support systems for the diffusion of renewable energy technologies an investor perspective concern over climate change impacts and the projected depletion of fossil fuels has urged more governments to adopt policies that stimulate the diffusion of renewable energy technologies ret with an increasingly diverse suite of support instruments the question emerges as to which instruments or combinations are able to achieve faster more substantial diffusion results although various support instruments were extensively addressed in policy studies there is still no consensus this is partly because many policy studies take a policy maker approach in comparing support instruments leaving relationships between policy design and policy results as a black box this paper proposes an investor oriented perspective to analyze the diffusion potential of support systems for ret the main argument is that it is not the type of support instrument but rather its risk profitability characteristics that influence investor behavior and the rate of diffusion the two instruments most frequently discussed and compared are the feed in tariff and the quota model the analysis in this paper concludes that policy design is crucial while often feed in tariffs are applauded and quota system feared feed in tariffs may also bring about disappointing diffusion results when poorly designed while quota systems may be also conceived as attractive instruments for independent power producers

wind power price trends in the united states struggling to remain competitive in the face of strong growth the amount of wind power capacity being installed globally is surging with the united states the world leader in terms of annual market share for three years running 2005 2007 the rapidly growing market for wind has been a double edged sword however as the resulting supply demand imbalance in wind turbines along with the rising cost of materials and weakness in the u s dollar has put upward pressure on wind turbine costs and ultimately wind power prices two mitigating factors reductions in the cost of equity provided to wind projects and improvements in project level capacity factors have helped to relieve some of the upward pressure on wind power prices over the last few years because neither of these two factors can be relied upon to further cushion the blow going forward policymakers should recognize that continued financial support may be necessary to sustain the wind sector at its current pace of development at least in the near term though this article emphasizes developments in the u s market for wind power those trends are similar to and hold implications for the worldwide wind power market

community based tradable permits for localized pollution this paper considers the assignment of tradable permits representing property rights of an environmental good to community members who are harmed by pollution generated by firms these community members can in turn sell permits to polluters according to their personal preferences for a special case with a sole household market transactions between the household and polluters achieve an efficient pollution level however for a group of households the decentralized market solution fails to yield social efficiency because of competitive consumption of the environmental goods we design a revenue sharing mechanism akin to unitization under which market transactions also achieve efficient resource allocation importantly in some cases efficiency can be achieved even when regulators are ignorant of the private valuation of the environmental good

regulatory reform and productivity growth in the uk s public utilities the reforms in the regulation of the uk nationalised industries over the last decade are examined and the extent to which they have been successful in achieving one of their declared aims that of increasing the efficiency of the enterprises operations is considered to achieve this the productivity performance of nine of the largest enterprises over the last twenty years was analysed the results show that the rate of productivity growth has been significantly higher during the 1980s compared with the preceeding decade it is concluded that a large part of the observed upturn in productivity is a result of changes in efficiency

avoiding an ecological regime shift is sound economic policy we extend the shallow lake model by adding the capital stock of an industry a government can mitigate the effects of pollution arising from industrial activities by imposing the requirement to abate emissions within this framework two scenarios are examined in the social optimal benchmark the social planner optimally allocates investment in the competitive equilibrium market forces determine the investment in capital but the government can still abate emissions we find that irreversible environmental regime shifts are avoided in the competitive equilibrium by means of a static level of abatement when it is socially optimal to do so

effluent regulation and long run optimality a regulator faced with free entry of firms is concerned not only with the implications of public policy for the discharges from a representative firm but also with the total pollution observed at the long run market equilibrium the regulator must take into account not only the effects of regulations upon the net marginal returns of the firm but must also consider the total profit of the firm and incentives for entry and exit this paper shows that effluent charges and tradeable effluent permits lead to long run optimality with entry of small firms the difference between firm payments and environmental damages is interpreted as the rent accruing to the environmental resource this result applies only to the competitive case with small polluters the analysis presented here allows a comparison and clarification of the literature on small and large polluters in a multi input framework with social damages dependent upon total effluents effluent charges are shown here to result in socially optimal entry confirming an assertion of baumol and oates 2 p 179 fn 161 and the important result of schulze and d arge 15 by taking average as well as marginal damages into account the effluent charge results in optimal firm scale levels and the correct input mix at the free entry market equilibrium the firm subject to an effluent tax will operate above or below the private minimum efficient scale depending upon whether average external costs exceed or are less than marginal external costs since public policy to reduce effluents is often directed at reducing the effluentgenerating activity some policy recommendations include a tax on the final output of the polluting firm in some theoretical analyses a relation between the output of the firm and the effluent level is identified and a pigouvian output tax is applied this approach should not be followed by policymakers since an output tax does not provide firms with the correct incentives for either input substitution or market entry it is shown that while a lump sum transfer is needed to provide correct entry incentives when a pigouvian output tax is applied no such transfer is needed if the tax is correctly applied to effluents contrary to 5 even if optimal firm scale and i thank the referees for helpful suggestions the support of the national science foundation under grant ses 82 19121 is gratefully acknowledged any errors are my responsibility 103

levelized cost of electricity lcoe of renewable energies and required subsidies in china newhuadu business school research fund china sustainable energy program g 1305 18257 national social science foundation of china 12zd059 ministry of education 10 jbg 013

designing economic instruments for the environment in a decentralized fiscal system designing economic instruments for the environment when external effects are important markets will be inefficient and economists have considered several broad classes of economic instruments to correct these inefficiencies however the standard economic analysis has tended to neglect important distinctions and interactions between the geographic scope of pollutants the enforcement authority of various levels of government and the fiscal responsibilities of the levels of government for example externalities generated in a particular local area may be confined to the local area or may spill over to other jurisdictions also local governments may be well informed about how best to regulate or enforce pollution control within their jurisdiction but they may not consider the effects of their actions on other jurisdictions finally the existence of locally generated waste emissions affects the appropriate assignment of both expenditure and tax responsibilities among levels of government the standard analysis therefore focuses mainly upon an aggregate or national perspective it typically ignores the possibility that the externality may be created and addressed by local governments and it does not consider the implications of decentralization for the design of economic instruments targeted at environmental problems this paper examines the implications of decentralization for the design of corrective policies that is how does one design economic instruments in a decentralized fiscal system in which externalities exist at the local level and in which subnational governments have the power to provide local public services as well as to choose tax instruments that can both finance these expenditures and correct the market failures of externalities

externalities a market model failure we focus here on a set of conceptual problems related to the accepted theory of externalities we are primarily concerned with difficulties that arise when a theoretical system is extended beyond its logical domain this is the practice in externality theory when the market model assuming independent agents is used to analyze physical interdependency the different kinds of dependencies obscure the standard use of the paretian analysis as the issues of rights and efficiency are mixed up the creation of emissions and the creation of externalities are further not held apart producing flows in the efficiency evaluations due to the interdependencies involved actions of both emitter and victim must be taken into account while searching for efficient policies finally we analyze the interrelationships between what is termed the internal structure of the market model and the annexed sphere of externalities we conclude that the accepted policy prescriptions both assume and demand no interrelationships between these two spheres we find the assumption unrealistic and inconsistent as concerns the basic foundations of the market model there are two main traditions addressing externalities the coasean and the pigovian this paper shows that both are vulnerable to the above critique thus the presumption that externality theory is now settled and coherent is seen to be without theoretical support

on the economic interpretation and measurement of optimal capacity utilization with anticipatory expectations this study builds on recent research giving the notion of capacity utilization clearer economic foundations in this research optimal output ye is defined as the minimum point on the firm s short run average total cost curve and capacity utilization is then computed as cu y y where y is actual output here i extend these concepts to include adjustment costs due to changes in the stock of capital and nonstatic expectations of future output demand and input prices the more general notion of cu is shown to depend on the shadow values of the firm s quasi fixed inputs and is decomposed to isolate the effects of anticipatory expectations an empirical comparison is then made between traditional indices and alternative economic cu measures using annual u s manufacturing data 1954 1980 the calculated indices exhibit plausible patterns which can be interpreted as the effects of nonstatic expectations and adjustment costs

pigovian taxes which work in the small number case abstract an appropriately conceived pollution tax can achieve a pareto optimal equilibrium which is 1 stable in the presence of myopia 2 not subject to strategic manipulation even in the small number case and 3 resistant to inefficient cost shifting by the participants when transaction costs are low a considerable amount of confusion in the literature exists because different authors use different tax formulas often implicitly and different assumptions regarding conjectural behavior some of this confusion is cleared up by formally presenting various pigovian tax formulas explicitly considering whether there is cournot or stackleberg behavior and comparing the properties of the various configurations

fiscal federalism approach for controlling global environmental pollution this paper finds that optimal international carbon taxes are country specific and we can decompose a tax on a domestically produced carbon intensive commodity into a revenue tax a tax to control local atmospheric pollution and an international carbon tax it shows that an institutional arrangement for the world economy similar to the fiscal federalism in the federal countries can be useful to internalize the global externalities of atmospheric pollution

the assessment the european internal market the next steps the treaty of rome envisaged the creation of the common internal market between the member states of the european community progress to wards this goal has been slow punctuated by sudden bursts of activity after the expiry of the deadline for the 1992 programme 1993 may mark the beginning of a prolonged pause or it may provide the impetus towards full economic mon etary and political integration at the time of writing the treaty on european union the maas tricht treaty the product of the french initiative to bind a unified germany into the european economy has not yet been ratified in all ec member coun tries the second danish referendum is outstand ing as is completion of the ratification process in the ukparliament the exchange rate mechanism erm has come under severe pressure with the suspension of uk membership and a series of devaluations in short monetary integration ac cording to the delors programme seems more remote now than at any time since the uk joined the erm stage n is extremely unlikely to begin on 1 january 1994 2 the main cause of these difficulties has been german reunification high german inter est rates have not only undermined currency pari ties they have also exacerbated recession across the community this shock to the european commu nity will take several years more to work through

reformulating taxes for an energy transition abstract an energy transition toward clean energy sources would reduce environmental impacts one proposal to trigger this energy transition uses economic instruments particularly environmental taxes this research studies the potential impact of taxes on electricity on the environment and the economy using a dynamic computable general equilibrium model for spain with energy and environmental extensions we assess their current impact on gdp growth energy use and a set of different pollutant emissions then we propose a reform that would foster an energy transition toward clean energies and assess their economic and environmental impact we find that only taxing the production of electricity by coal oil and natural gas can be better for the environment and economy than taxing all forms of electricity production in a revenue neutral context moreover the production of electricity by biomass though considered renewable is an important source of pollutant emissions and in these terms should have less importance in an energy transition

productivity and long term growth potential in the uk economy 1924 1968 this paper examines the long term structural determinants of labour productivity for the uk economy using a panel data set from 1924 to 1968 trade union product market competition and human capital explanations are embedded within the model and compared labour quality or human capital is found to be the most important of the explanations considered

quantifying the long term economic benefits of european electricity system integration abstract this paper aims to quantify the long term economic benefits that arise from an increasing integration of the pan european electricity system by means of comparing model based decarbonization scenarios developed with the model limes eu it explicitly accounts for the interplay between transmission infrastructure and renewable generation capacity expansion we confirm earlier findings that on aggregate pan european transmission capacity expansion constitutes a no regret option for integrating increasing shares of variable renewables it leads to positive social returns on investment in all mitigation scenarios under analysis however the reduction in total discounted system costs stemming from transmission capacity expansion is modest in magnitude over the period 2010 2050 it reaches a maximum of 3 5 for a case with massive expansion compared to one in which the status quo remains in technical terms this means that the optimum is rather flat and taking into account regional and local benefits and distributional aspects could alter the evaluation of the economic benefits a crucial finding is that the configuration of pan european transmission infrastructure and the importance of specific country connections i e a southern versus a northern solution hinges on the relative development of specific investment costs for solar and wind technologies over the next decades

renewable energy certificate mechanism in india a preliminary assessment abstract the indian national action plan for climate change napcc envisages several measures to address global climate change one of the important measures identified involves increasing the share of renewable energy in total electricity consumption in the country this would mean napcc envisages renewable energy to constitute approximately 15 of the energy mix of india by 2020 to achieve the target set by the napcc indian ministry of power launched renewable energy certificate rec mechanism in november 2010 however participation in the rec markets is low and recs have failed to attract significant investment so far in this study a preliminary attempt has been made to assess the performance of existing rec mechanism in india after highlighting the salient features of the indian renewable energy policy framework a brief description of renewable purchase obligation rpo and source specific rpos for different states is discussed along with an overview of rec market in india to date the performance of indian rec mechanism is evaluated by cost competiveness decentralized distributed generation and renewable energy portfolio diversity and their effectiveness has also been measured on the basis of the available data although it is difficult to make any conclusive remark on the success or failure of rec mechanism due to its short experience this study examines the process to date to come out with some recommendations which can be used to fine tune the functioning of existing rec market in india for instance rec price bounds should be revised because it has been not explicitly supporting cost competiveness by offering 60 33 higher average price than the existing average feed in tariff fit it is also observed that state wise contribution in registered capacity is skewed towards few states like tamil nadu 27 maharashtra 23 and uttar pradesh 22 which puts pressure on policy makers to restructure the existing rec mechanism

sharing the cost of global warming due to meteorological factors the distribution of the environmental damage due to climate change bears no relationship to that of global emissions we argue in favor of osetting this discrepancy and propose a global insurance scheme to be ncanced according to countries respon sibility for climate change because ghg decay very slowly we argue that the actual burden of global warming should be shared on the basis of cumulated emissions raher than sharing the expected costs of actual emissions as in a pigovian taxation scheme we characterize new versions of two well known cost sharing schemes by adapting the responsibility theory of bossert and fleurbaey 1996 to a context with externalities j e l classi cation d62 d63 q54

the recent slowdown of productivity growth the slowdown of productivity growth in the developed countries during the seventies will in this paper be viewed as a combined effect of three closely interacting forces i a long term deterioration in the efficiency and flexibility of some basic mechanisms of the economic and political systems of these countries ii the fading away of a number of uniquely favourable circumstances for productivity growth during the fifties and sixties and iii the exposure of these economies to unusually severe macroeconomic disturbances in the seventies careful inspection of time series with attempted modifications for cyclical factors suggests that there was hardly any general slowdown of productivity growth among developed countries before approximately i972 4 1 as we know the situation is radically different since then labour productivity growth per year for the entire national economy gdp per man hour seems to have fallen between the periods i960 73 and i973 9 by about i 2 percentage points in the united states 45 by about 24 percentage points in western europe2 45 and by about 5 9 percentage points in japan 6o table i see also fig i the slowdown was of about the same size in the business and manufacturing sectors see table i to calculate the extent of the slowdown of total factor productivity growth is of course a much more hazardous matter to which i will return later if just the various system changes and the fading away of the uniquely favourable factors had been the dominating forces behind the productivity growth slowdown we would expect the slowdown to have been gradual rather than abrupt as it turned out to be this abruptness as well as its timing makes the dramatic macroeconomic disturbances around i972 4 a prime suspect when looking for the villain behind the productivity growth slowdown indeed it is a basic hypothesis of the paper that these macroeconomic disturbances were not only by themselves strongly unfavourable for productivity growth but that they also revealed and accentuated the gradual deterioration of the

energy price shocks and productivity growth in us and uk manufacturing because sustained changes in the trend of productivity growth are so very important for people s long run economic welfare the dramatic productivity growth slowdown of the 1970 s and early 1980 s has been the focus of much analysis and discussion for some observers it was much more than coincidence that the oil price shocks of 1973 74 accompanied the sharp slowdowns in traditionally measured productivity growth not only in the united states and the united kingdom but throughout the industrialised world however establishing quantifying and explaining sig nificant linkages between energy price shocks and productivity growth has proved to be most difficult traditional and time honoured relationships involving productivity growth have all seemed incapable of explaining this slowdown for example edward denison author of several widely cited productivity studies has concluded that energy had essentially no role in explaining the productivity growth slowdown and that moreover what happened is to be blunt a mystery 1979 p 4

are renewable energy subsidies effective evidence from europe abstract we test if policy support for renewable electricity have been effective in promoting renewables in the five largest european countries in the period 2000 2010 we collect data on the exact amount of monetary incentives and the average tariffs granted the econometric analysis reveals a positive correlation between subsidies and the production of incentivized energy as well as the installed capacity we find that a 1 1c increase in the incentive tariff leads to an increase in renewable generation of 0 4 1 18 26 feed in tariffs appear to outperform tradable green certificates overall the analysis shows that these policies have been effective in promoting renewable energy both in the short and in the long run

the assessment productivity and competitiveness in british manufacturing this issue of the oxford review examines productivity and competitiveness in british manufac turing the simplest and most widely used measure of productivity is output per head from this definition sprout at once the horns of a dilemma for an economy facing unemployment on the present scale for a given rate of expansion of output the higher the rate of productivity growth the greater the decline in employment or at least the smaller its growth on the other hand in an economy open to international competition a high rate of productivity growth relative to that of other countries is the long term key to achieving the favourable international competitive po sition necessary to sustain growth and a low level of unemployment

labour and productivity it has long been commonplace to claim that trade unions and worker attitudes are important constraints upon the level and growth of productivity such problems are seen to be especially acute in britain arguments of this kind are to be found in the early stages of the industrial rev olution and have been voiced on numerous occasions ever since the debate over the relation ship between labour and productivity has been considerable over the last two decades first with moves to reform workplace industrial relations and more recently with a variety of legislative and market based initiatives drawing upon a variety of theories this paper seeks to explore a number of organisational characteristics which may help to explain the relationship between labour and productivity

do council housing policies reduce migration between regions data from the 1973 general household survey of great britain are used to examine whether the council house system which currently provides a dwelling for one british family in every three tends to discourage long distance migration controls are introduced for various socioeconomic variables and the importance of occupation sector of employment age and education in explaining migration is discussed comparisons are also made between local movements and long distance migration the findings indicate that over longer distances council tenants have much lower migration rates than owner occupiers

the effect of production versus consumption based emission tax under demand uncertainty abstract emission tax is an instrument widely adopted by countries and regions to incentivize emission abatement by emission intensive firms including manufacturers however policies differ in how they allocate emission responsibilities among stakeholders for example the chile emission tax directly penalizes manufacturers for the emissions they generate during their production production based emission tax whereas the sweden electricity emission tax penalizes the consumption of electricity rather than its production consumption based emission tax these two methods have potentially varying implications on manufacturers profits their emission abatement decisions as well as the resulting emission levels especially when demand uncertainty is involved in this paper we investigate the impact of the two distinct methods by studying a profit maximizing manufacturer facing stochastic demand under either production or consumption based emission tax the manufacturer s optimal decisions on its selling price production quantity and emission abatement investment are derived perhaps surprisingly we show that under either tax it is possible for an increase in the emission tax to discourage the manufacturer from investing in emission abatement the impact of tax rate abatement technology efficiency and demand uncertainty on the manufacturer s profitability and abatement decision are also studied interestingly higher demand uncertainty may motivate the manufacturer to invest more in emission abatement under production based emission tax using a numerical example of an electricity power generator we offer further insights into the comparison between the two taxes and find that there exist cases for either tax to dominate the other in terms of both profit and emissions

the economics of renewable energy support abstract this paper uses theoretical and numerical economic equilibrium models to examine optimal renewable energy re support policies for wind and solar resources in the presence of a carbon externality associated with the use of fossil fuels we emphasize three main issues for policy design the heterogeneity of intermittent natural resources budget neutral financing rules and incentives for carbon mitigation we find that differentiated subsidies for wind and solar while being optimal only yield negligible efficiency gains policies with smart financing of re subsidies which either relax budget neutrality or use polluter pays financing in the context of budget neutral schemes can however approximate socially optimal outcomes our analysis suggests that optimally designed re support policies do not necessarily have to be viewed as a costly second best option when carbon pricing is unavailable

production uncertainty and pollution there has been considerable interest in two sector models in which the production of one of the goods is subject to uncertainty the major papers in this area are by rothenberg and smith 13 batra 1 britto 3 diamond 5 mills 12 and harford and park 8 in the latest of these papers harford and park 8 41 build on a model in mills 12 to show that if constant relative risk aversion r which is mathematically analogous to the pratt arrow measure is less than exceeds or equal to unity the direction of efficient resource flow under uncertainty as compared to certainty is away from the risky sector toward the risky sector or unchanged respectively in their model as in mills 12 the preferences of consumers are represented by a community expected utility function in the present two sector model the risky sector is an industry that is adversely affected by air pollution which is a by product of production in the other industry although there is a deterministic relation between the output and emissions of the polluting stable sector the damage caused to the other sector as a result of any given level of emissions depends upon random variables such as mixing height and wind velocity and is therefore stochastic it is not intuitively obvious whether the results of harford and park 8 hold if the uncertainty in the risky sector is the consequence of production in the stable sector in fact there is substantial dissimilarity in the results if the measure of risk aversion r is less than unity the efficient direction of resource flow is generally though not always toward the risky polluted sector if r equals unity the results also differ with resources shifting under uncertainty in the direction of the risky polluted sector only if r exceeds unity are the results always the same in both models with resources flowing toward the risky sector this paper presents the marginal condition such that under uncertainty the optimal combination of outputs includes less of the stable polluting good and more of the risky pollution sensitive good than would be the case if pollution damage were anticipated with certainty if this marginal condition does not hold the risk averse community may prefer either more or less of the polluting good a narrowed interpretation of the marginal condition is then used to predict the special case in which the efficient flow of resources under uncertainty is toward the polluting sector

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

monetary economic myth and econometric reality few of the main macro economic forecasting systems can produce sensible forecasts without the tender loving care of their proprietors many econometric equations in com mon use show significant deterioration in the accuracy with which they characterise data as time passes and many economists are sceptical about empirical evidence feeling it lacks credibility monetary relationships have the dubious distinction of being among the leaders in this field as witnessed by the very large mispredictions of m1 models in the usa over what is now known as the missing money period 1973 76 as well as during the recent great velocity decline 1979 82 in the uk models of m1 and m3 demand experienced large structural breaks following the competition and credit control regu lation changes and the move to floating exchange rates perhaps it is no surprise that goodhart s law should have been formulated with respect to money demand equations

externality regulation and the monopoly firm abstract differences in strategic assumptions lead to predictable variations in the conclusions one may draw the formal theory of monopoly power and externalities reflects this variability in assumptions and conclusions this paper contains a unified model of monopoly power marketable product output and externality abatement

age analysis of the impact of a carbon energy tax on the irish economy a computable general equilibrium model with specific detail in taxation and energy use is developed in this paper to quantify the impact of the implementation of energy taxation to reduce carbon dioxide emissions in ireland benchmark data combining physical energy and emissions data and economic data in the form of a social accounting matrix sam had to be compiled from various data sources because energy and pollution accounts from the seea are not available for ireland we find that the reduction target for energy related co2 emissions in ireland of 25 8 compared to 1998 levels can be achieved with a carbon energy tax of 10 15 euros per tonne of co2 though fuel switching is important in meeting the target this result is more sensitive to the possibilities for producers to substitute away from energy use welfare would fall but only by small percentages production and consumption patterns would change more significantly with a shift in demand from fuels with a high emission factor to energy sources with a lower carbon intensity and from energy to other commodities this paper confirms that a carbon energy tax leads to greater emission reductions than an equivalent uniform energy tax the latter has a stronger negative impact on the less polluting energy sectors whereas the carbon tax greatly stimulates the use of renewable energy and reduces the use of peat and coal the new sam the model and the application to energy taxes contribute to a better informed debate on environmental policy in ireland

explanations of unemployment economists commonly distinguish between two sorts of unemployment roughly speak ing the involuntarily unemployed workers are unwillingly out of work i e they feel that they would be better off with jobs on the other hand the voluntarily unemployed workers prefer to be out of work for any of a wide variety of reasons e g because they are searching or training for a job or because they choose leisure over work

steering the climate system using inertia to lower the cost of policy common views hold that the efficient way to limit warming to a chosen level is to price carbon emissions at a rate that increases exponentially we show that this hotelling tax on carbon emissions is actually inefficient the least cost policy path takes advantage of the climate system s inertia to delay reducing emissions and allow greater cumulative emissions the efficient carbon tax follows an inverse u shaped path and grows more slowly than the hotelling tax economic models that assume exponentially increasing carbon taxes are overestimating the cost of limiting warming overestimating the efficient near term carbon tax and overvaluing technologies that mature sooner

providing adequate economic incentives for bioenergies with co2 capture and geological storage abstract knowing that carbon capture and storage ccs could play an important role in reducing emissions it is important to have a good understanding of this role and the importance of environmental policies to support carbon capture and geological storage from bioenergies beccs to date ccs technologies are not deployed on a commercial level and policy instruments should be used to provide incentives to firms to use these technologies to reduce pollution the aim of this paper is to compare the cost efficiency of several incentive based instruments a fossil fuel tax an emissions tax a cap and trade system and a subsidy on captured emissions needed to spur the adoption of ccs and beccs using a dynamic general equilibrium model this type of model has become the standard for assessing economy wide impacts of environmental and technological policies the study shows that beccs will be deployed only if a specific subsidy per unit of biomass emissions captured with a ccs technology is available we show also that the two most cost efficient instruments for achieving a given emissions reduction target are a specific subsidy that rewards captured emissions and a carbon tax whose revenues are recycled to subsidize beccs

accounting for the economic growth of firms in uk manufacturing since 1973 the dual relationship between the growth of total factor productivity and the growth of the price differential between inputs and outputs is used to decompose productivity changes since 1973 the decline in total factor productivity 1973 79 is best explained by the dual increase in the average output price input price differential resulting from the squeeze in profit rates in 1979 86 the average increase in total factor productivity was not significantly different from zero there was no thatcher productivity miracle growth of output is determined primarily by growth of inputs and not by general increases in efficiency c 1996 academic press limited copyright 1996 by oxford university press

pigou and coase a mathematical reconciliation abstract this paper provides a rigorous statement of the coase theorem and establishes a formal equivalence between abstract allocative mechanisms attributed to coase and pigou the model proceeds from output functions that reduce to production functions in special cases thereby capturing effects that are obscured by conventional production and cost functions the model also emphasizes fundamental differences in the characteristics of inputs particularly land that are implied in the construction of externality stories finally the model embodies a clear distinction between local e g nuisance and global e g pollution externalities the coase theorem as stated is valid only in the former case

understanding wind turbine price trends in the u s over the past decade understanding wind turbine price trends in the u s over the past decade mark bolinger and ryan wiser lawrence berkeley national laboratory pre print of article submitted to energy policy abstract on a per kw basis wind turbine prices in the u s have declined by nearly one third on average since 2008 after having previously doubled over the period from 2002 through 2008 these two substantial and opposing trends over the past decade and particularly the earlier price doubling run counter to the smooth gradually declining cost trajectories predicted by standard learning curve theory taking a bottom up approach we examine seven possible drivers of wind turbine prices in the u s with the goal of estimating the degree to which each contributed to the doubling in turbine prices from 2002 through 2008 as well as the subsequent decline in prices through 2010 in aggregate these seven drivers which include changes in labor costs warranty provisions manufacturer profitability turbine scaling raw materials prices energy prices and foreign exchange rates explain from 70 to 90 depending on the year of empirically observed wind turbine price movements in the u s through 2010 turbine scaling is found to have been the largest single contributor to the price doubling through 2008 although the incremental cost of scaling has been justified by greater energy capture resulting in a lower cost of wind generation acknowledgments the work described in this article was funded by the u s department of energy s wind water power program within the office of energy efficiency and renewable energy under contract no de ac02 05ch11231 disclaimer this document was prepared as an account of work sponsored by the united states government while this document is believed to contain correct information neither the united states government nor any agency thereof nor the regents of the university of california nor any of their employees makes any warranty express or implied or assumes any legal responsibility for the accuracy completeness or usefulness of any information apparatus product or process disclosed or represents that its use would not infringe privately owned rights reference herein to any specific commercial product process or service by its trade name trademark manufacturer or otherwise does not necessarily constitute or imply its endorsement recommendation or favoring by the united states government or any agency thereof or the regents of the university of california the views and opinions of authors expressed herein do not necessarily state or reflect those of the united states government or any agency thereof or the regents of the university of california ernest orlando lawrence berkeley national laboratory is an equal opportunity employer

inflation bankruptcy default premia and the stock market in this paper we explore some of the possibilities and argue that in the absence of index linked loans higher inflation implies higher liquidation rates and default premia this would also be one possible reason why higher inflation would depress share values our evidence also suggests that the modigliani and cohn 1979 valuation errors hypothesis is extremely important in order to see why higher inflation might lead to more bankruptcies consider the following example suppose that the real interest rate p is i and that a firm has borrowed iooo if there is no inflation the firm s interest payments are io now suppose that inflation p rises to io and that the nominal interest rate r is given by the formula i r i p i fi then r rises to i i i and total interest payments to i i i hence at a time when revenue has risen by only io interest payments rise elevenfold and this creates cashflow problems for the firm index linked debt would avoid this problem because the principal could be indexed and would rise to i ioo leaving the firm to only pay li i in interest

reforming the labour market there is nothing new about government attempts to reform the labour market the primary emphasis put upon this aspect of economic policy by the two conservative gov ernments since 1979 however is perhaps unique this emphasis is in part the conse quence of a new stress on supply side economics and of a belief that many imperfections in the labour market are in fact removable by a mixture of measures de signed to alter the attitudes of both institutions and individuals and the environment in which they operate having been shocked into heightened receptiveness by the re cession actors and institutions have been regaled by a variety of measures these in clude trade union and industrial relations legislation the abolition of the fair wages resolution a review of wages councils measures on social security benefits initiatives on training and mobility incentives for individual and community enterprise and schemes to reduce the size of the effective labour force

causes of the current stagflation since 1975 labour slack has been unusually high in the oecd countries and yet inflation has not diminished the less favourable mix of unemployment and rate of change of inflation which we call stagflation is explained by a fall in the feasible rate of growth of real wages unmatched by a reduction in the constant term in phillips curve to investigate this mechanism conventional wage and price equations are estimated for 19 countries and then used for simulation stagflation has been caused in roughly equal amounts by rising relative import prices and by the fall in the rate of productivity growth in the basic model the phillips curve is assumed not to adapt to falls in feasible real wage growth but in a final section an adaptive wage equation is estimated which confirms that the process of adaptation is slow

banning the bulb institutional evolution and the phased ban of incandescent lighting in germany much academic attention has been directed at analysing energy efficiency investments through the lens of behavioural failure these studies have challenged the neoclassical framing of regulation which emphasises the efficiency benefits of price based policy underpinned by the notion of rational individual self mastery the increasing use of a regulatory ban on electric lamps in many countries is one of the most recent and high profile flash points in this dialectic of freedom versus the state in the public policy discourse this paper interrogates this debate through a study of electric lamp diffusion in germany it is argued that neoclassical theory and equilibrium analysis is inadequate as a tool for policy analysis as it takes the formation of market institutions such as existing regulations for granted further still it may be prone to encourage idealistic debates around such grand narratives which may in practice simply serve those who benefit most from the status quo instead we argue for an evolutionary approach which we suggest offers a more pragmatic framing tool which focuses on the formation of market institutions in light of shifting social norms and political goals in our case progress towards energy efficiency and environmental goals

raw materials profits and the productivity slowdown a factor price frontier framework is used to clarify the analogy of an increase decrease in raw material prices with autonomous technological regress progress factor price profiles are estimated for the manufacturing sector of the united states the united kingdom germany and japan the production model in conjunction with estimates obtained from the factor price frontier attributes much of the slowdown in manufacturing productivity to the rise in relative raw material prices part of the apparent productivity riddle may have to do with the use of double deflated national accounting measures of value added which have an inherent measurement bias

coasean bargaining in the presence of pigouvian taxation coasean arguments against the pigouvian perspective are well established a central tenet in this criticism argues that a pigouvian tax may be a source of inefficiency if parties were to bargain in the presence of a pigouvian tax allocative inefficiencies would occur the so called buchanan stubblebine turvey theorem by analyzing a coasean environment where the appropriation of property rights is costly we show coasean bargaining in the presence of a pre existing pigouvian tax may be superior this has implications for policy where dual regulatory environments exist such as regulation at the state and federal level as well as environmental liability and litigation

elements of an economic justification for municipal zoning abstract the possibility that externalities will produce a nonconvexity in the social production set limits the application of both the coase and pigou solutions for achieving an optimal allocation of land resources conditions on relative land prices are derived which indicate that external effects are strong enough to introduce a nonconvexity into the production set these conditions were not fulfilled in a sample of single family and multifamily dwellings in foster city california this does not preclude the possibility that they are fulfilled in cases of more severe external effects

an integrated economic and distributional analysis of energy policies most public policies particularly those in the energy sphere have not only efficiency but also distributional effects however there is a trade off between modelling approaches suitable for calculating those impacts on the economy for the former most of the studies have been conducted with general equilibrium models whereas partial equilibrium models represent the main approach for distributional analysis this paper proposes a methodology to simultaneously carry out an analysis of the distributional and efficiency consequences of changes in energy taxation in order to do so we have integrated a microeconomic household demand model and a computable general equilibrium model for the spanish economy we illustrate the advantages of this approach by simulating a revenue neutral reform in spanish indirect taxation with a large increase of energy taxes that serve an environmental purpose the results show that the reforms bring about significant efficiency and distributional effects in some cases counterintuitive and demonstrate the academic and social utility of this approximation

renewable electricity generation in germany a meta analysis of mitigation scenarios german energy policy targets envision a share of electricity from renewable energy sources res e of at least 80 in 2050 how can the transformation of the german electricity sector be achieved and at what costs this paper addresses these questions by means of a meta analysis of 10 recent model based mitigation scenarios for germany it turns out that the scenarios exploit the three basic strategic options of increasing the share of res e domestic res e generation electricity demand reductions and res e imports to substantially different extents domestic res e generation increases in all scenarios particularly from onshore and offshore wind scenarios that rely heavily on reducing electricity demand require a relatively low expansion of domestic res e generation despite detailed technical analyses insights on the costs of the transformation remain limited a discussion of underlying scenario assumptions reveals that it is unclear whether i res e and system integration technology development will be as cost competitive as postulated ii implicitly assumed institutional requirements will be realized and iii relevant actors in the transformation process will be incentivized accordingly therefore future research should pursue a thorough assessment of strategic options for transforming the german electricity system that consistently integrates technologies institutions and actors

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

controlling the monopolistic polluter nihilism or eclecticism abstract this paper is concerned with the consequences of pollution control when the polluter is a monopolist who can choose between abating pollution by reducing output and by adopting a less polluting technology it is suggested that the risk of welfare losses resulting from control policy is lower when technology is flexible than when it is rigid nevertheless some risk does remain so the paper concludes with a discussion of the possible use of selective control instruments to keep the risk to a minimum

the inefficiency of private adaptation to pollution in the presence of endogenous market structure the paper considers an industry where production costs rise due to pollution but where this effect can be partially off set by investing in adaptation as a private good the focus is not on external effects but industries where economies of scale are introduced from adapting to pollution the structure of the resulting oligopolistic market is endogenous since the level of adaptation is chosen by the firms the analysis of externalities usually disregards defensive or adaptation measures with a few exceptions that point to considerable complications the present debate on adaptation to climate change shows the importance of understanding defensive measures i show that the market failure caused by economies of scale leads to production costs above the social optimum i e to under adapation when pollution increases adaptation only increases if demand is price inelastic otherwise welfare loss from market failure decreases with pollution the total welfare loss is only convex if demand is price inelastic and the influence of pollution on production costs is stronger than the influence of adaptation concave welfare loss has crucial implications for abatement policies

renewable electricity production costs a framework to assist policy makers decisions on price support abstract despite recent progress the production costs for renewable electricity remain above those for conventional power expectations of continuous reductions in production costs typically underpin governments policies for financial support they often draw on the technology focused versions of the experience curve model this paper discusses how national contextual factors also have a strong influence on production costs such as geographic infrastructural institutional and resource factors as technologies mature and as they reach significant levels of diffusion nationally sustained increases in production costs might be recorded due to these nationally contextual factors poorly accounted for in policy making decisions for price support the paper suggests an analytical framework for a more comprehensive understanding of production costs based on this it recommends that the evolution of specific cost levels and factors be monitored to locate sources of changes the paper also suggests policy instruments that governments may use to facilitate cost decreases whenever possible the application of the framework is illustrated for the diffusion of wind power in spain during the past three decades

china s future energy mix and emissions reduction potential a scenario analysis incorporating technological learning curves abstract this paper examines the impacts of co 2 emission reduction targets and carbon taxes on the structure of power generation in china a model is developed to minimize the total electricity generation cost and select the optimal energy technology and resource mix for china the model contributes to existing work by utilizing the learning curve concept which manifests as diminishing costs of production and includes constraints for minimum energy generation and also an emissions cap the result shows that the introduction of the co 2 emission reduction targets and carbon taxes both shift energy production technologies away from high carbon content fossil fuels towards low carbon content fossil based and renewable energies co 2 emission reduction targets turn out to be more effective in the early years while carbon taxes become more effective in the later periods perhaps unsurprisingly all options result in a net increase in total production costs in addition some scenario analyses are conducted to consider the possible roles of shale gas and improved carbon capture and storage technologies showing the general conclusions to be robust

a note on externalities and taxation the purpose of this paper is to explore the distributional aspects of a tax that is imposed in order to correct the detrimental effects of a production externality in the framework of a two sector general equilibrium model we show that harberger s classic results of tax incidence may change considerably because of the presence of the externality we also show that the tax is effective in reducing the detrimental effect of the externality although the return of the taxed factor may rise relative to the return of the untaxed factors

productivity and income per capita convergence in a peripheral european economy the irish experience birnie j e and hitchens d m w n 1998 productivity and income per capita convergence in a peripheral european economy the irish experience reg studies 32 223 234 gdp per capita in ireland increased from 60 to 90 of the uk average during 1986 95 this extremely rapid convergence begs the question whether increases in comparative productivity were of a similar magnitude industry of origin comparisons were used to benchmark ireland uk labour productivity in 1935 1968 and 1985 dramatic improvement in manufacturing comparative productivity was the immediate explanation of much of the convergence in gdp per capital levels unadjusted manufacturing productivity in the mid 1990s was as high as that in the us this was prima facie evidence of transfer pricing the likely scale of distortion created by transfer pricing is discussed and hence the extent of exaggeration of gdp an agenda for further research was suggested birnie j e et hitchens d m w n 1998 la convergence de la productivite e

the uk economy analysis and prospects world trade and output expanded rapidly in 1984 led by a high rate of growth in the united states however the recovery which started in 1983 has not been evenly spread across countries in the us fiscal policies have been lax and domestic demand has expanded at a breakneck pace japan benefited significantly from rapid growth in the us but europe has done less well partly because fiscal policies remain very tight and domestic demand restrained high real interest rates and the strength of the dollar held down commodity prices and thus stopped the pick up in activity feeding through into inflation rates however unemployment has continued to rise in most countries and in total 30 million people are now out of work in the oecd area

energy policymaking in denmark implications for global energy security and sustainability denmark is arguably the most energy secure and sustainable country in the organization of economic cooperation and development oecd the country has reduced its dependence on foreign sources of energy to zero and become self sufficient in its own energy production and use offering important lessons for other nations around the world this study explores the core of denmark s successful approach a commitment to energy efficiency prolonged taxes on energy fuels electricity and carbon dioxide and incentives for combined heat and power chp and wind turbines through these commitments the study shows how denmark transitioned from being almost 100 percent dependent on imported fuels such as oil and coal for their power plants in 1970 to becoming a net exporter of fuels and electricity today the country leads the world in terms of exportation of wind energy technology with a hold on roughly one third of the world market for wind turbines it was able to phase out the use of virtually all oil fired power plants in less than five years and implemented a progressive moratorium on future coal fired power plants in the 1990s their most recent strategy seeks to achieve 30 percent of total energy supply from renewable energy by 2025

who invests in renewable electricity production empirical evidence and suggestions for further research transforming energy systems to fulfill the needs of a low carbon economy requires large investments in renewable electricity production res e recent literature underlines the need to take a closer look at the composition of the res e investor group in order to understand the motives and investment processes of different types of investors however existing energy policies generally consider res e investments made on a regional or national level and target investors who evaluate their res e investments according to least cost high profit criteria we present empirical evidence to show that res e investments are made by a heterogeneous group of investors that a variety of investors exist and that their formation varies among the different types of renewable sources this has direct implications for our understanding of the investment process in res e and for the study of motives and driving forces of res e investors we introduce a multi dimensional framework for analyzing differences between categories of investors which not only considers to the standard economic dimension which is predominant in the contemporary energy literature but also considers the entrepreneurship innovation adoption and institutional dimensions the framework emphasizes the influence of four main investor related factors on the investment process which should be studied in future research motives background resources and personal characteristics