endogenous growth convexity of damage and climate risk how nordhaus framework supports deep cuts in carbon emissions to slow or not to slow nordhaus 1991 was the first economic appraisal of greenhouse gas emissions abatement and founded a large literature on a topic of worldwide importance we offer our assessment of the original article and trace its legacy in particular nordhaus s later series of dice models from this work many have drawn the conclusion that an efficient global emissions abatement policy comprises modest and modestly increasing controls we use dice itself to provide an initial illustration that if the analysis is extended to take more strongly into account three essential elements of the climate problem the endogeneity of growth the convexity of damage and climate risk optimal policy comprises strong controls

observable and unobservable determinants of replacement of home appliances despite the dominant role of replacement purchases in many consumer durable categories the research in this area has not been extensive only in the last few years has the economic theory made progress towards a more rigorous analysis of the dynamic nature involved in replacement decisions as a consequence of this applied researchers have switched from conventional discrete choice models to new econometric techniques e g duration analysis that allow for richer relationships between socioeconomic variables characteristics of the durable good and the likelihood of its replacement over time our study focuses on two home appliances taken from the residential energy consumption survey recs based on a duration model that allows for unobserved heterogeneity across households we conclude that household demographics and product features both observable and unobservable in general have statistical power to explain replacement decisions over time

fat tails exponents extreme uncertainty simulating catastrophe in dice abstract the problem of low probability catastrophic risk is increasingly central to discussion of climate science and policy but the integrated assessment models iams of climate economics rarely incorporate this possibility what modifications are needed to analyze catastrophic economic risks in an iam we explore this question using dice a well known iam we examine the implications of a fat tailed probability distribution for the climate sensitivity parameter a focus of recent work by martin weitzman and the shape of the damage function one of the issues raised by the stern review forecasts of disastrous economic outcomes in dice can result from the interaction of these two innovations but not from either one alone

dynamic interaction between markets for leasing and selling automobiles we develop a model of dynamic interactions between price variations in leasing and selling markets for automobiles our framework assumes a differential game between multiple bertrand type competing firms which offer differentiated products to forward looking agents empirical analysis of our model using monthly us data from 2002 to 2011 shows that variations in selling cash market prices lead rapidly dissipating changes of leasing market prices in the opposite direction we discuss the practical implications of these results by augmenting a standard leasing valuation formula the additional terms represent the leased asset value changes that can be expected on the basis of past variations in automobile selling market prices

how durable should durable products be made under different scenarios of technological advance abstract this paper addresses the question of how durable or reliable manufacturers of durable goods should make their products essentially consumers are likely willing to pay more for a more durable product yet increased durability depresses replacement demand we gain insight into this trade off by developing analytical models of the interplay between consumers and a monopolist manufacturer of durable goods we start this research from the base model that assumes symmetric information between the manufacturer and consumers and no technological advance we then extend it to more general models in which these assumptions are relaxed interesting managerial insights are obtained which explain well some realistic cases observed in practice 1 when the technology advances at a given non negative rate it is always optimal for the manufacturer to motivate consumers to replace the existing durable goods by using a buy back offer before the end of the life of the product 2 faster technological advance does not always bring quicker product replacements under some circumstances it might be optimal for manufacturers to extend the replacement cycle of the product and increase its durability when the technology advances more quickly and 3 when the rate of the technological advance is uncertain and is not directly observable by consumers consumers are willing to pay more than when the technological advance rate is known and constant

decisions to replace consumer durables goods an econometric application of wiener and renewal processes current sales of most consumer durable goods are accounted for by replacements however only in recent years has the economic literature provided a more rigorous analysis of replacement purchases by incorporating elements of dynamic programming and of the theory of stochastic processes this paper is an empirical study of household replacement decisions modeled as an optimal stopping rule using data from the residential energy consumption survey recs of the u s department of energy we conclude that demographic variables operation and replacement costs and equipment characteristics may affect ownership spells of appliances such as electric heaters and central air conditioners

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

the social cost of carbon with economic and climate risks uncertainty about future economic and climate conditions substantially affects the choice of policies for managing interactions between the climate and the economy we develop a framework of dynami

stationary equilibrium in a market for durable assets this paper presents a dynamic model of consumer trading on the primary secondary and scrap markets for a stochastically deteriorating durable good in a stationary economy with perfect information and no transaction costs we explicitly model the trading process by tracking each durable from its birth in the primary market through its sequence of owners in the secondary market until its death in the scrap market we prove that a stationary equilibrium exists characterize the distribution of consumer holdings of durables and show that equilibrium asset prices are shadow prices to a particular regenerative optimal stopping problem we show that each heterogeneous agent equilibrium is observationally equivalent to a homogeneous agent equilibrium we derive a differential equation for equilibrium rental rates and a functional equation which links rental rates to asset prices these equations show precisely how the structure of durable prices and rental rates embody the functional form and population distribution of preferences and the technological characteristics of durable goods this abstract was borrowed from another version of this item

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

job durations with worker and firm specific effects mcmc estimation with longitudinal employer employee data we study job durations using a multivariate hazard model allowing for worker specific and firm specific unobserved determinants the latter are captured by unobserved heterogeneity terms or random effects one at the firm level and another at the worker level this enables us to decompose the variation in job durations into the relative contribution of the worker and the firm we also allow the unobserved terms to be correlated in a model that is primarily relevant for markets with small firms for the empirical analysis we use a portuguese longitudinal matched employer employee dataset the model is estimated with a bayesian markov chain monte carlo mcmc estimation method the results imply that unobserved firm characteristics explain almost 40 of the systematic variation in log job durations in addition we find a positive correlation between unobserved worker and firm characteristics 2012 american statistical association

annual miles drive used car prices this paper investigates whether the net benefits from owning a vehicle proxied by annual miles driven explain the price declines observed over a vehicle s life we first model the household decision on how much to drive each of its vehicles then we empirically establish that variation in household annual miles across brands explains observed price declines furthermore the effect of vehicle age on annual miles decisions and consequently on market value depends on household characteristics and the composition of the vehicle stock owned

environmental accounting for pollution in the united states economy this study presents a framework to include environmental externali ties into a system of national accounts the paper estimates the air pollution damages for each industry in the united states an inte grated assessment model quantifies the marginal damages of air pol lution emissions for the us which are multiplied times the quantity of emissions by industry to compute gross damages solid waste com bustion sewage treatment stone quarrying marinas and oil and coal fired power plants have air pollution damages larger than their value added the largest industrial contributor to external costs is coal fired electric generation whose damages range from 0 8 to 5 6 times value added jel e01 l94 q53 q56

existence of stationary equilibrium in the markets for new and used durable goods abstract we prove the existence of stationary equilibrium in the primary and secondhand markets for an indivisible consumer durable in a general model with stochastic degradation and endogenous scrappage decisions unlike rust econometrica 53 1985 783 we introduce transaction costs in the model as a motivation for consumer holdings of durables across multiple quality levels our technique allows for both multiple types of durables e g porsche and bmw and relaxation of the single crossing condition on consumer tastes we provide a simple example showing how increasing transaction costs affect secondhand prices eventually for sufficiently costly transactions closing the secondhand market altogether

wages mobility and firm performance advantages and insights from using matched worker firm data to illustrate the wide applicability of longitudinal matched employer employee data we study the simultaneous determination of worker mobility and wage rates using an econometric model that allows for both individual and firm level heterogeneity the model is estimated using longitudinally linked employer employee data from france structural results for mobility show remarkable heterogeneity with both positive and negative duration dependence present in a significant proportion of firms the average structural returns to seniority are essentially zero but this result masks enormous heterogeneity with positive seniority returns found in low starting wage firms

job turnover and the returns to seniority in this article we match firm data to individual work history files to simultaneously estimate the wage and employment duration processes of a longitudinal sample of 2 million french workers employed in roughly 1 million firms and followed over 20 years the particular structure of the dataset allows us to distinguish between the impact of job search and labor demand indicators on wages and employment at the job level the model allows for correlated individual and job unobserved heterogeneity controlling for job matching we find that returns to seniority are close to zero

estimating gender differences in access to jobs this paper proposes a new measure of gender differences in access to jobs based on a job assignment model this measure is the probability ratio of getting a job for a female and a male at each rank of the wage ladder we derive a nonparametric estimator of this access measure and estimate it for french full time executives aged 40 45 in the private sector our results show that the gender difference in the probability of getting a job increases along the wage ladder from 9 to 50 females thus have a significantly lower access to high paid jobs than to low paid jobs

a quantitative analysis of the used car market we quantitatively investigate the allocative and welfare effects of secondary markets for cars an important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher quality newer goods but transaction costs are an impediment to instantaneous trade calibration of the model successfully matches several aggregate features of the u s and french used car markets counterfactual analyses show that transaction costs have a large effect on volume of trade allocations and the primary market aggregate effects on consumer surplus and welfare are relatively small but the effect on lower valuation households can be large

durable goods monopoly with varying demand this paper solves for the proflt maximising strategy of a durable goods monopolist when incoming demand varies over time each period additional consumers enter the market these consumers can then choose whether and when to purchase we flrst characterise the consumer s utility maximisation problem and under a monotonicity condition show the proflt maximising allocation can be solved through a myopic algorithm which has an intuitive marginal revenue interpretation consumers ability to delay creates an asymmetry in the optimal price path which exhibits fast increases and slow declines this asymmetry pushes the price level above that charged by a flrm facing the average level of demand applications of this framework include deterministic demand cycles one ofi shocks and iid demand draws the optimal policy outperforms renting and can be implemented by a time consistent best price provision

quality quantity and spatial variation of price this paper develops and implements a method for estimating price elasticities of demand using cross sectional household survey data geographically clustered households report unit values which when corrected for quality effects and for measurement error indicate the underlying spatial variation in prices and can be matched to variation in demand patterns a simple model of quality choice is proposed while the correction for measurement error exploits the clustered design of such surveys data from a 1979 household survey from the ivory coast are used to estimate price elasticities for beef meat fish cereals and starches copyright 1988 by american economic association

economic growth and climate the carbon dioxide problem in contemplating the future course of economic growth in the west scientists are divided between one group crying wolf and another which denies that species existence one persistent concern has been that man s economic activities would reach a scale where the global climate would be significantly affected unlike many of the wolf cries this one in my opinion should be taken very seriously the present article will first give a brief overview of the climatic implications of economic activity with special reference to carbon dioxide and then will present possible strategies for control a more complete report with references to the literature on climatic change is contained in nordhaus 1976 it is thought that the economic activities which most affect climate are agriculture and energy of these the latter is probably more significant is certainly more easily analyzed and will be discussed here in the energy sector emissions of carbon dioxide particulate matter and heat are of significance for the global climate

policy analysis of the greenhouse effect an application of the page model abstract in this paper we introduce a comprehensive model for policy analysis of the greenhouse effect page we apply the page model to assess the merits of policies to prevent global warming by controlling the emissions of greenhouse gases and policies to adapt to any global warming that occurs the results confirm that it is difficult to overcome the problem of global warming by taking preventive action alone the argument for introducing an aggressive adaptive policy is very strong we calculate the valuation that would have to be placed upon non economic environmental and social impacts for a combined strategy of preventive and adaptive policies to be considered a worthwhile option both for individual regions and for the world as a whole we also show that uncertainties in all four groups of inputs to the model scientific costs of control costs of adaptation and valuation of impacts have a great influence on the costs and impacts of the combined strategy

do wages rise with job seniority a reassessment the authors provide new estimates of the return to job seniority using a dataset similar to that employed in joseph altonji and robert shakotko do wages rise with job seniority review of economic studies 1987 and robert topel specific capital mobility and wages journal of political economy 1991 they consider the strengths and weaknesses of these studies treatment of economy wide trends their dating conventions for tenure and wages their handling of wage observations that might span multiple jobs and their estimation approaches re estimation points to an effect often years of tenure on the log wage equal to 11 which is above the preferred estimate of altonji and shakotko but far below that of topel changes in earnings distributions and in the employment relationship motivate the examination of more recent data perhaps surprisingly the return to tenure has probably increased over time

revenue management for durable goods using trade ins with certified pre owned options abstract the economics research suggests that firms can use trade ins as a revenue management device for price discrimination between new and replacement buyers of durabprle goods offering different prices to different groups of customers creates a market segmentation effect this study examines such an effect by considering trade ins and certified pre owned options for a durable goods firm where certified pre owned cpo represents the used goods market generated from the return flow of trade in transactions the optimal pricing and or trade in rebate is determined and the strategic choice between the two options is examined an analytical model is developed that incorporates the key durable goods features into model formulation specifically the deterioration rate or durability in a reverse measure and the variation in quality of the used goods our research findings indicate that i the magnitude of trade in rebates increases with the deterioration rate and quality variation ii the segmentation effect outweighs the cannibalization effect when the deterioration rate is moderately high iii the strategic choice of trade ins and cpo options is critically dependent on these two features and iv the majority of profit improvement is generated from trade in provisions although the cpo option can serve as a second profit boosting device

how fast should we graze the global commons unlike the vast preponderance of planets earth has been bequeathed a hospitable environment in which to thrive up to now man s activities have affected this environment negligibly scientists are becoming convinced however that release of carbon dioxide co2 from combustion of fossil fuels will lead to a significant modification of the global climate see woodwell how should we think about such a destruction of our heritage should it be treated as anathema like bondage or should the pace and extent of use of our global commons be subject to the same reasoned balancing of costs and benefits as other economic activities the present paper takes the second approach asking how fast the global economy should allow a buildup of atmospheric co2 the first section reviews the current scientific knowledge on this subject while the second puts this into an optimal growth framework the third section then presents a numerical example while the last presents some realistic policy views on the subject this abstract was borrowed from another version of this item

the flat rental puzzle 4cars and replace them after 2 years or when their odometer exceeds 34 000 km this is a very costly 5 strategy caused by rapid depreciation in used car prices we show how economic theory predicts that 6 in a competitive market cars are rented out covering their full economic lifespan and rental prices are 7 a declining function of their odometer value our solution to these puzzles is that actual rental markets 8 are not fully competitive and firms may be behaving suboptimally we provide a case study of a large 9 car rental company that provided us access to its operating data we develop a model of the company s 10 operations that predicts that the company can significantly increase its profits by keeping its rental cars 11 twice as long as it currently does and also by discounting the rental cost of older vehicles to induce 12 its customers to rent them the company undertook an experiment to test our model s predictions 13 we report initial findings from this experiment which involved over 4500 rentals of over 500 cars in 14 4 locations over a 5 month period the results are consistent with the predictions of our model and 15 suggest that a properly chosen declining rental price function can increase overall revenues profits 16 also increase significantly since doubling the holding period of rental cars cuts discounted replacement 17 costs by nearly 40 18

gasoline prices fuel economy and the energy paradox abstract policymakers often assert that consumers undervalue future gasoline costs when they buy automobiles we test this by measuring whether relative prices of vehicles with different fuel economy ratings fully adjust to variation in gasoline prices vehicle prices move as if consumers are indifferent between 1 00 in discounted future gas cost and 0 76 in vehicle purchase price we show how corrections for endogenous market shares and utilization measurement error and different gasoline price forecasts affect the results we also provide unique evidence of sticky information vehicle markets respond to changes in gasoline prices with up to a six month delay

the agnostic s response to climate deniers price carbon with the election of president trump climate deniers feel emboldened and moved from the fringes to the centre of global policy making we study how an agnostic approach to policy based on pascal s wager and allowing for subjective prior probability beliefs about whether climate deniers are right prices carbon using the dice integrated assessment model we find that assigning a 10 chance of climate deniers being correct lowers the global price on carbon in 2020 only marginally from 21 to 19 per ton of carbon dioxide if policymakers apply nordhaus discounting and from 91 to 84 per ton of carbon dioxide if they apply stern discounting agnostics reflection of remaining scientific uncertainty leaves climate policy essentially unchanged the robustness of an ambitious climate policy also follows from using the max min or the min max regret principle letting the coefficient of relative ambiguity aversion vary from zero corresponding to expected utility analysis to infinity corresponding to the max min principle we show how policy makers deal with fundamental climate model uncertainty if they are prepared to assign prior probabilities to different views of the world being correct allowing for an ethical discount rate and a higher market discount rate and for a wide range of sensitivity exercises including damage uncertainty we show that pricing carbon is the robust response under rising climate scepticism

understanding the role of trade ins in durable goods markets theory and evidence the act of trading in a used car as partial payment for a new car resonates with practically all consumers such transactions are prevalent in many other durable goods markets ranging from golf clubs to ct scanners what roles do trade ins play in these markets what motivates the seller to set up a channel to facilitate trade ins intuitively accepting a trade in would appear to stimulate demand for the producer s product but facilitating the resale of these used goods that substitute for new goods might also increase cannibalization although such transactions involve billions of dollars we know relatively little about this practice from the extant research literature this paper develops an analytical model that incorporates key features of real world durable goods markets i coexistence of new and used goods markets ii consumer heterogeneity with respect to quality sensitivity iii firms that anticipate the cannibalization problem arising from the coexistence of new and used goods and iv lemon problems in resale markets whereby sellers of used goods are better informed than buyers about the quality of their particular item in our analysis a trade in policy amounts to an intervention by the firm in the used goods market which reduces inefficiencies arising from the lemon problem it motivates owners to purchase new goods and reduces their proclivity to hold on to purchased goods because of the low price the latter would fetch in a lemon market we also show that trade in programs are more valuable for less reliable products as well as for products that deteriorate more slowly our analysis shows that producers in durable goods markets should consider trade in programs as a matter of routine despite cannibalization concerns arising from a more active resale market a producer s profits will inevitably rise from introducing trade ins given pervasive lemon problems we test the key predictions of the model about price and volume of trade by assembling a data set of transactions of u s automobile consumers and find broad support for our model

dynamics and equilibrium in a structural model of wide body commercial aircraft markets summary this paper develops and estimates a dynamic equilibrium model of the market for new and used commercial aircraft the model is estimated by maximum simulated likelihood using data on wide body aircraft owners and prices for transactions occurring 1978 1997 the importance of explicitly modeling dynamics and equilibrium in new and used markets for durable goods is illustrated in two counterfactual experiments estimates of the structural model are used to show that implementing an investment tax credit not only increases demand for new wide body aircraft by the airlines that receive the tax credit but also increases the number of new wide body aircraft owned by airlines not directly affected by the policy further the model indicates that a policy which improves the efficiency of secondary markets for used wide body aircraft will also stimulate demand for new wide body aircraft copyright 2010 john wiley sons ltd

an empirical model of mainframe computer investment this paper introduces a dynamic model of investment decisions in mainframe computer systems i estimate and test the model using detailed micro data from a company in the telecommunications industry the model accounts for technological depreciation which distinguishes computers from other investment goods where physical depreciation is typically a key factor underlying replacement investment decisions the company increased its installed mainframe computer capacity by over 30 fold over the 10 year sample period part of this growth was undoubtedly due to the huge increase in performance and the corresponding drop in the per unit cost of processing capacity of mainframes a consequence of moore s law however there was also tremendous growth in the need for computers for billing account processing and other tasks due to the rapid growth in the telecommunications industry over this same time period i estimate the unknown parameters of the investment model using a nonlinear least squares nested fixed point algorithm nls nfxp which solves the bellman equation underlying the dynamic model of investment and replacement of mainframe computers by nonlinear least squares i demonstrate that it is feasible to estimate this model on an ordinary pc whereas standard discretization approaches to solving the firm s optimal investment policy might not even be feasible using supercomputers i show that the estimated model fits the data very well and accurately captures the large growth in installed mainframe capacity the timing and magnitude of replacement investment as well as periodic upgrades of existing mainframe units i use the model to decompose how much of the 30 fold increase in mainframe computer capacity is due to moore s law i e the huge drop in the unit cost of installed mainframe capacity and how much is due to the growth in demand for services of mainframes due to the rapid growth in demand for telecommunications services particularly cell phone accounts by the firm s customers copyright 2010 john wiley sons ltd

unraveling the mne wage premium whereas ib has extensively studied mnes generic positive impact on host economies but rarely on employee wages economics research has only shown an overall mne wage premium we unravel this premium considering multiple levels of analysis and accounting for host country contextual contingencies to unveil mnes different positive or negative distributional effects using unique micro level data from over 40 000 employees in 13 countries we examine mnes distributional effects for employees gender experience and immigrant status the influence of host country property rights protection and labor regulation and interplays with region and industry effects mnes distributional effects show marked differences that largely depend on the host country context and that are positive for experienced and foreign born employees in developed countries but negative for females working in developing countries whereas in developed countries the gender wage gap is smaller in mnes than in domestic firms as hypothesized we find evidence of a larger wage gap in developing countries the analysis also reveals that the higher host countries level of property rights protection the lower the mne wage premium our study points at the need to reassess statements about the generic positive impact of mnes in host countries particularly in developing countries and discusses further research implications

the welfare implications of climate change policy abstract the response to three different climate change policies is measured within a general equilibrium model of world output technological change greenhouse gas emissions and climate driven changes in productivity the proposed policies including an approximation to the kyoto protocol are shown to differ greatly in how they mitigate climate change support economic growth and allocate rents across generations benefits of alternative policies relative to the status quo do not necessarily accrue to the generations that bear the costs the results also show that the chosen rent distribution rule has a profound effect on policy evaluation in particular policies which allocate rents on a per capita basis are shown to be systematically welfare preferred to situations where emissions rights are grandfathered to emitting firms this implies that both the optimal level of emissions and the welfare cost of reaching a given target of emissions or atmospheric concentration would be lower under a per capita allocation of emissions permits or carbon tax revenues

demand for differentiated durable products the case of the u s computer printer market i introduction this paper aims to provide a theoretical and empirical description of consumer behavior in a dynamic market for differentiated durable goods the computer hardware industry serves as an example of the type of market we consider markets for computer systems and components as well as for many other high technology products exhibit some striking similarities that are of particular concern for an empirical economist as follows products are differentiated in multiple dimensions in addition to price products are durable yielding consumption services over multiple periods product quality rapidly improves over time empirical work on estimating differentiated product demand systems has been dominated by static discrete choice models with random utility see berry levinsohn and pakes 1995 goldberg 1995 and nevo 2001 among others however markets for durable goods exhibit several features at odds with their assumption of myopic consumer behavior first traditional static discrete choice models implicitly assume that consumers participate in the market every period choosing one of the available products or an outside option thus the fraction of consumers who do not buy any product in a given period could only be explained by the high value they assign to the outside alternative for durable goods however purchases are made infrequently and result in a consumer s exiting the market for a significant period of time hence the model needs to account for consumers outflow from the market arising from their purchase decisions second a static framework may give a misleading picture of the aggregate sales time pattern in a dynamic industry in many markets for durable products it is not uncommon to see rapidly improving product quality and falling prices given any reasonable set of consumer preferences over the product characteristics space static discrete choice models for such an industry will tend to predict an upward trend in aggregate sales this fails to account for a variety of patterns commonly seen in the data third the evolution of product quality leads to the possibility of intertemporal demand substitution by forgoing a current purchase the consumer retains the option to buy a potentially better product in the future hence the decision of when to buy may be just as important for consumers as the decision of what to buy this trade off cannot be accounted for in the static framework the purpose of this paper is to remedy these shortcomings of static discrete choice models in durable goods markets with particular attention paid to technological change and the dynamics of new products adoption the paper presents a dynamic model of consumer demand for differentiated durable products that explicitly accounts for consumers expectations of future product quality and consumers outflow from the market that arises endogenously from their purchase decisions in this model the consumer faces a sequence of static discrete choice problems over a non stationary choice set we show that for a subclass of random utility models which include the multinomial logit and the mcfadden 1978 generalized extreme value gev model there exists a scalar valued sufficient statistic that determines the value of the option to postpone the purchase this allows us to model industry evolution over a vastly reduced state space and to formalize the consumer s decision of when to buy as an optimal stopping problem a solution to that problem defines the hazard rate of product adoptions while the nested discrete choice model determines the alternative specific purchase probabilities integrating individual decisions over the population distribution generates rich dynamics of aggregate and product level sales the paper proceeds to present monte carlo evidence that ignoring the time dimension of consumer choice will induce a downward bias in the estimates of consumer preferences over quality sometimes reversing the sign of the coefficients

job duration seniority and earnings an important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience this study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker the job or the worker employer match the implication is tha t earnings do not in fact rise very much with seniority copyright 1987 by american economic association

durable goods oligopoly with secondary markets the case of automobiles we study the effects of durability and secondary markets on equilibrium firm behavior in the car market we construct a dynamic oligopoly model of a differentiated product market to incorporate the equilibrium production dynamics that arise from the durability of the goods and their active trade in secondary markets we derive an econometric model and estimate its parameters using data from the automobile industry over a 20 year period our estimates are used to provide a measure of the competitive importance of the secondary market

does raiding explain the negative returns to faculty seniority i introduction economists have studied various aspects of faculty mobility research shows that turnover is greater among nonunion faculty rees 1994 female faculty average slightly more employers than male faculty barbezat and hughes 2001 ginther and kahn 2004 1 the responsiveness of turnover to relative pay diminishes with rank ehrenberg kasper and rees 1991 and research productivity enhances prospects for upward mobility ault rutman and stevenson 1979 1982 coupe smeets and warzynski 2005 still questions remain unanswered where do faculty go when they leave a university how does faculty turnover vary with time at a university what percentage of faculty move upward and what percentage move downward because of tenure denials or the prospect of being turned down for tenure the present article contributes to our understanding of these issues but its primary objective was to use data on faculty mobility to provide insights on another issue returns to academic seniority the negative returns to seniority that many studies find are commonly attributed to one of two factors 2 the first view is that negative returns reflect monopsony power on the part of universities faculty with high mobility costs acquire high seniority and because they are unlikely to move they are paid less than equally productive faculty that employers view as more likely to leave a competing explanation is that highly productive faculty are raided according to this story returns to seniority are biased negatively because faculty with high seniority tend to have low unmeasured productivity the best faculty are bid away moving on to better jobs those who remain are the faculty without outside offers and the negative returns estimated for senior faculty actually reflect a penalty for low unmeasured productivity rather than a true penalty for seniority the raiding story has several implications first estimated returns to seniority should become less negative the more fully the productivity is measured second estimated returns should be less negative once we control for faculty who are bid away finally and of particular importance estimated returns to seniority should not be negative for faculty who are bid away the faculty for whom unmeasured productivity is presumably high with the right data set these hypotheses can be tested rejection of the raiding hypothesis would provide tacit evidence of monoposony in academic markets 3 this article contributes to the literature in several ways it is the first research to directly test the raiding hypothesis it provides a detailed look at faculty mobility in one segment of the academic labor market it extends and improves bratsberg ragan and warren 2003 in the following ways it expands the sample to cover three decades of faculty pay records it includes additional controls for productivity number and types of books recent and prospective articles and so forth resulting in the most complete specification of research productivity to date and it allows for heterogeneity in the seniority penalty via phd pedigree and direction of move finally it tests for the possibility that the academic job market does a better job of matching faculty and universities in recent years as might be expected because of the information revolution the sample consists of five public phd granting universities in the midwest we track all tenure track economics faculty employed in these universities over a 30 yr period we measure their productivity their pay and their mobility as such the study provides a rich and detailed investigation of one subset of economics programs it is possible that mobility may be greater in urban areas where faculty can more readily obtain alternative employment without relocating and prior research indicates that pay structures depend on the university s stature and its relative emphasis on research and teaching

wages and job mobility of young workers this paper presents a discrete time version of jovanovic s model of worker firm matching descriptive evidence is presented that supports the notion that unobserved worker firm heterogeneity is an important component in the intertemporal structure of wages for young workers a structural econometric model of wage dynamics under worker firm sorting is developed and estimated finally a formal test of the matching model is carried out and the matching structure on intertemporal covariances of wages is not rejected my results indicate the necessity of jointly considering processes of turnover and wage growth when analyzing the labor market experiences of young workers

the flexible coefficient multinomial logit fc mnl model of demand for differentiated products we show fc mnl is flexible in the sense of diewert thus its parameters can be chosen to match a well defined class of possible own and cross price elasticities of demand in contrast to models such as probit and random coefficient mnl models fc mnl does not require estimation via simulation it is fully analytic under well defined and testable parameter restrictions fc mnl is shown to be an unexplored member of mcfadden s class of multivariate extreme value discrete choice models therefore fc mnl is fully consistent with an underlying structural model of heterogeneous utility maximizing consumers we provide a monte carlo study to establish its properties and we illustrate its use by estimating the demand for new automobiles in italy

group learning wage dispersion and non stationary offers can differences in equilibrium beliefs among otherwise identical individuals account for a substantial degree of wage inequality this paper shows that this is possible if two conditions are met first people learn about the distribution of wage offers from the experience of their peers and second people believe that wage offers are stationary even though offers that arrive later tend to have higher wages than offers that arrive earlier peer groups can then end up with different stable beliefs that lead to intergroup wage differences the non stationarity of offers is rationalized in a model where firms can either advertise their job openings or not and where advertised ones have more influence on more inexperienced job searchers a statistic is proposed whose application to existing studies suggests that the non stationarity considered here is present in data

the internal economics of the firm evidence from personnel data we analyze twenty years of personnel data from one firm the hierarchical structure is quite simple and stable career movements suggest that the employee s rate of learning and the firm s learning about ability are important there are promotion fast tracks exit rates vary little with tenure or salary the firm has personnel policies like those described in the internal labor markets literature although several theoretical preconditions for ilms such as ports of entry and exit are lacking job levels are important to compensation but there is also substantial individual variation in pay within levels our companion paper in this issue explores the wage policy of this firm

climate clubs overcoming free riding in international climate policy notwithstanding great progress in scientific and economic under standing of climate change it has proven difficult to forge inter national agreements because of free riding as seen in the defunct kyoto protocol this study examines the club as a model for international climate policy based on economic theory and empirical modeling it finds that without sanctions against non participants there are no stable coalitions other than those with minimal abatement by contrast a regime with small trade penalties on non participants a climate club can induce a large stable coalition with high levels of abatement jel q54 q58 k32 k33

discounting the distant future how much do uncertain rates increase valuations abstract we demonstrate that when the future path of the discount rate is uncertain and highly correlated the distant future should be discounted at significantly lower rates than suggested by the current rate we then use two centuries of us interest rate data to quantify this effect using both random walk and mean reverting models we compute the certainty equivalent rate that summarizes the effect of uncertainty and measures the appropriate forward rate of discount in the future under the random walk model we find that the certainty equivalent rate falls continuously from 4 to 2 after 100 years 1 after 200 years and 0 5 after 300 years at horizons of 400 years the discounted value increases by a factor of over 40 000 relative to conventional discounting applied to climate change mitigation we find that incorporating discount rate uncertainty almost doubles the expected present value of mitigation benefits

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

spatial climate economic models in the design of optimal climate policies across locations we couple a one dimensional energy balance climate model with heat transportation across latitudes with an economic growth model we derive temperature and damage distributions across locations and optimal taxes on fossil fuels which in contrast to zero dimensional integrated assessment models account for cross latitude externalities we analyze the impact of welfare weights on the spatial structure of optimal carbon taxes and identify conditions under which these taxes are spatially nonhomogeneous and are lower in latitudes with relatively lower per capita income populations we show the way that heat transportation affects local economic variables and taxes and locate sufficient conditions for optimal mitigation policies to have rapid ramp up initially and then decrease over time

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

optimal dynamic carbon taxes in a climate economy model with distortionary fiscal policy how should carbon be taxed as a part of fiscal policy the literature on optimal carbon pricing often abstracts from other taxes however when governments raise revenues with distortionary taxes carbon levies have fiscal impacts while they raise revenues directly they may shrink the bases of other taxes e g by decreasing employment this article theoretically characterizes and then quantifies optimal carbon taxes in a dynamic general equilibrium climate economy model with distortionary fiscal policy first this article establishes a novel theoretical relationship between the optimal taxation of carbon and of capital income this link arises because carbon emissions destroy natural capital they accumulate in the atmosphere and decrease future output consequently this article shows how the standard logic against capital income taxes extends to distortions on environmental capital investments second this article characterizes optimal climate policy in sub optimal fiscal settings where income taxes are constrained to remain at their observed levels third this article presents a detailed calibration that builds on the seminal dice approach but adds features essential for a setting with distortionary taxes such as a differentiation between climate change production impacts e g on agriculture and direct utility impacts e g on biodiversity existence value the central quantitative finding is that optimal carbon tax schedules are 8 24 lower when there are distortionary taxes compared to the setting with lump sum taxes considered in the literature

an empirical stationary equilibrium search model of the housing market this article specifies and estimates a computationally tractable stationary equilibrium model of the housing market the model is rich and incorporates many of its unique features buyers and sellers simultaneous search behavior heterogeneity in their motivation to trade transaction costs a trading mechanism with posting prices and bargaining and the availability of an exogenous advertising technology that induces endogenous matching estimation uses maximum likelihood methods and multiple listing services data the estimated model is used to simulate housing market outcomes when a the amount of information displayed on housing listings increases and b real estate agent s commission rates change

george bush versus al gore irreversibilities in greenhouse gas accumulation and emission control investment abstract this paper investigates the fundamental problem of mitigating the impacts of climate change in an environment of uncertainty and learning in particular the paper uses a stochastic version of nordhaus s dice model to show that the irreversibility of investment capital has a stronger effect than irreversibilities in climate change other than catastrophic effects the implications are that if abatement decisions are irreversible there should be less emission control today than would be optimal without taking learning into account and that policy makers should pursue control policies that are costlessly reversible a variant on the no regrets strategy

turnover of used durables in a stationary equilibrium are older goods traded more this paper develops a dynamic model with transaction costs to determine the equilibrium resale pattern in a market for a durable good the key result is that the probability of resale is nonmonotonic in the age of the good trade volume is relatively low in the very beginning and in the middle of a good s life this result helps explain observed variations of resale rates across vintages for the u s market of used cars

dots to boxes do the size and shape of spatial units jeopardize economic geography estimations this paper evaluates in the context of economic geography estimates the magnitude of the distortions arising from the choice of zoning system which is also known as the modifiable areal unit problem maup we consider three standard economic geography exercises the analysis of spatial concentration agglomeration economies and trade determinants using various french zoning systems differentiated according to the size and shape of spatial units which are the two main determinants of the maup while size matters a little shape does so much less both dimensions seem to be of secondary importance compared to specification issues

consequences of seniority wages on the employment structure the author examines seniority wage profiles in german establishments to discern hiring patterns with respect to age and sex using the country s linked employer employee dataset liab over the per

an overlapping generations model of climate economy interactions a numerically calibrated overlapping generations model of climate change and the world economy is examined in this paper in the absence of intergenerational transfers efficient rates of greenhouse gas emissions abatement rise from 16 in the present to 25 in the long run while mean global temperature increases by 7 40c relative to the preindustrial norm a utilitarian optimum which attaches equal weight to each generation s life cycle utility yields abatement rates that rise from 48 to 89 with a long run temperature increase of 3 40c a second best utilitarian path in which intergenerational transfers are by assumption institutionally infeasible also supports stringent abatement measures i introduction the infinitely lived agent framework pioneered by frank ramsey 1928 has emerged as a central structure in the economics of climate change as characterized by ipcc 1996 working group iii climate change occurs when anthropogenic emissions of greenhouse gases principally carbon dioxide but also chlorofluorocarbons methane nitrous oxide and water vapor contribute to long term increases in mean global temperature potentially disrupting ecological systems and climate dependent production activities the best known study on the economics of this subject is nordhaus 1994 dynamic model of climate and the economy dice which incorporates assumptions regarding the costs and benefits of greenhouse gas emissions in a standard one sector growth model in nordhaus analysis a 50 reduction in greenhouse gas emissions would reduce gross world output by 0 93 a doubling of greenhouse gas concentrations relative to the preindustrial norm which is expected to occur by the middle of the twenty first century would reduce output by

when do secondary markets harm firms to investigate whether secondary markets aid or harm durable goods manufacturers we build a dynamic model of durable goods oligopoly with transaction costs in the secondary market calibrating model parameters using data from the us automobile industry we find the net effect of opening the secondary market is to decrease new car manufacturers profits by 35 percent counterfactual scenarios in which the size of the used good stock decreases such as when products become less durable when the number of firms decreases or when firms can commit to future production levels increase the profitability of opening the secondary market

labour mobility and returns to experience in foreign firms this paper uses finnish linked employer employee panel data to study whether employees are able to appropriate returns to knowledge accumulated in foreign owned firms when moving to domestic firms the estimates indicate that highly educated employees earn a return to prior experience in a foreign owned firm which is over and above the return to other previous experience these employees do not appear to pay for the knowledge they accumulate in the form of lower starting wages in foreign owned firms

operational asset replacement strategy a real options approach abstract this paper analyses the problem of replacement by investigating the optimal moment of investment replacement in a given tax environment with a given depreciation policy an operation and maintenance cost minimization model based on the definition of equivalent annual cost is applied to a real options paradigm the developed methodology allows for an innovative evaluation of the flexibility of replacement process analysis a new two factor evaluation function is introduced to quantify decisions on asset replacement under a unique cycle environment this study improves upon previous findings in the literature as it accounts for autonomous salvage value processes based on partial differential equations this model achieves a general analytical solution and particular numerical solution the results differ significantly from those observed in one factor models by showing evidence of over evaluation in optimal levels of replacement and by confirming suspicions that different types of uncertainties produce non monotonous effects on the optimal replacement level the scientific contribution of this study lies in new and stronger approaches to equivalent annual cost literature supplying an algorithm for operation and maintenance cost minimization that is conditioned by autonomous salvage value this study also contributes to the real options literature by developing a two factor model with brownian processes applied to asset replacement

asset prices and public information abstract this paper examines the impact of public quality information on the structure of equilibrium prices in a consumer durables market we model the link between prices and an observable quality index on the basis of the user cost approach using cross section data of the west german automobile market we show that the hypothesis of information efficiency cannot be rejected

adverse selection in durable goods markets we present a dynamic model of adverse selection to examine the interactions between new and used goods markets we find that the used market never shuts down the volume of trade can be large and distortions are lower than previously thought new cars prices can be higher under adverse selection than in its absence an extension to several brands that differ in reliability leads to testable predictions of the effects of adverse selection unreliable brands have steeper price declines and lower volumes of trade we contrast these predictions with those of a model where brands physically depreciate at different rates

resources as a constraint on growth for a considerable part of its history the american economy has functioned as a cowboy economy it has been a cowboy economy in the sense that there have been no important resource constraints on growth this is not to say that land minerals and a clean environment have been freely available rather agricultural land could be obtained at roughly constant costs most essential minerals have been present at fairly high grade in considerable abundance and the environment could be used as a sink without becoming fouled in the last several decades however cropland has stayed almost constant some high grade mineral deposits have been exhausted and the carrying capacity of our environment has been strained the scarcity of resources has led many to argue that the operating rules of our economy must change whereas in the cowboy economy we could afford to use our resources profligately the new view of economic growth is that the closing of all our frontiers means that we are now operating in a spaceship economy in a spaceship economy great attention must be paid to the sources of life and to the dumps where our refuse is piled things which have traditionally been treated as free goods air water quiet natural beauty must now be treated with the same care as other scarce goods it would seem difficult to question the observation that the world economy is progressing toward a closed system many have carried this observation further describing a future imperiled by famine depleted of essential materials running out of energy or choking in its own exhaust fumes behind these pessimistic visions is a deeper skepticism about the very fruits of economic growth economists have for the most part ridiculed the new view of growth arguing that it is merely chicken little run wild i think that the new view of growth must be taken seriously and analyzed carefully what have we learned about the new view the first set of studies relates to theoretical investigations by theoretical i mean propositions based on largely untested assumptions about model structure perhaps hypothetical would be a more accurate term in this category belong the celebrated writings sponsored by the club of rome as well as many offshoots of this work jay forrester dennis h meadows et al these works have demonstrated that under certain conditions involving technology population and resource availability a sustained growth path for consumption is not possible the conclusions of these works have not generally been accepted by economists because of the dubious nature of many of their assumptions in particular the assumptions regarding population growth and technology are quite unsatisfactory several authors have shown that the conclusions of these models are not robust to minor modifications in structure thus r boyd showed that introducing a new factor called technology would drastically alter the model s path my work 1973a showed that any of three changes in model structure ongoing technological progress adequate factor substitution or population decline would lead to opposite and more optimistic results it should be stressed however that all yale university

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

why do wages increase with tenure on the job training and life cycle wage growth observed within firms empirical results in this paper indicate that firm specific wage growth occurs almost exclusively during periods of on the job training this finding suggests that within firm wage growth is mainly determined by contemporaneous productivity growth the results provide no evidence that contractual considerations are an important source of firm specific wage growth copyright 1989 by american economic association

interfirm mobility wages and the returns to seniority and experience in the united states in this paper we expand on the seminal work of altonji and shakotko 1987 and topel 1991 and reinvestigate the returns to seniority in the united states we begin with the same wage equation as in previous studies we extend the model of hyslop 1999 and explicitly model the participation employment and inter firm mobility decisions which in turn define the individual s experience and seniority we introduce into the wage equation a summary of the workers entire career path the three equation system is estimated simultaneously using data from the panel study of income dynamics psid we find that for each of the three education groups studied the returns to seniority are larger than those previously found in the literature

the climate beta how does climate change mitigation affect the aggregate consumption risk borne by future generations in other words what is the climate beta in this paper we argue using a combination of theory and integrated assessment modelling that the climate beta is positive and close to unity for maturities of up to about one hundred years this is because the positive effect on the climate beta of uncertainty about exogenous emissions neutral technological progress overwhelms the negative effect on the climate beta of uncertainty about the carbon climate response particularly the climate sensitivity and the damage intensity of warming mitigating climate change therefore has no insurance value to hedge the aggregate consumption risk borne by future generations on the contrary it increases that risk which justifies a relatively high discount rate on the expected benefits of emissions reductions however the stream of undiscounted expected benefits is also increasing in the climate beta and this dominates the discounting effect so that overall the net present value of carbon emissions abatement is increasing in the climate beta

the nobel memorial prize for william d nordhaus william d nordhaus and paul m romer received the 2018 sveriges riksbank prize in economic sciences in memory of alfred nobel this paper surveys nordhaus contributions on integrating climate change into long run macroeconomic analysis for which he was recognized with this prize

quality standards for used durables an indirect subsidy abstract we construct a theoretical framework to study the impact of quality standards for used durable goods on trade ows pro ts and consumer welfare we show that asymmetric quality standards generate trade in used goods from high to low standard countries while at the same time reducing trade in new goods producers in the exporting country bene t from this change while consumers lose in the importing country consumers are better off but domestic industry is hurt these ndings suggest that quality standards on used goods may be a powerful policy tool whose use should be monitored by the wto

price and quality discrimination in durable goods monopoly with resale trading abstract we examine a durable goods monopolist s optimal dynamic price and product quality strategy when buyers are rational and can trade used durables among themselves in contrast to the usual credibility problem of the durable goods monopolist intertemporal quality discrimination introduces a time inconsistency problem of not raising prices against high valuation consumers who delay purchase for quality upgrades resale trading ameliorates this time inconsistency problem and allows the monopolist to effectively price discriminate especially when the buyers are patient the monopolist s optimal price and quality offers in the new good market exhibit complex dynamic patterns and new good prices can fall as product quality improves even in the absence of entry threats or learning economies initial quality distortions are followed by steady state quality allocations that are always efficient for the high valuation buyers but sometimes also for the marginal consumer types both the resale trading frequency and the price discount for secondhand goods are driven by the pace of strategic quality obsolescence in the new good market

bayesian learning growth and pollution abstract environmental problems such as climate change have great uncertainties current expectations are that uncertainties about climate change will be resolved quickly we examine this hypothesis theoretically and computationally we consider bayesian learning about the relationship between greenhouse gas levels and global mean temperature changes a key uncertainty learning is non trivial because of a stochastic shock to the realized temperature we find theoretically the expected learning time which is related to the variance of the shock and the emissions policy implying a tradeoff between the benefits of controlling emissions and information we imbed the learning model into an optimal growth model with a climate sector and solve the resulting dynamic program we find computationally that learning takes on average over 90 yr far longer than currently believed

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

on the spatial economic impact of global warming we propose a dynamic spatial theory to analyze the geographic impact of climate change agricultural and manufacturing firms locate on a hemisphere trade is costly firms innovate and technology diffuses over space emissions from energy used in production contribute to the atmospheric stock of carbon which increases temperature warming differs across latitudes and its effect on productivity varies across sectors we calibrate the model to analyze how climate change affects the spatial distribution of economic activity trade migration growth and welfare we assess quantitatively the impact of migration and trade restrictions energy taxes and innovation subsidies

optimal climate change mitigation under long term growth uncertainty stochastic integrated assessment and analytic findings abstract economic growth over the coming centuries is one of the major determinants of today s optimal greenhouse gas mitigation policy at the same time long run economic growth is highly uncertain this paper is the first to evaluate optimal mitigation policy under long term growth uncertainty in a stochastic integrated assessment model of climate change the sign and magnitude of the impact depend on preference characteristics and on how damages scale with production we explain the different mechanisms driving optimal mitigation under certain growth under uncertain technological progress in the discounted expected utility model and under uncertain technological progress in a more comprehensive asset pricing model based on epstein zin weil preferences in the latter framework the dominating uncertainty impact has the opposite sign of a deterministic growth impact the sign switch results from an endogenous pessimism weighting all of our numeric scenarios use a dice based assessment model and find a higher optimal carbon tax than the deterministic dice base case calibration

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

imperfect durability and the coase conjecture this article considers a market served by a monopolist who sells a durable good that depreciates stochastically over time we show that there exist three types of stationary equilibria a coase conjecture equilibrium a monopoly equilibrium and a reputational equilibrium when the depreciation rate is low the coase conjecture equilibrium is the unique equilibrium for intermediate values of the depreciation rate all three equilibrium types coexist when the depreciation rate is high the monopoly equilibrium is the unique equilibrium consequently when selling a good of sufficiently low durability the monopolist does not lose any of her monopoly power furthermore the steady state output in the reputational equilibrium falls below the monopoly quantity hence in durable goods markets welfare losses due to monopoly power may be larger than in markets for perishables

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

economics and climate change integrated assessment in a multi region world this paper develops a model that integrates the climate and the global economy an integrated assessment model with which different policy scenarios can be analyzed and compared the model is a dynamic stochastic general equilibrium setup with a continuum of regions thus it is a full stochastic general equilibrium version of rice nordhaus s pioneering multi region integrated assessment model like rice our model features traded fossil fuel but otherwise has no markets across regions there is no insurance nor any intertemporal trade across them the extreme form of market incompleteness is not fully realistic but arguably not a bad approximation of reality its major advantage is that along with a set of reasonable assumptions on preferences technology and nature it allows a closed form model solution we use the model to assess the welfare consequences of carbon taxes that differ across as well as within oil consuming and producing regions we show that surprisingly only taxes on oil producers can improve the climate taxes on oil consumers have no effect at all the calibrated model suggests large differences in views on climate policy across regions

board independence and operating performance analysis on french company and individual data this article studies the relationship between board independence and firm operating performance in french listed companies we take advantage of an original database with a time series dimension that can be used to mitigate heterogeneity and dynamic endogeneity issues in addition this database can be disaggregated at the individual director level this design enables us to introduce firm fixed effects and individual fixed effects in firm performance equations thereby controlling for heterogeneity at the firm and individual levels our main result is to document a significant negative relationship between independence and accounting performance this result suggests that in the french context the costs of independence i e the informational gap supported by independent directors compared to insiders and affiliated directors outweigh the benefits of independence i e the reduction in agency costs