revealing space in spatial externalities edge effect externalities and spatial incentives abstract this paper analyzes the spatial incentives created by distance dependent negative spatial externalities titled edge effect externalities it illustrates standard externality results in a spatial context and derives several new results while the externality creates an incentive for a recipient to distance himself from the externality generating land use this distance is too small from a social standpoint rationalizing buffer zones imposed by regulatory authorities further the market rental rate of land for the externality recipient is higher than socially optimal resulting in a potential barrier to entry for the impacted land use finally although the recipient understands and can geographically avoid externality damage standard market failure occurs results are demonstrated using graphical and land rent interpretations of familiar aspatial general equilibrium conditions the paper thus strives to provide a more thorough exposition of the spatial impacts of this class of externalities than provided elsewhere in the literature

assessing the regional economic impacts of renewable energy sources a literature review abstract the transition of the global energy system is one of the main trends that offers opportunities as well as challenges for the economy most literature evaluates the impact of that transition at a national level that view is broadened towards a regional scale due to the lower energy density of many renewable energy sources renewable energy generation will be more decentralised leading to potentially significant changes in the regional economy when transitioning to a renewable energy system in this paper the current literature and methods of assessing regional economic impacts of a transition to renewable energy generation is reviewed the findings suggest an overall need to clearly define the topics such as technologies that are assessed and the evaluated time period a guideline for a regional impact assessment is provided focusing on the suitability of applied impact assessment methods employment ratios supply chain analyses input output models and computable general equilibrium models

exact welfare measurement for producers under uncertainty many useful results have been derived for different characterizations of uncertainty in the theory of the firm for example sandmo batra and ullah pope and kramer blair however the limited literature available on producer welfare measurement under uncertainty pope chavas and just pope and chavas just hueth and schmitz is pessimistic about the possibilities for deriving exact welfare measures from ex ante supply functions the only exception is pope and chavas who derive error bounds for the use of producer s surplus as an approximation for true welfare change that are analogous to willig s bounds for consumer s surplus as an approximation of compensating or equivalent variation however these results are presumably subject to the same shortcomings noted by hausman and amended by haveman gabay and andreoni for willig s error bounds even though compensating or equivalent variation is approximated well a poor approximation of deadweight loss may result pope chavas and just show that the ex ante supply function derived from an uncertainty model is generally not sufficient for determining true welfare change except in the special case of constant absolute risk aversion because decisions depend on the firm s wealth for nonneutral risk preferences a parameter price change induces a wealth effect in addition to an ordinary output effect thus for exact welfare measurement under price uncertainty the unobservable compensated constant expected utility supply function is needed newbery and stiglitz among others have shown that the area above an expected supply function is generally not a valid welfare measure

transforming the energy sector the evolution of technological systems in renewable energy technology this paper analyses the development and diffusion of technologies that utilize renewable energy sources in germany sweden and the netherlands the analysis enlarges the life cycle model of industry evolution to one where the focus is on the formation and evolution of new technological systems particular focus is on explaining success and failures in shifting from a formative phase into one characterized by positive feedbacks a set of challenges is identified for policy makers attempting to influence the process of transforming the energy sector

location and housing demand abstract william alonso s model of the demand for housing and location in the monocentric city is one of two pre eminent models of its type the purpose of this article is to provide the detailed analysis and the comparative statics of the alonso model the complexity of the analysis is seen to derive from the nature of the constraint which is nonlinear and has slopes which vary with income a new result is that housing and closeness can be inferior even when they are taste normal the empirical direct variation of income with distance is explained consistent with the finding that income increase has indeterminate effects on location and housing demand the alonso specification is shown to be superior to others

economic welfare evaluations for producers under uncertainty the validity of producer and consumer surplus measures of firm welfare under risk is examined under constant absolute risk aversion and output price uncertainty only these measures are an exact measure of firm welfare as defined by compensating variation equivalent variation or the change in the certainty equivalent under decreasing absolute risk aversion qualitative comparisons of various measures are discussed for example producer s surplus as measured by the area above the uncompensated risk averse supply curve overstates the compensating variation of a change in expected price of output procedures for calculating firm welfare under production uncertainty and a variety of economic environments are proposed generally these procedures are applicable only when absolute risk aversion is constant

ex ante and ex post welfare optimality under uncertainty it is widely believed by economic theorists that if there were no transactions costs and if all information about the economy were perfectly shared by all then arrow debreu contingent commodity markets should bring about an ideal allocation the basis for this belief seems clear we have the two efficiency theorems of welfare economics which assure us that in the absence of external effects any competitive allocation is pareto efficient and that any pareto efficient allocation is competitive provided that appropriate lump sum transfers are made of course there are some reservations that need to be made local satiation and non convexities are well known to cause problems but these are not the problems i wish to discuss here to return to the usual argument the next step involves noticing how with contingent commodity markets the efficiency theorems of welfare economics carry over to an economy with uncertainty as explained for instance in chapter 7 of debreu s theorpj of value the fundamental value judgment that gives these efficiency theorems their normative interest is what may be called consumer sovereignty it is an assumption that the social welfare ordering should respect the preferences that govern consumers market behaviour it is a serious value judgment more serious than most economists have been prepared to concede but its seriousness increases when there is uncertainty we know full well that individuals misperceive the probabilities of certain events assuming that they even perceive any probabilities at all see for example kahneman and tversky 1979 nor are we always willing to accept as appropriate the attitudes to risk of individuals who seem either extremely reckless or extremely cautious societies are often willing to make some gestures towards property owners who have not insured themselves adequately against damage from fire flood or tempest and not just because of imperfect insurance markets or even misperceptions of probabilities in addition the inequalities of income that arise when some individuals take more risks than others are not necessarily seen to be desirable particularly if an individual has undertaken a useful but risky activity and has a very low income as a result of failure such gestures are examples of contingent lump sum transfers it seems clear that if such transfers occur to a sufficient extent they could supplant completely the securities markets which are usually sufficient to bring about pareto efficiency they may even be able to go further and correct the imperfections of an arrow debreu market allocation when individuals do misperceive probabilities or else have wrong attitudes to risk this is the main question i wish to consider here the idea that consumer sovereignty should not always extend to economies with uncertainty is not new it can be found in work by diamond 1967 dr6ze

acreage decisions under risk the case of corn and soybeans an acreage supply response model is developed under expected utility maximization the resulting framework is used to specify and estimate a system of risk responsive acreage equations for corn and soybeans in the united states particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices also a wealth variable is included in the acreage equations the empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions the analysis also shows that cross commodity risk reduction is important in acreage allocation decisions

producer surplus and risk this paper examines the welfare economics of producer behavior under risk aversion hicksian marshallian and money equivalent measures are explored it is found that under decreasing absolute risk aversion compensating variation is less than the ordinary marshallian surplus which is less than the money equivalent measure under constant absolute risk aversion all measures coincide finally bounds on compensating and equivalent variations using ordinary producer surplus in a manner analogous to willige approach in consumer theory under certainty are studied similar results hold mutatis mutandis for input demands

capital constraints and optimal hedging in factor markets abstract this paper examines the optimal hedging strategy of a capital constrained firm which faces an uncertain price of one of its inputs risk neutral firms take either a long or short position in the futures forward market when capital constrained despite the absence of a speculative motive key parameters which govern the firm s position include the elasticity of demand for the hedged factor with respect to output and the elasticity of supply

spatial competition with a land market hotelling and von thunen unified we introduce into the standard spatial competition model the consumption of land by households and study the spatial competition under the influence of a land market in contrast to the standard assumption of a fixed given distribution of households we introduce the possibility of households relocation in reaction to firms location decisions thus the spatial distribution of households is treated as endogenous and a land market is introduced on which households compete for land use households consume simultaneously land and firms output accordingly the demand of each household becomes in turn endogenous as it depends on the income left after the land rent is paid not surprisingly the results obtained within this more general framework prove to be very different from the standard results for example in the 2 and 3 firm cases the optimal configuration of firms is a nash equilibrium when transport costs are high enough or the amount of vacant land is large enough the existence property is restored in the 3 firm case when the transport costs are high enough the introduction of vacant land causes a discontinuous change in the set of equilibrium configurations

symposium on new institutions for developing country debt t he developing country debt crisis has been the dominant factor in north south relations for more than eight years the authors in this symposium discuss some of the bargaining problems underlying the debt crisis and debate whether new institutions are needed for dealing with it two authors peter kenen and jeffrey sachs recommend the creation of a new multilateral lending institution to buy up deeply discounted third world debt and pass the discounts on to troubled middle income debtors kenen pioneered this approach in 1983 with his proposal for an international debt discount corporation here he updates his plan and answers some of its critics jeremy bulow and kenneth rogoff contend that the debt crisis is better viewed as a symptom rather than the cause of poor growth in many developing countries and that multilateral aid should be directed at rewarding good behavior in habitat preservation population control and drug interdiction they propose an international citizenship fund as a vehicle for accomplishing this according to jonathan eaton s assessment the principal difficulty underlying the debt crisis is a murky contract enforcement structure and adding a new international organization will not in itself do much to improve the situation

a foundation of location theory consumer preferences and demand abstract location models with a continuum of consumers have severe conceptual shortcomings this article considers an alternative foundation for location economics the commodity space of each of a finite number of consumers is the collection of measurable subsets of land this space is so large that a solution to the consumer maximization problem does not always exist the main result is the definition and use of a topology on land parcels to show that a solution will always exist for utilities continuous with respect to the topology the underlying preferences are exposed

equilibrium of a residential city attributes of housing and land use zoning this paper investigates the impact of land use zoning such as building height and building density restrictions on housing rent land rent the design parameters of a building and population density in a residential city a theoretical land use model with several new features is used building capital the demand for and the supply of housing are explicitly defined housing is treated as a multi dimensional good the elements of which are floor area finishing cost of a dwelling unit garden space and building height building costs are the sum of structural frame costs which are a function of building height and building area and finishing costs which are independent of design parameters zoning restrictions are explicitly considered the utility and profit maximisations are simultaneous through the housing attributes which are implicitly priced there are six major conclusions first the relative gradients of the endogeneous variables all with regard to distance depend not only on demand speci

increasing returns and perfect competition the role of land abstract the classical inconsistency between increasing returns and perfect competition is studied for example if firms must pay a fixed cost of entry but then can produce using a constant returns to scale technology they will generally operate at a loss necessitating a government subsidy in order to attain an efficient allocation here we provide examples demonstrating that perfect competition and increasing returns can be consistent by extending the alonso model to include production the key is that producers use intervals of land and the price they pay for land interior to the parcels can be adjusted to provide an implicit subsidy

non parametric tests of consumer behaviour the neoclassical model of consumer behaviour postulates that a consumer s choice behaviour can be described as deriving from utility maximization subject to a budget constraint one is then naturally led to ask what this model implies about observed behaviour this question has been addressed from two quite distinct approaches the first approach originating in the work of slutsky 1915 and antonelli 1886 derives necessary and sufficient conditions involving the derivatives of the demand functions the second approach originating in the work of samuelson 1938 1947 1948 derives algebraic conditions on the demand functions implied by maximizing behaviour

nullity restrictions and comparative static analysis while homogeneity restrictions of optimal choice functions are well known in the context of neoclassical economic theory the existence and implications of homogeneity like restrictions in more general optimization models have not received much attention in the literature the authors call such restrictions nullity restrictions since they involve the null space of the matrix of slopes of choice functions the existence nature and implications of nullity restrictions are investigated in the context of a general optimization problem this contributes to closing a major gap in the analysis of the implications of optimization for economic behavior copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

on the political economy of zoning abstract households choose a community in a metropolitan area and collectively set a minimum housing quality and a property tax to finance a local public good the collective imposition of a lower bound on housing consumption induces an income stratified equilibrium in a specification where meaningful community differentiation would not arise without zoning we show computationally that zoning restrictions are likely to be stringent with a majority facing a binding constraint in communities that permit it by inducing a stratified equilibrium zoning causes tiebout welfare gains in aggregate but with large welfare transfers relative to stratified equilibrium without zoning the zoning equilibrium is significantly more efficient as it reduces housing market distortions

constructing regional advantage platform policies based on related variety and differentiated knowledge bases asheim b t boschma r and cooke p constructing regional advantage platform policies based on related variety and differentiated knowledge bases regional studies this paper presents a regional innovation policy model based on the idea of constructing regional advantage this policy model brings together concepts like related variety knowledge bases and policy platforms related variety attaches importance to knowledge spillovers across complementary sectors the paper categorizes knowledge into analytical science based synthetic engineering based and symbolic arts based in nature with different requirements of virtual and real proximity mixes the implications of this are traced for evolving platform policies that facilitate economic development within and between regions in action lines appropriate to incorporate the basic principles behind related variety and differentiated knowledge bases asheim b t boschma r and cooke p

technical change dynamics evidence from the emerging renewable energy technologies abstract this paper explores the respective contributions of the effects of learning and returns to scale in the capital costs reduction pattern experienced by renewables causality analysis and econometric estimation of learning curves are performed on two emerging renewable energy technologies namely pv and wind learning effects appear as an essential driving force a result which concurs with the widely acknowledged importance of experience in technical progress inherent to economic growth the existence of non constant and flexible returns to scale are further highlighted their effect on diffusion dynamics is shown to be potentially considerable particularly at the outset of innovation deployment however returns to scale are suggested to be constant in the long term institutional commitment in supporting innovation therefore seems justified both on the basis of the occurrence of learning effects and diseconomies of scale these findings appear to be essential to the dynamics of innovation diffusion and market structure

taxation of economic rents economic rents have long been identified as an efficient tax base in addition the recent literature documents that rent income is highly concentrated and that rents are quickly increasing rent taxation thus seems attractive for reasons of both efficiency and equity nevertheless rent taxation remains a marginal topic in research and policy making in a systematic review of the neoclassical literature on different rent types we find that some types of rents reflect inefficiencies and should thus be minimized while others reward investments and should be supported in line with social welfare what remains for taxation are land rents one of the few true scarcity rents land rents have significant potential to improve the efficiency of the tax system we then begin to develop a comprehensive theory of land rent taxation by identifying relevant efficiency and equity effects the interaction of many of these effects remains unexplored which might explain policymakers hesitation in using land taxes to date

the expansion of renewable energies and employment effects in germany the promotion of electricity produced from renewable energy is a high priority of the european union as well of its member states the german government wants to increase the share of renewable energies from about 5 to 12 by 2010 to attain this goal the german government has introduced compulsory compensation schemes for electricity produced from renewable energy fed into the public grid this paper examines the economic impact of this policy employing an econometric model particular emphasis was given to employment effects in general we distinguish two effects 1 an expansive effect resulting from additional investments and 2 a contractive effect resulting from an increase in the production cost of power the first effect will dominate during the first years and lead to an increase in employment of approximately 33 000 new jobs however the contractive effect will offset these gains and lead to a slightly negative employment balance by 2010

economic and co2 mitigation impacts of promoting biomass heating systems an input output study for vorarlberg austria this paper reports on an empirical investigation about the economic and co2 mitigation impacts of bioenergy promotion in the austrian federal province of vorarlberg we study domestic value added employment and fiscal effects by means of a static input output analysis the bioenergy systems analysed comprise biomass district heating pellet heating and automated wood chip heating systems as well as logwood stoves and boilers ceramic stoves and buffer storage systems the results indicate that gross economic effects are significant regarding both investment and operation of the systems and that the negative economic effects caused by the displacement of conventional decentralised heating systems might be in the order of 20 40 finally co2 mitigation effects are substantial contributing already in 2004 around 35 of the 2010 co2 mitigation target of the land vorarlberg for all renewable energy sources

application of computable general equilibrium cge to climate change mitigation policy a systematic review abstract with the growing literature related to climate change mitigation measures and policy interventions a systematic review of the application of computable general equilibrium cge model is inevitable therefore this article aims to characterise the relevant studies define a comparative framework to identify the current state of the art and the gaps in applied general equilibrium models firstly the systematic review found a total of 301 research articles from scopus and web of science databases and finally analysed 154 articles based on inclusion and exclusion criteria from 67 refereed journals the review analysis found that application of cge model is very vital in addressing climate change mitigation issues at the national regional and global levels however china attracted the most substantial research interests followed by the usa india and australia among others which are in line with their share of greenhouse gas emissions in the world most of the research themes focus on the carbon tax emission reduction target emission trading renewable energy energy efficiency and carbon capture and storage as primary drivers of low carbon economy nevertheless there is a trend of employing more static cge model compared to the dynamic cge although application of the latter has a limitation of providing right inputs to the macroeconomic policy finally research directions and gaps envision other complementary models such as dynamic stochastic general equilibrium dsge and agent based model abm for proper policy interventions

competitive industry equilibrium under uncertainty and free entry this paper investigates the properties of industry equilibrium under price uncertainty given free entry and exit for any form of risk averse behavior it is shown that an increase in demand uncertainty as measured by a mean preserving spread increases mean output price and reduces output of firms in long run equilibrium

alonso s discrete population model of land use efficient allocations and competitive equilibria in his 1964 book w alonso proposed several concepts of land use equilibrium in terms of discrete population however the so called new urban economics has been concerned exclusively with continuous population models it is the authors belief that in order to develop logical foundations for continuous population models it would be useful to go back to the original models of alonso in this paper they focus on the additive land price model of alonso and examine its solution characteristics in particular the authors demonstrate the existence and pareto efficiency of equilibria and the supportability of efficient allocations through additive land price systems copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the logical foundations of urban economics are consistent the logical foundations of models in urban economics with continua of agents distributed over continuous spaces have recently been questioned it was argued among other things that these models cannot represent properly models with discrete numbers of households each occupying a parcel of land in this paper we propose a mapping based on the continuous model utility and defined over discrete parcels of land which determines the discrete model utility so that the equilibrium solutions of the two models coincide hence the continuous model of urban economics can be used as a tool for studying equilibria and comparative statics of a discrete model which appears to have sound logical foundations journal qf economic literature classification numbers 022 930 1990 academic press inc

regional employment impacts of marine energy in the scottish economy a general equilibrium approach gilmartin m and allan g regional employment impacts of marine energy in the scottish economy a general equilibrium approach regional studies one aspect of the case for policy support for renewable energy developments is the wider economic benefits that are expected to be generated within scotland as with other regions of the uk there is a focus on encouraging domestically based renewable technologies this paper uses a regional computable general equilibrium framework to model the impact on the scottish economy of expenditures relating to marine energy installations the results illustrate the potential for considerable legacy effects after expenditures cease in identifying the specific sectoral expenditures with the largest impact on lifetime regional employment this approach offers important policy guidance

supply and equilibrium in an economy with land and production a model with a finite number of consumers trading in land that can be changed through production is examined unlike most other models in urban economics land is modeled as measurable subsets of a compact set formally there are three major results conditions are found under which a solution to the producer s profit maximization problem exists secondly conditions are found under which a solution to the consumer s problem exists the assumptions used to prove these two results are standard finally the existence of an equilibrium is demonstrated copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

econometric tests of firm decision making under uncertainty optimal output and hedging decisions comparative statics of the competitive firm under price uncertainty were first developed by sandmo 23 and batra and ullah 3 more recently pope 21 and chavas and pope 7 extended these results by deriving the corresponding symmetry and homogeneity properties these latter two papers have particular importance in econometric modeling because symmetry or reciprocity results are equality restrictions which can be easily imposed in empirical research and hence increase the degrees of freedom and allow the theory to be tested however while theoretical work on various related models has become quite common in the literature few studies have actually empirically tested these models notable exceptions include brown and snow 4 chavas and holt 6 and antonovitz and roe 1 which empirically test various models of firm optimization under uncertainty holthausen 13 and feder just and schmitz 12 introduced hedging into the model of the firm under price uncertainty paroush and wolf 20 applied the expected utility model to include basis risk and the comparative statics were derived this paper presents the first empirical test of the expected utility model based on firm level production and hedging decisions a prime motivation for this paper is the gap in the literature between the assumptions underlying theoretical models of decision making and econometric tests of risk averse behavior chari jagannathan and jones 5 demonstrated that when a futures market is present producers may benefit even as the variance of spot prices increases the key role played by the assumption of constant absolute risk aversion is highlighted and noted as an extension of the more restrictive mean variance model yet econometric results presented by chavas and holt for aggregate corn and soybean production decisions suggested that risk preferences were not consistent with constant absolute risk aversion

estimation of portfolio balance functions that are mean variance optimizing the mark and the dollar abstract this paper offers a way of efficiently estimating the parameters in demand functions for mark and dollar assets the technique imposes the constraint that the parameters rather than being determined arbitrarily are based on investors optimizing behavior regarding expected returns and variances it dominates some previous empirical applications of finance theory in the respect that the expected returns are allowed to vary from period to period which is a necessary feature of any macro model the constraint that the parameters are based on mean variance optimization is also tested and not rejected

the derived demand with hedging cost uncertainty in the futures markets this study explores the significance of production technology and other parameters on the employment of inputs and hedging the paper establishes an explicit relationship between the risk as well as prices parameters and the derived demand production and hedging the authors find that the futures price relative to the expected spot price affects the demand for production factors additionally the presence of basis risk determines the impact of prices and risk parameters on the derived demand for inputs production technology is instrumental in fixing the size of the change in the demand given a change in the model s parameters copyright 1992 by royal economic society

optimal hedging on futures markets for commodity exporting nations this paper utilises portfolio theory to examine the usefulness of futures markets to commodity exporting nations the theory of optimal hedging is extended to multi product exporters and applied to a sample of cocoa coffee and sugar exporting nations which face both price and quantity risks it is found that the optimal hedging strategy differs considerably across nations although they should all sell futures contracts totalling much less than expected exports and in many cases they should even buy futures it appears that futures markets may offer some but not all countries an attractive means of reducing year to year fluctuations in export revenues

green jobs economic impacts of renewable energy in germany abstract the labor market implications of large investment into renewable energy re are analyzed in this text although a growing re industry can be observed in germany the overall effect of large increases of re based electricity and heat generating technologies on the german economy require a careful model based analysis the applied model panta rhei has been used among others to evaluate the german energy concept in 2010 it takes positive and negative impacts of re into account the paper shows the overall effects under different assumptions for fossil fuel prices domestic installations and international trade the results are sensitive to assumptions on the development of re world markets and german exports to these markets almost all of these scenarios exhibit positive net employment effects under medium assumptions net employment of re expansion will reach around 150 thousand in 2030 only with assumptions for german re exports below today s level net impacts are slightly negative gross employment will increase from 340 thousand in 2009 to between 500 and 600 thousand in 2030

revealed preference and location choice abstract the assumption that population and structural densities are defined over parcels of land with zero area is problematic when interpreting the standard residential land use model as approximating a large finite economy this paper extends revealed preference theory to depict a spatial economy with land parcels of finite area the model generalizes the standard utility function approach allowing for many consumer types with different tastes and incomes and labor leisure choice to show that the most important predictions of the standard theory hold in the general finite framework studied here

on models with an uncongestible public good and a continuum of consumers abstract this short note shows that models with an uncongestible or mildly congestible public good and a non atomic continuum of consumers have an interesting but unfortunate property only an infinite level of public good provision in the continuum economy can be approximated by feasible public good levels in a sequence of economies with finite populations we discuss the theoretical and practical problems this creates for familiar models that employ a continuum of consumers and a finite level of an uncongestible public good

social welfare and income inequality in a system of cities abstract this paper develops a general equilibrium model of a system of core periphery cities to examine the main determinants of intra and inter regional income disparities the economy is populated by a continuum of homogeneous unskilled and heterogeneous skilled workers unskilled workers whose wages are determined competitively specialize in food production in local cities skilled workers whose wages are determined according to a nash bargain manufacture a high tech commodity in the metropolis we establish conditions under which this core periphery equilibrium spatial configuration emerges we show that both intra and inter regional income disparities are present the determinants of each type of disparity and the social welfare implications are fully investigated our results suggest that public policy programs that improve income equality may not be necessarily welfare enhancing

a characterization of the demand for land abstract in a model of an economy where land is modelled explicitly as heterogeneous subsets of the plane and utility takes an integral form demand can be characterized as a specific map from endowments and prices into subsets of the plane a modified form of the neyman pearson lemma is used to obtain this result the modification being necessary because the analog of randomized tests must be excluded from this model

managing multiple international risks simultaneously with an optimal hedging model abstract a risk management model based on portfolio theory which accounts jointly for price quantity interest rate and exchange rate risks is developed and applied to cocoa and coffee production and exports in the ivory coast utilizing commodity and financial futures markets jointly the results show that a government export agency can reduce risks from 27 to 89 by following a multicommodity hedging program which manages several risks simultaneously the model and technique developed are applicable to many multiproduct firm and international risk management situations

accounting for changes in tastes health concerns are thought by many to have shifted consumption away from red meats though econometric evidence is mixed testing for structural change is difficult especially when one time series is used for both estimating demand equations and testing their stability specification errors may suggest a shift where none has occurred using nonparametric demand analysis we find that meat consumption patterns in the united states and australia can be explained using only relative prices and expenditures only imposing particular functional forms can reverse the conclusion suggesting that specification errors in econometric demand studies can account for findings of taste changes

assessment of sustainability indicators for renewable energy technologies the non combustion based renewable electricity generation technologies were assessed against a range of sustainability indicators and using data obtained from the literature the indicators used to assess each technology were price of generated electricity greenhouse gas emissions during full life cycle of the technology availability of renewable sources efficiency of energy conversion land requirements water consumption and social impacts the cost of electricity greenhouse gas emissions and the efficiency of electricity generation were found to have a very wide range for each technology mainly due to variations in technological options as well as geographical dependence of each renewable energy source the social impacts were assessed qualitatively based on the major individual impacts discussed in literature renewable energy technologies were then ranked against each indicator assuming that indicators have equal importance for sustainable development it was found that wind power is the most sustainable followed by hydropower photovoltaic and then geothermal wind power was identified with the lowest relative greenhouse gas emissions the least water consumption demands and with the most favourable social impacts comparing to other technologies but requires larger land and has high relative capital costs

on the continuum approach of spatial and some local public goods or product differentiation models some problems abstract models with a continuum of consumers and locations such that each consumer can purchase goods in only one location are examined such models are common in the literature of the new urban economics an approximation by economies with a finite number of consumers is shown to fail in the first two examples the continuum economy equilibrium exists and is unique but the finite economy has many equilibria example 1 or none at all example 2 in example 3 the continuum economy has no equilibrium but the finite economy has one these three examples employ location dependent utilities the fourth example illustrates the conceptual difficulties that arise in approximation when transportation cost is introduced even with location independent utilities the results are related to the literatures concerning product differentiation and spatial economies

regional economic impacts of biomass based energy service use a comparison across crops and technologies for east styria austria abstract biomass action plans in many european countries seek to expand biomass heat and fuel supply mainly to be supplied by peripheral agricultural regions we develop a two plus ten region energy focused computable general equilibrium cge model that acknowledges land competition in analysing the sub state local regional economic implications of such a strategy embedded within a global context our model is based on a full cost analysis of selected biomass technologies covering a range of agricultural and forestry crops as well as thermal insulation the local regional macroeconomic effects differ significantly across technologies and are governed by factors such as net labour intensity in crop production the high land intensity of agricultural biomass products crowds out conventional agriculture and thus lowers employment and drives up land prices and the consumer price index the regional economic results show that net employment effects are positive for all forestry based biomass energy and also show for which agriculture based biomass systems this is true even when accounting for land competition when regional consumer price development governs regional wages or when the agricultural sector is in strong enough competition to the international market positive employment and welfare impacts vanish fully for agriculture based bio energy

a determination of bid rents through bidding procedures abstract rent profiles in land markets with finitely many participants are derived under two bidding procedures free unit size bidding and single unit size bidding free unit size bidding is shown to be basically equivalent to an english auction whereas the rent determination problem under single unit size bidding reduces to a mathematical programming problem an application of the latter case is provided in which a density model of land use is shown to be a good approximation of appropriately chosen discrete models

land use and zoning in an urban economy zoning statutes are a nearly ubiquitous phenomenon in urban america allen manvel in his report to the national commission on urban problems p 31 estimated that 90 percent of the cities and towns in the united states with a population of over 5 000 had some kind of zoning statute in 1967 in addition 51 of the 52 largest cities possessed such ordinances in spite of this ubiquity and in spite of the recent public controversy concerning the legality of suburban exclusionary zoning the modern economics literature on the institution is amazingly sparse there have been some significant contributions in recent years notably those by otto davis martin bailey davis and andrew whinston and john crecine davis and robert jackson however i think it is fair to say that economists have barely scratched the surface of what seems to me to be a very complex subject in particular there has been very little progress made in the task of incorporating zoning or land use parameters into the kinds of micro economic models that economists are accustomed to deal with the contrast with another urban economic institution the property taxis rather striking in this respect the basic objective of this paper will be to attempt to fill this gap the first section introduces a simple model of an urban space economy with a manufacturing and residential sector having constructed this model i will show how a change in the allocation of land between the two sectors affects the spatial pattern of land rents the size of the urban labor force and the wage rate the second section of the paper will then be devoted to a discussion of the appropriateness and implications of a land allocation policy which maximizes aggregate land rent

measurement of consumer gains from market stabilization for most cases of practical significance in which partial equilibrium analysis is appropriate there is little difference between exact measures of consumer gains from market stabilization and approximations such as expected change in marshallian or hicksian consumer surplus careful specification of the nature of stabilization is more crucial than the choice of welfare measure it is important to represent correctly the demand curvature and supply response and to determine whether general equilibrium responses can be ignored in any event an improved analytical approximation and a simple numerical method for calculating the exact measures make it unnecessary to rely on suspect measures

hedonic prices and cost benefit analysis abstract hedonic prices have been used to evaluate the willingness to pay for attributes we reformulate the notion of hedonic price from a composite price on housing to a unit price on traded quantities in conformity with long run competitive equilibrium theory this formulation was suggested but not developed by rosen j polit econ 82 no 1 1974 34 35 by first characterizing an efficient allocation of consumers to space we show that hedonic unit prices can be understood as a bid rent function which supports the efficient allocation this is despite the fact that the lots over which consumers bid are themselves endogenous we show that unit hedonic prices reveal preferences in a manner different from composite hedonic expenditures

urban commuting journeys are not wasteful do urban workers commute too much bruce hamilton 1982 was the first to raise the question whether urban workers commuting journeys are too long or in his terms wasteful he argued that the monocentric urban model predicts that workers commuting journeys will be minimized to test the model he calculated the minimum commuting journey length for the average worker in a group of u s cities and compared the results to the actual average commuting journey length for those workers he assumed that any difference between the two figures was wasteful commuting he found that the average minimum commuting distance was only 1 1 miles but the average distance actually commuted by workers in those cities was 8 7 miles or nearly eight times as great hamilton therefore concluded that the monocentric urban model has little predictive value concerning commuting behavior and that actual commuting behavior could be predicted just as well using an assumption that commuting is random commuting behavior is a central feature of any model that purports to explain urban residential and job location choice hamilton s assertion that the monocentric urban model has little predictive value concerning commuting behavior therefore strikes at the heart of

location housing and leisure demand muth s model of cbd employed household behavior has been successfully extended to include labor leisure choice in order to deal with the original version s deficient treatment of commuting time the extension demonstrates how all the basic results of the simpler formulation remain valid this paper provides a similar extension for the locally employed household variant of muth s model the analysis demonstrates a surprising difference between the demand gradient and comparative static results for the locally employed household without leisure choice and the locally employed household with leisure choice not observed for the cbd employed household model

efficient allocations under ambiguity abstract important implications of the expected utility hypothesis and risk aversion are that if agents have the same probability belief then consumption plans in every efficient allocation of resources under uncertainty are comonotone with the aggregate endowment and if their beliefs are concordant then the consumption plans are measurable with respect to the aggregate endowment we study these two properties of efficient allocations for models of preferences that exhibit ambiguity aversion using the concept of conditional beliefs which we introduce in this paper we provide characterizations of such conditional beliefs for the standard models of preferences used in applications

constrained choices under risk there has recently been a revival of interest in the implications of rationing for economic theory extending the work of samuelson 21 tobin and houthakker 24 and pollak 16 recent papers by bruno 3 howard 8 latham 13 and neary and roberts 15 have explored the theory of producer and consumer behavior under quantity rationing these developments have provided useful hypotheses in the investigation of economic behavior for example they have stimulated a reexamination of macroeconomic disequilibrium however previous work seems to have focused on economic models in the absence of uncertainty yet given that production decisions are often made before output prices are known and in the absence of complete contingent markets sandmo 22 batra and ullah 2 and others have developed the theory of the competitive firm under price uncertainty under the expected utility maximization hypothesis such a theory provides useful information about the influence of changing economic conditions or of risk behavior on production decisions but because of the presence of short run adjustment costs leading to short run input fixity or because of regulatory or institutional constraints quantity rationing often influences production decisions in order to evaluate how rationing influences such decisions there is a need to develop a conceptual model of constrained choices of the firm under risk the objective of this paper is to explore the implications of quantity rationing in the context of production theory under price uncertainty by introducing risk and risk behavior it extends the classical analysis of quantity constrained production decisions 3 21 the implications of quantity constraints for risk responsive choice functions are derived using the concepts of compensated choice functions and virtual prices it is shown that expected price effects can be decomposed into substitution effects and wealth effects the substitution effects measure the effects of a change in expected price on the compensated choice functions the compensation being made through a change in initial wealth holding expected utility constant the wealth effects characterize risk preferences since a non zero wealth effect reflects a departure from an arrow pratt constant absolute risk aversion utility function the influence of rationing on the properties of ordinary as well as compensated choice functions is analyzed in details by deriving the implications of quantity constraints for firm behavior under uncertainty the paper presents a number of useful results concerning the influence of risk or technology on economic behavior under rationing for example a

on welfare analysis under temporal uncertainty the implications of uncertainty for costbenefit analysis remain controversial one issue raised in the evaluation of welfare compensation tests has been the appropriate use of observable economic behavior in the measurement of agents willingnessto pay or willingness to receive in the context of surplus measure this question has received considerable attention in the analysis of the welfare impact of price changes under certainty e g willig 1976 chipman and moore 1980 hausman 1981 mckenzie and pearce 1982 moreover the introduction of uncertainty has raised a number of questions about the appropriateness of alternative welfare measures e g schmalensee 1972 1975 graham 1981 for example graham 1981 has argued that there is little basis to recommend either option price or expected surplus for a role of prominence in welfare analysis the issue rather is whether or not there exists a distribution of individual payments or receipts that maximizes aggregate willingness to pay and passes the pareto improvement test i e that leaves no individual worse off and makes at least one individual better off graham 1981 but in the implementation of the pareto improvement test how is the aggregate willingness topay supposed to be measured empirically more specifically what is the influence of uncertainty and its temporal resolution on the validity of agent surplus the welfare triangle given by the area between a compensated choice function and its corresponding price as a welfare measure some progress has been made in this direction by chavas bishop and segerson 1986 in the context of option price however as shown by graham 1981 while option price is the appropriate measure of benefits in situations involving similar individuals and collective risk it may not be the appropriate welfare measure in more general situations therefore there is a need to refine our understanding of how agent surplus can be used as a welfare measure in the general context of a potential pareto improvement test under temporal uncertainty the objective of this paper is to investigate how temporal uncertainty can affect the measurement of willingness to pay in general welfare compensation tests temporal uncertainty corresponds to the situation where new information becomes available over time which resolves at least part of current uncertainty facing economic agents this new information can influence future individual decisions as well as individual willingness to pay particular attention will be given here to the case where income compensation is conditional on the new information that will become available in the future and results in a more efficient allocation of risk among individuals this paper focuses on competitive agents e g households or firms for which welfare changes can be expressed in terms of price changes this includes the analysis of the welfare effects of various government pricing policies this also includes the evaluation of public projects based on the travel cost method which under a weak complementarity condition consists in using price changes of related private goods as an indirect means of measuring the value of a public project maler 1974 the analysis is presented in the context of a general two period model where the agents are uncertain about the state of the world as suggested by graham 1981 it is shown that the option price provides a lower bound on