photovoltaic investment roadmaps and sustainable development abstract this paper analyzes the potential contributions of photovoltaic energy to sustainable development in its three dimensions environmental economic and social for that purpose the capacity deployments proposed by the main international institutions in the field are considered mainly the international energy agency the paper focuses on the monetary valuation of avoided co2 emissions and the assessment of the required financial funds the risk implied by the uncertain photovoltaic prices are dealt with and methods to manage it are suggested it is shown that valuing emission at a conservative price and properly discounted would be enough to finance on average the required investments thus a low carbon tax is all that would be required to finance the investments

strategic delegation by unobservable incentive contracts many strategic interactions in the real world take place among delegates empowered to act on behalf of others managers make strategic decisions that affect profits sales persons have power over setting prices and lawyers and sports agents represent their clients in bargaining processes one of the central messages of game theory is that this could be at least partly due to the strategic advantage delegation may provide to the delegating party the idea that signing binding and publicly observable contracts with a third party may serve as a beneficial commitment device goes back at least to schelling 1960 and has been put into use in many areas of economics 1 however the observability of contracts appears to be a precondition for them to play a commitment role and for this reason almost all applications of strategic delegation theory are couched in terms of observable contracts the formalization of this intuition is given by katz 1991 who showed that if contracts are unobservable then the nash equilibrium outcomes of a game with and without delegation coincide in particular delegation through unobservable contracts does not change the predicted outcome of games with a unique nash equilibrium these observations in turn call the empirical relevance of the applied delegation studies into serious question since in most real world transactions the signed contracts are unobservable to the outside parties however there are important strategic environments that fall outside the confines of katz s analysis first katz s model does not include the scenarios in which the outcome of the decision of delegating or not delegating is observable to the outside party in contrast in some models it is natural that the outside party observes the outcome of this decision simply because s he

transparency and economic policy we provide a two period model of political competition in which voters imperfectly observe the electoral promises made to other voters imperfect observability generates an incentive for candidates to offer excessive transfers even if voters are homogeneous and taxation is distortionary government spending is larger than in a world of perfect observability transfers are partly financed through government debt and the size of the debt is higher in less transparent political systems the model provides an explanation of fiscal churning it also predicts that groups whose transfers are less visible to others receive higher transfers and that imperfect transparency of transfers may lead to underprovision of public goods from the policy perspective the main novelty of our analysis is a separate evaluation of the transparency of spending and the transparency of revenues we show that the transparency of the political system does not unambiguously improve efficiency transparency of spending is beneficial but transparency of revenues can be counterproductive because it endogenously leads to increased wasteful spending

a folk theorem for one shot bertrand games we show that bounded monopoly profits are essential for the uniqueness of the bertrand paradox zero profit outcome otherwise a folk theorem obtains for one shot homogeneous product bertrand games any positive but finite payoff vector can be achieved in a symmetric mixed strategy nash equilibrium

pollution claim settlements under private information abstract the classical problem of resolving a nuisance dispute between a pollution generating firm and nearby residents is modelled here as a mechanism design problem we assume that the designer of the mechanism is the firm that it is uncertain about the actual losses suffered by residents and that the initial assignment of property rights is one where each resident is entitled to prevail we derive a profitmaximizing scheme under the individual rationality and incentive compatibility constraints and examine its properties it is shown that the outcomes it yields are sometimes inefficient moreover when many residents are affected by pollution and the degree of uncertainty with respect to the losses they suffer is large these inefficiencies become rampant

climate change policy what do the models tell us very little a plethora of integrated assessment models iams have been constructed and used to estimate the social cost of carbon scc and evaluate alternative abatement policies these models have crucial flaws that make them close to useless as tools for policy analysis certain inputs e g the discount rate are arbitrary but have huge effects on the scc estimates the models produce the models descriptions of the impact of climate change are completely ad hoc with no theoretical or empirical foundation and the models can tell us nothing about the most important driver of the scc the possibility of a catastrophic climate outcome iam based analyses of climate policy create a perception of knowledge and precision but that perception is illusory and misleading jel c51 q54 q58

what are the key drivers of mac curves a partial equilibrium modelling approach for the uk marginal abatement cost mac curves are widely used for the assessment of costs related to co2 emissions reduction in environmental economics as well as domestic and international climate policy several meta analyses and model comparisons have previously been performed that aim to identify the causes for the wide range of mac curves most of these concentrate on general equilibrium models with a focus on aspects such as specific model type and technology learning while other important aspects remain almost unconsidered including the availability of abatement technologies and level of discount rates this paper addresses the influence of several key parameters on mac curves for the united kingdom and the year 2030 a technology rich energy system model uk markal is used to derive the mac curves the results of this study show that mac curves are robust even to extreme fossil fuel price changes while uncertainty around the choice of the discount rate the availability of key abatement technologies and the demand level were singled out as the most important influencing factors by using a different model type and studying a wider range of influencing factors this paper contributes to the debate on the sensitivity of mac curves

does social capital affect investment in human capital family ties and schooling decisions we analyse whether traditional sharing norms within kinship networks affect education decisions of poor black households in kwazulu natal theory predicts that the size of the kinship network ambiguously impacts on the incentive to invest in human capital due to opposing empathy and free rider effects our empirical analysis based on a range of different estimators suggests the latter effect dominates forced solidarity within the network discourages investments in human capital

a new assessment model of social cost of carbon and its situation analysis in china abstract the social cost of carbon scc represents monetary value of the damage caused by carbon dioxide emissions in climate change it is an important standard for the formulation of climate policy the uncertainty of carbon social cost is closely related to climate sensitivity damage parameters discount rate and so on previous studies have mainly focused on the consequences of climate change and the effect of social cost of carbon and welfare under different policies its research on the social cost of carbon has not included the evolution coefficient of carbon emissions and it has rarely introduced the climate disaster damage function into the process of solving the social cost of carbon this paper provides a simplified formula for the social cost of carbon the model has a nonlinear processing of the carbon circulation system which increases the nonlinear structure of co2 emission potential in addition the model modifies the climate damage function which adds additional losses from climate catastrophes this paper analyzes the combined effects of several key sensitivity parameters resulting in a fat tail distribution of social cost of carbon ultimately it is found that the mean scc of 2015 is 44 93 tco2 and the median scc is 15 9054 tco2 considering the possibility of extreme results and the impact of disaster risk loss on uncertain structure the joint effects of damage parameters climate sensitive parameters and discount rates make the social cost of carbon as much as 2 8 times the median and fat tail effect is obvious this brings uncertainty to the current emission reduction policies and abatement costs making it more difficult to assess cost effectiveness at last the paper evaluates the social cost of carbon under the base situation and low discount rate in china

markets for ownership the prevailing economic theory of the firm based on a property rights perspective has demonstrated that ownership by dispensable outside parties is an inefficient outcome relative to ownership by productive agents in order to better understand observed patterns of ownership this paper considers the outcome of ma rkets for ownership that operate prior to production taking place the main result is that outside parties will often become the equilibrium asset owners this is precisely because but for ownership such parties would not earn rents in contrast productive agents earn rents even when they do not own assets given that their contribution is complementary with other productive agents their willingness to pay for ownership is less than that of an outside party this result is robust to the introduction of moderate levels of inefficiency arising from outside ownership and to a consideration of opportunities for re sale before production begins the main conclusion drawn is that the nature of the operation of markets for ownership stands alongside incentive effects as important predictors of firm boundaries journal of economic literature classification numbers d23 l22

financial development and economic growth the case of taiwan this paper examines the relationship between financial development and economic growth in taiwan from 1962 to 1998 using a four variable var model the competing hypotheses of demand following versus supply leading are empirically tested the results from granger causality tests based on vector error correction models vecm suggest unidirectional causality running from financial development measured as the ratio of m2 to gdp to economic growth this result supports the supply leading hypothesis for taiwan this finding highlights the importance of financial development in taiwan s recent growth

trading between agents for a better match this paper studies externalities that arise when agents can trade outcomes ex post i show that when agents can trade outcomes ex post principals are incentivized to contract with agents ex ante to reduce ex post transfers to outside agents with whom the principals do not directly contract this causes principals to offer agents piece rates that are inefficiently low and lower than the piece rates they would offer if trading was not allowed although trading reduces an agent s effort and could increase the agent s outside option of rejecting a principal s ex ante contract principals ultimately gain from allowing ex post trading because such trading results in outcomes that better match their tastes

games played in a contracting environment we analyze normal form games where a player has to pay a price to a supplier in order to play a specific action our focus is on supplier competition arising from the fact that distinct suppliers supply different players and possibly different actions of the same player with private contracts where a player only observes the prices quoted by his own suppliers the set of equilibrium distributions over player actions coincides with the set of equilibrium distributions when all actions are supplied competitively at cost with public contracts the two distributions differ dramatically even in simple games

monetary valuation of the social cost of co2 emissions a critical survey an expanding branch of research has estimated the potential costs of climate change which are often expressed as the social cost of carbon scc or the costs of an additional ton of co2 emissions estimates of the scc can be used by policy makers to evaluate climate change policies and greenhouse gas emission reduction projects by means of cost benefit analyses cbas such analyses are complicated by the wide range of scc values that have been reported in the literature and the large uncertainties involved in estimating the potential economic impacts and related costs of climate change this study presents a critical review of the reported scc estimates by examining some neglected consequences of climate change uncertain and extreme scenarios of climate change the discounting of future climate change effects the treatment of individual risk aversion and assumptions about social welfare in view of the many uncertainties and omissions in conventional cost benefit analyses of climate impacts and the scc alternative approaches to decision making should be considered for climate policy

the social cost of carbon and its policy implications the shadow price or social cost of carbon is an important indicator of the global incremental damage done by emitting greenhouse gases today cost benefit analysis would set the optimal amount of greenhouse gas emission reduction at the point where this social cost just equals the incremental cost of controlling emissions the higher the value for the social cost of carbon the more control is warranted this comparison assumes that cost benefit analysis is the correct way of determining climate change policy and many believe this is not the case because of the very long term irreversible and potentially catastrophic nature of global warming but in the short run at least a comparison of cost and benefits is required and in any event all decisions imply costs and benefits but what is the right figure for the social cost of carbon this paper reviews the uk government s assessment of the cost and concludes that it has been set far too high because of a misreading of the integrated assessment models used to balance costs and benefits moreover adoption of the uk government s shadow price would have formidable implications for energy policy in the uk and for policies on afforestation copyright 2003 oxford university press

environmental prices uncertainty and learning there is an increasing demand for putting a shadow price on the environment to guide public policy and incentivize private behaviour in practice setting that price can be extremely difficult as uncertainties abound there is often uncertainty not just about individual parameters but about the structure of the problem and how to model it a further complication is the second best nature of real environmental policy making in this paper we propose some practical steps for setting prices in the face of these difficulties drawing on the example of climate change we consider how to determine the overall target for environmental protection how to set shadow prices to deliver that target and how we can learn from the performance of policies to revise targets and prices perhaps most significantly we suggest that estimates of the marginal cost of environmental protection rather than the marginal benefit will often provide the more consistent and robust prices for achieving targets

the limits of monopolization through acquisition we address the question of whether competitive acquisition of firms by their rivals can result in complete or partial monopolization of a homogeneous product industry this question is modeled in terms of two distinct three stage noncoopera tive games analysis of subgame perfect pure strategy nash equilibria of these games discloses that under simplifying assumptions monopolization of an industry through acquisition is limited to industries with relatively few firms partial monopolization is either limited in scope or can be completely eliminated by prohibiting any owner from acquiring over 50 percent of the firms in the industry

does financial development lead economic growth a vector auto regression appraisal using a vector autoregression var approach several hypotheses are re examined suggested by the literature concerning the relationship between financial development and economic growth investment and productivity the models use quarterly time series data from ten oecd countries and china innovation accounting or variance decomposition and impulse response function analysis is applied to examine interrelationships between variables in the var system and therefore differs from the more usual granger causality approach in particular it examines the relationship between financial development proxied by total credit at best weak support is found for the hypothesis that financial development leads economic growth

a solution to the problem of externalities when agents are well informed the author describes a class of simple two stage mechanisms that implement efficient allocations as subgame perfect equilibria for economic environments involving externalities these mechanisms known as compensation mechanisms solve a wide variety of externalities problems including implementation of lindahl allocations regulation of monopoly and efficient solutions to the prisoner s dilemma copyright 1994 by american economic association

observable contracts strategic delegation and cooperation the role of commitments in noncooperative games is well acknowledged and documented one way to achieve commitments is by letting delegates represent the players of a game in this paper the authors study a delegation game in which the players can use agents strategically to play on their behalf and the contracts they sign with them are common knowledge they show that in such cases every pareto optimal outcome of the game can become the unique subgame perfect nash equilibrium of the delegation game the authors demonstrate this result by discussing the cournot type duopolistic game copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

over confidence may reduce negotiation delay abstract when a seller negotiates with multiple buyers how does over confidence affect the timing of trade in this paper we distinguish between over confidence about trade opportunities and over confidence about the terms of trade in bargaining environments without externalities both types of over confidence can cause delays in agreement if externalities are present the two forms of subjective bias have very different impacts on delay in particular over confidence about trade opportunities may reduce bargaining delay

characteristics of households in the informal sector of an emerging economy using the case study of trinidad and tobago we investigate the socio economic demographic and attitudinal characteristics of households that participate in the informal sector of an emerging economy and their perception of the risk of detection by tax authorities while doing so data are gathered from a cross sectional field survey covering 570 households results using multinomial logit and ordered probit models suggest that households are motivated to participate in the informal sector when members spend little time in formal sector activity believe that taxes are too high and their incomes are too low have dependents to support and believe that the resulting tax evasion will go undetected their perception of the risk of detection by the tax authority is determined largely by the income they earn in the formal sector and the extent of government bureaucracy prevailing there

foreign direct investment in vertically related markets we study an mne s choice of fdi mode in a vertically related market with local input sourcing we show how the market s vertical structure and trading features affect this choice an mne s incentives to expand through cross border acquisition rather than through greenfield investment are stronger in markets with higher upstream bargaining power upstream concentration and unobservable contract terms the opposite holds in markets in which wholesale price contracts instead of two part tariffs are used our welfare analysis suggests that the host country should not always welcome fdi and should discourage fdi through acquisition investissements exterieurs directs sur les marches verticaux dans cet article nous etudions le choix d une entreprise multinationale de proceder a un investissement exterieur direct dans un marche vertical avec sources d approvisionnement locales nous montrons la facon dont la structure verticale et les caracteristiques commerciales du marche ont une incidence sur une telle decision les mesures incitatives offertes aux entreprises multinationales pour se developper par l entremise d acquisitions transfrontalieres plutot que par l investissement dans de nouvelles installations sont plus fortes sur les marches dotes d un pouvoir de negociation et d une concentration en amont plus eleves ainsi que par des conditions contractuelles non observables l inverse s observe sur les marches ou les contrats a prix de gros sont utilises en lieu et place des tarifs binomes en termes de bien etre notre analyse suggere que le pays hote ne devrait pas toujours accueillir les investissements exterieurs directs et devrait decourager ces memes investissements realises par l entremise d acquisitions

the structure of economic modeling of the potential impacts of climate change grafting gross underestimation of risk onto already narrow science models scientists describe the scale of the risks from unmanaged climate change as potentially immense however the scientific models because they omit key factors that are hard to capture precisely appear to substantially underestimate these risks many economic models add further gross underassessment of risk because the assumptions built into the economic modeling on growth damages and risks come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes a new generation of models is needed in all three of climate science impact and economics with a still stronger focus on lives and livelihoods including the risks of large scale migration and conflicts

carbon prices were they an obstacle to the launching of emission abatement projects in spain in the kyoto protocol period abstract the future of the carbon market approach under the united nations framework convention on climate change unfccc is uncertain however further development of carbon markets is expected this paper estimates the average carbon price of the carbon emission permits cop approved units acquired by the spanish government and also a more realistic figure for the average carbon cost of the aforesaid emission permits this is very useful for evaluating and comparing different carbon prices and markets in addition the paper contributes to the existing literature by providing a deeper understanding of the flow of emission permits between the european union emission trading scheme eu ets and the emission trading scheme ets under the kyoto protocol the main conclusions are that the estimated carbon price and cost are both lower than other reported prices and costs this may go some way towards explaining why the government preferred to use the flexibility mechanisms and acquire an especially large number of cop approved units mainly assigned amount units aaus through bilateral transactions with other annex b countries instead of launching actual greenhouse gas ghg abatement projects in the country moreover more transparency is needed in regard to bilateral transactions of aaus between the spanish government and other annex b seller countries

naked exclusion an experimental study of contracts with externalities this paper reports the results of an experiment designed to assess the ability of an incumbent seller to profitably foreclose a market with exclusive contracts we use the strategic environment described by rasmusen ramseyer and wiley 1991 and segal and whinston 2000 where entry is unprofitable when sufficiently many downstream buyers sign exclusive contracts with the incumbent when discrimination is impossible the game resembles a stag hunt coordination game in which the buyers payoffs are endogenously chosen by the incumbent seller exclusion occurs when the buyers fail to coordinate on their preferred equilibrium two way non binding pre play communication among the buyers lowers the power of exclusive contracts and induces more generous contract terms from the seller when discrimination and communication are possible the exclusion rate rises divide and conquer strategies are observed more frequently when buyers can communicate with each other exclusion rates are significantly higher when the buyers payoffs are endogenously chosen rather than exogenously given finally secret offers are shown to decrease the incumbent s power to profitably exclude

monetary valuation in life cycle assessment a review abstract monetary valuation is the practice of converting measures of social and biophysical impacts into monetary units and is used to determine the economic value of non market goods i e goods for which no market exists it is applied in cost benefit analysis to enable the cross comparison between different impacts and or with other economic costs and benefits for this reason monetary valuation has a great potential to be applied also in life cycle assessment lca especially in the weighting phase however several challenges limit its diffusion in the field which resulted in only a few applications so far the authors have performed a review of different monetary valuation methods for use in lca firstly monetary valuation approaches methods and lca applications were identified secondly key features and the strengths and weaknesses of each monetary valuation method were determined finally monetary valuation methods and lca applications were evaluated according to a comprehensive set of criteria ranging from scientific foundation to uncertainty and complexity it was found that observed and revealed preference methods and the abatement cost method have limited applicability in lca whereas the choice experiment method and the budget constraint method are the best options for monetary valuation in lca

contracting with externalities the paper studies inefficiencies arising in contracting between one principal and n agents when the utility of each agent depends on all agents trades with the principal when the principal commits to a set of publicly observable bilateral contract offers the arising inefficiency is due entirely to the externalities imposed on non signers in contrast when the principal s offers are privately observed the distortion is due to the externalities given agents equilibrium trades comparison of the two externalities determines the relative efficiency of the two contracting regimes in both cases we show that when n is large each agent can be treated as non pivotal provided that appropriate continuity assumptions are satisfied we also study the case in which the principal can condition each agent s trade on other agents messages we characterize the set of such mechanisms in which each agent s participation is voluntary when the principal can commit to any such mechanism she implements the first best outcome while threatening each deviator with the harshest possible punishment however in the presence of noise that goes to zero slower than n goes to infinity in the limit we obtain a generally inefficient outcome in which each agent feels non pivotal

marginal abatement costs of greenhouse gas emissions a meta analysis in this paper we carry out a meta analysis of recent studies into the costs of greenhouse gas mitigation policies that aim at the long term stabilisation of these gases in the atmosphere we find the cost estimates of the studies to be sensitive to the stringency of the stabilisation target the assumed emissions baseline the way in which the time profile of emissions is determined in the model the choice of control variable co2 only versus multigas the number of regions and energy sources in the model and to a lesser degree the scientific forum in which the study was developed we find that marginal abatement costs of the stringent long term targets that are currently considered by the european commission are still very uncertain but might exceed the costs that have been suggested by recent policy assessments

the effect of social capital on post earthquake reconstruction programmes in nantou county taiwan an assessment the study aims through an examination of social capital on post earthquake reconstruction programmes to assess the impact of government s programmes on integrated community development and to draw policy implications to this end the study explores the programmes implemented by the government in the communities of nantou county after the earthquake the findings show that of the three measurements infrastructure improvement satisfied most respondents in the three survey areas but in lugu township and in nantou city further improvements are needed in unemployment reduction and respondents betterment

why higher takeover premia protect minority shareholders posttakeover moral hazard by the acquirer and free riding by the target shareholders lead the former to acquire as few sharcs as necessary to gain control as moral hazard is most severe under such low ownership concentration inefficiencies arise in successful takeovers moreover share supply is shown to be upward sloping rules promoting ownership concentration limit both agency costs and the occurrence of takeovers furthermore higher takeover premia induced by competition translate into higher ownership concen tration and are thus beneficial finally one share one vote and simple majority are generally not optimal and socially optimal rules need not emerge through private contracting

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

vertical contracting with informational opportunism we consider vertical contracting arrangements between a manufacturer and a retailing network when retailers have private information and the organization is run through bilateral contracts we highlight a new form of informational opportunism arising when the manufacturer manipulates information learned separately in each relationship we characterize the set of allocations robust to such opportunism by means of simple ex post incentive compatibility constraints those constraints limit the manufacturer s ability to use yardstick competition among retailers they simplify contracts and restore a rent efficiency trade off even with correlated information we show that sell out contracts are optimal under a wide range of circumstances

optimal taxes on fossil fuel in general equilibrium we analyze a dynamic stochastic general equilibrium dsge model with an externality through climate change from using fossil energy our central result is a simple formula for the marginal externality damage of emissions or equivalently for the optimal carbon tax this formula which holds under quite plausible assumptions reveals that the damage is proportional to current gdp with the proportion depending only on three factors i discounting ii the expected damage elasticity how many percent of the output flow is lost from an extra unit of carbon in the atmosphere and iii the structure of carbon depreciation in the atmosphere thus the stochastic values of future output consumption and the atmospheric co2 concentration as well as the paths of technology whether endogenous or exogenous and population and so on all disappear from the formula we find that the optimal tax should be a bit higher than the median or most well known estimates in the literature we also formulate a parsimonious yet comprehensive and easily solved model allowing us to compute the optimal and market paths for the use of different sources of energy and the corresponding climate change we find coal rather than oil to be the main threat to economic welfare largely due to its abundance we also find that the costs of inaction are particularly sensitive to the assumptions regarding the substitutability of different energy sources and technological progress

the strategic choice of managerial incentives do firms with separate owners and managers maximize profits we address this question for an oligopoly where managers compete in quantities or prices as in the cournot or bertrand models and owners choose their managers incentives we find that there is a strategic aspect in the problem of selecting incentives and that profit maximizing behavior does not result in particular in the oligopoly we study the behavior of firms competing in quantity price more closely resembles perfectly competitive collusive behavior than cournot bertrand behavior

a cost benefit analysis of the eu 20 20 2020 package the european commission did not publish a cost benefit analysis for its 2020 climate package this paper fills that gap comparing the marginal costs and benefits of greenhouse gas emission reduction the uncertainty about the marginal costs of climate change is large and skewed and estimates partly reflect ethical choices e g the discount rate the 2010 carbon price in the eu emissions trading system can readily be justified by a cost benefit analysis emission reduction is not expensive provided that policy is well designed a condition not met by planned eu policy it is probably twice as expensive as needed costing one in ten years of economic growth the eu targets for 2020 are unlikely to meet the benefit cost test for a standard discount rate 3 pure rate of time preference the benefit cost ratio is rather poor 1 30 so that benefits need to be very much higher or costs very much lower than typically assumed to justify the 2020 targets only a very low discount rate 0 prtp would justify the 20 emission reduction target for 2020

confining the coase theorem contracting ownership and free riding if individuals own the right to take any action that they please and are free to contract about behaviour will outcomes be efficient in all situations that is does the coase theorem hold we study this classic question through the lens of a non cooperative model of contract negotiations considering both compulsory and voluntary participation in negotiations in either case we find that all consistent equilibria of the contracting game are efficient in the case of two players but if participation is voluntary and there are more than two players there are situations in which all consistent equilibria are inefficient specifically the provision of public goods tends to be inefficiently low due to strategic abstention from contracting free riding on others agreements can be avoided if individuals do not own all their actions when actions involve the use of assets efficient action ownership may correspond to collective rather than individual asset ownership

choosing a monetary value of greenhouse gases in assessment tools a comprehensive review there is a societal need for using monetary estimates of social impacts of co2 and other greenhouse gases in different assessment tools such as cost benefit analysis and life cycle assessment a number of estimates are available in the literature since these differ by several orders of magnitude there is ambiguity and confusion about which to use this review aims to give some guidance on this issue the variation in carbon value estimates depends on several uncertain aspects which will remain uncertain including climate sensitivity assumptions about future emissions and decision makers ethical standpoints hence there is no single correct monetary value for co2 it will depend on the ethical standpoint of the user due to this estimates of social costs of co2 emissions cannot be used for calculating an optimal emission level although they can inform such assessments it is suggested that marginal abatement cost values are used for emissions capped by binding targets in short term assessments and that social cost of carbon values should be used for all other emissions benchmark principles for choosing a monetary carbon value are suggested along with associated estimates depending on the choices made with regard to ethical standpoints and assumptions about future emissions and climate sensitivity estimates can be significantly higher than the ones typically used in assessment tools today the estimates need continuous updating and there is need for better understanding and communication around the limitations and uncertainties involved

opportunism in multilateral vertical contracting nondiscrimination exclusivity and uniformity comment an input supplier selling to competing downstream firms would benefit from publicly committing at the outset to all contracts efficient commitment however would require complete contracts the authors study instead bilateral contracting without commitment regarding others terms each firm then fears that the supplier might opportunistically renegotiate another s contract to increase bilateral profit at the firm s expense the authors show that nondiscrimination clauses generally cannot curb such third party opportunism even with symmetric firms to reassure firms crude forms of commitment may be adopted this could explain the pervasiveness of exclusivity arrangements and the striking uniformity and intertemporal rigidity of franchise contracts copyright 1994 by american economic association

investment in segmented capital markets bankers screening devices are identified to determine firms probability of borrowing in the formal segment of the capital market in pakistan incorporating this information investment functions are estimated using a two stage switching regressions model with endogenous switching it is concluded that firms that borrow in the formal markets behave according to the flexible accelerator model of investment while non borrowing firms plough back profits furthermore the former have higher capital output ratios and find it less difficult to adjust to their desired capital stocks compared to the latter investment determinants related to entrepreneurial and firm features are also identified

assessing pv and wind roadmaps learning rates risk and social discounting abstract methods to assess global renewable energy investment plans are presented and applied to photovoltaic and wind energy roadmaps recently published by international organizations price learning rate effects uncertainty and derived risk social discounting investment depreciation cost of capital and other factors are dealt with in detail some significant empirical results are a the roadmaps are market competitive globally and also economically efficient from an environmental point of view b the volume of funds required is significant but the investments can be financed with moderate carbon taxes c more expansive roadmaps yield enhanced results regarding both competitiveness and environmental efficiency d risks derived from the uncertainty in estimated learning rates may be significant and measures to control them are presented

targets for global climate policy an overview a survey of the economic impact of climate change and the marginal damage costs shows that carbon dioxide emissions are a negative externality the estimated pigou tax and its growth rate are too low to justify the climate policy targets set by political leaders a lower discount rate or greater concern for the global distribution of income would justify more stringent climate policy but would imply an overhaul of other public policies catastrophic risk justifies more stringent climate policy but only to a limited extent

network effects and environmental externalities do clean technologies suffer from excess inertia abstract we study the diffusion of a clean substitute to a dirty durable in a dynamic model consumer utility of both durables increases in their respective market shares due to network effects first we characterize the optimal dirty good tax the tax should achieve a long run optimal division of the market between the two goods along the transition path to this steady state the optimal tax depends on the current and future market shares of the clean durable thus even if the marginal environmental damage from an additional dirty durable is constant the optimal tax should not be constant second we study whether excess inertia can occur if the emission tax is not optimally set we then find that a constant tax that only accounts for the environmental damage caused by the dirty good may lead to excess inertia excess inertia could happen even if the clean technology is proprietary and the technology owner has incentives to sponsor the initial market diffusion of the technology

how to license intangible property we examine the optimal licensing strategy of a research lab selling to firms who are product market competitors we consider an independent lab as well as a research joint venture we show that 1 demands are interdependent and hence the standard price mechanism is not the profit maximizing licensing strategy 2 the seller s incentives to develop the innovation may be excessive 3 the seller s incentives to disseminate the innovation typically are too low 4 larger ventures are less likely to develop the innovation and more likely to restrict its dissemination in those cases where development occurs and 5 a downstream firm that is not a member of the research venture is worse off as a result of the innovation

an optimal auction with identity dependent externalities we analyze the problem of a seller of multiple identical units of a good who faces a set of buyers with unit demands private information and identity dependent externalities we derive the seller s optimal mechanism and characterize its main properties we show that the probability that a buyer obtains a unit is an increasing function of the externalities he generates and enjoys also the seller s allocation of the units of the good need not be ex post efficient as an illustration we apply the model to the problem faced by a developer of a shopping mall who wants to allocate and price its retail space among anchor and non anchor stores we show that a commonly used sequential mechanism is not optimal unless externalities are large enough

asymmetric information bargaining problems with many agents a yes or no decision must be made about some issue all agents must agree the coase theorem asserts that the efficient outcome will always result suppose the value positive or negative that an individual attaches to an affirmative decision is privately known to that individual it is proved under very mild conditions that with independent types as the number of agents increases the probability of an affirmative efficient decision goes to zero an example in which it is common knowledge that an affirmative decision is efficient and yet the probability of such a decision goes to zero is given

benefits and costs of international financial integration theory and facts the author provides a selective review of the recent analytical and empirical literature on the benefits and costs of international financial integration he discusses the impact of financial openness on consumption investment and growth and the impact of foreign bank entry on the domestic financial system consistent with some recent studies the author argues that financial integration must be carefully prepared and managed to ensure that the benefits outweigh the short run risks prudent macroeconomic management adequate supervision and prudential regulation of the financial system greater transparency and improved capacity to manage risk in the private sector are important requirements for coping with potentially abrupt reversals in pro cyclical short term capital flows the author adopts a more skeptical view than some assessments in two areas however first only foreign direct investment appears to provide dynamic gains and improved prospects for growth the evidence on the benefits of other types of capital flows remains weak second empirical research on the net benefits associated with foreign bank penetration is far from conclusive in particular the possibility that such penetration may lead to adverse changes in the allocation of credit among domestic firms cannot be dismissed on the basis of the existing evidence

description prescription and the choice of discount rates abstract the choice of discount rates is a key issue in the analysis of long term societal issues in particular environmental issues such as climate change approaches to choosing discount rates are generally placed into two categories the descriptive approach and the prescriptive approach the descriptive approach is often justified on grounds that it uses a description of how society discounts instead of having analysts impose their own discounting views on society this paper analyzes the common forms of the descriptive and prescriptive approaches and finds that in contrast with customary thinking both forms are equally descriptive and prescriptive the prescriptions concern who has standing i e who is included in society how the views of these individuals are measured and how the measurements are aggregated such prescriptions are necessary to choose from among the many possible descriptions of how society discounts the descriptions are the measurements made given a choice of measurement technique thus the labels descriptive approach and prescriptive approach are deeply misleading as analysts cannot avoid imposing their own views on society

endogenous games and mechanisms side payments among players we characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played this does not always lead to efficient outcomes despite complete information and costless contracting the characterizations are illustrated in a series of examples including voluntary contribution public good games cournot and bertrand oligopoly principal agent problems and commons games among others

commitment and observability in a contracting environment this paper examines leader follower games where a leader must purchase an essential input from a price setting supplier in order to take an action we show that equilibrium outcomes when the followers perfectly observe the leaders actions cannot be approximated by mixed equilibrium outcomes of the game where followers imperfectly observe the leaders actions i e they are not accessible accessibility fails since in a pure strategy equilibrium a supplier makes positive profits however in an equilibrium where a leader randomizes supplier profits must be zero our result follows from a generalized indifference principle that mixed strategies must satisfy in economic environments while supplier profits cannot be approximated player action profiles are accessible our results also apply to games with costly observation

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

discounting climate and sustainability climate policy recommendations differ widely because of disagreements over what discount rates to use disagreement reduces the impact of economic models and signals a need for improved methodology the problem is related to the choice of intergenerational welfare functions a first questionnaire finds that the standard welfare function swf fails to capture people s dislike of overshooting and fluctuating consumption paths a second questionnaire reveals that when very long term sustainability of well being is threatened people s implicit discount rates resemble the low estimates used by the stern review an alternative welfare function awf reflecting consumption growth can potentially capture the preference structure revealed in both questionnaires this makes the awf an interesting candidate when searching for policies for sustainable development under uncertainty importantly the questionnaires demonstrate that people are able to choose among policies by inspecting time graphs of policy consequences thus it is possible to circumvent the complexities and disagreements introduced by welfare functions and discounting

livestock disease indemnity design when moral hazard is followed by adverse selection averting or limiting the outbreak of infectious disease in domestic livestock herds is an economic and potential human health issue that involves the government and individual livestock producers producers have private information about preventive biosecurity measures they adopt on their farms prior to outbreak ex ante moral hazard and following outbreak they possess private information about whether or not their herd is infected ex post adverse selection we investigate how indemnity payments can be designed to provide incentives to producers to invest in biosecurity and report infection to the government in the presence of asymmetric information we compare the relative magnitude of the first and second best levels of biosecurity investment and indemnity payments to demonstrate the tradeoff between risk sharing and efficiency and we discuss the implications for status quo u s policy

competing vertical structures precommitment and renegotiation we consider a model where two agents privately informed about their own characteristics play a normal form game on behalf of two uninformed principals we analyze the existence of precommitment effects through public announcements of contracts in a model where agency contracts designed ex ante can always be secretly renegotiated at the ex ante and interim stages we show that the existence of precommitment effects depends both on the strategic complementarity of the agents actions and on the direct effect of the opponents actions on each principal s welfare in our model the possibility of renegotiation is crucial for the existence of precommitment effects the results are introduced through an example of cournot and bertrand competition between firms viewed as vertical structures