towards a testable model of entry a study of the us manufacturing industries this paper develops a simple model of firms entry decisions fits it to interindustry data and tests hypotheses related to contestability theory it is shown that entry increases with the profit level of incumbents holding fixed the expected losses that the entrant would suffer in the event of exit these expected losses are greater the higher the probability of a predatory incumbent response and the larger the sunk costs that must be committed by the entrant the effects of sunk costs are significant and incumbents are significantly more likely to react aggressively when they are both profitable and concentrated copyright 1990 by the london school of economics and political science

pollution and politician productivity the effect of pm on mps applying methods of textual analysis to all 119 225 speeches made in the canadian house of commons between 2006 and 2011 we establish that air pollution reduces the speech quality of canadian members of parliament mps exposure to fine particulate matter concentrations exceeding 15 g m3 causes a 2 3 reduction in the quality of mps speech equivalent to a 2 6 month decrease in education for more difficult communication tasks the decrement in quality is equivalent to the loss of 6 5 months of schooling our design accounts for the potential endogeneity of exposure and controls for many potential confounders including individual fixed effects

the determinants of research and development intensity in the uk the primary purpose of this paper is to discover whether research and development expenditures are related to firm size market structure and technological influences in the uk after providing a preliminary analysis of r d activity the paper tackles the problem of the rather limited data set two approaches are adopted first analysing part of the relationship using a broadly based sample and second providing data on a more narrowly based sample over three years the results suggest that firm size and concentration have virtually no influence on r d intensity in the uk among firms with r d programmes

environment health and human capital in this review we discuss three major contributions economists have made to our understanding of the relationship between the environment and individual well being first in explicitly recognizing how optimizing behavior particularly in the form of residential sorting can lead to nonrandom assignment of pollution economists have employed a wide range of quasi experimental techniques to develop causal estimates of the effect of pollution second economic research has placed a considerable focus on the role of avoidance behavior which is an important component for understanding the difference between biological and behavioral effects of pollution and for proper welfare calculations lastly economic research has expanded the focus of analysis beyond traditional health outcomes to include measures of human capital including labor supply productivity and cognition our review of the quasi experimental evidence on this topic suggests that pollution does indeed have a wide range of effects on individual well being even at levels well below current regulatory standards given the importance of health and human capital as an engine for economic growth these findings underscore the role of environmental conditions as an important factor of production jel i12 i31 j24 q51 q53

economic assessment of the regional clean air incentives market a new emissions trading program for los angeles this article documents the methodology used to compare policy alternatives considered for reclaim an emissions trading program for los angeles which commenced january 1994 reclaim reduces no x and so x emissions from stationary sources with declining emissions credit allocations the emissions trading model etm includes credit supply and demand spatial restrictions and opportunity costs of owning credits the etm solves interactively with a regional model that estimates economic impacts predicted emissions distributions are input into airshed and exposure models the models predict similar improvements in air quality and public health as command and control regulations but with lower costs and employment impacts

age size growth and survival uk companies in the 1980s this paper examines growth and survival amongst quoted and unquoted u k companies in the period 1975 85 and compares the results with earlier u k and u s studies an examination of death rates shows that smaller companies had higher death rates but the largest and smallest companies were least vulnerable to takeover careful attention is therefore paid to problems of sample selection bias it is shown that smaller companies grew faster than larger companies that gibrat s law does not hold amongst smaller firms that age is negatively related to growth and that these results are not an artifact of sample selection bias copyright 1994 by blackwell publishing ltd

terminating links between emission trading programs abstract links between emission trading programs are not immutable as highlighted by new jersey s exit from the regional greenhouse gas initiative in 2011 this raises the question of what to do with existing permits that are banked for future use choices that have consequences for market behavior in advance of or upon speculation about delinking we consider two delinking policies one differentiates banked permits by origin the other treats banked permits the same we describe the price behavior and relative cost effectiveness of each policy treating permits differently generally leads to higher costs and may lead to price divergence even with only speculation about delinking

how to estimate market concentration given grouped data a novel method is proposed of estimating market concentration for the census case in which firms are grouped into size classes and all that is known about the firms in each category is their number and aggregate size the formula arises as a way of applying an alternative expression for the concentration ratio based upon the original and first moment size distributions of firms the semi parametric technique which includes a method of interval as well as point estimation is derived applied and validated using actual and simulated data it is anticipated that the estimator will be of use in competition analysis as well as in academic research

the effect of language on economic behavior evidence from savings rates health behaviors and retirement assets languages dier widely in the ways they encode time i test the hypothesis that languages that grammatically associate the future and the present foster future oriented behavior this prediction arises naturally when well documented eects of language structure are merged with models of intertemporal choice empirically i nd that speakers of such languages save more retire with more wealth smoke less practice safer sex and are less obese this holds both across countries and within countries when comparing demographically similar native households the evidence does not support the most obvious forms of common causation i discuss implications for theories of intertemporal choice

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

seller concentration the technological explanation and demand uncertainty the level of seller concentration in an industry depends on two characteristics of the size distribution of the firms concerned their number and the inequality of their sizes acknowledging these two dimensions the aim of this paper is to construct a unified theoretical framework capable of shedding some light on the economic forces which determine the degree of concentration it builds on the analysis of two schools of thought within the existing literature the first of these we shall label the technological explanation of concentration since it emphasises the role of the cost curve in particular the minimum efficient scale of production and barriers to the entry of new firms implicitly this attaches most importance to the firm number component of concentration the second school includes the various stochastic models of firm growth these models have demonstrated the influence on concentration of what is sometimes called luck or more deterministically those factors which might influence the spread of growth rates of firms within an industry to that extent these models emphasise the other component of concentration size inequalities we see our present contribution as an attempt to build a bridge between these two approaches we develop the well known simon and bonini i958 stochastic growth model in such a way as to provide a formal statement of the technological explanation and then discuss various ways of deepening the economic content of their original contribution section i provides a brief resume of the technological explanation and section ii describes the salient features of the simon and bonini model it goes on to show how this model can be used to disentangle a mathematical relationship between the concentration ratio and i minimum efficient scale ii the share of sub optimal firms and iii the degree of firm size inequalities this relationship is tested with some success using i968 uk census data an important conclusion of the simon and bonini model is that firm size inequalities depend crucially on the probability of entry by new firms section iii considers how this proposition may be invested with more economic content the discussion is couched at a fairly general level but in the appendix we suggest a specific model which explains entry as a consequence of the fact that incumbent firms typically operate in a world of demand uncertainty where entry deterrence may be too costly it provides specific economic predictions

international emissions trading with endogenous allowance choices abstract this paper compares endogenous choices of tradable and non tradable emission allowances by non cooperative countries i find that the cost savings of trading do not necessarily lead to less pollution in particular environmentally more concerned countries usually choose less allowances if these are tradable but this may be offset by the choice of more allowances on the side of environmentally less concerned countries moreover if the establishment of a trading system requires the unanimous approval of all countries there may be no agreement on trading even if it were to lead to less pollution overall conversely a trading system may find unanimous approval even if it induces more pollution

do firm sizes and profit rates converge evidence on gibrat s law and the persistence of profits in the long run three panel unit root tests are applied to a 31 year firm size growth and profit rate data set for 96 large quoted uk firms all tests reject the unit root null for log size if the augmented dickey fuller autoregressions exclude a linear time trend if a linear trend is included the results are more ambiguous and appear to differ systematically between tests the view that firm growth is either random or near random does not receive unequivocal support in all tests there is however strong and consistent evidence of mean reversion in profit rates

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

transitional restricted linkage between emissions trading schemes linkages between emissions trading systems are deemed an important element of the future climate policy landscape they are however difficult to agree and remain few and far between temporary restrictions on permit trading have potential to facilitate and gradually approach unrestricted full linkage we compare the relative merits of several link restrictions in this respect namely quantitative transfer limits border taxes on transfers exchange and discount rates and unilateral linkage to this end we develop a simple model to have a unifying framework which in conjunction with lessons we draw from real world experiences serves as a basis for a broader policy oriented discussion while quantitative restrictions seem to be the natural route to full linkage they can lead to uncertain distributional effects and weaken price signals these aspects are mitigated under a border permit tax but this policy seems harder to implement exchange rates have potential to adjust for programmes stringencies and raise ambition over time but can be challenging to select as experience corroborates unilateral linkage can be a convenient approach

international emissions trading good or bad abstract using a non cooperative climate policy game applied in the literature we find that an agreement with international emissions trading leads to increased emissions and reduced efficiency

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

optimal trading ratios for pollution permit markets abstract we demonstrate a novel method for improving the efficiency of pollution permit markets by optimizing the exchange of emissions through trade under full information it is optimal for emissions to exchange according to the ratio of marginal damages under asymmetric information we derive necessary conditions for the marginal damage trading ratios to be optimal illustrate that the marginal damage trading ratios are generally not optimal and show how to improve efficiency using optimal trading ratios we calculate the optimal trading ratios for a global carbon market the gains from using optimal trading ratios rather than marginal damage trading ratios range from substantial to trivial which suggests the need for careful consideration of asymmetric information when designing permit markets

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes