energy security in asean a quantitative approach for sustainable energy policy abstract we investigate energy security of the association of southeast asian nations asean under the 4 a s framework the asean economic community aec agreement launched in 2015 renewed a regional focus on energy security and sustainability we employ an analytic framework to quantitatively assess progress in different categories including availability acceptability affordability and applicability key metrics include the documentation of co 2 emissions energy access measures and energy supply reserves from 2005 2010 we identify relevant energy indicators using high quality historical data from the iea and world bank we find that asean made little progress toward establishing energy security in the previous five year planning period 2005 2010 as it regressed in most categories except applicability therefore we suggest that increased development of renewable energy and energy efficiency technologies would move asean in a positive direction toward achieving energy security and sustainable energy policy goals

the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

a spatial model of international conflict 1 he model presented here assumes that nations initiate conflict to change the international status quo across one or more issues to an outcome they prefer their preferences for different issue outcomes are represented by a classical spatial utility function international coalitions are formed both to enhance the chance of a successful challenge and to counter existing challenges disputes are modeled as periods of competition between two coalitions through the recruitment of additional members erosion of support for the opposing coalition and escalation of the crisis the two nation model is analyzed in detail and the existence of the core for the resulting game is proved the two main conclusions of the two nation model are that nations have a general incentive to exaggerate their issue positions in disputes and that the possibility of issue trades enhances the likelihood of compromise because scientific understanding arises from theories the explication of theories is essential for the development of scientific understanding to understand international conflictthat is the resolution of disputes between nations by coercion or the threat of coercion a theory that can explain such conflict is needed this paper will present a model drawn from rational choice theory specifically game theory that explains national actions in conflicts as strategic choices made in order to gain preferred resolutions of the international issues in dispute compared to existing game theory models of international conflict the model presented here provides an explicit description of how each nation s evaluation of the issues in dispute affects its desire to pursue compromise or conflict a more detailed sequence of escalation allowing for the detailed study of escalation strategies and a framework that can explain the timing and extent of third party interventions into ongoing crises

food versus fuel an updated and expanded evidence abstract this paper replicates the study of zhang et al 2010 food versus fuel what do prices tell us energy policy 38 pp 445 451 we confirm the findings of the original paper that there was only a weak relationship between ethanol and food commodities in the period between march 1989 and july 2008 in addition we extend that study and examine the cointegration relationship between biofuels and related commodities for a considerably enlarged dataset 3 vs 1 market 26 vs 8 commodities analysis up till 2017 vs 2008 weekly vs monthly data frequency focusing on the biofuel markets of brazil the eu and the usa in the three separate periods before during and after the food crisis of 2007 and 2008 we show that studying the time variation of the relationships plays an essential role in their proper understanding our results help to clarify the wide extensive discussion about the role of biofuels prices in food shortages manifested particularly during the food crises in agreement with the original study we confirm that price series data do not support strong statements about biofuels uniformly serving as main leading source of high food prices and consequently the food shortages

correlations between biofuels and related commodities before and during the food crisis a taxonomy perspective abstract in this paper we analyze the relationships between the prices of biodiesel ethanol and related fuels and agricultural commodities with a use of minimal spanning trees and hierarchical trees to distinguish between short term and medium term effects we construct these trees for different frequencies weekly and monthly we find that in short term both ethanol and biodiesel are very weakly connected with the other commodities in medium term the biofuels network becomes more structured the system splits into two well separated branches a fuels part and a food part biodiesel tends to the fuels branch and ethanol to the food branch when the periods before and after the food crisis of 2007 2008 are compared the connections are much stronger for the post crisis period this is the first application of this methodology on the biofuel systems

known unknowns power shifts uncertainty and war large and rapid power shifts resulting from exogenous economic growth are considered sufficient to cause preventive wars yet most large and rapid shifts result from endogenous military investments we show that when the investment decision is perfectly transparent peace prevails large and rapid power shifts are deterred through the threat of a preventive war when investments remain undetected however states may be tempted to introduce power shifts as a fait accompli knowing this their adversaries may strike preventively even without conclusive evidence of militarization in fact the more effective preventive wars are the more likely they will be launched against states that are not militarizing our argument emphasizes the role of imperfect information as a cause of war it also explains why powerful states may attack weaker targets even with ambiguous evidence of their militarization we illustrate our theory through an account of the 2003 us led invasion of iraq

a dynamic theory of nuclear proliferation and preventive war we develop a formal model of bargaining between two states where one can invest in a program to develop nuclear weapons and the other imperfectly observes its efforts and progress over time in the absence of a nonproliferation deal the observing state watches the former s program waiting until proliferation seems imminent to attack chance elements when the program will make progress and when the other state will discover this determine outcomes surprise proliferation crises over the suspected progress of a nuclear program and possibly mistaken preventive wars arise endogenously from these chance elements consistent with the model s predictions and contrary to previous studies the empirical evidence shows that the progress of a nuclear program and intelligence estimates of it explain the character and outcomes of most interactions between a proliferant and a potential preventive attacker counterintuitively policies intended to reduce proliferation by delaying nuclear programs or improving monitoring capabilities may instead encourage it

bayesian estimation and selection of nonlinear vector error correction models the case of the sugar ethanol oil nexus in brazil nonlinear adjustment toward long run price equilibrium relationships in the sugar ethanol oil nexus in brazil is examined we develop generalized bivariate error correction models that allow for cointegration between sugar ethanol and oil prices where dynamic adjustments are potentially nonlinear functions of the disequilibrium errors a range of models are estimated using bayesian monte carlo markov chain algorithms and compared using bayesian model selection methods the results suggest that the long run drivers of brazilian sugar prices are oil prices and that there are nonlinearities in the adjustment processes of sugar and ethanol prices to oil price but linear adjustment between ethanol and sugar prices

the armed peace a punctuated equilibrium theory of war according to a leading rationalist explanation war can break out when a large rapid shift of power renders unbelievable a rising state s promise to compensate its declin ing opponent causing the latter to attack preventively this mechanism does not provide a complete and coherent explanation of war because it does not specify how inefficient fighting resolves this commitment problem we present a complete information model of war as a sequence of battles and show that although opportunities for a negotiated settle ment arise throughout the very desirability of peace creates a commitment problem that undermines its likelihood because players have incentives to settle as soon as possible they cannot credibly threaten to fight long enough if an opponent launches a surprise at tack this decreases the expected duration and costs of war and causes mutual deterrence to fail fighting s sheer destruction improves the credibility of these threats by decreasing the benefits from continuing the war equilibrium fighting may involve escalating costs that exceed the value of the stakes by the time peace is negotiated and that leave both players worse off than when the war began

nuclear brinkmanship with two sided incomplete information a brinkmanship crisis with two sided incomplete information is modeled as a game of sequential bargaining in which each state is uncertain of its adversary s resolve the sequential crisis equilibria are characterized explicitly and used to analyze the influences of resolve misperception and the status quo on escalation and crisis stability the description of brinkmanship as a contest of resolve is found to be misleading the state with the greatest resolve may not prevail in the crisis a state may be less not more likely to prevail the greater its resolve and a states expected payoff may be less not more the greater its resolve moreover reducing misperception may destabilize a crisis surprisingly increasing the stake a potential challenger has in the status quo may not make a challenge less likely finally crises involving severe conflicts of interest are shown to be less likely than crises not entailing a severe conflict of interest

a model of military spending and economic growth this paper investigates a model of militaryconflict between two regimes in which eachmay initiate combat in order to confiscateresources from the other conflict or thepotential for same results in wastefulmilitary spending which lowers growth foreach regime equilibrium military spendingis determined in a one shot game analysisof the one shot game is followed by a studyof the prospects for an equilibrium inwhich regimes lower military spending anddo not engage in combat in repeated play in this latter case military spending willbe decreased to a level just sufficient todeter deviations from the no combatequilibrium this minimum level increases and growth decreases with the internalpolitical instability of each regime moreover an exogenous increase in thedefensive capability of each regime mayeither increase or decrease growth depending upon the initial level ofmilitary spending and growth

a literature survey on energy growth nexus abstract this paper provides a survey of the recent progress in the literature of energy consumption economic growth and electricity consumption economic growth causality nexus the survey highlights that most empirical studies focus on either testing the role of energy electricity in stimulating economic growth or examining the direction of causality between these two variables although the positive role of energy on growth has become a stylized fact there are some methodological reservations about the results from these empirical studies a general observation from these studies is that the literature produced conflicting results and there is no consensus neither on the existence nor on the direction of causality between energy consumption electricity consumption and economic growth as a policy implication to avoid from conflicting and unreliable results the authors may use the autoregressive distributed lags bounds test two regime threshold co integration models panel data approach and multivariate models including new variables such as real gross fixed capital formation labor force carbon dioxide emissions population exchange rates interest rates etc thus the authors should focus more on the new approaches and perspectives rather than by employing usual methods based on a set of common variables for different countries and different intervals of time

abolishing biofuel policies possible impacts on agricultural price levels price variability and global food security abstract in this paper we assess the impact of abolishing biofuel policies mandates tax credits import and export tariffs on agricultural price levels and price variability as well as some aspects related to global food security for the analysis we employ a recursive dynamic agricultural multi commodity model within a stochastic framework results of the 10 years forward looking scenario indicate that the removal of biofuel policies would have a significant effect on price variability of biofuels but only a marginal impact on the variability of agricultural commodity prices without biofuel policies global biofuel demand would decrease by 25 for ethanol and 32 for biodiesel moreover prices would only moderately decrease for ethanol feedstock commodities like wheat and coarse grains while prices for biodiesel feedstock commodities specifically vegetable oils would be more affected due to competing uses of crop production such as feed and industrial use abolishing biofuel policies would not necessarily lead to an increase in global food security as food use increases would remain low for most crops and regions

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

the impact of electricity supply on economic growth in sri lanka abstract yang energy econ 22 2000 309 has found a bi directional causal relationship between gross domestic product and electricity consumption in taiwan roc this study applies yang s model to examine the impact of electricity supply on economic growth in sri lanka morimoto and hope an extended cba model of hydro projects in sri lanka 2001 have found that the expected increase in economic output due to increased electricity supply parameter eo plays a crucial role in their cost benefit analysis model this study shows that the application of yang s regression analysis is one possible approach to estimate a better range for the parameter eo the estimated figure is that an extra output of rs 88 000 137 000 us1120 1740 for every 1 mw h increase in electricity supply

energy security electricity population and economic growth the case of a developing south asian resource rich economy economic growth and increasing population is driving the demand for energy in developing economies globally including south asia energy security concerns have heightened in these economies consequently raising questions in their ability to meet the key sustainable development goals this paper specifically examines the inter relationships between energy security captured through the channel of electricity availability based on electricity consumption and economic output in a multivariate framework incorporating the effects of capital formation and population for nepal a developing economy in south asia time series econometrics based on the ardl bounds test approach to cointegration and the toda yamamoto granger causality tests are used to examine and test for long run equilibrium relationships and causality between 1975 and 2014 we find that there is no long run relationship between electricity consumption and economic output for nepal distinguishing it at the regional level for south asia however a 1 increase in population increases electricity consumption by 4 16 in the long run we propose that large scale development of available renewable energy such as hydropower and improvements in energy efficiency will not only strengthen energy security in the long run but also will help tackling climate change in south asian developing economies like nepal

economics of alliances the lessons for collective action this essay provides an up to date summary of the findings of the literature on the economics of alliances we show that the study of the economics of alliances has played a pivotal role in understanding and applying public good analysis to real world applications we establish that the manner in which alliances address burden sharing and allocative issues is related to strategic doctrines weapon technology perceived threats and membership composition past contributions are evaluated and areas needing further development are identified the theoretical and empirical knowledge gained from the study of alliances is shown to be directly applicable to a wide range of international collectives

oil price volatility financial institutions and economic growth abstract theory attributes finance with the ability to both promote growth and reduce output volatility and therefore increase energy security but evidence is mixed partly due to endogeneity effects for example financial institutions themselves might be a source of volatility as the events of 2008 suggest we address this endogeneity issue by using periods of extreme oil price volatility as a source of nearly exogenous volatility to study the effect of finance to do this we develop a quasi natural experiment and study the effect of the dramatic decline of oil prices in 2014 using a synthetic control methodology our hypothesis is that the ability of oil rich countries to mitigate the effects of this decline rested on the quality of their financial institutions we focus on 11 oil rich countries between 2006q1 and 2016q4 that had poor measures of financial development treatment group out of 20 such countries and synthetically create counterfactuals from the remaining control group with superior financial development we subject both to the oil price shock of 2014 and find evidence that better financial institutions do indeed reduce output volatility and mitigate its negative effect on growth in the year that showed a sustained decline in oil price to address any remaining potential endogeneity between oil prices and finance we use a cross sectionally augmented autoregressive distributed lag model with data on 30 oil producing countries over the period 1980 2016 and confirm that the effects of oil volatility on growth is mitigated with better financial institutions our results make a strong case for the support of the positive role of financial development in improving energy security and fostering growth

borrowed power debt finance and the resort to arms military expenditure is often funded by debt and war losers often repudiate some or all of their obligations since governments tend to repay their debt in peace or victory negotiated settlements become inefficient and can affect crisis bargaining and war termination i analyze a complete information model in which players can determine the distribution of power through their military allocations b efore attempting to reach a peaceful bargain i show that players might borrow to improve their military capabilities even when doing so will make it impossible to settle the dispute without fighting this new explanation for war is not driven by commitment problems or informational asymmetries but by the inefficiency of peace imposed by the need to repay the debt wa r is the result of actions that eliminate the bargaining range rather than inability to loc ate mutually acceptable deals in that range as the traditional explanation has it

polarity the offense defense balance and war bipolar systems are inherently more stable than multipolar configurations of power kenneth waltz argues his empirical justification for this conclusion relies on the multipolar systems that preceded the two world wars and the bipolar cold war the weakness of waltz s argument is the small number of cases and the failure to consider alternative explanations for different levels of war in the three periods in another historical period of both multi and bipolarity europe from 1495 to 1559 i have found that polarity cannot account for the constant level of instability across a change in polarity in the system instead the offense defense balance which includes the technical military balance the cumulativity of power resources and strategic beliefs explains instability in the period drawing on this alternative theory i reassess the high level of stability associated with the cold war and speculate on the level of stability we can expect in the post cold war period

causality relationship between electricity consumption and gdp in bangladesh in this paper we examine the causal relationship between the per capita electricity consumption and the per capita gdp for bangladesh using cointegration and vector error correction model our results show that there is unidirectional causality from per capita gdp to per capita electricity consumption however the per capita electricity consumption does not cause per capita gdp in case of bangladesh the finding has significant implications from the point of view of energy conservation emission reduction and economic development

the principle of convergence in wartime negotiations if war results from disagreement about relative strength then it ends when opponents learn enough about each other learning occurs when information is revealed by strategically manipulable negotiation behavior and nonmanipulable battlefield outcomes i present a model of simultaneous bargaining and fighting where both players can make offers and asymmetric information exists about the distribution of power in the markov perfect sequential equilibrium making and rejecting offers has informational value that outweighs the one provided by the battlefield however states use both sources of information to learn and settle before military victory the principle of convergence posits that warfare ceases to be useful when it loses its informational content and that belief in defeat victory is not necessary to terminate initiate hostilities thus the standard puzzle in international relations that seeks to account for prewar optimism on both sides may not be that relevant

promoting regional energy co operation in south asia abstract energy is a key ingredient of the socio economic development of any region south asia is not only one of the fastest growing regions in the world it is also one of the poorest which thus puts energy at the very heart of the development process in the region this paper looks at the challenges faced by the south asia sub region for economic co operation sasec comprised of bangladesh bhutan india and nepal and also at the role of greater regional energy co operation therein the region is characterized by pressures of growing economies and increasing population while the per capita energy consumption is one of the lowest in the world energy intensity continues to be very high a large portion of the population lacks access to modern sources of energy and depends on traditional sources that are not only inefficient but also have severe health and environmental problems associated with them increasing oil import dependency and huge investment needs for energy market development pose a further challenge the region has a good resource potential and tremendous scope for energy co operation which can play a key role in addressing many of these energy security concerns and in putting it on the path of sustainable development it is ironic that the record in the area has been so limited and that too in the most basic form of co operation i e bilateral arrangements between countries this paper puts forth a multi pronged strategy for sub regional energy co operation encompassing softer options aimed at confidence building to more substantial and larger scale co operation efforts delays in decision making to ensure stronger and mutually beneficial co operation efforts are associated with high costs not only to the energy sector but also for the entire development agenda with the precarious energy situation in the region and unprecedented increases in international oil prices seen in recent times it is high time for policy makers financing institutions ngos and the civil society to push for a greater integration of the sasec energy sector

how will energy demand develop in the developing world most of the medium run growth in energy demand is forecast to come from the developing world which consumed more total units of energy than the developed world in 2007 we argue that the main driver of the growth is likely to be increased incomes among the poor and near poor we document that as households come out of poverty and join the middle class they acquire appliances such as refrigerators and vehicles for the first time these new goods require energy to use and energy to manufacture the current forecasts for energy demand in the developing world may be understated because they do not accurately capture the dramatic increase in demand associated with poverty reduction

external threat and collective action i introduction individuals with common interests usually attempt to further their welfare by acting collectively examples of collective action include the provision of a public good or collective good the establishment of clubs and the formation of alliances or political parties in his seminal work the logic of collective action olson 1965 uses the provision of collective goods as an example to discuss collective action problem or coordination failure in particular he analyzes how group size and the distribution of individual benefits of a collective good may affect the provision level of the good two of the most celebrated propositions from his book are the suboptimality proposition the larger the group the farther it will fall short of providing an optimal amount of a collective good p 35 and the exploitation proposition there is a systematic tendency for exploitation of the great by the small p 29 these propositions have generated a broad research effort in collective action problems in economics and political science many scholars have examined the validity of these propositions 1 a limitation of olson s theory is that he analyzed collective action problems as phenomena within a single group while assuming that external threat to a group either does not exist or is treated as a constant in many cases however two or more groups compete against each other in these situations a group s provision of collective goods might be affected by the configurations of its own group and the competing groups and relative strength of the groups to illustrate assume that two alliances of states say a and b are competing for supremacy an increase in a s military spending poses a greater threat to b s security in response to the heightened threat members of b might feel the need to increase their military spending which in turn could affect the military spending decisions of members of a bruce 1990 develops a model that endogenizes external threat in a three country model with two allies and one adversary interest group lobbying is another example to understand a group s lobbying behavior scholars often focus on the number and size of firms within the group and their geographical distribution however the configuration of a competing interest group and the two groups relative strengths should also figure into an individual firm s decision concerning the appropriate contribution to its group s lobbying efforts other examples include party discipline voter turnout ledyard 1981 1984 palfrey and rosenthal 1983 electoral coalitional politics tsebelis 1990 hausken 1995a b negative campaigning in primary elections newman and niou 2000 factional rivalry in civil wars and joint ventures for research and development in industrial organizations all these examples point to the importance of external threat in explaining the logic of collective action in this article to study simultaneously the way intergroup competition and intragroup collective action interact we develop a collective good model that endogenizes external threat in the context of competition between two groups a group can be either defensive or offensive in nature we define a group as defensive if its fighting capacity can be used only to defend its own resources a group is offensive if its fighting capacity can be used to expropriate resources from its rivals as well as protect its own resources we realize that empirically it is difficult to determine whether a group is offensive or defensive but theoretically it is useful to know how the offensive or defensive nature of a group can affect the collective action problem we analyze collective action problems when 1 one of the groups is offensive whereas the other is defensive and 2 both groups are offensive respectively also in group competition if conquests are economically profitable the way spoils of victory are divided among group members can also affect collective action

market integration in us gasoline markets this paper analyses the degree of market integration in the retail gasoline markets in the united states after it was completely deregulated in 1981 the monthly average prices of unleaded regular gasoline excluding taxes from january 1983 to december of 1998 for five us petroleum administration defense districts were considered in the analysis there is evidence of a high degree of market integration in the gasoline markets as evidenced by the engel and granger and johansen cointegration tests but perfect market integration is rejected in all but a few cases

how biofuel policies backfire misguided goals inefficient mechanisms and political ecological blind spots abstract the development of an economically viable biofuel industry rests on strong state subsidies for production and processing creation of markets through government procurement fuel blending mandates price controls as well as foreign trade tariffs and quotas and multiple interventions in agricultural ecological and other regulations we use an approach grounded in agrarian political economy to critically analyze the literature on how biofuel policies interact with broader production trade and agro ecological processes we focus on policies involving the most prominent crops in the places where biofuel production has advanced the most i e usa brazil and the eu but also extend analysis to their relations with broader transformations in production commercial and even governance practices around the world we investigate the political and economic interests driving biofuel policies and how these set the terms in which state interventions and policies are conceived and implemented we find that these are not developed and implemented according to environmental or inclusive pro poor development purposes but according to state interests in energy security and its intersection with a tense alliance between corporate sectors rendering many policy mechanisms ineffective or even outright counterproductive to effectively facilitate more socially and environmentally sustainable energy production and agricultural practices

a theory of dynamic oligopoly iii cournot competition abstract we study the markov perfect equilibrium mpe of an alternating move infinite horizon duopoly model where the strategic variable is quantity we exhibit a pair of difference differential equations that when they exist differentiable mpe strategies satisfy for quadratic payoff functions we solve these equations in closed form and demonstrate that the mpe corresponding to the solution is the limit of the finite horizon equilibrium as the horizon tends to infinity we conclude with a discussion of adjustment costs and endogenization of the timing

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

the impact of ethanol production on us and regional gasoline markets abstract this study quantifies the impact of increasing ethanol production on wholesale retail gasoline prices employing pooled regional time series data from january 1995 to march 2008 we find that the growth in ethanol production kept wholesale gasoline prices 0 14 gallon lower than would otherwise have been the case the negative impact of ethanol on retail gasoline prices is found to vary considerably across regions the midwest region has the biggest impact at 0 28 gallon while the rocky mountain region had the smallest impact at 0 07 gallon the results also indicate that the ethanol induced reduction in gasoline prices comes at the expense of refiners profits we find a net welfare loss of 0 5 billion from the ethanol support policies in multiple markets

openness of the economy terms of trade and arms it is estimated that world military spending in 2011 amounted to over 2 5 of the world s gross domestic product gdp this corresponds to a spending of 233 per person in the world at 2010 constant prices an amount close to the gdp per capita of the poorest country in the world therefore it is important for economists to understand the allocation of resources to this sector of the economy i present a model that explores the determinants of a country s level of military spending i show how greater gains from trade can lead to greater military expenditures to protect them it is also found that expansion in the demand for a country s tradable commodities that is an improvement in that country s terms of trade will impact defense spending several other propositions emerge from the model which are then empirically tested using both pooled and time series data the statistical results support the model s propositions

second best biofuel policies and the welfare effects of quantity mandates and subsidies abstract the quest for biorenewable energy sources is held to justify a number of government interventions including support policies for biofuels such as those responsible for the recent rapid growth of us ethanol production this article provides an analytical assessment of such policies we construct a general equilibrium open economy model that captures the rationale typically invoked to justify government intervention in this setting to alleviate the environmental impact of energy consumption and to decrease us energy dependence on foreign sources the model is used to study both the positive and normative implications of alternative policy instruments including the subsidies and mandates specified by the 2007 energy independence and security act from a positive perspective we find that biofuels mandates are equivalent to a combination of fuel taxes and biofuels subsidies that are revenue neutral from a welfare perspective we show that biofuels mandates dominate biofuels subsidies and that combining fuel taxes with mandates would be welfare enhancing

guns butter and anarchy a state in the international system implicit in realism must allocate its limited resources between satisfying its intrinsically valued ends and the means of military power i formalize this guns versus butter problem in a simple infinite horizon model in which two states must continually decide how to allocate their resources and whether to attack the other state the analysis establishes sufficient conditions to ensure the existence of an equilibrium in which neither state attacks shows that there is a strictly pareto dominant pair of peaceful equilibrium payoffs characterizes the unique peaceful markov perfect equilibrium that yields them and describes the comparative statics of the equilibrium allocations more broadly the analysis also suggests that the notion of anarchy has little if any substantive significance distinctively related to international politics and that the problem of absolute and relative gains is superfluous

military coercion in interstate crises in an international crisis states make demands backed by threats to use force although these threats can be explicit in diplomatic communications they will not generally carry much weight unless substantiated by some show of force military measures designed to convey the commitment to resort to arms if one s demands are not satisfactorily met to have an impact this commitment must be credible it must be in one s interest to carry out the threat if the opponent refuses to comply in an environment where states possess private information about their valuations capabilities or costs credibility can be established by actions that a state unwilling to fight would not want or would not dare to take military moves such as arms buildups troop mobilizations and deployments to the potential zone of operations can alter incentives in a crisis by changing one s expected payoff from the use of force these are tacit bargaining moves that can restructure the strategic context thereby creating and possibly signaling one s commitments while undermining those of the opponent how can states use the military instrument to establish commitments and how does the nature of the instrument affect their ability to communicate them credibly to their adversaries there are two distinct mechanisms for credible signaling in economic models information can be transmitted reliably by sinking costs actors burn money to reveal that they value the disputed issue even more in contrast theories of interstate crisis bargaining usually rely on choices that increase the difference between backing down and fighting actors tie their hands by running higher risks of war to reveal their resolve the first mechanism involves costs that actors pay regardless of outcome and the second involves costs that actors pay only if they fail to carry out some threat or promise

energy security in china a quantitative analysis and policy implications abstract this study aims to examine how china s energy security has changed over 30 years of reform and the opening period it constructs a 4 as quantitative evaluation framework the availability of energy resources the applicability of technology the acceptability by society and the affordability of energy resources the quantitative results show that china s energy security was at its best during the sixth fyp period 1981 1985 but then deteriorated until it hit higher levels between 1995 and 2005 however it was still lower than the level reached during the sixth fyp period during the eleventh fyp period 2006 2010 the energy security situation deteriorated again differences in policy priority over the study period appear to affect the country s energy security status this study suggests that china needs to develop renewable energy resources on a large scale and pay more attention to emissions control to reverse the downward trend in energy security

the security dilemma revisited robert jervis s article cooperation under the security dilemma is among the most important works in international relations of the past few decades in it jervis develops two essential arguments first he explains that the security dilemma is the key to understanding how in an anarchic international system states with fundamentally compatible goals still end up in competition and at war the security dilemma exists when many of the means by which a state tries 1 to increase its security decrease the security of others it provides the rational foundation for what jervis termed the spiral model which describes how the interaction between states that are seeking only security can fuel competition and strain political relations 2 second jervis explains that the magnitude and nature of the security dilemma depend on two variables the offense defense balance and offense defense differentiation 3 as a result the security dilemma can vary across space and time although states exist in a condition of international anarchy that does not vary there can be significant variation in the attractiveness of cooperative or competitive means the prospects for achieving a high level of security and the probability of war

a dynamic theory of resource wars we develop a dynamic theory of resource wars and study the conditions under which such wars can be prevented our focus is on the interaction between the scarcity of resources and the incentives for war in the presence of limited commitment we show that a key parameter determining the incentives for war is the elasticity of demand our first result identifies a novel externality that can precipitate war price taking firms fail to internalize the impact of their extraction on military action in the case of inelastic resource demand war incentives increase over time and war may become inevitable our second result shows that in some situations regulation of prices and quantities by the resource rich country can prevent war and when this is the case there will also be slower resource extraction than the hotelling benchmark with inelastic demand our third result is that because of limited commitment and its implications for armament incentives regulation of prices and quantities might actually precipitate war even in some circumstances where wars would not have arisen under competitive markets copyright 2012 oxford university press

absolute and relative gains in international relations theory the problem of absolute and relative gains divides neoliberal institutionalism and structural realism the former assumes states focus primarily on their absolute gains and emphasizes the prospects for cooperation the latter supposes states are largely concerned with relative gains and emphasizes the prospects for conflict existing work in international relations theory generally traces the differences between these two theories to different assumptions about states preferences using a simple game theoretic model this essay offers a reformulation of the problem of absolute and relative gains that links changes in the states behavior the feasibility of cooperation and especially the states concern for relative versus absolute gains explicitly to changes in the constraints facing the states many of the differences between neoliberal institutionalism and structural realism appear as special cases of the model

workers warriors and criminals social conflict in general equilibrium we incorporate appropriation activities social conflict into canonical models of trade and study how economic shocks and policies affect the intensity of conflict we show that not all shocks that could make society richer reduce conflict positive shocks to labor intensive industries diminish conflict while positive shocks to capital intensive industries increase it the key requirement is that conflict activities be more labor intensive than the economy as this determines how shocks affect the returns and costs of conflict our theory is consistent with several observed patterns of conflict and implies that empirical work should take into account the relative factor intensities of the productive and conflict sectors in each country incorporating appropriation into a canonic general equilibrium model affects what policies may be deemed desirable in order to reduce conflict and generate pareto improvements policy must be distortionary while reforms that appear efficiency enhancing under the unrealistic assumption of perfect property rights may backfire this offers one explanation for why reforms based on traditional models without appropriation may be delayed and become unpopular when implemented and why societies may sympathize with seemingly inefficient redistribution

monopolizing violence and consolidating power governments in weak states often face an armed opposition and have to decide whether to try to accommodate and contain that adversary or to try to consolidate power and monopolize violence by disarming it when and why do governments choose to consolidate power and monopolize violence how fast do they try to consolidate power when does this lead to costly fighting rather than to efforts to eliminate the opposition by buying it off we study an infinite horizon model in which the government in each period decides how much to offer the opposition and the rate at which it tries to consolidate its power the opposition can accept the offer and thereby acquiesce to the government s efforts to consolidate or it can fight in an attempt to disrupt those efforts in equilibrium the government always tries to monopolize violence when it has coercive power against the opposition where roughly coercive power is the ability to weaken the opposition by lowering its payoff to fighting whether the government consolidates peacefully or through costly fighting depends on the size of any contingent spoils which are benefits that begin to accrue from an increase in economic activity resulting from the monopolization of violence and the higher level of security that comes with it when contingent spoils are small the government buys the opposition off and eliminates it as fast as is peacefully possible when contingent spoils are large the government tries to monopolize violence by defeating the opposition militarily jel codes d02 d74 h1 copyright 2013 oxford university press

food versus fuel what do prices tell us abstract sorting out the impacts of biofuels on global agricultural commodity prices is impossible without turning to data and distinguishing between the short run versus the long run impacts using time series prices on fuels and agricultural commodities the aim is to investigate the long run cointegration of these prices simultaneously with their multivariate short run interactions results indicate no direct long run price relations between fuel and agricultural commodity prices and limited if any direct short run relationships in terms of short run price movements sugar prices are influencing all the other agricultural commodity prices except rice with sugar the number one world input for ethanol results indicate increased ethanol production is potentially influencing short run agricultural commodity prices overall results support the effect of agricultural commodity prices as market signals which restore commodity markets to their equilibria after a demand or supply event shock

roles and potentials of renewable energy in less developed economies the case of nepal increasing the share of renewable energy in the national energy mix remains one of the major energy policy goals across many economies this paper assesses the roles and potentials of renewable energy sources in less developed economies while citing nepal as an example renewable energy has a significant role to play in the electrification of rural areas in developing economies and contribute towards sustainable development realizing full potentials of renewable however requires addressing both the associated demand side and supply side constraints innovative subsidies and tax incentives adequate entrepreneurial support strengthening institutional arrangement and promoting local community based organizations such as the cooperatives are the necessary factors in promoting the green technologies in countries like nepal international factors such as large scale investment and adequate technology transfer are equally crucial to create a rapid spread and increase affordability of decentralized renewable energy technologies in less developed economies

war and conflict in economics theories applications and recent trends we review the main economic models of war and conflict these models vary in details but their implications are qualitatively consistent highlighting key commonalities across a variety of conflict settings recent empirical literature employing both laboratory and field data in many cases confirms the basic implications of conflict theory however this literature also presents important challenges to the way economists traditionally model conflict we finish our review by suggesting ways to address these challenges

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

how policies affect international biofuel price linkages abstract we estimate the role of biofuel policies in determining which country is the price leader in world biofuel markets using a cointegration analysis and a vector error correction vec model weekly prices are analyzed for the eu us and brazilian ethanol and biodiesel markets in the 2002 2010 and 2005 2010 time periods respectively the us blender s tax credit and brazil s consumer tax exemption are found to play a role in determining the ethanol prices in other countries for biodiesel our results demonstrate that eu policies the consumer tax exemption and blending target tend to determine the world biodiesel price

stability in anarchic international systems can stability emerge solely from the competition and self interest of sovereign powers existing in a state of anarchy or does stability depend on restraints from the complex nexus of interdependencies characterizing the contemporary world economy and its associated institutions we suppose some infinitely divisible resource that all nation states are endowed with and maximize and that enables them to overcome adversaries in the event of conflict we offer a noncooperative extensive form model of international conflict without exogenous mechanisms to enforce agreements in order to learn under what conditions balance of power and collective security ensure the sovereignty of all states in anarchic systems we conclude that there exists at least one world albeit an abstract one in which anarchy yields stability

the impact of opec on east asian oil import security a multidimensional analysis abstract east asian countries such as china japan and south korea are major importers in the international oil market therefore oil import security is critical to sustainable economic development in these countries this paper uses a modified two stage dea like model to investigate the impact of the organization of petroleum exporting countries opec on oil import security in the east asian region over time specifically three dimensional variables were introduced to the model the opec internal dimension the opec and asian country interaction dimension and the international external dimension the empirical results show a substantial difference between china and the other two countries in terms of these dimensions although the impact of opec on china s oil security has increased over time its impact on japan has declined political uncertainty in opec countries and oil price volatility are the major issues for china whereas cost is the key area of concern for japan south korea s concerns are less clear the results of this study lay an important foundation for discussing policy issues involved in regional cooperation integration and sustainable growth in the east asian region

price relationships in the petroleum market an analysis of crude oil and refined product prices in this paper the relationships between crude oil and refined product prices are investigated in a multivariate framework this allows us to test several partly competing assumptions of earlier studies in particular we find that the crude oil price is weakly exogenous and that the spread is constant in some but not all relationships moreover the multivariate analysis shows that the link between crude oil prices and several refined product prices implies market integration for these refined products this is an example of supply driven market integration and producers will change the output mix in response to price changes

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

international market integration for natural gas a cointegration analysis of prices in europe north america and japan this paper investigates the degree of integration of natural gas markets in europe north america and japan in the time period between the early 1990s and 2004 the relationship between international gas market prices and their relation to the oil price are explored through principal components analysis and johansen likelihood based cointegration procedure both of them show a high level of natural gas market integration within europe between the european and japanese markets as well as within the north american market at the same time the obtained results suggest that the european respectively japanese and the north american markets were not integrated

can the shadow of the future harm cooperation abstract it is generally thought that in long term relationships high valuations of the future are conducive to cooperation in an intertemporal model of conflict however we demonstrate the possibility of the opposite effect a longer shadow of the future may harm cooperation in particular we show that the degree of inefficiency is positively related to i the agents valuation of the future ii potential growth rates in resources iii the size of initial resource endowments and iv the effectiveness of conflict

electricity consumption growth nexus the case of malaysia abstract the goal of this paper is to model the relationship between electricity consumption and real gross domestic product gdp for malaysia in a bivariate and multivariate framework we use time series data for the period 1971 2003 and apply the bounds testing approach to search for a long run relationship our results reveal that electricity consumption real gdp and price share a long run relationship the results of the autoregressive distributed lag ardl estimates of long run elasticity of electricity consumption on gdp are found to be around 0 7 and statistically significant finally in the short run the results of the causality test show that there is a unidirectional causal flow from electricity consumption to economic growth in malaysia from these findings we conclude that malaysia is an energy dependent country leading us to draw some policy implications this paper adds support and validity thus reducing the policy makers concern on the ambiguity of the electricity and growth nexus in malaysia

electricity consumption and economic growth in india abstract this paper tries to examine the granger causality between electricity consumption per capita and gross domestic product gdp per capita for india using annual data covering the period 1950 51 to 1996 97 phillips perron tests reveal that both the series after logarithmic transformation are non stationary and individually integrated of order one this study finds the absence of long run equilibrium relationship among the variables but there exists unidirectional granger causality running from economic growth to electricity consumption without any feedback effect so electricity conservation policies can be initiated without deteriorating economic side effects

producing biodiesel from soybeans in zambia an economic analysis facing a huge fiscal burden due to imports of its entire petroleum demand in the face of ample supply of agricultural land to produce biofuels zambia has recently introduced a biofuel mandate however a number of questions particularly those related to the economics of biofuels have not been fully investigated yet using an empirical model this study analyzes the economics of meeting the biodiesel mandate using soybean oil the study finds that meeting the biodiesel mandate would reduce social welfare mainly because of the welfare loss to fuel consumers and net reduction in foreign exchange earnings due to soybean oil imports however if zambia increases its domestic soybean supply as well as oil yield soybean based biodiesel is likely to be welfare beneficial the country s welfare is found to be the highest under expanded soybean production and its domestic processing but with no biodiesel mandate

political economy of dynamic resource wars abstract the political economy of exhaustible resource extraction is analysed in three contexts first if an incumbent faces a threat of being removed once and for all by a rival faction extraction becomes more voracious if the factions do not share rents equally second perennial political conflict cycles are more inefficient if constitutional cohesiveness or the partisan in office bias is large and political instability is high third resource wars are more intense if constitutional cohesiveness is weak the incumbent has a partisan in office bias reserves of resources are high the wage is low governments can be less frequently removed from office and fighting technology has less decreasing returns to scale resource depletion in such wars is more rapacious if there is more government instability the political system is less cohesive and the partisan in office bias is smaller

arms races and arms control modeling the hawk perspective of the three major theories developed by post world war 11 american social science to explain arms races the repeated prisoner s dilemma the spiral model and the deterrence model the deterrence model has received the least attention from game theorists i present a model of this perspective and discuss its implications for arms racing and armscontrol theory arms races arise in the model when there is a conflict of interest between two states and uncertainty about the ability of at least one side to bear the strains of increased military spending the model provides support for two common critiques of arms control first arms control is difficult to achieve when it is most needed when there is a dispute accompanied by uncertainty that could lead to war second arms races though they occur in times of tension do not necessarily increase the likelihood of war and may even reduce it by reducing uncertainty about relative power

conflict war and redistribution this article analyzes the circumstances under which conflict leads to the outbreak of war using a formal model which incorporates both the redistribution of resources as an alternative to war and imperfect information countries act as rational agents concerned with both consumption and the public bad of a war in the first period both countries can either consume or build arms whereas in the second period there can be either the threat or the use of force to reallocate resources if both countries are fully informed then there will be no war but rather a voluntary redistribution of resources in a situation of asymmetric information however in which one country is fully informed and the other is not a war can occur if the uninformed country uses a separating equilibrium strategy precommitting itself to a positive probability of war in order to prevent bluffing by the informed country

crisis bargaining escalation and mad although incomplete information is recognized to be an essential feature of crises game theoretic formulations have not generally modeled this explicitly this paper models a mutually assured destruction mad crisis as a game of sequential bargaining with incomplete information sufficiently simple that its equibria may be found these provide better game theoretic foundations for the notions of resolve and critical risk and their role in crises and also make it possible to compare the bargaining dynamics of this model with those of descriptively richer but incompletely specified models revealing several inconsistencies several analyses of mad conclude that the state with the greatest resolve in this contest of resolve will prevail many models based on critical risks suggest that a state is less likely to escalate the greater its adversary s resolve in our model however the state with the weakest resolve sometimes prevails and some states prove more likely to escalate if their adversaries resolve is greater

relative gains and the pattern of international cooperation many political situations involve competitions where winning is more important than doing well in international politics this relative gains problem is widely argued to be a major impediment to cooperation under anarchy after discussing why states might seek relative gains i demonstrate that the hypothesis holds very different implications from those usually presumed relative gains do impede cooperation in the two actor case and provide an important justification for treating international anarchy as a prisoner s dilemma problem but if the initial absolute gains situation is not a prisoner s dilemma relative gains seeking is much less consequential its significance is even more attenuated with more than two competitors relative gains cannot prop up the realist critique of international cooperation theory but may affect the pattern of cooperation when a small number of states are the most central international actors

the relative gains problem for international cooperation modern realism claims that the fear that others will enjoy relatively greater benefits frequently impedes international cooperation recent articles in this review by duncan snidal and robert powell modeled conditions under which the impact of relative gains varied joseph grieco criticizes snidal s model as based on assumptions that allow him to avoid rather than confront the realist arguments he also argues that powell s model while constructive ignores important additional sources of sensitivity to relative gains in response powell discusses the value of alternative assumptions about preferences and constraints in international relations snidal defends his analysis and presents an additional proof to support the independence of his central result the diminishing impact of relative gains with increasing numbers of states from assumptions of concern to grieco both responders emphasize their work as contributing to a contextually rich theory of international politics that builds on elements of both realism and neo liberalism

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

power and interdependence revisited ten years ago we published power and interdependence 1 the passage of a decade makes this an appropriate time to reread and reevaluate that book and to take stock of the research program to which it contributed in doing this we hope to deepen and enrich scholarly understanding of the politics of interdependence and to stimulate reflection on directions for the field of international relations over the next decade 2 such a reappraisal seems particularly opportune given the changes in world politics and especially in american policy that have marked the intervening years stanley j michalak commented in 1979 that the authors may cringe from the analogy but power and interdependence may well become the politics among nations of the 1970s 3 but from the perspective of the late 1980s the world may look different while the 1970s were seen as the decade of interdependence many observers regard the use of force and concern for security as characteristic of the 1980s indeed the view is widespread in some circles that the 1980s resemble the 1950s more than the 1970s and that hans j morgenthau s work is more relevant to contemporary issues of world politics than power and interdependence

sequential bargaining with incomplete information this paper describes a simple two person two period bargaining game and solves it using the concept of perfect bayesian equilibrium in which the actions of each player convey information which is used by his opponent the paper examines the effects of changes in bargaining costs the size of the contract zone and the length of the bargaining process on such aspects of the solution as the probability of impasse and the likelihood of concessions the combination of information transfer and the lack of pre commitment embodied in perfectness yields many surprising results common perceptions about the effects of parameter changes on bargaining processes are suspect and should be checked in the particular game being discussed

the message in north american energy prices how similar is the price behavior of north american natural gas fuel oil and power prices using current state of the art econometric methodology we explore the degree of shared trends across north american energy markets across these markets there appear to be effective arbitraging mechanisms for the price of natural gas and fuel oil but not for the price of electricity

potential gains from expanding regional electricity trade in south asia abstract the south asia region is lagging behind many regions in regional electricity trading despite the huge potential for trade using an electricity system optimization model this study quantifies the benefits of unrestricted cross border electricity trade in south asia during the 2015 2040 period the study finds that the unrestricted electricity trade provision would save us 226 billion us 9 billion per year of electricity supply costs over the period 100 billion when discounted at 5 rate the ratio of benefits in the form of reduction of fuel and other operating costs to increased costs of generation and interconnection investment would be more than 5 1 the provision would reduce regional power sector carbon dioxide emissions by 8 mainly through substitution of coal based generation with hydro based generation although regional emissions would be well above current levels absent other policy interventions because of rapidly growing demand to achieve these benefits the region would need to add 95 gw of new cross border transmission interconnection capacity but at the same time it would avoid 36 gw of additional interconnection capacity between the regional grids within india

the dynamic links between energy consumption economic growth financial development and trade in china fresh evidence from multivariate framework analysis abstract this study investigates the relationship between energy use and economic growth by incorporating financial development international trade and capital as important factors of production function in case of china over the period of 1971 2011 the ardl bounds testing approach to cointegration was applied to examine long run relationship among the series while stationarity properties of the variables was tested by applying structural break test our empirical evidence confirmed long run relationship among the variables the results showed that energy use financial development capital exports imports and international trade have positive impact on economic growth the granger causality analysis revealed that unidirectional causal relationship running from energy use to economic growth financial development and energy use granger cause each other there is bidirectional causality between international trade and energy use the feedback relation exists between financial development and international trade there is also bidirectional causality exists between capital and energy demand financial development and economic growth and international trade and economic growth this paper makes significant contribution in energy economics and opens up new direction for policy makers to explore new and alternative sources of energy which would be helpful in meeting the rising demand of energy due to sustained rate of economic growth

reforming small electricity systems under political instability the case of nepal this paper assesses the issues and options in reforming small electricity sector systems in general while citing nepal as a specific case political instability and increasing electricity demand are two major complicating factors in power sector reform of small systems such as that of nepal lessons from international experience suggest that measures such as cost reflecting pricing restructuring and independent regulation are important for the success of reforms in small systems the creation of an independent regulatory authority is more important than unbundling of the sector in the present context of nepal accounting separation of the main activities may be a pragmatic restructuring approach given the present political and market condition as the systems gradually grow larger vertical separation of the system and horizontal splitting of the generation segment and competition in organised wholesale market followed by privatisation remains an option in the long run

arms races and conflict experimental evidence we study escalation and aggression in an experimental first strike game in which two participants play multiple rounds of a money earning task in each round both players can spend money to accumulate weapons the player with more weapons can spend money to strike against the other player which almost totally eliminates the victim s earnings potential and removes their capacity to strike weapons can serve as a means of deterrence in four treatments we find that deterrence is strengthened if weapon stocking cannot be observed that a balance of power is effective in maintaining peace and that mutually beneficial trade decreases the risk of confrontation but not necessarily the likelihood of costly arms races