equity returns and integration is europe changing this paper analyses the consequences of the process of financial and economic integration on european equity markets it documents significant changes in fundamentals notably an increased synchronization of macroeconomic activities and a non negligible evolution in pricing with a decrease in the cost of capital and converging equity premiums as to equity returns themselves in the face of what could turn out to be long run upward trends in the correlations among both country and sector returns and a narrowing of the superiority of country factors the benefits to be gained from finding diversification opportunities at a more disaggregated level appear to be higher than ever copyright 2004 oxford university press

simultaneous attainment of energy goals by means of green certificates and emission permits abstract we discuss the analytical effects of introducing emission permits and green certificates and the corresponding quotas as regulatory mechanisms to respectively reduce emissions from electricity production and ensure a certain deployment of renewable energy the different case studies in this paper show that both instruments can be used in order to reach an emission goal or a goal of renewable energy however the combination of these instruments and the way they are used is shown to be important for the price faced by consumers it is shown that the effect on the consumer price is not an unambiguous increase with the introduction of a green quota there is a choice between quotas leading to a lower consumer price and quotas leading to a higher consumer price as a result of this it is shown that it is always optimal to reach a renewable energy deployment goal by the use of green certificates however to reach an emission goal it is sometimes most favourable with respect to consumer prices to use green certificates and sometimes to use emission permits

why does the combination of the european union emissions trading scheme and a renewable energy target makes economic sense abstract the european climate and energy mix of targets and policies has been criticised by many economists in particular it is often argued that the renewable energy targets do not make economic sense because they represent an expensive option to reduce co2 emissions within a cap and trade scheme such as the european union emissions trading scheme eu ets in addition it has also been claimed that support for renewable electricity deployment negatively interacts with the eu ets having a dampening effect on the co2 price which favours the dirtiest technologies and is detrimental for the greener ones in this article we argue that this mainstream economic view is short sighted and that a multidisciplinary economic analysis of the climate and energy policy mix is required mainstream economic analysis is based on a narrow approach for the assessment of instrument combinations and neglects relevant insights from several economic disciplines including innovation economics and political economy approaches in reality economic theory supports the combination of an ets and renewable energy targets the existence of different policy goals and market failures the demand pull influence of renewable energy policies on innovation a political economy approach and the different risk exposure of renewable energy technologies call for a policy mix although policy combinations are not a panacea and bring problems on their own the aforementioned negative interaction between renewable energy deployment and the carbon price in the eu ets can be mitigated through appropriate coordination and or instrument choice and design

electricity shortages and firm productivity evidence from china s industrial firms unreliable inputs to production particularly those that are difficult to store can significantly limit firms productivity leading them to react in a number of ways this paper uses a panel of 23 000 energy intensive chinese firms from 1999 to 2004 to examine how firms responded to severe power shortages in the early 2000s our results suggest that in response to electricity scarcity chinese firms re optimize among inputs to production by substituting materials for energy both electric and non electric sources a shift from make to buy of intermediate inputs to production while outsourcing can be costly chinese firms were able to avoid substantial productivity losses by doing so as a result of the increase in electricity scarcity from 1999 onward we find that unit production costs increased by eight percent

an efficiency explanation for why firms second source firms facing research costs and demand uncertainty may engage in second sourcing in which potential suppliers agree to pool production facilities i show how sellers and buyers both can benefit from the practice second sourcing allows firms to meet a wider range of possible rates of demand and often to supply a given rate of demand at a lower total cost than under non cooperation buyers benefit through a reduced probability of stock outs and frequently a lower purchase price semiconductor industry data are found to be consistent with the paper s predictions i introduction the practice of second sourcing is frequently observed among firms facing technological and demand uncertainty second sourcing encompasses agreements between buyers and sellers requiring that a firm license its proprietary technology to rivals as well as agreements among potential suppliers to pool production facilities the first type of agreement is often explained as guaranteeing buyers a secure supply at a fair price in this type of second sourcing agreement control over production and pricing decisions resides with each supplier the second arrangement where the owner of the production technology controls production and pricing has largely been overlooked by the literature despite its adoption by firms in a wide range of technologically dynamic industries including semiconductors robotics and biotechnology a primary motivation for this second form of secondsourcing i will argue is to achieve a more efficient matching between the industry s productive capacity and market demand this paper indicates how second sourcing of this form may benefit both purchasers and suppliers and identifies the conditions making second sourcing profitable for firms the existing literature has offered two explanations for second sourcing according to the first explanation second sourcing is sought by prospective buyers purchasers may require that a developer license alternative suppliers to force revelation of private cost information in the contract bidding process or to discipline the eventual supplier s pricing behavior examples of this line of reasoning are found in riordan and sappington 1989 anton and yao 1987 demski sappington and spiller 1987 and rob 1986 if this motivation is correct however it is sufficient for firms to compete at the contract bidding stage demsetz 1968 in contrast we often observe competition at the production stage with active second sourcing and a large number of licensed alternative suppliers in a single industry see section v this explanation s exclusive focus on the gains to buyers from second sourcing also is inconsistent with swann s 1987 observation that many manufacturers have actually sought second sources the literature s alternative explanation suggests that second sourcing may be preferred by producers farrell and gallini 1988 and shepard 1987 show how a monopoly supplier can use second sourcing as a commitment not to raise price or lower product quality in the future either of which would debase the value of sunk investments made by prospective purchasers if credible this commitment may stimulate industry demand sufficiently to yield higher profits for the former monopolist despite increased product market competition an important shortcoming of this second explanation is its apparent incongruity with the existence of five six or more second sourced suppliers in a single industry shepard 1987 for example shows that a single licensed alternate supplier will provide the monopolist with its desired credible commitment to future price and quality this paper suggests an alternative explanation that is consistent with observed trends in second sourcing i depart from the existing literature s focus upon principal agent problems to analyze secondsourcing in a market flamework the paper indicates why sellers may secondsource voluntarily explains why multiple second sources will be preferred and shows how both sides in the agreement may benefit

the innovation impact of the eu emission trading system findings of company case studies in the german power sector abstract this paper provides a detailed analysis of how the european emission trading system eu ets as the core climate policy instrument of the european union has impacted innovation towards this end we investigate the impact of the eu ets on research development and demonstration rd d adoption and organizational change in doing so we pay particular attention to the relative influences of context factors policy mix market factors and public acceptance and firm characteristics value chain position technology portfolio size and vision empirically our qualitative analysis is based on multiple case studies with 19 power generators technology providers and project developers in the german power sector which were conducted in 2008 09 we find that the innovation impact of the eu ets has remained limited so far because of the scheme s initial lack of stringency and predictability and the relatively greater importance of context factors additionally the impact varies significantly across technologies firms and innovation dimensions and is most pronounced for rd d on carbon capture technologies and organizational changes our analysis suggests that the eu ets on its own may not provide sufficient incentives for fundamental changes in corporate innovation activities at a level which ensures political long term targets can be achieved

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

second sourcing and the experience curve price competition in defense procurement we examine a dynamic model ofprice competition in defense procurement that incorporates the experience curve asymmetric cost information and the availability of a higher cost alternative system we model acquisition as a two stage process in which initial production is governed by a contract between the government and the developer competition is then introduced by an auction in which a second source bids against the developer for remaining production we characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information when high costs are revealed these contracts result in a credible cutoff of new system production in favor of the still higher cost alternative system

supply of renewable energy sources and the cost of eu climate policy abstract what are the excess costs of a separate 20 target for renewable energy as a part of the eu climate policy for 2020 we answer this question using a computable general equilibrium model worldscan which has been extended with a bottom up module of the electricity sector the model set up makes it possible to base the calibration directly on available estimates of costs and capacity potentials for renewable energy sources in our base case simulation the costs of eu climate policy with the renewables target are 6 higher than those of a policy without this target the uncertainty in this estimate is considerable however and depends on our assumptions about the availability of low cost renewable energy the initial cost level the steepness of the supply curves and share of renewable energy in the baseline within the range we explore the excess costs vary from zero when the target is not a binding constraint to 32 when the cost progression and the initial cost disadvantage for renewable energy are high and its initial share is low

good things do not always come in threes on the excess cost of overlapping regulation in eu climate policy since the mid 1990 s the european union eu aims at pushing global climate policy the objective is to promote international cooperation by the adoption of substantial eu wide greenhouse gas emission reduction targets and their least cost implementation our quantitative impact assessment of the eu climate and energy package shows that the myriad of instruments used in the eu to curb greenhouse gas emissions is doomed to generate substantial excess cost we conclude that eu climate and energy policy should better disentangle its choices of objectives targets and policy instruments on rigorous economic grounds in order to improve the coherence and overall cost effectiveness of policy initiatives

product competition in microprocessors there have been some striking recent developments in the theory of spatial and product competition but relatively few empirical studies see however shaw 1982 a and b this paper is an attempt to assess the empirical usefulness of these developments drawing on the history of product competition in microprocessors over the period 1971 81 in particular our interest centres on attempts to introduce a role for what have been called agglomeration economies 1 that is mutual external economies accruing to two or more producers selling similar products in a recent survey graitson 1982 suggested that this particular development would provide theoretical models of special empirical relevance and the evidence presented here though by no means conclusive tends to support that view the paper is in five parts section i gives a brief review of some of the relevant developments in spatial and product competition theory section ii gives a brief account of how the wide variety of microprocessors will be classified for the purposes of this study section iii describes the history of developments in microprocessors over the period 1971 to 1981 and section iv assesses the theoretical developments in the light of this evidence finally section v summarises the main points of the paper

are european business cycles close enough to be just one abstract we propose a comprehensive methodology to characterize the business cycle comovements across european economies and some industrialized countries without imposing any given model but trying to leave the data speak we develop a novel method to show that there is no evidence of a european economy that acts as an attractor to the other economies of the area we show that the establishment of the monetary union has not significantly increased the level of comovements across euro area economies finally we are able to explain an important proportion of the distances across their business cycles using macrovariables related to the structure of the economy to the directions of trade and to the size of the public sector

impact of renewables deployment on the co2 price and the co2 emissions in the european electricity sector abstract as of 2005 electricity generators in europe operate under the european union emission trading system eu ets at the same time european member states have launched support mechanisms to stimulate the deployment of renewable electricity sources res e res e injections displace co 2 emissions within the sectors operating under the eu ets and they reduce the demand for european union allowances euas thereby reducing the eua price this paper presents the results of an ex post analysis to quantify the impact of res e deployment on the eua price and co 2 emissions in the western and southern european electricity sector during the period from 2007 to 2010 following from an operational partial equilibrium model of the electricity sector this study shows that the co 2 displacement from the electricity sector to other ets sectors due to res e deployment can be up to more than 10 of historical co 2 emissions in the electricity sector the eua price decrease caused by res e deployment turns out to be likely significant

second sourcing as a commitment monopoly incentives to attract competition we show that a new product monopolist may benefit from delayed competition if consumers incur setup costs setup costs create a dynamic consistency problem the monopolist cannot guarantee low future prices once customers have incurred those costs we show that if customers anticipate this problem the monopolist s profits can be improved through ex ante commitment to competition in the post adoption market if setup costs are large if setup costs are small the monopolist can typically achieve the same level of profits without price commitment as with

eu climate policy up to 2020 an economic impact assessment in its fight against climate change the eu is committed to reducing its overall greenhouse gas emissions to at least 20 below 1990 levels by 2020 to meet this commitment the eu builds on segmented market regulation with an eu wide cap and trade system for emissions from energy intensive installations ets sectors and additional measures by each eu member state covering emission sources outside the cap and trade system the non ets sector furthermore the eu has launched additional policy measures such as renewable energy subsidies in order to promote compliance with the climate policy target basic economic reasoning suggests that emission market segmentation and overlapping regulation can create substantial excess costs if we focus only on the climate policy target in this paper we evaluate the economic impacts of eu climate policy based on numerical simulations with a computable general equilibrium model of international trade and energy use our results highlight the importance of initial market distortions and imperfections as well as alternative baseline projections for the appropriate assessment of eu compliance cost

balancing demand pull and supply push measures to support renewable electricity in europe abstract increasing the share of renewable energy is deemed essential to reduce the carbon intensity of the current electricity mix the promotion of renewable energy technologies should thus be as effective and efficient as possible therefore support schemes should explicitly consider the balance between demand pull e g production subsidies and supply push efforts public rdd the cumulative pull push ratio for biogas is about 700 in the 5 year lag case and about 1200 in the other cases 10 yr lag or more although the debate on optimal rd d efforts is not conclusive and very sector specific it is relevant to compare our findings to average pull push ratios of about 20 in the engineering sector overall we can safely conclude that european governments should critically evaluate current renewables subsidy schemes and increase public rd d investments to support next waves of renewable energy technologies

designing an eu energy and climate policy portfolio for 2030 implications of overlapping regulation under different levels of electricity demand abstract the european union s current climate and energy policy has to operate under an ex ante unforeseen economic crisis as a consequence prices for carbon emission allowances in the eu emissions trading system collapsed however this price collapse may be amplified by the interaction of a carbon emission cap with supplementary policy targets such as minimum shares for renewables in the power sector the static interaction between climate and renewable policies has been discussed extensively this paper extends this debate by analysing the efficiency and effectiveness of a policy portfolio containing a cap and trade scheme and a target for a minimum renewable share in different states of aggregate electricity demand making use of a simple partial equilibrium model of the power sector we identify an asymmetric interaction of emissions trading and renewable quotas with respect to different states of aggregate electricity demand the results imply that unintended consequences of the policy interaction may be particularly severe and costly when aggregate electricity demand is low and that carbon prices are more sensitive to changes in economic activity if they are applied in combination with renewable energy targets our analysis of the policy interaction focuses on the eu yet the conclusions may also be of relevance for fast growing emerging economies like china

measuring the temporal dynamics of policy mixes an empirical analysis of renewable energy policy mixes balance and design features in nine countries abstract complex societal or environmental problems require fast and substantial socio technical transitions for instance in the case of climate change these transitions need to take place in the energy transport and several industry sectors to induce and accelerate such transitions numerous policy interventions are required which interact with each other in policy mixes while several conceptual studies on policy mixes have been published recently there is very little empirical research apart from single case or small n studies it has been prominently argued that the debate about policy mixes has reached an impasse partly due to this lack of empirical work this paper addresses this gap by providing a first analysis of the temporal dynamics of complex policy mixes to do so we develop a conceptualization and measurement of policy mix balance across instrument types as well as policy mix design features in the form of intensity as a general and technology specificity as a technology focused design feature this allows us to answer the question how temporal dynamics of policy mixes differ between countries regarding their balance and design features our measurement approach is developed bottom up i e policies are assessed individually and then aggregated systematically at the policy mix level this enables overcoming the dependent variable problem in the study of policy change i e the problem of measuring policy output more specifically we develop a comparative dataset of 522 renewable energy policies in nine oecd countries our analysis shows that countries policy mix dynamics vary strongly regarding some variables e g technology specificity but less regarding others e g balance as a validity check we also test the effects of these mix dynamics on policy outcome in the form of renewable energy technology diffusion we reflect our findings in light of the theoretical debates around policy mixes and policy design and discuss how our results provoke an agenda for the new generation of research on policy mixes we specifically discuss avenues for future research with a particular focus on the politics of policy mixes

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

on crises contagion and confusion abstract since the tequila crisis of 1994 1995 the asian flu of 1997 and the russian virus of 1998 economists have been busy producing research on the subject of contagion yet few studies have examined empirically through which channels the disturbances are transmitted if there are indeed fundamental reasons for the spillovers we observe we attempt to fill this gap by analyzing how both trade links and the largely ignored financial sector links influence the pattern of fundamentals based contagion we examine the role of international bank lending the potential for cross market hedging and bilateral and third party trade in the propagation of crises

no chance for incentive oriented environmental policies in representative democracies a public choice analysis abstract using the public choice approach this paper gives an explanation as to why in representative democracies in which political entrepreneurs attempt to maximize utility an incentive oriented environmental policy has hardly any chance of being implemented we discuss two main aspects first the reasons which make it difficult to enforce any kind of environmental policy in the competitive political environment and second why such a policy if it can be implemented at all is very often enacted with inefficient instruments in order to give a satisfactory explanation of these execution deficits we differentiate between voters politicians interest groups and bureaucracies behavior to show that there are conflicts with other policies and that individual rationality may be the greatest obstacle in implementing most incentive oriented environmental policies in the final section we provide five suggestions for overcoming these difficulties

dynamic correlation analysis of financial contagion evidence from asian markets we apply a dynamic conditional correlation model to nine asian daily stock return data series from 1990 to 2003 the empirical evidence confirms a contagion effect by analyzing the correlation coefficient series we identify two phases of the asian crisis the first shows an increase in correlation contagion the second shows a continued high correlation herding statistical analysis of the correlation coefficients also finds a shift in variance during the crisis period casting doubt on the benefit of international portfolio diversification evidence shows that international sovereign credit rating agencies play a significant role in shaping the structure of dynamic correlations in the asian markets

the political economy of an energy tax the united kingdom s climate change levy energy taxes designed to control energy consumption and to assist the achievement of climate change control targets under the kyoto protocol are fairly common in european union countries yet many of these taxes bear little resemblance to the design guidance that is given in economics textbooks political economy analysis in which the interaction of economics and political reality is emphasised explains the gap between theoretical ideals and practical reality a closer look at the factors that influence real world policy design should help policy oriented economists in designing measures that have a greater chance of adoption the end result may well be nth best solutions which simply have to be lived with but there may also be room for design improvements that still honour the political constraints of policy design this paper illustrates these issues in the context of one tax the uk climate change levy

escaping carbon lock in this article explores the climate policy implications of the arguments made in understanding carbon lock in unruh 2000 which posited that industrial countries have become locked into fossil fuel based energy systems through path dependent processes driven by increasing returns to scale carbon lock in arises through technological organizational social and institutional co evolution culminating in what was termed as techno institutional complex tic in order to resolve the climate problem an escape from the lock in condition is required however due to the self referential nature of tic escape conditions are unlikely to be generated internally and it is argued here that exogenous forces are probably required

long term global market correlations the correlation structure of the world equity markets varied considerably over the past 150 years and was high during periods of economic integration we decompose diversification benefits into two parts one component due to variation in the average correlation across markets and a another component due to the variation in the investment opportunity set from this we infer that periods of globalization have both benefits and drawbacks for international investors globalization expands the opportunity set but as a result the benefits from diversification rely increasingly on investment in emerging markets

licensing to enhance demand for new technologies this article presents a model in which licensing competitors expands demand for a new proprietary product and therefore may be a profit maximizing strategy for the licensor even when licensing increases industry cost in the model buyers care about price and quality sellers can contract on price but not on quality and a single supplier has monopoly power licensing induces quality competition and allows the supplying firms to make a quality commitment that would not be credible for a single firm as a result licensing increases industry demand and may generate an increase in industry revenue sufficient to offset any increase in industry cost some of the characteristics of the model are informed by observations in the semiconductor industry

adjustment to production uncertainty and the theory of the firm this paper considers the behavior of the firm which faces uncertainty in its production process but can adjust its output once the uncertainty is resolved ex post adjustment unlike previous treatments involves a marginal cost penalty if more output is required and a lowering of price if too much is produced with ex post adjustment allowed in this fashion it is found that nonlinear risk preferences do not affect the sign of the firm s marginal risk premium at optimum ex ante output the firm will produce less output than under certainty whether it is risk averse risk neutral or prefers risk

causes of the eu ets price drop recession cdm renewable policies or a bit of everything new evidence the price of eu allowances euas in the eu emissions trading scheme eu ets fell from almost 30 tco2 in mid 2008 to less than 5 tco2 in mid 2013 the sharp and persistent price decline has sparked intense debates both in academia and among policy makers about the decisive allowance price drivers in this paper we examine whether and to what extent the eua price drop can be justified by three commonly identified explanatory factors the economic recession renewable policies and the use of international credits capitalizing on marginal abatement cost theory and a broadly extended data set we find that only variations in economic activity and the growth of wind and solar electricity production are robustly explaining eua price dynamics contrary to simulation based analyses our results point to moderate interaction effects between the overlapping eu ets and renewable policies the bottom line however is that 90 of the variations of eua price changes remains unexplained by the abatement related fundamentals together our findings do not support the widely held view that negative demand shocks are the main cause of the weak carbon price signal in view of the new evidence we evaluate the eu ets reform options which are currently discussed

the tradable permits approach to protecting the commons lessons for climate change tradable permit approaches for rationing access to the commons have been applied to many different types of resources in many different countries this essay reviews the experience with three main applications of tradable permit systems air pollution control water supply and fisheries management as well as some unique related programmes the purpose of the review is to draw together what we have learned about tradable permits in practice that might offer some useful insights for the implementation of the three tradable permit mechanisms that are part of the kyoto protocol copyright 2003 oxford university press

the impact on electric power industry under the implementation of national carbon trading market in china a dynamic cge analysis abstract as the largest carbon emissions source sector electric power industry is undoubtedly a principal part of the carbon trading market in china aimed at researching the impact on power industry beyond establishing the national carbon trading market a dynamic computable general equilibrium cge model embedded with carbon trading block is introduced in this paper subsequently we design 8 scenarios of which illustrate corresponding industry carbon emissions baselines and free quotas ratios the main simulation results are as follows the implementation of carbon emissions trading would bring a certain negative impact on the overall economy real gdp will be reduced by about 0 08 0 52 in 2030 though low free quotas ratio will cause a relatively high loss of gdp this negative impact would be eliminated in the long run in addition carbon emissions trading would also promote the clean production of electricity indeed the electric power industry would reach carbon emissions peak around 2020 relative to scenarios without carbon trading carbon emissions would reduce more than 1000 million tons in 2030 when industry carbon emissions baseline declines at an annual rate of 2 consequently the carbon market can achieve a more significant reduction in carbon emissions with the influencing of quotas fully auctioned scenario

economic modelling of price support mechanisms for renewable energy case study on ireland abstract the irish government is considering its future targets policy and programmes for renewable energy for the period beyond 2005 this follows a review in 2003 of policy options that identified a number of different measures to stimulate increased deployment of renewable energy generation capacity this paper expands this review with an economic analysis of renewable energy price support mechanisms in the irish electricity generation sector the focus is on three primary price support mechanisms quota obligations feed in tariffs and competitive tender schemes the green x computer model is utilised to characterise the res e potential and costs in ireland up until and including 2020 the results from this dynamic software tool are used to compare the different support mechanisms in terms of total costs to society and the average premium costs relative to the market price for electricity the results indicate that in achieving a 20 res e proportion of gross electricity consumption by 2020 a tender scheme provides the least costs to society over the period 2006 2020 but only in case there is limited or no strategic bidding considering however strategic bidding a feed in tariff can be the more efficient solution between the other two support mechanisms the total costs to society are highest for feed in tariffs fit until 2013 at which point the costs for the quota system begin to rise rapidly and overtake fit in 2014 2020 the paper also provides a sensitivity analysis of the support mechanism calculations by varying default parameters such as the interim 2010 target the assumed investment risk levels and the amount of biomass co firing this analysis shows that a 2010 target of 15 rather than 13 2 generates lower costs for society over the whole period 2006 2020 but higher costs for the res e strategy over the period 2006 2010

stock market synchronization and monetary integration abstract this paper focuses on the relationship between stock market comovements and monetary integration a panel specification is used to explain bilateral stock market return correlations between fifteen developed economies over the period 1975 2006 time fixed effects are included to capture global shocks and we also examine the role of bilateral trade linkages and international financial integration monetary integration leads to stronger stock market synchronization both through the elimination of exchange rate volatility and through the common monetary policy and the convergence of inflation expectations trade and financial integration also contribute to higher stock market return comovements

comparing the innovation effects of support schemes for renewable electricity technologies a function of innovation approach abstract the aim of this paper is to provide a comparative assessment of the innovation effects of instruments which support the diffusion of renewable electricity technologies with a functions oriented technological innovation system perspective the paper provides a link between two major streams of the literature the functions of innovation systems and the literature on renewable electricity support schemes we show that when a functional perspective is adopted feed in tariffs are likely to be superior to other policy instruments quotas with tradable green certificates and tendering although they still need to be complemented with other instruments most importantly direct r d support furthermore those innovation effects are affected by the specific design elements of the instruments chosen

renewable energy sources in european energy supply and interactions with emission trading abstract this paper presents a model based approach which allows to determine the optimised structure and operation of the eu 15 electricity supply under different political and economic framework conditions with a focus on the integration of renewable energy sources for electricity generation res e in the eu 15 countries the approach is designed to take into account the characteristics of power production from both renewable and conventional sources including the technological and economic characteristics of existing plants as well as those of future capacity expansion options beyond that fuel supply structures are modelled as well as the international markets for power and co 2 certificates with their restrictions thus a profound evaluation of the exploitation of mid term renewable potentials and an assessment of the market penetration of the various renewable power generation technologies under the normative premise of a cost optimised evolution of the power system becomes possible results show that a promotion of renewable energies reduces the scarcity of co 2 emission allowances and thus lowers marginal costs of co 2 reduction up to 30 in 2030 despite the higher overall costs a diversification of the energy resource base by res e use is observed as primarily natural gas and nuclear fuels are replaced

what drives european union stock market co movements abstract this paper analyses the co movements and contagion between 24 european union stock markets we apply a dynamic conditional correlation mixed data sampling model to extract short and long run correlations we use short term correlations to detect contagion finally we employ a gravity type regression to investigate the determinants of long term correlations first we find significant differences between the stock market co movements which seem to depend on economic development and market deepening moreover the time varying correlations emphasize different phases of development i e integration contagion and divergence second the contagion estimates reveal that during some crisis episodes the contagion is temporary while for other periods the contagion becomes more persistent indicating a herding behavior third the co movements determinants show that global factors and economic similarities are important in explaining correlations finally our findings on long term correlations drivers in contagion times are mixed revealing on the one hand a pure contagion that is not explained by fundamentals and on the other hand a wake up call in terms of cross border bank flows

european equity market integration and joint relationship of conditional volatility and correlations abstract we analyse the integration patterns of seven leading european stock markets from 1990 to 2013 using daily data and mismatched monthly macroeconomic data to study the mismatch of data frequencies we use the dcc midas dynamic conditional correlation mixed data sampling technique developed by colacito engle and ghysels journal of econometrics 2011 we benchmark european integration patterns against the german stock market the reported integration patterns show a clear divide between large and relatively small equity markets short run and long run return correlations the small markets display higher short run european convergences than the large markets and vice versa the across the board divergence from greek risk during the crisis period is the most unambiguous conclusion of our study during this period cross country joint relationships of conditional variances and return correlations a convergence of risks resulting in global regional contagious spillovers are typically positive only exceptions are the german stock market s joint relationships

do support systems for res e reduce eu ets driven electricity prices abstract support systems for electricity from renewable energy sources res e can reduce electricity prices which have also been influenced by a co2 emission trading scheme ets additional res e substitutes electricity from fossil fuels and thus co2 emissions are reduced the demand for emission reductions is lowered as a result the co2 price is also reduced consequently the wholesale price for electricity decreases however most res e support systems are financed via the electricity market which increases the retail electricity price an assessment for germany shows that retail electricity prices in the first trading period of the eu ets 2005 2007 are lowered by 2 6 euro mwh due to additional res e considering the complete eu the effect is substantially higher this paper describes the effect and the influence of different policy designs it develops an approach for assessing the effect and applies it for the case of germany and roughly estimates the effect for the eu

the role of markets and policies in delivering innovation for climate change mitigation this paper identifies market incentives and international and domestic policies that could technologically alter energy systems to achieve greenhouse gas stabilization targets while also meeting other societal goals i consider the conceptual basis and empirical evidence on the effectiveness and efficiency of climate technology policies the paper reviews the literature on trends and prospects for innovation in climate change mitigation and examines the evidence on induced innovation and the implications for the choice of technology policy i then consider the impact of technological advances on the environment the role of direct government support for r d and the complementarities between policies internalizing

a public choice view on the climate and energy policy mix in the eu how do the emissions trading scheme and support for renewable energies interact abstract in this paper we analyze the rationale for an energy policy mix when the european emissions trading scheme ets is considered from a public choice perspective that is we argue that the economic textbook model of the ets implausibly assumes 1 efficient policy design and 2 climate protection as the single objective of policy intervention contrary to these assumptions we propose that the ets originates from a political bargaining game within a context of multiple policy objectives in particular the emissions cap is negotiated between regulators and emitters with the emitters abatement costs as crucial bargaining variable this public choice view yields striking implications for an optimal policy mix comprising res supporting policies whereas the textbook model implies that the ets alone provides sufficient climate protection our analysis suggests that support for renewable energies 1 contributes to a more effective ets design and 2 may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered thus our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix

auctions for split award contracts the buyer of a homogeneous input divides his input requirements into two contracts that are awarded to different suppliers he uses a sequential second price auction to award a primary and a secondary contract with a fixed number of suppliers the buyer pays a higher expected price than with a sole source auction the premium paid to the winner of the secondary contract must also be paid to the winner of the primary contract as an opportunity cost when entry is endogenous we identify the conditions under which a secondary contract can increase the number of suppliers and lower the expected price

a note on adjustment to production uncertainty and the theory of the firm this paper analyzes the impact of production uncertainty on the firm s optimal output decision if uncertainty is introduced by an additive risk variable then short run optimal output is unchanged but the owner manager s expected utility can change causing long run output effects if uncertainty is introduced by a multiplicative random variable then short run output can change as well

currency unions and international integration this paper characterizes the integration patterns of international currency unions such as the cfa franc zone we empirically explore different features of currency unions and compare them to countries with sovereign monies by examining the criteria for mundellos concept of an optimum currency area we find that members of currency unions are more integrated than countries with their own currencies for instance we find that currency union members have more trade and less volatile real exchange rates than countries with their own monies business cycles are more highly synchronized across currency union countries than across countries with sovereign monies

when renewable portfolio standards meet cap and trade regulations in the electricity sector market interactions profits implications and policy redundancy emission trading programs c t and renewable portfolio standards rps are two common tools used by policymakers to control ghg emissions in the energy and other energy intensive sectors little is known however as to the policy implications resulting from these concurrent regulations especially given that their underlying policy goals and regulatory schemes are distinct this paper applies both an analytical model and a computational model to examine the short run implications of market interactions and policy redundancy the analytical model is used to generate contestable hypotheses while the numerical model is applied to consider more realistic market conditions we have two central findings first lowering the co2 c t cap might penalize renewable units and increasing the rps level could sometimes benefit coal and oil and make natural gas units worse off second making one policy more stringent would weaken the market incentive which the other policy relies upon to attain its intended policy target