the efficiency of producing alcohol for energy in brazil brazil is one of the few countries actually producing renewable fuels as a substitute for opec oil there are now 150 distilleries producing five billion liters of ethanol a year from sugar cane with another 100 distilleries in the planning and construction stages the current stability of world oil prices however does not make alcohol substitution economically efficient for brazil and costs foreign exchange the authors analyze the economics of alcohol production in two regions and find it to be socially unprofitable in terms of breaking even although it does serve to dampen any impact from increasing oil prices 5 tables dck

optimal product launch times in a duopoly balancing life cycle revenues with product cost we present a model describing the demand dynamics of two new products competing for a limited target market the demand trajectories of the two products are driven by a market saturation effect and an imitation effect reflecting the product experience of previous adopters in this general setting we provide analytical results for the sales trajectories and life cycle sales of the competing products we use these results to study the impact of launch time on overall life cycle sales we consider the perspective of one of the competing products and model the trade off between the lost revenues resulting from a delayed launch and the lower unit production costs we find that the profit maximizing launch time exhibits a counterintuitive behavior in particular we show that a firm facing a launch time delay from a competing product might benefit from accelerating its own product launch as opposed to using the softened competitive situation to further improve its cost position we identify conditions under w

should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

a note on the optimal tariff retaliation and the welfare loss from tariff wars in a framework with intraindustry trade abstract this paper uses krugman s 1980 model of trade with product differentiation and monopolistic competition to examine the effects of a uniform ad valorem tariff the main results are there exists an optimal tariff even for a small economy and the optimal tariff rate is an increasing function of the size of the economy and the degree of production differentiation under reasonable parameter assumptions a tariff war between two countries of equal size in which each country retaliates by imposing its own optimal tariff causes a welfare loss equivalent to a drop in income of about 4 percent

do big countries win tariff wars yes it is widely believed that tariffs invite retaliation and that the postretaliation equilibrium l eaves all countries worse off than they would be at free trade the a uthors present a simple pure exchange model with two countries and t wo goods and show which endowment patterns are consistent with this belief they find that if one country is substantially bigger than th e other it can expect to gain from a tariff war despite retaliation the model can be extended to show that the advantage obtained by bei ng part of a large trading unit can help explain the formation of cus toms unions copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

diffusion of new products empirical generalizations and managerial uses the diffusion model developed by bass bass f m 1969 a new product growth model for consumer durables management sci 15january 215 227 constitutes an empirical generalization it represents a pattern or regularity that has been shown to repeat over many new products and services in many countries and over a variety circumstances numerous and various applications of the model have lead to further generalizations modifications and extensions of the model have lead to further generalizations in addition to the empirical generalizations that stem from the model we discuss here some of the managerial applications of the model

alternative designs for tariffs on embodied carbon a global cost effectiveness analysis in the absence of effective world wide cooperation to curb global warming import tariffs on embodied carbon have been proposed as a potential supplement to unilateral emissions pricing we consider alternative designs for such tariffs and analyze their effects on global welfare within a multi region multi sector computable general equilibrium cge model of global trade and energy our analysis suggests that the most cost efficient policy could be region specific tariffs on all products based on direct plus electricity emissions in the end however the potential cost savings through carbon tariffs must be weighed against the administrative costs as well as legal issues and political considerations

measures to enhance the effectiveness of international climate agreements the case of border carbon adjustments abstract actions on climate change which are not supported by all countries are not very effective however full participation in a global climate treaty with meaningful emission reductions is difficult to achieve the non excludability of the public good mitigation provides an incentive to abstain from global action moreover carbon leakage renders it unattractive to join a treaty without full participation we study whether and under which conditions border carbon adjustments bcas can mitigate free riding and reduce carbon leakage in a simple strategic trade model we show that bcas can lead to large stable climate agreements including full participation associated with large global welfare gains if treaties do not restrict membership open membership as this is typical for environmental agreements we caution against restricting accession to treaties exclusive membership as this is typical for trade agreements which may serve individual but not global interests

optimal tariff equilibria with customs unions the authors construct a model of customs unions in which countries charge optimal tariffs customs unions internalize the externality that exists whenever two countries import the same good also customs unions make several countries into one large unit with more market power big customs unions can improve their members welfare relative to the free trade the authors model of customs unions separates the effects of tariff reduction from the effects of policy coordination the movement from nash equilibrium to a free trade association improves global resource allocations moving from a free trade association to a full customs union has ambiguous resource allocation effects

the impacts of carbon pricing on coastal megacities a cge analysis of singapore abstract pricing carbon is a widely used policy instrument for climate change mitigation quantitative analysis of carbon pricing are mainly conducted at the regional and national level rarely at the city level due to data availability as a representative of coastal megacities that are vulnerable to both climate change and climate policies singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures a city level computable general equilibrium cge model is developed to simulate potential impacts of carbon pricing on the city including paying border carbon adjustment bca on exports or introducing a domestic carbon tax different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax the simulation results show that a domestic carbon tax is a more cost effective option than paying bca given an identical carbon price at s 10 t co 2 gdp total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the bca scenario in terms of absolute emissions reduction a carbon tax that covers energy manufacturing and land transport sectors would be preferred making emissions around 2 7 lower than 2010 baseline level

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

designing an emissions trading scheme for china an up to date climate policy assessment abstract we assess recent chinese climate policy proposals in a multi region multi sector computable general equilibrium model with a chinese carbon emissions trading scheme ets when the emissions intensity per gdp in 2020 is required to be 45 lower than in 2005 the model simulations indicate that the climate policy induced welfare loss in 2020 measured as the level of gdp and welfare in 2020 under climate policy relative to their level under business as usual bau in the same year is about 1 the chinese welfare loss in 2020 slightly increases in the chinese rate of economic growth in 2020 when keeping the emissions target fixed at the 2020 level after 2020 in absolute terms the welfare loss will reach about 2 in 2030 if china s annual economic growth rate is 0 5 percentage points higher lower the climate policy induced welfare loss in 2030 will rise decline by about 0 5 percentage points full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation but full auctioning leads to higher reductions in output than free allocation for ets sectors linking the chinese to the european ets and restricting the transfer volume to one third of the eu s reduction effort creates at best a small benefit for china yet with smaller sectoral output reductions than auctioning these results highlight the importance of designing the chinese ets wisely

hotelling bertrand duopoly competition under firm specific network effects abstract social pressure plays a crucial role in consumer choices the impact of network social effects has also been largely recognised in the context of market competition in this paper we consider a duopoly where competing firms are differentiated solely by the level of social or network externality they induce on consumers perceived utility we fully characterise nash equilibria in locations prices and market shares under a scenario of weak social externality firms opt for maximum differentiation and the firm with the highest social recognition enjoys a relative advantage in terms of profit this outcome is not the only possible we formally prove that large values of social recognition may lead to adverse coordination among consumers and move the strongest firm out of the market with positive probability this scenario is related to a pareto inefficient trap of no differentiation

clean air and renewable fuels the market for fuel ethanol in the us from 1984 to 1993 abstract ethanol made from corn has become an increasingly important fuel additive in the us over the past decade the market for ethanol has grown from 550 million gallons in 1984 to approximately 1 5 billion gallons in 1995 recent clean air legislation has mandated the use of cleaner burning fuels in the us in specific regions and seasons the fundamental role of fuel ethanol is changing from a gasoline substitute and octane enhancer to being one of a number of possible clean air additives in addition to these changing market conditions the institutional structure surrounding the ethanol market has changed while there is a uniform national subsidy for ethanol use each state has its own supplemental subsidy level which varied from zero to over 0 40 per gallon recently many state subsidy levels have been declining but significant incentives still remain including the federal 0 54 per gallon incentive this paper explores the economic characteristics of the us ethanol market the market supply and demand for ethanol are estimated econometrically the results highlight the importance of the state and federal incentives and mandates along with transportation costs in making corn based ethanol an attractive alternative to gasoline further investigation using a probit model to predict whether a state has an ethanol market or not reinforces the results of the supply demand market model the implications of the market characteristics for current and future us ethanol policy and clean fuels use are discussed

can tariffs be used to enforce paris climate commitments we evaluate the potential of border carbon adjustments bcas and strategic tariffs to compel noncompliant countries to meet emission reduction targets pledged under the paris climate agreement our analysis employs a numerical economy wide model with energy sector detail and given recent actions by the us administration considers bcas on us exports we find that when the us does not restrict emissions and faces bcas on its exports us welfare losses are smaller than when the us meets its paris commitments hence bcas are preferable for the us and cannot be used to enforce paris climate commitments the use of strategic tariffs on the contrary would result in a trade war and a larger welfare decrease in us welfare than when it meets its paris commitments strategic tariffs also decrease welfare in countries that meet their paris pledges accordingly strategic tariffs which are much higher than bca rates can be used to enforce paris climate commitments if compliant countries are willing to incur welfare losses to punish non compliant countries

energy tariffs in a small open economy abstract tariffs on imported energy alter production and redistribute income the present paper examines a small open economy producing two traded goods with capital labor and imported energy a tariff reduces import and domestic factor income but payment to one domestic factor rises energy intensive output falls but the other output may rise in the general equilibrium political opinions on the tariff would differ revenue is concave in the tariff suggesting that the government might set the tariff to maximize revenue a simulation illustrates these general equilibrium properties across a range of tariffs

biofuels and the role of space in sustainable innovation journeys this paper aims to identify the lessons that should be learnt from how biofuels have been envisioned from the aftermath of the oil shocks of the 1970s to the present and how these visions compare with biofuel production networks emerging in the 2000s working at the interface of sustainable innovation journey research and geographical theories on the spatial unevenness of sustainability transition projects we show how the biofuels controversy is linked to characteristics of globalised industrial agricultural systems the legitimacy problems of biofuels cannot be addressed by sustainability indicators or new technologies alone since they arise from the spatial ordering of biofuel production in the 1970 80s promoters of bioenergy anticipated current concerns about food security implications but envisioned bioenergy production to be territorially embedded at national or local scales where these issues would be managed where the territorial and scalar vision was breached it was to imagine poorer countries exporting higher value biofuel to the north rather than the raw material as in the controversial global biomass commodity chains of today however controversy now extends to the global impacts of national biofuel systems on food security and greenhouse gas emissions and to their local impacts becoming more widely known south south and north north trade conflicts are also emerging as are questions over biodegradable wastes and agricultural residues as global commodities as assumptions of a food versus fuel conflict have come to be challenged legitimacy questions over global agri business and trade are spotlighted even further in this context visions of biofuel development that address these broader issues might be promising these include large scale biomass for fuel models in europe that would transform global trade rules to allow small farmers in the global south to compete and small scale biofuel systems developed to address local energy needs in the south

optimal firm behavior with consumer social image concerns and asymmetric information abstract this paper explores how consumers belief dependent social image concerns can affect firm strategic choices in a product market setting we consider a theoretical framework with incomplete information where a profit maximizing monopolist sets a price for its product taking into account that consumers care about the belief that others hold about the product s popularity throughout our analysis we highlight the close connection between our dynamic psychological game and the literature on network effects we show in particular that belief dependent social image concerns generate equilibrium price distortions that do not arise in a network effect setting and we explore the implications for consumer demand and firm profits

correlated equilibrium as an expression of bayesian rationality if it is common knowledge that the players in a game are bayesian utility maximizers who treat uncertainty about other players actions like any other uncertainty then the outcome is necessarily a correlated equilibrium random strategies appear as an expression of each player s uncertainty about what the others will do not as the result of willful randomization use is made of the common prior assumption according to which differences in probability assessments by different individuals are due to the different information that they have where information may be interpreted broadly to include experience upbringing and genetic makeup copyright 1987 by the econometric society

fair optimal or detrimental environmental vs strategic use of border carbon adjustment abstract we carry out a detailed sensitivity analysis of border carbon adjustment rates by applying a global computable general equilibrium cge gtap7 based model we find different incentives for the regions in the climate coalition to raise carbon based border tax rates btax above the standard rate that mimics an equalisation of carbon prices across regions herein the strategic use of btax the manipulation of the terms of trade is stronger for all coalition regions than the environmental use the reduction of carbon emissions abroad higher btax can reduce carbon leakage but with a declining marginal effect furthermore we find different incentives for regions outside the coalition to oppose high btax rates russia and the other energy exporters would oppose it while the low income countries would not because of benefits from the trade diversion effect thus btax encourages the former to join the coalition while compensating transfers are necessary to encourage the other developing countries including china and india

bertrand competition under network externalities abstract two firms engage in price competition to attract buyers located on a network the value of the good of either firm to any buyer depends on the number of neighbors on the network who adopt the same good when the size of externalities increases linearly with the number of adoptions we identify the set of pricing strategies that are consistent with an equilibrium in which one of the firms monopolizes the market the set includes marginal cost mc pricing as well as bipartition pricing which offers discounts to some buyers and charges markups to others we show that mc pricing fails to be an equilibrium under non linear externalities in a general network but identify conditions for an equilibrium with bipartition pricing to be robust against perturbations in the externalities from linearity the analysis is applied to platform competition in a two sided market under local and approximately linear externalities

pricing of conspicuous goods a competitive analysis of social effects abstract social needs play an important role in the purchase of conspicuous goods in this article the authors extend traditional economic models to accommodate social needs such as desire for uniqueness and conformism and examine their implications for pricing conspicuous goods first in the context of a duopoly the authors identify the conditions under which the desire for uniqueness can increase demand among some consumers as the price of a product increases second the authors show that though the desire for uniqueness leads to higher prices and firm profits a desire for conformity leads to lower prices and profits third the authors find that consumers purchase high quality products not because of their desire for uniqueness but despite it finally marketers of conspicuous goods may find it beneficial not to emphasize the functional differences among their products when the need for uniqueness is high in a laboratory test the authors find support for the claim that demand for a product amo

recent progress of cooperation on climate mitigation a bibliometric analysis abstract effective international cooperation is an important measure to mitigate climate change the purpose of this study is to clarify the research progress in the field of cooperation on emission reduction identify the influential authors and articles and reveal the main research topics based on the bibliometric method and the web of science database this study analyzes the literature in the field of cooperation on emission reduction the results show that the publications in this field have increased significantly over the past decade with the usa and china are the most influential countries keyword co occurrence and frequency analysis show that the most important research topics are as follows burden sharing and equity the stability of the climate coalition and international environmental agreements technology transfer and climate finance the linkage of carbon markets and the response to noncooperation behavior the main methods involved are game theory model integrated assessment models and computable general equilibrium model equitable distribution of mitigation responsibilities is the basis for cooperation on carbon reduction specific rulebooks for carbon market linkage is the key to its successful implementation this study helps researchers to clarify the current research status in the field of cooperation on emission reduction and provide valuable information for future research

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

between a rock and a hard place a trade theory analysis of leakage under production and consumption based policies without a comprehensive global climate agreement carbon leakage remains a contentious issue consumption based pricing of emissions which could in practice be implemented with a full border tax adjustment bta has been forwarded as an option to increase the effectiveness of unilateral climate policy this paper questions the economic rationale behind this approach using a theoretical 2 times 2 trade model in which leakage occurs through terms of trade effects we show analytically first that consumption based pricing of emissions does not necessarily result in less leakage than production based policies second the sign of the optimal unilateral carbon tariff depends on the carbon intensity differential between the foreign country s exporting and non exporting sectors and not on the differential between home s and foreign s exporting sectors as implied by the full bta approach third based on empirical data for the year 2004 our model implies that full bta applied by the european union on e g imports from and exports to china would by shifting china s production from the export sector with a relatively low carbon intensity towards the more carbon intensive non export sector actually increase leakage

switching to carbon free production processes implications for carbon leakage and border carbon adjustment climate policy under partial global compliance raises concerns regarding carbon leakage while border carbon adjustment bca measures are a potential remedy they have also been criticised on various grounds this paper therefore investigates whether a policy fostering the switch to carbon free technologies can substitute for bcas a reason for the effectiveness of a targeted technology policy is that major leakage prone sectors such as iron and steel have two main sources of carbon emissions combustion of fossil fuels and industrial processes while combustion emissions can be reduced relatively easy by increasing energy efficiency reducing process emissions requires a switch to low carbon production processes e g in steel production by deploying electrolysis based on large scale solar electricity we show by means of a multi regional computable general equilibrium analysis that such a switch in steel production technology can eliminate a significant fraction of carbon leakage and also increase sectoral output and welfare since the necessary technologies are not available at large scale yet however are likely to be by 2020 a transitional bca scheme may be a crucial supportive instrument to foster such technology switches yet in the long run bca should be phased out to preserve the incentive for carbon free innovation

price competition when consumer behavior is characterized by conformity or vanity it has long been recognized that the pleasure of consuming a good may be affected by the consumption choice of other consumers in some cases social pressures may lead to conformity in some others individuals may feel the need of exclusiveness under the form of vanity such externalities have proven to be important in several markets however the market implication of these externalities are still unclear to investigate them we propose to combine the consumption externality model and the spatial duopoly model when conformity is present but not too strong both firms remain in business but price competition is fiercer and results in lower prices the market share of the large firm increases with the population size as the population keeps rising the large firm may serve the entire market and set a price that has the nature of a limit price when conformity is strong enough different equilibria may exist in most of these equilibria a single firm captures the whole market at the other extreme when vanity is at work price competition is relaxed

social stability and equilibrium in the field of noncooperative game theory nash equilibrium nash 1951 has played a central role as a solution concept in bold strokes one may discern two major interpretations of nash equilibrium in the context of rational players the first which is close to the eductive interpretation of binmore 1987 1988 and the complete information interpretation of kaneko 1987 assumes that the game is played exactly once if it is a repeated game the repetition occurs once and the players have sufficient knowledge and ability to analyze the game in a rational manner sometimes it is assumed that all players have consistent hierarchies of beliefs where the game and their priors are common knowledge bayesian interpretation such as proposed by aumann 1987 advanced this idea to the level that the players have a common prior from this point of view however nash equilibrium seems far from being satisfactory

the eu decarbonisation roadmap 2050 what way to walk we carry out a detailed cge computable general equilibrium analysis of the eu decarbonisation roadmap 2050 on a macroeconomic and on a sectoral level herein we study a reference scenario that implements existing eu policies as well as 3 unilateral and 3 global climate action scenarios we identify global climate action with international emissions trading and the full equalization of co2 prices across all eu sectors as a reasonable policy option to avoid additional costs of the decarbonisation roadmap to a large extent this policy option may include cdm clean development mechanism in the sense of where flexibility in an extended form if there are countries without emissions caps moreover we identify diverse sectoral effects in terms of output investment emissions and international competitiveness we conclude that the successful realization of the eu decarbonisation roadmap probably requires a wise and joint consideration of technology policy design and sectoral aspects

optimal export taxes in a multicountry framework abstract this paper extends the optimum export tax analysis to multicountry partial pe and general equilibrium ge frameworks using a computable general equilibrium cge model of the global cocoa market analyzing myopic optimum nash optimum and nash revenue maximizing taxes we show that optimum and revenue maximizing taxes obtained in the ge framework differ from their pe counterparts as they are determined not only by the elasticity of the residual demand curve facing the country but by domestic supply conditions as well second not only are nash revenue maximizing taxes higher than nash optimum taxes in the ge but paradoxically the society attains a higher level of welfare under nash revenue maximizing taxes than under nash optimum taxes finally we show that the frequent use of lerner symmetry lerner a p 1936 the symmetry between import and export taxes economica 11 306 313 in the policy oriented analysis of optimum export taxes is not warranted

optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements in this paper we report calculations of optimal tariffs both with and without retaliation in a sequence of 2 2 trade models we extend the earlier calculations by johnson 1954 1961 and gorman 1957 which assume constant elasticity offer surfaces by using functional forms from the cobb douglas ces les family for utility functions and by also incorporating production into our calculations results indicate that the most critical parameters in any such calculations for a 2 2 model are the import prices elasticities and we briefly survey the empirical evidence as to their values our major conclusion is that these models confirm the suggestion from casual inspection of reported trade elasticities that current levels of tariff protection are some distance from optimal tariffs and that the margin for tariff retaliation in a worldwide trade war is potentially large other implications of the results are explored in the text

new product diffusion with influentials and imitators we model the diffusion of innovations in markets with two segments influentials who are more in touch with new developments and who affect another segment of imitators whose own adoptions do not affect the influentials this two segment structure with asymmetric influence is consistent with several theories in sociology and diffusion research as well as many viral or network marketing strategies we have four main results 1 diffusion in a mixture of influentials and imitators can exhibit a dip or chasm between the early and later parts of the diffusion curve 2 the proportion of adoptions stemming from influentials need not decrease monotonically but may first decrease and then increase 3 erroneously specifying a mixed influence model to a mixture process where influentials act independently from each other can generate systematic changes in the parameter values reported in earlier research 4 empirical analysis of 33 different data series indicates that the two segment model fits better than the standard mixed influence the gamma shifted gompertz and the weibull gamma models especially in cases where a two segment structure is likely to exist also the two segment model fits about as well as the karmeshu goswami mixed influence model in which the coefficients of innovation and imitation vary across potential adopters in a continuous fashion

biofuel v fossil fuel economics in developing countries how green is the pasture abstract as relative fuel prices change the attractiveness of biofuels and fossil fuels to different sectors of the economy alters significantly given the volatility of oil prices and the subsequent intense attention to biofuel technologies over the previous decade in developing countries many questions still remain regarding actual financial and economic performance of these fuels this paper explores sectoral differences between biofuel and fossil fuels with regard to production costs economies of scale subsidies and other economic incentives in developing countries

the structure of technology in brazilian sugarcane production 1975 87 an application of a modified symmetric generalized mcfadden cost function sugarcane based ethanol has become a primary automotive fuel in brazil over the past 15 years because sugarcane costs are over two thirds of the costs of ethanol production the economic efficiency of this renewable petroleum substitute hinges on the structure of technology in sugarcane production in this paper a modified symmetric generalized mcfadden sgm cost function for sugarcane is estimated and the presence of technical change and economies of scale are investigated the original sgm proposed by diewert and wales 1987 is modified to allow for fixed factors of production this allows the cost function to be applied to processes which have fixed factors the results suggest that there is no empirical evidence of economies of scale and very little technical change only in the north of brazil the implications for the future economic efficiency of this petroleum substitute are discussed