intergenerational equity and sustainability abstract this paper explores the limitations of conventional economic analysis of intergenerational problems and examines some of the alternatives suggested in the literature it is argued that proper consideration of future generations has at least three requirements first when future costs and benefits are considered it should be taken into account that they are to be enjoyed by different generations second the sustainability requirement should be adopted this represents an equity commitment to the future and implies the recognition that future generations have the right to nondeteriorated ecological and economic capacity the paper studies the ways in which the recognition of these rights might be incorporated into economic evaluation and management third an appropriate institutional network to enforce the recognition of these rights in decision making processes should be constituted its design and necessary functions are also analyzed

the ethics of intergenerational distribution reply and response to john e roemer recent concerns among economists over global climate change have given rise to an uneven literature on intergenerational welfare economics environmental resource economics in its march 2011 issue published a paper by the political philosopher john e roemer that contains not only errors of interpretation of what others have written but also misunderstandings of settled matters i respond and reply to roemer by re exploring the foundations of intergenerational welfare economics i show that ethical pluralism gives rise to a very different framework for thinking about the subject than the one roemer presents in his paper moreover his dismissal of much of what welfare economists write on such concepts as social discount rates has as its source an utterly narrow view of the contexts in which economic evaluation is undertaken in the contemporary world

learning from failure towards an evolutionary model of collaborative ventures this paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture we develop a model of the collaboration process in partnership and alliances based on earlier work by ring and van de ven 1994 and by doz 1996 we employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners and to explicate the impact that external shocks have on their perceptions of efficiency and equity the impact of these events as well as the responses they elicit on the quality of the relationship and vice versa are also considered we find that the partners assessments cause them to either engage in renegotiation of the terms of the contract or to modify their behavior unilaterally in an attempt to restore balance to the relationship the process feeds back until a new mutual understanding of equity is restored or else the relationship deteriorates gradually until a point when the venture is dissolved we conclude that positive feedback loops are critical in the evolutionary process that relationship quality is both an outcome and a mediating variable and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship

towards an attention based view of the firm the central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision makers what decision makers do depends on what issues and answers they focus their attention on what issues and answers they focus on depends on the specific situation and on how the firm s rules resources and relationships distribute various issues answers and decision makers into specific communications and procedures the paper develops these theoretical principles into a model of firm behavior and presents its implications for explaining firm behavior and adaptation 1997 by john wiley sons ltd

the ethics of intertemporal distribution in a warming planet this paper evaluates from the ethical viewpoint current work by economists on intergenerational resource allocation in the presence of global warming we begin by attempting to elucidate the debate that has recently occurred on the appropriate choice of the discountrate weofferthreejustificationsformaximizingthediscountedsumofgenerational utilities and find only one of these to be a satisfactory justification of that practice the pos sibility that the human species may become extinct this implies that a very small discount rate large discount factor should be used we argue that the justification for discounting inherent in the approaches taken by many economists is that of the present generation of hegemon which is unacceptable the role of the ramsey equation in deducing the discount rate in these theories is explained as an alternative to discounted utilitarianism we propose a principle of sustainability we describe optimal paths that have been calculated for the sus tainabilitiarian rawlsian objectivefunction andpathsthatwillsustaingrowthinwelfare at a positive rate we report results concerning optimal paths when the uncertainty of existence of future generations is taken into account in sharp contrast to the utilitarian model it turns out that under some conditions the sustainabilitarian can ignore the uncertainty regarding thedateatwhichhumansbecomeextinct thereisastrikingdifferencebetweenthesolutions of the discounted utilitarian program and the sustainabilitarian program under uncertainty

marshallian factor market externalities and the dynamics of industrial localization abstract when an industry has thus chosen a locality for itself it is likely to stay there long so great are the advantages which people following the same skilled trade get from near neighborhood to one another a localized industry gains a great advantage from the fact that it offers a constant market for skill employers are apt to resort to any place where they are likely to find a good choice of workers while men seeking employment naturally go to places where there are many employers who need such skill as theirs the advantages of variety of employment are combined with those of localized industries in some of our manufacturing towns and this is a chief cause of their continued growth alfred marshall principles of economics 8th ed pp 271 272 1920

reconciling sustainability and discounting in cost benefit analysis a methodological proposal abstract the incorporation of the intergenerational equity objective has rendered the traditional cost benefit analysis cba approach obsolete for the evaluation of projects presenting an important number of environmental externalities and for those whose impacts extend throughout a long period of time based on the assumption that applying a discount rate rewards current consumption and therefore that it is only possible to introduce a certain intergenerational equity in a cost benefit analysis in this work we propose an approach to discounting based on a different rationale for tangible and intangible effects we designed two indicators of environmental profitability a the intergenerational transfer amount ita which quantifies in monetary units what the current generation is willing to pass on future generations when an environmental restoration project is carried out and b the critical environmental rate cer measures the implicit environmental profitability these concepts were tested through an empirical case study pertaining to the assessment of an erosion control project in the southeast of spain the results yield traditional profitability indicators that are higher and probably closer to the real values set by the contemporary society the information provided by the environmental profitability indicators proposed renders more transparency to the quantification of the levels of intergenerational equity applied thereby facilitating the difficult reconciliation of the cba technique with the objective of sustainability

double co2 and beyond benefits costs and compensation abstract economic decisions over what action if any to take concerning the greenhouse effect tend to revolve around the social discount rate implicitly the debate concerns how to attribute intertemporal weights to welfare and implies a moral stance that is rarely given explicit recognition refocusing on the outcomes of current actions emphasises the role of compensation a conflict is apparent between the view that the current generation need be unconcerned over the loss or injury caused to future generations because they will benefit from advances in technology investments in both man made and natural capital and direct bequests and the requirement to avoid harming the innocent changes in units of welfare cannot be viewed as equivalent regardless of their direction in general doing harm is not cancelled out by doing good the result is a rejection of the potential compensation principle which underlies the current economic stance and a reconsideration of the acceptability of compensation altogether the concept of human rights and a non utilitarian perspective are used to show how cost benefit analysis denies the existence of inalienable rights and economics limits the moral considerability of harm

sectoral growth patterns at the metropolitan level an evaluation of economic development incentives abstract economic development incentives are much used and expensive yet information on their effectiveness is scarce this paper reports a regression analysis of employment growth in 37 disaggregated sectors across u s metropolitan areas in the time period 1977 1984 the results indicate that variation in taxes and subsidies are not related significantly to the location of either high technology manufacturing or most services our results suggest however that enterprise zones and university research parks which may be proxies for focused economic development programs are associated with increased job growth nevertheless the strongest determinants of growth are localization and urbanization externalities along with labor costs and skill factors we hypothesize that localization economies operate through the reduction of information costs especially those associated with firms search behaviors for skilled labor forces

optimal growth resource amenities and the preservation of natural environments this paper examines the conditions for which it is optimal to permanently preserve natural environments in which a productive natural resource is found the conditions are more restrictive than those previously indicated in the literature on the economics of natural environments increasing consumption and declining commodity prices are not sufficient to warrant permanent preservation the initial capital stock can be an important determinant of the optimal level of preservation in addition resource amenity values will increase the initial resource price and decrease the rate of growth of the resource price the natural world provides a variety of services to the human community natural resources are essential inputs in the production of goods and services in addition the natural world generates a variety of amenity services including the scientific recreational and aesthetic value of preserved natural environments krutilla 1967 krutilla and fisher 1975a this paper examines the impact of resource amenity values on the optimal growth of an economy which depends upon natural resource inputs for the production of goods and services in particular the paper examines the conditions under which it is optimal to permanently preserve some natural environments in which the productive resource is found the conditions which warrant permanent preservation are more restrictive than previously indicated by the literature on the economics of natural environments increasing consumption and declining commodity prices are not sufficient to warrant permanent preservation in addition the initial capital endowment can be an important determinant of the optimal level of preservation

the changing technology of technological change general and abstract knowledge and the division of innovative labour abstract in the past most innovations have resulted from empiricist procedures the outcome of each trial yielding knowledge that could not be readily extended to other contexts while trial and error may remain the primary engine of innovation developments in many scientific disciplines along with progress in computational capabilities and instrumentation are encouraging a new approach to industrial research instead of relying purely on trial and error the attempt is also to understand the principles governing the behaviour of objects and structures the result is that relevant information whatever its source can now be cast in frameworks and categories that are more universal the greater universality makes it possible for the innovation process to be organised in new ways firms can specialise and focus upon producing new knowledge and the locus of innovation may be spread across both users and producers more generally the use of general and abstract knowledge in innovation opens up the possibility for a division of labour in inventive activity the division of innovative labour the implications for public policy especially that on intellectual property rights are discussed

the damage costs of climate change a note on tangibles and intangibles applied to dice economic cost benefit analysis of the costs of greenhouse gas emission abatement and climate change often points towards limited abatement this note elucidates one reason why this result is obtained the way in which the intangible damages are treated and the utility function is specified on the basis of the dice model it is shown that by putting the intangible damages directly into the utility function and by assuming them to grow with per capita income the optimal reduction increases and in the second case more than triples compared to nordhaus s original results

clusters dispersion and the spaces in between for an economic geography of the banal while the geographical clustering of economic activities remains an enduring feature of the industrial landscape and a perennial source of theoretical and empirical interest the geographical scale at which external economies and agglomerative effects are now claimed to operate is on the increase such changes in the spatial form and potential causes of agglomeration over time pose important questions how should we analyse changes in the spatial extent of external economies and agglomerative effects ought we to pay more attention to the sorts of banal economic spaces thrown up as part of increasingly diffuse forms of agglomeration to answer the first of these questions it is noted how economists and geographers have explained agglomerations often in the rather singular and invariant categories of pecuniary and marshallian externalities respectively this paper considers the relevance of neo marshallian analysis and the concept of borrowed size as variations on these classical principles to an analysis of the mobility and fixity of external economies and contemporary diffuse forms of agglomeration whilst reflecting important changes in the spatial extent of industrial agglomerations they are insufficiently sensitive to the interaction of different types of external economies with different scale dependencies in answering the second question it is noted that part of the value of analysing the economic basis of largely overlooked banal intermediate places lies in what they may reveal about the functioning of diffuse forms of agglomeration

industrial reallocation across us cities 1977 1997 abstract between 1977 and 1997 us employment shifted dramatically in favor of industries that used skilled labor intensively during this same period some cities withered while others prospered this paper examines employment growth in 39 industries across 316 cities to evaluate the importance of learning by doing industry specific location fundamentals human capital externalities and hiring cost explanations in these geographic shifts growth in industries that used skill intensively was particularly sensitive to the presence of local human capital that growth was almost always negatively related to the initial size of the industry within the city implies a limited role for learning by doing and industry specific location fundamentals stories

fishing upstream firm innovation strategy and university research alliances this paper examines how innovation strategy influences firms level of involvement with university based research our results suggest that firms with internal r d strategies more heavily weighted toward exploratory activities allocate a greater share of their r d resources to exploratory university research and develop deeper multifaceted relationships with their university research partners in addition firms with more centralized internal r d organizations spend a greater share of their r d dollars on exploratory research conducted at universities in contrast to other external partners we find evidence suggesting that universities are preferred when the firm perceives potential conflicts over intellectual property 2007 elsevier b v all rights reserved

pay the farmer or buy the land cost effectiveness of payments for ecosystem services versus land purchases or easements in central kenya abstract payments for ecosystem services pes have emerged as a popular conservation tool yet evaluation alongside other direct conservation strategies remains piecemeal we prospectively compared cost effectiveness of pes to land purchases or easements lpe in central kenya we spatially predicted opportunity costs and land prices using household survey and literature data and sampled conservation management costs from four regional conservation organizations we simulated a fixed budget spatial ecological economic site selection process for conservation intervention pes or lpe over 30 years we included effects of land markets property value fluctuations rising agricultural productivity and climate change depending on the scenario the lpe strategy led to larger reserves by 26 610 better representation of mammal species ranges by 47 112 and lower unit costs by 26 48 adding a yearly egalitarian social development payment to the lpe strategy did not increase costs beyond the basic pes model our findings were robust to discount rate choice but cost savings of lpe only materialized after about a decade furthermore kenyan law restricts foreign land ownership and the use of land easements thus simpler institutional requirements make pes a more immediate if less effective property based tool

intertemporal distribution sufficiency and the social cost of carbon abstract we explore how the intertemporal distribution of well being affects the social cost of carbon in contrast to the literature that studies parameters of a particular social welfare function such as the discount rate we shift the focus and directly assume a parametric form for the intertemporal distribution of well being this has the advantage of avoiding explicit discounting choices which has initiated much debate specifically we consider a set of intertemporal distributions that reach a steady state at a pre specified level of sufficient well being or equivalently after a pre specified end of growth horizon we numerically illustrate our results in dice and find that the social cost of carbon increases over proportionally with the sufficiency level of well being while the social cost of carbon in 2015 is us 7 if the sufficiency level is four fold the present level it is us 30 if the sufficiency level is 15 fold and us 100 if the sufficiency level is 26 fold the present level this shows in a transparent way how conceptions of intergenerational distributive justice drive the social cost of carbon

ecological macroeconomics in the open economy sustainability unequal exchange and policy coordination in a center periphery model abstract this article introduces a novel environmental interpretation of a keynesian coordination game and develops four potential scenarios to remaining within a global carbon emissions constraint with inspiration from research on ecologically unequal exchange eue we demonstrate the drawbacks of present green growth strategies by considering how pollution and resource intensive industries are distributed unevenly in the world economy with large and increasing negative impacts on the periphery the situation may only be exacerbated if the reduction of emissions in the center is based on shifting heavy industries and extractive enterprises to low cost producers in the periphery in this way existing research likely overemphasizes the capacity of green investment policy to achieve sustainable outcomes our scenarios show that achieving global sustainability and improving global equity will require an impressive level of coordination between the center and periphery as well as a significant reduction in the rate of growth degrowth in the center

fair allocation of disputed properties we model problems of allocating disputed properties as generalized exchange economies in which agents have preferences and claims over multiple goods and the social endowment of each good may not be sufficient to satisfy all individual claims in this context we investigate procedural and end state principles of fairness their implications and relations to do so we explore procedural allocation rules represented by a composition of a rights assignment mechanism to assign each profile of claims individual property rights over the endowment and walrasian or other individually rational exchange rule using variants of fairness based on no envy as end state principles we provide axiomatic characterizations of the three focal egalitarian mechanisms known in the literature on rationing problems as constrained equal awards constrained equal losses and proportional mechanisms our results are connected to focal contributions in political philosophy and also provide rationale for market based environ mental policy instruments such as cap and trade schemes and personal carbon trading and moral foundation for the three proposals to allocate ghg emission rights known as the equal per capita sharing the polluter pays principle and the equal burden sharing the victims pay principle

global warming discounting is not the issue but substitutability is the cost benefit study of nordhaus 1994 is representative for the neoclassical approach towards global warming nordhaus found that no substantial emission cuts are warranted most of his critics have concentrated on the issue of discounting and demanded that a lower discount rate should be applied these criticisms first miss the point and second lead to ethically dubious inconsistent conclusions and inefficient policy choices they miss the point because the real problem of nordhaus s methodology is his implicit underlying assumption of perfect substitutability between natural and other forms of capital given the validity of this assumption lowering the rate of discount is inconsistent with current savings behaviour is ethically dubious because future generations will be much richer than the current one anyway and is inefficient because scarce financial resources are channelled into emissions abatement that exhibits rates of return far inferior to alternative public investments any call for aggressive emission abatement must therefore directly attack the perfect substitutability assumption of neoclassical economics the real disagreement is about whether consumption growth can compensate for environmental degradation caused by global warming discounting is not the issue but substitutability is

zero discounting can compensate future generations for climate damage abstract in cost benefit analysis of climate policy there are two main approaches to discounting each with implications conflicting with our moral intuitions thus discounted utilitarianism implies that we hardly need to protect future generations against climate change while classical utilitarianism implies that we should reduce our consumption across the board to benefit future generations the insolubility of the debate derives from the fact that both classical and discounted utilitarianism permit only a single discount rate for all consequences occurring in the same future year while our intuitions clearly do distinguish between consequences depending on whether we cause adverse effects on other people s interests and violate their rights most people share the moral intuition that we ought to refrain from harming others and ought to compensate them if we were unable to prevent harm to regain a reflective equilibrium between such deontological intuitions and economic theory there is a need to accept different discount rates for different situations a zero consumption discount rate in the case of cost benefit analysis of measures to prevent wrongful harm to future generations and standard discounting in all other cases applying a zero consumption discount rate means that future generations are automatically largely compensated for climate damage that remains unmitigated

the rate of time preference implications for the greenhouse debate abstract if one adopts a real annual discount rate of 5 or more and there are no significant climate impacts for half a century these impacts have a present value that is virtually negligible within a cost benefit framework it then becomes exceedingly difficult to justify any near term actions other than no regrets policies in the greenhouse debate it is important to draw a clear distinction between prescriptive and descriptive reasoning a philosopher or an economist may counsel a low or a zero rate of time preference but this advice does not provide a good description of the collective outcome of individual choices in particular it implies an unrealistically rapid increase in the rate of savings and investment

distributional biases in the analysis of climate change abstract the economic analysis of global warming is dominated by models based on optimal growth theory these representative agent models have an intrinsic distributional bias in favor of the rich the bias is compounded by the use of revenue neutrality in the allocation of emission permits the result is mitigation recommendations that are biased downwards

do firms learn to create value the case of alliances we investigate whether firms learn to manage interfirm alliances as experience accumulates we use contract specific experience measures in a data set of over 2000 joint ventures and licensing agreements and value creation measures derived from the abnormal stock returns surrounding alliance announcements learning effects are identified from the effects of unobserved heterogeneity in alliance capabilities we find evidence of large learning effects in managing joint ventures but no such evidence for licensing contracts the effects of learning on value creation are strongest for research joint ventures and weakest for marketing joint ventures these results are consistent with the view that learning effects are more important in situations characterized by greater contractual ambiguity copyright 2000 john wiley sons ltd

an environmental economic measure of sustainable development abstract a central issue in the study of sustainable development is the interplay of growth and sacrifice in a dynamic economy this paper investigates the relationship among current consumption sacrifice and sustainability improvement in a general context and in two canonical stylized economies we argue that the maximin value of utility measures what is sustainable and provides the limit to growth maximin value is interpreted as a dynamic environmental economic carrying capacity and current utility as an environmental economic footprint the time derivative of maximin value is interpreted as net investment in sustainability improvement it is called durable savings to distinguish it from genuine savings usually computed with discounted utilitarian prices

characterizing sustainability the converse of hartwick s rule this note offers a general proof of the converse of hartwick s rule namely that in an economy with stationary instantaneous preferences and a stationary technology an efficient constant utility path is characterized by the value of net investments being zero at each point in time in a one consumption economy with two stocks a stock of a natural resource and a stock of man made capital this means that if consumption remains constant at the maximum sustainable level then the accumulation of man made capital always exactly compensates in value for the depletion of the natural resource

why the far distant future should be discounted at its lowest possible rate abstract a critical feature of the distant future is currently unresolvable uncertainty about what will then be the appropriate rate of return on capital to use for discounting this paper shows that there is a well defined sense in which the lowest possible interest rate should be used for discounting the far distant future part of any investment project some implications are discussed for evaluating long term environmental projects or activities like measures to mitigate the possible effects of global climate change

provision of a public good with multiple dynasties carbon emissions create externalities across countries and generations these externalities depend on the degree of contemporaneous cooperation and intergenerational altruism i study the relative importance of these features in determining equilibrium climate policy by imbedding an olg framework with intergenerational altruism into a differential game among dynasties each representing a coalition of nations there is an isomorphism between pure and paternalistic altruism i illustrate the multiplicity of equilibria using an analytic linear in state model equilibrium steady states are more sensitive to small changes in cooperation than altruism consideration of large changes in altruism and cooperation can reverse this ranking

greenhouse gas abatement cost curves of the residential heating market a microeconomic approach in this paper we develop a microeconomic approach to deduce greenhouse gas abatement cost curves of the residential heating sector our research is based on a system dynamics microsimulation of private households investment decisions for heating systems to the year 2030 by accounting for household specific characteristics we investigate the welfare costs of different abatement policies in terms of the compensating variation and the excess burden we investigate two policies i a carbon tax and ii subsidies on heating system investments we deduce abatement cost curves for both policies by simulating welfare costs and greenhouse gas emissions to the year 2030 we find that i welfare based abatement costs are generally higher than pure technical equipment costs ii given utility maximizing households a carbon tax is the most welfare efficient policy and iii if households are not utility maximizing a subsidy on investments may have lower marginal greenhouse gas abatement costs than a carbon tax

does state economic development spending increase manufacturing employment abstract recent studies which have attempted to determine what causes an industrial sector in a state to grow have ignored the general role of the state s economic development agency we extend the analysis to include its effect and determine that economic development expenditure by the state is significantly correlated with manufacturing growth in the state our result is robust to a variety of specification tests

aggregating infinite utility streams with intergenerational equity the impossibility of being paretian it has been known that in aggregating infinite utility streams there does not exist any social welfare function which satisfies the axioms of pareto intergenerational equity and continuity we show that the impossibility result persists even without imposing the continuity axiom and in frameworks allowing for more general domains of utilities than those used in the existing literature

discounting the distant future an experimental investigation we use a laboratory experiment to elicit discount rates over a 20 year time horizon using government savings bonds as a payment vehicle when using a constant exponential discount rate function we find an implied average discount rate of 4 9 which is much lower than has been found in previous experimental studies that used time horizons of days or months however we also find strong support for non constant declining discount rates for longer time horizons with an extrapolated implied annual discount rate approaching 0 5 in 100 years there is heterogeneity in discount rates and risk preferences in that people with more optimistic beliefs about technological progress have higher discount rates these findings contribute to the debate over the appropriate discount rate to use in comparing the long term benefits of climate change mitigation to the more immediate costs

a review of the stern review on the economics of climate change the stern review calls for immediate decisive action to stabilize greenhouse gases because the benefits of strong early action on climate change outweighs the costs the economic analysis supporting this conclusion consists mostly of two basic strands the first strand is a formal aggregative model that relies for its conclusions primari ly upon imposing a very low discount rate concerning this discount rate aspect i am skeptical of the review s formal analysis but this essay points out that we are actual ly a lot less sure about what interest rate should be used for discounting climate change than is commonly acknowledged the review s second basic strand is a more intuitive argument that it might be very important to avoid possibly large uncertain ties that are difficult to quantify concerning this uncertainty aspect i argue that it might be recast into sound analytical reasoning that might justify some of the review s conclusions the basic issue here is that spending money to slow global warming should perhaps not be conceptualized primarily as being about consump tion smoothing as much as being about how much insurance to buy to offset the small change of a ruinous catastrophe that is difficult to compensate by ordinary savings

between ostrom and nordhaus the research landscape of sustainability economics abstract we survey the emerging research area of sustainability economics through a quantitative full text analysis of peer reviewed journal publications from 1987 to 2013 to identify relevant contributions we draw on existing definitions of sustainability economics for a keyword based identification strategy a combined focus on a the human nature relationship b the long term uncertain future c normative orientation towards sustainability and d economic analysis our analysis of a random subsample of 343 relevant papers reveals that i sustainability economics is a rapidly developing research area ii while theoretical contributions shaped the area in earlier years applied work now constitutes the largest share of contributions iii the research landscape can be clustered into eleven research clusters these range from participatory governance of social ecological systems associated with the work of elinor ostrom to questions of intertemporal allocation and distribution applied to climate economics associated with the work of william nordhaus iv the research area is broad in scope and heterogeneous and there is relatively little interaction between important clusters v relevant contributions are published in more than 100 journals ten journals publish half of all contributions led by ecological economics and 40 appear in non economics journals underscoring the importance of interdisciplinary dialogue

climate change economics and discounted utilitarianism abstract in the recent debate on climate change economics triggered by the stern review and his opponents fundamental methodological issues emerge it becomes obvious that different choices for some variables in the models applied lead to vastly different conclusions specifically the choice of the pure time discount rate decides on whether immediate strong action in the stern review or a more moderate response as in nordhaus writings is the right strategy facing the climate change challenge this contribution critically comments the use of both and the elasticity of marginal utility with respect to income as adjustment screws in models of climate economics often the models remain ambiguous as to whether they apply empirical or normative variables facts and value judgments are not sufficiently distinguished furthermore discounted utilitarianism appears to be a questionable fundament for climate change economics from a non utilitarian specifically a rawlsian point of view it is pointless to maximize the utility an abstract eternally long lived phantasm humanity where no human individuals are distinguished the more persuading position in climate economics is to postulate a duty to do everything in order to avoid serious evil for future generations

prioritarianism and climate change prioritarianism is the ethical view that gives greater weight to well being changes affecting individuals at lower well being levels this view is influential both in moral philosophy and in theoretical work on social choice where it is captured by a social welfare function swf summing a concave transformation of individual well being numbers however prioritarianism has largely been ignored by scholarship on climate change this article compares utilitarianism and prioritarianism as frameworks for evaluating climate policy it reviews the distinctive normative choices that are required for the prioritarian approach specifying a ratio scale for well being if the prioritarian swf takes the standard atkinson form determining the degree of concavity of the transformation function i e the degree of social inequality aversion and choosing between ex ante and ex post prioritarianism under conditions of risk the article also sketches some of salient implications of a prioritarian swf for climate policy with respect to the social cost of carbon the social discount rate optimal mitigation and the dismal theorem finally it discusses the issue of variable population

a dynamic analysis of human welfare in a warming planet anthropogenic greenhouse gas ghg emissions have caused atmospheric concentrations with no precedents in the last half a million years inducing serious uncertainties about future climates and their effects on human welfare recent climate science supports the view that the climate stabilization will require very low ghg emissions in the future we ask is a path of low emissions compatible with sustainable levels of human welfare with steady growth in human quality of life addressing these questions requires both defining welfare criteria and empirically estimating the possible paths of the economy we specify and calibrate a dynamic model with four intertemporal links education physical capital knowledge and the environment in line with nordhaus 2008a and with the stern review 2007 we assume that ghg emissions allow increased production while a higher stock of atmospheric carbon decreases production our index of human welfare which we call quality of life quol emphasizes education knowledge and the environment affected by greenhouse gas emissions in addition to consumption and leisure thus we avoid a consumptionist fallacy that welfare depends only on commodity consumption and perhaps leisure we reject discounted utilitarianism as a normative criterion and consider two alternatives the first is an intergenerational maximin criterion which maximizes the quality of life of the first generation subject to maintaining at least that level for all successive generations the second is human development optimization that seeks the maximization of the quol of the first generation subject to achieving a given constant rate of growth in all subsequent generations hence our analysis focuses on a human notion of sustainability as opposed to the conventional green sustainability limited to keeping the quality of the environment constant because our dynamic optimization programs defy explicit analytical solutions our approach has been computational as a benchmark we consider a simple model with physical and human capital for which we prove a turnpike theorem we then devise a computational algorithm inspired by the turnpike property to construct feasible although not necessarily optimal paths in the more complex and realistic model our analysis indicates that with ghg emission paths entailing very low emissions in the future positive rates of growth in quol are possible while the first generation experiences a quol higher than the historical reference level we also observe a tradeoff between the quality of life of the first generation and the rate of growth in the quality of life yet generation 1 s sacrifice for the sake of a higher growth rate appears to be small the paths that we compute involve investments in knowledge at noticeably higher levels than in the past

let s work it out or we ll see you in court litigation and private dispute resolution in vertical exchange relationships we examine how partners in vertical exchange relationships actually resolve disputes that are sufficiently serious to get lawyers involved reaching beyond the usual domain of organizational and management research we leverage findings from law and economics to offer a novel organizational perspective on litigation and private dispute resolution and we develop hypotheses about the likelihood of litigation in different exchange settings our empirical analysis generates three sets of new findings first counter to the received wisdom we see that the involvement of lawyers does not necessarily signal the bitter end of an exchange relationship because firms frequently manage to avoid litigation and resolve their disputes privately and they do so in a manner that accords with our theoretical predictions second we see that familiarity with exchange partners does not automatically lead to increased willingness to work things out rather our empirical results suggest that the impact of exchange duration on parties willingness to resolve disputes privately is contingent on the development of norms of cooperation in the event that such norms do not develop the probability of a litigated outcome actually increases over time finally we see that firms willingness to work things out privately is also influenced positively by the shadow of the future these findings are suggestive of a discriminating alignment between exchange characteristics and the choice of dispute resolution procedure and they thus inject important new evidence into ongoing discussions about the legal underpinnings of different governance forms

cognition capabilities and incentives assessing firm response to the fiber optic revolution this study examines how ceo cognition organizational capabilities and organizational incentives interacted to shape firm strategy during the fiber optic revolution i tested for these factors as

expected utility theory and the tyranny of catastrophic risks expected utility theory is not only applied to individual choices but also to ethical decisions e g in cost benefit analysis of climate change policy measures that affect future generations in this context the crucial question arises whether eu theory is able to deal with catastrophic risks i e risks of high but very unlikely losses in an ethically appealing way in this paper we show that this is not the case rather if in the framework of eu theory a plausible level of risk aversion is assumed a tyranny of catastrophic risk tcr emerges i e project evaluation may be dominated by the catastrophic event even if its probability is negligibly small with low degrees of risk aversion however the catastrophic risk eventually has no impact at all when its probability goes to zero which is ethically not acceptable as well

the possibility of social choice the subject of social choice includes within its capacious frame various problems with the common feature of relating social judgments and group decisions to the views and interests of the individuals who make up the society or the group some challenges and foundational problems faced by social choice theory as a discipline are discussed social choice theory is a subject in which formal and mathematical techniques have been very extensively used voting based procedures are entirely natural for some kinds of social choice problems such as elections referendums or committee decisions they are however altogether unsuitable for many other problems of social choice impossibility results in social choice theory led by the pioneering work of arrow 1951 have often been interpreted as being thoroughly destructive of the possibility of reasoned and democratic social choice including welfare economics that view is argued against

once more on intergenerational discounting in climate change analysis reply to partha dasgupta discounting the utilities of future generations in many problems such as climate change analysis has several justifications only one of which can be supported by ethics which postulate that every individual no matter when born has an equal right to well being that justification is that future generations may not exist in an earlier article published here i explained this view and criticized economists who deviate from it the practical aspect of this deviation is to choose discount rates which are far too high thus relegating future generations to lower utility than they a priori have a right to as well many economists continue to rely upon a utilitarian ethic a reliance which is independent of the discounting issue but which i also criticize dasgupta responded to my article the present article is a response to dasgupta

liberal egalitarianism and the harm principle this paper analyses the implications of classical liberal and libertarian approaches for distributive justice in the context of social welfare orderings an axiom capturing a liberal non interfering view of society named the weak harm principle is studied whose roots can be traced back to john stuart mill s essay on liberty it is shown that liberal views of individual autonomy and freedom can provide consistent foundations for social welfare judgements in both the finite and the infinite context in particular a liberal non interfering approach can help to adjudicate some fundamental distributive issues relative to intergenerational justice however a surprisingly strong and general relation is established between liberal views of individual autonomy and non interference and egalitarian principles in the rawlsian tradition

establishment size and local employment growth in a sample of more than 2000 u s counties smaller average establishment size is generally associated with faster subsequent growth rates of sectoral employment both within and across sectors the estimated effects are large in magnitude and thus economically important and are consistent with several theories previously developed these findings contribute toward a more precise understanding of the role of small businesses in economic growth and labor markets

sustainability under uncertainty a deontological approach a deontological or kantian approach to intergenerational fairness suggests that sustainability criteria should be imposed as prior constraints on the maximization of social preferences concerning the distribution of welfare between present and future generations in particular it is plausible to assert that each successive generation holds a duty to ensure that the expected welfare of its offspring is no less than its own perceived well being this moral rule implies a bias against actions that generate present benefits but impose the risk of irreversible future losses if the preservation of options would allow for improved decisions as new information became available

the economic effects of climate change greenhouse gas emissions are fundamental both to the world s energy system and to its food production the production of co2 the predominant gas implicated in climate change is intrinsic to fossil fuel combustion specifically thermal energy is generated by breaking the chemical bonds in the carbohydrates oil coal and natural gas and oxidizing the components to co2 and h2o one cannot have cheap energy without carbon dioxide emissions similarly methane ch4 emissions an important greenhouse gas in its own right are necessary to prevent the build up of hydrogen in anaerobic digestion and decomposition one cannot have beef mutton dairy or rice without methane emissions climate change is the mother of all externalities larger more complex and more uncertain than any other environmental problem the sources of greenhouse gas emissions are more diffuse than any other environmental problem every company every farm every household emits some greenhouse gases the effects are similarly pervasive weather affects agriculture energy use health and many aspects of nature which in turn affects everything and everyone the causes and consequences of climate change are very diverse and those in low income countries who contribute least to climate change are most vulnerable to its effects climate change is also a long term problem some greenhouse gases have an atmospheric life time measured in tens of thousands of years the quantities of emissions involved are enormous in 2000 carbon dioxide emissions alone and excluding land use change were 24 billion metric tons of carbon dioxide tco2

learning to contract evidence from the personal computer industry organizational forms involving more detailed contracts than are found in traditional spot market exchanges appear to be increasingly prevalent there has been relatively little analysis however of the extent to which firms learn how to use contracts to manage their interfirm relationships over time in this paper we conduct a detailed case study of a time series of 11 contracts concluded during 1989 1997 between the same two partners both of whom participate in the personal computer industry to explore whether and how firms learn to contract we find many changes to the structure of the contracts that cannot be fully explained by changes in the assets at risk in the relationship and evidence that these changes are largely the result of processes in which the firms were learning how to work together including learning how to contract with each other the nature of this learning appears to have been quite incremental and local that is not very far sighted we suggest how and when contracts might serve as repositories for knowledge about how to govern collaborations and suggest some boundary conditions for this phenomenon our findings also provide implications for the debate about whether contracts have a positive or negative effect on interorganizational trust we conclude with suggestions for future research

small firms borrowed size and the urban rural shift in this paper we suggest that some elements of the observed urban rural shift in firm formation and growth may centre on the phenomenon of borrowed size in doing so we make a link between literature on the geography of small firm formation and growth the theory of agglomeration and the relations among settlements within urban systems spatial externality fields have expanded over time so that small firms can locate in smaller settlements and yet access specialized labour and informational external economies of nearby larger urban areas we examine the relevance of aspects of borrowed size in the relationship of small firms in leighton linslade and lichfield to the local economy and nearby larger urban centres in particular we question the contribution of local institutional support to the growth of rural enterprise stressed in recent analysis we conclude by briefly noting the implications of borrowed size for conceptions of the local economy and local economic policy cet article cherche a avancer

correcting the climate externality pareto improvements across generations and regions many argue that the present generation must reduce consumption to mitigate future climate change however as significant climate change is due to market failure the correction of market failures by definition gives rise to the possibility of pareto improvements in this paper we examine the implications of pareto improvements both within and across generations we employ the representative consumer model rice 10 a global model including different regions to see how we could potentially distribute any benefits across and within generations such that nobody loses the model shows that different combinations of present and future consumption along the pareto improving frontier yield different combinations of capital investment and emissions we also calculate a conventional social optimum while the social optimum by definition is on the pareto efficiency frontier it is not necessarily on the pareto improving segment of this frontier total emissions and hence temperature change vary significantly across different pareto improving scenarios it obviously matters which generations get the utility gain and one of our results is that for pareto improvements where none of the gain goes to the distant future and allowing transfers total emissions will be higher than in the social optimum even without any welfare gain to the distant future total emissions may be lower in the pareto improving scenarios we have considered than under the social optimum if transfers are not permitted moreover in this case carbon taxes differ substantially across regions for all pareto improvements

effects of economic incentives in the american film industry an ecological approach abstractus states have offered billions of dollars in film industry incentives but despite the popularity of these incentives the effects of these investments are unclear this study adopts an ecological framework and tests the hypothesis that film incentives are effective when they produce changes in the composition of organizational communities the results of longitudinal linear mixed effects models centred around incentive introduction in each state show that above the impact of their dollar value the simple presence of economic incentives organizational diversity and the presence of dominant organizational populations are associated with increases in filming employment and new establishments theoretical and policy implications are discussed

who i am and how i contract the effect of contractors roles on the evolution of contract structure in university industry research agreements in this exploratory study of university industry sponsored research agreements we investigate how organizational roles direct the relational learning of contracting personnel which subsequently influences contract evolution integrating theory with comments from field interviews we posit that as scientists gain contracting experience with an exchange partner their focus of attention on knowledge creation supports the establishment of a relationship based on technical competence behavioral experience and operational routines that cause the enforcement terms of subsequent contracts to become less detailed we also submit that contract administrators because of their focus on knowledge protection mitigating opportunism and enforcement primarily accumulate joint governance experience and establish administrative routines that cause the enforcement terms of subsequent contracts to become more detailed rich content analysis of monitoring and intellectual property terms of sponsored research agreements supports our theoretically grounded hypotheses

banking structure and employment growth recent studies have documented an association between financial structure and per capita income growth the relationship between financial structure and job growth by contrast is an unexplored issue of independent interest here we find that us nonmetropolitan employment grew faster in 1973 1996 where there were fewer locally owned bank offices and a more concentrated initial banking market structure these linkages were less stable in metropolitan areas in addition controlling for employment growth does not undermine the empirical linkage between initial bank structure and subsequent per capita income growth

specifications of social welfare in economic studies of climate policy overview of criteria and related policy insights an important assumption in economic studies of climate policy is the social welfare function this paper shows that applying distinct decision or social welfare criteria can result in different optimal policies of climate control notably if climate change impacts are uncertain first decision criteria in current climate economic studies are reviewed next the most important alternatives are discussed including their mathematical formalization and incorporation in economy climate models most of these alternative criteria suggest more stringent climate policies to be optimal than the standard discounted utilitarianism approach however several important welfare criteria have not or hardly seen any application in the economic analysis of climate policy we conclude that there is clear need for systematic research on this theme for which the current review provides a solid basis

sustainability of an economy relying on two reproducible assets evaluating the sustainability of a society requires a system of shadow or accounting values derived from the sustainability objective as a first step toward the derivation of such shadow values for a maximin objective this paper studies an economy composed of two reproducible assets each producing one of two consumption goods the effect of the substitutability between goods in utility is studied by postulating in turn neoclassical diminishing marginal substitutability perfect substitutability and perfect complementarity the degree of substitutability has strong effects on the maximin solution affecting the regularity or non regularity of the program and on the accounting values this has important consequences for the computation of genuine savings and the sustainability prospects of future generations

network prominence bargaining power and the allocation of value capturing rights in high tech alliance contracts we suggest and provide empirical evidence that the bargaining power of alliance partners stemming from their prominence in alliance networks influences the ex ante allocation of value capturing rights in high tech alliance contracts network prominence can enhance the availability of alternative partners for a firm and thereby elevates the firm s bargaining power and enables the firm to receive i more value capturing rights vis a vis its partner i e more net value capturing rights and ii more rights to the unexpected outcomes vis a vis its partner we empirically investigate the content of research and development r d collaboration contracts between biotech and pharmaceutical firms and show that as the prominence of the client i e pharmaceutical firm increases it is able to attain i more net value capturing rights to outcomes within the area of collaboration and ii more rights to unexpected outcomes by contrast increased prominence of the r d firm i e biotech firm decreases both t

carbon dioxide and intergenerational choice depending on ethical beliefs different decisions emerge for resolving the carbon dioxide co sup 2 issue it is doubtful that an international consensus can be reached on a correct ethical criterion perhaps the best strategy would be to delay acceptance of either a particular set of beliefs or the existing scientific evidence and wait for more accurate and conclusive research to emerge if the scientific evidence is accepted as valid and all future generations that will exist are evaluated equally then the optimal current regulatory strategy is to restrict as much as possible current emissions of co sup 2 17 references 2 figure 1 table

positive time preference the case for positive time preference is absolutely compelling unless there is an infinite time horizon with the expectation of unending technological advance combined with what we call drastically diminishing marginal utility this finding holds both in the positive and normative senses a corollary is that savings are interest elastic

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

are we consuming too much this paper articulates and applies frameworks for examining whether consumption is excessive we consider two criteria for the possible excessiveness or insufficiency of current consumption one is an intertemporal utility maximization criterion actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility the other is a sustainability criterion which requires that current consumption be consistent with non declining living standards over time we extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change in applying this formula we find that some poor regions of the world are failing to meet the sustainability criterion in these regions genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital

intergenerational equity discounting and the role of cost benefit analysis in evaluating global climate policy when public policies with impacts far into the future are being debated the question inevitably is raised whether cost benefit analysis which discounts future costs and benefits is not biased against future generations and whether if such discounting is appropriate at all a lower rate should be used to avoid such bias the debate on global climate change is no exception this paper sketches and analyses the welfare foundations of cost benefit analysis and from this perspective analyses the role of cost benefit analysis in the climate policy debate particularly with reference to intergenerational effects the paper concludes that the cost benefit criterion cannot provide a definitive basis for deciding whether we should commit to a longer term programme to moderate climate change the issues of intergenerational equity are not that global climate change will significantly lower the gnp of future generations but relate to the possibility of science fiction like changes in the planet that will produce catastrophic effects in the future and the typical way in which the cost benefit problem is posed obscures the basic choices that we should be evaluating

on sustainability and social welfare abstract this paper proposes to define sustainability in terms of leaving it possible for future generations to sustain certain defined targets it is shown that variants of genuine savings and the ecological footprint can then serve as indicators of sustainability the link between sustainability and intergenerational welfare is examined and it is shown how to incorporate indicators of sustainability into a social welfare measure including risk in the analysis

long term substitutability between environmental and man made goods abstract substitutability between environmental and man made goods plays a major role in the sustainability debate the notion of substitutability covers a continuous spectrum with perfect substitutability at one end and poor substitutability at the other in this paper it is shown that if economic growth sustains a sharp distinction emerges between perfect and poor substitutability without any intermediate interpretation of substitutability if poor substitutability prevails environmental resources will eventually constitute the major part of total consumption value we relate our results to baumol s disease and assess the implications of this phenomenon for the compensation of environmental losses

beggar thy neighbor the in state out of state and aggregate effects of r d tax credits abstract the proliferation of r d tax incentives among u s states in recent decades raises two questions i are these tax incentives effective in increasing in state r d ii how much of any increase is due to r d being drawn away from other states this paper answers i yes and ii nearly all the paper estimates an augmented r d factor demand model using state panel data from 1981 to 2004 i estimate that the long run elasticity of in state r d with respect to the in state user cost is about 2 5 while its elasticity with respect to out of state user costs is about 2 5 suggesting a zero sum game among states

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

valuing the future one of the most controversial areas of economics is the practice of discounting attaching a lower weight to future costs and benefits than present costs and benefits discounting appears to offend notions of sustainable development and the interests of future generations recent advances in the theory of discounting hold out strong hope that the tyranny of discounting can be avoided through the use of time varying discount rates tvdrs this paper reviews the recent rationales for tvdrs and applies the results to issues such as nuclear power and global warming control

on modeling and interpreting the economics of catastrophic climate change with climate change as prototype example this paper analyzes the implications of structural uncertainty for the economics of low probability high impact catastrophes even when updated by bayesian learning uncertain structural parameters induce a critical tail fattening of posterior predictive distributions such fattened tails have strong im plications for situations like climate change where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages this paper shows that the economic consequences of fat tailed structural uncertainty along with unsureness about high temperature damages can readily outweigh the effects of discounting in climate change policy analysis

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formal contracts in the presence of relational enforcement mechanisms evidence from technology development projects formal contracting addresses the moral hazard problems inherent in interfirm deals via explicit terms designed to achieve incentive alignment alternatively when firms expect to interact repeatedly relational mechanisms may achieve similar results without the associated costs however as we now know from a growing body of theoretical and empirical work the resulting intuition that relational mechanisms will be substituted for formal ones whenever possible does not generally hold the extent to which firms substitute relational mechanisms for formal ones in the presence of repeated interaction is an empirical question that forms the basis of this paper we study a sample of 52 joint technology development contracts in the telecommunications and microelectronics industries and devise a coding scheme to allow empirical comparison of contract terms counter to the above intuition but consistent with recent research we find that a firm s contracts are more detailed and more likely to include penalties when it engages in frequent deals whether with the same or different partners our results suggest complementarity between formal and relational contracts and have implications for optimal contracting particularly in high technology sectors

complementarity and evolution of contractual provisions an empirical study of it services contracts an increasing volume of business activity appears to be occurring via alliances or other interfirm arrangements in which complex contracts are featured yet there has been relatively little study of contract design in the strategy or management literatures the economics literature on contracting has been extensive but it has been less concerned with learning and evolution phenomena in which strategy and organization scholars are deeply interested in this paper we investigate the relationship between two types of contractual provisions that are important in high technology contracts or contracts for which environmental uncertainty or technological complexity are significant namely contingency planning and task description previous research suggests that contracts can vary significantly in the degree of detail with which such key provisions are written and that they are each subject to learning in this paper we find evidence from a sample of 386 contracts that contingency planning and task description behave as complements in contractual design we argue that this complementarity reflects patterns of learning to contract we also find that repeated exchange between two firms leads to greater effort at contingency planning in subsequent contracts a finding that is also consistent with learning effects but not with frequently made claims that contracts and trust are substitutes