estimates of the value of patent rights in great britain and ireland 1852 1876 parameters of the distribution of the value of patent rights in britain and ireland for the 1852 76 period are estimated and compared with similar estimates by schankerman and pakes 1986 for the 1950 76 period market variables of the earlier period have a low ability but those of the later period a high ability to explain fluctuations in the value of patent rights aggregate patent rights have more lower valued patents in the earlier period in the earlier period there was no trade off between quantity and quality of patents but in the later period there was aggregate value of patent rights increased relative to gross fixed capital formation from 1870 to 1970 by approximately 100 percent a greater amount of r d effort helps to explain many of the differences found between the two periods copyright 1994 by the london school of economics and political science

are policy incentives for solar power effective evidence from residential installations in the northeast abstract state incentives for solar power have grown significantly in the past several years this paper examines the effectiveness of policy incentives to increase residential solar photovoltaic pv capacity we use county level panel data and control for demographic characteristics solar resources and pro environmental preferences results show that among financial incentives rebates have the most impact with an additional 1 per watt rebate increasing annual pv capacity additions by close to 50 factors that affect financial returns to solar pv such as electricity price and solar insolation are also found to be significant results also point to a significant positive relationship between hybrid vehicle sales and residential pv capacity growth indicating the importance of pro environmental preferences as a predictor of solar pv demand back of the envelope calculations suggest that the cost of carbon mitigation through rebates is around 184 per ton of co2

a model of forum shopping owners of intellectual property or mere sponsors of an idea e g authors security issuers sponsors of standards resort to more or less independent certifiers to persuade potential users buyers or adopters of the worth of their property or idea we analyze the sponsor s choices ofcertifier and design social preferences regarding these choices and the impacts thereon of multiple categories of users of a downstream presence of the sponsor and of certifier market power finally we study strategic forum shopping by sponsors of competing ideas

evidence on whether banks consider carbon risk in their lending decisions banks face a dilemma in choosing between maximising profits and facilitating the sustainable use of resources within a carbon constrained future this study provides empirical evidence on this dilemma investigating whether a bank loan announcement for a firm with high carbon risk conveys information to investors about the firm s carbon risk exposure collected through a bank s pre loan screening and ongoing monitoring we use a sample of 120 bank loan announcements for asx listed firms over the period 2009 2015 we measure high low carbon risk exposure based on whether firms meet do not meet the reporting threshold of the nger scheme we document positive and significant excess loan announcement returns for loan renewals for high carbon risk firms but not for loan initiations further we document a more significant loan announcement return for renewals with favourable term revisions finally we find no evidence that the market differentiates between domestic and foreign lenders taken together our results suggest that investors perceive that banks incorporate carbon risk considerations into their lending decisions our results highlight the value of banks as financial intermediaries given the information asymmetry surrounding firms carbon risk exposure and more generally the need to extend modern banking theory to consider issues such as the impact of banks csr reputation on lending decisions

underwriting by commercial banks incentive conflicts scope economies and project quality the authors study the issue of commercial bank underwriting of securities their analysis examines the incentive conflict faced by intermediaries that both lend and underwrite securities thereby imposing a cost on their customers seeking to raise capital despite this cost firms may choose to use such an intermediary if there are sufficiently large scope economies in combined lending and underwriting the authors demonstrate that the regulatory separation of such combined intermediation may be optimal if firms recognize the intermediary s subsequent incentive conflict when choosing projects to be funded and if there is a social cost to bank funding of poor quality projects they also examine the conditions for intermediaries reputation building to mitigate the incentive conflict without the need for regulation

drexel burnham lambert s bankruptcy and the subsequent decline in underwriter fees abstract in the 1980s drexel burnham lambert dominated the underwriting of junk bonds with close to a 50 market share in 1990 drexel went bankrupt and was liquidated and the percentage underwriting fees for junk bonds subsequently dropped dramatically we present strong evidence that the exit of drexel burnham lambert and the resulting increase in competition for market share were major contributing factors to the decline in junk bond underwriter fees

lignocellulosic ethanol production from woody biomass the impact of facility siting on competitiveness abstract just as temperate region pulp and paper companies need to compete with brazilian eucalyptus pulp producers lignocellulosic biofuel producers in north america and europe in the absence of protectionist trade policies will need to be competitive with tropical and sub tropical biofuel producers this work sought to determine the impact of lignocellulosic ethanol biorefinery siting on economic performance and minimum ethanol selling price mesp for both east and west coast north american fuel markets facility sites included the pine dominated pacific northwest interior the mixed deciduous forest of ontario and new york and the brazilian state of espirito santo feedstock scenarios included both plantation poplar willow and eucalyptus respectively and managed forest harvest site specific variables in the techno economic model included delivered feedstock cost ethanol delivery cost cost of capital construction cost labour cost electricity revenues and co product credits and taxes insurance and permits despite the long shipping distance from brazil to north american east and west coast markets the mesp for brazilian produced eucalyptus lignocellulosic ethanol modelled at 0 74 l 1 was notably lower than that of all north american produced cases at 0 83 1 02 l 1

bond underwriting by banks and conflicts of interest evidence from japan during the pre war period abstract article 65 of the securities and exchange law of japan which was carried into effect in 1948 prohibited banks from underwriting corporate securities partially because of the concern that combining the banking and securities businesses might result in a potential conflict of interest this paper studies the pricing and long term default performance of industrial bonds underwritten by commercial banks the industrial bank of japan ibj and trust firms as compared to those underwritten by investment houses during the pre war period in japan when banks were allowed to underwrite industrial bonds the evidence rejects the concern about the conflicts of interest

understanding the reductions in us corn ethanol production costs an experience curve approach the us is currently the world s largest ethanol producer an increasing percentage is used as transportation fuel but debates continue on its costs competitiveness and energy balance in this study technological development of ethanol production and resulting cost reductions are investigated by using the experience curve approach scrutinizing costs of dry grind ethanol production over the timeframe 1980 2005 cost reductions are differentiated between feedstock corn production and industrial ethanol processing corn production costs in the us have declined by 62 over 30 years down to 100 2005 tonne in 2005 while corn production volumes almost doubled since 1975 a progress ratio pr of 0 55 is calculated indicating a 45 cost decline over each doubling in cumulative production higher corn yields and increasing farm sizes are the most important drivers behind this cost decline industrial processing costs of ethanol have declined by 45 since 1983 to below 130 2005 m3 in 2005 excluding costs for corn and capital equivalent to a pr of 0 87 total ethanol production costs including capital and net corn costs have declined approximately 60 from 800 2005 m3 in the early 1980s to 300 2005 m3 in 2005 higher ethanol yields lower energy use and the replacement of beverage alcohol based production technologies have mostly contributed to this substantial cost decline in addition the average size of dry grind ethanol plants increased by 235 since 1990 for the future it is estimated that solely due to technological learning production costs of ethanol may decline 28 44 though this excludes effects of the current rising corn and fossil fuel costs it is also concluded that experience curves are a valuable tool to describe both past and potential future cost reductions in us corn based ethanol production

risk reputation and ipo price support immediately following an initial public offering underwriters often repurchase shares of poorly performing offerings in an apparent attempt to stabilize the price using proprietary nasdaq data i study the price effects and determinants of price support some of the key findings are 1 stabilization is substantial inducing price rigidity at and below the offer price 2 i find no evidence that stocks with larger information asymmetries are stabilized more strongly 3 larger underwriters stabilize more perhaps to protect their reputations with investors and 4 investment banks with retail brokerage operations stabilize much more than other banks inconsistent with the view that stabilization benefits primarily institutional investors

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

a review of uncertainties in technology experience curves abstract the use of log linear experience curves or learning curves relating reductions in the unit cost of technologies to their cumulative production or installed capacity has become a common method of representing endogenous technical change in energy economic models used for policy analysis yet there are significant uncertainties in such formulations whose impact on key model results have been insufficiently examined or considered this paper reviews the major types of uncertainty in log linear experience curves and their effect on projected rates of cost reduction uncertainties are found not only in the learning rate parameter of a log linear model but also in the functional form that determines the shape of an experience curve evidence for alternative forms such as an s shaped curve is reviewed along with case studies that demonstrate the uncertainties associated with cost increases during early commercialization of a technology a phenomena that is widely recognized but rarely quantified or incorporated in learning models additional factors discussed include the effects of learning discontinuities institutional forgetting and the influence of social economic and political factors we then review other models of causality which aim to improve modelers ability to explain and predict the influence of other underlying processes that contribute to technology cost reductions in addition to learning ignoring other types of underlying mechanisms can create a false sense of precision and overestimate the true contribution of learning currently however uncertainties in such multi factor models remain large due to the difficulties of estimating key parameters such as private sector r d investments and extending models of a specific technology to a broader suite of technologies and cost projections pending the development and validation of more robust models of technological change we suggest ways to significantly improve the characterization and reporting of current learning model uncertainties and their impacts on the results of energy economic models to help reduce the potential for drawing inappropriate or erroneous policy conclusions

risky debt investment incentives and reputation in a sequential equilibrium the agency relationship of corporate insiders and bondholders is modeled as a dynamic game with asymmetric information the incentive effect of risky debt on the investment policy of a levered firm is studied in this context in a sequential equilibrium of the model a concept of reputation arises endogenously resulting in a partial resolution of the classic agency problem of underinvestment the incentive of the firm to underinvest is curtailed by anticipation of favorable rating of its bonds by the market this anticipated pricing of debt is consistent with rational expectations pricing by a competitive bond market and is realized in equilibrium some empirical implications of the model for bond rating debt covenants and bond price response to investment announcements are explored

efficiency in agricultural production the case of peasant farmers in eastern paraguay abstract this paper contributes to the productivity literature in developing country agriculture by quantifying the level of efficiency for a sample of peasant farmers from eastern paraguay a stochastic efficiency decomposition methodology is used to derive technical allocative and economic efficiency measures separately for cotton and cassava an average economic efficiency of 40 1 for cotton and of 52 for cassava is found which suggests considerable room for productivity gains for the farms in the sample through better use of available resources given the state of technology gains in output through productivity growth have become increasingly important to paraguay as the opportunities to bring additional virgin lands into cultivation have significantly diminished in recent years no clear strategy to improve farm productivity could be gleaned from an examination of the relationship between efficiency and various socioeconomic variables one possible explanation for this finding is the existence of a stage of development threshold below which there is no consistent relationship between socioeconomic variables and productivity if this is the case then our results suggest that this sample of paraguayan peasants are yet to reach such a threshold hence improvements in educational and extension services for example would be needed to go beyond this threshold once this is accomplished additional productivity gains would be obtained by further investments in human capital and related factors

incentivizing wood based fischer tropsch diesel through financial policy instruments an economic assessment for norway the objective of this study is to evaluate a select set of financial incentive instruments that can be employed by the norwegian government for encouraging early investment and production experienc

efficiency differentials in peasant agriculture and their implications for development policies this paper reviews the theoretical and empirical work on allocative efficiency in traditional agriculture and presents a new study of technical efficiency among tanzanian cotton farmers the theoretical arguments are shown to apply primarily in a competitive context that differs significantly from that in which peasant farms operate re analysis of earlier empirical studies shows that on average the marginal value products of inputs differ by more than 40 per cent from the marginal factor costs to which they should be equated under allocative efficiency our own study among tanzanian cotton farmers in geita district reveals that output could be increased by 51 per cent if all farmers achieved those levels of technical efficiency that were in fact achieved by the best farmers in the sample using the same inputs and technologies that the less efficient used these results indicate that the efficiency hypothesis may not be applicable to much of peasant agriculture and that development policies might fruitf

anticompetitive financial contracting the design of financial claims this paper presents the first model where entry deterrence takes place through financial rather than product market channels in standard models of the interaction between product and financial markets a firm s use of financial instruments deters entry by affecting product market behavior whereas in our model entry deterrence occurs by affecting the credit market behavior of investors towards entrant firms we find that in order to deter entry the claims held on incumbent firms should be sufficiently risky i e equity in contrast to the standard branderlewis 1986 result that debt deters entry the model sheds light on the policy debate on the separation of banking as to whether banks should be permitted to hold equity in firms it also provides an explanation for why venture capitalists hold automatically convertible securities in start up firms

information reliability and a theory of financial intermediation this paper is an analysis of when it will be beneficial for agents engaged in the production of information to form coalitions the model is cast in a financial market framework thus leading to an identification of conditions sufficient for the existence of financial intermediaries intermediation is shown to improve welfare if informational asymmetries are present and the information generated to rectify these asymmetries is potentially unreliable the usual appeal to transactions costs to explain intermediation is not needed

on the coexistence of banks and markets we examine the coexistence of banks and financial markets by studying a credit market where the qualities of investment projects are not observable and the investment decisions of entrepreneurs are not contractible standard banks can alleviate moral hazard problems while financial markets operated by investment banks can alleviate adverse selection problems in competition standard banks are forced to increase repayments since financial markets can attract the highest quality borrowers this in turn increases the share of shirkers and may make lending unprofitable for standard banks the coexistence of financial markets and standard banks is socially inefficient the same inefficiency may occur with the entrance of sophisticated banks operating with a combination of rating and ongoing monitoring technologies

education and technical efficiency in small farm production differences in technical efficiency are observed as differences in the physical output produced from a given bundle of physical inputs these differences are not considered in the traditional theory of the firm wherein the output resulting from a particular input bundle is specified as the maximum possible according to the latest technology presupposing technical efficiency the theory of the firm concentrates on allocative efficiency on the choice of the particular input bundle that maximizes profit given prices and the technically efficient production function the best utilization of any particular input combination according to henderson and quandt is a technical not an economic problem 1 economic theory notwithstanding empirical studies of production must take into account differences in the utilization of inputs since in the real world producers are not all equally efficient it is conceptually convenient to divide the output variation observed over a number of firms into two parts one that stems from variation in physical inputs and another that reflects differences in technical efficiency timmer has developed an approach by which to compare the technical efficiency of firms using linear programming he determines the function that relates physical inputs to output for the most efficient of a sample of firms in other words he finds the production surface that is the envelope of all the observation points he calls this function the technical frontier the relative tech

poor but allocatively efficient evidence from the eastern amazon this research empirically investigates the well known poor but efficient hypothesis formulated by schultz 1964 assuming that small scale farmers in developing countries are reasonably efficient in allocating their scarce resources by responding positively to price incentives deviating from schultz it is assumed here that scale effects explain a considerable proportion of small scale farmers relative efficiency the theoretical underpinnings of the scale efficiency concept are briefly reviewed before a normalized generalized leontief gl profit function is modeled by using its output supply and input demand system to capture the joint production of cassava flour and maize by a sample of small scale farmers in the bragantina region of the eastern amazon brazil the discussion of theoretical consistency and functional flexibility is considered by imposing convexity on the gl profit framework the empirical results confirm our revised hypothesis that small farmers in traditional development settings are poor but allocatively efficient by clearly suggesting considerable inefficiency with respect to the scale of operations

the berlin stock exchange in imperial germany a market for new technology analysing 474 cases of firms going public in the german capital between 1892 and 1913 we show that innovative firms could rely on the berlin stock market as a source of financing the data also reveal that initial public offerings ipo of innovative firms were characterized by particularly low underpricing comparatively high first trading prices and no long run underperformance we interpret these empirical results as evidence for the surprising fact that contemporary investors had rational expectations

an optimal ipo mechanism we analyse the optimal initial public offering ipo mechanism in a multidimensional adverse selection setting where institutional investors have private information about the market valuation of the shares the intermediary has private information about the demand and the institutional investors and intermediary collude theorem 1 states that uniform pricing is optimal all agents pay the same price and characterizes the ipo price in terms of conditional expectations theorem 2 states that the optimal mechanism can be implemented by a non linear price schedule decreasing in the quantity allocated to retail investors this is similar to ipo procedures used in the u k and france relying on french ipo data we perform a gmm structural estimation and test of the model the price schedule is estimated and the conditions characterizing the optimal mechanism are not rejected

market response to bank relationships evidence from korean bank reform abstract this paper examines how the forced closure of failing banks and the transfer of their loans to surviving banks affect the market value of firms that borrow from the closed banks pre existing relationships between firms and the banks that acquire their loans are detrimental to the positive valuation effects of the event banks may have an incentive to favor pre existing relationships to increase the value of previously extended loans therefore loan renewals to firms with prior relationships do not signal borrower quality to the market which is aware of the banks conflicts of interest this study highlights the importance of the specific mechanisms employed to replace failed banks without decreasing the value of their client firms

the price for biofuels sustainability abstract the production and usage of biofuels has increased worldwide seeking goals of energy security low carbon energy and rural development as biofuels trade increased the european union introduced sustainability regulations in an attempt to reduce the risks associated with biofuels producers were then confronted with costs of sustainability certification in order to access the eu market hopes were that sustainably produced biofuels would be rewarded with higher prices in the eu based on a review of recent literature interviews with traders and price data from platts this paper explores whether sustainability premiums emerged and if so did they represent an attracting feature in the market for sustainable biofuels this article finds that premiums for ethanol and biodiesel evolved differently between 2011 and 2012 but have been in general very small or inexistent with certified fuels becoming the new norm in the market for different reasons there has been an apparent convergence between biofuel policies in the eu and the us as market operators perceive a long term trend for full certification in the biofuels market producers in developing countries are likely to face additional challenges in terms of finance and capacity to cope with the sustainability requirements

the peaceful conspiracy bond markets and international relations during the pax britannica this article provides foundations to polanyi s famed argument that monopoly power in the global capital market served as an instrument of peace during the pax britannica 1815 1914 our perspective is novel we focus on the role of intermediaries and certification we show that when information and enforcement are imperfect there is scope for the endogenous emergence of prestigious intermediaries who enjoy a monopoly position and as a result control government actions they can implement conditional lending they subject the distribution of credit to the adoption of peaceful policies prestigious intermediaries act that way because of their concern with maintaining an unblemished track record when wars increased risks of default our analysis which brings together insights from different disciplines provides a significant extension to and departure from recent research on how countries accumulate reputational capital

an empirical study of cereal crop production and technical efficiency of private farmers in ethiopia a mixed fixed random coefficients approach in this paper we use a fixed random coefficients regression model to analyse data for cereal growing small scale farmers in efficiency results show that land size is a major constraint and only small changes in cultivated area and land quality yield relatively high increments to output larger farms are relatively less productive everything else being equal human capital in the form of literacy and experience are found to affect productivity positively our findings show a high degree of farm specific technical inefficiency with regard to the inputs we find high degrees of input specific technical inefficiency especially so for labour and fertilizer the age structure of the household environmental factors and education are found to be weakly correlated with efficiency furthermore sharecropping is found to be positively correlated with technical efficiency

signalling and the pricing of new issues this paper develops a signalling model with two signals two attributes and a continuum of signal levels and attribute types to explain new issue underpricing both the fraction of the new issue retained by the issuer and its offering price convey to investors the unobservable intrinsic value of the firm and the variance of its cash flows many of the model s comparative statics results are novel empirically testable and consistent with the existing empirical evidence on new issues in particular the degree of underpricing which can be inferred from observable variables is positively related to the firm s post issue share price

technical efficiency in developing country agriculture a meta analysis abstract a meta analysis is performed to review empirical estimates of technical efficiency te in developing country agriculture the objective of the study is to contribute to a better understanding of the factors that influence estimates of mean te a data set of 51 observations of te from 32 studies is used in order to test if specific characteristics of the data and econometric specifications account for systematic differences in the efficiency estimates results using the two limit tobit procedure indicate that factors such as primal versus dual number of fixed inputs and number of variable inputs increase average te estimates on the other hand using the cobb douglas functional form and cross sectional data yields a lower level of te other factors including the number of variables in the model crop type stochastic versus deterministic frontiers and sample size do not seem to significantly affect estimates of te across studies

investment bank reputation and the price and quality of underwriting services the relation between investment bank reputation and the price and quality of bond underwriting services is studied here after controlling for endogeneity in issuerunderwriter matching i find that reputable banks obtain lower yields and charge higher fees but issuers net proceeds are higher these relations are pronounced in the junk bond category in which reputable banks underwriting criteria are most stringent these findings suggest that banks underwriting decisions reflect reputation concerns and are thus informative of issue quality they also suggest that economic rents are earned on reputation and thereby provide continued incentives for underwriters to maintain reputation in capital markets investment banks play the important role of bridging firms that need capital with investors that seek investment opportunities intermediation services are valuable first because the banks specialization in the sales and marketing of securities helps lower the issuers transactional costs of borrowing but perhaps more importantly investment banks can provide value through their role in lowering the issuers informational cost of capital this role arises from the information asymmetry that typically exists between insiders the issuing firms and outsiders the investors in security issuance events such an information gap as akerlof demonstrated in his classic 1970 paper at best causes investors to discount the securities and at worst can threaten the existence of the market investment banks standing between the insiders and the outsiders seem to be in the perfect position to reduce information asymmetry and lower the cost of capital that issuers would otherwise have to pay but how does an investment bank solve its own information problem visa vis the investor one solution is the reputation capital at stake for the intermediary a key difference between investment banks and ordinary issuers lily hua fang is from finance area insead this paper is based on a chapter of my dissertation i am indebted to my advisors gary gorton robert holthausen andrew metrick david musto and ayako yasuda for their guidance and support i owe special thanks to an anonymous referee whose insightful comments helped me improve the paper greatly i also want to thank franklin allen john core petra todd jay ritter and robert stambaugh the editor for valuable feedback comments and suggestions from seminar participants at boston college insead

a theory of the syndicate form follows function we relate the organizational form of investment banking syndicates to moral hazard in team production although syndicates are dissolved upon deal completion membership stability across deals represents a barrier to entry that enables the capture of quasi rents this improves incentives for individual bankers to cultivate investor relationships that translate into greater expected proceeds reputational concerns of lead bankers amplify the effect we derive conditions under which restricted entry and designation of a lead banker strictly pareto dominate in which case it is also strictly pareto dominant for the syndicate s fee to be greater than members cost of participation copyright the american finance association 2001

the effect of lender identity on a borrowing firm s equity return previous research demonstrates that a firm s common stock price tends to fall when it issues new public securities by contrast commercial bank loans elicit significantly positive borrower returns this article investigates whether the lender s identity influences the market s reaction to a loan announcement although we find no significant difference between the market s response to bank and nonbank loans we do find that lenders with a higher credit rating are associated with larger abnormal borrower returns this evidence complements earlier findings that an auditor s or investment banker s perceived quality signals valuable information about firm value to uninformed market investors previous studies show that certain types of loan announcements generate significantly positive abnormal returns to the average borrower s equity 1 this finding contrasts with the negative equity returns generally associated with a corporation s issuance of public securities smith 1986 this difference in market reactions indicates that private and public securities are not perfect substitutes for the average firm in this sense lender identity defined as public versus private lender significantly impacts the borrower s abnormal equity return the standard theoretical explanation for this difference is that private lenders either obtain private information about the firm s value or they have the incentive and ability to monitor firm behavior more effectively than other outside monitors can although the empirical literature on private lending has evaluated primarily commercial bank loans and lines of credit these theoretical arguments apply equally to any type of private

investment banks as corporate monitors in the early twentieth century united states we study the effect of financial relationships on firms investment decisions and access to external finance in the early twentieth century securities underwriters commonly held directorships with american corporations section 10 of the clayton antitrust act prohibited bankers from serving on the boards of railroads for which they underwrote securities we find that following the implementation of section 10 railroads with strong preexisting relationships with underwriters saw declines in their investment rates valuations and leverage and increases in their costs of external funds reassuringly we do not observe similar effects among industrials and utilities which were not subject to section 10 our results are consistent with underwriters on corporate boards acting as delegated monitors and highlight the potential for regulations intended to address conflicts of interest to disrupt valuable information flows

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

a review of learning rates for electricity supply technologies a variety of mathematical models have been proposed to characterize and quantify the dependency of electricity supply technology costs on various drivers of technological change the most prevalent model form called a learning curve or experience curve is a log linear equation relating the unit cost of a technology to its cumulative installed capacity or electricity generated this one factor model is also the most common method used to represent endogenous technical change in large scale energy economic models that inform energy planning and policy analysis a characteristic parameter is the learning rate defined as the fractional reduction in cost for each doubling of cumulative production or capacity in this paper a literature review of the learning rates reported for 11 power generation technologies employing an array of fossil fuels nuclear and renewable energy sources is presented the review also includes multi factor models proposed for some energy technologies especially two factor models relating cost to cumulative expenditures for research and development r d as well as the cumulative installed capacity or electricity production of a technology for all technologies studied we found substantial variability as much as an order of magnitude in reported learning rates across different studies such variability is not readily explained by systematic differences in the time intervals geographic regions choice of independent variable or other parameters of each study this uncertainty in learning rates together with other limitations of current learning curve formulations suggests the need for much more careful and systematic examination of the influence of how different factors and assumptions affect policy relevant outcomes related to the future choice and cost of electricity supply and other energy technologies

financial innovation in microcap public offerings abstract this paper examines external financing of small and growth firms using a regulatory experiment in the us microcap market the paper focuses on a new financing method for entrepreneurial firms small public offerings under regulation a which was significantly expanded by 2015 amendments regulation a offerings serve as a financing alternative for issuers that seek public capital but are unable to conduct a traditional registered public offering compared to small registered public offerings regulation a involves fewer requirements and draws smaller younger companies often raising capital without intermediaries or on a best efforts basis regulation a companies raise less capital on average after accounting for their historical financials the use of regulation a increased significantly following the 2015 shock particularly in market segments that had more private placements and traditional public offerings different types of issuers are pursuing regulation a and registered offerings and regulation a does not appear to draw issuers away from traditional public offerings

commercial bank underwriting of credit enhanced bonds are there certification benefits to the issuer recent studies have expanded the commercial bank certification hypothesis to include banks acting in an underwriting capacity this paper further develops that research by focusing on the industrial revenue bond market in which banks have the unique opportunity to simultaneously act as both credit guarantor and underwriter when explicitly allowing for bank issued standby letters of credit guarantees we find significantly greater yield spreads for those bonds underwritten by commercial banks compared to bonds underwritten by investment banks overall no net benefit appears to accrue to the bond issuer when attempting to achieve joint or double certification benefits by employing commercial banks as both credit guarantor and underwriters except in the special case where the same bank acts as both guarantor and underwriter this limited certification effect is further validated when the credit quality of participating banks is accounted for this result is consistent with an economy of scope in monitoring and reusing information

ipos with buy and sell side information production the dark side of open sales the proposed model by incorporating both 1 banker screening of new issues and 2 costly evaluation by investors is the first to admit endogenous double sided information production it demonstrates a nontrivial link between these two sides the banker wishes to structure a sale conducive to investor research because selling to an uninformed pool would result in his own shirking one application of this paradigm indicates that contrary to the findings of most ipo models larger investor pools are not always better this result resolves the participation restriction puzzle of why bankers do not open sales to all bidders even when doing so would maximize competition and reduce underpricing copyright 2005 oxford university press

investment bank reputation information production and financial intermediation we model reputation acquisition by investment banks in the equity market entrepreneurs sell shares in an asymmetrically informed equity market either directly or using an investment bank investment banks who interact repeatedly with the equity market evaluate entrepreneurs projects and report to investors in return for a fee setting strict evaluation standards unobservable to investors is costly for investment banks inducing moral hazard investment banks credibility therefore depends on their equity marketing history investment banks evaluation standards their reputations underwriter compensation the market value of equity sold and entrepreneurs choice between underwritten and nonunderwritten equity issues emerge endogenously

the impact of rising ethanol production on the brazilian market for basic food commodities an econometric assessment the controversial debate on the impacts of rising biofuel production on food commodity markets is of great policy relevance in brazil this paper contributes to the discussion by applying panel data regression models with fixed effects using ols our dataset comprises annual production harvested area data for sugar ethanol and five other staple commodities ranging from 1981 to 2009 for 24 brazilian states our results indicate that rising ethanol production exerts statistically significant positive impacts on sugarcane negative impacts on rice beans and soybeans acreage but no statistically significant effect on the areas for corn and manioc the negative impacts on commodities acreage have implications for the associated prices ceteris paribus rising ethanol production puts some upward pressure on the prices for rice beans and soybeans however the economic implication of these direct land use effects is attenuated due to the moderate scale of any effect

anatomy of initial public offerings of common stock initial public offerings of common stocks ipos are typically underpriced in this paper the author develops and tests the hypothesis that underpricing serves as a form of insurance against legal liability and the associated damages to the reputations of investment bankers the empirical results based on samples of ipos that were brought to the market before and after the securities act of 1933 provide considerable support for the implicit insurance hypothesis specifically gross underpricing and market segmentation between prestigious and fringe investment bankers in originating unseasoned new issues appear to be peculiar to the post 1933 era a number of studies have documented that unseasoned common stocks typically garner large positive abnormal returns during a short period following the initial offering in his recent review of the empirical evidence on the initial returns of common stock offerings smith 36 concluded that the returns from offer price to after market price have exceeded fifteen percent his calculations did not include some of the earlier results obtained by mcdonald and fisher 23 and logue 20 when their samples are combined with those in smith s review the initial returns of unseasoned equity offerings appear even larger over seventeen percent these results imply that underwriters consistently offer the securities at substantial discounts from their values that are set in the after market in other words initial public offerings ipos appear to be underpriced what is even more puzzling is the fact that in some time periods underpricing appears to be systematically larger than in other periods ibbotson and jaffe 15 and ritter 29 have documented that during the postwar era there have been a number of periods in which the initial returns of common stocks have been extremely high ritter for example reported that the average return from the offer price to the first after market price was over forty eight percent for ipos in 1980 and 1981 1 similarly the initial returns of unseasoned issues of common stock brought to the market in 1950 1951 1961 and 1968 were unusually large these periods in which ipos were grossly underpriced are referred to as the hotissue markets why do investment bankers underprice ipos why do issuers

explaining the reductions in us corn ethanol processing costs testing competing hypotheses abstract the processing costs of us corn ethanol have declined by 45 since 1983 as production volumes have increased seventeen fold we investigate the role of various factors that could explain this including economies of scale cumulative experience induced innovation in response to rising input prices an autonomous technological change and trade induced competition from imported ethanol using data on dry mill ethanol processing costs over the 1983 2005 period we find evidence to show that us corn ethanol production exhibited decreasing returns to scale that learning by doing played an important role in reducing these processing costs with a learning rate of 0 25 and that sugarcane ethanol imports contributed to making the corn ethanol industry more competitive other factors such as the rising prices of energy and labor did induce lower processing costs but the effect is not statistically significant the inclusion of these competing explanations for the reduction in processing costs of us corn ethanol lead to a significantly higher learning rate than otherwise and this learning rate is found to be robust across specifications

pricing initial public offerings evidence on the pricing of initial public offerings is presented for germany a data set of 92 going publics over the years 1961 1987 is analyzed on average the initial return from the offer price to the first day of trading adjusted for market movements is more than 15 o tests of several hypotheses indicate that underpricing is related to ex ante uncertainty about the value of the shares

a theory of the transition to secondary market trading of ipos abstract we develop a model in which investment banks and institutional investors collaborate in smoothing an initial public offering s ipos transition to secondary market trading their intervention promotes welfare under the assumption that significant new information arrives in the market in the immediate aftermath of the ipo under this assumption it is optimal to stage the offering and suboptimal to commit to selling shares at a uniform price the optimal strategy yields an economic rationale for secondary market price stabilization for ipos carried out via a well coordinated network of repeat institutional investors

innovation without patents evidence from world s fairs abstractthis paper introduces a unique historical data set of more than 8 000 british and american innovations at world s fairs between 1851 and 1915 to explore the relationship between patents and innovations the data indicate that the majority of innovations 89 percent of british exhibits in 1851 were not patented comparisons across british and u s data also show that patenting decisions were unresponsive to differences in patent laws cross sectional evidence suggests that high quality and urban exhibits were more likely to be patented the most significant differences however occurred across industries inventors were most likely to use patents in industries in which innovations are easy to reverse engineer and secrecy is ineffective relative to patents in the late nineteenth century scientific breakthroughs including the publication of the periodic table reduced the effectiveness of secrecy in the chemical industry difference in differences regressions suggest that this change resulted in a

modelling production cost scenarios for biofuels and fossil fuels in europe competitive production costs compared to conventional fuels are imperative for biofuels to gain market shares as current tax advantages for biofuels are only temporary comparing production costs of different biofuels with fossil fuels is a challenge due to the complexity of influencing factors the objective of this research paper is threefold 1 to project future bio fuel feedstock prices based on the crude oil price development the price index for agricultural products growth in world population growth in wealth per capita income and change in energy consumption per capita 2 to simulate production costs under consideration of likely economies of scale from scaling up production size and technological learning and 3 to compare different biofuels and fossil fuels by scenario analysis a calculation model for biofuel production is used to analyse projected production costs for different types of biofuels in europe for 2015 and 2020 unlike engineering oriented bottom up approaches that are often used in other biofuel studies the macro economic top down approach applied in this study enables an economic comparison and discussion of various fuel types based on reference scenarios of crude oil prices of 50 100 150 and 200 per barrel depending on the specific raw material prices as well as the conversion costs the analysis delivered a differentiated view on the production costs and thus on the competitiveness of each individual type of fuel the results show that 2nd generation biofuels are most likely to achieve competitive production costs mid to long term when taking into account the effects from technological learning and production scale size as well as crude oil price scenarios between 50 and 200 per barrel for both reference years in all crude oil price scenarios bioethanol from lignocellulosic raw materials as well as biodiesel from waste oil are associated with high cost saving potentials which enable them to outperform fossil fuels and 1st generation biofuels

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

pricing initial public offerings further evidence from germany abstract in a recent article in this review wasserfallen and wittleder pricing initial public offerings evidence from germany european economic review 38 1505 1517 1994 ww provide evidence of the well known underpricing phenomenon for 92 german ipos coming to market in 1961 1987 using a larger sample of 189 firms from 1970 1993 this paper i reassesses the evidence on underpricing in germany after choosing a different risk proxy to avoid potential endogeneity problems and ii provides evidence of long run ipo performance a number of new results emerge stock market returns the macroeconomic climate insider retention rates and inverse offer size all affect underpricing positively over longer horizons german ipos are poor investments losing more than twelve percent over their first three years of trading relative to the market exclusive of the initial underpricing return negative performance is heavily concentrated after the end of ww s sampling period in the post 1987 cohort

signalling by underpricing in the ipo market abstract empirical evidence suggests the existence of hot issue markets for initial public offerings in certain periods and in certain industries new issues are underpriced and rationing occurs this paper develops a model consistent with this observation which assumes the firm itself best knows its prospects in certain circumstances firms with the most favorable prospects find it optimal to signal their type by underpricing their initial issue of shares and investors know that only the best can recoup the cost of this signal from subsequent issues

how market efficiency and the theory of storage link corn and ethanol markets this article uses the theories of market efficiency and supply of storage to develop a conceptual link between the corn and ethanol markets and explores statistical evidence for the link we propose that a long run no profit condition is established in distant futures markets for ethanol corn and natural gas and then use the theory of storage to define an inter temporal equilibrium among these prices the relationship shows that under certain conditions future price expectations will influence nearby futures prices and that a short term relationship between input and output prices will exist we demonstrate validity of the theory using a structural price model and then by means of time series techniques

investment banker reputation and two stage combination carve outs and spin offs abstract this study examines whether investment banker reputation impacts the initial period returns of two stage combinations carve outs followed by spin offs all prior literature regarding investment banker reputation is based on single stage events ipos an analysis is conducted of all completed two stage carve outs spin offs from 1981 to 2002 findings indicate that underwriters for two stage combinations retain their reputation in contrast with the single stage findings of carter et al carter r b dark f h piwowar m s 2002 ipos and underwriter reputation redeeming the value of reputation working paper iowa state university that investment bankers redeemed cashed in their reputation also this study finds that the carter et al reputation factors dominate the loughran and ritter loughran t ritter j r 2002 why don t issuers get upset about leaving money on the table in ipos the review of financial studies 15 2 413 443 reputation factors

analytical issues in external financing alternatives for sbes as the amount of information about an enterprise is generally not neutral with respect to firm size financiers have problems to identify the default risk associated with a borrower or to have control over a borrower s investments this review paper analyses how various control mechanisms are fit to reduce this information problem and how various types of capital suppliers are endowed to finance small business enterprises

borrowing relationships intermediation and the cost of issuing public securities abstract this paper investigates how an established borrowing relationship affects the costs associated with initial public offerings of equity our model illustrates how the existence of a borrowing relationship reduces the ex ante uncertainty about the value of the issuing firm s equity in the secondary market if underpricing is related to uncertainty a borrowing relationship can reduce underpricing empirically we find that other things equal ipos of firms with previously established borrowing relationships are underpriced substantially less than other ipos

traders vs relationship managers reputational conflicts in full service investment banks we present a model that explains why investment bankers struggle to manage conflicts of interest banks can build a type reputation for technical competence by performing complex deals that may not serve their clients interest on the other hand banks can sustain a behavioral reputation by refraining from doing so a behavioral reputation is a luxury reserved for banks that have proven their abilities the model sheds light on conflicts between the trading and advisory divisions of investment banks as well as the consequences of technological change for time variation in the relative strength of behavioral and type reputation concerns

public information ipo price formation and long run returns japanese evidence the price formation process of jasdaq ipos is more transparent than in the united states the transparency facilitates analysis of important issues in the ipo literature why offer prices only partially adjust to public information and adjust more fully to negative information and why adjustments are related to initial returns the evidence indicates that early price information conveys the underwriter s commitment to compensate investors for acquiring and or disclosing information offer prices reflect pre ipo market values of public companies and implicit agreements between underwriters and issuers that originate well before the offering underadjustment of offer prices is substantially reversed in the aftermarket copyright c 2009 the american finance association

firm and product specific technical efficiencies in a multiproduct cycle system measures of technical efficiency were estimated using stochastic translog production frontiers for a sample of farmers operating in a rainfed area in india these estimates were farm specific as opposed to being based on deviation from an average sample efficiency in contrast to other studies farm specific efficiency estimates were obtained for farmers growing multiple outputs in which the production levels were interrelated and each product was competing for the farm s inputs the results of the study show that on average sample participants can increase their farm output by about 30 per cent 35 per cent 28 per cent and 32 per cent respectively in the production of rice corn and rice by efficient use of existing inputs rather than by incurring any additional expenditures on inputs the empirical results imply that the potential for increasing farm outputs varies widely across farms

estimates of the value of patent rights in european countries during the post 1950 period this paper examines the distribution of the values of patent rights in the united kingdom france and germany during the post 1950 period these values are inferred from the behavior of patentees with respect to payment of renewal fees on their patents a simple economic model of renewal decisions is combined with data on the proportion of patents renewed at alternative ages and the renewal fee schedules to produce estimates of the distribution and the total value of patent rights in these countries moreover the data indicate that there have been changes in the value distribution and we follow these changes over the period the empirical results of particular interest concern the total value of patent rights and the relationship between changes in it and changes in the quantity of patents the skew in the distribution of patent values and the rate of obsolescence on the returns to patents

corporate social responsibility in the banking industry motives and financial performance abstract the current study investigates the association between corporate social responsibility csr and financial performance fp and discusses the driving motives of banks to engage in csr three motives namely strategic choices altruism and greenwashing suggest that the relationship between csr and fp is positive non negative and non existent respectively we obtained our sample which covered 2003 2009 from the ethical investment research service eiris databank and bankscope database the data consists of 162 banks in 22 countries we then classified the banks into four types based on their degree of engagement in csr this study proposes the use of an extended version of the heckman two step regression in which the first step adopts a multinomial logit model and the second step estimates the performance equation with the inverse mills ratio generated by the first step the empirical results show that csr positively associates with fp in terms of return on assets return on equity net interest income and non interest income in contrast csr negatively associates with non performing loans hence strategic choice is the primary motive of banks to engage in csr

understanding cost reduction of china s biomass direct combustion power generation a study based on learning curve model abstract during the critical transition towards cleaner production cp the developing and transition countries should pay extra attention to displace traditional biomass utilization with cp concepts such as biomass direct combustion power bio dcp china has witnessed impressive growth in its bio dcp sector from 2006 to 2014 the further industrial expansion and policy making of bio dcp in china and other countries in transition call for a deeper understanding of cost reduction mechanisms in this study the learning curve models i e electricity production cost as a function of multiple factors including cumulative installed capacity operation maintenance costs feed in tariff and cogeneration were developed to i empirically estimate the learning rates of china s bio dcp and ii investigate the impacts of past technological developments and policies on the cost development main findings include i the overall learning rate of china s bio dcp is 4 54 over the period 2006 2014 ii the raised feed in tariff in 2010 shows a positive effect on the learning of bio dcp iii the circulating fluidized bed projects show a higher learning rate compared to that of the grate boiler projects based on the above results suggestions regarding the bio dcp s future development are offered including discriminative subsidies biomass waste supply chains cogeneration and multi industry parks

food vs fuel the effect of biofuel policies the rise in food commodity prices since 2004 which reached record highs in 2008 has coincided with the tripling of corn ethanol production from 15 billion liters bl to 50 bl over the 2004 2010 period this has spurred the food vs fuel debate and raised questions about the extent to which biofuels have contributed to the increase in food crop prices estimates of the impact of observed levels of biofuel production differ widely across studies and lie between 20 and 60 hochman et al 2011 biofuel production in the united states us has surged as a result of government policies like the renewable fuel standard rfs volumetric ethanol excise tax credit veetc for blenders of ethanol and tariffs that restrict the imports of sugarcane ethanol the rfs authorized by the energy independence and security act eisa of 2007 has set ambitious targets of increasing biofuel production sixfold to 136 bl by 2022 with over 60 of it to be met by advanced biofuels produced using non corn starch based feedstocks a 0 12 liter veetc is provided to blenders of ethanol to reduce their costs of meeting the rfs while a tariff of 0 14 liter and an ad valorem tariff of 2 5 were enacted to prevent transfer of the tax credit to ethanol producers in brazil the current veetc and import tariff expired in 2011 with increasing federal debt and concerns about the impact of these policies on food and feed prices political support for the

the pricing of initial public offerings a dynamic model with information production this paper presents an information theoretic model of ipo pricing in which insiders sell stock in both the ipo and the secondary market have private information about their firm s prospects and outsiders may engage in costly information production about the firm high value firms knowing they are going to pool with low value firms induce outsiders to engage in information production by underpricing which compensates outsiders for the cost of producing information the information is reflected in the secondary market price of equity giving a higher expected stock price for high value firms

dynamics of energy technologies and global change technological choices largely determine the long term characteristics of industrial society including impacts on the natural environment however the treatment of technology in existing models that are used to project economic and environmental futures remains highly stylized based on work over two decades at iiasa we present a useful typology for technology analysis and discuss methods that can be used to analyze the impact of technological changes on the global environment especially global warming our focus is energy technologies the main source of many atmospheric environmental problems we show that much improved treatment of technology is possible with a combination of historical analysis and new modeling techniques in the historical record we identify characteristic l such network e ects yield high barriers to entry even for superior competitors these simple observations allow three improvements to modeling of technological change and its consequences for global environmental change one is that the replacement of long lived infrastructures over time has also replaced the fuels that power the economy to yield progressively more energy per unit of carbon pollution from coal to oil to gas such replacement has d they also include endogenous generation of s we show that doing so can yield projections with lessened environmental impacts without necessarily incurring negative e ect on the economy arriving on that path by the year 2100 depends on intervening actions such as incentives to promote greater diversity in technology and lower barriers to entry for new infrastructures that could accelerate historical trends of decarbonization 1999 elsevier science ltd all rights reserved

originator performance cmbs structures and the risk of commercial mortgages this article examines information and incentive problems that can exist in the market for commercial mortgages that are pooled and repackaged as commercial mortgage backed securities cmbss we find that mortgages that are originated by institutions with large negative stock returns in the quarters prior to the origination date tend to have higher credit spreads and default more than other mortgages with similar observable characteristics properties financed with these mortgages also exhibit weaker post securitization operating performance in addition stock price loser institutions are anxious to securitize mortgages they originate more quickly finally we find that credit rating agencies require higher levels of subordination for cmbs pools i e view these pools as riskier that include more mortgages originated by underperforming originators this evidence is consistent with reputation models in which poorly performing originators have less incentive to carefully evaluate the credit quality of prospective borrowers thereby letting relatively riskier mortgages pass through their weaker screening standards the author 2010 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press