factor productivity and income inequality a general equilibrium analysis economic growth over the past two decades has failed to reduce income inequality we contend that major reasons for this are the slowdown and bias in technological change productivity growth given the complexity of the many interactions that take place this phenomenon is best addressed in a general equilibrium context for this purpose we have developed a computable general equilibrium cge model with advanced features relating to income distribution we perform a series of simulations based on recent overall productivity changes but under various forms of technological change bias factor mobility and government budgetary balance we find the labour augmenting technological change cases to be most consistent with recent experience

nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

how to improve the performance of carbon tax in china abstract the chinese government committed to controlling carbon dioxide co 2 emissions and promoting development of non fossil fuels thus it becomes a top priority for the government to develop effective climate policies against such background this paper develops a new multi country computable general equilibrium cge model with detailed energy disaggregation this study evaluates the impact of single policy instrument carbon tax and combined policy mixes in order to investigate driving factors affecting the policy performance the main findings are as follows firstly the driving factors can be classified into two types the first type of factors affects cost effectiveness significantly while the second type generates considerable effect on emission performance secondly cross border externalities function as important barriers to the co 2 emission reduction since they imply extra competitiveness loss and result in considerable carbon leakage finally this paper considers two integrated policy mixes wherein carbon tax revenue is recycled to reduce capital tax or support clean energy subsidy these policy mixes can improve both cost effectiveness and emission performance and thus perform better than carbon tax alone in this way carbon tax revenue can be used to improve the performance looking ahead complicated policy mixes are preferred to improve the performance of china s carbon tax

capacity choice and the theory of the mine when extraction from mineral deposits is constrained byfixed capacity an r per cent rule holds this deposit specific rule however is more partial than hotelling s rule in that it is followed byprice takers and does not require price to adjust to produce equilibrium toobtain the resource rent to which the rule applies the shadow value ofcapacity must be subtracted from the usual net price i e price lessshort run marginal cost but the shadow value of capacity cannot becalculated from common depreciation formulas an alternative method ofcalculating the shadow values is derived the shadow value of reserves maybe increasing in the level of initial reserves if there are increasingreturns to installing capacity the value of the resource is not equal tothe discounted resource rent

should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

a multiplier decomposition method to analyze poverty alleviation abstract the objective of this paper is to present a multiplier decomposition method focusing on poverty alleviation the decomposition captures the various mechanisms and linkages through which a production sector s output contributes to poverty alleviation within a socioeconomic system represented by a social accounting matrix sam it is shown that a multiplier can be broken down into two multiplicative effects the distributional and interdependency effects the decomposition method is applied to the case of indonesia a key policy implication is that the human capital of the poor needs to be enhanced if they are not to be sealed off from the industrialization process

making sense of the competitiveness debate the debate over national competitiveness is marked by some basic misperceptions with few exceptions those who use the term have a crude essentially mercantilist view of world trade in which competition among nations is just like competition between corporations not only do the authors and readers of reports on national competitiveness usually not understand comparative advantage they are unaware of the most basic adding up constraints economists however find it hard to believe that seemingly well informed people can really be this naive and assume that there must be more sophisticated ideas lying behind what they say the rationales offered by economists in turn offer false comfort to the would be sophisticates who like the term competitiveness they believe that they have transcended conventional economic theory when the fact is that they have failed to comprehend it in short the actual level of discussion is lower than any of the participants imagines copyright 1996 by oxford university press

a microeconometric test of the theory of exhaustible resources abstract this paper generalizes extant developments of the economic theory of exhaustible resource production derives and extends a halvorsen and smith 1991 quarterly journal of economics 106 123 140 type test of the theory and applies the test to a sample of natural gas resources to facilitate our empirical test we extend the model developed in chermak and patrick 1995 journal of environmental economics and management 28 174 189 to explicitly account for the fact that the extracted resource gross product must be processed to obtain the final saleable product duality theory is used to derive econometric models with which the theory is statistically tested using panel data from 29 natural gas wells shadow prices of the resource stock through time which are generally unobservable but necessary for the test are estimated via the indirect cost function contrary to the extant literature we find inter alia that i at any point in time ceteris paribus the in situ resource price a decreases with gross production and b increases with final production and ii we cannot reject the theory of exhaustible resources i e producer behavior is consistent with the theory

approximating infinite horizon models in a complementarity format a primer in dynamic general equilibrium analysis abstract we demonstrate the advantages of the complementarity formulation for approximating infinite horizon equilibria in neoclassical growth models as compared with techniques originally developed for optimal planning models the complementarity approach does not require an ex ante specification of the growth rate in the terminal period and is therefore suitable for models with endogenous growth or short time horizons we also consider approximation issues in models with multiple infinitely lived agents changes in net indebtedness over a finite period are estimated as part of the model to obtain a precise approximation of the infinite horizon equilibria with a small number of time periods

the cross country implications of alternative climate policies abstract because of worldwide growing concerns about global climate change great interest has been expressed in the potential of alternative climate policies to reduce global carbon emissions in this paper we compare cross country implications of alternative climate policies including unilateral and multilateral climate policies our main findings are as follows firstly there are large differences in cross country effects of alternative unilateral climate policies when the same given carbon emission reductions are achieved in each abating country respectively meanwhile cross border externalities undermine efficiency of unilateral climate policies secondly there are significant differences in cross country implications of alternative multilateral climate policies when the same global emission reductions are allocated in several different ways among abating countries thirdly it is difficult to reach a stable global climate treaty since any abating country has the incentive to argue for small carbon emission reductions finally multilateral climate policies can reduce the negative impacts of cross border externalities but cannot cure all cross border externalities looking ahead it will be a great policy challenge for the world to reduce carbon emissions in a cost effective way

nonconvexity efficiency and equilibrium in exhaustible resource depletion we consider the problem of efficiency and existence of a competitive equilibrium in exhaustible resource markets where extraction costs are nonconvex nonconvexity is shown to imply that 1 efficient extraction ceases to the left of the minimum efficient scale i e where average costs exceed marginal costs and 2 a competitive equilibrium does not exist introduction of a backstop technology which induces a flat portion of the industry demand curve restores both existence and efficiency provided that the backstop price is sufficiently low if firms face even a small amount of uncertainty regarding their rivals stocks a backstop technology is sufficient to restore existence of competitive equilibrium even if the backstop price is very high in this case however the competitive equilibrium is not efficient

electricity prices and industrial competitiveness a case study of final assembly automobile manufacturing in the united states and canada this paper studies the real and perceived impacts of electricity pricing on competitiveness in the united states and canada financial analysis is combined with interviews to explore whether and how the cost of electricity affects competitiveness in one of north america s most important sectors automobile manufacturing the cost of electricity in top automobile manufacturing jurisdictions in canada and the us is captured over a six year period starting in 2010 at between approximately us 2 00 and 11 00 per vehicle the paper finds that the per vehicle gap between electricity costs in the most expensive automobile making jurisdiction in north america ontario and all others is quite small how then to explain the preoccupation of industry actors with electricity costs in ontario several reasons are suggested including media coverage the relatively narrow inventory of issues under local management control and mechanics of the pricing system itself the paper explains how the pricing system causes manufacturers to make decisions that depart from core mandates making things and generates the unintended effect of heightened scrutiny a combination of factors that has the effect of aggravating tension around electricity pricing and damaging perceived competitiveness

existence of equilibria in exhaustible resource industries nonconvexities and discrete vs continuous time abstract i demonstrate in a very general model that decreasing or u shaped average cost curves always rule out competitive equilibrium in continuous time models of extractive industries discrete time models of these industries however can have competitive equilibria existence of competitive equilibria in the presence of nonconvexities is sometimes more and sometimes less problematic for extractive industries than for industries making a producible commodity

the effect of carbon tax on farm income comment olale et al environ resour econ 605 623 2019 argue that the introduction of a carbon tax substantially reduced farm income in the canadian province of british columbia in this comment we raise serious concerns with their data empirical methods and theory most importantly olale et al 2019 assume that the difference in farm income between british columbia and the rest of canada would have remained constant over time without the introduction of the carbon tax we provide evidence that this is unlikely to be true and show that their results disappear when we account for differential trends we conclude that the estimates in olale et al 2019 do not represent the effect of a carbon tax on farm income

the elephant in hotelling s room this paper questions the assumption commonly used in theoretical and policy research that scarcity rents make up a large proportion of market prices for oil and coal we show that the empirical literature simple calculations of historical and future scarcity rent shares and possible theoretical explanations all imply the same overall conclusions that scarcity rents seem to have been marginal or non existent historically that they almost certainly do not dominate fossil resource prices today and that there will be other factors shaping the prices in the upcoming decades we therefore argue that using the scarcity rent as the main or only basis for policy or for explaining empirical outcomes is ill advised

the cut off grade and the theory of extraction the cutoff grade problem arises when technological infeasibility or high cost prevents an extractive firm from exploiting a heterogeneous deposit in strict sequence the optimal cutoff grade varies directly with anticipated changes in present value price a stochastic price path induces a higher lower initial cutoff grade if the marginal profit function is concave convex the optimal response to an unanticipated price change depends on the difference between the rates of change in price along the new and original price paths and whether or not the firm can increase extractive capacity including the life of the mine

addressing the competitiveness effects of taxing carbon in china domestic tax cuts versus border tax adjustments abstract this study focuses on the international competitiveness effects of levying a carbon tax in china based on a computable general equilibrium model this study analysed the impacts of a carbon tax on different sectors from the aspect of changes in market shares of domestic producers in the domestic markets and changes in exports the effects of different measures including domestic tax cuts and border tax adjustments in alleviating the unfavourable competitiveness impacts were also analysed and compared as were the impacts of different tax schemes on the macro economy sectoral profits and carbon emissions the results show that without any complementary measures a carbon tax would negatively shock the domestic market shares and exports of almost all tradable sectors and the profits of almost all sectors as for cushioning the unfavourable effects the domestic tax cuts are able to ease the negative impacts on the domestic market shares and exports of almost all tradable sectors moreover the unfavourable impacts of domestic tax cuts on both the macro economy and the sectoral profits are obviously smaller than those of the other schemes regardless of the use of the same tax rate or emission reduction amount among the border tax adjustment measures the best performance in general corresponds to the measure purely implementing adjustments on exports

international and sectoral variation in industrial energy prices 1995 2015 energy price rises for industry are a major political concern access to cheap energy is often considered a key factor for the competitiveness of industry to enable international comparisons and to foster further empirical research on the impacts of energy price or tax differentials on a wide range of outcomes such as international trade and investment patterns we construct sector level energy prices for 12 industrial sectors in 48 countries for the period 1995 to 2015 our prices are constructed as weighted averages of fuel specific prices by fuel consumption we provide guidelines for the use of our energy price data which is made available for download as well as a set of stylized facts on major trends and variations and illustrative applications

european emission trading scheme and competitiveness a case study on the iron and steel industry abstract we quantify the impact of the european emission trading scheme ets on the two dimensions of competitiveness production and profitability for the iron and steel industry among those covered by the scheme this sector is one of the most exposed since it is both highly co 2 intensive and relatively open to international trade we also examine the robustness of these results to various assumptions marginal abatement cost curve trade and demand elasticities as well as pass through rates and updating of allocation rules of which the latter two are scarcely debated we conclude that for this sector competitiveness losses are small we prove this conclusion to be robust hence arguments against tightening the environmental stringency of the ets in phase ii are not justified on grounds of competitiveness loss our systematic sensitivity analysis allows us to identify the important assumptions for each output variable it turns out that pass through rates and updating rules are significant despite being often implicit and least debated in existing analyses

climate policy instruments and industry effects and potential responses in the swedish context efficient policy instruments for reducing the emission of greenhouse gases are essential for the realization of a successful climate policy general economic policy instruments have the potential for providing efficient emission reduction as they equalise marginal costs for emission reduction between different actors they also provide incentives for a great variety of responses such as energy efficiency improvements fuel substitution and reduced consumption of carbon intensive products however as a result of the fact that it has so far been impossible to implement policy instruments on a global scale these instruments are often adapted in such a way that some of their potential advantages are eliminated in this paper the possibility of different policy instruments to contribute to reductions in industrial co2 emissions while preserving the competitiveness of industry is evaluated theoretically the consequences of increasing the cost of co2 emission in various industrial sectors are also discussed attention is directed towards carbon taxes emission trading and regulation co2 taxes without tax reductions and emission trading with allocation through auctioning have theoretical advantages in a global climate regime but may lead to significant disadvantages if implemented in a single or a small groups of countries emission trading with free intensity based allocation would in this case have a major advantage in combining incentives for emission reductions through efficiency improvements and fuel substitution with little impact on production levels less

how large are the impacts of carbon motivated border tax adjustments on china and how to mitigate them shandong social science planning fund program 12djjj12 independent innovation foundation of shandong university iifsdu 2012gn038 ministry of education research of social sciences youth funded projects 13yjc790065 national natural science foundation of china 71203186 71173170 china postdoctoral science foundation 2013m530309 2012t50802

energy efficiency and economic growth a retrospective cge analysis for canada from 2002 to 2012 abstract the efficiency with which energy is used by firms and households has widespread impacts on economic activity which in turn has implications for environmental quality and energy security using a novel method that could be used for other jurisdictions we estimate the impact of energy efficiency improvements on canadian gdp employment economic structure and welfare from 2002 to 2012 we use a counterfactual back casting method with a sectorally and regionally disaggregated dynamic recursive computable general equilibrium model in effect reverse calibrating the model from observed data to isolate the effects of energy efficiency we estimate that total energy efficiency improvements in canada during this period increased gdp by 2 0 0 19 yr employment by 2 5 0 24 yr and household welfare by about 1 5 0 15 yr additionally energy efficiency improvements reoriented economic structure from capital intense energy supply sectors to relatively labour intense manufacturing and services we find evidence of widespread rebound on an energy expenditure basis across most sectors and backfire where energy efficiency leads to absolute energy use increases in oil sands in situ extraction bitumen upgrading shale gas extraction lime production pulp paper and metal smelting but overall energy use is reduced by energy efficiency improvements over this period

futures markets price stabilization and efficient exploitation of exhaustible resources markets for natural resource futures contracts and cash forward contracts experience a rapid growth according to theory this should result in more efficient resource depletion implying that price formation is more consistent with hotelling s rule the rationale of this stabilization effect is briefly discussed next we analyze the impact of expanding futures markets on the behaviour of individual resource owners trading on the cash market using a simple pulse extraction model we demonstrate that the expected time of depletion can shift to the present or the future and that utility of exploitation can go up or down as market prices are stabilized

how do oil producers respond to giant oil field discoveries abstract the classical hotelling model predicts that the optimal extraction level rises immediately after an unexpected resource discovery whereas in reality there are substantial adjustment costs in petroleum production and an average lag of several years between a discovery and the start of production using a large panel of country level production data and a difference in differences identification approach i show that domestic production levels respond before a newly found oil field comes on line and that this increase is driven by non opec producers consistent with different responses of opec and non opec drilling activity offshore fields and exceptionally large super or mega giant fields are also more likely to raise country level production given that domestic petroleum consumption rises by less in response to a discovery at least part of the increase in production seems to go into net oil exports

testing the efficiency of extraction from a stock resource the theoretical conditions for efficient extraction from a known stock resource by a competitive mining firm are reviewed these conditions are tested using proprietary data from a mining firm output price data and coefficient estimates from a translog cost system are used to compute the in situ value of the resource and the stock effect changes in the in situ value over time are then statistically compared with the expected price path the results reject the hypothesis that the data are consistent with the theoretical model and the maintained hypotheses variations of the basic model that incorporate a time varying discount rate an alternative expected price series and a constraint on the rate of output are also tested and rejected 46 references 10 tables

existence and transversality conditions for a general unbounded horizon model of the mining firm abstract this paper derives conditions under which optimal programs exist for a general model of the competitive or monopolistic mining firm the model significantly extends and synthesizes previous formulations by including both resource extraction and discoveries of new reserves with stock dependent resource exploitation costs and incomplete resource exhaustion endogenous technical innovation and state dependent resource demand in addition the analysis addresses complications arising from having optimal programs defined over an unbounded horizon with the possibility of either a finite or infinite terminal time and a non zero terminal salvage valuation if the terminal time is finite the necessity of the infinite horizon transversality conditions also is established the paper illustrates a strongly intuitive approach to existence questions for infinite horizon or unbounded horizon control problems with weaker concavity and interiority assumptions than are often encountered in the literature

transboundary effects of environmental policy markets and emission leakages abstract one of many explanations for environmental kuznets curves for rich countries can be that dirty production is relocated to economies with laxer abatement regimes if this is caused by national abatement policies environmental stresses are transferred to other countries further the economic costs of national abatement policies can be shared with foreigners to some extent both through a lower demand for imports and losses of market shares for foreign competitors that produce cleaner products we quantify effects internally and abroad of a growth induced unilateral carbon tax policy in a rich open economy we find that the environmental benefits fall and the economic costs rise when a global rather than a national perspective is employed

steady state growth in a hotelling model of resource extraction this paper re examines the hotelling model of optimal nonrenewable resource extraction in light of stock effects and technological progress we assume functional forms for cost and demand so that the solution to the hotelling problem is a steady state consistent with the empirical observation that the growth rates of market prices have remained zero over a long period of time we use data on 14 minerals from 1970 to 2004 to estimate the supply and demand functions using sur and 3sls and to test the model we validate the model for 8 of 14 minerals c 2007 elsevier inc all rights reserved

border tax adjustments in the climate policy context co2 versus broad based ghg emission targeting abstract using a multi region multi sector computable general equilibrium cge model this paper compares the efficiency distributional and emission leakage effects of border tax adjustments btas as part of unilateral climate policies that are based on carbon dioxide co2 only versus those based on all greenhouse gases ghgs simulation results suggest that the broad based ghg policies in general have lower efficiency costs and result in less re distributive effects btas bring modest efficiency gains with adverse distributional consequences the distributional impacts are smaller under broad based ghg policies compared to that based on co2 only however these are due to a wider variety of abatement options under multi gas policies rather than the btas per se the main difference between the two policies is distributional effects first co2 only based policies have worse impacts on fossil fuel exporters such as russia and relatively better outcomes for oil importers such as india and china compared to that of multi gas policies particularly when it involves large global emission reduction second sectoral coverage under btas also influences the differential outcomes for example brazil is worse impacted under ghg based policies if agriculture is brought under btas as two third of its emissions are non co2 based and agriculture is the primary source of these emissions

taxation ore quality selection and the depletion of a heterogeneous deposit of a nonrenewable resource abstract the effect of taxation on depletion is examined when ore quality varies within a deposit and the firm s selection of the sequence of exploitation is constrained tax policies in this setting are less conserving of the resource than if ore quality is homogeneous and can be less conserving of the resource than in other models of ore quality selection for example a constant severance tax can induce faster depletion decrease the life of the mine reduce total recovery and increase metal output in periods when extraction is positive

cost specification and firm behaviour in a hotelling model of resource extraction in applied resource economics much attention has been focused on the ability of the hotelling model to explain observed firm behavior in this paper a preliminary specification search is performed to determine the appropriate cost function parameterization for the firms in the sample before proceeding to the estimation of the euler equation once a cost function specification is chosen the corresponding euler equation is estimated via the generalization method of moments gmm which allows for better estimates of the euler equations than in previous studies even with the preliminary specification search and the use of gmm estimation the behavior of the panel of fourteen canadian copper mining firms in the data set examined does not seem to be consistent with the basic hotelling model used

unilateral co2 reductions and carbon leakage the consequences of international trade in oil and basic materials a recursively dynamic general equilibrium model featuring six world regions with trade in energy and non energy goods is used to simulate the period from 1990 through 2100 in 10 year intervals the simulations explore the effect of unilateral action by the oecd to curb global co2 emissions unilateral cuts create incentives for free riding by non participating regions so that global emissions are reduced by less than the amount that the oecd cuts back its regional emissions carbon leakage occurs through two channels first basic materials production increases in unconstrained regions resulting in increased carbon intensity of gdp second reductions in oecd oil imports cause the world oil price to fall leading to an increased energy intensity in the non participant regions in this paper we use a general equilibrium model to assess the extent to which these two mechanisms reduce the effectiveness of oecd reductions in curbing global co2 concentrations

allocation of carbon permits within a country a general equilibrium analysis of the united kingdom abstract the kyoto agreement includes international trade in carbon permits from 2008 we have used a cge model to evaluate methods of allocating permits within the uk auctioning is broadly similar to a carbon tax with revenues recycled to reduce other distortions grandfathering some permits free to large firms would mean a loss of recycling and possibly give windfall profits to foreigners alternatively regularly revised allocation using best practice estimates would be similar to recycling revenue as an output subsidy such a system could allow much of the potential double dividend to be realised though an auction system might still be preferable

climate change policy market structure and carbon leakage abstract the 1997 kyoto protocol on climate change obliges the industrialized countries to initiate the international effort of abating anthropogenic greenhouse gas ghg emissions if such an initiative is to be taken the associated competitive effects may lead to significant relocation of developed countries energy intensive production this paper examines this issue i adopt an oligopolistic structure combined with increasing returns to scale production technologies to represent the strategic interaction among the firms producing energy intensive products this representation is then embedded within a multi regional computable general equilibrium model which in turn is used for quantifying these relocational effects the results suggest that significant relocation of energy intensive industries away from the oecd may occur depending on the type of market structure with leakage rates as high as 130 in which case ghg control policies in the industrialized countries actually lead to higher global emissions

carbon reducing taxes and income inequality general equilibrium evaluation of alternative energy taxation in taiwan recently several studies have been a detailed evaluation of the economic implications of energy taxation as a policy instrument to conserve energy and reduce carbon emissions however little attention has been devoted to inquiring about the economic implications of energy taxation in the newly industrialized countries the so called nics in this paper we use a multisector multihousehold computable general equilibrium model to assess the distributional effects of alternative energy taxation on the taiwan economy the counterfactual simulation technique is applied to investigate the income distribution implications of 1 an increase in the import taxes of crude oil and 2 an increase in the excise taxes of petroleum products our empirical results basing on taiwan s data show that both energy taxes increase government revenue and the gini coefficient but reduce net value added private consumption disposable income and equivalent variation a raise in the gini coefficient implies that there is a

carbon taxation and market structure a cge analysis for russia abstract russia is one of the world s major sources of carbon based energy as well as one its most intensive users introducing carbon taxes can lead to a reduction in emissions and encourage investment in energy efficiency we investigate the economic effects of carbon taxes on the russian economy under perfect competition and a cournot oligopoly in output markets the main findings are i substituting carbon taxes for labour taxes can yield a strong double dividend in russia however welfare gains strongly depend on the labour supply elasticity and elasticities of substitution between capital labour and energy ii under the assumption of a cournot oligopoly with homogenous products and symmetric firms in the markets for natural gas petroleum and chemical products metals and minerals welfare costs of the environmental tax reform can be higher than under perfect competition this is because introducing carbon taxes leads to a reduction in already sub optimal output thereby exacerbating pre existing distortions arising from imperfect competition iii furthermore increases in energy costs can result in higher mark ups in some markets because of less competition resulting from firms exit

a quest for the economics of sustainability and the sustainability of economics abstract this paper briefly reviews key insights from natural resource and environmental economics ecological economics and industrial ecology in an effort to identify the major contributions of these fields to the understanding and promotion of sustainable development each is based on overlapping worldviews methods and tools their synthesis and extension subsumed under the rubric of natural economics is suggested as a new thrust in environmental research offering valuable guides to policy making an early illustration of the application of natural economics in new zealand is presented

the assessment international competitiveness the concept of international competitiveness as applied to national economies is a popular one politicians businessmen and economists alike re fer to it in day to day discussion when looking at the external export import market share or trade balance performance of different countries indi cators are produced showing changes in or levels of various countries competitiveness e g the relative price or cost indices regularly published by the imf and the oecd or the absolute measures produced by organizations such as the geneva world economic forum and the lausanne institute for management development governments of ten instigate research on the matter as for instance in the case of the 1993 us competitiveness policy council orthe 1995 eu competitiveness advisory group yet it has recently been argued by paul krugman that competitiveness is a meaningless word when applied to national economies and the obsession with competitiveness is both wrong and dangerous krugman 1994 p 44 apositionkrugman forcefully reaffirms in his contribution to this issue of the oxford review of economic policy

estimation of market power in a nonrenewable resource industry in nonrenewable resource industries the existence of a markup of price over marginal market cost may reflect the existence of an implicit user cost for the resource rather than market power we show that valid estimates of market power can be obtained by the joint estimation of a restricted cost function and an inverse supply relation estimation of the model with data for the largest firm in the international nickel industry indicates that output price substantially exceeded marginal market cost with most of the difference due to the exercise of market power rather than the user cost of the resource

comparing policies to combat emissions leakage border carbon adjustments versus rebates we explore conditions determining which anti leakage policies might be more effective complements to domestic greenhouse gas emissions regulation we consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness a border charge on imports a border rebate for exports full border adjustment and domestic output based rebating each option faces different potential legal hurdles in international trade law each also has different economic impacts while all can support competitiveness none is necessarily effective at reducing global emissions nor is it possible to rank order the options effectiveness depends on the relative emissions rates elasticities of substitution and consumption volumes we illustrate these results with simulations for the energy intensive sectors of three different economies the united states canada and europe although most controversial full border adjustment is usually most effective but output based rebating for key manufacturing sectors can achieve many of the gains

european emissions trading and the international competitiveness of energy intensive industries a legal and political evaluation of possible supporting measures abstract the eu emissions trading directive is expected by european energy intensive industries to harm their competitiveness vis a vis non european competitors many additional measures have thus been proposed to level the playing field and to protect the competitiveness of european energy intensive industries within the larger effort of reducing europe s greenhouse gas emissions and of meeting its obligations under the 1997 kyoto protocol this article evaluates a range of proposed measures based on a set of political and legal criteria including environmental effectiveness the need to consider differentiated commitments responsibilities and capabilities conformity with world trade law and european union law and europe s overall political interests we discuss measures that could be adopted by the european union and its member states such as direct support for energy intensive industries restrictions of energy intensive imports into the european union through border cost adjustments quotas or technical regulations and cost reimbursement for affected developing countries we also analyse measures available to multilateral institutions such as the united nations framework convention on climate change and its kyoto protocol and the world trade organisation we conclude with a classification of the discussed measures with red unfeasible yellow potentially feasible or green feasible labels

tax policy can change the production path a model of optimal oil extraction in alaska we model the economically optimal dynamic oil production decisions for seven production units fields on alaska s north slope we use adjustment cost and discount rate to calibrate the model against historical production data and use the calibrated model to simulate the impact of tax policy on production rate we construct field specific cost functions from average cost data and an estimated inverse production function which incorporates engineering aspects of oil production into our economic modeling producers appear to have approximated dynamic optimality consistent with prior research we find that changing the tax rate alone does not change the economically optimal oil production path except for marginal fields that may cease production contrary to prior research we find that the structure of tax policy can be designed to affect the economically optimal production path but at a cost in net social benefit

why are there large differences in performances when the same carbon emission reductions are achieved in different countries great interest has been in unilateral climate policies given present difficulty of establishing stable global coordinated agreements in this paper we investigate underlining factors explaining large differences in performances when the same carbon emission reductions are achieved in different abating countries to this end we develop a new multi country general equilibrium model incorporating six countries or world regions two goods six production inputs capital mobility energy mobility and international trade meanwhile we adopt two performance indicators with carbon leakage representing environmental efficiency and carbon emission abatement costs revealing cost effectiveness our findings are as follows firstly there are large differences in performances among these unilateral climate policies as evidenced by large differences in leakage rates and carbon emission abatement costs secondly the new global climate treaties to replace the kyoto protocol should be able to induce more carbon emission reductions in countries with low carbon emission reduction costs since such setting contributes to global cost savings finally developed countries have high carbon emission abatement costs compared with large developing countries china and india in this paper implying that there should be trade off mechanisms between efficiency and equity regarding how to allocate carbon emission reductions among countries

impacts of climate policy on the competitiveness of canadian industry how big and how to mitigate competitiveness concerns have been at the forefront of climate policy debates in canada particularly as a result of its high energy intensity and significant exposure to international markets this paper uses a dynamic computable general equilibrium model to assess the likely impacts on sectoral competitiveness that would accompany efforts to meet greenhouse gas mitigation targets that have been set by the canadian government additionally it evaluates several design mechanisms that could be used to reduce the negative competiveness impacts associated with adoption of domestic climate policies the analysis suggests that several sectors would likely face significant competiveness challenges under a reference scenario in which permits are given to emitters in lump sum however it finds that competiveness impacts can be minimized by using output based recycling of permits or by using border tax adjustments

output based rebating of carbon taxes in a neighbour s backyard competitiveness leakage and welfare we investigate how in an open economy carbon taxes combined with output based rebating obr perform in interaction with the carbon policies of a large neighbouring trading partner analytical results suggest that whether the purpose of the obr policy is to compensate firms for carbon tax burdens or to maximize welfare accounting for global emission reductions the obr rate should be positive in policy relevant cases numerical simulations for canada with the us as the neighbouring trading partner indicate that the impact of us policies on the obr rate will depend crucially on the purpose of the canadian obr policies if for a given us carbon policy canada s aim is to restore the competitiveness of domestic emission intensive and trade exposed eite firms to the same level as before the introduction of its own carbon taxation we find that the necessary domestic obr rates will be insensitive to the foreign carbon policies however if not only the canadian carbon tax but also an equally high us tax is introduced compensatory canadian obr rates will be up to 50 lower depending on the sector and on us obr policy if the policy objective is to increase economy wide allocative efficiency welfare of canadian policies by accounting for carbon leakage the us policies will have only a minor downward pressure on desirable obr rates in canada practical choices of obr rates hardly affect overall domestic economic performance thus output based rebating qualifies as an instrument for compensating eite industries without a large sacrifice in terms of economy wide allocative efficiency

a model of the operation and development of a national oil company we present a model of the exploration and development activities of a national oil company noc which uses similar technology to a private firm to extract a depletable resource however unlike the private firm the noc may have a wider range of objectives than maximizing the present value of profits specifically we assume an objective function that balances firm profitability against a political desire to favor domestic consumer surplus and domestic employment we find that the non commercial objectives faced by a noc tend to reinforce each other in their effects on profitability the timing of cash flows and employment

information and exhaustible resources a bayesian analysis abstract we develop a continuous time bayesian model of investment in information about an exhaustible resource because of the way that information affects expectations the deterministic hotelling rule turns out to be more appropriate as a description of how resource owners forecast the value of their stocks than as a predictor of observed changes in the resource price a flow of information generates both unanticipated changes in expectations which cause the mean rate of change in the resource price to deviate systematically from the deterministic hotelling rule and reductions in uncertainty which do not affect the hotelling prediction

a hotelling faustmann explanation of the structure of christmas tree prices we examine the relationship between a tree price and a tree age height using a hotelling faustmann type model of optimal plantation management which accounts for the possibility of replanting and biological growth the model predictions are tested using the data on christmas tree prices in north carolina collected in december 1997 the estimates show that in general the rates of change in prices between adjacent age cohorts reflect a competitive equilibrium in the capital market thus supporting the hotelling faustmann paradigm rigorous empirical testing of the basic economic models of optimal natural resource pricing has proven to be difficult the source of the difficulty has been the unavailability of micro level data on either prices or extraction harvest rates for in situ resource stocks 1 for nonrenewable resources hotelling s famous pricing rule has rarely been tested with firm level data stollery s study of the international nickel company of canada supported hotelling s rule and miller and upton s study of oil company values supported a corollary called the hotelling valuation principle most other studies such as halvorsen and smith and farrow have refuted this bedrock of natural resource economics in fact two studies of old growth timber essentially a nonrenewable resource provide some of the most compelling support for the hotelling model berck johnson

uncertainty and the convenience yield in crude oil price backwardations abstract this study examines why firms hold stocks of crude oil particularly during price backwardations when spot prices exceed prices for forward delivery using a stochastic control model this paper shows that the equilibrium value of inventories contains the conventional hotelling principle the convenience yield from the classical theory of storage and an option value related to price uncertainty our empirical results suggest that a convenience yield and risk premium are important elements of crude oil price backwardations

comparing climate policies to reduce carbon emissions in china new huadu business school research fund national social science foundation of china 12zd059 shandong social science planning fund program 12djjj12 independent innovation foundation of shandong university iifsdu 2012gn038 ministry of education research of social sciences china postdoctoral science foundation 2013m530309

output based allocation of emissions permits for mitigating tax and trade interactions the allocation of tradable emissions permits has important efficiency as well as distributional effects when tax and trade distortions are taken into account we compare different rules for allocating carbon allowances within sectors lumpsum grandfathering output based allocation oba auctioning and among sectors historical emissions or value added shares the output subsidies implicit in oba mitigate tax interactions unlike grand fathering oba with sectoral distributions based on value added is similar to revenue recycling with auctioning oba based on historical emissions supports heavier polluters more effectively counter acting carbon leakage but at higher welfare costs less energy intensive sectors are also sensitive to allocation rules

removal of farm subsidies in a regional economy a computable general equilibrium analysis the purpose of this article is to analyse the importance of farm subsidies for the extremadura economy to this end a computable general equilibrium model for this region is presented with which we analyse the economic effects caused by a simulated removal of these subsidies different scenarios involving the labour market rigidities and tax compensation are considered model parameters are determined by the procedure known as calibration using a social accounting matrix constructed for this economy the results clearly show the negative effects that this elimination would produce on the main micro and macroeconomic variables

linear sam models for inequality changes analysis an application to the extremadurian economy social accounting matrices are adequate databases for the economic modelling these matrices emphasize the role of households in the economy and so they usually disaggregate the household sector into several groups this disaggregation allows social accounting matrices to be used for diverse income distribution analysis the objective of this work is to use the linear sam models to study how inequality is modified by several exogenous injections of income the set of multipliers and indicators presented is applied to the economy of extremadura a region situated in the southwest of spain in particular together with the accounting multipliers two redistributed income matrices are presented to show how changes in final demand and in income transfers cause opposite effects in inequality for contrasting these results gini and theil indices are also used finally a major reduction in both would result from an appropriate re allocation of transfers

carbon taxes with exemptions in an open economy a general equilibrium analysis of the german tax initiative abstract sectoral exemptions from environmental regulation are applied in many countries to avoid adverse adjustment effects in specific industries the problem with exemptions is that they can make environmental policy more costly our paper analyzes the welfare costs of exemptions in environmental policy together with the issue of unilateral carbon taxes in an open economy several countries within the eu have introduced or contemplated unilateral taxes to reduce anthropogenic co2emissions taxes which are unilaterally imposed in an open economy can have significant impacts on production and employment of energy and export intensive industries to save jobs by maintaining international competitiveness most co2taxation schemes include exemptions for energy and export intensive industries as a compromise between environmental objectives and employment in these sectors this paper shows that such compromises are costly as the tax base narrows the dead weight loss increases our calculations illustrate this point in the framework of a static general equilibrium model for west germany calibrated to 1990 data we evaluate the excess costs of exemptions as a means of saving jobs in specific industries relative to an alternative instrument a uniform carbon tax cum wage subsidy which achieves an identical level of national emissions and employment at a fraction of the cost

the impacts of carbon pricing on coastal megacities a cge analysis of singapore abstract pricing carbon is a widely used policy instrument for climate change mitigation quantitative analysis of carbon pricing are mainly conducted at the regional and national level rarely at the city level due to data availability as a representative of coastal megacities that are vulnerable to both climate change and climate policies singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures a city level computable general equilibrium cge model is developed to simulate potential impacts of carbon pricing on the city including paying border carbon adjustment bca on exports or introducing a domestic carbon tax different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax the simulation results show that a domestic carbon tax is a more cost effective option than paying bca given an identical carbon price at s 10 t co 2 gdp total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the bca scenario in terms of absolute emissions reduction a carbon tax that covers energy manufacturing and land transport sectors would be preferred making emissions around 2 7 lower than 2010 baseline level