the political economy of urban food security in sub saharan africa abstract sub saharan african cities in the late 1990s face a daunting set of problems including rapid growth increasing poverty deteriorating infrastructure and inadequate capacity for service provision even as a renewed debate is shaping up around issues of urban development there is little attention given to the question of urban food security whereas in the 1970s and 1980s urban food problems in africa commanded political attention the nature of urban food insecurity in the 1990s is such that it has tended to lose political importance this is largely because in the 1970s the problem was one of outright food shortages and rapid price changes that affected large portions of the urban population simultaneously the impact of structural adjustment continued rapid growth and an increase in poverty make urban food insecurity in the 1990s primarily a problem of access by the urban poor under circumstances where the urban poor spend a very large portion of their total income on food urban poverty rapidly translates into food insecurity the lack of formal safety nets and the shifting of responsibility for coping with food insecurity away from the state towards the individual and household level has tended to atomize and muffle any political response to this new urban food insecurity this paper briefly reviews urban food insecurity and generates a set of empirical questions for an analysis of food and livelihood security in contemporary urban sub saharan africa and then examines historical and contemporary evidence from kampala uganda and accra ghana to suggest some tentative conclusions

the maize transition in asia unlocking the controversy it is difficult to overstate the importance of maize in the global food economy maize and the other related coarse grains constitute half of global cereal production and trade maize based cropping systems provide the basic staple for consumption in much of subsaharan africa central america the andean region and many of the poorer parts of asia they also supply fodder for livestock in many developing nations and the basic energy source for the burgeoning livestock systems of middleand upper income countries it is not surprising therefore that the long run demand prospects for maize appear stronger than those for most other crops with that strength however comes a complexity that challenges analysis and complicates projections much of the resulting debate has focused on china at one end of the

control of accumulating stock pollution by heterogeneous producers abstract this paper presents a framework to determine optimal resource allocation over time for the production of a good by heterogeneous producers who generate a stock externality we analyze the optimal intertemporal and quality specific combination of abatement strategies at the source source abatement given by a change in the intensity intensive margin of production and in the chosen technology extensive margin and or removal of existing pollution stock stock abatement the results show how the specifications of the production and the emission functions affect technology adoption and the design of the optimal intertemporal combination of source and stock abatement strategies moreover the paper shows that regulation at the intensive margin cannot be considered as a substitute for a regulation at the extensive margin the paper employs the so called two stage solution approach for solving the resulting quality distributed intertemporal optimal control problem

rural infrastructure transactions costs and market participation in kenya abstract we develop a conceptual framework for quantifying fixed transactions costs facing semisubsistence households using household survey data from a sample of 324 kenyan maize farmers we jointly estimate household supply and demand schedules and transactions costs econometric results indicate that on average the ad valorem tax equivalent of fixed transactions costs for households in our sample is 15 additional analysis indicates that economic isolation is positively associated with the size of transactions costs to the best of our knowledge ours are the first empirical estimates of the magnitude of fixed transactions costs for agricultural households in developing countries

market failure in incentive based regulation the case of emissions trading abstract among the existing evaluations of the us epa s emissions trading program a consensus has emerged while the program has resulted in significant cost savings it has not even approximately achieved a cost effective allocation of the control responsibility the cost savings have been smaller and the trades fewer than might have been expected at the outset of the program in this article we explore one hypothesis which purports to explain the divergence between the cost minimizing and the observed pattern of trades for nonuniformly mixed pollutants the trading process hypothesis attributes some significant proportion of this divergence to the nature of the process by which emission reduction credits are traded under the bubble policy an examination of actual bubble trades reveals that the actual trading process is sequential and bilateral and hence differs considerably from the implicit process modeled in the existing empirical studies simulations of this more realistic trading process suggest that the resulting equilibria deviate considerably from cost effective allocations of the control responsibility

the control of invasive species on private property with neighbor to neighbor spillovers invasive pests cross property boundaries property managers may have private incentives to control invasive species despite not having sufficient incentive to fully internalize the external costs of their role in spreading the invasion each property manager has a right to future use of his own property but his property may abut others properties enabling spread of an invasive species the incentives for a foresighted property manager to control invasive species have received little attention we consider the efforts of a foresighted property manager who has rights to future use of a property and has the ability to engage in repeated discrete control activities we find that higher rates of dispersal associated with proximity to neighboring properties reduce the private incentives for control controlling species at one location provides incentives to control at a neighboring location control at neighboring locations are strategic complements and coupled with spatial heterogeneity lead to a weaker link public good problem in which each property owner is unable to fully appropriate the benefits of his own control activity future use rights and private costs suggest that there is scope for a series of coase like exchanges to internalize much of the costs associated with species invasion pigouvian taxes on invasive species potentially have qualitatively perverse behavioral effects a tax with a strong income effect e g failure of effective revenue recycling can reduce the value of property assets and diminish the incentive to manage insects on one s own property

pattern formation spatial externalities and regulation in coupled economic ecological systems abstract we study the management of ecosystems in which interacting state variables that are affected by management decisions diffuse in space we study pattern formation first in a setting where economic agents maximize myopic profits and ignore spillovers onto agents at other sites and second in the context of a social planner who internalizes these spillovers we compare patterns under these two institutions and study how the differences in the patterns generated by these two institutions impact the design of regulatory schemes to internalize the externalities at the same time we introduce new methods based on fourier series type decompositions that enable us to turn an intractable infinite dimensional optimal control problem into a countable number of finite dimensional optimal control problems as far as we know these methods are new to the economics literature our theory is applied to the management and regulation of a semi arid system

evidence of capacity constraints in insurance markets this article provides empirical support for the primary predictions of capacity constraint theories of property casualty insurance cycles the primary implications concern industry capacity and the difference between the price of insurance and noncapital costs referred to here as the price payment margin ppm capacity constraint theories predict that low capacity will lead to higher ppms and that capacity growth will follow ppm increases as insurers rebuild capacity price payment margin and capacity series are constructed using industry time series for 1949 90 the estimation finds that ppm growth varies inversely with capacity at the beginning of the period and also inversely with changes in capacity in addition declines in capacity are associated with ppm growth next period while increases in capacity generally have no significant effect on next period s ppm growth furthermore current capacity growth is positively correlated with last period s ppm growth

natural resource economics and conservation contributions of agricultural economics and agricultural economists research by agricultural economists on natural resources has been distinguished by an interdisciplinary emphasis and a dynamic perspective it has recognized technological and institutional constraints has been oriented toward solving concrete resource management and policy problems and has emphasized empirical and quantitative analysis agricultural economists have introduced methods for evaluating natural resource conservation efforts for predicting adoption of resource conservation technologies and for designing efficient and sustainable resource management policies they have identified ways of improving land management and preventing land degradation proposed reforms of institutions governing water allocation and water quality and introduced policies for balancing environmental and efficiency considerations in the management of pests biodiversity and livestock diseases their research has had substantial impacts on the formulation of resource conservation policies

is the locus of poverty changing abstract urbanization is now a dominant demographic phenomenon in low and middle income countries by the year 2000 half of the world s population will live in urban areas of this half two thirds will be in developing countries predominantly in asia whether there will be a corresponding shift of poverty from rural to urban areas is the central question of this analysis evidence from cross sectional time series and case data indicates that the percent of poverty in urban areas is dependent on income levels income growth and income distribution the evidence also indicates that the number of poor in rural areas will exceed those in urban areas well into the 21st century these poverty and urbanization trends are significant politically and important also with respect to food policy and required investments in agriculture

when two wrongs make a right second best point nonpoint trading ratios most research on point nonpoint trading focuses on the choice of trading ratio the rate point source controls trade for nonpoint controls although the first best ratio is jointly determined with the optimal number of permits in practice program managers often do not have control over the number of permits only the trading ratio the trading ratio in this case can only be second best we derive the second best trading ratio and using a numerical example of trading in the susquehanna river basin we find the values are in line with current ratios but for different reasons than those that are normally provided

are urban poverty and undernutrition growing some newly assembled evidence abstract the population of the developing world is becoming more urban are poverty and undernutrition beginning to relocate to urban areas as well we use survey data on poverty from eight countries and on child undernutrition from 14 countries to address this question using data from the past 15 20 years we find that in a majority of countries the absolute number of poor and undernourished individuals living in urban areas has increased as has the share of overall poverty and undernourishment coming from urban areas given these trends and the current stock of knowledge as to the levels determinants and solutions to urban poverty and undernutrition we argue for more research on these issues

a comparison of two marketable discharge permits systems abstract this paper is an extension of a krupnick w oates and e van de verg j environ econom management10 233 247 1983 their proposed permit system is shown to be formally equivalent to w d montgomery s j econom theory5 395 418 1972 pollution permit system under perfect competition however under noncompetitive assumptions the two systems function differently while montgomery s system may lead to large transaction costs polluters under krupnick et al s pollution offset system can be free riders benefiting from the transactions of others finally some empirical evidence suggests that the pollution offset system may be the most promising but only after several conditions are satisfied

structural agricultural land use modeling for spatial agro environmental policy analysis this paper develops a spatially disaggregated structural econometric model of agricultural land use and production based on the joint multi output technology representation introduced by chambers and just 1989 starting from a flexible specification of the farm profit function we derive land use allocation input application crop yield and livestock intensity equations in a joint and theoretically consistent framework to account for the presence of censored observations in micro level data the model is estimated as a system of two limit tobit equations via quasi maximum likelihood we present an empirical application using fine scale spatial data covering the entirety of england and wales and including the main economic policy and environmental drivers of land use change in the past forty years a simulation of the effects of diffuse pollution reduction measures illustrates how our approach can be applied for agro environmental policy appraisal

reversing property rights practice based approaches for controlling agricultural nonpoint source water pollution when emissions aggregate nonlinearly nonpoint source water pollution remains a major issue despite decades of research and sizable conservation programs we suggest that by taking advantage of contemporary modeling and optimization approaches good approximations to physical relationships can be constructed so that even in the presence of unobservable field emissions and nonlinear fate and transport relationships standard economic tools of command and control requirements performance standards and trading can be implemented the boone river watershed in the u s state of iowa is used for empirical demonstration although the approach can be used to construct voluntary conservation policies the described policies involve imposing requirements on agricultural polluters rather than relying on voluntary actions alone

health and mortality delta assessing the welfare cost of household insurance choice we develop a pair of risk measures health and mortality delta for the universe of life and health insurance products a life cycle model of insurance choice simplifies to replicating the optimal health and mortality delta through a portfolio of insurance products we estimate the model to explain the observed variation in health and mortality delta implied by the ownership of life insurance annuities including private pensions and long term care insurance in the health and retirement study for the median household aged 51 to 57 the lifetime welfare cost of market incompleteness and suboptimal choice is 3 2 of total wealth

economic incentives to improve water quality in agricultural landscapes some new variations on old ideas agricultural nutrients and other emissions remain a primary source of water quality degradation in much of the nation many such sources are classified as nonpoint sources under the clean water act and are therefore exempt from most federal regulations and enforceable standards in addition many agricultural nonpoint source emissions are difficult to measure and the damages that result from them depend on the amount that is transported to the waterways nutrient runoff particularly nitrogen and phosphorous from intensive row crop agriculture in much of the cornbelt exemplifies these issues both the lack of enforceable standards and the physical characteristics of nutrient fate and transport make the design of efficient policy challenging as witnessed by the lack of significant progress over the last several decades this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item thi this abstract was borrowed from another version of this item

is historical cost accounting a panacea market stress incentive distortions and gains trading we provide new empirical evidence concerning the contentious debate over the use of historical cost versus fair value accounting in regulating financial institutions these accounting rules through their interactions with capital regulation alter financial institutions optimal portfolio choice and trading behavior the insurance industry provides a natural laboratory in which to explore these interactions first there exist significant differences in regulatory accounting rules life insurers have greater flexibility to hold speculative grade instruments at historical cost than property and casualty insurers second within an insurer s investment portfolio detailed data are available on transactions positions and most importantly the regulatory accounting treatment for each security when faced with severe downgrades among their holdings in asset backed securities abs life insurers largely continue to hold the downgraded securities at historical cost and instead selectively sell their corporate bond holdings with the highest unrealized gains inducing significant price declines this is particularly true for life insurers facing regulatory capital constraints and with high abs exposures this behavior is largely absent among property and casualty insurers they instead disproportionately sell their re marked abs holdings historical cost accounting creates an altered incentive environment in which constrained financial institutions sell assets to realize gains insofar as this behavior transmits shocks across potentially unrelated markets historical cost accounting is not a panacea

point nonpoint effluent trading with spatial heterogeneity potential earnings from permits sales may provide an incentive for farmers to accept water quality regulation we derive optimal adjustments of point nonpoint effluent trading ratios for heterogeneity in marginal environmental damage and degradation retention of the pollutant across locations in a watershed a simulation based on data from the kymi river valley finland indicates that farmers are the greatest suppliers of permits as expected but that gains from trading vary substantially some farmers may become net buyers of permits and thus net losers from regulation the benefits of effluent trading are distributed unevenly among point sources as well copyright 2008 oxford university press

the economics of dead zones linking externalities from the land to their consequences in the sea the purpose of this review and analysis is to provide a basic understanding of the issues related to worldwide hypoxic zones and the range of economic questions sorely in need of answers we begin by describing the causes and extent of hypoxic zones worldwide followed by a review of the evidence concerning ecological effects of the condition and impacts on ecosystem services we describe what is known about abatement options and cost effective policy design before turning to an analysis of the large seasonally recurring hypoxic zone in the gulf of mexico we advance the understanding of this major ecological issue by estimating the relationship between pollutants nutrients and the areal extent of the hypoxic zone this production function relationship suggests that both instantaneous and legacy contributions of nutrients contribute to annual predictions of the size of the zone highlighting concerns that ecologists have raised about lags in the recovery of the system and affirms the importance of multiple nutrients as target pollutants we conclude with a discussion of critical research needs to provide input to policy formation

markets for water rights under environmental constraints abstract the cumulative impact of pollutants on water quality at a given location along a river is a function of prior loadings as well as pollution and surface flows at that particular site the question of whether it is possible to maintain water quality under alternative mechanisms for allocating surface water and pollution rights is addressed we model the optimal allocation of surface water and pollution rights along a river with water quality constraints due to cumulative effects the shadow values of water and pollution rights are contingent on location it is shown that a nash equilibrium in a market for tradable surface water rights in conjunction with a market for pollution damages implements the optimal solution the market supports location specific prices for both consumptive water rights and pollution damages

trade offs in designing markets with multiple objectives abstract this paper explores some of the problems involved in designing markets with multiple objectives the first part of the paper considers the issue of how such markets are designed in theory while the second part reviews some evidence on actual applications in the field of air pollution control

a trading ratio system for trading water pollution discharge permits abstract the fact that water flows to the lowest level uni directionally is a very specific and useful property of water by utilizing this property we design a trading ratio system trs of tradable discharge permits for water pollution control such a trading ratio system has three main characteristics 1 the zonal effluent cap is set by taking into account the water pollutant loads transferred from the upstream zones 2 the trading ratios are set equal to the exogenous transfer coefficients among zones and 3 permits are freely tradable among dischargers according to the trading ratios this paper shows that the trs can take care of the location effect of a discharge and can achieve the predetermined standards of environmental quality at minimum aggregate abatement costs problems with hot spots and free riding can be avoided and the burdens on both dischargers and the environmental authority should be relatively light

economics of additionality for environmental services from agriculture abstract we present a model of additionality for offsets sold from agriculture to industrial sector sources regulated by cap and trade we consider a potential policy where agricultural sources would not be covered by cap and trade requirements but would be eligible to receive offsets whenever their emissions fall below a policy specified baseline and would not be penalized for emissions above their baseline major results are 1 the optimal baseline should be set above the average counterfactual emissions of participating farms an unexpected result that has been missing from the literature 2 the optimal trading ratio should be greater than one a ton of offsets counts for less than a ton of covered emissions even under emissions certainty previous research has justified such trading ratios by emissions uncertainty 3 emissions uncertainty does not justify a change in the baseline if the accompanying emissions model is unbiased 4 an optimal combination of policies is to subsidize offsets and tighten the baseline relative to the no subsidy case

measuring changes in poverty a methodological case study of indonesia during an adjustment period analysis of the effects of policy changes on the poor is often hindered by the difficulties inherent in measuring poverty and comparing levels of poverty before and after policy changes this article outlines two techniques which can overcome many of these measurement problems stochastic dominance conditions which can facilitate a robust poverty ranking of distributions of living standards and a decomposable poverty index which allows measured changes in aggregate poverty to be disaggregated into their various components such as the changes among population subgroups and growth and redistributive components these techniques can be applied to a wide range of indicators of economic well being and poverty lines and to assumptions about the poor the approaches are illustrated using household survey data from indonesia before and after external shocks and the subsequent structural adjustment program in the mid 1980s the study finds that favorable initial conditions and pro poor pattern of growth enabled indonesia to maintain its momentum in poverty alleviation during the period

long term care utility and late in life saving older wealth holders spend down assets much more slowly than predicted by classic life cycle models this paper introduces health dependent utility into a model with incomplete markets in which pre

biofuel policies and the environment do climate benefits warrant increased production from biofuel feedstocks abstract we examine whether climate benefits warrant policies promoting biofuel production from agricultural crops when other environmental impacts are accounted for we develop a general economic ecological modelling framework for integrated analysis of biofuel policies an economic model of farmers decision making is combined with a biophysical model predicting the effects of farming practices on crop yields and relevant environmental impacts they include ghg emissions over the life cycle nitrogen and phosphorus runoff and the quality of wildlife habitats we apply our model to crop production in finland we find that under current biofuel production technology the case for promotion of biofuels is not as evident as has been generally thought only reed canary grass for biodiesel is unambiguously desirable whereas biodiesel from rape seed and ethanol production from wheat and barley cause in most cases negative net impacts on the environment suggested policies in the us and the eu tend to improve slightly the environmental performance of biofuel production

transaction costs and tradeable permits abstract tradeable permit systems are at the center of current interest and activity in market based reforms of environmental policy because these systems can offer significant advantages over conventional approaches to pollution control unfortunately claims made for their relative cost effectiveness have often been exaggerated transaction costs which may be significant in these markets reduce trading levels and increase abatement costs in some cases equilibrium permit allocations and hence aggregate control costs are sensitive to initial permit distributions providing an efficiency justification for politicians typical focus on initial allocations

the dynamics of spatial pollution the case of phosphorus runoff from agricultural land abstract the paper analyzes based on a land classification system the optimal management of negative production externalities while taking into account the intertemporal and spatial aspects of the problem to incorporate both aspects simultaneously a two stage modeling approach is proposed where the solution of the spatial problem first stage is optimized over time second stage as a result it is possible to relate long run and short run supply and input demand functions attention is given to runoffs from agricultural land leading to the contamination of a water body in particular the one of phosphorus and the eutrophication of lakes the employment of a land classification system supports a full information approach and allows to address the optimal management of mineral fertilizer and manure based on zonal taxes zonal permits and zonal standards which all vary over time

incremental and average control costs in a model of water quality trading with discrete abatement units this paper answers three questions related to the discrete nature of pollution abatement i does a source s incremental control cost as defined by the u s environmental protection agency necessarily exceed its average control cost ii is incremental control cost a better approximation of a source s willingness to pay for abatement credits than average control cost and iii exactly how does trading in discrete and continuous abatement markets differ we find that the answer to the first two questions are both no suggesting that the u s environmental protection agency needs to refine its reliance on incremental control cost as the sole measure upon which to assess the financial feasibility of water quality trading in answer to the third question we show that the outcome of bilateral trading in the presence of discrete abatement is determined by comparing the gains from trade associated with the full sequence of possible sunk cost trading scenarios for the most common case where trading partners average control cost curves cross the trading outcome with discrete abatement is inherently sensitive to the initial allocation of abatement responsibilities

research needs and challenges in the few system coupling economic models with agronomic hydrologic and bioenergy models for sustainable food energy and water systems on october 12 13 a workshop funded by the national science foundation was held at iowa state university in ames iowa with a goal of identifying research needs related to coupled economic and biophysical models within the few system approximately 80 people attended the workshop with about half representing the social sciences primarily economics and the rest from the physical and natural sciences the focus and attendees were chosen so that findings would be particularly relevant to sbe research needs while taking into account the critical connectivity needed between social sciences and other disciplines we have identified several major gaps in existing scientific knowledge that present substantial impediments to understanding the few system we especially recommend research in these areas as a priority for future funding 1 economic models of decision making in coupled systems deliberate human activity has been the dominant factor driving environmental and land use changes for hundreds of years while economists have made great strides in modeling and understanding these choices the coupled systems modeling literature with some important exceptions has not reflected these contributions several paths forward seem fruitful first baseline economic models that assume rationality can be used much more widely than they are currently moreover the current generation of iams that include rational agents have emphasized partial equilibrium studies appropriate for smaller systems to allow this approach to be used to study larger systems the potential for and consequences of general equilibrium effects should be studied as well second it is important to address shortcomings in these models of economic decision making valuable improvements could be gained from developing coupled models that draw insights from behavioral economics many decision makers deviate systematically from actions that would be predicted by strict rationality but very few iams incorporate this behavior potentially leading to inaccurate predictions about the effects of policies and regulations improved models of human adaptation and induced technological change can also be incorporated into coupled models particularly for medium to long run models decisions about adaptation and technological change will have substantial effects on the conclusions and policy implications but more compelling methods for incorporating these changes into modeling are sorely needed in addition some economic decisions are intrinsically dynamic yet few coupled models explicitly incorporate dynamic models economic models that address uncertainty in decision making are also underutilized in coupled models of the few system 2 coupling models across disciplines despite much recent progress established models for one component of the few system often cannot currently produce outcomes that can be used as inputs for models of other components this misalignment makes integrated modeling difficult and is especially apparent in linking models of natural phenomena with models of economic decision making economic agents typically act to maximize a form of utility or welfare that is not directly linked to physical processes and they typically require probabilistic forecasts as an input to their decision making that many models in the natural sciences cannot directly produce we believe that an especially promising approach is the development of bridge models that convert outputs from one model into inputs for another such models can be viewed as application specific reduced form distillations of a richer and more realistic underlying model ideally these bridge models would be developed in collaborative research projects involving economists statisticians and disciplinary specialists and would contribute to improved understanding in the scientific discipline as well 3 model validation and comparison there is little clarity on how models should be evaluated and compared to each other both within individual disciplines and as components of larger iams this challenge makes larger integrated modeling exercises extremely difficult some potential ways to advance are by developing statistical criteria that measure model performance along the dimensions suitable for inclusion in an iam as well as infrastructure and procedures to facilitate model comparisons focusing on the models out of sample distributional forecasting performance as well as that of the iam overall is especially promising and of particular importance moreover applications of iams tend to estimate the effect of hypothetical future policy actions but there have been very few studies that have used these models to estimate the effect of past policy actions these exercises should be encouraged they offer a well understood test bed for the iams and also contribute to fundamental scientific knowledge through better understanding of the episode in question the retrospective nature of this form of analysis also presents the opportunity to combine reduced form estimation strategies with the iams as an additional method of validation

endogenous transport coefficients implications for improving water quality from multi contaminants in an agricultural watershed the effectiveness of imperfect pollution control instruments is examined for a diffuse source multi contaminant problem in which the transport coefficients for sediment bound residuals are endogenous similar evaluations fix the percentage of sediment deposited and optimize either for a single firm managing the whole watershed or on a firm by firm basis this study shows that ignoring the dependence of the transport coefficients on intervening land uses creates a positive externality the filtering potential of activities conducted by firms close to the receptor permits firms further away to undertake more profitable but erosive practices optimizing management choices and consequently endogenizing the transport coefficients for all firms simultaneously removes the externality an empirical application combines hydrological simulation models with an economic optimization model for nutrient pollution of surface and ground water within an agricultural watershed although firms are homogeneous in abatement costs differences in spatial location leave uniform instruments unable to achieve the water quality goal efficiently an ambient tax subsidy scheme can achieve the water quality goal efficiently but the informational requirements will be excessive in most situations where the transport mechanisms for residuals are dependent upon the practices of independent decision making units

marketable permits market power and cheating abstract in this paper we present a model of a noncompliant firm operating in a marketable pollution permit market in the main result of the paper we show how compliance is related to the initial distribution of permits a firm with market power will cheat less the larger its endowment of permits is from a fixed stock of permits the competitive fringe however will cheat more as its endowment of permits is reduced generating an ambiguous global impact on cheating

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

water quantity management in a heterogeneous landscape with farsighted farmers agricultural production contributes to many environmental problems in semi arid areas agricultural irrigation causes the so called waterlogging phenomenon this phenomenon is both spatial and dynamic since percolation depends on soil quality summed up in landscape heterogeneity and evolves along time furthermore farmers can be farsighted with respect to their contribution to percolation we study regulation schemes to be implemented to restore the socially optimal spatial and temporal production plan of farmers in such a context we show that both a temporal tax on percolation and a spatio temporal tax on inputs both at the extensive and at the intensive margin are efficient for the restoration of the socially optimal solution furthermore a numerical example demonstrates that the consequences of implementing a fiscal scheme designed for myopic farmers whereas they are farsighted depends on the distribution of soil quality

endogenous risk and point nonpoint uncertainty trading ratios point nonpoint trading enables highly uncertain nonpoint pollution abatement to be substituted for relatively certain point source pollution abatement market designers use uncertainty trade ratios to address imperfect substitution between these commodities guidance from government agencies and other entities recommends large ratios that penalize trades for nonpoint abatement and extant programs universally implement this guidance previous research has shown that the standard guidance is based on an inappropriate framing of the risk effects of substituting nonpoint for point source pollution abatement and has demonstrated that the trade ratios should be set to encourage or discourage substitution depending on whether the substitution is risk reducing or risk increasing however the pigouvian pricing approach used to develop this result obscures the underlying economic calculus because it does not recognize or characterize the tradeoffs between abatement costs savings and environmental risk that must be considered in an economic evaluation of alternative ratios and that would be key to explaining why ratios recommended by economic analysis would be preferred to received wisdom we develop a new approach that explicitly identifies and characterizes the tradeoffs associated with the choice of ratio the approach is examined both in first best settings where trade ratios and initial permit allocations are jointly determined and in second best settings where permit allocations are taken as given we provide a numerical analysis of trading in the susquehanna river basin in pennsylvania to illustrate theory we find theoretical and numerical support suggesting that smaller ratios may be optimal

farm level economic analysis incorporating stochastic environmental risk assessment a farm level risk programming framework is presented which evaluates income environmental risk tradeoffs this framework uses a time series of environmental risk indices to incorporate the stochastic multiattribute characteristics of environmental outcomes associated with agricultural production practices the model is applied to a representative farm in the oklahoma panhandle region of the central high plains results indicate that expected income is sensitive to nitrate loading restrictions and relatively less sensitive to pesticide loading restrictions results also indicate that prescriptions derived using deterministic environmental risk measures may ignore significant probabilities of exceeding an environmental standard

markets for tradeable emission and ambient permits a dynamic approach this paper discusses trade mechanisms in pollutionpermit markets proofs are given that sequential bilateral trade in tradeable emissions permitsconverges to a market equilibrium with minimal totalcosts of pollution control if ambient or depositionpermits are traded the convergence of bilateraltransactions occurs only in the case of a singlereceptor for multiple receptors the proof ofconvergence for tradeable emissions and ambientpermits is given for two trade mechanisms sequential multilateral trade and a walrasian auction

product differentiation search costs and competition in the mutual fund industry a case study of s p 500 index funds we investigate the role that non portfolio fund differentiation and information search frictions play in creating two salient features of the mutual fund industry the large number of funds and the sizeable dispersion in fund fees in a case study we find that despite the financial homogeneity of s p 500 index funds this sector exhibits the fund proliferation and fee dispersion observed in the broader industry we show how extra portfolio mechanisms explain these features these mechanisms also suggest an explanation for the puzzling late 1990s shift in sector assets to more expensive and often newly entered funds an influx of highinformation cost novice investors

the sectoral structure of poverty during an adjustment period evidence for indonesia in the mid 1980s the authors examine the structure of poverty in indonesia by sector of employment and how it changed during the adjustment period 1984 to 1987 they find that while aggregate poverty decreased during the period the gains to the poor were quite uneven across regions and sectors gains to the rural sector in key regions were quantitatively important to indonesia s success in alleviating poverty they found most poverty exists and most gains in alleviating poverty were made in the rural farming sector these gains were associated with crop diversification and continued growth in off farm employment the government s adjustment program favored rural areas and were crucial to indonesia s evident success at maintaining momentum in alleviating poverty however one should not underrate the favorable conditions in indonesia when adjustment started

new evidence on the money s worth of individual annuities this paper presents new information on the expected present discounted value of payouts on individual life annuities the annuity we examine is the single premium immediate life annuity an insurance product that pays out a nominal level sum as long as the covered person lives in exchange for an initial lump sum premium this annuity offers protection against the risk of someone outliving his saving given uncertainty about longevity for reasonable estimates of behavioral parameters we calculate that individual annuities are currently priced so that retirees without bequest motives should find these policies of substantial value in configuring their portfolios to smooth retirement consumption we also find that the expected present discounted value of payouts relative to the initial cost of the annuity has increased over the last decade these findings bear on the policy debate regarding the role of individual choice and self reliance in retirement planning this abstract was borrowed from another version of this item

efficiency gains under exchange rate emission trading in the case of emission of non uniformly dispersed pollutants such as so2 the negative effects depend on the location of the sources a unit increase at one source must be compensated by either a larger or smaller reduction at another source to keep the negative effects at the same level emission trading between countries is possible under the second sulphur protocol exchange rate trading and third party problems are studied within a simultaneous model facilitating impositions of various environmental constraints simulations based on the negotiated emission quotas are offered results indicate potential cost savings of 19

emission trading in europe with an exchange rate this paper explores the analytical and empirical properties of a new method for emission trading according to a fixed exchange rate the exchange rate is based on the ratios of the marginal costs of abatement in the optimal solution in order to account for the impact of the location of emission sources on the deposition it is shown that generally this system will not achieve the optimal solution and does not guarantee that environmental deposition constraints are not violated although total abatement costs are always reduced a routine was developed to mimic trading as a bilateral sequential process subject to an exchange rate in the example used results for so2 emissions in europe show that starting from a uniform reduction exchange rate trading achieves higher cost savings than one to one trading without achieving the cost minimum sulfur deposition targets are not violated since the initial emission allocation overfulfilled targets at many places the results are sensitive to pre trade emission levels the transaction costs the availability of information on potential cost savings and assumptions made on the behavior of trading partners

tradeable permits for pollution control when emission location matters what have we learned our knowledge about tradeable permit approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with them in the u s this article draws upon economic theory empirical studies and actual experience with implementation to summarize what we have learned about applying tradeable permits to air pollution control in the special circumstance where the spatial aspects of the problem are a prime consideration

the case of the negative nominal interest rates new estimates of the term structure of interest rates during the great depression throughout the 1930s and early 1940s u s treasury bonds and notes appeared to have negative nominal yields as they approached maturity but negative nominal interest rates are impossible in a world in which one can always hold cash the resolution to this puzzle is that treasury securities in addition to making coupon payments gave the owner the right to buy a new security on a future date this paper describes the institutional environment that led to the apparent negative nominal interest rates develops a method for valuing the exchange privilege and computes accurate measures of the yield to the coupon bearing component of these composite bond options these corrected bond and not yields are then used to calculate new estimates of the term structure of interest rates from 1929 to 1949

the cost of financial frictions for life insurers during the financial crisis life insurers sold long term policies at deep discounts relative to actuarial value the average markup was as low as 19 percent for annuities and 57 percent for life insurance this extraordinary pricing behavior was due to financial and product market frictions interacting with statutory reserve regulation that allowed life insurers to record far less than a dollar of reserve per dollar of future insurance liability we identify the shadow cost of capital through exogenous variation in required reserves across different types of policies the shadow cost was 0 96 per dollar of statutory capital for the average company in november 2008 jel g01 g22 g28 g32

differences in social and public risk perceptions and conflicting impacts on point nonpoint trading ratios if stochastic nonpoint pollution loads create socially costly risk then an economically optimal point nonpoint trading ratio the rate point source controls trade for nonpoint controls is adjusted downward a risk reward for nonpoint controls encouraging more nonpoint controls however in actual trading programs ratios are adjusted upward in response to nonpoint uncertainties a risk premium for nonpoint controls this contradiction is explained using a public choice model in which regulators focus on encouraging abatement instead of reducing damages the result is a divergence of public and social risk perceptions and a trading market that encourages economically suboptimal nonpoint controls copyright 2001 oxford university press