contestability in real time experimental flow markets this article reports the results from laboratory markets using a new trading institution in which sellers post offers to sell flows of output in real time we use the new institution to examine the outcomes in natural monopoly experimental markets no stable price outcomes were observed in markets contestable by two firms a finding that is consistent with the contestable markets hypothesis but in conflict with assertions commonly made by those advancing the theory s role in policy formation the average efficiency of markets contestable by two firms while greater than that of monopoly markets protected from entry was significantly less than that associated with the sustainable equilibrium

renewable resource management with environmental prediction variations in environmental conditions affect renewable resource growth the ability to predict such variations is improving providing scope for improved management we generalize a common stochastic stock recruitment model to explore how optimal management changes with environmental prediction we obtain three main results first while it might seem that a prediction of adverse future conditions should lead to more conservative management the opposite may be true second optimal management requires only a one period ahead forecast suggesting forecast accuracy is more important than forecast lead time finally we derive conditions on environmental fluctuations guaranteeing positive optimal harvest in every period gestion d une ressource renouvelable quand on predit les conditions futures de l environnement les variations dans les conditions de l environnement affectent la croissance de la ressource renouvelable la capacitea prevoir ces variations s ameliore et ouvre la possibilite d ameliorer la gestion de la ressource les auteurs utilisent un modele de ressource renouvelable avec croissance stochastique et obtiennent trois resultats d abord alors qu il peut sembler que des previsions pessimistes de conditions difficiles dans l avenir peuvent conduire a une gestion plus conservatrice le contraire peut etre vrai ensuite la gestion optimale requiert seulement une prediction pour la prochaine periode voila qui suggere qu il est plus important d avoir une prevision exacte que d avoir des previsions a plus long terme enfin on developpe les conditions pour les fluctuations de l environnement qui garantissent une recolte positive optimale a chaque periode

pulse fishing and stock uncertainty large variation in stock dynamics affects the accuracy of stock estimates which fisheries managers rely on when determining quotas and other regulations the purpose of this paper is to investigate the implications of uncertainty on pulse fishing we show that as the variance of the random natural fluctuations increases the optimal pulse length decreases and converge toward a constant escapement policy hence in fisheries with large natural variability a constant escapement policy is a good approximation of the optimal policy

the role of investment specific technological change in the business cycle this is a quantitative investigation of the importance of technological change speci c to new investment goods for postwar us aggregate uctuations a growth model that incorporates this form of technological change is calibrated to us data and simulated using the relative price of new equipment to identify the process driving investmentspeci c technology shocks the analysis suggests that this form of technological change is the source of about 30 of output uctuations 2000 elsevier science b v all rights reserved

the effect of usage and size on tractor depreciation an econometric model was estimated to explain prices for tractors sold at auction tractor age hours of use size and condition were statistically significant explanatory variables real tractor depreciation most closely approximated a sum of the years digits pattern tractors sold at consignment and bankruptcy auctions brought a lower price than tractors sold by retiring farmers high levels of usage did not greatly reduce tractor value but tractors with low annual usage brought substantial premiums in the auction market

estimating farm equipment depreciation which functional form is best farm equipment depreciation has been the focus of research in economics and engineering for more than 60 years using data from 16 years of auction sales depreciation functions were estimated for 17 types of equipment including tractors combines swathers planters discs and trucks the box cox function did the best job of explaining variability in these various sales data bases and in forecasting prices in an out of sample data set nevertheless the much less complicated double square root and sum of year s digits functions performed nearly as well simplified double square root estimates are provided for practitioners interested in forecasting equipment depreciation

renewable resource management with stochastic recharge and environmental threats abstract exploitation diminishes the capacity of renewable resources to withstand environmental stress increasing their vulnerability to extreme conditions that may trigger abrupt changes the onset of such events depends on the coincidence of extreme environmental conditions and on the resource state determining its resilience when the former is uncertain and the latter evolves stochastically the uncertainty regarding the event occurrence is the result of the combined effect of these two uncertain components we study optimal management in this setting the environmental threat renders the single period discount factor policy dependent and as a result the compound discount factor becomes history dependent existence of an optimal markovian deterministic stationary policy is established and the optimal state process is shown to converge to a steady state distribution

a viability analysis for a bio economic model abstract this paper presents a simple dynamic model dealing with the management of a marine renewable resource but instead of studying the ecological and economic interactions in terms of equilibrium or optimal control we pay much attention to the viability of the system or in a symmetric way to crisis situations these viability crisis situations are defined by a set of economic and biological state constraints the analytical study focuses on the compatibility between the state constraints and the controlled dynamics using the mathematical concept of viability kernel we reveal the situations and if possible management options to guarantee a perennial system going further we define overexploitation indicators by the time of crisis function in particular we point out irreversible overexploitation configurations related to the resource extinction

experimental evidence of a sunk cost paradox a study of pricing behavior in bertrand edgeworth duopoly a well known implication of microeconomic theory is that sunk costs should have no effect on decision making we test this hypothesis with a human subjects experiment students recruited from graduate business courses with an average of over six years of work experience played the role of firms in a repeated price setting duopoly game in which both firms had identical capacity constraints and costs including a sunk cost that varied across experimental sessions over six different values we find contrary to the prediction of microeconomic theory that subjects pricing decisions show sizable differences across treatments the effect of the sunk cost is non monotonic as it increases from low to medium levels average prices decrease but as it increases from medium to high levels average prices increase these effects are not apparent initially but develop quickly and persist throughout the game cachon and camerer s 1996 loss avoidance is consistent with both effects while cost based pricing predicts only the latter effect and is inconsistent with the former

market contestability in the presence of sunk entry costs this article extends previous laboratory experimental research to examine the competitive discipline of contested markets with a natural monopoly type cost structure where sunk costs are neither zero nor infinite several alternative conjectures as to how or whether sunk costs can weaken the discipline of contested markets are presented and interpreted in the context of the experimental design sunk costs are found to weaken the support for strong interpretations of the contestable markets hypothesis and thus yield a wide diversity of dynamic patterns of market performance yet the disciplining power of contestability remains impressive with no indications of sustained monopoly pricing

renewable resource harvesting under correlated biological and economic uncertainties implications for optimal and second best management biologists have long recognized environmental disturbances impact both the growth of renewable resources and the efficiency of harvest effort however models of renewable resource management under uncertainty have commonly assumed economic and biological uncertainties to be uncorrelated we present examples of valuable fish species that experience correlated variation in biological growth and catchability in response to a common environmental disturbance building correlation into a model of renewable resource management under uncertainty we find correlation to alter the optimal response by managers to cost disturbances and impact the value of retaining intra period flexibility over harvest targets examining the performance of three harvest control mechanisms harvest quotas effort quotas and taxes reveals that positive correlation between costs and growth favors harvest quotas over effort quotas and effort quotas over taxes and vice versa the model is then applied numerically to the pacific bigeye tuna fishery which experiences positively correlated shocks driven by the el nino southern oscillation correlation qualitatively changes the optimal response to a cost shock and harvest quotas are found to be strongly favored over both effort quotas and taxes

endogenous fishery management in a stochastic model why do fishery agencies use tacs along with fishing periods this paper seeks to explain the circumstances under which using total allowable catch tac as an instrument to manage a fishery along with fishing periods may be of interest from a regulatory point of view the deterministic analysis by homans and wilen j environ econ manag 32 1 21 1997 and anderson ann oper res 94 231 257 2000 is thus extended to a stochastic scenario where the resource cannot be measured accurately the resulting model is solved numerically to find the optimal control rules in the iberian sardine stock three relevant conclusions can be highlighted from simulations first the greater the uncertainty regarding the state of the stock the lower the probability of the fishery being closed before the end of the fishing period second the use of tacs as a management instrument in fisheries that are already regulated by fishing periods leads to i an increase in the optimal season length and harvests especially for medium and high numbers of licences ii improved biological and economic variables when the fleet is large and iii extinction risk for the resource being eliminated third the regulator would rather select the number of licences than restrict the season length

risk and sustainability assessing fishery management strategies we develop a theoretical framework to assess the sustainability of fishery management strategies when the bioeconomic dynamics are marked by uncertainty and several conflicting objectives have to be accounted for stochastic viability ranks management strategies according to their probability to sustain economic and ecological outcomes over time the approach is extended to build stochastic sustainable production possibility frontiers representing the trade offs between sustainability objectives at any risk level given the current state of the fishery this framework is applied to a chilean fishery faced with el nino uncertainty we study the viability of effort and quota strategies when catch and biomass levels have to be sustained we show that 1 for these sustainability objectives whatever the level of the outcomes to be sustained quota based management results in a better viability probability than effort based management and 2 the fishery s historical quota levels were not sustainable given the stock levels in the early 2000s

price changes maintenance and the rate of depreciation this study estimates rates of deterioration and depreciation for a sample of used privately owned single and twin engine aircraft over the period 1971 1991 the adoption of a strict liability stan

cooperation in a stochastic transboundary fishery the effects of implementation uncertainty versus recruitment uncertainty this paper examines how non binding cooperative agreements on fisheries management can be sustained when the management plans in participating countries are implemented imperfectly and compares the effects of implementation uncertainty and of recruitment uncertainty on the potential for cooperation the model developed assumes two countries that share a fish stock reproduction depends on how much fish each country leaves behind after harvesting and hence on random variation in each country s achieved abandonment level a self enforcing agreement is proposed that accounts for the random variation the agreement is illustrated with a numerical example a self enforcing cooperative solution can only be sustained when uncertainty is not pronounced and when the two countries control close to equal shares of the fishery even when a cooperative agreement can be achieved frequent phases of reversion to non cooperative harvest levels are needed to support the agreement a comparison of the effects of recruitment and implementation uncertainty on implicit cooperation indicates that implementation uncertainty is more likely to hamper cooperation

does the optimal size of a fish stock increase with environmental uncertainties we analyze the effect of environmental uncertainties on optimal fishery management in a bio economic fishery model unlike most of the literature on resource economics but in line with ecological models we allow the different biological processes of survival and recruitment to be affected differently by environmental uncertainties we show that the overall effect of uncertainty on the optimal size of a fish stock is ambiguous depending on the prudence of the value function for the case of a risk neutral fishery manager the overall effect depends on the relative magnitude of two opposing effects the convex cost effect and the gambling effect we apply the analysis to the baltic cod and the north sea herring fisheries concluding that for risk neutral agents the net effect of environmental uncertainties on the optimal size of these fish stocks is negative albeit small in absolute value under risk aversion the effect on optimal stock size is positive for sufficiently high coefficients of constant relative risk aversion

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

allocating resources in an uncertain world water management and endangered species instream flows may be essential in protecting aquatic species that are threatened or endangered an economic model of the optimal allocation of water under pure uncertainty is developed with particular attention paid to the situation when a species characterized by critical depensation is affected by instream flows we adopt the notion of pure uncertainty that frank knight and daniel ellsberg intended which applies when decision makers cannot reduce their uncertainty to a unique probability distribution following recent work by hansen sargent and others we employ robust control as a way to deal with this problem copyright 2008 oxford university press

on uncertain renewable resource stocks optimal harvest policies and the value of stock surveys abstract annual harvest quotas are commonly employed in the management of renewable resource stocks commercial fisheries being a prime example such resource stocks often undergo quite significant natural fluctuations to which quotas must be adapted a further complication arises from the fact that estimates of stock abundance are often highly uncertain in this paper a bayesian approach is used to model optimal quota decisions for an uncertain fluctuating renewable resource stock

optimal management with reversible regime shifts abstract in this paper we examine the management of a natural resource a fishery subject to regime shifting dynamics a regime shift is defined as an episode in which the dynamics of the resource can switch between two alternative regimes at random times specifically we study the impact of reversible regime switching both observed and unobserved on optimal harvesting policy the case in which the regime is not directly observed i e observational uncertainty is addressed by using the extended pomdp approach developed in fackler and pacifici 2014 we illustrate the performance of the model under different assumptions on the underlying stochastic growth variability the biological structure of the stock in different regimes and the resilience of the regimes when the regime is known optimal policies depend on the population level and which regime is currently active when the regime is unobserved on the other hand the optimal policy depends on the population level and a belief distribution about the current regime in general when the probability of regime change is fixed and hence is not affected by harvesting policy the optimal policy is of the constant escapement variety when the probability of switching regime is endogenous the optimal policy is no longer of the constant escapement type optimal policies when the regime is uncertain are approximately equal to a weighted average of the policies when the regime is certain with the weights equal to the beliefs in the associated regimes but there are differences

the erosion of colonial trade linkages after independence high trade between countries with colonial ties may be explained by government policies that establish preferential access or as a consequence of networks formed through social interactions using bilateral trade data from 1948 to 2003 we examine the eect of independence on post colonial trade the severing of formal colonial relations can lead to an immediate reduction in trade as preferential access is eliminated as well as a gradual reduction corresponding to the deterioration of trading networks our results reveal that independence reduces colonial trade with its colonizer metropole the reduction cumulates over a 30 year period and the disruption is particularly severe for hostile separations we also find that overall colonial trade falls subsequent to independence but to a lesser extent than trade with the metropole

factor hoarding and the propagation of business cycles shocks this paper analyzes the role of variable capital utilization rates in propagating shocks over the business cycle to this end we formulate and estimate an equilibrium business cycle model in which cyclical capital utilization rates are viewed as a form of factor hoarding we find that variable capital utilization rates substantially magnify and propagate the impact of shocks to agents environments the strength of these propagation effects is evident in the dynamic response functions of various economy wide aggregates to shocks in agents environments in the statistics that we construct to summarize the strength of the propagation mechanisms in the model and in the volatility of exogenous technology shocks needed to explain the observed variability in aggregate u s output other authors have argued that standard real business cycle rbc models fail to account for certain features of the data because they do not embody quantitatively important propagation mechanisms these features include the observed positive serial correlation in the growth rate of output the shape of the spectrum of the growth rate of real output and the correlation between the forecastable component of real output and various other economic aggregates allowing for variable capital utilization rates substantially improves the ability of the model to account for these features of the data

partial enclosure of the commons abstract we examine the efficiency distributional and environmental consequences of assigning spatial property rights to part of a spatially connected natural resource while the remainder is competed for by an open access fringe we refer to this as partial enclosure of the commons we obtain sharp analytical results regarding partial enclosure of the commons including 1 while second best it typically improves welfare relative to no property rights 2 all resource users can be made better off 3 positive rents arise in the open access area and 4 the resource maintains higher stocks under spatial heterogeneity we also characterize spatial regions that are ideal candidates for partial enclosure typically society should seek to enclose those patches with high environmental productivity and high self retention but whether high economic productivity promotes or relegates a patch may depend on one s objective

vintage capital investment and growth abstract we study the dynamics of growth and investment in a continuous time model with vintage capital vintage capital models may be characterized by non exponential rates of depreciation and technical change and can incorporate gestation lags as well as learning by using we investigate the effect of such features on the dynamics of investment and growth and show how they can contribute to explaining the volatile nature of investment time series

monopoly behaviour decentralized regulation and contestable markets an experimental evaluation this study provides a comparative experimental evaluation of several alternative approaches to the single product monopoly problem we contrast incentive compatible decentralized regulatory mechanisms with notions of market contestability in a decreasing cost environment the decentralized regulatory mechanisms are found to be significantly more effective at restraining monopoly power than is allowing direct contestability but the regulatory mechanisms examined require that the regulatory agency know the market demand curve though not the industry cost curve since this is significantly more information than is required to implement direct contestability an interesting tradeoff is suggested does the greater efficiency in monopoly restraint provided by the regulatory mechanism relative to direct contestability outweigh the former s greater informational requirements

fishery management under multiple uncertainty abstract among others who point to environmental variability and managerial uncertainty as causes of fishery collapse roughgarden and smith proc natl acad sci 93 1996 5078 argue that three sources of uncertainty are important for fisheries management variability in fish dynamics inaccurate stock size estimates and inaccurate implementation of harvest quotas we develop a bioeconomic model with these three sources of uncertainty and solve for optimal escapement based on measurements of fish stock in a discrete time model among other results we find 1 when uncertainties are high we generally reject the constant escapement rule advocated in much of the existing literature 2 inaccurate stock estimation affects policy in a fundamentally different way than the other sources of uncertainty and 3 the optimal policy leads to significantly higher commercial profits and lower extinction risk than the optimal constant escapement policy by 42 and 56 respectively

fisheries management under cyclical population dynamics cycles in environmental conditions e g sea surface temperature directly impact fish growth this paper extends the classical gordon schaefer fishery model by replacing the constant growth rate with a cyclical growth rate the optimal harvest rate is shown to fluctuate but the cycle of the harvest rate lags the cycle of the biological growth function with the highest harvest rate occurring after biological conditions start to decline simulations contrast various fishing policies and illustrate the proclivity to crash a fishery if it is wrongfully managed as if there is a constant growth rate with i i d environmental shocks finally we show that small cyclical fluctuations in one species can result in large fluctuations in the optimal harvest rate of another species if the fish species are interlinked through predator prey relationships

fisheries management with stock growth uncertainty and costly capital adjustment we develop a dynamic model of a fishery which simultaneously incorporates random stock growth and costly capital adjustment numerical techniques are used to solve for the resource rent maximizing harvest and capital investment policies capital rigidities bring diminishing marginal returns to the current period harvest and introduce an incentive to smooth the catch over time with density dependent stock growth however catch smoothing increases stock variability resulting in reduced average yields the optimal management policy balances the catch smoothing benefits against yield loss we calibrate the model to the alaskan pacific halibut fishery to demonstrate the main insights

the evolution of price dispersion in the european car market car prices in europe are characterized by large and persistent differences across countries the purpose of this paper is to document and explain this price dispersion using a panel data set extending from 1980 to 1993 we first demonstrate two main facts concerning car prices in europe i the existence of significant differences in quality adjusted prices across countries with italy and the u k systematically representing the most expensive markets 2 substantial year to year volatility that is to a large extent accounted for by exchange rate fluctuations and the incomplete response of local currency prices to these fluctuations these facts are analysed within the framework of a multiproduct oligopoly model with product differentiation the model identifies three potential sources for the international price differences price elasticities generating differences in markups costs and import quota constraints local currency price stability can be attributed either to the presence of a local component in marginal costs or to markup adjustment that is correlated with exchange rate volatility the latter requires that the perceived elasticity of demand is increasing in price we find that the primary reason for the higher prices in italy is the existence of a strong bias for domestic brancs that generates high markups for the domestic firm fiat in the u k higher prices are mainly attributed to better equipped cars and or differences in the dealer discount practices the import quota constraints are found to have a significant impact on japanese car prices in italy france and the u k with respect to local currency price stability a large percentage of the documented price inertia can be attributed to local costs and a smaller fraction to markup adjustment that is indicative of price discrimination based on these results we conjecture that the emu will substantially reduce the year to year volatility observed in the car price data but without further measures to increase european integration it will not completely eliminate existing cross country price differences

maintenance and investment complements or substitutes a reappraisal a benchmark ak optimal growth model with maintenance expenditures and endogenous utilization of capital is considered within an explicit vintage capital framework scrapping is endogenous and the model allows for a clean distinction between age and usage dependent capital depreciation and obsolescence it is also shown than in this set up past investment profile completely determines the size of current maintenance expenditures among other findings a closed form solution to optimal dynamics is provided taking advantage of very recent development in optimal control of infinite dimensional systems more importantly and in contrast to the pre existing literature we study investment and maintenance co movements without any postulated ad hoc depreciation function in particular using impulse response experiments we find that optimal investment and maintenance do move together in the short run in response to neutral technological shocks which seems to be more consistent with the data

capital maintenance and depreciation over the business cycle abstract this paper develops and estimates a stochastic general equilibrium model with capital maintenance which affects endogenously the depreciation rate of capital the estimate of maintenance series is found to track survey based measures for canada quite closely and to generate the procyclical pattern of maintenance observed in the data we use our model estimates to infer the time profile of equipment capital depreciation in canadian and us manufacturing the depreciation rate is estimated to be volatile and highly procyclical in both countries

capacity utilization and depreciation in use in this paper the effect capacity utilization has on the depreciation of capital goods is studied starting from a quadratic approximation to a normalized short run cost function expressions for the optimal rate of capacity utilization the demands for labour and energy and for investment are obtained investment is a function of past capital stock expected future capital stock expected future relative prices and expected future depreciation rates expectations are modelled via instruments the model is tested using us total manufacturing quarterly data depreciation dependent upon usage is found to be both statistically and economically significant

fishery management under poorly known dynamics abstract adapting fishing regulations in a highly uncertain environment remains a complex challenge for managers who have to deal with non linear dynamics of fish population and harvest levels in this research a recent method of stochastic control is adapted to a general fishery management problem under multiples sources of uncertainty related to the dynamics of the fish population and the effect of fishing on its growth the question is about adjusting permanently the management rule or to hold a fixed policy thus avoiding additional noise the mathematical problem developed here though oversimplified represents an original approach to the fishery management issue inspired by the monetary policy challenge of a central bank brainard principle it assumes that control variation increases the level of uncertainty namely cviu approach under particular conditions resulting in preferable inaction regions for managers we specify these conditions to show that the management of a poorly known fishery is still possible by using a cviu approach

frictionless technology diffusion the case of tractors many new technologies display long adoption lags and this is often interpreted as evidence of frictions inconsistent with the standard neoclassical model we study the diffusion of the tractor in american agriculture between 1910 and 1960 a well known case of slow diffusion and show that the speed of adoption was consistent with the predictions of a simple neoclassical growth model the reason for the slow rate of diffusion was that tractor quality kept improving over this period and more importantly that only when wages increased did it become relatively unprofitable to operate the alternative laborintensive horse technology jel l62 n51 n52 n71 n72 o33 q11 understanding the determinants of the rate at which new technologies are created and adopted is a critical element in the analysis of growth even though modeling equilibrium technology creation can be somewhat challenging for standard economic theory understanding technology adoption should not be specifically once the technology is available the adoption decision is equivalent to picking a point on the appropriate isoquant dynamic considerations make this calculation more complicated but they still leave it in the realm of the neoclassical model a simple minded application of the theory of the firm suggests that profitable innovations should be adopted instantaneously or with some delay depending on various forms of cost of adjustment the evidence on the adoption of new technologies seems to contradict this prediction jovanovic and lach 1997 report that for a group of 21 innovations it takes 15 years for its diffusion to go from 10 percent to 90 percent the 10 90 lag they also cite the results of a study by grubler 1991 covering 265 innovations who finds that for most diffusion processes the 10 90 lag is between 15 and 30 years 1

estimation of r d depreciation rates a suggested methodology and preliminary application the 2008 version of the sna will recommend capitalization of r d expenditures to implement this recommendation measures for the stock of r d capital must be constructed and this implies a need to determine the depreciation rate of r d capital in this paper we develop a simple model based on a production function method that allows for monopolistic competition to estimate the annual depreciation rate of r d capital we treat r d capital as a technology shifter instead of as an explicit input factor both the r d stock and the time variable are used to capture technological progress modeling r d capital in this manner can better represent the role r d plays in economic growth estimated r d depreciation rates and markup factors are presented for the u s manufacturing sector and four u s knowledge intensive industries namely chemical products sic 28 non electrical machinery sic 35 electrical products sic 36 and transportation equipment sic 37

a dynamic model of bertrand competition with entry abstract this paper analyzes a simple repeated game of simultaneous entry and pricing we report a surprising property of the symmetric equilibrium solution if the number of potential competitors is increased above two the market breaks down with higher probability and the competitive outcome becomes less likely more potential competition lowers welfare another bertrand paradox the model can also be applied to auctions to explore whether a revenue maximizing auctioneer should restrict the number of bidders if bidder participation is costly

harvesting in a fishery with stochastic growth and a mean reverting price we analyze a continuous nonlinear bioeconomic model to demonstrate how stochasticity in the growth of fish stocks affects the optimal exploitation policy when prices are stochastic mean reverting and possibly harvest dependent optimal exploitation has nonlinear responses to the price signal and should be conservative at low levels of biological stochasticity and aggressive at high levels price stochasticity induces conservative exploitation with little or no biological uncertainty but has no strong effect when the biological uncertainty is larger we further observe that resource exploitation should be conservative when the price reverts slowly to the mean simulations show that in the long run both the stock level and the exploitation rate are lower than in the deterministic solution with a harvest dependent price the long run price is higher in the stochastic system the price mean reversion rate has no influence on the long run solutions

uncertain measurements of renewable resources approximations harvesting policies and value of accuracy abstract this paper deals with the management of renewable resources subject to measurement error the method stochastic optimization in policy space sops allows for more general solutions to problems that are not lq than earlier attempts measurement errors are found to be more important for quota policies than natural stochastic variation with little error filtering in time or in policy space is important with considerable error caution becomes important various approximations are compared policies based simply on historical measurements are found to give higher expected values than policies based on advanced kalman filter estimates values of measurement accuracy are estimated

new evidence on the retirement and depreciation of machine tools i introduction in the late 1970s and early 1980s charles hulten and frank wykoff 1979 1981a 1981b undertook a major effort to estimate economic depreciation for the u s capital stock their pioneering work which analyzed prices for many used assets became the primary reference for estimates of economic depreciation however since then research on depreciation has been limited despite the need to examine the robustness of hulten and wykoff s results and to cover assets omitted from their studies in addition little work has been done to estimate retirement distributions which also play an important role in the construction of capital stocks this paper provides new evidence on the depreciation and retirement patterns of machine tools a grouping that includes many types of equipment that cut or form metal the data were collected from a survey of dealers belonging to the machinery dealers national association these dealers provided information on the prices of used machine tools from their own sales records they also estimated certain facets of the retirement distribution for machine tools including the average service life the direction of change in the average life since the mid 1970s and the ages by which 25 percent and 75 percent of an investment cohort are retired machine tools can be divided into two broad groups the first consists of the conventional machines that require manual control from an operator although the design and safety of these conventional machines has improved over the years the pace of technical progress has been slow the second group consists of numerically controlled machines which are more highly automated than their conventional counterparts 1 american manufacturers began to install numerically controlled machines in large numbers during the 1970s and these machines have continued to replace conventional if machines on the factory floor however at the time of my survey conventional machines still represented the bulk of machine tools operating in the united states and the estimates of depreciation and retirement in this paper refer strictly to conventional machines the paper is organized as follows section ii traces the adoption of numerically controlled machines by u s industry and then models how this phenomenon would have affected the depreciation and retirement patterns of conventional machine tools section iii briefly describes the data set section iv analyzes the information on retirement patterns provided by the dealers while section v presents the estimates of economic depreciation section vi summarizes my findings and suggests avenues for further research ii adoption of numerically controlled machines evidence and implications at roughly five year intervals since the 1920s american machinist magazine has conducted an in depth inventory of the stock of machine tools used by american manufacturers for a detailed breakdown of machine types the inventory provides information on the number of machines in use and the age distribution of this stock table i uses the american machinist surveys to characterize the adoption of numerically controlled machines in the united states since the mid 1970s as shown on the first line the share of numerically controlled machines in the total machine tool stock rose from 1 8 percent in 1976 78 to 9 2 percent in 1989 this five fold increase in the share of numerically controlled machines in the existing stock implies a considerably higher share of these machines in new investment indeed as shown in the right hand columns of the table numerically controlled machines represented 17 1 percent and 25 2 percent of all machine tools acquired during 1979 83 and 1985 89 respectively 2 thus numerically controlled machines have become a significant part of total u s investment in machine tools table i also shows that the adoption of numerically controlled machines has varied widely across machine categories

long run implications of investment specific technological change an attempt is made to disentangle its effects from the more traditional hicksneutral form of technological progress the balanced growth path for the model is characterized and calibrated to u s national income and product account nipa data the quantitative analysis suggests that investment specific technological change accounts for the major part of growth jel e13 030 041 047

optimal growth with unobservable resources and learning abstract this paper examines the problem of choosing optimal resource consumption from an imperfectly observable aggregate capital wealth or resource stock which the decision maker learns about over time learning is complicated by the fact that the planner receives information about an object the true resource stock which is a moving target under the assumption that the utility of zero consumption is we show that the optimal policy follows a completely deterministic cautious or minmax policy that assumes the worst in each period and optimizes against that when this model is compared to a model with completely observable wealth levels the following insights are obtained 1 there is over saving 2 investment and output processes are more volatile than consumption and 3 regressions underestimate the risk aversion of agents information about the wealth or stock level is only valuable if it alters the support of the agent s beliefs thus information may be statistically informative yet economically valueless if information changes the support of the agent s beliefs then the optimal solution features an endogenous resource discovery process

a cross country database for sector investment and capital this article presents a new database of investment and capital in agriculture manufacturing and the overall economy it covers 62 industrial and developing countries for the years 1967 92 a common method is used in the calculations to facilitate comparisons across countries and sectors the sensitivity of the calculations to choices of parameters and estimation methods is tested collectively the data show that as economies grow capital stocks accumulate but the composition of capital changes together and individually capital stocks in agriculture and manufacturing constitute a smaller share of the total capital stock than they did 20 years ago capital labor ratios show that agriculture has become more capital intensive m most countries the composition of agricultural capital has changed as well capital from investments in orchards and livestock has declined relative to capital from fixed investments in machinery irrigation and buildings

fisheries instrument choice under uncertainty this paper uses data from an actual fishery to construct a tractable dynamic model to compare expected profit and its variance optimal stock size optimal harvest rate and optimal fishing effort under different management regimes under uncertainty the results provide a comparison of instrument choice between a total harvest control and a total effort control under uncertainty an original method to evaluate the tradeoffs between profits and other criteria in a dynamic context and insights regarding the relative merits of catch and effort controls in fisheries management

landing fees vs harvest quotas with uncertain fish stocks a revised version of this paper was published in the journal of environmental economics and management volume 43 issue 2 march 2002 pages 325 338

natural monopoly and contested markets some experimental results a firm may become a monopolist because the average cost of producing the product reaches a minimum at an output rate that is big enough to satisfy the entire market at a price that is profitable in a situation of this sort if there is more than one firm producing the product each must be producing at a higher thanminimum level of average cost each may be inclined to cut the price to increase its output rate and reduce its average costs the result is likely to be economic warfare and the survival of a single victor the monopolist

empirical studies of depreciation this paper surveys empirical research on depreciation based on an econometric model of asset prices introduced by hall in 1971 and shows how hall s model provides a vehicle for unifying research on constant quality price indices and depreciation an additional objective of the paper is to illustrate the use of this research in constructing an integrated system of income product and wealth accounts a system of vintage accounts like that originated by christensen and jorgenson in 1973 is the key to successful integration

posted offer markets in near continuous time an experimental investigation this paper reports an experiment conducted to evaluate a near continuous variant of the posted offer trading institution where the number of periods in a market session is increased by reducing sharply each period s maximum length experimental results suggest that although decisions in time truncated periods are not equivalent to periods of longer duration extensive repetition improves considerably the drawing power of equilibrium predictions in some challenging environments nevertheless significant deviations remain in the near continuous framework we also observe that the extra data collected in the near continuous framework allows new insights into price convergence and price signaling

coalition formation in fisheries with potential regime shift a system can undergo rapid regime shift in which the growth of natural resources suddenly and permanently declines we examine how the threat of such a shift alters the strategic management of a common pool renewable resource we consider exogenous and endogenous threats and examine their effects on both incentives to join a coalition and harvest decisions we find that an exogenous threat of reduced resource growth may cause the coalition to grow in size and perhaps of most interest we identify conditions under which members of the stable coalition reduce harvest while non members increase harvest in response to the threat in contrast an exogenous threat of total stock collapse may destabilize coalitions resulting in higher harvest from former members but reduced harvest by non members when the threat of either type of shift is endogenous the threat of regime shift can induce stable coalitions with more than two members in particular we identify cases in which the first best full cooperation is sustained as an equilibrium outcome finally we find that the relation between the magnitude of the shift and the size of stable coalitions may be negative

measure twice cut once optimal inventory and harvest under volume uncertainty and stochastic price dynamics abstract natural resources are often subject to state uncertainty resource abundance is not known with certainty but can be measured measurements are typically imperfect and costly to obtain the decision of whether to invest in resource measurement may be influenced by other state variables for example a resource commodity price we introduce a mixed observability model of optimal forest management featuring a partially observable forest resource and perfectly observable stochastic price the decision maker optimizes the expected net present value of forest returns by choosing when to measure current forest volume conduct an inventory harvest and replant or delay action parameter values are obtained from numerous forestry data sources optimal investment in inventory reduces the cost of uncertainty about timber volume and increases the predictability of returns moreover price stochasticity interacts with inventory decisions to produce asymmetric effects of high and low prices on inventory timing we also produce the first graphical faustmann rule analogues for jointly optimal inventory and harvest

increasing marginal returns and the danger of collapse of commercially valuable fish stocks abstract on the basis of data from the north sea herring fishery we discuss the consequences of increasing marginal returns on the exploitation of renewable resources we show that high but still reasonable discount rates can cause extinction to be optimal even in the ideal case of a sole owner and a resource with a high growth rate in the case of lower discount rates optimal cyclical policies can periodically drive the resource to levels approaching safe minimum standards we discuss the sustainability intergenerational equity social risk aversion and theoretical issues raised by increasing marginal returns