploit fans utility loss from team departures a negative deviation from the status quo to extract large subsidies from local governments fans loss aversion provides an explanation of the current team distribution and observed team relocation and league expansion decisions in north america the model also highlights the importance of anti trust exemptions of the leagues in creating credible relocation threats for existing teams

optimal bid selection for dichotomous choice contingent valuation surveys abstract this paper develops a model for optimal survey design for the dichotomous choice contingent valuation method that finds the bid amounts as well as the sample sizes corresponding to each bid the model uses an iterative procedure to select the survey design that minimizes the mean square error of the welfare measure a set of monte carlo simulations shows that the model produces significantly lower mean squared errors for the welfare estimate than the next best model produces survey design under alternative assumptions regarding the statistical distribution of the welfare measure is also addressed the model produced significantly different survey designs depending on whether the distribution was assumed to be symmetric or asymmetric

consumption benefits of national hockey league game trips estimated from revealed and stated preference demand data this paper examines the demand for hockey game trips among metropolitan and nonmetropolitan residents of alberta canada using data on both revealed and stated preference game trip behavior from a telephone survey conducted throughout alberta we estimate the effect of ticket prices team quality arena amenities and capacity on the latent demand for national hockey league hockey games we nd that lower ticket prices higher team quality and additional capacity encourage attendance in the status quo scenario consumer surplus per game is 50 for those who had attended hockey games and about 50 less for those who had not attended games exploiting the stated preference data we develop a number of other consumer surplus estimates we also include travel costs in the estimation of the demand function and estimate the full value of the game trip considering both ticket prices and travel costs sold out arenas in calgary and edmonton generate annual consumption bene ts of 40 and 35 million when only ticket prices are used to calculate consumer surplus i e excluding travel costs considering the full price consumer surplus for the calgary flames of 103 per game trip the annual consumption bene ts may be as high as 82 million jel r22 l83 d61

trade transboundary pollution and foreign lobbying in this paper we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution we show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream polluted country but if the upstream polluting country can lobby the downstream government to impose lower tariffs distortions brought by corruption and foreign lobbying lead to a rise in the upstream country s social welfare and to a decrease in social welfare in the downstream country thus the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments susceptibility to foreign political influence

a new paradigm for valuing non market goods using referendum data maximum likelihood estimation by censored logistic regression abstract this paper challenges the w m hanemann amer j agr econom 66 332 341 1984 and c sellar j p chavas and j r stoll j environ econom management 13 382 390 1986 utilizations of logit models to estimate the value of non market resources from referendum survey data these data are more informative than conventional choice data the random utility interpretation of logit models is therefore too restrictive bypassing the utility function entirely it will be shown that parameters and standard errors for utility theoretic inverse hicksian demand functions can be extracted directly and much more simply estimated demand functions need not be limited to those corresponding to the linear in parameters utility difference specifications which can be handled by packaged logit programs

valuation methods and policy making in environmental economics 1 valuation methods and policy making in environmental economics relevance and scope h folmer e van ierland part i the valuation of public goods 2 non market asset prices a comparison of three valuation approaches r c d arge j f shogren 3 valuing public goods in a risky world an experiment p o johansson 4 recreational values pareto optimality and timber supply p o johansson k g lofgren k g maler 5 estimating social benefits of environmental improvements from reduced acid rain deposition a contingent valuation survey s navrud part ii the valuation of health and life 6 benefits of reduced morbidity from air pollution control a survey m dickie s gerking 7 valuing a public good direct and indirect valuation approaches to the measurement of the benefits from air pollution abatement m shechter m kim l golan 8 environmental regulation and the valuation of life interindustry mobility and the market price of safety h w herzog jr a m schlottmann part iii cost benefit analysis 9 disequilibrium cost benefit rules an exposition and extension p o johansson k g lofgren 10 macroeconomic cost benefit analysis of environmental programmes a nentjes part iv aspects of policy making 11 benefit estimation for complex policies a randall j hoehn 12 the acid rain game k g maler index

the externalities problem of transboundary and persistent pollution abstract this paper deals with implementing the efficient allocation of transboundary and persistent pollution in particular we adapt varian s compensation mechanism varian a solution to the problem of externalities when agents are well informed amer econ rev 85 1994 1278 1293 to cover situations in which pollutants extend to neighboring regions and their effects persist over time the main contribution of this paper is the design of a mechanism that implements in subgame perfect equilibrium the efficient pollution levels in this context

selling the game estimating the economic impact of professional sports through taxable sales sports leagues franchises and civic boosters tout the economic benefits of professional sports as an incentive for host cities to construct new stadiums or arenas at considerable public expense past league sponsored studies have estimated that new stadiums franchises and mega events such as the super bowl increase economic activity by potentially hundreds of millions of dollars in host cities a detailed regression analysis of taxable sales in florida over the period extending from 1980 to 2005 fails to support these claims new stadiums arenas and franchises as well as mega events appear to be as likely to reduce taxable sales as increase them similarly strikes and lockouts in professional sports have not systematically lead to reductions in local taxable sales

deriving benefit measures with higher precision a study of economic values of air quality a calibration strategy using ridge regression to generate more precise estimates for a particular parameter in a model is proposed formulae to compute the proposed ridge estimates from standard ordinary least squares ols results are provided the strategy is applied to recomputing marginal effects of air pollution on property values for 30 housing studies results show that ridge estimates are superior to the ols estimates under the mean squared error criterion the same strategy can be used to reestimate key parameters of interest in other applications such as price elasticities for demand forecasts or the value of a statistical life from hedonic wage regressions

is a minimum wage an appropriate instrument for redistribution textabstractwe analyze the redistributional dis advantages of a minimum wage over income taxation in competitive labor markets without imposing assumptions on the in efficiency of labor rationing compared to a distributionally equivalent tax change a minimum wage increase raises involuntary unemployment but also raises skill formation as some individuals avoid unemployment a minimum wage is an appropriate instrument for redistribution if and only if the public revenue gains from additional skill formation outweigh both the public revenue losses from additional unemployment and the utility losses of inefficient labor rationing we show that this critically depends on how labor rationing is distributed among workers a necessary condition for the desirability of a minimum wage increase is that the public revenue gains from higher skill formation outweigh the revenue losses from higher unemployment we write this condition in terms of measurable sufficient statistics our empirical analysis suggests that a minimum wage increase is undesirable in nearly all oecd countries a reduction in the minimum wage along with tax adjustments that keep net incomes constant would yield a pareto improvement

universal health insurance in the clinton plan coverage as a tax financed public good the financing arrangements embodied in the clinton health reform plan involve some important differences in the way in which public goods are usually financed the subsidies to small low wage firms mandated to provide benefits distort markets in both labor and products and offer incentives for the creation of small firms in addition the financing scheme implicitly envisions a head tax on families at modest income levels but offers a possible rationale for it nevertheless the main reason for many of the financing features appears to be an attempt to hold down the apparent budgetary cost of universal coverage

the specification of hedonic indexes for urban housing most studies evaluating the effect on housing prices of regulatory programs for controlling urban growth use econometric methods hedonic price models without considering the research design aspects of the task this article examines the strengths and

welfare measurements using contingent valuation a comparison of techniques three commonly used techniques of asking contingent valuation questions are compared iterative bidding payment cards and dichotomous choice the results reveal that no single contingent valuation technique is neutral in the elicitation of hicksian surplus and each technique has its strengths and weaknesses the iterative bidding estimates contain a starting point bias while the payment card and dichotomous choice estimates were influenced by the interviewers soliciting the contingent values finally the analysis of dichotomous choice responses involves unresolved issues that warrant further investigation on the other hand dichotomous choice is the easiest technique to administer in a survey setting

willingness to pay for ozone control inferences from the demand for medical care abstract the paper applies a discrete choice version of the household production approach to the valuation of nonmarket goods willingness to pay for tropospheric ozone control is estimated using medical care demand under assumptions of input necessity and weak complementarity in example calculations individuals living in high ozone areas are willing to pay over 170 annually for an environment in which ozone concentrations never exceed 12 pphm willingness to pay figures are two to four times larger than medical expense savings caused by the same ozone reductions estimates obtained are compared with results of previous studies and proposed ozone control measures are discussed

carbon motivated border tax adjustments old wine in green bottles 1285 ben lockwood and john whalley we discuss emerging proposals for border tax adjustments btas to accompany commitments to reduce carbon emissions in the eu the us and other oecd economies the rationale offered for such border adjustment is that various entities such as the eu if making commitments to reduce emissions which go beyond those undertaken in other regions of the world impose added costs on domestic producers which create a competitive disadvantage for them some form of remedy is viewed as reasonable to maintain the competitiveness of domestic industries when responding to global environmental problems in this paper we argue that despite its current carbon manifestation the issue of border tax adjustments and both their rationale and their effects on trade are not new and despite the present debate which seems to overlook older literature have arisen before earlier debate on border tax adjustments occurred at the time of the adoption of the value added tax vat in the eu as a tax harmonisation target in the early 1960s but academic literature of the time showed that a change between origin and destination basis in the vat would be neutral and hence the use of a destination based tax in the eu to accompany the vat offered no trade advantage to europe here we argue that essentially the same arguments also apply for carbon motivated btas and in the current debate there seems to be a misconception between price level effects and relative price effects stemming from a bta which needs correcting we also argue that the impact of border tax adjustments should be viewed as independent of the motivation of the adjustments

does compulsory school attendance affect schooling and earnings we establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws individuals born in the beginning of the year start school at an older age and can therefore drop out after completing less schooling than individuals born near the end of the year roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws we estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education the instrumental variables estimate of the return to education is close to the ordinary least squares estimate suggesting that there is little bias in conventional estimates every developed country in the world has a compulsory schooling requirement yet little is known about the effect these laws have on educational attainment and earnings 1 this paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the united states the experiment stems from the fact that children born in different months of the year start school at different ages while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday in effect the interaction of school entry requirements and compulsory schooling laws compel students born

winners and losers in a world with global warming noncooperation altruism and social welfare abstract in this paper global warming is an asymmetric transboundary externality which benefits some countries or regions and harms others we use a simple two country model to analyze the effects of global warming on resource allocations the global warming stock and national and global welfare

cooperation on climate change mitigation abstract we analyze conditions under which it is possible to achieve efficient mitigation of greenhouse gas emissions with a self enforcing international agreement in which all countries find it in their self interest to abide by the agreement we model the choice of emissions by countries as a dynamic game we use a two part punishment scheme for deviations from an agreement that is renegotiation proof and show when this scheme supports the efficient outcome as a subgame perfect equilibrium using numerical examples we show that an efficient subgame perfect equilibrium exists for a range of reasonable parameter values the existence of such equilibrium may be non monotonic in the discount rate and the ratio of slope of marginal abatement cost and marginal damages

optimal experimental design for double bounded dichotomous choice contingent valuation the double bounded dichotomous choice model is becoming popular in the contingent valuation literature this technique considers the responses to two bids the second one being determined according to the response to the first and it has been shown to be statistically more efficient than the standard single bounded model in this paper the issue of the optimal choice of bid values for the double bounded logit model is addressed these designs are derived to satisfy the d optimal c optimal and fiducial method criteria

valuing public goods a comparison of survey and hedonic approaches although the theory of public goods has progressed rapidly since paul samuelson s seminal article the empirical measurement of the value of demand for public goods only recently has received increased attention perhaps the best known and most widely accepted empirical approach has been the use of hedonic prices wherein for example it is assumed that either wages or housing values reflect spatial variation in public good characteristics of different communities this indirect approach based on theoretical work of charles tiebout kelvin lancaster sherwin rosen and others has proven quite successful among public goods or bads which have been valued using the hedonic approach are climate i hoch air pollution robert anderson and thomas crocker d harrison and d rubinfeld social infrastructure r cummings et al and other community characteristics such as noise level j nelson and ethnic composition ann schnare an alternative approach is to directly ask households or individuals to state their willingness to pay for public goods using survey techniques despite arguments that strategic bias will invalidate survey results there exists the need for an alternative to the hedonic approach as an example consider the case of a remote and unique scenic vista valuable to recreators which is threatened by air pollution from a proposed coal fired plant a typical situation in the western united states although it is possible in principle to impute the value of clean air and visibility from the relative decline in local visitation which might follow construction of a power plant information on the value of visibility at the site is needed prior to construction for socially optimal decision making on plant location and pollution control equipment the hedonic approach is unavailable both because the scarcity of local population as opposed to recreators makes use of wage or property value data impossible and because scenic vistas may themselves be unique for these reasons a randall et al first applied survey methods for valuing visibility and other environmental effects of large coal fired power plants in the four corners region of new mexico since this initial application the survey approach has been widely used to value environmental commodities where market data for hedonic analysis is difficult to acquire see for example brookshire ives and schulze rowe et al brookshire et al other early attempts to value public goods using the survey approach include r davis peter bohm and j hammack and g brown although results of using the survey approach for estimating the value of public goods appear to be internally consistent replicable and consistent with demand theory see schulze et al little work on external validation has been reported thus the purpose of this paper is to report on an experiment designed to validate the survey approach by direct comparison to a hedonic property value study the los angeles metropolitan area was chosen for the experiment because of the well defined air pollution problem and be assistant professor university of wyoming assistant professor university of missouri rolla associate professor university of wyoming and professor university of wyoming respectively the research reported here was funded under a grant methods development for assessing air pollution control benefits from the u s environmental protection agency we would like to give special thanks to alan carlin and shelby gerking for their helpful suggestions and contributions additional helpful comments were received from a myrick freeman iii john tschirhart and james murdoch all conclusions are of course our sole responsibility

optimal designs for discrete choice contingent valuation surveys single bound double bound and bivariate models this paper finds the designs for discrete choice contingent valuation surveys which maximize the precision of a statistic of interest about the public s willingness to pay wtp for a change in the environmental quality such as median wtp an optimization problem is set up in which the efficiency of the estimate of median wtp or a related concept is the objective function to optimize with respect to the survey design i e the set of bids offered to the respondents in deriving the optimal designs we consider alternative econometric models such as the basic single bound model that uses the responses to the first payment question the traditional interval data or double bound model for surveys with a follow up payment question and the recently proposed bivariate binary response model simulations are carried out to compare the alternative design principles and assess their performances with respect to the statistic of primary interest median wtp and other welfare measures such as mean wtp other designs that are constructed ad hoc are also examined

directional heterogeneity of environmental disamenities the impact of crematory operations on adjacent residential values a hedonic study of residential house sales in rawlins wyoming was conducted to estimate the impact of an environmental shock from a new point source upon adjacent residential property values we use a unique data base of house sale prices and associated house attributes including structural and neighbourhood characteristics and geographic distances and directions from the source of the shock atmospheric emissions from a new crematory our data spans 27 months of house sales 7 months before and 20 months after the startup of crematory operations results indicate that proximity measured both in terms of direction and distance from the crematory imparts a statistically significant negative impact on average house sale prices an increase of 0 3 to 3 6 of average sale price for every one tenth mile increase up to one half mile in distance away from the crematory but depending on direction from the crematory this distance benefit increases somewhat with calendar time only for houses located west of

time consistent shapley value allocation of pollution cost reduction we study the problem of allocation over time of total cost incurred by countries in a cooperative game of pollution reduction we compute the characteristic function for all possible coalitions and apply the shapley value to determine a fair distribution of the total cooperative cost among players we design a mechanism for allocation over time of total individual cost so that the initial agreement remains valid for the whole duration of the game

measuring the environmental consequences of trade policy a nonmarket cge analysis the newly approved gatt trade agreement is likely to focus greater attention on the conflicts between the proliferation of diverse national policies toward environmental quality and the need to maintain competitiveness in world markets virtually all policy evaluations of this conflict have been limited by a significant misspecification in existing models none of the available computable general equilibrium cge models for international trading patterns consistently reflect the effects of environmental resources on consumers preferences the purpose of this paper is to report the first generation of a composite nonmarket and cge model nm cge for the european community the united states japan and a single region for the rest of the world the model incorporates the morbidity and mortality effects of particulates sulfur oxides and nitrogen oxides it uses existing nonmarket valuation estimates freeman with a specification for consumer preferences that allows changes in atmospheric emissions to diffuse in different amounts to

does the measurement of environmental quality affect implicit prices estimated from hedonic models hedonic property value models are often used to derive point estimates for identifying the relationship between environmental quality and property prices the measurement of the environmental quality variable is often selected based on convenience but variables reflecting different perceptions about environmental quality may result in implicit prices that vary substantially this case study derives implicit prices for nine measures of water clarity using hedonic property value models of lakefront properties in maine results show that water clarity variables based on different perceptions may result in differences in implicit prices large enough to potentially affect policy decisions

hedonic prices demands for urban housing amenities and benefit estimates abstract this paper uses a rosen two step hedonic price trait demand approach to estimate demand functions for a vector of urban amenities to ascertain whether this theoretically preferred approach yields benefit estimates which differ from the oft used ridker henning one step hedonic approach we conduct a sensitivity analysis we find that the two step approach does yield different benefit estimates and that the differences are large for some amenities the estimates are sensitive to the functional form of the hedonic equation when the forms are significantly different according to modified box cox results but are not particularly sensitive to specification of the amenity demand equation

a dynamic game of a transboundary pollutant with asymmetric players abstract modeling transboundary pollutants in a dynamic game framework provides a foundation for analyzing the impact of various policy options the focus of this analysis is on the results of a tax subsidy scheme used to address the transboundary problem of global climate change a nonzero sum dynamic game with asymmetric players is used to evaluate the policy impact of the tax subsidy scheme on the respective player s value functions and strategies as determined by a nash equilibrium feedback solution the asymmetry of the players is reflected in their respective attitudes toward global climate change with one player benefiting from the change and the other losing

the consequences of a one sided externality in a dynamic two agent framework abstract we develop a dynamic model where all agents contribute to a global externality but only those in a specific region suffer from it we model this in a dynamic setting via a two agent non cooperative overlapping generations model and analyze the consequences for economic growth and intertemporal choices we find that multiple steady states may result from this asymmetry in particular if the agent who is affected by the externality has to spend a large share of his income to offset it then he may be stuck in an environmental poverty trap we provide conditions for the existence of and local convergence to the equilibria as well as a condition for the global convergence to the poverty trap while in addition to maintenance expenditures externalities tend to be addressed via studying taxes investment in r d or alike we focus on capital market integration specifically agents in the affected region can open up their capital market to enable capital inflows we investigate whether an open capital market improves or worsens their welfare while we do find that capital market integration eliminates the environmental poverty trap we show that capital market integration is not always in both agents interest in particular we provide conditions under which the agents prefer autarkic or integrated capital markets

improving hedonic estimation with an inequality restricted estimator economists commonly estimate the value of characteristics not traded in explicit markets by hedonic pricing unfortunately these nonexplicitly traded characteristics often display a lack of independent variation or multicollinearity often some prior information on the value of these characteristics is available from submarkets this paper utilizes this type of prior information to circumvent multicollinearity problems in hedonic pricing models using an inequality restricted bayesian estimator the authors perform a monte carlo experiment and cross validation analysis to demonstrate the superiority of inequality restricted bayesian over ordinary least squares at many margins in a variety of situations typically faced in hedonic estimation copyright 1995 by mit press

schools and housing values this study combines historical and quantitative methods to determine the market response to a major nineteenth century american urban architectural form the speculatively built row house the paper estimates a hedonic price index which decomposes the

a bayesian approach to assessing the robustness of hedonic property value studies hedonic price models are widely employed to estimate implicit prices for bundled attributes residential property value studies dominate these applications using a representative cross sectional property value data set we employ bayesian methods to translate a range of priors in covariate selection typical of hedonic property value studies into a range of posterior estimates we also formulate priors regarding measurement error in individual covariates and compute the ranges of resulting posterior means finally we empirically demonstrate that a greater and more systematic use of prior information drawn from one s own data and from other studies can break the collinearity deadlock in this data

does student employment really impact academic achievement the case of france student employment is usually thought to curb academic achievement our research relating to a survey at a french university in 2012 emphasizes the significance of the intensity of student working hours allowance for the endogeneity of student employment reinforces the negative effects particularly for young people working more than 16 hours a week however the academic achievement of those working fewer than 8 hours per week seems unaffected the type of employment also affects the chances of success students with public sector jobs appear to be less prone to failure possibly because of more flexible working hours

the impact of rental properties on the value of single family residences abstract this study examines the effects that single family rental properties in a residential neighborhood have on the value of single family residences in that area the analysis blends real estate valuation concepts with evidence found in the housing maintenance literature and urban succession theory to develop testable hypotheses regarding the property specific proximity related and neighborhood wide impacts of rental properties on property values the data used to test the hypotheses include the tenure status of 23 119 single family residences and 1 162 single family sales regression results support all three hypotheses although numerous studies on the value impacts of other externalities have been published this is the first study to examine the separation of property rights the results of this study provide additional insights into housing maintenance and also have implications for neighborhood zoning regulations

optimal designs of discrete response experiments in contingent valuation studies optimal designs for estimating model parameters and other characteristics such as mean and median willingness to pay are discussed when a logistic or a probit regression model is used for analyzing a contingent valuation study with discrete questions a numerical example related to a study of the value of preserving some virgin forests in sweden illustrates the efficiencies of different designs and how a sequential procedure can be applied copyright 1992 by mit press

pesticide residue risk and food safety valuation a random utility approach a new approach is developed for integrating consumers risk perceptions with stated purchase behavior when consumption decisions must be made with incomplete information the application involves health risks from exposure to pesticide residues on fresh produce unlike traditional food demand analysis the present approach treats produce choices as discrete outcomes resulting in a random utility model empirical results from a pilot survey suggest a clear linkage between perceptions and behavior in response to new risk information consumers stated preferences for safer produce were primarily influenced by price differences and perceived risks not by the technical risk information provided alone however the linkage between behavior and valuation was less clear cut the risk price tradeoffs entailed by contingent discrete choices indicate high price premia for small risk reductions and little variation in price premium across alternative risk reductions

international pollution problems unilateral initiatives by environmental groups in one country abstract international pollution involving two groups of countries is modelled as a two player game each country is characterized by specific preferences for consumption goods and the environment both countries produce a single consumption good with a given technology that determines pollution per unit output each country is economically isolated except for the presence of a global pollutant within a static framework m hoel j environ econom management 20 55 70 1991 shows that unilateral actions to reduce harmful emissions advocated by environmental groups in one country may result in higher total emissions i characterize cooperative and noncooperative emission strategies for the two countries using welfare functions that within a static framework yield total emissions without cooperation always higher than those with cooperation when both governments choose linear closed loop strategies and one country is not sensitive to the environmental condition the unique equilibrium exhibits less pollution than the cooperative equilibrium only if the other country cares a great deal about the well being of future generations and has relatively low bargaining power in the negotiations equilibria that result from nonlinear closed loop strategies are also characterized

existence and uniqueness of equilibrium in a distorted dynamic small open economy abstract we provide a set of sufficient conditions for existence and uniqueness of recursive equilibrium for a class of small open economies with distortion the second welfare theorem is not available in this framework and usual approach for studying optimal neoclassical growth models is also not applicable

inference and optimal design for a welfare measure in dichotomous choice contingent valuation this paper considers the use of contingent valuation to estimate non market benefits from separately valued nested goods survey respondents were asked referendum wtp questions regarding either a scheme to protect the whole area of a wetland or a

measuring the cost of time in recreation demand analysis an application to sportfishing since the work of cesario and knetsch economists have recognized that the opportunity cost of time plays an important role in determining the demand for outdoor recreation the opportunities one has for spare time are more significant for consumption of time intensive outdoor recreation activities than for other commodities especially nondurables bishop and heberlein illustrate the overwhelming importance of time costs to final recreational values total consumer surplus is nearly four times as large when time costs are added at half the income rate as when time costs were set at zero p 21 despite the recognition economists have neither successfully integrated the costs of time with the methods of recreational demand analysis nor reached a consensus on how it should be measured brown charbonneau and hay state finally the apparently crucial importance of how opportunity cost of time is handled needs further work while we are convinced it is an appropriate concept exactly how it should be included and measured s remains to be determined p 24 several approaches have been taken to include it in the travel cost method one approach brown and nawas gum and martin suggests that time in transit be considered as a separate independent variable another approach bishop and heberlein brown charbonneau hay nicols bowes dwyer cesario and knetsch measures the cost of time and adds it to other costs several approaches have been suggested to measure time costs one approach is simply to choose an hourly wage e g 2 00 per hour or perhaps the minimum wage rate a more flexible but still ad hoc approach is to use some proportion of the individual s wage rate as the opportunity cost of time nichols bowes dwyer the proportion is usually taken from independent studies and used to value the travel time this approach is better than using a constant opportunity cost of time because it allows variation across individuals it suffers because the choice of the percentage of the wage rate is arbitrary independent of the sampled population cesario has discussed the consequences of ignoring time costs and the differences in values arising from alternative measurement approaches in this paper we argue that the opportunity cost of time is some proportion of the individual s market wage rate or income per hour and that this proportion can be determined from sample data this method permits the proportion to vary from one study to another rather than imposing either an arbitrary estimate or one from a sample different from the study s sample

design of sequential experiments for contingent valuation studies abstract sequential experimentation is recommended as an alternative to the usual one or two shot approach to contingent valuation surveys the sequential c optimal approach is introduced and developed and it is compared to the established parametric and non parametric sequential procedures it is shown to be an improvement in terms of statistical precision in a finite sample over the standard sequential procedures

on optimal domestic processing of exhaustible natural resource exports abstract this paper is concerned with the desirability of domestic processing of natural resource exports from a small open economy completely dependent upon these exports in the framework of a malleable capital model where the services of imported capital are needed to process the resource domestically the paper examines the optimal rates of extraction domestic processing and import of capital services in different economic scenarios defined in terms of processing technology cost and market structures presence or absence of taxes and subsidies historical growth in prices etc

managing the international commons resource use and pollution control the simultaneous management in an international context of free access renewable resources and transboundary pollution is examined in a dynamic game framework first best outcomes under international cooperation are determined and compared to noncooperative outcomes when countries follow linear markov strategies an international policy consisting of taxes on emissions and harvesting with international redistribution of tax receipts is used to achieve the cooperative solution in addition side payments may be required to prevent free riding and thus make the international policy implementable

time consistent side payments in a dynamic game of downstream pollution abstract this note determines a rule to share a surplus gained when two countries or regions agree to coordinate their policies to reduce downstream pollution an intertemporal decomposition scheme for the total side payment is proposed this scheme has the following individual rationality property in each subgame that starts along the cooperative trajectory one country is guaranteed to receive a higher payoff in the cooperative solution than in the disagreement solution for this country another notion of individual rationality obtains this country will at any instant of time during the play of the game receive a higher payoff in the cooperative solution than in the disagreement solution

sensitivity of contingent valuation to alternative payment schedules insensitivity to payment schedule wherein respondents do not adequately differentiate between a one time payment and a series of payments may be an important but often overlooked factor in the design interpretation and use of contingent valuation studies several contingent valuation experiments involving a familiar private good and a less familiar environmental commodity indicate that although respondents distinguished between lump sum and periodic payment schedules implicit discount rates were very high suggesting that sensitivity to payment schedule is an important subject for further study

hedonic prices goods specific effects and functional form inferences from cross section time series data tests for two key elements of the hedonic model of price determination for differentiated goods are proposed when cross sectional time series data are available first the hedonic hypothesis that price is determined by sellers and buyers valuations of characteristics bundled in a good is tested against the alternative that consumers demand specific goods the sensitivity of the outcome of the test to unmeasured characteristics serial correlation or heteroscedasticity and misspecification of functional form is assessed second a novel approach to testing functional form illustrates limitations of testing hedonic specifications only against alternatives nested in the box cox functional form

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

the damage costs of climate change toward more comprehensive calculations it is argued that estimating the damage costs of a certain benchmark climate change is not sufficient what is needed are cost functions and confidence intervals although these are contained in the integrated models and their technical manuals this paper brings them into the open in order to stimulate discussion after briefly reviewing the benchmark climate change damage costs region specific cost functions are presented which distinguish tangible from intangible losses and the losses due to a changing climate from those due to a changed climate furthermore cost functions are assumed to be quadratic as an approximation of the unknown but presumably convex functions results from the damage module of the integrated climate economy model fund are presented next uncertainties are incorporated and expected damages are calculated it is shown that because of convex loss functions and right skewed uncertain ties the risk premium is substantial calling for more action than analysis based on best guess estimates the final section explores some needs for further scientific research

hedonic models and air pollution twenty five years and counting this paper reports a meta analysis of how effectively hedonic property models have detected the influence of air pollution on housing prices probit estimates are reported describing how data model specification and local property market conditions in cities represented in thirty seven studies influence the ability of hedonic models to uncover negative statistically significant relationships between housing prices and air pollution measures

a differential game design of watershed pollution management under ecological compensation criterion abstract the watershed ecological compensation is used as a policy instrument in china in order to reduce water pollution and attain watershed sustainability in this paper we construct a differential game between a local government and a profit maximizing local firm with one competitor in a watershed ecological compensation system then the optimal dynamic strategy is obtained by applying maximum principle finally we investigate the influence of shadow prices on control variables and firm s output in three different cases this study focuses on how to reach a balance between the sustainable development of local economy and the effective protection of water resources from an ecological perspective for the local government as well as on how to maximize the profit of the local firm in an ecological compensation system

hazardous waste sites and property values in the state of new jersey the polluter pays principal is justified as a deterrent to future pollution however the us experience suggests that it has considerably reduced the clean up rate of existing hazardous waste sites coaseapos s theorem is used as basis to propose that a partnership between the polluters and property owners near these sites will not only ease financial burden but will also speed up the pace of cleanup a hedonic price model is used to empirically estimate the impact of siting of hazardous waste sites on property values and determine the economic feasibility of the proposed partnership the empirical estimates are based on municipality level data from the state of new jersey the benefis from speedy clean up of hazardous waste sites to new jersey property owners are observed to exceed the cleanup cost of these sites

dropout school performance and working while in school abstract we develop an econometric model where the determinants of working while in school academic performance and the decision to drop out are set in the context of two types of high school students those who prefer schooling and those who are more likely to join the labor market the likelihood function of this model with heterogeneous preferences for schooling is composed of 48 individual contributions of a standard quadrivariate normal function exploiting a unique canadian microdata set of high school students and school dropouts we show that being a female student attending a private school and living with educated parents are linked to having a strong preference for schooling over the labor market we also find that working fewer than fifteen hours per week while in school is not necessarily detrimental to success in school our results indicate that the decision to drop out is affected by the legal age to access the labor market high minimum wages and low unemployment rates several polic

the economics of sports facilities and their communities since the 1950s taxpayers have been the primary investors in stadia built for the use of privately owned professional sports teams team owners have argued that sports facilities boost local economic activity however economic reasoning and empirical evidence suggest the opposite public support for stadia is also driven by demand for community image and owners of sports teams supply a scarce input into image enhancement participation in the major league for which they have been able to extract monopoly rents from dispersed taxpayers we suggest reforms to dissipate the monopoly sports leagues exercise when negotiating with host communities for their teams