scarce or abundant the economics of natural resource availability most natural resources that are used in production are non renewable when they become depleted they are lost for future use does it follow that the limited availability of natural resources will at some time in the future constrain economic growth as many environmentalists believe while classical economists have shared the belief in limits to growth the distinctive feature of modern neoclassical economics is its optimism about the availability of natural resources this survey suggests that resource optimism can be summarised in four propositions first a rise in the price of a resource leads to a substitution of this resource with another more abundant resource and to a substitution of products that are intensive in this resource second a rise in the price of a resource leads to increased recycling of the resource and to the exploration and extraction of lower quality ores third man made capital can substitute for natural resources fourth technical progress increases the efficiency of resource use and makes extraction of lower quality ores economical in a critical analysis of these four propositions it is shown that while the conjecture that natural resources will never constrain future economic growth is logically conceivable we do not and indeed cannot know whether it will be possible in practice to overcome any resource constraint jel classification q20 q30 q40

retail chains corporate social responsibility communication this study examines determinants of retail chains corporate social responsibility csr communication on their web pages the theoretical foundation for the study is signaling theory which suggests that firms will communicate about their csr efforts when this is profitable for them and when such communication makes it possible for outsiders to distinguish good from bad performers based on this theory i develop hypotheses about retail chains csr signaling the hypotheses are tested in a sample of 208 retail chains in the norwegian market as hypothesized i find that foreign chains chains using private brands and vertically integrated chains are more likely to signal but i find no relationship between pricing and signaling in further analysis using chains csr memberships and certifications as the measure of signals only the relationship between organizational form and signaling is replicated in total the findings give partial support to signaling theory

the impact of franchising on labor standards compliance recent studies document pervasive noncompliance with basic labor standards in industries with high concentrations of low wage workers the authors examine how franchising a common form of business organization in low wage industries affects compliance they estimate the effect of franchise ownership on compliance with federal minimum wage and overtime standards in the fast food industry using unique data on top 20 branded restaurants franchised outlets have far higher levels of noncompliance than comparable company owned establishments the authors argue that observed differences arise from internal incentives facing franchisees versus franchisors rather than from external enforcement pressures facing the parties

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

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

production functions for climate policy modeling an empirical analysis abstract quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution the empirical foundation for both is generally lacking this paper estimates the parameters of 2 level ces production functions with capital labour and energy as inputs and is the first to systematically compare all nesting structures using industry level data from 12 oecd countries we find that the nesting structure where capital and labour are combined first fits the data best but for most countries and industries we cannot reject that all three inputs can be put into one single nest these two nesting structures are used by most climate models however while several climate policy models use a cobb douglas function for part of the production function we reject elasticities equal to one in favour of considerably smaller values finally we find evidence for factor specific technological change with lower elasticities and with factor specific technological change some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy

costs of control the source of economic rents for mcdonald s franchisees the main purpose of this article is to establish empirically using financial data that there are both ex ante and ex post rents left downstream at mcdonald s we find that the present value of the ex ante rents is around 300k 455k 1982 dollars ex post rents are of course even larger we argue that the ex post rents represent an incentive mechanism that complements the use of profit sharing rights at mcdonald s we also argue that ex ante rents arise here because franchisees wealth constraints prevent the up front extraction of the full present value of the ex post rents finally we note that mcdonald s desire for a particular type of individual to operate its franchises namely owner operators whose livelihoods are tied to the success of their outlets increases the likelihood that downstream operators face liquidity constraints this in turn contributes to the need for mcdonald s to leave ex ante rents downstream

eu type carbon regulation and the waterbed effect of green energy promotion abstract this paper studies waterbed effects in a stylized model of carbon regulation in which all countries participate in an emissions trading scheme ets implement national emissions caps on non ets emissions and support green electricity since a change in some country s ets emissions is exactly offset by opposite changes in the other countries ets emissions waterbed effect allocative disturbances in one country affect all other ets countries we analyze the allocative displacement effects on inputs outputs prices and trade that a country say country a triggers at home and in the other ets countries when it unilaterally increases its support of green electricity via raising its feed in tariff ets emissions turn out to decline in country a and to rise in the other countries another remarkable waterbed effect is that country a suffers a welfare loss whereas the other countries are better off country a s welfare loss is larger than it would be if there would be national etss instead of the joint ets if green electricity support takes the form of subsidies on the electricity price instead of feed in tariffs we get another waterbed effect green electricity production increases in country a but declines in the other countries various decarbonization indicators improve in country a but tend to point into the opposite direction in the other countries

fossil fuel producing economies have greater potential for industrial interfuel substitution abstract this study analyzes industrial interfuel substitution in an international context using a large unbalanced panel dataset of 63 countries we find that compared to other countries fossil fuel producing economies have higher short term interfuel substitution elasticities this difference increases further in the long run as fossil fuel producing countries have a considerably longer adjustment of their fuel using capital stock these results imply lower economic cost for policies aimed at climate abatement and more efficient utilization of energy resources in energy intensive economies

a nested ces approach to capital energy substitution abstract this paper uses the nested constant elasticity of substitution ces production function to estimate elasticities of substitution between capital labour energy and materials over the 1971 1976 period around the initial energy crisis elasticities are estimated for each of the two digit sic industries within us manufacturing using more disaggregate four digit sic data the nested ces function makes it possible to distinguish between engineering and economic elasticities of substitution capital and energy are estimated to be slight engineering substitutes and economic complements labour energy and materials are estimated economic substitutes

deforestation and seigniorage in developing countries a tradeoff abstract most of countries covered by natural forests are developing countries with limited ability to levy taxes and restrained access to international credit markets consequently they are amenable to draw heavily on two sources of government financing namely seigniorage and deforestation revenues first we develop a theoretical model emphasizing a substitution effect between seigniorage and deforestation revenues second a panel data econometric analysis over the 1990 2010 period confirms our findings consequently a tighter monetary policy hastens deforestation third we extend the theoretical model and show that international transfers dedicated to forest protection can upturn the positive link between tighter monetary policies and deforestation and then discuss the relevance of this finding with respect to recent institutional arrangements

franchising agency problems and the cost of capital explanations for franchising are examined in the context of the us hotel industry the study is distinct from previous research on franchising because it explicitly recognizes the existence of three organizational forms whereas previous research has focused exclusively on two of these three forms the two organizational forms examined in previous work are franchising and company ownership the additional organizational form is company management investor ownership which involves management by the franchisor and ownership by outside investor groups a plausible explanation for the existence of the last organizational form is based on the availability of low cost capital from non chain sources

environmental keynesian macroeconomics some further discussion abstract this paper extends the is lm ee framework first formulated by heyes heyes a 2000 a proposal for the greening of textbook macro is lm ee ecol econ 32 1 7 in his model exogenous fiscal or monetary shocks are needed so that the intersection of all three schedules is reached such independent adjustments are circumvented in this paper which argues that a naturally adjusting process exists and formalizes this mechanism for the is lm ee framework

north south interactions in the presence of trade in environmental permits a structuralist investigation this article develops a structuralist framework to analyse a world where production requires emission permits international agreements bind northern output whilst leaving room for the south under the principle of common but differentiated responsibilities act i considers the effects of reducing northern output through tighter emission regulations in the short run traditional structuralist results such as a negative effect on southern terms of trade and accumulation follow in the long run the impact of northern regulation is bottled up within that region this latter property vanishes once act ii allows for the creation of international permit markets permit trade relaxes the northern output constraint whilst also establishing a channel through which the north directly influences southern permit prices the result in the short run is to reverse the effects of tighter northern regulation on relative southern terms of trade and accumulation which now increase in the long run international permit trade leads to increased variability in the 1 global distribution of capital in response to tighter northern regulation and 2 intensity of northern emissions in response to tighter southern regulation thus globalised permit exchanges generate new trade offs between the global distribution of capital and environmental efficiency

leakage welfare and cost effectiveness of carbon policy policymakers fear that a unilateral carbon policy will reduce competitiveness increase imports and lead to higher carbon emissions elsewhere leakage in fullerton karney and baylis 2012 we show that it may actually reduce emissions in other sectors negative leakage but reducing emissions in both sectors may merely reflect welfare costs of carbon policy that reduce real income and thus reduce consumption of both outputs these possibilities capture the concern that unilateral carbon policy might have a high cost per global unit of carbon abated that is low cost effectiveness based on harberger 1962 the two input two output analytical general equilibrium model of fullerton karney and baylis 2012 could represent two countries or two sectors of a closed economy each sector has some initial carbon tax or price and the paper solves for the effect of a small increase in one sector s carbon tax on the quantity of emissions in each sector but it does not solve for welfare effects here we use the same model but derive expressions for the costeffectiveness of a unilateral carbon tax the welfare cost per ton of emission reduction we show that higher leakage does not always mean lower welfare if one sector is already taxed at a higher rate then an increase in the other sector s tax might reduce deadweight loss from preexisting misallocations thus abatement can have negative cost the welfare cost most directly depends on the relative levels of tax in the two sectors we show that negative leakage always corresponds to a negative income effect but negative income

an empirical look at franchising as an organizational form franchise contracts are identified as a hybrid form of economic organization motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm firm growth managerial and employee selection a nd brand name capital empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available the results s uggest that both principal agent incentives and informational incenti ves favor the use of franchise arrangements copyright 1988 by the university of chicago

do renewable energy policies reduce carbon emissions on caps and inter industry leakage abstract in a parsimonious two sector general equilibrium model we challenge the widely held tenet that within a cap and trade system renewable energy policies have no effect on carbon emissions if the cap does not capture all sectors we demonstrate that variations of a renewable energy subsidy change aggregate carbon emissions through an inter industry leakage effect we decompose this effect into intuitively intelligible components that depend in natural ways on measurable elasticity parameters raising the subsidy always reduces emissions if funded by a lump sum tax reinforcing recent findings that tightening environmental regulation can cause negative leakage however if the subsidy is funded by a levy on electricity it can increase emissions these results provide a valuable basis for an informed design of renewable energy policies and an accurate assessment of their effectiveness we highlight how a state of the art statistic used by governments to gauge such effectiveness virtual emission reductions is biased because inter industrial leakage effects are not captured

on the economics of compliance with the minimum wage law this paper reexamines the issues of compliance with and enforcement of the minimum wage law recently addressed in this journal by ashenfelter and smith and by grenier pursuing a more rigorous methodology we are able to add new general conclusions and correct and reconcile some previous conflicting conclusions concerning the role of the disparity between the minimum and free market wages the level and elasticity of labor demand and the magnitude of deterring monetary sanctions on the noncompliance decision our formulation also addresses the law evasion reduced wages as well as the law avoidance modified employment aspects of the noncompliance decision which previous formulations have ignored

second best renewable subsidies to de carbonize the economy commitment and the green paradox climate change must deal with two market failures global warming and learning by doing in renewable energy production the first best policy consists of an aggressive renewables subsidy in the near term and a gradually rising and falling carbon tax given that global carbon taxes remain elusive policy makers might have to rely on a second best subsidy only with credible commitment the second best subsidy is higher than the social benefit of learning to cut the transition time and peak warming close to first best levels at the cost of higher fossil fuel use in the short run weak green paradox without commitment the second best subsidy is set to the social benefit of learning it generates smaller weak green paradox effects but the transition to the carbon free takes longer and cumulative carbon emissions are higher under first best and second best with pre commitment peak warming is 2 1 2 3 circ c under second best without commitment 3 5 circ c and without any policy 5 1 circ c above pre industrial levels not being able to commit yields a welfare loss of 95 of initial gdp compared to first best being able to commit brings this figure down to 7

the choice of organizational form the case of franchising abstract we examine companies that franchise some units and centrally operate own others the agency problems confronting these two organizational forms are analyzed testable hypotheses are developed the empirical results support the notion that owning versus franchising reflects a trade off among agency related problems the cost of monitoring store managers appears to be especially important in the own franchise decision the level of repeat business and initial investment requirements per unit also appear to be important

ownership agency and wages an examination of franchising in the fast food industry this paper estimates the difference in compensation between company owned and franchisee owned fast food restaurants the contrast is of interest because contractual arrangements give managers of company owned outlets less of an incentive to monitor and supervise employees estimates based on two data sets suggest that employee compensation is slightly greater at company owned outlets than at franchisee owned outlets the earnings gap is 9 percent for assistant and shift managers and 2 percent for full time crew workers furthermore the tenure earnings profile is steeper at company owned restaurants these findings suggest that monitoring difficulties influence the timing and generosity of compensation

challenges from state federal interactions in us climate change policy with a focus on two sorts of regulation renewable electricity and clean energy standards and automobile fuel economy standards we analyze problematic interactions that arise when state policies are nested within the domain of federal policy here state efforts may fail to reduce greenhouse gas emissions nationally and may compromise cost effectiveness difficulties from overlapping regulations are avoidable through price as opposed to quantity based federal policy we identify some potentially positive interactions between state and federal policies and identify rationales for state action when federal and state policies do not overlap

efficient co2 emissions control with emissions taxes and international emissions trading abstract we consider a stylized model of the hybrid co 2 emissions control in the eu a group of countries operates a joint emissions trading system ets covering only part of each country s economy the countries levy an emissions tax in the rest of their economy and possibly an additional tax in their ets sectors welfare maximizing governments are shown to lack incentives for group efficient policies preexisting taxes overlapping with the ets lead policy makers to allocate more permits to their ets sectors than cost effectiveness would suggest the cases of small and large countries exhibit significantly different efficiency implications

the economics of franchise contracts as an organizational arrangement the franchise contract lies between anonymous price mediated exchange and centralized intrafirm employment in contrast to conventional market exchange franchise contracts typically impose on franchisees retail quality standards common hours of business price controls and nonlinear payment schedules for example fixed initial royalty fees plus a percentage of gross retail revenues while franchisors typically provide national advertising and training programs monitor and inspect the franchisees performance with varying intensity across industries and hold the residual power to terminate the franchise agreement observations of actual terminations indicate that franchisors sometimes exclude this power franchisors sometimes face persistent queues of potential franchisees in contrast to simple employment contracts franchise agreements provide for sharing of profits through royalties on revenue or output and considerable freedom for independent decisions by local franchisees 1 why do these franchise contracts exist