corrective taxes under oligopoly with inter firm externalities pollution externalities between polluters should be taken into account in the design of corrective taxes when the externalities are substantial and or the number of polluters is large the effluent levies on these firms do not necessarily result in a deadweight loss consequently the second best tax exceeds the marginal social cost of pollution a more general rule is that the tax rate should be greater than the marginal social cost of pollution if and only if a marginal increase in the tax rate results in opposite effects on the changes of equilibrium emission level and output

can poorly informed regulators hinder competition this paper considers an entry deterrence game in which environmental policy is set without perfectly observing the incumbent firm s costs we investigate if regulators who can have an informational advantage relative to the potential entrant support entry deterring practices the paper demonstrates that while entry deterring equilibria only emerge under restrictive conditions when the regulator is perfectly informed these equilibria arise under larger settings as he becomes uninformed furthermore we show that the regulator is willing to support the incumbent s entry deterring practices regardless of his degree of information if entry costs are sufficiently high however when entry costs are lower the regulator only sustains this type of practices if he is poorly informed

carbon allowance allocation in the transportation industry abstract this study proposes models for projecting reductions in co 2 emissions of 10 20 30 and 40 compared to business as usual bau using a carbon allowance allocation policy and both unimodal and intermodal modes of transportation the results show that for 10 to 80 decreases in free carbon allowance the intermodal ratio increased from 1 01 to 53 44 which led to decreases in carbon emissions and demand ranging from 10 41 to 48 19 and 8 45 to 7 57 respectively when free carbon allowances are decreased the demand for intermodal systems increases accordingly these results suggest that a carbon allowance allocation policy could mitigate transportation carbon emissions with a relatively small negative impact on economic activity

feebates rebates and gas guzzler taxes a study of incentives for increased fuel economy abstract us fuel economy standards have not been changed significantly in 20 years feebates are a market based alternative in which vehicles with fuel consumption rates above a pivot point are charged fees while vehicles below receive rebates by choice of pivot points feebate systems can be made revenue neutral feebates have been analyzed before this study re examines feebates using recent data assesses how the undervaluing of fuel economy by consumers might affect their efficacy tests sensitivity to the cost of fuel economy technology and price elasticities of vehicle demand and adds assessments of gas guzzler taxes or rebates alone a feebate rate of 500 per 0 01 gallon per mile gpm produces a 16 percent increase in fuel economy while a 1000 per 0 01 gpm results in a 29 percent increase even if consumers count only the first 3 years of fuel savings unit sales decline by about 0 5 percent but sales revenues increase because the added value of fuel economy technologies outweighs the decrease in sales in all cases the vast majority of fuel economy increase is due to adoption of fuel economy technologies rather than shifts in sales

future energy and emissions policy scenarios in ireland for private car transport in this paper we use a technological model of ireland s future car stock to simulate the impact of a range of policy measures on the baseline trend in energy demand in the period to 2030 the policies and measures modelled comprise meeting deployment targets for electric vehicles and compressed natural gas vehicles an eu regulation for the improvement of vehicle efficiency implementation of a national biofuel obligation as well as several behavioural measures encouraging modal shifting and reduced travel demand the impact of the different measures simulated is measured in terms of their contribution to meeting ireland s ambitious targets for energy savings for renewable energy penetration and for greenhouse gas ghg emissions reductions the results point to a possible improvement of 32 in car stock efficiency the achievement of 7 8 renewable energy share of road and rail transport and a 22 reduction in non ets private car co2 emissions relative to 2009 levels a scenario analysis on meeting the ev penetration target shows a significant range of co2 emissions reductions depending on the cars and mileage displaced and on the electricity generation portfolio

environmental policy under oligopoly with endogenous market structure emission taxes under both fixed number oligopoly and endogenous market structure which are the most relevant market structures for policy issues are examined in the latter case and contrary to what is expected under imperfect competition the optimal tax could exceed marginal external damages which implies that externalities generated by oligopolistic firms could be optimally controlled by overinternalizing environmental damages under endogenous market structure a scheme consisting of a license fee and a second best underinternalizing emission tax can increase social welfare as compared to the use of a single emission tax exceeding marginal damages copyright 1995 by the editors of the scandinavian journal of economics

asymmetric information signaling and environmental taxes in oligopoly abstract this paper examines the effects of signaling on environmental taxation in a two period oligopoly model in which each firm privately knows whether its technology is clean or dirty while third parties the rival firms and the regulator have only a subjective perception about this fact consequently there are both horizontal and vertical asymmetric information and each firm can strategically manipulate both the competitor s and the regulator s priors in this context we find that each firm wishes to be perceived as a technologically clean firm in period 2 whenever the regulator s ecological conscience is sufficiently high we also show that taxes under symmetric information are always positive but under asymmetric information and signaling they may be negative subsidies and lower or greater than in the symmetric information case depending on the ecological conscience of the regulator and the probability of firms being dirty finally taxes are below environmental marginal damage both under symmetric and asymmetric information and signaling reinforces such under taxation

new vehicle feebates new vehicle feebate programs encourage improved fleet wide vehicle fuel efficiency yet analyses of these policies have been limited to ad hoc proposals in this paper we exploit an extensive multi year dataset which includes more than 16 million observations to evaluate the welfare implications of a long standing vehicle feebate program in the canadian province of ontario we 1 show that second best optimal feebates can be written as a function of new vehicle pigouvian taxes 2 find that ontario s feebate program was welfare enhancing relative to a no feebate scenario but that a second best optimal benchmark would have yielded additional welfare while reducing fleet wide emissions and 3 find that ontarian consumers responded asymmetrically to fees versus rebates

emission taxes and optimal refunding schemes with endogenous market structure the purpose of this paper is to investigate optimal schemes for refunding the emission tax in a free entry market where the production process generates emissions we consider the regulation by a three part tax policy the government sets an emission tax a refunding scheme and an entry license tax in contrast to the case of the two part tax refund policy under no entry we show that even if it is impossible to obtain subsidies from outside the first best outcome is always attained further the government s budget constraint is binding under the optimal schemes our result implies that the tax refund system works effectively in a market with endogenous entry

long run welfare effect of energy conservation regulation we investigate the long run effect of energy conservation regulation which forces firms to raise energy saving investment above the cost minimizing level if pigovian tax is imposed additional regulation always harms social welfare under perfect competition while it can improve welfare under imperfect competition our result under imperfect competition holds regardless of whether strategies are strategic substitutes or complements in contrast to direct entry regulation

the uk transport carbon model an integrated life cycle approach to explore low carbon futures abstract current debate focuses on the need for the transport sector to contribute to more ambitious carbon emission reduction targets in the uk various macro economic and energy system wide top down models are used to explore the potential for energy demand and carbon emissions reduction in the transport sector these models can lack the bottom up sectoral detail needed to simulate the effects of integrated demand and supply side policy strategies to reduce emissions bridging the gap between short term forecasting and long term scenario models this paper introduces a newly developed strategic transport energy emissions and environmental impacts model the uk transport carbon model uktcm the uktcm covers the range of transport energy environment issues from socio economic and policy influences on energy demand reduction through to life cycle carbon emissions and external costs the model is demonstrated in this paper by presenting the results of three single policies and one policy package scenario limitations of the model are also discussed developed under the auspices of the uk energy research centre ukerc the uktcm can be used to develop transport policy scenarios that explore the full range of technological fiscal regulatory and behavioural change policy interventions to meet uk climate change and energy security goals

annual miles drive used car prices this paper investigates whether the net benefits from owning a vehicle proxied by annual miles driven explain the price declines observed over a vehicle s life we first model the household decision on how much to drive each of its vehicles then we empirically establish that variation in household annual miles across brands explains observed price declines furthermore the effect of vehicle age on annual miles decisions and consequently on market value depends on household characteristics and the composition of the vehicle stock owned

world transport energy demand modelling methodology and elasticities abstract this paper presents the international energy agency s iea approach of modelling transport energy demand fuel demand which is not a demand per se is derived whenever possible from the economic activity in the transport sector and not estimated directly ie using one equation or simultaneous equation system in general the transport models employ a two step approach in the first step transport activity the sector s relevant energy service is estimated econometrically in the second step the transport activity projections are then combined with estimates of efficiency improvements car turnover rates and diesel gasoline penetration assumptions in order to arrive at projections of fuel demand the principal advantages of this approach are that the relevant energy services are modelled and that for model simulation efficiency improvements can be dealt with explicitly the effectiveness of economic instruments is a function of the reaction of consumers and businesses to income and price changes an in depth understanding of income and price elasticities of transport demand and transport energy demand is important in order to be able to assess the effectiveness of policies considered the paper also shows the underlying long term income and price elasticities for oecd and non oecd regions

modelling future private car energy demand in ireland abstract targeted measures influencing vehicle technology are increasingly a tool of energy policy makers within the eu as a means of meeting energy efficiency renewable energy climate change and energy security goals this paper develops the modelling capacity for analysing and evaluating such legislation with a focus on private car energy demand we populate a baseline car stock and car activity model for ireland to 2025 using historical car stock data the model takes account of the lifetime survival profile of different car types the trends in vehicle activity over the fleet and the fuel price and income elasticities of new car sales and total fleet activity the impacts of many policy alternatives may only be simulated by such a bottom up approach which can aid policy development and evaluation the level of detail achieved provides specific insights into the technological drivers of energy consumption thus aiding planning for meeting climate targets this paper focuses on the methodology and baseline scenario baseline results for ireland forecast a decline in private car energy demand growth 0 2 compared with 4 in the period 2000 2008 caused by the relative growth in fleet efficiency compared with activity

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

correlated uncertainty and policy instrument choice abstract for two decades environmental economists have generally maintained that benefit uncertainty is irrelevant for choosing between price and quantity instruments but that cost uncertainty matters with the identity of the efficient instrument depending upon the relative slopes of the marginal benefit and cost functions but in the presence of simultaneous correlated uncertainty such policy instrument recommendations may be inappropriate with plausible values of relevant parameters the conventional identification of a price instrument will be reversed to favor instead a quantity instrument the opposite reversal from the choice of a quantity instrument to a price instrument seems less likely to occur

vintage specific driving restrictions local air pollution has led authorities in many cities around the world to impose limits on car use by means of driving restrictions or license plate bans by placing uniform restrictions on all cars many of these programs have created incentives for drivers to buy additional more polluting cars we study vintage specific restrictions which place heavy limits on older polluting vehicles and no limits on newer cleaner ones we use a novel model of the car market and results from santiago s 1992 program the earliest program to use vintage specific restrictions to show that such restrictions should be designed to work exclusively through the extensive margin type of car driven never through the intensive margin number of miles driven if so vintage restrictions can yield important welfare gains by moving the fleet composition toward cleaner cars comparing well to alternative instruments such as scrappage subsidies and pollution based registration fees

or practice assisting defined benefit pension plans the defined benefit pension system poses substantial long term risks for the u s economy we describe a flexible asset liability management alm system for pension planning the primary goals are to improve the performance and survivability of the pension trust we first employ a stochastic program for enhancing investment strategies in light of company and other goals and pension risk constraints the results are linked with a policy simulator for further analysis we illustrate the concepts via two disparate real world companies the first is a slowly growing auto company and the second a profitable pharmaceutical enterprise we show that a stochastic program can help in the process of discovering sound policy rules the alm system has been employed extensively throughout the world by a large global actuarial firm

consumer myopia imperfect competition and the energy efficiency gap evidence from the uk refrigerator market abstract the empirical literature on the energy efficiency gap concentrates on demand inefficiencies in the energy using durables markets and finds evidence that consumers underestimate future energy costs when purchasing a new appliance we take a broader view and also consider the impact of imperfect competition using data on the uk refrigerator market 2002 2007 we find that the average energy consumption of appliances sold during this period was only 7 2 higher than what would have been observed under a scenario with a perfectly competitive market and non myopic consumers one reason for this small gap is that market power actually reduces energy use

environmental tax in a green market we examine the impact of an emission tax in a green market characterized by consumers environmental awareness and competition between firms for both environmental quality and product prices the unique aspect of this model comes from the assumption that the cost for an increase in quality is fixed we show that the emission tax improves welfare thanks to a decline in pollution and despite an accentuation of product differentiation the higher the marginal environmental damage is the higher the optimal tax will be the optimal tax however becomes lower than the marginal damage when the market is not too large finally when marginal environmental damage is not too low the optimal tax leads to a green product monopoly

oligopoly limit pricing we expand milgrom and roberts 1982 limit pricing model to allow for multiple incumbents each incumbent is informed as to the level of an industry cost parameter and selects a preentry price while a single entrant observes each incumbent s preentry price we find that incumbents are unable to coordinate deception which results in a separating equilibrium in which preentry prices are not distorted further introducing the refinement of unprejudiced beliefs we show that the no distortion equilibrium is the only refined separating equilibrium plausible pooling equilibria fail to exist or involve downward distortions in preentry prices

the demand for road diesel in canada abstract in this paper we estimate the demand for road diesel in canada using aggregate annual data for the period 1986 2008 using a partial adjustment model pam we find short and long run price elasticities of 0 43 and 0 8 respectively however using cointegration techniques we obtain price elasticities that are 30 to 50 lower the short run elasticity with respect to gdp per capita is evaluated at 0 5 with the pam and 1 55 with cointegration in the long run both estimation techniques indicate an income elasticity around 0 9 our results underline the importance of controlling for the expansion of the primary sector which has been characterizing the canadian economy in the 2000s

the signaling effect of emission taxes under international duopoly we analyze equilibrium emission taxes under international cournot duopoly in the presence of asymmetric information between firms when each firm does not know the production cost of its rival located in the other country the government of each country can use its emission tax as a signal of the competitiveness of its domestic firm we show that owing to this signaling effect the equilibrium emission tax and expected welfare of each country can be higher than those under symmetric information between firms or even higher than those obtained if the governments were to non strategically set the tax rate equal to the expected marginal damage from pollution i e the pigouvian tax level our results suggest that the presence of asymmetric information between firms can mitigate a race to the bottom in strategic environmental policymaking

designing incentive schemes for promoting energy efficient appliances a new methodology and a case study for spain the energy efficiency gap has been high on research and policy agendas for several decades incentive schemes such as subsidies taxes and bonus malus schemes are widely used to promote energy efficient appliances most research however considers instruments in isolation and only rarely in the context of political constraints on instrument use or for alternative policy goals this paper presents a methodology for the optimal design of incentive schemes based on the minimisation of dead weight loss for different policy goals and policy restrictions the use of the methodology is illustrated by designing optimal combinations of taxes and subsidies in spain for three types of appliance dishwashers refrigerators and washing machines the optimal policies are designed subject to different policy goals such as achieving a fixed reduction in emissions or a certain increased market share for efficient appliances and for policy constraints such as budget neutrality the methodology developed here can also be used to evaluate past and current incentive schemes

fiscal policy and co2 emissions of new passenger cars in the eu to what extent have national fiscal policies contributed to the decarbonisation of newly sold passenger cars we construct a simple model that generates predictions regarding the effect of fiscal policies on average hbox co 2 emissions of new cars and then test the model empirically our empirical strategy combines a diverse series of data first we use a large database of vehicle specific taxes in 15 eu countries over 2001 2010 to construct a measure for the vehicle registration and annual road tax levels and separately for the hbox co 2 sensitivity of these taxes we find that for many countries the fiscal policies have become more sensitive to hbox co 2 emissions of new cars we then use these constructed measures to estimate the effect of fiscal policies on the hbox co 2 emissions of the new car fleet the increased hbox co 2 sensitivity of registration taxes have reduced the hbox co 2 emission intensity of the average new car by 1 3 partly through an induced increase of the share of diesel fuelled cars by 6 5 percentage points higher fuel taxes lead to the purchase of more fuel efficient cars but higher diesel fuel taxes also decrease the share of more fuel efficient diesel cars higher annual road taxes have no or an adverse effect

the impact of emissions based taxes on the retirement of used and inefficient vehicles the case of switzerland abstract previous evaluations of emissions based car taxes have estimated their impact on the shares or sales of new vehicles in contrast we ask whether taxes that penalize high emitters induce changes in the retirement of existing and inefficient vehicles we exploit natural experiment conditions in switzerland to analyze the impact of three different bonus malus annual registration fee schemes implemented at the cantonal level in the three schemes the bonus rewards new fuel efficient vehicles the malus is retroactive in canton obwalden i e it is charged on both new and existing high emitting cars but prospective in geneva and ticino we use a difference in difference design within a survival analysis framework to assess direct treatment effects and spillover effects while the bonus malus in obwalden hastens the retirement of existing high emitting vehicles by around 5 the scheme in geneva postpones retirement by some 3 we find no statistically significant effects in ticino these findings have important implications about the desirability of bonus malus schemes and on their design as well as on old car scrappage programs

behavioral environmental economics promises and challenges environmental issues provide a rich ground for identifying the existence and consequences of human limitations in this paper we present a growing literature lying at the interface between behavioral and environmental economics this literature identifies alternative solutions to traditional economic instruments in environmental domains that often work imperfectly but it also faces a set of challenges including the difficulty of computing welfare effects and the identification of a robust environmental policy based on context dependent socio psychological effects we illustrate our critical discussion with two behavioral schemes that have been widely implemented green nudges and corporate environmental responsibility

empirical estimates of the direct rebound effect a review beginning with william stanley jevons in 1865 a number of authors have claimed that economically justified energy efficiency improvements will increase rather than reduce energy consumption jevons paradox is extremely difficult to test empirically but could have profound implications for energy and climate policy this paper summarises and critiques the arguments and evidence that have been cited in support of jevons paradox focusing in particular on the work of len brookes and harry saunders it identifies some empirical and theoretical weaknesses in these arguments highlights the questions they raise for economic orthodoxy and points to some interesting parallels between these arguments and those used by the biophysical school of ecological economics while the evidence in favour of jevons paradox is far from conclusive it does suggest that economy wide rebound effects are larger than is conventionally assumed and that energy plays a more important role in driving productivity improvements and economic growth than is conventionally assumed 2008 elsevier ltd all rights reserved

free entry and social inefficiency our goal is to provide a simple yet general exposition of the conditions under which the number of entrants in a free entry equilibrium is excessive insufficient or optimal our analysis compares the number of firms that enter a market when there is free entry with the number that would be desired by a social planner who is unable to control the behavior of firms once they are in the market that is we consider the second best problem of choosing the welfare maximizing number of firms while we take as given their noncompetitive behavior after entry we demonstrate that the crucial conditions for establishing the presence of an entry bias can be stated quite simply in terms of the outcome of the postentry game played by entrants in contrast to previous work we do not need to model this postentry game explicitly

price elasticities of demand are minus one half abstract as an empirical regularity for broad groups price elasticities of demand are scattered around minus one half a result not inconsistent with preference independence when nothing is known about the price sensitivity of a good a reasonable first approximation to its price elasticity is minus one half

modelling transport energy demand a socio technical approach despite an emerging consensus that societal energy consumption and related emissions are not only influenced by technical efficiency but also by lifestyles and socio cultural factors few attempts have been made to operationalise these insights in models of energy demand this paper addresses that gap by presenting a scenario exercise using an integrated suite of sectoral and whole systems models to explore potential energy pathways in the uk transport sector techno economic driven scenarios are contrasted with one in which social change is strongly influenced by concerns about energy use the environment and well being the what if lifestyle scenario reveals a future in which distance travelled by car is reduced by 74 by 2050 and final energy demand from transport is halved compared to the reference case despite the more rapid uptake of electric vehicles and the larger share of electricity in final energy demand it shows a future where electricity decarbonisation could be delayed the paper illustrates the key trade off between the more aggressive pursuit of purely technological fixes and demand reduction in the transport sector and concludes there are strong arguments for pursuing both demand and supply side solutions in the pursuit of emissions reduction and energy security

to rebate or not to rebate fuel economy standards versus feebates we compare the welfare effects in equilibrium of two environmental regulations that aim at increasing the new cars fleet s average fuel efficiency the fuel economy standards and the feebate policies maintaining the same environmental benefit and tax revenue we simulate the implementation of each policy in france and the united states standard type policies have larger negative welfare effects up to 3 2 times those from the feebate effects on manufacturers are heterogeneous some are better of under the standard regulation the addition of a market to trade levels of fuel efficiency dominates the simple standard regulation but not always the feebate we also consider the attribute based standard technological improvements and the equivalence with fuel taxes as extensions

the environmental effect of green taxation the case of the french bonus malus a feebate on the purchase of new cars the bonus malus was introduced in france in 2008 less polluting cars benefited from a price reduction of up to 1 000 euro whereas the most polluting ones were subject to a taxation of 2 600 euro we estimate the impact of this policy on carbon dioxide emissions in the short and long run if the shift towards the classes benefiting from rebates is considerable we estimate the environmental impact of the policy to be negative while feebates may be efficient tools for reducing co2 emissions they should thus be designed carefully to achieve their primary goal

the effects of the corporate average fuel efficiency standards in the us this paper examines the effects of the corporate average fuel economy standards cafe on automobile sales prices and fuel consumption first a discrete choice model of automobile demand and a continuous model of vehicle utilization are estimated using micro data from the consumer expenditure survey for 1984 1990 next the demand side model is combined with a model of oligopoly and product differentiation on the supply side with these elements in place the effects of the cafe regulation are assessed through simulations and compared to the effects of alternative policy instruments such as an increase in gasoline tax

environmental policy under imperfect information incentives and moral hazard abstract when net emissions of individual polluters cannot be efficiently monitored then emissions charges controls on emissions levels or subsidies for emissions reduction are not effective as environmental policy instruments this paper proposes instruments that can be applied in such limited information situations these instruments take the form of contracts between a pollution control agency and individual polluters the contracts include a combination of fines and subsidies that induces dischargers to follow optimal environmental policies in the absence of individual monitoring

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

how responsive is saudi new vehicle fleet fuel economy to fuel and vehicle price policy levers abstract this paper investigates the drivers of recent improvements in saudi arabia s fleet fuel economy for new vehicles including passenger cars and light duty trucks vehicle choice models are estimated using both aggregate new vehicle sales data and disaggregate new vehicle buyer survey data the estimated models are used to simulate counterfactual policy scenarios simulation results suggest that the saudi gasoline price elasticity of demand for new vehicle fuel economy decreased slightly over recent years but it is still more elastic than that of the united states moreover the increase in domestic gasoline prices between 2014 and 2016 accounted for 42 of the increase in estimated new vehicle fleet fuel economy over that period finally the estimated elasticities and thus policy sensitivities vary by income and household size a revenue neutral household income and size based feebate policy could be more progressive than a gasoline price increase for improving the new vehicle fleet fuel economy

tax incidence with endogenous quality and costly bargaining theory and evidence from hybrid vehicle subsidies abstract endogenous quality and bargaining are important features of many markets but are typically omitted from studies of incidence we develop a model with product upgrades and costly bargaining and find that tax rate pass through only partially characterizes the welfare impact of taxation consumers may respond to a tax or subsidy by changing product quality or by changing their bargaining effort we apply the insights of our theory to the study of subsidies for green goods specifically hybrid electric vehicles in canada we utilize highly detailed transaction data and leverage panel variation in subsidies across provinces for identification our baseline estimate finds that prices rises by 570 for every 1000 increase in the subsidy but this pass through estimate substantially underestimates consumer gains because a majority of this price increase 459 80 is due to increased product quality in the form of additional options and features

optimal savings management for individuals with defined contribution pension plans abstract the paper provides some guidelines to individuals with defined contribution dc pension plans on how to manage pension savings both before and after retirement we argue that decisions regarding investment annuity payments and the size of death sum should not only depend on the individual s age or time left to retirement nor should they solely depend on the risk preferences but should also capture 1 economical characteristics such as current value on the pension savings account expected pension contributions mandatory and voluntary and expected income after retirement e g retirement state pension and 2 personal characteristics such as risk aversion lifetime expectancy preferable payout profile bequest motive and preferences on portfolio composition specifically the decisions are optimal under the expected crra utility function and are subject to the constraints characterizing the individual the problem is solved via a model that combines two optimization approaches stochastic optimal control and multi stage stochastic programming the first method is common in financial and actuarial literature but produces theoretical results however the latter which is characteristic for operations research has practical applications we present the operations research methods which have potential to stimulate new thinking and add to actuarial practice

simple explicit formula for near optimal stochastic lifestyling abstract in life cycle economics the samuelson paradigm samuelson 1969 states that the optimal investment is in constant proportions out of lifetime wealth composed of current savings and the present value of future income it is well known that in the presence of credit constraints this paradigm no longer applies instead optimal life cycle investment gives rise to so called stochastic lifestyling cairns blake and dowd 2006 whereby for low levels of accumulated capital it is optimal to invest fully in stocks and then gradually switch to safer assets as the level of savings increases in stochastic lifestyling not only does the ratio between risky and safe assets change but also the mix of risky assets varies over time while the existing literature relies on complex numerical algorithms to quantify optimal lifestyling the present paper provides a simple formula that captures the main essence of the lifestyling effect with remarkable accuracy

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

the entry deterring effects of inflexible regulation this paper investigates the signalling role of tax policy in promoting or hindering the ability of a monopolist to practise entry deterrence we show that environmental policy can facilitate the incumbent firm s concealment of information from potential entrants thus deterring entry and yet entail welfare improvements furthermore we demonstrate that entry deterrence is more likely to arise when environmental regulation cannot be rapidly revised across time if market conditions change inflexible regimes than when regulatory agencies can adjust environmental policy over time les effets de dissuasion de l entree d une reglementation inflexible ce texte examine le role de signalisation d une politique fiscale qui promeut ou reduit l habilete d un monopole a pratiquer la dissuasion de l entree de concurrents on montre qu une politique environnementale peut faciliter la dissimulation d information par la firme en place vis a vis les concurrents potentiels et donc les dissuader d entrer et pourtant engendrer des ameliorations de bien etre de plus on montre que la dissuasion de l entree est davantage susceptible d emerger quand la reglementation environnementale ne peut pas etre revisee rapidement dans le temps si les conditions de marche se modifient regimes inflexibles que quand les agences de reglementation environnementales peuvent ajuster la politiques dans le temps

motor vehicle stocks scrappage and sales this paper offers a framework for forecasting aggregate sales of new motor vehicles this framework incorporates separate models for the change in the vehicle stock and for the rate of vehicle scrappage because this approach requires only a minimal set of assumptions about demographic trends the state of the economy consumer preferences new vehicle prices and repair costs and vehicle retirements it is shown to be especially useful as a macroeconomic forecasting tool in addition this paper presents a new historical annual time series estimate of motor vehicle stocks in the united states

when does environmental regulation facilitate entry deterring practices abstract this paper evaluates the welfare benefits of introducing environmental regulation in a market that is subject to the threat of entry we consider complete and incomplete information settings where potential entrants use the regulator s tax policy and the incumbent s output decisions in order to infer the incumbent s cost structure when the regulator is absent we show that firms entry deterring practices increase pollution relative to complete information hence under certain conditions environmental regulation becomes more beneficial in incomplete than in complete information contexts our results therefore identify under which cases an under or over estimation of the welfare benefits of environmental regulation arises from ignoring the information setting in which firms interact we also examine how this estimation error increases as firms become more symmetric in their production costs

balladurette and juppette a discrete analysis of scrapping subsidies this paper studies the effects of subsidies on durable goods markets in particular we focus on a recent policy in france in which the governments of balladur and juppe subsidized the replacement of old cars with new ones to study this policy we construct a dynamic stochastic discrete choice model of car ownership at the household level the resulting decision rules and equilibrium conditions are used to estimate the underlying parameters of the model using aggregate data these policy functions are used to evaluate the short and long run effects of the french policies we find that these policies do stimulate the automobile sector in the short run but through the induced changes in the cross sectional distribution of car ages create the basis for subsequent low activity further while these policies increase government revenues in the short run revenues in the long run are lower relative to a baseline without intervention

information and the coase theorem abstract some economists think the coase theorem implies a lot about the proper scope of government intervention in the economy and about the welfare consequences of laissez faire others see it as a mere tautology that if people negotiate efficiently then every outcome will be efficient the coase theorem is important only if we believe that efficient negotiation is likely of course we can attribute inefficiencies to bargaining imperfection but it may not be useful to do so such attitudes sometimes seem to depend more on ideology than on reason this article gives one economist s reasoned view it discusses the coase theorem as a decentralization result and why decentralization results are interesting it considers mechanism design for revealing private information and describes the problems of centralization should the coase theorem should be viewed as a second best result property rights are more efficient than some reasonable alternative does the coase theorem recommend an institution or make

the impact of tax reform on new car purchases in ireland we examine the impact of recent tax reforms in ireland on private car transport and its greenhouse gas emissions a carbon tax was introduced on fuels and purchase vehicle registration and ownership motor taxes were switched from engine size to potential emissions we use a demographic model of the car stock by age size and fuel and a car purchase model that reflects the heterogeneous distribution of mileage and usage costs across various engine sizes the model shows a dramatic shift from petrol to diesel cars particularly for large engines the same pattern is observed in the latest data on car sales this has a substantial impact on tax revenue as car owners shift to the lower tax rates the tax burden has shifted from car ownership to car use and that the overall tax burden on private car transport falls as diesel engines are more fuel efficient than petrol engines carbon dioxide emissions fall modestly or if we consider the rebound effect of travel costs on mileage minimally from the perspective of the revenue the costs per tonne of carbon dioxide avoided are very high

taxing incumbent monopoly to foster entry abstract this paper investigates whether it is welfare enhancing to tax the output of a monopoly in order to foster cost inefficient entry this question is of particular concern in the energy markets dominated by cartel like affiliations opec and oil russia s gas exports to europe and the interest and practice to stimulate the development of alternative fuels making the realistic assumption that none of the players can commit to future policies subsidies are not a viable strategy for the government a tax cannot be first best but can be second best if the government cannot force the incumbent monopoly to sell its output at no profit and if the incumbent s profit is discounted however stimulating supply by improving the conditions for entry is not the prime concern of taxation after all it lowers aggregate supplies and may even lower the entrant s supply but to accrue parts of the monopoly rent

government control or low carbon lifestyle analysis and application of a novel selective constrained energy saving and emission reduction dynamic evolution system abstract this paper explores a novel selective constrained energy saving and emission reduction eser dynamic evolution system analyzing the impact of cost of conserved energy cce government control low carbon lifestyle and investment in new technology of eser on energy intensity and economic growth based on artificial neural network the quantitative coefficients of the actual system are identified taking the real situation in china for instance an empirical study is undertaken by adjusting the parameters of the actual system the dynamic evolution behavior of energy intensity and economic growth in reality are observed with the results in perfect agreement with actual situation the research shows that the introduction of cce into eser system will have certain restrictive effect on energy intensity in the earlier period however with the further development of the actual system carbon emissions could be better controlled and energy intensity would decline in the long run the impacts of cce on economic growth are positive government control and low carbon lifestyle play a decisive role in controlling eser system and declining energy intensity but the influence of government control on economic growth should be considered at the same time and the controlling effect of low carbon lifestyle on energy intensity should be strengthened gradually while the investment in new technology of eser can be neglected two different cases of eser are proposed after a comprehensive analysis the relations between variables and constraint conditions in the eser system are harmonized remarkably a better solution to carry out eser is put forward at last with numerical simulations being carried out to demonstrate the results

dynamics of consumer demand for new durable goods most new consumer durable goods experience rapid prices declines and quality improvements suggesting the importance of modeling dynamics this paper specifies a dynamic model of consumer preferences for new durable goods with persistently heterogeneous consumer tastes rational expectations and repeat purchases over time we estimate the model on the digital camcorder industry using panel data on prices sales and characteristics we find that the 1 year elasticity in response to a transitory industrywide price shock is about 25 percent less than the 1 month elasticity standard cost of living indices overstate welfare gain in later periods due to a changing composition of buyers

automobile externalities and policies this paper discusses the nature and magnitude of externalities associated with automobile use including local and global pollution oil dependence traffic congestion and traffic accidents it then discusses current federal policies affecting these externalities including fuel taxes fuel economy and emissions standards and alternative fuel policies summarizing insofar as possible the welfare effects of those policies finally we discuss emerging pricing policies including congestion tolls and insurance reform and summarize the appropriate combination of policies to address automobile externalities

transport energy demand in andorra assessing private car futures through sensitivity and scenario analysis abstract this paper presents a model which estimates current car fleet energy consumption in andorra and forecasts such consumption as a reference scenario the base year model is built through a bottom up methodology using vehicle registration and technical inspection data the model forecasts energy consumption up to 2050 taking into account the fleet structure the car survival profile trends in activity of the various car categories and the fuel price and income elasticities that affect car stock and total fleet activity it provides an initial estimate of private car energy demand in andorra and charts a baseline scenario that describes a hypothetical future based on historical trends a local sensitivity analysis is conducted to determine the most sensitive input parameters and study the effect of its variability in addition the scenario analysis explores the most uncertain future aspects which can cause important variability in the results with respect to the reference scenario and provides a broad estimate of potential energy savings related to different policy strategies

simulating demand for electric vehicles using revealed preference data we have modelled the market for new cars in ireland with the aim of quantifying the values placed on a range of observable car characteristics mid sized petrol cars with a manual transmission sell best price and perhaps fuel cost are negatively associated with sales and acceleration and perhaps range are positively associated hybrid cars are popular the values of car characteristics are then used to simulate the likely market shares of three new electric vehicles electric vehicles tend to be more expensive even after tax breaks and subsidies are applied but we assume their market shares would benefit from an environmental premium similar to those of hybrid cars the environmental premium and the level of subsidies would need to be raised to incredible levels to reach the government target of 10 market penetration of all electric vehicles

how to deal with the rebound effect a policy oriented approach policy makers and environmental agencies have echoed concerns brought forward by academics about the need to address the rebound effect for achieving absolute energy and environmental decoupling however such concerns have generally not been translated into tangible policy action the reasons behind this inaction are not fully understood and much remains unknown about the status of the rebound effect issue on the policy agenda and policy pathways available such knowledge gaps may hamper the development of effective policies to address this issue in this paper we examine the extent to and ways in which the rebound effect is considered in policy documents and analyse thirteen specific policy pathways for rebound mitigation the effectiveness of the pathways is scrutinised and conclusions are offered to mitigate rebound effects the main policy conclusions of the paper are that an appropriate policy design and policy mix are key to avoiding undesired outcomes such as the creation of additional rebound effects and environmental trade offs from the discussion economy wide cap and trade systems as well as energy and carbon taxes when designed appropriately emerge as the most effective policies in setting a ceiling for emissions and addressing energy use across the economy

welfare implications of car feebates a simulation analysis vehicle taxation based on emissions is increasingly being adopted worldwide to shift consumer purchases to low carbon cars yet evidence on its effectiveness and economic impact is limited we focus on feebate schemes which impose a fee on high carbon vehicles and give a rebate to low carbon cars we estimate demand for passenger cars in germany and simulate the impact of alternative feebate schemes on emissions consumer welfare public revenues and firm profits we find that revenue neutral feebate schemes are welfare decreasing welfare can only increase with schemes that increase tax revenues at the expense of consumer and producer surplus

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

product differentiation and oligopoly in international markets the case of the u s automobile industry this paper develops and estimates a model of the u s automobile industry on the demand side a discrete choice model is adopted that is estimated using micro data from the consumer expenditure survey the estimation results are used in conjunction with population weights to derive aggregate demand on the supply side the automobile industry is modelled as an oligopoly with product differentiation equilibrium is characterized by the first order conditions of the profit maximizing firms the estimation results are used in counterfactual simulations to investigate two trade policy issues the effects of the ver and exchange rate pass through

a signaling model of environmental overcompliance abstract we present a theory of unilateral regulatory overcompliance as a signaling device firms that have a competitive advantage in the use of a cleaner but more costly technology overcomply in order to signal to an imperfectly informed benevolent government that compliance costs are low thereby triggering tougher regulation we identify the conditions under which such an overcompliance signaling equilibrium arises showing that there may be over overcompliance in that firms may overcomply even when tougher regulation is not socially desirable we also discuss the differential implications of the signaling theory as compared to other theories of unilateral regulatory overcompliance

car notches strategic automaker responses to fuel economy policy notches where small changes in behavior lead to large changes in a tax or subsidy gure prominently in many policies but have been rarely examined by economists in this paper we analyze a class of notches associated with policies aimed at improving vehicle fuel economy we provide several pieces of evidence showing that automakers respond to notches in fuel economy policy by precisely manipulating fuel economy ratings so as to just qualify for more favorable treatment we then describe the welfare consequences of this behavior and derive a welfare summary statistic applicable to many contexts