barriers to energy efficiency a comparison across the german commercial and services sector abstract based on a large sample for the german commercial and services sector this paper econometrically assesses the relevance of various types of barriers to energy efficiency at the sectoral level and across fifteen sub sectors the results at the level of entire sectors suggest that the lack of information about energy consumption patterns and about energy efficiency measures lack of staff time priority setting within organizations and in particular the investor user dilemma are all relevant barriers allowing for sector specific differences in the relevance of these individual barriers yields a more heterogeneous picture the numbers and types of relevant barriers vary across sub sectors and the majority of sub sectors are subject to relatively few barriers the statistically most significant barriers are found for the sub sector of public administrations these findings are robust independent of whether the definition of an organization s energy efficiency performance includes only measures that have actually been realized or also those that are being planned for planned projects however organizations appear to underestimate internal priority setting as a barrier to energy efficiency

benchmarking in the european union emissions trading system abatement incentives abstract this paper investigates abatement incentives for allowance allocation based on output and sector specific benchmarks here called output based allocation or benchmarking special attention is given to updated allocation and we assume that allowances can be traded with other sectors open cap we confirm earlier studies that output based allocation based on ex ante data provide the same abatement incentives as auction or grandfathering and also confirm that output based allocation with updated output and ex ante benchmarks provides as high abatement incentives as auction but constitutes a production subsidy however we also find that benchmarking with updated output and updated benchmarks reduces abatement incentives somewhat but less so than updated grandfathering an allocation rule where the sector cap is prescribed ex ante for instance based on historic emissions and distributed to installations in proportion to their updated production preserves full abatement incentives and avoids some of the costs associated with the determination of benchmarks however this rule also constitutes a production subsidy which decreases with industry concentration if a sector is split into smaller groups each with one benchmark per sub sector benchmarking evolves toward grandfathering since benchmarking is conditioned on production this allocation method protects production from leakage i e migrating to areas where firms face no emissions cost this may actually be the most compelling reason for choosing benchmarking

on the design of optimal grandfathering schemes for emission allowances to meet its commitment under the kyoto protocol the eu plans to implement an emissions trading system whith grandfathering of allowances besides having distributional impacts the choice of the grandfathering scheme may affect efficiency if firms anticipate how future allocations depend on upcoming decisions in this paper we determine central design rules for optimal grandfathering within a simple two period model we find that for small open trading systems where allowance prices are exogenous first best second period grandfathering schemes must not depend on firm specific decisions in the first period second best schemes correspond to a ramsey rule of optimal tax differentiation and are generally based on both previous emissions and output however ofr closed emissions trading systems i e endogeneous allowance prices firstand second best rules coincide and must not depend on previous output levels they consist of an assignment proportional to the emissions in the first period plus a term which does not depend on firm specific decisions in either of the two periods

the efficiency paradox bureaucratic and organizational barriers to profitable energy saving investments abstract the paradox of why profitable energy saving investments are not undertaken continues to provoke debate the underlying phenomenon might be called the efficiency paradox because it represents a case in which business firms which are often presumed or taken axiomatically to be economically efficient make decisions that do not maximize profits new data from one of the us environmental protection agency s voluntary pollution prevention programs enables this paradox to be explored statistically the data show that both the level and variation in returns to lighting upgrade investments cannot be explained by standard economic models substantial gains in energy efficiency can be achieved without sacrificing profitability both economic and organizational factors account for some of the variation in observed returns to these investments but the results suggest a need for improved and more comprehensive theories of the investment behavior of firms and other organizations

environmental policy incentives to adopt advanced abatement technology abstract we investigate incentives through environmental policy instruments to adopt advanced abatement technology first we study the case where the regulator makes long term commitments to policy levels and does not anticipate arrival of new technology we show that taxes provide stronger incentives than permits auctioned and free permits offer identical incentives and standards may give stronger incentives than permits second we investigate scenarios where the regulator anticipates new technologies we show that with taxes and permits the regulator can induce first best outcomes if he moves after firms have invested whereas this does not always hold if he moves first

how stable are corporate capital structures leverage cross sections more than a few years apart differ markedly with similarities evaporating as the time between them lengthens many firms have high and low leverage at different times but few keep debt to assets ratios consistently above 0 500 capital structure stability is the exception not the rule occurs primarily at low leverage and is virtually always temporary with many firms abandoning low leverage during the post war boom industry median leverage varies widely over time target leverage models that place little or no weight on maintaining a particular ratio do a good job replicating the substantial instability of the actual leverage cross section

the real consequences of market segmentation we study the real effects of market segmentation due to credit ratings using a matched sample of firms just above and just below the investment grade cutoff these firms have similar observables including average investment rates however flows into high yield mutual funds have an economically significant effect on the issuance and investment of the speculative grade firms relative to their matches especially for firms likely to be financially constrained the effect is associated with the discrete change

determinants of oligopsony power the haitian coffee case abstract this paper investigates the determinants of oligopsony power exerted by coffee exporters in haiti it develops and estimates a two equation model with cross parameter restrictions one equation for the lerner index of oligopsony and the other for the residual supply function facing exporters empirical results indicate that both institutional arrangements and domestic market conditions have significantly shaped oligopsony power

an international comparison of capital structure and debt maturity choices this study examines how the institutional environment influences capital structure and debt maturity choices of firms in 39 developed and developing countries we find that a country s legal and tax system corruption and the preferences of capital suppliers explain a significant portion of the variation in leverage and debt maturity ratios specifically firms in more corrupt countries and those with weaker laws tend to use more debt especially short term debt explicit bankruptcy codes and deposit insurance are associated with higher leverage and more long term debt more debt is used in countries where there is a greater tax gain from leverage

the european bond markets under emu in this paper we document how in the wake of monetary unification the markets for euro area sovereign and private sector bonds have become increasingly integrated issuers and investors alike have come to regard the euro area bond market as a single one primary and secondary bond markets have become increasingly integrated on a pan european scale issuance of corporate bonds has taken off on an unprecedented scale in continental europe in the process both investors and issuers have reaped the considerable benefits afforded by greater competition in the underwriting of private bonds and auctioning of public ones and by the greater liquidity of secondary markets bond yields have converged dramatically in the transition to emu the persistence of small and variable yield differentials for sovereign debt under emu indicates that euro area bonds are still not perfect substitutes however to a large extent this does not reflect persistent market segmentation but rather small differentials in fundamental risk liquidity differences play at most a minor role and this role appears to arise partly from their interaction with fundamental risk the challenges still lying ahead are numerous they include the imbalance between the german dominated futures and the underlying cash market the vulnerability of the cash markets prices to free riding and manipulation by large financial institutions the possibility of joint bond issuance by euro area countries the integration of clearing and settlement systems in the euro area bond market and the participation of new accession countries issuers in this market copyright 2004 oxford university press

individual preferences monetary gambles and stock market participation a case for narrow framing we argue that narrow framing whereby an agent who is offered a new gamble evaluates that gamble in isolation may be a more important feature of decision making than previously realized our starting point is the evidence that people are often averse to a small independent gamble even when the gamble is actuarially favorable we find that a surprisingly wide range of utility functions including many nonexpected utility specifications have trouble explaining this evidence but that this difficulty can be overcome by allowing for narrow framing our analysis makes predictions as to what kinds of preferences can most easily address the stock market participation puzzle

production optimization considering environmental performance and preference in the cap and trade system abstract many countries like china are in a dilemma between economic growth and environmental deterioration e g smog weather simultaneously a growing people concern the product s environmental performance along with their improving environment awareness this paper focuses on the impacts of carbon footprint and low carbon preference on the production decision of emission dependent firms in the cap and trade system the cap and trade system uses the total cap to attain environmental goals and allows trade to achieve the effective scheduling through market regulation under this mechanism through analyzing the influence of carbon footprint and low carbon preference on the market supply and demand we build a production optimization model and develop the optimal decisions several interesting management insights on environmental preference and policy are concluded

the impacts of liquidity dynamics on emissions allowances price different evidence from china s emissions trading pilots abstract the liquidities of china s emissions trading markets have significant impacts on emissions allowances price movement and pricing efficiency liquidity measures on illiquidity ratio and trade values indicate hubei emissions allowances hbea product has the highest liquidity shenzhen allowances sza and guangdong emissions allowances gdea products have the higher liquidity than beijing emissions allowances bea and shanghai emissions allowances shea products while tianjin emissions allowances tjea product has the lowest market liquidity in considered china s emissions trading pilots the dynamics of the illiquidity ratios for all selected emissions allowances products are negatively related with emissions allowances returns and trade volumes for bea tjea sza and hbea products are also negatively related with emissions allowances returns the dynamics of daily illiquidity ratios and trade based liquidity in beijing tianjin guangdong shenzhen hubei emissions pilots have significant volatility clustering impacts on the variances of regional emissions allowances returns previous market shocks of overnight and intraday price variations have the more persistent influences on the gdea returns than hbea returns reflecting greater inter day price ranges clustering effect

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

emission abatement untangling the impacts of the eu ets and the economic crisis abstract in this study we use historical emission data from installations under the european union emissions trading system eu ets to evaluate the impact of this policy on greenhouse gas emissions during the first two trading phases 2005 2012 as such the analysis seeks to disentangle two causes of emission abatement that attributable to the eu ets and that attributable to the economic crisis that hit the eu in 2008 09 to do so we use a dynamic panel data approach our results suggest that by far the biggest share of abatement was attributable to the effects of the economic crisis this finding has serious implications for future policy adjustments affecting core elements of the eu ets including the distribution of eu emission allowances

abatement and allocation in the pilot phase of the eu ets we use historical industrial emissions data to assess the level of abatement and over allocation that took place across european countries during the pilot phase 2005 2007 of the european union emission trading scheme using a dynamic panel data model we estimate the counter factual business as usual emissions scenario for eu member states comparing this baseline to allocated and verified emissions we find that both over allocation and abatement occurred along with under allocation and emissions inflation over the three trading years of the pilot phase we find over allocation of approximately 280 million euas and total abatement of 247 mt co2 however we calculate that emissions inflation of approximately 73 mt co2 also occurred possibly due to uncertainty about future policy design features

business perspective to the national greenhouse gases emissions trading scheme a survey of cement companies in china abstract applying data gathered from 105 cement companies this paper gives an analysis of how business views the upcoming national greenhouse gases emissions trading scheme in china despite a good overall understanding the surveyed companies have not been able to prepare properly for the implementation of this policy they still need training to enhance their related capacity probably due to strict competition it is difficult for cement companies to pass the policy cost on to their clients the sampled companies intend to make self mitigation efforts for compliance it is highly likely that cement companies would mitigate emissions themselves if the carbon price is higher than 108 of the self abatement cost the surveyed cement companies anticipate an increase in the carbon price in china from about 35 yuan t co2 in 2020 to 60 yuan t co2 in 2025 and 90 yuan t co2 by 2030 the analysis provides reference for the smooth introduction and effective implementation of national carbon market in china from the business viewpoint

a literature based multi criteria evaluation of the eu ets abstract this article reviews the existing literature on the european union emission trading scheme eu ets focusing on empirical ex post research since the end of the first period 2007 the literature is presented through a multi criteria evaluation concerning environmental effectiveness despite over allocation during the first period abatement is estimated between 2 5 and 5 trade driven carbon leakage was not observed even if long term economic models predict divergent leakage estimates for certain at risk sectors the abatement target was likely to be below an economically efficient level but was reached in a fairly cost effective way even if free allocation gave rise to several distortional effects equity concerns were manifold and constitute a major drawback to the policy finally institutional feasibility can be considered positive in that the eu ets passed the european legislative process unlike the previously proposed eu wide carbon tax

incentives and prices in an emissions trading scheme with updating abstract emissions trading schemes where allocations are based on updated baseline emissions give firms less incentive to reduce emissions for a given quota or allowance price nevertheless according to bohringer and lange on the design of optimal grandfathering schemes for emission allowances europ econ rev 49 2005 2041 2055 such allocation schemes are cost effective if the system is closed and allocation rules are identical across firms in this paper we show that the cost effective solution may be infeasible if marginal abatement costs grow too fast moreover if a price cap or banking borrowing is introduced the abatement profile is no longer the same as in the case with an auction or lump sum allocation in addition we show that with allocation based on updated emissions the quota price will always exceed marginal abatement costs possibly misguiding policy makers and investors about abatement costs numerical simulations indicate that the quota price most likely will be several times higher than marginal abatement costs unless a significant share of allowances is auctioned

causes of the eu ets price drop recession cdm renewable policies or a bit of everything new evidence the price of eu allowances euas in the eu emissions trading scheme eu ets fell from almost 30 tco2 in mid 2008 to less than 5 tco2 in mid 2013 the sharp and persistent price decline has sparked intense debates both in academia and among policy makers about the decisive allowance price drivers in this paper we examine whether and to what extent the eua price drop can be justified by three commonly identified explanatory factors the economic recession renewable policies and the use of international credits capitalizing on marginal abatement cost theory and a broadly extended data set we find that only variations in economic activity and the growth of wind and solar electricity production are robustly explaining eua price dynamics contrary to simulation based analyses our results point to moderate interaction effects between the overlapping eu ets and renewable policies the bottom line however is that 90 of the variations of eua price changes remains unexplained by the abatement related fundamentals together our findings do not support the widely held view that negative demand shocks are the main cause of the weak carbon price signal in view of the new evidence we evaluate the eu ets reform options which are currently discussed

neoclassical theory versus prospect theory evidence from the marketplace several experimental studies have provided evidence that suggest indifference curves have a kink around the current endowment level these results which clearly contradict closely held economic doctrines have led some influential commentators to call for an entirely new economic paradigm to displace conventional neoclassical theory e g prospect theory which invokes psychological effects this paper pits neoclassical theory against prospect theory by investigating data drawn from more than 375 subjects actively participating in a well functioning marketplace the pattern of results suggests that prospect theory adequately organizes behavior among inexperienced consumers but consumers with intense market experience behave largely in accordance with neoclassical predictions moreover the data are consistent with the notion that consumers learn to overcome the endowment effect in situations beyond specific problems they have previously encountered this transference of behavior across domains has important implications in both a positive and normative sense

a general equilibrium impact study of the emissions reduction fund in australia by using a national environmental and economic model abstract several climate change policies such as emissions trading schemes and carbon taxes have been implemented in many countries and regions around the world however the current coalition government in australia does not prefer such methods and has argued that these policies would substantially increase the electricity price and weaken the australian competitiveness and the whole economy subsequently the government replaced the carbon tax policy in july 2014 with its emissions reduction fund which fundamentally uses the government budget of a 2 55 billion to buy emission abatements from polluters there are major arguments among the australian public about the efficiency and the effects of this approach but the economic effects are still unidentified this study aims to examine the economy wide effects of this policy on the australian economy by employing a national environmental and economic general equilibrium model so that australians and international audience would be aware of the impacts and how the reverse auction and carbon subsidy work as a policy to reduce emissions at large scales across all sectors in a country results show that australia only experiences relatively small impact on its economy real gdp only declines by 0 3 0 4 over all scenarios industrial and private sectors also experience relatively small unfavourable impacts but the output and export level of the agricultural commodity will decline substantially the renewable sectors are expanded to compensate output reductions in fossil fuel electricity generation sectors though the expansion is insufficient to compensate for the losses

government debt and corporate leverage international evidence abstract we empirically investigate the impact of government debt on corporate financing decisions in an international setting we show a negative relation between government debt and corporate leverage using data on 40 countries between 1990 2014 this negative relation is stronger for government debt that is financed domestically for firms that are larger and more profitable and in countries with more developed equity markets to address potential endogeneity concerns we use an instrumental variable approach based on military spending and a quasi natural experiment based on the introduction of the euro currency our findings suggest that government debt crowds out corporate debt

how carbon offsetting scheme impacts the duopoly output in production and abatement analysis in the context of carbon cap and trade abstract in the context of addressing climate change the carbon emission trading scheme has become one of the main measures adopted by many countries and regions to achieve emission reduction goals noticing this current lack of research based on a duopoly model this paper quantitatively explores the impact of carbon offsetting scheme on both emission trading participants profits and industry s output by drawing on advanced experience of carbon offsetting scheme from developed countries such as us switzerland and eu and thus provides a perspective for government to design optimal aggregate standard for carbon cap and trade results show a negative correlation between enterprises carbon intensity and their equilibrium output in the product market and indicate a threshold for the relative magnitude of the duopoly enterprises carbon intensity above which their absolute output will differ dramatically the incorporation of carbon offsetting scheme into a non offset quota trading scheme will reduce its equilibrium carbon price thereby mitigate its negative impact on industry s total output in the product market by an either linear or quadratic form depending on the design for the proportion ceiling of offsetting quota

triggers and barriers to energy efficiency measures in the ceramic cement and lime sectors evaluating and understanding the interplay of barriers to the diffusion of energy efficiency measures is highly relevant because if policies are effective in overcoming these barriers co2 emissions can be decreased at low cost the study aims to understand how managers make decisions to invest in energy efficiency how perceived barriers affect these decisions and how policy can overcome these barriers we apply neo classical economic theory as well as insights from transaction cost economics and behavioural economics to understand why hurdle rates even when omitted costs and risk are taken into account are higher than the weighted average cost of capital we find that internal capital budgeting rules and the effort of studying technical feasibility and profitability are relevant to understanding the efficiency gap the results indicate that the voluntary agreement and the emission trading scheme are complementary addressing different barriers in different contexts

the effect of allocation above emissions and price uncertainty on abatement investments under the eu ets abstract the european union emission trading scheme eu ets by far the largest in its kind has inspired several other carbon markets in the world based on interviews with plant managers from almost all belgian ceramics lime and cement producers this study describes how manager s perceptions on emission trading affected investment decisions in line with behavioural economics reference dependence is found to explain why free allocation below emissions creates a greater incentive to abatement investment compared to allocation above emissions in the ceramics sector allocation above emissions refrained managers from including carbon gains in payback times this contradicts the famous coase theorem which predicts that free allocation has no effect on abatement incentives the results indicate that auctioning part of the emission rights will reduce barriers to abatement investment carbon price uncertainty is seen as a disincentive for abatement investment by some managers and as an incentive by others intermediate levels of uncertainty add option value to abatement investments because the associated gradual learning adds flexibility in an uncertain carbon constrained future however high levels of uncertainty creating a risk of offshoring even when companies innovate creates an option value to postpone abatement investments narrow framing misperceiving the risk hedging counter cyclicality of carbon costs reinforces the option value to wait therefore policy should aim to reduce price uncertainty for very low and very high carbon prices not for an intermediary price range

renewable energy technologies as beacon of cleaner production a real options valuation analysis for liberia abstract the importance of energy consumption for growth and development calls for improved decision support for a sustainable energy transition given africa s dependence on fossil fuels the economic and environmental savings from research development and deployment of renewable energy technologies may be substantial although the benefits of renewable energy technologies research development funding may appear to be low assuming immediate deployment the uncertainty in the non renewable energy price and the flexibility over timing makes research development program more appealing this study develops different scenarios in order to quantify benefits provided by research development funding for renewable power generation in liberia by using real options pricing approach to estimate the value of renewable energy technologies while taking into account the uncertainty of fossil fuel prices and learning by doing in renewable energy technologies the optimal solution shows that renewable energy technologies are economically attractive especially when external costs are internalized however annual research development funding is low and should be raised significantly in order to guarantee the highest possible investment incentives with minimal expenditures the study also hypothesizes that with the likelihood of renewable energy to replace non renewable energy renewable power use in liberia can potentially reduce carbon dioxide emissions by approximately 13 9 by 2015 compared to the 2008 levels the key insight provided by the real options analysis in this study is that while renewable energy may have inherent limitations such as seasonality of supply low energy content and capacity factor issues they still hold a significant amount of value which can only be detected when externalities are internalized thus underscoring the need for external costs related policies

uncertainty loss aversion and markets for energy efficiency increasing energy efficiency is critical to mitigating greenhouse gas emissions from fossil fuel combustion reducing oil dependence and achieving a sustainable global energy system the tendency of markets to neglect apparently cost effective energy efficiency options has been called the efficiency gap or energy paradox the market for energy efficiency in new energy using durable goods however appears to have a bias that leads to undervaluation of future energy savings relative to their expected value this paper argues that the bias is chiefly produced by the combination of substantial uncertainty about the net value of future fuel savings and the loss aversion of typical consumers this framework relies on the theory of context dependent preferences the uncertainty loss aversion bias against energy efficiency is quantifiable making it potentially correctible by policy measures the welfare economics of such policies remains unresolved data on the costs of increased fuel economy of new passenger cars taken from a national research council study illustrate how an apparently cost effective increase in energy efficiency would be uninteresting to loss averse consumers

does the source of capital affect capital structure prior work on leverage implicitly assumes capital availability depends solely on firm characteristics however market frictions that make capital structure relevant may also be associated with a firm s source of capital examining this intuition we find firms that have access to the public bond markets as measured by having a debt rating have significantly more leverage although firms with a rating are fundamentally different these differences do not explain our findings even after controlling for firm characteristics that determine observed capital structure and instrumenting for the possible endogeneity of having a rating firms with access have 35 more debt copyright 2006 oxford university press

financial intermediary development and growth volatility do intermediaries dampen or magnify shocks the authors extend the recent literature on the link between financial development and economic volatility by focusing on the channels through which the development of financial intermediaries affects economic volatility their theoretical model predicts that well developed financial intermediaries dampen the effect of real sector shocks on the volatility of growth while magnifying the effect of monetary shocks suggesting that overall financial intermediaries have no unambiguous effect on growth volatility the authors test these predictions in a panel data set covering 63 countries over the period 1960 97 using the volatility of terms of trade to proxy for real volatility and the volatility of inflation to proxy for monetary volatility they find no robust relationship between the development of financial intermediaries and growth volatility weak evidence that financial intermediaries dampen the effect of terms of trade volatility and evidence that financial intermediaries magnify the impact of inflation volatility in low and middle income countries

how china s current carbon trading policy affects carbon price an investigation of the shanghai emission trading scheme pilot abstract to better establish a unified carbon market in china this study evaluates the effect of current carbon trading policy and further investigates the relationship between such policy that is published during the second phase of shanghai environment and energy exchange seee and shanghai emission allowance shea price we aim to analyze whether these policies can improve the operation efficiency of current carbon market by the mean reversion test cox ingersoll ross cir model and event study method we first analyze the potential price discovery function of shea products thereby describing the transmission channel of current policy to shea price then we examine the effect of carbon policies published in different periods on their corresponding shea price by the auto correlation test and cir simulation we find that 3 4 of all auto correlation values are less than 0 after apr 2017 and the minimum cumulative error is 31 3792 under the supply and demand channel these findings imply that shea price has the discovery function at the middle and end of trading period and the current policy affects shea price through its effect on the fundamentals of supply and demand further more than 60 of all r values r value that reflects the response of price to policy are less than 1 which implies that the published policy will improves future shea price accordingly we argue that seee belongs to a policy oriented market and the change of carbon price is closely related to emission allocation policies in this case china s government should further push forward the smooth operation of current carbon market by the aid of incentive policy in the coming period