the acid rain game as a resource allocation process with an application to the international cooperation among finland russia and estonia we consider optimal cooperation in transboundary air pollution abatement among several countries under incomplete information i e local information only on marginal emission abatement costs and damage costs directions of emission abatement in each country are determined that generate a succession of emissions programs shown to converge to an economic optimum a cost sharing scheme that results from appropriately designed international transfers guarantees that the individual costs of all parties are nonincreasing along the path towards the optimum a version of maler s 1989 acid rain game is used for a numerical application

anticipated international environmental agreements abstract consider a situation in which countries anticipate an international environmental agreement iea to be in effect sometime in the future what is the impact of the future iea on current emissions after its announcement we show that the answer to this question is ambiguous we examine four types of ieas that aim to reduce pollution stock in the environment iea type 1 sets a level of emissions iea type 2 and iea type 3 set a percentage and a uniform cut vis a vis the business as usual policy respectively iea type 4 sets the policy that maximizes future joint benefits of the signatories we show that all of these agreements reach their goal in the long run but the intended benefits of these ieas can potentially be offset by the anticipatory non cooperative response of the signatories leading to an environmental degradation in the short run which iea is preferable depends on the targeted level emissions during the phase of cooperation when this target is above a certain threshold welfare under iea type 1 is larger than under iea type 2 which is larger than under iea type 3 moreover the highest level of welfare that can be attained under iea type 1 is above the highest level of welfare achieved by any one of the other three ieas

the value of fast fashion quick response enhanced design and strategic consumer behavior a fast fashion system combines quick response production capabilities with enhanced product design capabilities to both design hot products that capture the latest consumer trends and exploit minimal production lead times to match supply with uncertain demand we develop a model of such a system and compare its performance to three alternative systems quick response only systems enhanced design only systems and traditional systems which lack both enhanced design and quick response capabilities in particular we focus on the impact of each of the four systems on strategic or forward looking consumer purchasing behavior i e the intentional delay in purchasing an item at the full price to obtain it during an end of season clearance we find that enhanced design helps to mitigate strategic behavior by offering consumers a product they value more making them less willing to risk waiting for a clearance sale and possibly experiencing a stockout quick response mitigates strategic behavior through a different mechanism by better matching supply to demand it reduces the chance of a clearance sale most importantly we find that although it is possible for quick response and enhanced design to be either complements or substitutes the complementarity effect tends to dominate hence when both quick response and enhanced design are combined in a fast fashion system the firm typically enjoys a greater incremental increase in profit than the sum of the increases resulting from employing either system in isolation furthermore complementarity is strongest when customers are very strategic we conclude that fast fashion systems can be of significant value particularly when consumers exhibit strategic behavior this paper was accepted by yossi aviv operations management

buying cooperation in an asymmetric environmental differential game abstract we consider a two player asymmetric differential game of pollution control one player is non vulnerable to pollution or unwilling to consider damages when choosing her production policy in a non cooperative game we characterize the feedback nash equilibrium and the cooperative solution we establish conditions under which the vulnerable player can buy the cooperation of the non vulnerable player to control her emissions we further use the nash bargaining solution to allocate the total cooperative dividend between the two players and propose a time consistent decomposition overtime of the total payoff

reputation in dynamic games abstract we analyze reputation in a game between a large player and a continuum of long lived small players in which state variables affect players payoffs the large player s type is private information we give conditions under which in every nash equilibrium a very patient large player will get almost the largest payoff consistent with the small players choosing a best response in a large finite truncation of the game while our results apply to the time inconsistency problem of optimal government policy we show that for the durable goods monopoly reputation may fail to improve the monopolist s payoff journal of economic literatureclassification numbers c72 c73

collaborative replenishment in the presence of intermediaries in complex supply chains downstream buyers would often replenish individually from intermediaries instead of directly dealing with original manufacturers although collaborative replenishment from intermediaries might generate benefits significant cost reductions could be achieved when direct replenishments from manufacturers are considered this paper constructs a general model to study collaborative replenishment in multi product chains with alternative sources of supply i e manufacturers and intermediaries a collaborative organization determines the optimal choices of replenishment sources on behalf of its members to minimize collective costs we introduce a class of cooperative games associated with these situations and give sufficient conditions for their concavity we investigate the choice of allocation rule and its effect on supply chain efficiency when buyers strategically participate in the collaborative organization we prove that the shapley value coordinates the supply chain i e it makes complete participation the best strategy for buyers even under asymmetric information this setting is compared with an alternative structure where buyers can only collaborate in source specific replenishment organizations that purchase all requested products either from intermediaries or manufacturers although there are always participation strategies that result in minimum collective cost it is impossible to find allocation rules for source specific replenishment organizations that always motivate the buyers to choose such strategies

cooperative game theory applied to ieas a comparison of solution concepts this paper aims at providing a critical overview of the main solution concepts adopted by the cooperative game theoretical approach in analysing the constitution of an international environmental agreement iea the first part is mainly descriptive and focuses on the basic features of the global warming game characterizing the differences of the cooperative and non cooperative approaches to deal with this theme it then presents the most adopted cooperative solution concepts critically analysing their ratio furthermore two alternative solutions the rawlsian nucleolus and a revisited nash bargaining solution are proposed both based on the concept of minimum feasible core the second part is dedicated to a numerical exercise based on a standard emissions game in order to compare the mentioned concepts with particular focus on their redistributive properties and on their capability to minimize the potential losses caused by free riding the rawlsian nucleolus is among the considered solutions the one with the highest redistributive properties outperforming on this regard the chander and tulkens solution that still tends to prioritize polluted countries the ability of avoiding losses from free riding is shown to be strongly correlated with the redistributive properties of solution concepts till the point that their ranking perfectly coincides

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

cooperation in international environmental negotiations due to a preference for equity this paper demonstrates that cooperation in international environmental negotiations can be explained by preferences for equity within a n country prisoner s dilemma in which agents can either cooperate or defect in addition to the standard non cooperative equilibrium cooperation of a large fraction or even of all countries can establish a nash equilibrium in an emission game however where countries can choose their abatement level continuously equity preferences cannot improve upon the standard inefficient nash equilibrium finally in a two stage game on coalition formation the presence of equity interested countries increases the coalition size and leads to efficiency gains here even a stable agreement with full cooperation can be reached

optimal forest rotation under monopoly and competition abstract the two main propositions of the paper establish sufficient conditions for the optimal rotation to be invariant to market structure whether monopolistic competitive or maximizing the temporal sum of consumer s surpluses a corollary to the second proposition yields sufficient conditions for the monopolistic rotation to be actually longer than the competitive one

environmental policy and stable collusion the case of a dynamic polluting oligopoly we show that the imposition of a markovian tax on emissions that is a tax rate which depends on the pollution stock can induce stable cartelization in an oligopolistic polluting industry this does not hold for a uniform tax thus accounting for the feedback effect that exists within a dynamic framework where pollution is allowed to accumulate into a stock over time changes the result obtained within a static framework moreover the cartel formation can diminish the welfare gain from environmental regulation such that welfare under environmental regulation and collusion of firms lies below that under a laissez faire policy

research note trading up a strategic analysis of reference group effects reference groups influence product and brand evaluations especially when the product is a publicly consumed luxury good marketers of such luxury goods need to carefully balance two important social forces 1 the desire of leaders to distinguish themselves from followers and 2 the countervailing desire of followers to assimilate with leaders in this paper we examine the theoretical implications of these social forces for firm prices product design and target consumer selection we show that the presence of reference group effects can motivate firms to add costly features which provide limited or no functional benefit to consumers furthermore reference group effects can induce product proliferation on one hand and motivate firms to offer limited editions on the other hand we find that offering a limited edition can increase sales and profits in some cases reference group effects can even lead to a buying frenzy

the principle of minimum differentiation holds under sufficient heterogeneity the so called principle of minimum differentiation stated by hotelling has been challenged by many authors this paper restores the principle by showing that n firms locate at the center of the market and charge prices higher than the marginal cost of production when heterogeneity in consumers tastes is large enough

national politics and international agreements abstract in this paper we set up a political economy model of a two country world economy where an international agreement on the provisions of public goods generating cross border externalities such as environment protection subject to feasibility efficiency and equity constraints has to be negotiated by two elected national delegates we prove that any international agreement involves higher public good provisions through higher contributions in both countries than in the case of no agreement if feasible an ia may generate losers in either country under an equal tax rate rule an international agreement may or may not be reached unlike under an equal gain rule turning to the election stage depending on the type of equity rule imposed on the ia the choice of delegates depends crucially on distributive characteristics both between and within countries this is due to the struggle by electorates to transfer the tax burden to the other country s taxpayers

the voluntary provision of a pure public good the case of reduced cfc emissions and the montreal protocol abstract this paper applies the theory of the voluntary provision of a pure public good to the behavior of nations to curb chlorofluorocarbon cfc emissions during the late 1980s by devising an empirical test we determine that these cutbacks in emissions are consistent with nash behavior when taste parameters are controlled the relationship between emission cutbacks and national income is nearly linear as implied by the theory if the sample is purged of potential outliers then the linear relationship results a significant taste parameter is the extent of political and civil freedoms while a marginally significant parameter is geophysical position in terms of latitude

no lease is short enough to solve the time inconsistency problem the author provides a model of endogenous lease duration determination in the context of the durable goods monopolist problem he shows that infinitely many leases per finite unit of time are required to solve completely the time inconsistency problem thus suggesting that leasing may not provide a practical solution the author also provides a warning regarding the results that can be derived by exogenously setting lease durations equal to one period by resolving a paradoxical result in the literature copyright 1994 by blackwell publishing ltd

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

on the self interested use of equity in international climate negotiations abstract we discuss self interested uses of equity arguments in international climate negotiations using unique data from a world wide survey of agents involved in international climate policy we show that the perceived support of different equity rules by regions may be explained by the ranking of their economic costs despite being self interested equity arguments may be perceived as being used for different reasons for example out of fairness considerations or in order to facilitate negotiations consistent with experimental and behavioral studies on fairness perceptions we find that individuals are more likely to state reasons with positive attributes if they evaluate their own region or regions that support the individual s personally preferred equity rule negotiators perceive the use of equity by regions as less influenced by pressure from interest groups

endogenous minimum participation in international environmental agreements an experimental analysis almost all international environmental treaties require a minimum number of countries to ratify the treaty before it enters into force despite the wide spread use of this mechanism little is known about its effectiveness at facilitating cooperation we analyze an agreement formation game that includes an endogenously determined minimum participation constraint and then test the predictions using economic experiments we demonstrate theoretically that players will vote to implement an efficient coalition size as the membership requirement and this coalition will form experimental tests of the theory demonstrate that the minimum participation mechanism is highly effective at facilitating cooperation when efficiency requires the participation of all players however when efficiency requires only a subset of players to participate profitable coalitions are often deliberately blocked in light of our results it is possible that equity concerns can impede the formation of international agreements when membership requirements allow free riders

oligopolies and product durability abstract we analyze a simple two period quantity setting model where firms rent all of their output we compare the durability chosen by an oligopolist to the competitive socially optimal durability the model shows in subgame perfect equilibria the durability chosen by oligopolists will be cost minimizing independent of their output levels thus swan s independence result can be extended to oligopoly markets if the firms rent their output we also demonstrate the independence result can be extended to certain corner solutions

optimal dynamic durability abstract consider a firm that adjusts its production and the choice of durability for its products instantaneously we show that when the marginal cost with the respect to durability is nonincreasing a the optimal durability for both the competitive firm and the monopolist decreases over time and b the monopolist will produce a good with lower durability than the competitive firm we thus lend support for empirical findings and causal observations that found the phenomenon of declining durability over time

a strategic analysis of flexible manufacturing systems abstract in this paper a game theoretic model is presented by which investment in flexible manufacturing systems fms is analyzed if the investment in this innovative production system is viable due to either revenue enhancements or cost reductions the result is a competition for the first move among similar firms in an oligopolistic industry as a result the schumpeterian hypothesis of investment in a technological innovation occuring within an industry by swarms appears to apply to fms diffusion empirical evidence supporting the results of the theoretical analysis is presented

emissions taxation in durable goods oligopoly this paper examines the use of taxation to control external damage due to pollution when product durability is endogenously determined a special form of the emissions function is also examined which is equivalent to an excise tax on output the dynamic oligopoly model indicates that many conventional results in the durability and taxation literature need not hold when durability is endogenously determined in particular the analysis shows durability may not be independent of industry structure nor will firms minimize their manufacturing costs of providing service in addition the second best tax on imperfectly competitive firms is not necessarily less than the tax on a competitive firm when firms choose their product s durability

learning by doing and product durability many durable goods industries are industries that have significant learning affects i examine a monopolist s and social planner s cost minimizing durability choice in both the short and the long run when learning effects are present the model indicates that the relationship between durability and learning depends crucially upon whether or not knowledge decays and on learning s impact on the marginal cost of durability in particular this model demonstrates that swan s 1970 1971 independence result will hold in the long run if knowledge does not decay but will not hold if knowledge does decay thus whether or not monopolists will manufacture products with the same durability or quality as a social planner depends to a large extent on the type of learning process in the industry and on whether or not quality and durability directly influence this learning process

analysis and algorithm for the optimal investment times of new manufacturing technologies in a duopoly abstract on the basis of a dynamic and non cooperative game theoretic model the optimal timings of investments in new manufacturing technologies nmt is analysed under duopolistic competition non identical incumbents with time proportional demand always wait for some delay to invest in nmt the existence of silent timing equilibrium is addressed subsequently we show that cost reducing nmt diffuse over time within a duopoly the investments in strategic nmt however may be distributed through time or in a swarm economic interpretations of initial options and the comparative statics presented in this paper help decision makers develop strategies and make decisions under the situation they face finally a computational algorithm of optimal timings could verify this analysis and facilitate the real applications of game theoretic models

international environmental agreements on climate protection a binary choice model with heterogeneous agents abstract climate change poses a major challenge to present and future generations our analysis focuses on international environmental agreements ieas entered into by countries that decide rationally and autonomously on whether to adopt a climate friendly policy this raises the question how many and which countries will sign such an iea in addition to material incentives to combat climate change issues pertaining to justice and fairness motivate reciprocal behavior even during international negotiations integrating reciprocity preferences may stimulate cooperation and thus increase participation in an iea however there is some evidence that fairness also stabilizes small sized iea coalitions hence this gives rise to the following open question under which conditions does reciprocity have an enhanced and harmful impact on an iea furthermore we introduce heterogeneity with respect to a country s emphasis on reciprocity the costs it incurs when implementing a climate friendly policy its benefits from preventing negative consequences of climate change and country size in addition the present paper examines which countries might or might not sign an iea and identifies the characteristics that determine a country s participation or non participation in a coalition

do voluntary international environmental agreements work abstract we consider the effects of international environmental agreements using the 1988 sofia protocol on the reduction of nitrogen oxides panel data on 23 european countries for the period 1985 96 is used to evaluate the impact on emissions by dividing countries into participants and non participants that is those that did and those that did not ratify the sofia protocol using a difference in difference estimator and controlling for country specific variables we find that signing the treaty had a significant positive impact on emission reduction the estimated yearly reduction in emissions is approximately 2 1 greater than it would have been without the sofia protocol

sustaining cooperation in a differential game of advertising goodwill accumulation abstract the paper suggests a differential game of advertising competition among three symmetric firms played over an infinite horizon the objective of the research is to see if a cooperative agreement among the firms can be sustained over time for this purpose the paper determines the characteristic functions value functions of individual players and all possible coalitions we identify an imputation that belongs to the core using this imputation guarantees that in any subgame starting out on the cooperative state trajectory no coalition has an incentive to deviate from what was prescribed by the solution of the grand coalition s optimization problem

durable goods monopoly with incomplete information this article reconsiders the durable goods monopoly problem when the monopolist s marginal cost is private information we show that the coase conjecture implies the no trade theorem in any equilibrium in which the lowest cost seller s initial offer approaches her marginal cost the aggregate probability of trade must vanish however we also construct non coasean equilibria which approximate the unique outcome of the rental version of the same model these stationary equilibria are comparatively efficient the results are equally applicable to the mathematically equivalent problem of sequential bargaining with two sided incomplete information where one party makes all the offers what are the consequences of monopoly in a market for a durable good present day understanding of this question divides into two strands of thought first the monopolist may effectively lack any ability to credibly precommit on her future output under this scenario the price will drop almost instantaneously to marginal cost apparently yielding the efficient outcome normally associated with perfect competition 1 second the monopolist may possess an explicit e g leasing the good rather than selling2 or implicit e g the maintenance of reputation3 device enabling her to adhere to an output restriction under such circumstances price will be maintained at a non competitively high level suggesting an outcome fraught with all the inefficiency of classical monopoly the conclusions of the first paragraph rest on analysis of a standard model in which the monopolist s payoff function is taken to be common knowledge a single firm with known constant marginal cost sells an infinitely durable good to consumers with a known distribution of valuations for the good 4 the firm has the ability to revise its posted price

market structure and the durability of goods a basic proposition in microeconomics is that a monopolist tends to produce less output than would be produced by a competitive industry with this proposition in mind it is tempting to suggest that monopolistic producers of durable goods will produce goods with less durability than would be produced by a competitive industry this result was derived by martin 1962 kleiman and ophir 1966 levhari and srinivasan 1969 and schmalensee 1970 however swan 1970 showed that monopolists would choose the same degree of durability for their goods as would competitive producers the reason that earlier writers had reached a different result was that they had focused on long run equilibrium profits and ignored the role of initial conditions in optimizing decisions the swan independence result that durability is independent of market structurewas first derived under the assumption of constant returns to scale specifically the average cost of production was assumed to be an increasing function of durability but independent of the level of output the constant returns to scale assumption was first relaxed by sieper and swan 1973 by introducing a fixed capacity cost they showed that with finitely lived capacity which required replacement the independence result continued to hold in the very long run although market structure could affect durability before attainment of long run equilibrium no systematic results were derived kamien and schwartz 1974 introduced rising average cost curves and resurrected the result of earlier writers that a monopolist would choose a lower durability than competitive firms however swan 1977 pointed out that the kamien schwartz analysis is flawed by not allowing the monopolist access to the same technology as the competitive industry if the monopolist is allowed to choose the optimal number of plants then swan s independence result holds finally auernheimer and saving 1977 introduced costs of adjusting the rate of output and the durability of output they showed that if long run increasing costs arise from pecuniary external diseconomies then the independence result is preserved as remarked by schmalensee 1979 in his survey the general message of

durability choice under demand uncertainty this paper examines the impact of demand uncertainty on a monopolist s durability choice within a simple two period framework the analysis shows that the firm will produce the socially optimal durability if its output is rented and demand uncertainty is small but that it may produce units with inefficiently short life spans if output is sold however the model reveals that this planned obsolescence may be reduced from certainty levels depending upon the impact of uncertainty on future demand thus uncertainty may actually increase the firm s product durability relative to certainty levels

justifying the lindahl solution as an outcome of fair cooperation the motivation for the lindahl equilibrium is mostly a rather artificial price mechanism even though the analogy to a competitive market was emphasised by lindahl himself his approach does not directly explain the normative ideas behind his concept in the present paper we therefore show how the lindahl equilibrium can be deduced from some simple equity axioms these normative assumptions are the benefit principle on the one hand and the equal sacrifice principle or equivalently a non envy condition as a postulate for distributional equity on the other fairness among agents with different preferences and incomes is taken into account by considering their marginal willingness to pay as shadow prices in this way the reason why the lindahl solution can be perceived as an outcome of fair cooperation might become more understandable

intertemporal quality discrimination of a durable good monopolist abstract consider a durable good monopolist facing the technology constraint that when he introduces a new product he cannot produce a cheaper variant without a time lag we show that the qualities of his high end and low end products are higher than their efficient quality levels

impacts of trade and the environment on clustered multilateral environmental agreements many countries align their environmental policy and environmental regulation by way of multilateral environmental agreements meas previous work in economics provided insights in the economic and political determinants of meas at large this paper distinguishes meas by the main issues covered and classifies them in five clusters biodiversity atmosphere land chemicals and hazardous wastes and seas then the role of environmental economic and political factors and of dynamic and cross cluster effects is studied at the level of mea clusters two findings stand out from this empirical analysis first economic size and multilateral trade liberalisation of countries are found to be the most important drivers of mea participation across all clusters second adjustment costs turn out to deter and in particular cross cluster spillovers turn out to stimulate mea participation across countries and clusters

monopoly extraction of a durable non renewable resource failure of the coase conjecture the author studies a perfect information rational expectations markov equilibrium for the situation where a monopolist extracts a nonrenewable resource that is converted to a durable good even if short run extraction costs are constant the coase conjectur e fails provided that the depreciation rate of the durable good is positive copyright 1993 by the london school of economics and political science

the behavioural economics of climate change this paper attempts to bring some central insights from behavioural economics into the economics of climate change in particular it discusses i implications of prospect theory the equity premium puzzle and time inconsistent preferences in the choice of discount rate used in climate change cost assessments and ii the implications of various kinds of social preferences for the outcome of climate negotiations several reasons are presented for why it appears advisable to choose a substantially lower social discount rate than the average return on investments it also seems likely that taking social preferences into account increases the possibilities of obtaining international agreements compared to the standard model however there are also effects going in the opposite direction and the importance of sanctions is emphasized

product quality and imperfect information this paper considers markets in which consumers are imperfectly informed about both product prices and quality levels offered by firms we characterize necessary and sufficient conditions for existence of the various equilibrium configurations of price and quality that can arise in two paradigm cases when all consumers prefer higher quality and when all consumers prefer lower quality our results suggest that firms will exploit imperfect information by charging noncompetitive prices as well as by offering other than ideal quality in the former case but only by changing noncompetitive prices in the latter case

long term capacity decisions in uncertain markets for advanced manufacturing systems incorporating scope economies abstract by examining the literature in the field of manufacturing flexibility many researchers have located several form of flexibility by distinguishing them into strategic and operational flexibility forms furthermore many measures and design methods have been proposed for flexible manufacturing systems surely scope economies are one of the most important strategic form of flexibility in manufacturing systems and their strategic impact has been acknowledged by the very beginning of the flexible manufacturing era however despite several researches are available to address scope economies measurement and design methodologies very few researches investigate their economic convenience in front of dedicated manufacturing systems depending on the competitive market conditions this paper proposes a theoretical model whose main aim is the general understanding of the convenience conditions of scope economies based manufacturing systems the results of the theoretical model are very interesting because they locate market conditions that make scope economies manufacturing systems less profitable than dedicated manufacturing ones moreover the proposed model sets some general criteria to guide the entrepreneur in making right investment decision regarding this kind of manufacturing investments such results can explain the reason of many failures of flexible manufacturing systems and it suggests the use of this kind of approach to investigate other flexibility forms of manufacturing systems the ultimate goal of this research is the construction of a decision support system for supporting the entrepreneur in making decision on advanced manufacturing systems investment decisions

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

the impact of equity preferences on the stability of international environmental agreements this paper uses a coalition formation model to explore how equity considerations affect countries cooperation on global environmental issues e g on climate change when developing countries are exempted from obligations to reduce their emissions i find that opening them for abatement projects financed by industrialized countries changes the incentives to cooperate in a way which can increase emissions and decrease welfare equity concerns in industrialized countries regarding the difference between their per capita emission levels and those of developing countries lead to increased abatement but do not qualitatively change the incentives to cooperate inequality aversion with respect to differences to abatement targets across industrialized countries generally induces larger coalition sizes and stricter abatement here the inclusion of developing countries improves upon the prospects of cooperation

climate policy learning and technology adoption in small countries a significant reduction in global greenhouse gas emissions requires international cooperation in emission abatement as well as individual countries investment in the adoption of abatement technology the existing literature on climate policy pays insufficient attention to small countries which account for a substantial proportion of global emission in this study we investigate how climate policy and learning about climate damage affect investment in abatement technology in small countries we consider three alternative climate policy instruments emission standards harmonized taxes and auctioned permits we say that learning is feasible if an international environmental agreement iea is formed after the resolution of uncertainty about climate damage we find that either with learning and quadratic abatement costs or without learning harmonized taxes outperform emission standards and auctioned permits in terms of investment efficiency without learning a large cost of nonparticipation that a country incurs in the iea can be beneficial to the country whether learning improves investment efficiency depends on the size of this nonparticipation cost

the impact of competitive entry in a developing market upon dynamic pricing strategies this paper analyzes dynamic pricing strategies for new durable goods in a two period context the first period is characterized as a monopoly market structure for a new product having dynamic demand the second period begins when a new firm enters the market and thereby changes the market structure to a duopolistic one we begin by analyzing the pricing strategies of three types of monopolists nonmyopic myopic and surprised a nonmyopic monopolist is a first entrant who perfectly predicts the competitive entry a myopic monopolist totally discounts the duopolistic period and a surprised monopolist is a first entrant who has the longer time horizon of the nonmyopic monopolist but who does not foresee the competitive entry our results indicate that the nature of these pricing strategies may be quite different it is optimal for the nonmyopic firm to price its product at a higher level than the myopic monopolist additional results indicate under what circumstances the surprised monopolist will p

perceptions on equity and responsibility in coastal zone policies this paper studies public perceptions of fairness in managed retreat policies we try to empirically test the acceptance of the following four principles of fairness efficiency need responsibility and priority to property rights using responses from a questionnaire the objective of the paper is to generate information on the issue of solidarity between people exposed to the risk of climate change induced flooding and those who are not as regards to funding managed retreat policies and damage compensation to that end two population zones coastal and hinterland were surveyed in order to characterise personal preferences of stakeholders and distributive preferences of third parties results show i a support for national solidarity in the funding of managed retreat policies ii a difference in people ssupport for the responsibility principle depending on whether it is embedded in a general principle of justice or in a particular compensation scheme and iii a difference between distributional judgments of the coastal inhabitants stakeholders and those of the hinterland third parties according to the choices of the funding principles of damages on private assets and the choices of the general principles of fairness in managed retreat policies

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

fulfilled expectations of entry i develop a two period model of entry deterrence with endogenous market demands such that the consumer s expectation about the future market structure is fulfilled in equilibrium i find that both expectations duopoly and monopoly are fulfilled in the incumbent s price setting game while there is a unique equilibrium in the quantity setting game i also find that quantity is more entry deterring than price in the sense that the maximum value of the entry cost that allows entry in the price setting game is higher than or equal to that of the quantity setting game

estimating strategic models of international treaty formation this article develops an empirical framework for analysing the timing of international treaties a treaty is modelled as a dynamic game among governments that decide on participation in every period the net benefit of treaty membership increases over time spillovers among members and non members accelerate or delay treaty formation by transforming participation into a strategic complement or substitute respectively the predictions of the model inform the estimation of the structural parameters based on a cross section of treaty ratification dates with this approach i estimate the sign and magnitude of strategic interaction in the ratification of the montreal protocol in the formation of europe s preferential trade agreements and in the growth of germany s network of bilateral investment treaties through a series of counterfactual experiments i explore different mechanisms that give rise to strategic interaction in the formation of these treaties

a cooperative differential game of transboundary industrial pollution between two regions abstract in recent years the transboundary pollution problems in the world are becoming more and more serious the diffusion of pollutants is common and each region which suffers from the pollution wishes that the polluter in neighboring regions would either reduce polluting or compensate for the damages this paper studies a cooperative differential game of transboundary industrial pollution between two asymmetric regions there are two novel features in this paper first there is a stackelberg game between the industrial firms and their local government while the governments can cooperate in pollution reduction second transboundary pollution damages the regions in two ways through a global accumulative pollutant and a regional non accumulative pollutant the paper characterizes the parameter spaces that governments in two neighboring regions can collaborate and gives the feedback nash equilibrium strategies of governments and industrial firms it is found that only when the governments get cooperation the regional impact caused by the neighboring region pollution diffusion could be taken into consideration when the governments develop strategies additionally a payment distribution mechanism is proposed and a subgame consistent cooperative solution is provided with such a payment distribution both governments will receive a higher payoff in a cooperative solution than in a non cooperative solution at any instant of time during the game

global refunding and climate change abstract we design a global refunding scheme as a new international approach to address climate change participating in the global refunding system requires an initial payment it allows each country to set its carbon emission tax while aggregate tax revenues are partially refunded to member countries in proportion to the relative emission reductions they achieve within a given period the refunding scheme reduces the intertemporal climate change problem into a static public goods problem in a simple model we show that a suitably designed global refunding scheme achieves the social global optimum provided that all countries participate we discuss several procedures to achieve initial participation

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

upgrades switching costs and the leverage theory of tying this article investigates the role of product upgrades and consumer switching costs in the tying of complementary products previous analyses have found that a monopolist of one product will not increase its profits and reduce social welfare by tying and leveraging its monopoly position into a complementary market if the initial monopolised product is essential where essential means that all uses of the complementary good require the initial monopolised product we show that this is not true in settings characterised by product upgrades and consumer switching costs we also discuss various extensions including the role of the reversibility of tying

reciprocal climate negotiators abstract do reciprocal preferences matter for participation in international environmental agreements combining the two canonical models of barrett 2003 and rabin 1993 i find that 1 the empty coalition is always stable 2 the grand coalition is stable if reciprocity preferences are sufficiently strong 3 if a minority of countries are not reciprocal a majority coalition can still be stable if reciprocity is sufficiently strong and widespread and 4 there is also a stable minority coalition if costs are moderate and the number of countries is not too small the latter coalition is weakly larger than the maximum stable coalition with standard preferences but barely improves on welfare and is characterized by negative sentiments the analysis illustrates that although models of reciprocity tend to be complex the context of a specific applied game may reduce this complexity

corruption and air pollution in europe this paper examines how the effectiveness of regulatory framework influences levels of sulphur emissions in a scenario where to reduce its emission tax payments a polluting firm may under report emissions level at the risk of being audited and fined first a model to explain how changes in regulatory framework e g audit effectiveness and transboundary spillovers affect both actual and reported emissions is developed then the theoretical predictions using data for 39 european countries from 1999 to 2003 are tested and inferences about true emission levels are made the empirical analysis supports the theoretical predictions with significant implications for the interpretation of pollution data reported to international monitoring agencies countries with effective regulation are likely to have relatively high reported emissions of sulphur but this should not automatically be interpreted as weak environmental performance because their actual pollution levels are likely to be lower than in nations with less effective regulation

research on bonus penalty mechanism of pollution abatement a case study of the northeastern region of china abstract as china s environmental governance turn to a high quality management establishing reasonable and effective bonus penalty mechanism is an effective means to promote coordinated emission reduction and improve regional air quality therefore this paper constructs a bi level programming model with bonus penalty standards and emission quotas based on the maximization of social benefits and the minimization of the gap between reward and punishment funds given the np hard problem of bi level programming model this work also designs a nested hierarchical particle swarm optimization hpso algorithm for the above model subsequently from the emission data of so2 and macroeconomic data in the northeastern region of china from 2006 to 2015 the so2 emission quota and bonus penalty standards of each province are calculated the results demonstrate that 1 the optimal emission quotas of heilongjiang jilin and liaoning province are 37 7 30 3 and 69 3 10 000 tons respectively 2 when the compensation fee of pollutant abatement is set at 521 48 yuan ton and the standard of excess discharge levy is 2977 43 yuan ton the effect of pollution control in each province can be effectively improved the empirical analysis also reveals that the proposed model has a remarkable effect on regional environmental governance finally this paper puts forward some suggestions on the implementation of the bonus penalty mechanism

ecological sufficiency individual liberties and distributive justice implications for policy making we investigate the prospects of voluntary ecological sufficiency for environmental and climate policy under the constraints implied by political liberalism we find that freedom of choice restricts sufficiency to rather wealthy societies and that a sufficiency threshold cannot be derived by referring to the poor sufficiency can be in conflict with the demands of social justice i e if the sufficiency threshold is below the social minimum implied by social justice benefits from sufficiency are highly related to individual perceptions such benefits cannot be expressed in a standard preference framework consequently alternative measures of welfare and inequality are required if sufficiency is a significant phenomenon in society standard environmental policies can have a pronounced interaction with voluntary sufficiency i e if quantity regulation is present overall the voluntary notion of sufficiency causes a dilemma as sufficiency is largely a matter of civil society however voluntary sufficiency is expected to make important contributions to the preservation of ecological resources if properly balanced with social and environmental policies and framed by public discursive control

participation and commitment in voluntary coalitions to provide public goods this paper reports experimental evidence on the voluntary formation of coalitions to provide a public good participation and commitment in a coalition are either exogenously imposed or endogenously determined by the players themselves we find larger voluntary participation rates when commitments in the coalition are endogenously determined using a minimum contribution rule rather than exogenously determined however due to a trade off between participation and commitment coalitions with voluntary participation are less effective in facilitating cooperation compared to when all players are forced to participate this paper therefore confirms the rather pessimistic conclusions from coalition formation theories

coase and hotelling a meeting of the minds in this paper we tie together the two literatures of durable goods monopoly and exhaustible resource pricing we show that the intertemporal no arbitrage condition that arises if the durable good monopolist seller can commit to a price path mirrors the intertemporal no arbitrage condition if the monopsonist buyer of an exhaustible resource can commit to a price path the intuition is that the durable good monopolist initially announces high future prices to get high valuation buyers to buy early and subsequently lowers the price to attract additional buyers on the other hand the monopsonist buyer of the exhaustible resource initially announces low future prices to encourage sellers to supply their units early and subsequently as the stock of the resource declines raises the price to call forth additional supply as the period of commitment shrinks to zero the durable good s price drops to its marginal cost and the exhaustible resource s price jumps to its choke level all in a twinkling of the eye a

managing new product definition in highly dynamic environments in highly dynamic environments characterized by changing customer preferences and uncertainty about competitive products managing the development of a new product is a complex managerial task the traditional practice recommended in the literature of reaching a sharp definition early in the new product development npd process may not be optimal desirable or even feasible in such dynamic situations under high uncertainty forcing early finalization of specifications may result in a firm getting locked into an incorrect definition based on our study of npd in the high technology industry we present a model of an approach called real time definition in which a firm adapts its product definition process to the market and competitive environment uncertainty in the product definition is resolved through frequent repeated interactions with customers and using a flexible development process we find that early definition is optimal only in a limited set of situations to maximize its anticipated profits a firm should tune its definition process to the prevailing level of market uncertainty the marginal value of information obtained from the customer during the npd process and its own risk profile and internal development capabilities effects of competition on a firm s definition approach are also examined and implications for managers of a npd process are presented using a conceptual framework

minimum participation rules in international environmental agreements empirical evidence from a survey among delegates in international climate negotiations recent contributions to the theoretical and experimental literature suggest that minimum participation rules mprs are able to reduce free riding incentives and may facilitate cooperation or at least coordination at the extensive margin of international environmental agreements based on a dataset from a world wide survey among delegates in international climate negotiations this paper assesses preferences for different mprs for a future climate treaty among key players the empirical findings provide evidence that small countries with low bargaining power rather opt for large minimum membership requirements while industrialized countries push forward the idea of a small carbon club of the largest emitters only in contrast delegates from countries in transition try to keep emission thresholds rather low which would allow a future agreement to come into force without their signature

international aspects of pollution control pollution is a by product of production is only gradually dissolved by the environment and crosses national borders the market outcome ignores the adverse effects of pollution and thus yields higher levels of output and pollution than would prevail under a supranational social planner which does care about pollution in practice governments often do not cooperate and this leads to outcomes of pollution and production in between the market outcomes and the outcomes under supra national social planning absence of precommitment leads to lower emission charges less cleaning up activities and more pollution appropriate levels of emission charges under the various outcomes are a result of this analysis attention is also paid to investment in clean technology the debate between optimists who believe that higher production is compatible with sound environmental policy and pessimists can be analysed in this way