beyond gdp the quest for a measure of social welfare this paper critically examines the various approaches to the measurement of individual well being and social welfare that have been considered for the construction of alternatives to gdp special attention is devoted to recent developments in the analysis of sustainability in the study of happiness in the theory of social choice and fair allocation and in the capability approach it is suggested in the conclusion that although convergence toward a consensual approach is not impossible for the moment not one but three alternatives to gdp are worth developing jel i31 e23 e01

scientific ambiguity and climate policy economic evaluation of climate policy traditionally treats uncertainty by appealing to expected utility theory yet our knowledge of the impacts of climate policy may not be of sufficient quality to be described by unique probabilistic beliefs in such circumstances it has been argued that the axioms of expected utility theory may not be the correct standard of rationality by contrast several axiomatic frameworks have recently been proposed that account for ambiguous knowledge in this paper we apply static and dynamic versions of a smooth ambiguity model to climate mitigation policy we obtain a general result on the comparative statics of optimal abatement and ambiguity aversion and then extend our analysis to a more realistic dynamic setting where we introduce scientific ambiguity into the well known dice model of the climate economy system for policy relevant exogenous mitigation policies we show that the value of emissions abatement increases as ambiguity aversion increases and that this ambiguity premium can in some plausible cases be very large in these cases the effect of ambiguity aversion on welfare is comparable to that of other much studied welfare parameters thus ambiguity aversion may be an important neglected aspect of climate change economics and seems likely to provide another argument for strong abatement policy

on the demise of pigovian economics much has been written on the emergence of the keynesian and hicksian research programs in the 1930s yet the demise of the marshallian research program to the extent that it was preserved extended and or amended by pigou has attracted little attention as a result arthur cecil pigou who contributed extensively to the theories of welfare economics 58 54 and unemployment 57 56 53 48 47 is seldom credited with more than discovering the divergence between social and private costs and developing such concepts as the pigovian tax or the pigou effect a broader more encompassing view of pigovian economics deserves our attention on at least two grounds first recent literature argues that modern welfare economics is no more scientific than the pigovian analysis it meant to replace 59 16 on methodological grounds therefore the advantages of modern welfare economics over its pigovian counterpart are not obvious pigovian welfare analysis however does possess a nontrivial welfare criterion2 which deals with issues concerning both equity and efficiency 3 pigou s welfare economics therefore can be found relevant to the growing literature on social choice inequality and income distribution 70 the second basis for continued interest in pigou s economic analysis is his extensive treatment of unemployment which has received much less attention than his welfare writings perhaps because it is befogged by many undeserving myths this work however is important for macro

cost competitive incentives for wind energy development in china institutional dynamics and policy changes abstract this paper presents an overview of the development of wind power in china the factors that affect the directions of wind power development are analyzed it examines the economics of windfarm development and compares it with conventional energy sources the major constraints in wind technology development and defects of the current policies are discussed it points out that wind power development should be subject to rational policy change and institutional adjustment it discusses the incentive mechanisms and institutional frameworks for future development particular importance is attributed to market incentives for wind power to reach the objectives of industrialization and commercialization a number of cost competitive incentive measures and policies are recommended i introducing market based mechanisms through standard power purchase agreement ii establishing effective investment policies and regulations to attract private investment iii promoting localization of wind turbine production iv adjusting tax and subsidy policies and v reforming governmental institutions to make clear rules and responsibilities for policymaking and enhancing communication coordination between relevant government agencies in order to formulate uniform and effective policies

regulating stock externalities under uncertainty abstract using a simple analytical model incorporating benefits of a stock costs of adjusting the stock and uncertainty in costs we uncover several important principles governing the choice of price based policies e g taxes relative to quantity based policies e g tradable permits for controlling stock externalities as in weitzman rev econom stud 41 4 1974 477 the relative slopes of the marginal benefits and costs of controlling the externality continue to be critical determinants of the efficiency of prices relative to quantities with flatter marginal benefits and steeper marginal costs favoring prices but some important adjustments for dynamic effects are necessary including correlation of cost shocks across time discounting stock decay and the rate of benefits growth applied to the problem of greenhouse gases and climate change we find that a price based instrument generates several times the expected net benefits of a quantity instrument

cooperation in international environmental negotiations due to a preference for equity this paper demonstrates that cooperation in international environmental negotiations can be explained by preferences for equity within a n country prisoner s dilemma in which agents can either cooperate or defect in addition to the standard non cooperative equilibrium cooperation of a large fraction or even of all countries can establish a nash equilibrium in an emission game however where countries can choose their abatement level continuously equity preferences cannot improve upon the standard inefficient nash equilibrium finally in a two stage game on coalition formation the presence of equity interested countries increases the coalition size and leads to efficiency gains here even a stable agreement with full cooperation can be reached

determinants of entry and exit an application of the compounded bivariate poisson distribution to u s industries 1972 1977 numerous empirical studies have applied a variety of approaches and data to examine the market entry of firms across industries one branch of studies which is the focus of the present paper uses industry level census data to examine the role of industry characteristics as entry barriers this research features estimation results from very large samples that cover a wide range of industries examples include mcguckin 19 orr 20 gorecki 9 10 duetsch 6 7 kessides 14 and chappell kimenyi and mayer 5 henceforth referred to as chappell et al 5 the above studies use net entry e g the number of firms in 1977 minus the number of firms in 1972 as a measure of the number of new entrants in a given industry with the exception of chappell et al classical regression models of net entry have been the tool of analysis chappell et al point out that because net entry data are integer valued and thus deviate from classical regression assumptions the statistical specification of net entry calls for a discrete probability distribution chappell et al base estimation on a univariate poisson distribution in the present paper we consider another aspect of the data and improve upon the approach of chappell et al observations on net entry actually reflect the difference between unobservable entry and exit flows and as such contain information on both entry and exit while this point is well understood the focus of net entry studies has been entry and the approach has been to model the data as a function of entry alone unfortunately the failure to incorporate the true informational content of the data into the estimation clouds the results in particular neglecting the dependence of the data on exits can produce misleading estimates of the entry parameters small values of net entry for example might merely reflect a balancing of strong entry and exit flows

demand pull technology push and government led incentives for non incremental technical change abstract rising expectations about future demand for new technologies increase the incentives for investments in innovation by enlarging payoffs to successful innovations how well does this notion of demand pull apply to non incremental technological change when demand is largely attributable to actions by governments in this case inventors of the most important inventions did not respond positively to strong demand pull policies filing of highly cited patents declined precipitously just as demand for wind power created a multi billion dollar market three explanations for this apparent inconsistency with the demand pull hypothesis played a role 1 the rapid convergence on a single dominant design limited the market opportunity for non incremental technical improvements 2 even though the policies implemented were stringent enough to stimulate demand uncertainty in their longevity dampened the incentives for inventions that were likely to take several years to pay off and 3 alternative explanations such as declining r d funding and weakening presidential engagement on energy appear to have been important

perceptual and structural barriers to investing in natural capital economics from an ecological footprint perspective this paper argues that perceptual distortions and prevailing economic rationality far from encouraging investment in natural capital actually accelerate the depletion of natural capital stocks moreover conventional monetary analyses cannot detect the problem this paper therefore makes the case for direct biophysical measurement of relevant stocks and flows and uses for this purpose the ecological footprint concept to develop the argument the paper elaborates the natural capital concept and asserts the need of investing in natural capital to compensate for net losses it shows how the ecological footprint can be used as a biophysical measure for such capital and applies this concept as an analytical tool for examining the barriers to investing in natural capital it picks four issues from a rough taxonomy of barriers and discusses them from an ecological footprint perspective it shows why marginal prices cannot reflect ecological necessities how interregional risk pooling encourages resource liquidation how present terms of trade undermine both local and global ecological stability and how efficiency strategies may actually accelerate resource throughput affirming the necessity of biophysical approaches for exploring the sustainability implications of basic ecological and thermodynamic principles it draws lessons for current development

does voluntary participation undermine the coase theorem abstract the coase theorem states that costless enforcement of voluntary agreements yields efficient outcomes we argue that previous treatments fail to recognize the full meaning of voluntary it requires a two stage game a non cooperative participation decision followed by coaseian bargaining only among those who choose to participate we illustrate this in a simple public goods model and find outcomes ranging from extremely inefficient to fully efficient however the efficient equilibrium is not robust to even very small transaction costs thus we cast doubt on coaseian claims of universal efficiency finally we outline a kind of coercion that restores efficiency

on the organization of cooperative research and development theory and evidence abstract it has become increasingly prevalent that business firms often rival firms join forces in cooperative r and d to develop new technologies that they can use in their downstream business equity research joint ventures and non equity co development are the two major modes of organization and they differ in how ownership rights over newly developed technologies are assigned this paper addresses the question of when cooperative r and d should be carried out in a research joint venture as opposed to a co development program in a setting of contractual incompleteness the nature of the downstream business of participating firms is shown to determine the organization of cooperative r and d empirical evidence that is consistent with the theoretical analysis is also presented

generalized utilitarianism and harsanyi s impartial observer theorem harsanyi s impartial observer must consider two types of lotteries imaginary identity lotteries accidents of birth that she faces as herself and the real outcome lotteries life chances to be faced by the individuals she imagines becoming if we maintain a distinction between identity and outcome lotteries then harsanyi like axioms yield generalized utilitarianism and allow us to accommodate concerns about different individuals risk attitudes and concerns about fairness requiring an impartial observer to be indifferent as to which individual should face similar risks restricts her social welfare function but still allows her to accommodate fairness requiring an impartial observer to be indifferent between identity and outcome lotteries however forces her to ignore both fairness and different risk attitudes and yields a new axiomatization of harsanyi s utilitarianism

on the self interested use of equity in international climate negotiations abstract we discuss self interested uses of equity arguments in international climate negotiations using unique data from a world wide survey of agents involved in international climate policy we show that the perceived support of different equity rules by regions may be explained by the ranking of their economic costs despite being self interested equity arguments may be perceived as being used for different reasons for example out of fairness considerations or in order to facilitate negotiations consistent with experimental and behavioral studies on fairness perceptions we find that individuals are more likely to state reasons with positive attributes if they evaluate their own region or regions that support the individual s personally preferred equity rule negotiators perceive the use of equity by regions as less influenced by pressure from interest groups

entry barriers exit and sunk costs an analysis the relationship between entry rates entry barriers and sunk costs are examined across a set of four digit industry data results indicate that product differentiation barriers reduce entry rates and sunk capital costs reduce exit rates whether entry and exit are truly simultaneous however is not clear

the poverty of sustainability rescuing economics from platitudes the idea of sustainability has become confused and incoherent if sustainability is to regain a plausible pertinence to economic policy it must be understood to encompass two realms 1 human interaction with nature and 2 human interaction with others with respect to their interaction with nature the on going redefinition of the purposes of nature requires that institutions norms rules property regimes undergo constant evolution so that human action conduces to nondestructive action caution in the social realm is the greatest risk to environmental sustainability

the innovative performance of in house and contracted r d in terms of patents and utility models abstract the standard empirical framework for analysing the r d patents relationship is widened both by examining the different role of in house and contracted r d in the innovative performance of firms and by considering patents and utility models counts as measures of innovation output patents and utility models are considered to approximate for significant and incremental innovations respectively applying count data econometrics to a panel data set of spanish manufacturing firms surveyed in the period 1990 1996 a transcendental production function is estimated which allows for non constant elasticities of the r d inputs the results indicate that significant innovations are mainly gestated in house whereas contracted r d seems more orientated towards innovations of incremental nature

impact of household consumption on co2 emissions danish household consumption increased by 58 over the period 1966 1992 while co2 emissions only increased by 7 using decomposition analysis we investigated the global co2 impact of danish household consumption from 1966 to 1992 our conclusion is that overall growth in private consumption but not changes in the composition of consumption is the key to understanding the increase in co2 emissions however the effect of growth in private consumption has been partly offset by substantial energy conservation in the energy supply and manufacturing sectors

apples to kangaroos a framework for developing internationally comparable carbon emission factors for crop and livestock products abstract consumption based greenhouse gas accounting which encompasses emissions from a nation s domestic final consumption as well as emissions embodied in imports is gaining favor in the climate change literature for its effectiveness and consideration of equity unfortunately the calculation of emissions embodied in the trade of agricultural food products is hindered by a lack of consistent and comparable emission factors food import quantities for every country are readily available through the united nations food and agriculture organization unfortunately the carbon emission factors necessary to calculate the embodied emissions in imported foods are largely unavailable or unreliable for many countries on top of this different methodologies for determining carbon emission factors provide varying estimates based on different assumptions the differences in these assumptions and methodologies can mean that attempts to compare and combine emissions based on factors from different countries become less of a comparison of apples to apples and more of an apples to oranges or even apples to kangaroos exercise this study proposes a method to combine the food and agriculture organization s available greenhouse gas data production data and agricultural yields and scaling it against benchmarks in the literature to estimate a time series of crop and livestock carbon emission factors that are internally consistent within the food and agriculture organization s data set and comparable from nation to nation the framework provided is then used to produce a sample set of carbon emission factors for chinese agricultural import suppliers to determine the embodied greenhouse gases in china s food imports

promises and pitfalls in environmentally extended input output analysis for china a survey of the literature abstract as the world s largest developing economy china plays a key role in global climate change and other environmental impacts of international concern environmentally extended input output analysis ee ioa is an important and insightful tool seeing widespread use in studying large scale environmental impacts in china calculating and analyzing greenhouse gas emissions carbon and water footprints pollution and embodied energy this paper surveys the published articles regarding ee ioa for china in peer reviewed journals and provides a comprehensive and quantitative overview of the body of literature examining the research impact environmental issues addressed and data utilized the paper further includes a discussion of the shortcomings in official chinese data and of the potential means to move beyond its inherent limitations

interindustry technology flows and productivity growth a reexamination the relationship between productivity growth and r and d intensity is reexamined using detailed data for 193 us manufacturing industries and a breakdown of r and d into own product and process improvement oriented components and imported r and d from other industries a significant interindustry relationship between total factor productivity growth and r and d intensity is reconfirmed with used r and d having larger coefficients than own product r and d components but own product r and d is also significant and the explanatory power of the used r and d component rather than the embodied component imported from other industries thus the evidence for r and d spillovers remains tenuous 6 references 2 tables

fat tails and the social cost of carbon at high enough greenhouse gas ghg concentrations climate change might conceivably cause catastrophic damages with small but nonnegligible probabilities other things being equal this should lower the discount rate used to evaluate mitigation investment decisions and raise the social cost of carbon scc if the bad tail of climate damages is sufficiently fat with probability and if the utility function has relative risk aversion greater than one then at least in theory for at least some formulations this insurance like catastrophe reducing aspect of mitigation investments can be very powerful in the most extreme limit this tail hedge insurance effect can be infinitely strong and can dominate the economic analysis by making the scc infinite this kind of extreme and empirically unbelievable limiting result is a version of what i have previously labeled the dismal theorem 1 in this paper i use the simplest possible model to lay bare the basic structure of the argument i then attempt to place the underlying issues in a balanced perspective the dismal theorem of an infinite scc is a theoretical limiting result which relies on particular assumptions that may or may not have actual relevance for climatechange policy depending upon the interaction of a variety of empirical factors functional forms and parameter values i argue that the main value of the dismal theorem is to serve as a warning flag that a credible economic analysis of climate change should seriously consider extreme tail values of damages and their associated probabilities because they may have the potential to increase the scc significantly

the ideology of efficiency searching for a theory of policy analysis the potential pareto improvement criterion and other measures of economic efficiency do not pass the test of consistency and coherence within economic theory nor do such measures accord with what public decision makers seek in policy advice from economists such efficiency measures are nonetheless durable components of the ideology of economics in general and benefit cost analysis in particular the objectivity of the policy scientist has been confused with the objectivity of the science while economic efficiency has no claim to objectivity the policy scientist can be an objective analyst of policy choices

regulation by prices quantities or both a review of instrument choice choosing appropriate policy instruments is an important part of successful regulation once objectives are agreed and suitable targets adopted policy makers can employ command and control regulation and or economic instruments and choose between fixing a price or a quantity this paper examines the relative advantages of price quantity and hybrid instruments according to their efficiency under uncertainty the trade off between credible commitment and flexibility implementation international considerations and political economy various illustrations of the theory are provided with two detailed applications to climate change and transport policy specifically congestion and safety pricing

knowledge transfer in international acquisitions this paper reports on a multimethod study of knowledge transfer in international acquisitions using questionnaire data we show that the transfer of technological know how is facilitated by communication visits meetings and by time elapsed since acquisition while the transfer of patents is associated with the articulability of the knowledge the size of the acquired unit and the recency of the acquisition using case study data we show that the immediate post acquisition period is characterized by imposed one way transfers of knowledge from the acquirer to the acquired but over time this gives way to high quality reciprocal knowledge transfer

why the far distant future should be discounted at its lowest possible rate abstract a critical feature of the distant future is currently unresolvable uncertainty about what will then be the appropriate rate of return on capital to use for discounting this paper shows that there is a well defined sense in which the lowest possible interest rate should be used for discounting the far distant future part of any investment project some implications are discussed for evaluating long term environmental projects or activities like measures to mitigate the possible effects of global climate change

in defence of degrowth abstract this article defends the proposal of sustainable degrowth a starting premise is that resource and co2 limits render further growth of the economy unsustainable if degrowth is inevitable the question is how it can become socially sustainable i e a prosperous and stable rather than a catastrophic descent pricing mechanisms alone are unlikely to secure smooth adaptation a full ensemble of environmental and redistributive policies is required including among others policies for a basic income reduction of working hours environmental and consumption taxes and controls on advertising policies like these that threaten to harm the economy are less and less likely to be implemented within existing market economies whose basic institutions financial property political and redistributive depend on and mandate continuous economic growth an intertwined cultural and political change is needed that will embrace degrowth as a positive social development and reform those institutions that make growth an imperative sustainable degrowth is therefore not just a structuring concept it is a radical political project that offers a new story and a rallying slogan for a social coalition built around the aspiration to construct a society that lives better with less

joint r d in low carbon technology development in china a case study of the wind turbine manufacturing industry abstract china faces the dual challenges of climate change and increased energy demand these challenges in turn increase the demand for wind energy development along with rapid growth in manufacturing capacity chinese companies have aspired to increase their innovation capacity in order to enhance their competitiveness in the market joint research and development r d is an attractive path for chinese companies striving to advance their r d capacity this paper examines joint r d between chinese wind turbine manufacturing companies and foreign design firms assessing the performance of joint r d activities in china using the structure conduct performance scp framework the study found that joint r d has improved chinese companies technical capacity human resources and financial growth however the effect on chinese companies innovation capacity is still limited because of unequal technical capacities of the two sides in collaboration as well as their preference for augmenting profits rather than technical capacity current joint r d mode is only the extension of licensing mode in wind turbine manufacturing industry

the value of limited altruism abstract discounting the utilities of future people or giving smaller weights to groups other than one s own is often criticized on the grounds that the resulting objective function differs from the ethically appropriate one this paper investigates the consequences of changes in the discount rate and weights when they are moved toward the warranted ones using the utilitarian value function it is shown that except in restrictive special cases those moves do not necessarily lead to social improvements we suggest that limitations to altruism are better captured by maximizing the appropriate value function subject to lower bounds on some utilities journal of economic literature classification numbers d63 d71

retrospectives cost benefit analysis and the classical creed cost bene t analysis provides the dominant economic approach with whicheconomists talk to each other to government bureaucrats and to the general laityabout the desirability of public programs and investment projects cost bene tstudies have pushed economic thinking into public debates and reciprocally havebrought an uncommon level of public scrutiny to the technical deliberations ofeconomists precisely because cost bene t analysis addresses serious real world decisions this widely used and frequently abused tool of applied economics has had a bumpyhistory last year newspaper headlines across the country announced that apentagon investigation had found systematic manipulation of net bene t estimatesat the army corps of engineers for example grunwald 2000 the corps hasbeen the political godfather of cost bene t analysis in the united states but ithas also long been suspected of an institutional bias in favor of projects that canadd signi cantly to its own budget allocations re ecting on the early record of

justifying the lindahl solution as an outcome of fair cooperation the motivation for the lindahl equilibrium is mostly a rather artificial price mechanism even though the analogy to a competitive market was emphasised by lindahl himself his approach does not directly explain the normative ideas behind his concept in the present paper we therefore show how the lindahl equilibrium can be deduced from some simple equity axioms these normative assumptions are the benefit principle on the one hand and the equal sacrifice principle or equivalently a non envy condition as a postulate for distributional equity on the other fairness among agents with different preferences and incomes is taken into account by considering their marginal willingness to pay as shadow prices in this way the reason why the lindahl solution can be perceived as an outcome of fair cooperation might become more understandable

expanding the behavioral foundations of labor economics the author examines critiques and suggests modifications to the psychological assumptions of the rational choice model of the human agent that underlies much of the theoretical work in modern neoclassical labor economics he analyzes the rational choice model in terms of three psychological constructs motivation cognition and emotion in the context of a five step model of the human behavioral process examples from the empirical and theoretical labor economics literature illustrate both problems with the current theory and new or improved insights and predictions that can be gained by incorporating additional psychological theories and concepts in economic analysis the author concludes that although the rational choice model is a powerful and productive conceptual device in many cases it cannot adequately explain behavior in the world of work and labor economic theory would be improved by a more interdisciplinary approach that integrates conceptual and empirical research from the behavioral sciences abstract courtesy jstor

combining price and quantity controls to mitigate global climate change abstract uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences although most of the debate on global climate change policy has focused on quantity controls due to their political appeal this paper argues that price controls are more efficient simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy an alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices using an initial distribution of tradeable permits to set a quantitative target but allowing additional permits to be purchased at a fixed trigger price even sub optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls for example a 50 trigger price per ton of carbon converts the 3 trillion expected loss associated with a simple 1990 emission target to a 150 billion gain these results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system

what percentage of innovations are patented empirical estimates for european firms abstract a 1993 survey on the innovative activities of europe s largest industrial firms obtained useable results on patenting activities for 604 respondents the data are used to calculate the sales weighted propensity rates for 19 industries the propensity rates equal the percentage of innovations for which a patent application is made the propensity rates for product innovations average 35 9 varying between 8 1 in textiles and 79 2 in pharmaceuticals the average for process innovations is 24 8 varying from 8 1 in textiles to 46 8 for precision instruments only four sectors have patent propensity rates for both product and process innovations combined that exceed 50 pharmaceuticals chemicals machinery and precision instruments regression results that control for the effect of industry sector show that patent propensity rates increase with firm size and are higher among firms that find patents to be an important method for preventing competitors from copying both product and process innovations the effect of secrecy is not so straightforward firms that find secrecy to be an important protection method for product innovations are less likely to patent as expected but secrecy has little effect on the propensity to patent process innovations the r d intensity of the firm has no effect on patent propensity rates for both product and process innovations the sector of activity has a strong influence on product patent propensities but very little effect on process patent propensities after controlling for the effect of other factors

mill s scissors structural change and the natural resource inputs to labour the environmental structural change strategy claims that by shifting our expenditures to economic sectors with lower environmental intensity absolute resource consumption and environmental impact can be lowered environmental input output methodologies for computing these intensities attribute no resource consumption to labour or households because these are not classified as sectors the suggestion that service sectors entail less environmental impact however loses force if a unit of labour contains embodied energy and attributing these inputs to labour drastically reduces intensity variation between sectors relative growth of service sectors has furthermore not been accompanied by decreased resource consumption thus models whose intensity computations cover not only inter firm payments but also labour earnings and household expenditures may have superior predictive power if moreover natural resource and labour inputs to product are incommensurable intensity ratios themselves have perhaps only monetary rather than real significance

institutional ecological economics abstract new institutional economics and its forerunners have we argue made important contributions to the evolving agenda of ecological economics the conceptualisation of environmental problems as instances of interdependence and the acknowledgement of positive transaction costs are key insights into the nature of environmental problems we also discuss how plurality of behavioural motivations and limited cognitive capacity have important implications for environmental decision making and its analysis we show how evolutionary and collective action theories offer complementary takes on the choice and change of environmental governance institutions and how the concept of social capital can enrich analyses of environmental governance we conclude that an emerging institutional ecological economics has the greatest relative advantage in analysing the design implementation and effectiveness of environmental governance solutions

a review of the stern review on the economics of climate change the stern review calls for immediate decisive action to stabilize greenhouse gases because the benefits of strong early action on climate change outweighs the costs the economic analysis supporting this conclusion consists mostly of two basic strands the first strand is a formal aggregative model that relies for its conclusions primari ly upon imposing a very low discount rate concerning this discount rate aspect i am skeptical of the review s formal analysis but this essay points out that we are actual ly a lot less sure about what interest rate should be used for discounting climate change than is commonly acknowledged the review s second basic strand is a more intuitive argument that it might be very important to avoid possibly large uncertain ties that are difficult to quantify concerning this uncertainty aspect i argue that it might be recast into sound analytical reasoning that might justify some of the review s conclusions the basic issue here is that spending money to slow global warming should perhaps not be conceptualized primarily as being about consump tion smoothing as much as being about how much insurance to buy to offset the small change of a ruinous catastrophe that is difficult to compensate by ordinary savings

cred a new model of climate and development this paper describes a new model climate and regional economics of development cred which is designed to analyze the economics of climate and development choices its principal innovations are the treatment of global equity calculation of the optimum interregional flows of resources and use of mckinsey marginal abatement cost curves to project the cost of mitigation the model shows more equitable scenarios have better climate outcomes the challenge of climate policy is to persuade high income countries to accept the need for both international equity and climate protection

climate clubs overcoming free riding in international climate policy notwithstanding great progress in scientific and economic under standing of climate change it has proven difficult to forge inter national agreements because of free riding as seen in the defunct kyoto protocol this study examines the club as a model for international climate policy based on economic theory and empirical modeling it finds that without sanctions against non participants there are no stable coalitions other than those with minimal abatement by contrast a regime with small trade penalties on non participants a climate club can induce a large stable coalition with high levels of abatement jel q54 q58 k32 k33

china s foreign trade and climate change a case study of co2 emissions abstract the globalization of trade has numerous environmental implications trade creates a mechanism for consumers to shift environmental pollution associated with their consumption to other countries carbon leakage exerts great influences on international trade and economy applying an input output approach the paper estimates the amount of carbon dioxide co2 embodied in china s foreign trade during 1997 2007 it is found that 10 03 26 54 of china s annual co2 emissions are produced during the manufacture of export goods destined for foreign consumers while the co2 emissions embodied in china s imports accounted for only 4 40 1997 and 9 05 2007 of that we also estimate that the rest of world avoided emitting 150 18 mt co2 in 1997 increasing to 593 mt in 2007 as a result of importing goods from china rather than manufacturing the same type and quantity of goods domestically during 1997 2007 the net additional global co2 emissions resulting from china s exports were 4894 mt then the paper divides the trade embodied emissions into scale composition and technical effect it was found that scale and composition effect increased the co2 emissions embodied in trade while the technical effect offset a small part of them finally its mechanism and policy implications are presented

prioritarianism and climate change prioritarianism is the ethical view that gives greater weight to well being changes affecting individuals at lower well being levels this view is influential both in moral philosophy and in theoretical work on social choice where it is captured by a social welfare function swf summing a concave transformation of individual well being numbers however prioritarianism has largely been ignored by scholarship on climate change this article compares utilitarianism and prioritarianism as frameworks for evaluating climate policy it reviews the distinctive normative choices that are required for the prioritarian approach specifying a ratio scale for well being if the prioritarian swf takes the standard atkinson form determining the degree of concavity of the transformation function i e the degree of social inequality aversion and choosing between ex ante and ex post prioritarianism under conditions of risk the article also sketches some of salient implications of a prioritarian swf for climate policy with respect to the social cost of carbon the social discount rate optimal mitigation and the dismal theorem finally it discusses the issue of variable population

beyond revealed preference choice theoretic foundations for behavioral welfare economics we propose a broad generalization of standard choice theoretic welfare economics that encompasses a wide variety of nonstandard behavioral models our approach exploits the coherent aspects of choice that those positive models typically attempt to capture it replaces the standard revealed preference relation with an unambiguous choice relation roughly x is strictly unambiguously chosen over y written xp y iff y is never chosen when x is available under weak assumptions p is acyclic and therefore suitable for welfare analysis it is also the most discerning welfare criterion that never overrules choice the resulting framework generates natural counterparts for the standard tools of applied welfare economics and is easily applied in the context of specific behavioral theories with novel implications though not universally discerning it lends itself to principled refinements

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

environmental regulations and the problem of sustainability moving beyond market failure abstract the standard metaphor of market failure is an impediment to the crafting of environmental policy that can escape policy lock in sustainability requires a policy process that can avoid this lock in sustainability concerns the creation of dynamic human processes that can respond to indeed anticipate unanticipated feedback from biological processes

natural resource economics methodological orientations and policy effectiveness increasing numbers of resource economists serve as advisors to and employees of government agencies to be effective in this advisory role requires at least a modest amount of methodological thinking i will develop this argument by recasting randall s schools of resource economics into two groups the mainstream which includes his n rp pc u and pc i and the institutional or his i le also i will not distinguish resource economics from the larger discipline this more aggregated classification system will facilitate my discussion of how methodological orientations of economists affect their approach to and effectiveness in the public policy process i will argue that an institutionalist understanding of the governmental decision process is essential to being effective as a mainstream resource economist

household equivalence scales theory versus policy researchers agree that household equivalence scales are intended to measure the variation in income needed to bring households of different composition to the same welfare level researchers do not agree however about how the term household welfare is to be defined this article traces the historical and philosophical development of three distinct definitions when the conceptual bases of several popular methods for the estimation of equivalence scales are explored it becomes clear that advances in theoretical rigor have not always worked to bring the literature closer to answering questions of policy concern

the economic effects of climate change greenhouse gas emissions are fundamental both to the world s energy system and to its food production the production of co2 the predominant gas implicated in climate change is intrinsic to fossil fuel combustion specifically thermal energy is generated by breaking the chemical bonds in the carbohydrates oil coal and natural gas and oxidizing the components to co2 and h2o one cannot have cheap energy without carbon dioxide emissions similarly methane ch4 emissions an important greenhouse gas in its own right are necessary to prevent the build up of hydrogen in anaerobic digestion and decomposition one cannot have beef mutton dairy or rice without methane emissions climate change is the mother of all externalities larger more complex and more uncertain than any other environmental problem the sources of greenhouse gas emissions are more diffuse than any other environmental problem every company every farm every household emits some greenhouse gases the effects are similarly pervasive weather affects agriculture energy use health and many aspects of nature which in turn affects everything and everyone the causes and consequences of climate change are very diverse and those in low income countries who contribute least to climate change are most vulnerable to its effects climate change is also a long term problem some greenhouse gases have an atmospheric life time measured in tens of thousands of years the quantities of emissions involved are enormous in 2000 carbon dioxide emissions alone and excluding land use change were 24 billion metric tons of carbon dioxide tco2

agricultural ch4 and n2o emissions of major economies consumption vs production based perspectives abstract agriculture is one of the most important sectors for global anthropogenic methane ch4 and nitrous oxide n2o emissions while much attention has been paid to production side agricultural non co2 greenhouse gas anghg emissions less is known about the emissions from the consumption based perspective this paper aims to explore the characteristics of agricultural ch4 and n2o emissions of global major economies by using the latest emission data from the food and agriculture organization corporate statistical database faostat and the recently available global multi regional input output model from the world input output database wiod the results show that in 2014 the 42 major economies together accounted for 60 7 and 65 0 of global total direct and embodied anghg emissions respectively the consumption based anghg emissions in the us japan and the eu were much higher than their production based emissions while the converse was true for brazil australia and india the global average embodied anghg emissions per capita was 0 7 t co2 eq but major developing countries such as china india indonesia and mexico were all below this average value we find that the total transfer of embodied anghg emissions via international trade was 622 4 mt co2 eq 11 9 of the global total china was the largest exporter of embodied anghg emissions while the us was the largest importer most developed economies were net importers of embodied emissions mexico us china us china eu china japan china russia brazil eu india eu and india us formed the main bilateral trading pairs of embodied emission flows examining consumption based inventories can be useful for understanding the impacts of final demand and international trade on agricultural ghg emissions and identifying appropriate mitigation potentials along global supply chains

children and household economic behavior this paper looks at some of the methodological issues that arise in modeling the effects of children on household behavior and presents some estimates for selected areas for our purposes household behavior will be taken to refer to household decisions on labor supply the allocation of expenditure to different periods and the decision as to what to do with the difference between income and expenditure i shall be concerned mainly with the effects of dependent children and i restrict attention largely to western societies excerpt

the social value of mortality risk reduction vsl vs the social welfare function approach we examine how different welfarist frameworks evaluate the social value of mortality risk reduction these frameworks include classical distributively unweighted cost benefit analysis i e the value per statistical life vsl approach and various social welfare functions swfs the swfs are either utilitarian or prioritarian applied to policy choice under risk in either an ex post or ex ante manner we examine the conditions on individual utility and on the swf under which these frameworks display sensitivity to wealth and to baseline risk moreover we discuss whether these frameworks satisfy related properties that have received some attention in the literature namely equal value of risk reduction preference for risk equity and catastrophe aversion we show that the particular manner in which vsl ranks risk reduction measures is not necessarily shared by other welfarist frameworks jel d81 d61 d63 q51

dynamic properties of energy affordability measures measures of affordability are applied in practice e g to assess the affordability of energy services water or housing they can be interpreted as measures of deprivation in a specific domain of consumption the large body of literature on affordability measure has little overlap with the existing literature on poverty measurement a comprehensive assessment of the response of affordability measures as a result of changes in the distribution of income or expenditure is missing this paper aims to fill this gap by providing a conceptual discussion on the dynamics of energy affordability measures several types of measures are examined in a microsimulation framework to assess their dynamic properties our results indicate that some measures exhibit odd dynamic behavior this includes measures used in practice such as the low income high cost measure and the double median of expenditure share indicator odd dynamic behavior is attributed to definitions made with respect to higher moments of the expenditure distribution definitions that rely on a percentage share of expenditure relative to income or an absolute or relative income poverty line fare well from a dynamic perspective

searching for sustainability the poverty of spontaneous order abstract traditional approaches to sustainability rely on models that depend upon judgments of welfare across future generations right prices and some sense as to what future persons will find giving of utility these models both accept the spontaneous order of market processes and rely on that order to derive optimal consumption paths into the future sustainability is however not a problem of divining optimal paths predicated upon right prices rather sustainability to be operational requires a prior constructed order predicated upon rights for future persons and duties for those now living who sit in a position as dictator over the settings and circumstances that will be passed on to future persons rights based approaches to sustainability do not rely upon unknowable preferences of future persons but rather upon an environmental regency in which those now living agree to preserve settings and circumstances for the future this reminds us that the issue of sustainability concerns not how much to preserve but what to preserve

specifications of social welfare in economic studies of climate policy overview of criteria and related policy insights an important assumption in economic studies of climate policy is the social welfare function this paper shows that applying distinct decision or social welfare criteria can result in different optimal policies of climate control notably if climate change impacts are uncertain first decision criteria in current climate economic studies are reviewed next the most important alternatives are discussed including their mathematical formalization and incorporation in economy climate models most of these alternative criteria suggest more stringent climate policies to be optimal than the standard discounted utilitarianism approach however several important welfare criteria have not or hardly seen any application in the economic analysis of climate policy we conclude that there is clear need for systematic research on this theme for which the current review provides a solid basis

quo vadis mrio methodological data and institutional requirements for multi region input output analysis abstract in order to understand wider sustainability impacts of consumption and to successfully promote and implement sustainable consumption and production policies there is a need to capture the whole life cycle impact of products and services across international supply chains multi region input output mrio databases are a well described and suitable foundation for global sustainability analyses addressing a wide range of policy and research questions in this paper we reflect on the reasons for the recent boom in mrio compilation summarise the current state of development and discuss future options for mrio analysis we list in detail the requirements for efficient and effective mrio research and propose systemic and institutional changes we deliberately try to go beyond existing ambitions for mrio compilation and thus intend to stimulate discussion and to lay out the options for the future of mrio research

the movement from real to abstract value theory 1817 1959 general value theory has become a nonagenda item for orthodox economics determination of exchange value is the only value questio n asked value theory is synonymous with price theory bounded by representative classical works of david ricardo and gerard debreu this involved a process wherein the inclusive real value base of classical political economy is replaced by reductionis t abstract value the thesis is grounded on three classical value questions the determinants the measure and the source s of value it is developed in discussion of classical real value the half way house of neoclassicism and post neoclassical closure of the abstract equilibrium based value system copyright 1988 by oxford university press

structural dynamics of innovation networks funded by the european union in the context of systemic innovation of the renewable energy sector innovation in the renewable energy re sector relies on the concept of systemic innovation which requires interaction between two innovation aspects technology exploration and market exploitation the european union eu has introduced political instruments for systemic re innovation by integrating resources from different thematic and geographic areas however using these instruments to establish an ecosystem for systemic innovation remains unexplored this study develops a framework for evaluating the systemic innovation performance of networks through a time series analysis of network structural properties overall eu funded innovation networks have not evolved in a systemic direction first the network exhibits densely connected local clusters for technology exploration and market exploitation of re innovation which are disconnected from each other over time the gap between the two phases has weakened with increasing connectivity but the local clusters supporting either explorative or exploitative activities have diminished the existing networking linkages among organizations are considered ineffective because their positions in the network tend to display a mismatch with their innovation patterns this research presents policy suggestions for optimizing the exploration and exploitation activities in the eu s funding program and their complementarities to establish a systemic innovation environment in the re sector

assessing risky social situations this paper reexamines the welfare economics of risk it singles out a class of criteria the expected equally distributed equivalent as the unique class that avoids serious drawbacks of existing approaches such criteria behave like ex post criteria when the final statistical distribution of well being is known ex ante and like ex ante criteria when risk generates no inequality the paper also provides a new result on the tension between inequality aversion and respect of individual ex ante preferences in the vein of harsanyi s aggregation theorem

ecological sufficiency individual liberties and distributive justice implications for policy making we investigate the prospects of voluntary ecological sufficiency for environmental and climate policy under the constraints implied by political liberalism we find that freedom of choice restricts sufficiency to rather wealthy societies and that a sufficiency threshold cannot be derived by referring to the poor sufficiency can be in conflict with the demands of social justice i e if the sufficiency threshold is below the social minimum implied by social justice benefits from sufficiency are highly related to individual perceptions such benefits cannot be expressed in a standard preference framework consequently alternative measures of welfare and inequality are required if sufficiency is a significant phenomenon in society standard environmental policies can have a pronounced interaction with voluntary sufficiency i e if quantity regulation is present overall the voluntary notion of sufficiency causes a dilemma as sufficiency is largely a matter of civil society however voluntary sufficiency is expected to make important contributions to the preservation of ecological resources if properly balanced with social and environmental policies and framed by public discursive control

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

unilateral climate policy harmful or even disastrous this paper deals with possible foreign reactions to unilateral carbon demand reducing policies it differentiates between demand side and supply side reactions as well as between intra and inter temporal shifts in greenhouse gas emissions in our model we integrate a stock dependent marginal physical cost of extracting fossil fuels into eichner and pethig s int econ rev 52 3 767 805 2011 general equilibrium carbon leakage model the results are as follows under similar but somewhat tighter conditions than those derived by eichner and pethig int econ rev 52 3 767 805 2011 a weak green paradox arises furthermore a strong green paradox can arise in our model under supplementary constraints that means a green policy measure might not only lead to a harmful acceleration of fossil fuel extraction but to an increase in the cumulative climate damages at the same time in some of these cases there is even a cumulative extraction expansion which we consider disastrous

fostering a renewable energy technology industry an international comparison of wind industry policy support mechanisms this article examines the importance of national and sub national policies in supporting the development of successful global wind turbine manufacturing companies we explore the motivations behind establishing a local wind power industry and the paths that different countries have taken to develop indigenous large wind turbine manufacturing industries within their borders this is done through a cross country comparison of the policy support mechanisms that have been employed to directly and indirectly promote wind technology manufacturing in 12 countries we find that in many instances there is a clear relationship between a manufacturer s success in its home country market and its eventual success in the global wind power market whether new wind turbine manufacturing entrants are able to succeed will likely depend in part on the utilization of their turbines in their own domestic market which in turn will be influenced by the annual size and stability of that market consequently policies that support a sizable stable market for wind power in conjunction with policies that specifically provide incentives for wind power technology to be manufactured locally are most likely to result in the establishment of an internationally competitive wind industry

the role of co2 embodiment in us china trade abstract this study examines the influence of us china trade on national and global emissions of carbon dioxide co2 the three basic questions are as follows 1 what amount of co2 emissions is avoided in the us by importing chinese goods 2 how much are co2 emissions in china increased as a result of the production of goods for export to the us and 3 what are the impacts of us china trade on global co2 emissions our initial findings reveal that during 1997 2003 1 us co2 emissions would have increased from 3 to 6 if the goods imported from china had been produced in the us 2 about 7 14 of china s current co2 emissions were a result of producing exports for us consumers and 3 us china trade has increased global co2 emissions by an estimated 720 million metric tons we suggest that the export of us technologies and expertise related to clean production and energy efficiency to china could be a win win strategy for both countries for reducing their trade imbalance and mitigating global co2 emissions improved international accounting methodologies for assigning responsibility for co2 emissions must be designed to account for the dynamic nature of international trade

on modeling and interpreting the economics of catastrophic climate change with climate change as prototype example this paper analyzes the implications of structural uncertainty for the economics of low probability high impact catastrophes even when updated by bayesian learning uncertain structural parameters induce a critical tail fattening of posterior predictive distributions such fattened tails have strong im plications for situations like climate change where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages this paper shows that the economic consequences of fat tailed structural uncertainty along with unsureness about high temperature damages can readily outweigh the effects of discounting in climate change policy analysis

declining discount rates the long and the short of it the last few years have witnessed important advances in our understanding of time preference and social discounting in particular several rationales for the use of time varying social discount rates have emerged these rationales range from the ad hoc to the formal with some founded solely in economic theory while others reflect principles of intergenerational equity while these advances are to be applauded the practitioner is left with a confusing array of rationales and the sense that almost any discount rate can be justified this paper draws together these different strands and provides a critical review of past and present contributions to this literature in addition to this we highlight some of the problems with employing ddrs in the decision making process the most pressing of which may be time inconsistency we clarify their practical implications and potential pitfalls of the more credible rationales and argue that some approaches popular in environmental economics literature are ill conceived finally we illustrate the impact of different approaches by examining global warming and nuclear power investment this includes an application and extension of newell and pizer discounting the benefits of climate change mitigation how much do uncertain rates increase valuations journal of environmental economics and management 46 2003 52 to uk interest rate data

patent quality and research productivity measuring innovation with multiple indicators we analyse the determinants of the decline in research productivity using panel data on manufacturing firms in the us for the period 1980 93 we focus on three factors the level of demand the quality of patents and technological exhaustion we develop an index of patent quality using detailed patent information and show that using multiple indicators substantially reduces the measured variance in quality research productivity at the firm level is inversely related to patent quality and the level of demand as predicted by theory and patent quality is positively associated with the stock market value of firms

matching as a cure for underprovision of voluntary public good supply abstract matching mechanisms are widely regarded as providing a promising way to cure the public good underprovision problem but the pareto optimal interior matching equilibrium emerges only under very special conditions however we show that public good underprovision is normally avoided

the sufficiency strategy would rich world frugality lower environmental impact abstract one alleged weapon against unsustainable environmental impact is for the wealthy to consume less this sufficiency strategy is to complement the efficiency strategy of lowering ratios of resource inputs to economic outputs the former would reduce the affluence factor in i pat the latter the technology factor that the latter strategy suffers from a consumption rebound is widely recognized this paper identifies a similar rebound when the affluence factor is autonomously lowered the lower initial demand lowers prices which in turn stimulates new demand by others the strategy moreover addresses only the rich raising questions of its theoretical maximum efficacy its proponents usually conflate frugality with the north south dichotomy and intra generational with inter generational equity moreover there are difficulties with the supporting arguments that frugality is good for one s own sake as well as for the environment and that the rich should lead the way to living more lightly personal behaviour change is furthermore not a substitute for international political efforts finally since all changes in right side factors of the i pat equation change other right side factors such indirect attacks on impact should be abandoned in favor of supply and emissions quotas