sustainable consumption within a sustainable economy beyond green growth and green economies abstract in 1992 one unambiguous result of the unced conference was the need for changing consumption and production patterns with affluent countries taking the lead 20 years later at the 2012 uncsd little is left over and instead the green economy has been the theme pursued by the oecd the eu and other countries so the question needs to be answered if this is finally an attempt to put into practice what was promised 20 years ago or another diversion from what needs to be accomplished sustainable development is still a convincing concept if the original definition is taken avoiding the confusion caused by partisan interests reinterpreting the concept focussing on human needs fulfilment and respecting environmental limits it can still guide strong sustainable consumption green economy green growth on the other hand is a new terminology for what is known since 40 years as ecological modernisation it is indeed overdue but with its focus on efficiency and innovation it cannot guarantee to fulfil the brundtland sustainability criteria a factor analysis based on the i p a t formula demonstrates how optimistic the assumptions regarding future technologies must be to support the green growth concept consequently the authors pledge for a pragmatic risk avoiding approach by slimming the physical size of the economy this requires strong sustainable consumption including production as resource consumption which in turn requires a change of the societies institutional settings formal and informal mechanisms and orientations finally some elements of a strategy towards this end are pointed out with special emphasis on the role of non governmental organisations ngos through networking and advocacy they can both stimulate bottom up action and mobilise the pressure necessary for the institutional changes which are needed to mainstream strong sustainable consumption

greenhouse gas emissions per unit of value added geva a corporate guide to voluntary climate action abstract how much must i reduce my greenhouse gas ghg emissions if i want to do my fair share to contribute towards the global effort to keep global warming below a 2 c rise in average temperature over preindustrial times this paper suggests an answer for nations and corporations that want to move ahead of legislation on a voluntary basis if all nations reduce their ghg emissions per unit of gdp by 5 per year global ghg emissions will be 50 lower in 2050 than in 2010 as long as the global economy continues to grow at its historical rate of 3 5 per year the suggested 5 per year decline can be translated into a corporate resolution to reduce corporate ghg emissions per unit of value added geva by 5 per year if all corporations cut their geva by 5 per year the same global result will be achieved the suggested 5 per year decline can be used as a guideline for responsible action on a voluntary basis the guideline is unlikely to be made mandatory soon but compulsory publication of the necessary emissions and productivity data by nations and corporations could help civil society highlight top performers

optimal exit and valuation under demand uncertainty a real options approach this paper considers both the optimal exit strategy and the valuation of stochastic cash flows of a firm facing demand uncertainty and potential excess supply by relying on the standard theory of linear diffusions and ordinary nonlinear programming we derive the value of the rationally managed firm and state the necessary condition for optimal exit in contrast to the standard approaches in the real options literature our analysis is completely independent of both dynamic programming and the smooth fit principle i demonstrate that irreversible exit is optimal only when the value of the future productive opportunities becomes smaller than the value of irreversibly exercising the option to exit and in this way avoid further cumulative losses i also present the comparative static properties of the optimal exit threshold and demonstrate that increased uncertainty may increase or decrease the optimal exit threshold depending on the sign of the net convenience yield

public goods in networks this paper considers incentives to provide goods that are non excludable along social or geographic links we find first that networks can lead to specialization in public good provision in every social network there is an equilibrium where some individuals contribute and others free ride in many networks this extreme is the only outcome second specialization can benefit society as a whole this outcome arises when contributors are linked collectively to many agents finally a new link increases access to public goods but reduces individual incentives to contribute hence overall welfare can be higher when there are holes in a network

a theory of credibility this paper presents models in which one agent must decide whether to trust another whose motives are uncertain reliability can only be communicated through actions in this context it pays for people to build a reputation based on reliable behaviour someone becomes credible by consistently providing accurate and valuable information or by performing useful services the theory provides a justification for long term arrangements without binding contracts it also describes those situations where it pays an agent to cash in on his reputation many decisions depend on trusting someone consumers must decide whether to believe advertisements banks need to judge the reliability of loan applicants and employers must decide how much responsibility to delegate to their employees this paper attempts to model situations that arise when someone is uncertain about whether to trust the people he deals with in this context reputations for reliability are valuable an agent becomes credible by consistently providing accurate valuable information or by always acting responsibly i analyse a series of simple abstract models of information transmission in the basic model there are two agents the sender s and the receiver r who are to play the game a known finite number of times at each stage both players learn the value of a parameter measuring the importance of that period s play of the game that is the value of making a correct decision and s obtains payoff relevant information s then sends a signal to r who makes a decision that affects the welfare of both players after both players learn the consequences of r s decision the process repeats at each stage r must decide what action to take in order to do that he must assess the credibility of s the difficulty arises because r is uncertain about s s preferences when play begins i model this by assuming that with positive probability s has identical preferences to r s is a friend and with positive probability s has completely opposed preferences to r s is an enemy this uncertainty creates a trade off for enemy senders at each stage providing honest information enhances s s reputation but only at the expense of foregoing an opportunity for immediate gain by duping r the possibility that s is a friend lends credibility to what he says but this credibility may also be exploited by an enemy s the principal equilibrium has the following form in the basic model where s has no control over the importance of a given play s typically conveys accurate information for the first several periods r raises the probability he places on s being friendly after receiving accurate information if he believes that an enemy would have lied to him with positive probability the more important the information the more likely an enemy will attempt to deceive r an enemy will eventually take advantage of r by misleading him when this happens the sender loses all opportunities for deception in the future i

on the empirics of social capital this paper critically examines the way in which empirical evidence is developed in support of a role for social capital in socioeconomic outcomes three leading studies of social capital are reviewed and in each case argued to suffer from various identification problems a general set of conditions under which social capital effects may be identified in linear models is given careful attention to these conditions combined with greater openmindedness as to what constitutes appropriate evidence seems the best route to improving empirical studies of social capital

social capital and entrepreneurial activity a pseudo panel approach abstract this paper uses a pseudo panel approach at an age based cohort level to investigate the extent to which social capital accounts for differences in entrepreneurial activities the findings suggest that trust measured by trust either in strangers or in public institutions facilitates entrepreneurship we also find that parents emphasis on individual achievement relative to interpersonal relations in raising their child is positively associated with entrepreneurship evidence suggests that both social norms and networks influence entrepreneurship these results do not change when we use social capital measured at the national level

social capital access and entrepreneurship we investigate the effect of social capital access on entrepreneurship social capital helps entrepreneurs to overcome resource constraints this is especially important in small communities where we often see a lack of market oriented institutions such as venture capital firms entrepreneurs gain access to social capital via club memberships combining differences in the number of individual club memberships with differences in the importance of social capital across communities we identify a causal small community mark up effect of individual club memberships on entrepreneurship assuming that unobserved heterogeneity that might influence both the individual s selection into clubs and the occupational choice to be an entrepreneur is independent of community size we find that the effect of club membership on the propensity to be an entrepreneur is 2 6 percentage points larger in small communities than in large communities robustness tests support the validity of our identifying assumption and results

strategic growth options we provide a strategic rationale for growth options under uncertainty and imperfect competition in a market with strategic competition investment confers a greater capability to take advantage of future growth opportunities this strategic advantage leads to the capture of a greater share of the market either by dissuading entry or by inducing competitors to make room for the stronger competitor as a result of this strategic effect payoffs are in a rough sense more convex than in the case of no investment in a growth option when the strategic advantage is strong increased uncertainty encourages investment in growth options higher uncertainty means more opportunity rather than simply larger risk if the strategic effect is weak the reverse is true on the other hand an increase in systematic risk discourages the acquisition of growth options our results contradict the view that volatility is a strong disincentive for investment

is earth recognized as a finite system in corporate responsibility reporting abstract companies are increasingly encouraged to frame their sustainability activities and communication around ecological limits as captured by concepts such as planetary boundaries climate tipping points or regenerative capacity ecological limits may serve as scientific basis for defining environmental sustainability targets at the company level and moreover inspire companies to align their product portfolios with emerging societal needs related to sustainable transformations although corporate environmental reporting is widely researched little attention has hitherto been given to company use of the ecological limits concepts in stakeholder communication this study presents a comprehensive review of references made to ecological limits in corporate responsibility cr reports in 2000 2014 an exhaustive list of terms related to ecological limits was developed and used to search the corporateregister database which contained approximately 40 000 cr reports from this time period for every identified reference we analyzed the context in which the ecological limit term was used in the cr report we found a 10 fold increase in the number of references made to ecological limits in cr reports during the period 2000 2014 the number of cr reports published in this time period has also increased at a similar rate hence the proportion of companies referring to ecological limits in their cr reports has over the years remained stable roughly 5 the most commonly invoked ecological limits were related to climate change and references to 2 c were by far the most frequent the vast majority of companies referring to ecological limits did so without specific references to ongoing or planned changes in their activities as a consequence of recognizing these limits only a small percentage predominately high tech companies 31 in total explicitly used ecological limits to define targets for resource consumption emissions reductions and or as a stated reason for adjusting their product portfolio in defining targets for resource consumption or emissions only a few cr reports dealt explicitly with the issue of allocating resource and emission rights within ecological limits amongst companies and other actors a longitudinal study of three companies showed that these did not directly report progress towards planned changes based on ecological limits and offered explanations as to why some companies abandoned planned changes altogether our findings provide novel insights into the current use of the ecological limits concept by companies and may be useful for actors trying to motivate companies to align their activities with the finite nature of earth s natural systems

an economic approach to social capital a standard optimal investment model can be used to analyse an individual s decision to accumulate social capital we analyse six facts that support the predictions of this individual based approach 1 social capital first rises and then falls with age 2 social capital declines with expected mobility 3 social capital rises in occupations with greater returns to social skills 4 social capital is higher among homeowners 5 social connections fall sharply with physical distance 6 people who invest in human capital also invest in social capital we fail to find robust evidence that social capital investments fall with the value of time or that geographic religious groups generate social capital complementarities

detecting unsustainable pressures exerted on biodiversity by a company application to the food portfolio of a retailer companies are called by institutional organizations to assess their impacts on biodiversity and to take actions to achieve collectively conservation objectives this paper presents a method to assess whether the pressures exerted by a business and its value chain on biodiversity are compatible with biodiversity conservation the absolute environmental sustainability assessment framework is used to compare relevant life cycle assessment midpoint and endpoint indicators to the ecological budgets assigned to the company this approach is illustrated based on the case study of a mass market retailer with a focus on the pressures exerted by its food portfolio at the agricultural production step the results indicate that several pressures driving biodiversity loss are not sustainable the study also highlights the prominent weight of a few product categories in the ecological burden these findings have implications for mass market retailers as well as their food value chains and open research perspectives to make such an approach fully operational

a theory of exit in duopoly we develop a duopoly model in which exit occurs because of the existence of fixed costs or opportunity costs each firm enters the market knowing its own cost but not that of its opponent as times goes on each firm becomes increasingly pessimistic about the cost of its remaining rival the time of exit is the only strategic variable so that our model is a war of attrition in contrast to the classic war of attrition however we assume that with positive probability each firm s costs may be low enough that staying in forever is a dominant strategy thus our model unlike the classic one has a unique equilibrium

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

social capital and growth we define and characterize social capital in a simple growth model we capture social capital in a model where individuals in a community maximize their lifetime gains to trade each trade between two members of a community has the structure of the prisoners dilemma trades are repeated indefinitely but not necessarily each period social capital is defined as the social structure which facilitates cooperative trade as an equilibrium the trading model is incorporated into a growth model to explore the connections between growth labor mobility and social capital the key assumption is that technological innovation which drives growth involves a reallocation of labor that affects social capital modifying the responsiveness of labor to a technological shock has implications for both labor efficiency and social capital

the impact of debt financing on entry and exit in a duopoly this article investigates the interaction between market entry company foreclosure and capital structure in a duopoly we find that the order in which firms foreclose is determined not only by differences in firm specific factors but also by common economic factors such as the interest rate and the market profit volatility we extend the exit model by allowing financially distressed firms to renegotiate their debt contracts through a one off debt exchange offer we find that firms with high bankruptcy costs or with prospects of profit improvement can get bigger reductions on their debt repayments investigating market entry we find that financial vulnerability of the incumbent induces earlier entry article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

investment in competitive equilibrium the optimality of myopic behavior there is an extensive literature on the optimal irreversible investment strategy of a solitary firm facing an exogenous price process this paper shows that the investment strategies that this literature derives may be optimal in competitive equilibrium even though the price process is now endogenous this provides a simple means for computing equilibrium investment strategies

equilibrium and options on real assets in aggregate options on real and financial assets can have very different properties typically the good or service produced by a real asset has a finite elasticity of demand and developers have finite capacities also the supply of options can be limited and developers can be less than perfectly competitive in a subgame perfect nash equilibrium with these properties the optimal exercise policy and resulting values of developed and undeveloped assets are calculated explicitly the novel comparative statics are discussed in detail article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

exit in duopoly under uncertainty this paper examines a declining duopoly where the firms must choose when to exit from the market the uncertainty is modeled by letting the revenue stream follow a geometric brownian motion we consider the markovperfect equilibrium in firms exit strategies with a low degree of uncertainty there is a unique equilibrium where one of the fi rms always exits before the other however when uncertainty is increased another equilibrium with the reversed order of exit may appear ruining the uniqueness whether this happens or not depends on the degree of asymmetry in the firm specifi cp arameters

bowling alone a review essay abstract this paper is a critical review of robert putnam s influential analysis of social capital in america bowling alone the review argues that bowling alone reflects many of the strengths and weaknesses of the social capital literature like this literature bowling alone describes a remarkable number of facts concerning community life in america at the same time the book suffers from many of the conceptual problems and empirical weaknesses that have plagued the social capital literature i conclude that bowling alone does not succeed in establishing the importance of social capital in understanding various socioeconomic phenomena it purports to explain

capacity choice under uncertainty in a duopoly with endogenous exit abstract applying the real options framework this article investigates the investment decision of the entrant given that an incumbent is already active both firms have an option to exit this market if the demand level falls too low the combination of three decision components capacity choice entry and exit timing results into multiple trigger strategies for the entrant in particular in the presence of a large incumbent it can either choose to coexist with its rival in a duopoly or eventually monopolize the market by installing a sufficiently large capacity the former scenario is realized when the market is large while the latter occurs when the market is small when the market is of intermediate size a hysteresis region emerges where the entrant does not take any actions and prefers to postpone investment

the devolution of declining industries in declining industries capacity must be reduced in order to restore profitability who bears this burden where production is all or nothing there is a unique subgame perfect equilibrium the largest firms exit first ghemawat and nalebuff 1985 in this paper firms continuously adjust capacity again there is a unique subgame perfect equilibrium all else equal large firms reduce capacity first and continue to do so until they shrink to the size of their formerly smaller rivals intuitively bigger firms have lower marginal revenue and correspondingly greater incentives to reduce capacity this prediction is supported by empirical findings

immigrant self employment the family as social capital and the value of human capital we examine how self employment among asian and hispanic immigrants is affected by family composition and human capital class resources because of collective interests and strong personal ties the family facilitates the pooling of labor power and financial resources enterprising immigrants draw on these resources when establishing and operating small businesses our findings also show the importance of human capital class resources in accounting for immigrant self employment although foreign earned human capital is usually not highly valued in the host labor market immigrants successfully use this human capital to achieve business ownership interethnic variation in personal human capital and family composition accounts for a substantial portion of the observed interethnic variation in self employment the data are drawn from the 1980 five percent pums for greater new york city and los angeles excerpt

what does it really mean to be a strongly sustainable company a response to nikolaou and tsalis abstract in a recent issue of this journal nikolaou and tsalis 2018 published a paper titled a framework to evaluate eco and social labels for designing a sustainability consumption label to measure strong sustainability impact of firms products in their paper the authors n t develop a method for identifying strongly sustainable companies as a basis for consumer communication n t test their method on a case study of five chemical companies and conclude that two of these are strongly sustainable essentially because they had obtained a higher number of eco labels than the average across the five companies while we agree with n t on the relevance of applying a strong sustainability perspective in the assessment of companies we are afraid that their method can lead to misguided consumer communication at the root of this concern is that n t 1 use a market average as reference to decide whether a company has a strong or weak sustainability performance and 2 use the number of eco labels as an environmental indicator we lay the foundation of this response by briefly accounting for the academic origin of the weak strong sustainability dichotomy we then present our argument against the method presented by n t this is followed by a proposal for how to improve the method finally we discuss state of the art in strong sustainability assessments of companies taking into account other existing methods that draw on the planetary boundaries concept and life cycle assessment

preemption and rent equalization in the adoption of new technology we study the adoption of a new technology to illustrate the effects of preemption in games of timing we show that the threat of preemption equalizes rents in a duopoly but that this result does not extend to the general oligopoly game if the gain to preemption is sufficiently small then the optimal symmetric outcome which involves late adoption is an equilibrium this contrasts with reinganum s result that in precommitment equilibria there must be diffusion we develop a new and richer formalism for modeling games of timing which permits a continuoustime representation of the limit of discrete time mixed strategy equilibria

entrepreneurial ability venture investments and risk sharing a number of issues that relate to the desirability and implications of new venture financing are examined within a principal agent framework that captures the essence of the relationship between entrepreneurs and venture capitalists the model suggests 1 as long as the skill levels of entrepreneurs are common knowledge all will choose to involve venture capital investors since the risk sharing provided by outside participation dominates the agency relationship that is created 2 the less able entrepreneurs will choose to involve venture capitalists whereas the more profitable ventures will be developed without external participation because of the adverse selection problem associated with asymmetric information 3 if a costly signal is available that conveys the entrepreneur s ability some entrepreneurs will invest in such a signal and then sell to investors these entrepreneurs however need not be the more able ones the implications for new venture financing of these and other findings are discussed and illustrated by example