environmental policy and exports evidence from chinese cities we study environmental regulation and its role for trade in china specifically we assess the effectiveness of an environmental policy in china that introduced stricter regulations on sulfur dioxide so2 emissions in targeted cities to identify the causal effect of this policy on exports we use sectoral export data for a panel of chinese cities and exploit variations in exports between cities and sectors over time and in a second step between firm types we find a relative fall in sectoral exports in targeted cities after the implementation of the policy which is sharper the more polluting the industry further we find that the observed effect is mainly driven by privately owned firms whereas exports of state owned firms seem to be unaffected by the new policy this finding is consistent with the preferential political treatment of state owned firms in china

environmental policy in the european union fostering the development of pollution havens abstract a pollution haven occurs when dirty industries from developed nations relocate to developing nations in order to avoid strict environmental standards or developed nations imports of dirty industries expand replacing domestic production the purpose of this study is to determine whether the european union eu has increased its imports of dirty goods from poorer less democratic countries during a period of more stringent environmental standards previous empirical studies such as those by levinson and taylor levinson a and taylor m s in press unmasking the pollution haven effect international economic review ederington levinson and minier ederington j levinson a and minier j 2005 footloose and pollution free review of economics and statistics 87 92 99 kahn and yoshino 2004 and ederington and minier ederington j and minier j 2003 is environmental policy a secondary trade barrier an empirical analysis canadian journal of economics 36 137 54 find evidence that united states imports are responsive to changes in environmental stringency but the effects of eu policy have not been examined as thoroughly our study follows kahn kahn m e 2003 the geography of us pollution intensive trade evidence from 1958 to 1994 regional science and urban economics 33 383 400 and examines the impact of industry energy intensity and toxicity measured by an energy index and a toxic release inventory tri index on imports into the eu at the 2 digit industry level from 1970 to 1999 we use the signing of the maastricht treaty to signify a period of more uniform and stringent community wide environmental standards 1993 1999 and identify the level of per capita gdp within an eu trading partner we find an increased amount of eu energy intensive trade with poorer countries during the period with more stringent eu environmental standards this result is not robust however when poorer countries are defined by oecd membership and geographic region we do not find an increased amount of eu toxic intensive trade with poorer countries although there is some evidence of increased eu imports of toxic goods from poorer oecd and non eu european countries for our full sample of trading partners in all regions the evidence supports the phh for eu energy intensive trade but not for toxic intensive trade results for regional trade analysis are less clear

multiple environmental policies and pollution haven hypothesis evidence from china s polluting industries abstract theoretical studies of pollution haven hypothesis predict that differentiated environmental regulation policies will result in inter country relocation of polluting industries this paper investigates pollution haven hypothesis at domestic level in china using panel data of 30 provincial level regions for the period 2004 to 2013 this paper empirically examines to what extent multiple environmental policies affect intra country relocation of polluting industries in china it is found that the implementation of both economic policy instrument like pollution discharge fee and public participation like letter complaints on environmental problems encourages industrial relocation whereas the implementation of environmental legal policy instrument like laws regulations and rules prevents polluting industries from relocating to other regions it is also found that the relocation effect of environmental policies varies with industrial characteristics compared with water pollution intensive industry air pollution intensive industry dominated by stated owned capitals are insensitive to legal policy instruments these findings suggest that the validity of pollution haven hypothesis is jointly associated with the type of environmental policy as well as industrial characteristics

decoupling of emissions and gdp evidence from aggregate and provincial chinese data abstract we provide a comprehensive analysis of the relationship between greenhouse gas ghg emissions and gdp in china using both aggregate and provincial data the trend or kuznets elasticity is about 0 6 for china higher than that in advanced countries but below that of major emerging markets the elasticity is somewhat lower for consumption based emissions than for production based emissions providing mild evidence consistent with the pollution haven hypothesis the kuznets elasticity is much lower for the last three decades than for the three previous decades suggesting a longer term trend toward decoupling as china has become richer further evidence of this comes from provincial data richer provinces tend to have smaller kuznets elasticities than poorer ones in addition to the trend relationship we find that there is a cyclical relation also holding in china

regulation factor rewards and international trade this paper develops an approach for incorporating regulation into the theory of production distribution and trade using environmental regulation as an example four major conclusions emerge in the course of the analysis 1 production process regulation is equivalent in its effect on other cooperating factors to neutral technical regress i e negative progress 2 specific unambiguous income redistribution consequences follow from such regulation if commodity prices are held constant the factor used relatively intensively in the non regulated industry will gain absolutely in terms of both goods 3 unilateral or uncoordinated regulation destroys the link between uniform world commod ity prices and identical factor proportions factors prices across trading countries or regions 4 if any factor of production is freely mobile across frontiers the least differential regulation as between countries will entirely drive out the regulated industry from the more to the less regulated economy

warrant valuation and exercise strategy abstract this paper demonstrates that warrant valuation and exercise strategy differ fundamentally from call option valuation simultaneous exercise of warrants is shown to be suboptimal and a monopolist owning all warrants can achieve a higher value unless warrants are perfectly divisible no satisfactory equilibrium exists for the valuation and exercise of widely held warrants the problems encountered appear to be quite general and stem from necessary assumptions about future corporate dividend policy and capital structure such assumptions are necessary for any model of corporate security valuation

warrant exercise and bond conversion in competitive markets abstract we develop a theory of warrants held by competitive warrantholders not constrained to exercise their warrants as one block the theory also applies to convertible bonds held by competitive bondholders not constrained to convert their bonds as one block we prove that the warrant bond price in each of the competitive equilibria is less than or equal to the price in an economy with the block constraint and for at least one competitive equilibrium the warrant bond price equals the warrant bond price in the block constrained economy we illustrate the paths of competitive warrant exercise and bond conversion and conclude that under realistic assumptions they can be long

the impact of environmental policy stringency on industrial r d conditional on pollution intensity and relocation costs stringent environmental regulations may encourage industrial innovation as technological advancements lower the cost of pollution abatement popp et al in handbook of the economics of innovation vol ii academic press burlington pp 873 938 2010 the pollution havens hypothesis on the other hand indicates that rather than innovating dirty industries may relocate to countries with less stringent environmental regulations copeland and taylor in j econ lit 42 1 7 71 2004 thus more stringent environmental regulations may increase or decrease innovative activities this paper examines empirically the impact of environmental regulations on r d intensities and r d expenditures in 21 manufacturing industries in 28 oecd countries from 2000 to 2007 i consider pollution intensity and the relative ease of relocation immobility as industry characteristics that determine the optimal industry response to increased environmental policy stringency i find that more pollution intensive industries innovate less as regulatory environments become more restrictive relative to less pollution intensive industries at the same time more immobile industries innovate more than more mobile industries as environmental regulations become more stringent illustrating innovation as an alternative to relocation

is environmental policy a secondary trade barrier an empirical analysis should international trade agreements be extended to include negotiations over environmental policy the answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries our results suggest that they do previous studies of this relationship have treated the level of environmental regulation as exogenous and found a negligible correlation between environmental regulation and trade flows in contrast we find that when the level of environmental regulation is modelled as an endogenous variable its estimated effect on trade flows is significantly higher than previously reported jel classification fl f14 f18 est ce que la politique environnementale est une barriere commerciale secondaire une analyse empirique est ce que les accords commerciaux internationaux doivent etre etendus pour couvrir la politique environnementale la reponse depend du degre de distorsion que les pays introduisent dans leur politique environnementale pour proteger leurs industries nationales nos resultats suggerent que cet impact est important des etudes anterieures de cette relation ont traite la politique environnementale comme exogene et ont montre qu il existe une co relation negligeable entre politique envir onnementale et flux commerciaux au contraire nous revelons que quand la politique environnementale est consideree comme variable endoge ne son effet sur les flux com merciaux est plus eleve de maniere significative que ce qu on a note anterieurement

a strategic analysis of sinking fund bonds abstract unlike most securities the pricing of sinking fund bonds is influenced by the distribution of ownership which summarizes the extent to which the market is cornered the effect of the distribution of ownership on the pricing of sinking fund bonds is examined by an explicit game in which the price obtained for bonds sold can depend upon the size of the investor s position this framework is used to contrast the valuation of sinking fund bonds with the valuation of amortizing bonds and straight debt we show that it is generally incorrect to view sinking fund bonds as being equivalent to serial bonds

political economy aspects of climate change mitigation efforts regardless of the policies used to mitigate climate change a positive and relatively high price of carbon will have to be established with slow convergence across regions leading to huge rents up to capture way beyond those that have been fought over in the general agreement on tariffs and trade gatt based international trading system the paper explores the political economy feasibility and desirability implications of the two main alternatives a carbon tax and a cap and trade cat system having the same concerns cat systems in the eu and the us have accounted for different outcomes in each case likely leakages under foreseeable carbon prices are estimated to be small and not of an order of magnitude justifying the special allowances sought across a wide spectrum of industries the experience of the eu and us reviewed here suggests that mitigation is likely to continue to be carried out under a cat provided permits are distributed for free to the lobbies whose support is necessary to get adoption of mitigation policies this quota mechanism long used to allocate scarcity in the international trading system both nationally and internationally would end up with the most powerful receiving the quotas rents giving them the leverage and resources to maintain allocation schemes favourable to them

green havens and pollution havens we test for pollution haven effects in outward foreign direct investment fdi for different sectors using a comprehensive and exhaustive data set for outward fdi from the netherlands one of the most environmentally stringent countries and a major source of global fdi our evidence suggests that in the sectors natural resources extraction and refining construction retail food processing beverages and tobacco and utilities a less stringent environmental policy in the host country significantly attract fdi what is important for these pollution haven effects is not only regulation but also enforcement of environmental policy in contrast to earlier results it is not only footloose industries that display pollution haven effects but also the traditional pollution intensive industries but for the machines electronics and automotive and transportation and communication sectors a more stringent and better enforced environmental policy attracts more fdi as this may help their reputation for sustainable management and csr these sectors display green haven effects these findings have important implications for the sector distribution of fdi in destination countries

trade and climate policies do emissions from international transport matter this paper provides orders of magnitude of the importance of co2 emissions from international transport freight activities under a variety of scenarios regarding trade and climate policies it is based on a stylized multi region multi sector cge model that includes the four modes of international transport air water road and rail and where choices regarding the energy mix and transport mode have been endogeneized a separate decomposition of emission changes into the well known scale composition and technique effects is provided scale effects turn out to be roughly double in international transport than in exports while technique effects are weaker due to less substitutability between energy inputs as a result international transport represents half of the world increase in global emissions when trade liberalization is considered isolately when trade liberalization is coupled with a carbon tax limited to rich countries international transport represents roughly one eigth of the carbon leakage effect

an empirical investigation of the pollution haven effect with strategic environment and trade policy abstract using a new dataset on the stringency and enforcement of environmental policy this study is the first to find robust confirmation of a pollution haven effect in a cross country context by accounting for strategically determined environment trade and intellectual property right ipr policies a simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics it is found that for the top 20th percentile of countries in terms of growth in u s multinational affiliate value added as much as 8 6 of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy the results are robust to a number of identification tests weak iv tests and third country spatial effects further evidence is found that relatively footloose industries are more likely to be affected by environmental policy than more traditionally dirty industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set

environmental regulation and us state level production abstract using us data from 1977 1986 we estimate the impact of environmental policy on state level output using parametric and nonparametric techniques while the nonparametric approach yields additional insights the lack of a relationship between environmental regulation and output is robust

environmental regulation and french firms location abroad an economic geography model in an international comparative study abstract in this study we re examine the pollution haven hypothesis by a fresh take on both its theoretical and empirical aspects the originality of our work is twofold first we apply an economic geography model with the aim of deriving a rigorous specification for the impact of environmental regulation on firms location choice second we test a conditional logit model using french firm level data in an international comparative study we confirm evidence of a strong pollution haven effect for our pooled sample of countries receiving french direct investments however through a sensitivity analysis we validate this finding for developed countries and most of emerging economies and central and eastern european countries but not for most countries of the commonwealth of independent states and developing countries where a more stringent environmental regulation seems to attract investments furthermore we highlight a forward looking behavior of firms in terms of their location decision making

estimating the effects of kyoto on bilateral trade flows using matching econometrics many kyoto countries fear a loss of competitiveness due to unilateral climate policy efforts policymakers therefore call for carbon related border tax adjustments with this paper we attempt to estimate the treatment effect of kyoto commitment on bilateral export flows using regression adjusted differences in differences matching techniques the gravity and international environmental agreement formation literatures provide guidelines for the choice of matching variables we find that kyoto countries exports are reduced by 13 to 14 per cent due to kyoto commitment trade effects are largest in energy intensive homogeneous industries such as iron and steel non ferrous metals organic and inorganic chemicals but also in machinery and equipment

estimating social welfare using count data models an application to long run recreation demand under conditions of endogenous stratification and truncation this paper develops a negative binomial model of recreation demand that corrects for both truncation and endogenous stratification this approach recovers the demand associated with the general population not just the users of the site this model demonstrates the importance of the joint nature of the population s latent demand for trips and the consumer surplus associated with those trips the empirical results provide an estimate of the willingness to pay by washington state residents for hiking opportunities in the cascade mountain range these results are used to forecast total trips and willingness to pay over the next forty years copyright 1995 by mit press

footloose and pollution free in numerous studies economists have found little empirical evidence that environmental regulations affect trade flows in this paper we propose and test several common explanations for why the effect of environmental regulations on trade may be difficult to detect we demonstrate that whereas most trade occurs among industrialized economies environmental regulations have stronger effects on trade between industrialized and developing economies we find that for most industries pollution abatement costs are a small component of total costs and are unrelated to trade flows in addition we show that those industries with the largest pollution abatement costs also happen to be the least geographically mobile or footloose after accounting for these distinctions we measure a significant effect of pollution abatement costs on imports from developing countries and in pollution intensive footloose industries

exact consumer s surplus and deadweight loss consumer s surplus is a widely used tool in applied welfare economics both economic theorists and cost benefit analysis often use consumer s surplus despite its somewhat dubious reputation the basic idea is to evaluate the value to a consumer or his willingness to pay for a change in price of a good from say pricep to pricep because price changes affect consumer welfare an evaluation of this effect is often a key input to public policy decisions yet consumer s surplus is probably the most controversial of widely used economic concepts both paul samuelson and ian little conclude that the economics profession would be better off without it it is my feeling of the situation that substantial agreement exists on the correct quantities to be measured the amount the consumer would pay or would need to be paid to be just as well off after the price change as he was before the price change the quantities correspond to john hicks compensating variation measures an alternative measure which takes ex post price change utility as the basis of comparison is hicks equivalent variation the controversy arises in the measurement of these quantities the usual measurement procedure is to use the area to the left of the marshallian market demand curve between two price levels jules dupuit originated this measure of welfare change and alfred marshall and hicks derived appropriate conditions for its use the primary condition for the area to the left of the demand curve to correspond to the compensating variation is to have constant marginal utility of income marshall gave this condition and if it holds the same quantity will be derived as the area to the left of the compensated hicksian demand curve this area to the left of the compensated demand curve is exactly what the compensating variation and equivalent variation measure thus the constant marginal utility of income is a sufficient condition for marshallian consumer s surplus to be equal to hicks consumer s surplus in this case arnold harberger s plea to use the welfare triangle as one half times the product of the price change times the quantity change to measure deadweight loss corresponds to the correct theoretical amount of welfare change in a recent paper robert willig derives bounds for the percentage difference between the correct measure of either the compensating or equivalent variation and the marshallian measure derived form the market demand curve his bounds which depend on the income elasticity of demand for the single good in the region of price change being considered as well as the proportion of the consumer s income spent on the good demonstrate that the marshallian consumer s surplus is often a good approximation to hicks consumer s surplus the fact that the proportion of the consumer s income spent matters as well as the income elasticity was first pointed out by harold hotelling willig contends that the approximation error will be less than the errors involved in estimating the demand curve thus he hopes to remove the need for apology that applied economists often need to give to theorists who remark on the inappropriateness of using marshallian consumer s surplus to measure welfare change however in this paper i show that for the case primarily considered by willig of a single price change which is also the situation in which consumer s surplus is often used in applied work no approximation is necessary professor of economics massachusetts institute of technology and research associate national bureau of economic research i would like to thank peter diamond erwin diewert daniel mcfadden robert merton robert solow hal varian joel yellin and the referees for help and comments research support from the national science foundation is acknowledged the reason that we still have two rather than one of samuelson s six measures of consumer s surplus arises from an index number problem of the correct basis for the welfare comparison i will give both measures but plan to concentrate on the compensating variation

three new empirical tests of the pollution haven hypothesis when environmental regulation is endogenous the validity of existing empirical tests of the pollution haven hypothesis phh is constantly under scrutiny due to two shortcomings first the issues of unobserved heterogeneity and measurement error in environmental regulation are typically ignored due to the lack of a credible traditional instrumental variable second while the recent literature has emphasized the importance of geographic spillovers in determining the location choice of foreign investment such spatial effects have yet to be adequately incorporated into empirical tests of the phh as a result the impact of environmental regulations on trade patterns and the location decisions of multinational enterprises remains unclear in this paper we circumvent the lack of a traditional instrument within a model incorporating geographic spillovers utilizing three novel identification strategies using state level panel data on inbound u s fdi relative abatement costs and other determinants of fdi we consistently find i evidence of environmental regulation being endogenous ii a negative impact of own environmental regulation on inbound fdi in pollution intensive sectors particularly when measured by employment and iii larger effects of environmental regulation once endogeneity is addressed neighboring environmental regulation is not found to be an important determinant of fdi

emissions trading of global and local pollutants pollution havens and free riding abstract in the presence of local sulfur and global carbon pollutants we examine the pollution haven hypothesis and free riding behavior under domestic emissions trading poorer southern countries become pollution havens when free trade opens up whenever sulfur damage functions are linear or when sulfur levels in equilibrium are not higher in the south with global trading of carbon permits the pollution haven effect emerges in equilibrium whenever the convex sulfur damage functions are nonlinear countries that do not participate in a global protocol designed to reduce carbon emissions enjoy double benefits stemming from free riding and cleaner local environments

convertible debt valuation and conversion in complex capital structures abstract the impact of conversion strategies on the value of convertible debt is examined it is shown that for capital structures comprised of multiple classes of convertible debt the optimal conversion policy for a given bond class is affected by the decisions of other bond classes using this optimal conversion strategy closed form solutions for bond prices are derived

corporate climate risk management are european companies prepared abstract in recent years scholars have published numerous studies dealing with the consequences of climate change for businesses activity however a more holistic understanding of companies perceptions of and responses to physical regulatory and market related climate risks across a wider range of sectors is still missing to address this gap this paper provides an empirical analysis of corporate climate risk perception and countermeasures for companies in industries regulated and not regulated by climate policy drawing on data from the carbon disclosure project of a size matched sample of 126 european based companies it is shown that most firms feel less exposed to physical and market risks than to regulatory risks this is because physical risks are expected to materialize in the more distant future and the realization of market risks is considered rather unlikely moreover the results indicate that firms in regulated industries implement more regulatory response measures than firms that are part of non regulated industries while interestingly there are no significant differences between the two groups in exposure and responses to physical and market risks by discussing climate related risks and highlighting the significant role of regulation in spurring corporate action in the context of climate change this paper holds important implications for corporate managers and policy makers

do environmental regulations influence the location behavior of french firms this paper investigates the impact of environmental regulations on the location choices made by firms for their industrial activities using a sample of newly appeared imports of french firms from foreign industrial subsidiaries a simple static model based on the production cost minimization is developed in order to control for heterogeneous factor costs within countries distinguishing skilled labor unskilled labor and capital environmental regulations are then shown to be neither statistically nor economically a significant determinant of the location behavior of french firms

environmental regulation and u s state level production using data from the u s over the period 1977 1986 we estimate the impact of environmental policy on state level output using both parametric and nonparametric techniques we find that while the added flexibility of the nonparametric approach yields much insight the lack of a relationship between environmental regulation and output is quite robust

multilateral environmental agreements and the wto addressing many environmental problems requires international cooperation however rules under the world trade organization wto may deter participation in multilateral environmental agreements using a partial identification approach we obtain strictly negative bounds for non oecd countries in the wto era

greenhouse gas emission controls and firm locations in north south trade this paper studies greenhouse gas emission ghg controls in the presence of international carbon leakage through international firm relocation in a new economic geography model with two countries north and south only north sets a target for ghg emissions we compare the consequences of emission quotas and emission taxes under trade liberalization on location of two manufacturing sectors with different emission intensities and degrees of carbon leakage with low trade costs further trade liberalization increases global emissions by facilitating carbon leakage regulation by quotas leads to spatial sorting resulting in less carbon leakage and less global emissions than regulation by taxes

pollution havens and industrial agglomeration abstract this paper examines the pollution haven hypothesis using a spatial economy model of two countries and two sectors the manufacturing sector generates cross border pollution which reduces cross sectoral productivity of agricultural goods and lowers local income we derive a demand reducing effect that discourages firms to move to the country with laxer environmental regulations in the absence of any comparative advantage our analysis also demonstrates that manufacturing agglomeration forces can alleviate the pollution haven effect a pollution haven may not arise if environmental regulation is slightly more stringent in the larger country

effects of environmental regulation on foreign and domestic plant births is there a home field advantage abstract whether environmental regulations alter capital flows remains a hotly debated issue this paper uses county level data to examine the location decisions of domestic and foreign firms in a single empirical model and tests for asymmetries by firm origin in the degree to which capital flows are influenced by environmental standards we find that while domestic firms are influenced by environmental regulations foreign firms are not since the benefits of foreign investment are well documented foreign plants typically provide more jobs and increase local wages by more than domestic plants this result suggests a double dividend is available foreign plants provide an economic stimulus and are not unduly influenced by environmental protections

searching for the opportunity cost of an individual s time a traditional assumption made in the literature is that the value of an individual s time spent in any activity is equal to his or her wage rate this result stems from the derivation of the value of leisure time in the context of the standard labor supply model this paper pre sents some reasons why the relationship be tween the wage rate and the value of time does not hold suggestions for what to do when the relationship breaks down and the investigator needs some value to impute to the individual are given in the final section of the paper

environmental regulations in gravity equations evidence from europe one implication of the pollution haven hypothesis is that countries export more by applying more lenient environmental regulations most studies that apply gravity type equations do not find robust support for environmental regulations to affect bilateral exports in this paper we show that one can obtain robust negative effects of stringency as long as gravity equations are well specified with respect to theory our results based on the european data are both very consistent with us studies on environmental regulations and another line of very recent studies that infer non biased price or substitution elasticities from trade equations we show that more stringent environmental regulations when depicting a pure cost effect are reducing exports the coefficient is even larger in the case where exporting countries are central and eastern european countries comparing to the eu15 further we show that there is no significant difference in the impact of regulations on trade in case of dirty and clean sectors finally when using gmm estimation our environmental stringency coefficient gets significantly reinforced

robustness of option like warrant valuation abstract this paper presents a methodology for arriving at the unobserved asset value and its volatility of a firm with outstanding warrants this enables us to price warrants correctly and to examine the robustness of option like warrant valuation where the dilution that occurs when warrants are exercised is ignored our analysis helps to justify the frequent simplifying option like warrant valuation furthermore we examine 50 960 daily prices for 37 american type warrants written on 16 german stocks over the period 1979 1990 the empirical results confirm our theoretical analysis there is virtually no dilution related pricing bias of the american constant variance diffusion model with the stock price as the state variable

on the design of contingent capital with a market trigger contingent capital cc which intends to internalize the costs of too big to fail in the capital structure of large banks has been under intense debate by policy makers and academics we show that cc with a market trigger in which direct stake holders are unable to choose optimal conversion policies does not lead to a unique competitive equilibrium unless value transfer at conversion is not expected ex ante the no value transfer restriction precludes penalizing bank managers for taking excessive risk multiplicity or absence of an equilibrium introduces the potential for price uncertainty market manipulation inecient capital allocation and frequent conversion errors these results point to the need to explore alternative designs of a prudential capital structure for banks jel classication

environmental regulation and u s states technical inefficiency abstract using data on 48 states from 1982 1994 we estimate the impact of environmental regulation on technical inefficiency of u s states manufacturing sector the result indicates that environmental stringency has significant and positive impacts on u s states technical inefficiency

asymmetric tax policy responses in large economies with cross border pollution we build a model of cross border pollution between two large open economies one importing the polluting good and the other exporting it and derive their non cooperative trade and environmental tax policies we show among other things that 1 in response to a bilateral reduction in trade taxes by both countries the former country s optimal policy is to lower its nash emissions tax while the latter s is to raise it and 2 in response to an increase in emissions tax rates by both countries the former country s optimal reaction is to raise its nash import tariff while the latter s is to reduce its nash export tax that is in the present context freer trade leads the exporting country to adopt stricter while the importing country laxer environmental tax policies

environmental regulations transfers and trade theory and evidence abstract this paper develops a theory of compensation of producers for the costs associated with environmental regulations we show that the existence of transfers can give counter intuitive effects of environmental policy on both output and trade flows in particular the compensation obtained by producers neutralizes the effect of environmental policy on output and consequently on trade flows this may help explain why previous empirical research has found weak evidence that environmental regulations affect trade patterns the theory is tested using agricultural sector data the evidence supports the hypothesis that environmental regulations and transfers are positively correlated

using count data models in travel cost analysis with aggregate data estimators of recreational demand models frequently use continuous functional forms such as ordinary least squares ols on log transformed variables e g ziemer musser and hill however the nature of trip demand introduces complicating factors first trips occur in nonnegative quantities failure to control for this censoring will lead to biased estimation second because trips are available only in integer quantities the usual demand models which correlate marginal quantity with marginal price may be inapplicable in light of these factors a natural alternative is to use statistical models that explicitly recognize the count nature of trip demand several recent papers e g shaw smith grogger and carson creel and loomis have applied count models to the travel cost model these works largely have focused on truncated data sets based on choice based samples in this study the focus is on the older problem where zero demanders are included in particular the application of several robust estimators of count models to aggregated data will be considered the poisson distribution forms the foundation for the count models examined in this study although the poisson is a convenient distribution to work with it imposes some stringent constraints on the demand distribution in particular the poisson distribution assumes the variance of trip demand is equal to the expected value of trip demand to loosen these constraints a generalization of the poisson the negative binomial is discussed robust estimation procedures that permit further loosening of a priori assumptions are then reviewed permit data from the boundary waters canoe area are used to examine the effects of these count models on consumer surplus estimates and on coefficient variability

national account of timber and forest environmental resources in sweden this paper outlines an extension of the national account of income from forest resources in sweden 1987 incorporating changes in timber inventories production of nonmarketed timber and nontimber goods and depletion or improvement in vital environmental stocks such as soil nutrients biodiversity and carbon sinks the total net value added provided by forest resources and forestry labour 1987 is estimated to 22 billions sek this is one third more than the contribution of forestry to ordinary gnp

the influence of public subsidies on farm technical efficiency a robust conditional nonparametric approach the objective of this paper is to assess the influence of public subsidies on farm technical efficiency using recent advances in nonparametric efficiency analysis to this end we use robust conditional frontier techniques as well as insights from recent developments in nonparametric econometrics the paper contributes to the ongoing methodological discussion on how to model the effect of public subsidies on farmers production decisions the analysis is conducted using an unbalanced panel data of 1604 observations from 313 french farms located in the french region meuse over the period 2006 2011 the estimates indicate that public subsidies influence negatively the conditional technical efficiency of farms this suggests that public subsidies affect both the range of the attainable set for the inputs and outputs and the distribution of the efficiency scores inside the attainable set

on the aggregate value of recreational activities a nested price index approach using poisson demand systems an important consideration in the development ofregulations and policies that administer naturalresources in an area is the value of the non marketactivities supported by those lands little attentionhas been paid to the aggregate value of largegeographic areas this analysis builds autility theoretic price index and utilizes this indexto estimate an aggregate poisson demand to valuebackcountry recreational hiking opportunities innorthern california

a discrete count model of recreational demand abstract discrete choice models generate welfare measures resulting from environmental quality changes on a per trip basis instead of over a longer more policy relevant time period seasonal or annual welfare measures resulting from a quality change are often computed by multiplying each individual s per trip welfare measure by the number of trips the individual is forecasted to take at the new quality level these models are typically formulated so that increases in the quality of any site causes every individual to increase his or her participation this paper presents an alternative method of linking the discrete choice model to a demand model enabling welfare changes to be estimated in a conventional manner

is environmental efficiency trade inducing or trade hindering abstract global efforts to identify strategies for sustainable economic growth and development underline the need for understanding important links between environmental policies and international trade in this paper by constructing an environmental efficiency index for 111 countries from 1980 to 2009 we are able to empirically test for one such link an improvement in the environmental efficiency index in terms of carbon dioxide emissions reflects a decrease in the cost of efforts to mitigate the environmental costs associated with growth countries that improve their environmental efficiency are found to experience strong international trade effects both through increased exports and increased imports while the positive link between efficiency improvements and exports is supportive of the porter hypothesis the positive link between efficiency improvements and imports is supportive of strong positive income effects on account of environmental efforts these results which are robust to alternative estimation strategies lend strong support to global efforts to improve countries environmental efficiencies

warrant exercise dividends and reinvestment policy in this paper we examine sequential exercise strategies by warrantholders and the gain from hoarding warrants we analyze several obstacles to acquiring large blocks in order to exploit sequential strategies first we identify several reinvestment policies for which sequential exercise is not advantageous thereby eliminating the gain from hoarding however sequential exercise strategies may be advantageous for monopoly or oligopoly warrantholders even absent dividends because using exercise proceeds to repurchase stock or to expand the firm s scale increases the riskiness of an equity share second oligopoly warrantholders can receive a smaller warrant value than perfectly competitive warrantholders suggesting a potential cost to unsuccessful hoarding

trade politics and the environment tailpipe vs smokestack abstract the vast majority of economic research on environmental regulation in open economies focuses on producer generated smokestack pollution we instead consider consumer generated tailpipe pollution we examine how political opposition to environmental regulation varies with a country s trade regime and show that the impact on environmental policy of a move from autarky to free trade can depend critically on who ultimately generates pollution producers or consumers we find that opening to trade may raise industry opposition to smokestack regulation but reduce its opposition to strict tailpipe policy

addressing aggregation bias in zonal recreation models abstract models of recreation demand are often based on zonal data results from such models are susceptible to aggregation bias we propose a zonal model of recreation that captures some of the underlying heterogeneity of individual visitors by incorporating distributional information on per capita income from census sources into the aggregate demand function this adjustment eliminates the unrealistic constraint of constant income across zonal residents and thus reduces the risk of aggregation bias in estimated parameters in addition the corrected aggregate specification reinstates the applicability of generalized maximum likelihood methods and increases model efficiency

a difficulty with the travel cost method instead of observable prices of recreational visits travel cost method tcm re searchers are obliged to substitute researcher assigned visitation cost estimates i argue that visitation costs are inherently subjective but are ordinally measurable so long as the cost in creases with distance travelled it follows that traditional tcm yields only ordinally measur able welfare estimates the household produc tion function formulation of tcm resolves this problem only by imposing severe and un testable analytical restrictions tcm cannot serve as a stand alone technique for estimating recreation benefits rather it must be calibrated using information generated with fundamentally different methods jel q26

robert merton myron scholes and the development of derivative pricing the winners of this year s nobel memorial prize in economics robert merton and myron scholes have each made major contributions in many areas of economics but in keeping with the tradition of honoring specific contributions the citation of the royal swedish academy of sciences singles out their work on derivative valuation myron scholes famous paper on this topic was jointly authored with fischer black who sadly died in august 1995 the seminal papers on option pricing by fischer black and myron scholes 1973 and robert merton 1973c not only solved the specific problem of how to value a particular class of financial instrument but also set out clearly how these same ideas could be used to attack a much broader range of issues and in particular those connected with valuing corporate liabilities the range of actual applications which has emerged over the past 25 years has been wider still and includes problems such as the valuation of natural resources and the value of flexibility in capital projects their discovery set the research agenda for a whole generation of phd students in finance and along with portfolio theory capital asset pricing theory and the modigliani and miller theorems is a core part of what we may come to think of as classical financial economics there is however another consequence of their discovery which is almost as remarkable as its effect on scholarship and this is the impact it has had on the financial services industry many economic theories have affected economic life but most often through their influence on a relatively small group of macro economic policy makers but it is surely extremely unusual for an advance in the economic sciences to influence the details of the way literally thousands of individuals engaged in financial transactions carry out their analysis and make their decisions the past 25

the curse of the haven the impact of multinational enterprise on environmental regulation abstract we analyze the behavior of multinational enterprises in the context of resource rich and poor countries and regarding high and low income countries we depart from the pollution haven hypothesis and the resource curse the pollution haven hypothesis states that multinational enterprises move their dirty operations to countries with weak environmental regulation the resource curse holds that economic growth in countries abundant in natural resources is reduced we find that more polluting firms are relatively more often located in countries with weak environmental regulation however multinational enterprises do not have a significant impact on environmental regulation in the host country it appears that it is mainly the quality of institutions that drives both the pollution haven and the resource curse

agglomeration effects in foreign direct investment and the pollution haven hypothesis does environmental regulation impair international competitiveness of pollution intensive industries to the extent that they relocate to countries with less stringent regulation turning those countries into pollution havens we test this hypothesis using panel data on outward foreign direct investment fdi flows of various industries in the german manufacturing sector and account for several econometric issues that have been ignored in previous studies most importantly we demonstrate that externalities associated with fdi agglomeration can bias estimates away from finding a pollution haven effect if omitted from the analysis we include the stock of inward fdi as a proxy for agglomeration and employ a gmm estimator to control for endogenous time varying determinants of fdi flows furthermore we propose a difference estimator based on the least polluting industry to break the possible correlation between environmental regulatory stringency and unobservable attributes of fdi recipients in the cross section when accounting for these issues we find robust evidence of a pollution haven effect for the chemical industry

a theoretical foundation for count data models the paper develops a theoretical foundation for using count data models in travel cost analysis two micro models are developed a restricted choice model and a repeated discrete choice model we show that both models lead to identical welfare measures

unilateral climate policy and foreign direct investment with firm and country heterogeneity we analyse the effects of unilateral climate policy in a two country two firm model with endogenous plant location and heterogeneity in both country size and firm s characteristics the effectiveness of unilateral climate policy is shown to depend on the joint effect of country and firm heterogeneity and on their impact on equilibrium location choice for being effective and not leading to production relocation in the long run unilateral climate policy should be moderate implemented by a sufficiently larger area and complemented by mechanisms promoting the international transfer of clean technologies the model indicates that the smaller area cannot take the lead in global climate mitigation for a protracted time period finally when the local community is not environmentally concerned the unilateral policy unambiguously makes the society worse off

environmental regulation and foreign direct investment evidence from south korea abstract this paper studies how environmental regulation shapes the pattern of foreign direct investment fdi and thereby assesses the pollution haven hypothesis conflicting results exist in the case studies examining the most advanced countries partly due to the deterrent effect of clean technology adoptions on industry migration to minimize the clean technology effect we examine the pattern of south korean fdi over 2000 2007 the period that korean firms relied on old production technologies despite facing rapidly strengthened environmental standards a difference in differences type identification strategy circumvents other potential confounders we find strong evidence that polluting industries tend to invest more in countries with laxer environmental regulations in terms of both the amount of investment intensive margin and the number of new foreign affiliates extensive margin a similar finding is obtained when imports are analyzed

on the use of expectations data in estimating structural dynamic choice models despite the importance of expectations in models of decision behavior under uncertainty few empirical economists have made use of subjective expectations data in estimating such models assuming that expectations about future behavior accurately portray optimal future behavior conditional on current information it is shown that such data can provide similar information about the decision process as can data on current or retrospective behavior the value of self reported choice expectations is illustrated by using information on respondents expected future occupation in the estimation of a structural dynamic model of teacher career decisions under uncertainty

a demand theory for number of trips in a random utility model of recreation we present a simple random utility model of recreation site choice that incorporates an aggregate demand function for number of trips during a season we derive the trip demand function using conventional demand theory and use it to calculate seasonal welfare changes due to improvements in site characteristics or addition of new sites the model is based on bockstael et al s participation function

modeling recreation demand in the presence of unobservable travel costs toward a travel price model an important issue in the application of travel cost models is the construction of a travel cost variable this paper develops an econometric approach that views travel costs as an unobserved latent variable the latent variable approach utilizes indicators to capture the role of individual travel costs in recreational demand models the latent variables approach has at least two advantages over conventional approaches one the indicators can include both traditional components such as time and distance and non traditional components such as the scenic beauty second the estimation procedure results in each indicator being valued in dollar terms

strategic analysis of the competitive exercise of certain financial options abstract warrants and convertible bonds are claims on the firm which change the outstanding number of common stock shares when exercised or converted exercise of such claims in competitive circumstances is modeled here as a noncooperative game played by a continuum of players first equilibria of the game are shown to exist by applying results of schmeidler second the game s equilibria are compared to outcomes that come about when one individual controls the exercise of all the claims but is constrained to exercise them in one block the results are analogues of earlier results by one of the authors on the competitive pricing of such claims