the impact of ict investment and energy price on industrial electricity demand dynamic growth model approach the authors investigate the effects of information and communications technology ict investment electricity price and oil price on the consumption of electricity in south korea s industries using a logistic growth model the concept electricity intensity is used to explain electricity consumption patterns an empirical analysis implies that ict investment in manufacturing industries that normally consume relatively large amounts of electricity promotes input factor substitution away from the labor intensive to the electricity intensive moreover results also suggest that ict investment in some specific manufacturing sectors is conducive to the reduction of electricity consumption whereas ict investment in the service sector and most manufacturing sectors increases electricity consumption it is concluded that electricity prices critically affect electricity consumption in half of south korea s industrial sectors but not in the other half a finding that differs somewhat from previous research results reasons are suggested to explain why the south korean case is so different policymakers may find this study useful as it answers the question of whether ict investment can ultimately reduce energy consumption and may aid in planning the capacity of south korea s national electric power

information technology and productivity evidence from country level data this paper studies a key driver of the demand for the products and services of the global it industry returns from it investments we estimate an intercountry production function relating it and non it inputs to gdp output on panel data from 36 countries over the 1985 1993 period we find significant differences between developed and developing countries with respect to their structure of returns from capital investments for the developed countries in the sample returns from it capital investments are estimated to be positive and significant while returns from non it capital investments are not commensurate with relative factor shares the situation is reversed for the developing countries subsample where returns from non it capital are quite substantial but those from it capital investments are not statistically significant we estimate output growth contributions of it and non it capital and discuss the contrasting policy implications for capital investment by developed and developing economies

no free ride to zero emissions simulating a region s need to implement its own zero emissions vehicle zev mandate to achieve 2050 ghg targets abstract the adoption of zero emission vehicles zevs is limited by a variety of barriers some are region specific e g availability of charging infrastructure while others are global in nature e g battery prices where improvements spill over between regions this study explores regional spillover effects and ghg impacts of strong zev focused policy specifically the zev mandate in place in ten u s states zev states which requires automakers to sell a minimum amount of zevs each year we use a dynamic technology adoption model to simulate passenger vehicle sectors in north america focusing on the case of one small region british columbia covering 0 7 of the market as potentially free riding off of zev states policy covering 23 of the market results indicate that free ridership is not effective even with the zev mandate driving very high sales in zev states british columbia cannot achieve significant zev adoption without also implementing its own zev mandate further for british columbia to meet its 2050 ghg targets it may need a zev mandate in addition to complementary climate policies pushing zevs to account for 40 93 of new vehicle sales in 2050 in short regions seeking low carbon transportation likely need to implement their own stringent policies

exploring the potential for energy conservation in french households through hybrid modeling although the building sector is recognized as having major potential for energy conservation and carbon dioxide emissions mitigation conventional bottom up and top down models are limited in their ability to capture the complex economic and technological dynamics of the sector this paper introduces a hybrid framework developed to assess future household energy demand in france res irf a bottom up module of energy consumption for space heating has several distinctive features i a clear separation between energy efficiency i e investment in energy efficient technologies and sufficiency i e changes in the utilization of energy consuming durables which allows the rebound effect to be assessed ii the inclusion of barriers to energy efficiency in the form of intangible costs consumer heterogeneity parameters and the learning by doing process iii an endogenous determination of retrofitting which represents trade offs between retrofit quantity and quality subsequently res irf is linked to the imaclim r computable general equilibrium model this exercise shows that compared to a 37 reduction in final energy demand achievable in business as usual in existing dwellings an additional reduction of 14 could be achieved if relevant barriers to efficiency and sufficiency were overcome

removal of u s ethanol domestic and trade distortions impact on u s and brazilian ethanol markets we analyze the impact of trade liberalization and removal of the federal tax credit in the united states on u s and brazilian ethanol markets using a multi market international ethanol model calibrated on 2005 market data and policies the removal of trade distortions induces a 23 2 percent increase in the price of world ethanol on average between 2006 and 2015 relative to the baseline the u s domestic ethanol price decreases by 14 1 percent which results in a 7 5 percent decline in production and a 3 2 percent increase in consumption the lower domestic price leads to a 2 5 percent rise in the share of fuel ethanol in gasoline consumption u s net ethanol imports increase by 192 8 percent brazil responds to the higher world ethanol price by increasing its production by 8 8 percent on average total ethanol consumption in brazil decreases by 3 2 percent and net exports increase by 61 9 percent relative to the baseline the higher ethanol price leads to a 4 7 percent increase in the share of sugarcane used in ethanol production the removal of trade distortions and 51 per gallon tax credit to refiners blending ethanol induces a 22 5 percent increase in the world ethanol price

performance and potential of information technology an international perspective abstract rising information content of economic activity worldwide is making the use of information technology it increasingly relevant in a broad range of countries and activities effective planning and organizational capabilities are essential to successful adoption of the new technologies authors in this issue have concluded that managerial skills and entrepreneurship are key to effective use of it in addition to human capital development it diffusion requires a strategy for generating large investments in telecommunications while proactive measures at accelerating the diffusion of it have their place they need to be complemented by reduction of barriers to the international flow of services and investment

picking winners modelling the costs of technology specific climate policy in the u s passenger vehicle sector abstract researchers debate the cost effectiveness of technology specific versus technology neutral climate policies but few quantify the differences using the case of low carbon vehicle technologies in the us passenger vehicle sector ethanol plug in electric and hydrogen we develop a technology adoption simulation model that represents increasing returns to adoption in both financial costs and consumer preferences representing uncertainty through monte carlo analysis we compare the policy costs tonne co2 out to 2050 of i a technology neutral carbon tax ii a somewhat neutral vehicle standard requiring low carbon vehicle sales but allowing competition among technologies and iii technology specific vehicle standards requiring sales of just one technology on average across simulations the carbon tax is twice as cost effective as the best vehicle standard in part because the tax more substantially affects vehicle use rates among the vehicle standards a technology specific standard that selects the right winner plug in electric vehicles is more cost effective than the neutral standard as it more quickly stimulates technology improvement however there is risk in a technology specific approach mistakenly forcing a loser technology hydrogen results in policy costs that are 2 to 5 times higher than other policies results can help policymakers trade off the costs and risks of different climate policy options

the impact of high tech capital on productivity evidence from australia i introduction the bulk of the empirical research on the relationship between high tech capital investment and productivity has been based on data for the united states given the relatively large size of the high tech capital sector in the u s economy it is likely that the united states is a special case most economies resemble australia s in being net importers of high tech capital not producing high tech capital was often cited as a weakness in these economies relative to the united states however since the end of the late 1990s tech boom there has been a reappraisal of whether the production or the use of high tech capital is most beneficial hence to shed light on this debate the main purpose of this paper is to empirically examine the relationship between high tech capital use and the multifactor productivity mfp of 10 industries in the australian market sector using annual data for 1966 2002 alternative specifications of production functions are considered and estimated alternative measures of high tech capital are included with combinations of computers software and electronics capital in the first production function high tech capital is allowed to be more or less productive than other capital to determine whether there is a relationship between high tech capital and mfp it is also possible to test whether there are excess returns to high tech capital for robustness testing purposes a second production function is specified with high tech capital as a separate input into production other potential sources of mfp growth such as public capital research and development stocks and microeconomic reform are also included in the production functions we find evidence of a positive relationship between high tech capital and mfp in the market sector there is less evidence however of excess returns to high tech capital which suggests that current investment levels are not inadequate the results by industry suggest that the benefits of investing in high tech capital are not distributed evenly across the economy with only some industries experiencing a positive relationship between high tech capital and mfp the structure of this article is as follows in section ii the theoretical contribution of high tech capital to mfp and the evidence to date is reviewed in section iii the methodology is outlined in section iv data sources and trends are described in section v the results are presented and interpreted and section vi concludes ii the impact of high tech capital on output and productivity the theory and evidence the impact of investment in high tech capital has been the subject of debate between new economy sceptics and optimists for several years it is widely accepted that mfp has increased substantially in u s high tech producing industries in which the rate of technological change has been phenomenal over the past 40 years several publications have found a quantifiable contribution by computer producing industries to u s output growth 1 however australia is not generally regarded as a producer of computers data from the organisation for economic co operation and development oecd 1998 indicate that the high tech share of australian manufacturing value added was 4 5 in 1995 compared to 15 8 in the united states therefore the substantial u s economy wide mfp improvements specifically associated with its computer producing industry are unlikely to be replicated in the australian economy over the past 30 years there has been rapid accumulation of high tech capital in many countries australia was the third most intensive user of high tech capital in the oecd in 1995 behind the united states and new zealand simon and wardrop 2002 find that this rapid accumulation of high tech capital may have substantially contributed to australia s economic growth during the 1990s this accumulation has been driven by technological change in high tech producing industries lowering the price of high tech capital

implications of delaying transport decarbonisation in the eu a systems analysis using the primes model abstract the transport sector decarbonisation represents an essential part of the ghg emissions reduction strategy of the eu for the 2030 and 2050 horizon the strategy presumes a far reaching structural system change towards the marketing of advanced electrified powertrains and use of energy carriers such as electricity and hydrogen that are generated in a carbon free way the decade 2020 2030 is expected to set in motion the complex process of the necessary transformation of the power generation and transport systems which mandates the successful coordination of the interrelated market actors consumers and policy makers this paper presents a systems analysis that aims to assess what would happen if the decarbonisation strategy fails to develop as anticipated during the decade 2020 2030 we refer to this timeframe as the lost decade to answer this question our analysis is based on counterfactual scenarios quantified using the primes energy systems model the analysis concludes that the decade 2020 2030 is a critical point in this transformation limited progress in the coming decade would require the adoption of stringent policy measures beyond 2030 which along with the pressure to reduce emissions in a short period are found to increase substantially the total costs of the system

payoffs from investment in information technology lessons from the asia pacific region abstract this paper examines the factors influencing investment in information technology it and the payoffs from investment in it use on productivity and economic growth in 12 asia pacific countries for 1984 1990 it finds a significant positive correlation between growth in it investment and growth in both gdp and productivity over the seven year period countries with higher growth rates in it investment achieved consistently higher growth rates of gdp and productivity this finding is consistent with the notion of it led development it challenges the so called productivity paradox or the notion that investment in it has not paid off in productivity improvements

predicting carbon market risk using information from macroeconomic fundamentals abstract economic theories suggest that carbon price movements are closely related to economic fundamentals this paper develops an economic state dependent sd approach to evaluate carbon market value at risk var that incorporates information from macroeconomic fundamentals into carbon return var modeling and forecasting this method implements an economic sd sampling scheme that utilizes historical carbon return observations from the relevant economic states to predict future carbon market var applying this sd method to the european union eu carbon market we confirm that the eu fundamental economy has two distinct states that correspond to expansion and recession periods and that the carbon returns have different distributions in the two states we find that the sd method outperforms the traditional non sd methods in out of sample var forecasts and this is particularly evident when the carbon market experiences large scale economy driven structural breaks

is the forward bias economically small evidence from european rates abstract for the purpose of testing uncovered interest parity uip rates of european currencies against the mark offer a distinct advantage the admissible band of the exchange rate mechanism erm induces statistically significant mean reversion in weekly rates thus unlike for freely floating rates there is an expectation signal that has non trivial variation and is sufficiently traceable for research purposes when running the standard regression tests of the unbiased expectations hypothesis at the one week horizon we nevertheless obtain essentially zero coefficients for intra ems exchange rates and the familiar negative coefficients for extra ems rates even more puzzlingly lagged exchange rate changes remain significant when added to the regression a feature that seems hard to explain as a missing variable effect the deviation from uip is significant not just statistically but also economically trading rule tests reveal that for sufficiently large filters the average profit per trade exceeds transaction costs and that cumulative gains can be quite impressive the size of the profits and the patterns from buy versus sell decisions also allow us to reject the hypotheses of either a risk premium or peso issues about realignments as sufficient explanations

car buyers and fuel economy abstract this research is designed to help researchers and policy makers ground their work in the reality of how us consumers are thinking and behaving with respect to automotive fuel economy our data are from semi structured interviews with 57 households across nine lifestyle sectors we found no household that analyzed their fuel costs in a systematic way in their automobile or gasoline purchases almost none of these households track gasoline costs over time or consider them explicitly in household budgets these households may know the cost of their last tank of gasoline and the unit price of gasoline on that day but this accurate information is rapidly forgotten and replaced by typical information one effect of this lack of knowledge and information is that when consumers buy a vehicle they do not have the basic building blocks of knowledge assumed by the model of economically rational decision making and they make large errors estimating gasoline costs and savings over time moreover we find that consumer value for fuel economy is not only about private cost savings fuel economy can be a symbolic value as well for example among drivers who view resource conservation or thrift as important values to communicate consumers also assign non monetary meaning to fuel prices for example seeing rising prices as evidence of conspiracy this research suggests that consumer responses to fuel economy technology and changes in fuel prices are more complex than economic assumptions suggest the us department of energy and the energy foundation supported this research the authors are solely responsible for the content and conclusions presented

research note determinants of country level investment in information technology investment in information technology it is an important driver of economic growth and productivity in the united states and other developed countries but as yet it is not shown to be a significant driver in developing countries previous research suggests that it investment and complementary assets are insufficient for developing countries to realize economic benefits this research note examines the factors that influence it investment in developed and developing countries to determine how greater investment might be stimulated to achieve productivity gains we use the flexible accelerator model of investment and find that it is a good predictor of country level it investment we also extend the model to include country level variables and find a negative relationship between it investment and interest rates but positive and significant relationships between investment openness to trade and telecommunications infrastructure when we include interaction effects between national income levels and country variables we find that the impacts of interest rates size of the financial sector teledensity and intellectual property rights are strongest in shaping it investment for developed countries in contrast we find that the impact of openness to trade is greater for developing countries as is the size of government and education levels

passenger transport modal split based on budgets and implication for energy consumption approach and application in china transport will be the strongest growing energy demand sector in the future especially in developing countries like china and it needs more attention the evolution of transport structure is very important in the dynamic of transport development and therefore worth emphasis in this study a modal split model maximizing spatial welfare and constrained by travel money budget and time budget is developed this approach differs from the general econometric based approach used in most existing macro transport studies and deals with the cost and speed of transport modes as important variables explicitly the model is then applied to china s transport sector together with sensitivity test despite many data problems the decomposition of energy consumption generated from bottom up model based on this modal split identified the importance of modal split and turnover expansion in the next 30 years which should be a stronger area of focus in transportation studies

electric vehicles rising from the dead data needs for forecasting consumer response toward sustainable energy sources in personal transportation abstract since standard vehicles are powered by internal combustion mechanisms that rely on fossil fuels electric vehicles that are propelled by one or more electric engines have been proposed as an alternative to promote sustainable personal transportation in this paper we propose a general demand model for vehicle purchases at the individual level assuming that the necessary microdata is available we then list the ideal microdata that would be needed for estimating this general demand model for elaborating this list we take into account the particularities of low emission vehicles with emphasis in their cost reliability environmental benefits tradeoff as well as the potentiality for evaluation of welfare improving policies related to adoption of energy efficient technologies we discuss data sources and collection strategies for the different attributes of the model especially for those characteristics that are nonstandard such as symbolic values for instance we discuss the role of range anxiety as a barrier of adoption of electric vehicles and the implied relevance of including driving range to get consumers willingness to pay for better performing electric batteries

clean air and renewable fuels the market for fuel ethanol in the us from 1984 to 1993 abstract ethanol made from corn has become an increasingly important fuel additive in the us over the past decade the market for ethanol has grown from 550 million gallons in 1984 to approximately 1 5 billion gallons in 1995 recent clean air legislation has mandated the use of cleaner burning fuels in the us in specific regions and seasons the fundamental role of fuel ethanol is changing from a gasoline substitute and octane enhancer to being one of a number of possible clean air additives in addition to these changing market conditions the institutional structure surrounding the ethanol market has changed while there is a uniform national subsidy for ethanol use each state has its own supplemental subsidy level which varied from zero to over 0 40 per gallon recently many state subsidy levels have been declining but significant incentives still remain including the federal 0 54 per gallon incentive this paper explores the economic characteristics of the us ethanol market the market supply and demand for ethanol are estimated econometrically the results highlight the importance of the state and federal incentives and mandates along with transportation costs in making corn based ethanol an attractive alternative to gasoline further investigation using a probit model to predict whether a state has an ethanol market or not reinforces the results of the supply demand market model the implications of the market characteristics for current and future us ethanol policy and clean fuels use are discussed

software industry entry strategies for developing countries a walking on two legs proposition abstract two themes run through the following analysis first countries without a relatively active and up to date software sector will find it increasingly difficult to catch up in terms of capital outlays labor skills and the growing importance of technology changes organization and management in software production they will not have for example software management experience to undertake increasingly large and complex software development projects a quality consciousness and the institutional and support infrastructure for marketing and forming product development alliances with dominant international firms in the sector second the learning curves for domestic and international market activities are quite different the domestic software market being an important base for skills experience and establishing a track record that may later be applied to exports two developing countries india and brazil have used different development strategies for their software industries and as could be expected with disparate results both the brazilian and the indian software industries are trying to walk on one leg the domestic leg in the case of brazil and the export leg in the case of india both countries have at least some potential for moving to a two legged model assessment of these two industries suggests that countries need to pay more attention to domestic opportunities since these have high returns in terms of gaining experience and innovation in software production and provide training that allows a broadening of software exports

transport mode choice by commuters to barcelona s cbd this paper analyses the determinants of travel mode choice for suburbanised commuters in barcelona spain after describing the importance of residential suburbanisation and the parallel increase in the share of private car use by commuters into the city centre a nested logit model of transport mode choice is estimated the results reveal low elasticities particularly in the case of car commuters values of travel time savings are high although within the ranges obtained in the literature it is observed that continuing suburbanisation will result in increasing the market share of rail at the expense of the private car use and mainly the bus provided that accessibility to the public transport network is maintained at present levels

towards a contemporary approach for understanding consumer behaviour in the context of domestic energy use domestic sector energy use is increasing in the uk and currently accounts for 30 of total use policies of liberalised energy markets have allowed greater consumer choice but have not sought to reduce carbon emissions overall sales of energy efficiency products are rising but uk housing stock standards are poor and do not facilitate improved efficiency and further the sales of such products are influenced by their price thus the higher capital costs of products such as boilers and solar systems make them initially unattractive to consumers previous market based research into the adoption of energy efficiency products has often focused on single factors for example demographics this has limited the ability of policy makers to make informed decisions that address a broader range of factors such as individuals cognitive abilities values and attitudes as well as external factors such as social networks marketing and products and services this paper provides a wider critique of the theoretical base related to consumer behaviour product attributes and socio environmental theories that relate to energy use the aim of the paper is to draw together theories relevant to energy use in order to aid policy making in the broader context and to develop the discussion around integrated theories of consumer behaviour

portfolio optimization when asset returns have the gaussian mixture distribution abstract in this paper we consider a portfolio optimization problem where the underlying asset returns are distributed as a mixture of two multivariate gaussians these two gaussians may be associated with distressed and tranquil market regimes in this context the sharpe ratio needs to be replaced by other non linear objective functions which in the case of many underlying assets lead to optimization problems which cannot be easily solved with standard techniques we obtain a geometric characterization of efficient portfolios which reduces the complexity of the portfolio optimization problem

the costs of carbon sequestration a revealed preference approach increased concem by policy makers with the threat of global climate change has brought with it considerable attention to the possibility of encouraging the growth of forests as a means of sequestering carbon dioxide national academy of sciences nas 1992 james p bruce et al 1996 1 the kyoto protocol to the united nations framework convention on climate change 1997 which establishes emission reduction targets for the united states and other industrialized nations states that carbon sequestration can be used by participating nations to achieve their targets moreover even before the kyoto agreement this approach had become an explicit element of both u s and intemational climate policies u s department of energy 1991 united nations general assembly 1992 william j clinton and albert gore 1993 this high level of interest has been due in part to suggestions that sufficient lands are available to use the approach to mitigate a substantial share of annual carbon dioxide c02 emissions greg marland 1988 daniel a lashof and dennis a tirpak 1989 mark c trexler 1991 and claims that growing trees to sequester carbon is a relatively inexpensive means of combating climate change roger a sedjo and allen m solomon 1989 daniel j dudek and alice leblanc 1990 nas 1992 in other words the serious attention given by policy makers to carbon sequestration can partly be explained by implicit assertions about respective marginal cost functions i develop and demonstrate a method by which the costs of carbon sequestration can be estimated on the basis of evidence from landowners behavior when confronted with the opportunity costs of alternative land uses the simplest of previous economic analyses derived single point estimates of average costs associated with particular sequestration levels marland 1988 sedjo and solomon 1989 dudek and leblanc 1990 edwin s rubin et al 1992 omar masera et al 1995 often it has been assumed that land opportunity costs are zero g van kooten et al 1992 j k winjum et al 1992 new york state energy office 1993 robert k dixon et al 1994 another set of studies essentially engineering costing models has constructed marginal cost schedules by using information on revenues and costs of production for altemative uses on representative types or locations of land and then sorting these in ascending order of cost robert j moulton and kenneth r richards 1990 richards et al 1993 simulation models include a model of the lost profits due to removing land from agricultural production peter j parks and ian w hardie 1995 a mathematical programming model of the agricultural sector and the timber market richard m adams et al 1993 a related model incorporating the effects of agricultural price support programs j m callaway and bruce mccarl 1996 and a dynamic simulation model of forestry susan swinehart 1996 lastly an analysis by andrew j plantinga 1995 adopts land use elasticities from an econometric study to estimate sequestration costs we draw on some of the best features of the previous studies including the carbon levelization method of moulton and richards john f kennedy school of government harvard university 79 john f kennedy street cambridge ma 02138 and resources for the future richard newell supplied excellent research assistance and valuable comments on a previous version were provided by lawrence goulder william nordhaus andrew plantinga kenneth richards two anonymous referees participants in seminars at the universities of california at los angeles and santa barbara the university of maryland the university of michigan the university of texas harvard university stanford university yale university resources for the future and the national bureau of economic research the author alone is resdonsible for any errors 1 after fossil fuel combustion deforestation is the second largest source of carbon dioxide emissions estimates of annual global emissions from deforestation range from 0 6 to 2 8 billion tons compared with slightly less than 6 0 billion tons annually from fossil fuel combustion cement manufacturing and natural gas flaring combined r a houghton 1991 t m smith et al 1993

supply and demand elasticities in the u s ethanol fuel market abstract the market for ethanol has grown from approximately 1 2 billion gallons in 1997 to almost 5 billion gallons in 2006 with the huge increase in ethanol demand in recent years the growth in derived demand for corn has driven up many food prices this paper uses monthly data from 1997 2006 to estimate the market supply and demand for ethanol at the national level the simultaneous determination of the supply and demand curves using two stage least squares allows for the calculation of supply and demand side elasticities which are important results in light of the tremendous growth in this market and recent legislation concerning ethanol

a systematic assessment of the environmental impacts of transport policy this paper presents an integrated urbanpassenger transport model system for evaluatingthe impact of a large number of interrelatedpolicy instruments on urban travel behaviourand the environment the model system has fourintegrated modules defining household locationand automobile choices commuter workplace andcommuting travel choices non commuting travelactivity and worker distributed workpractices the demand model system estimatedas a set of discrete and continuous choicemodels is combined with a set of equilibratingcriteria in each of the location automobileand commuting markets to predict overall demandfor passenger travel in various socio economicsegments automobile classes and geographiclocations we illustrate the diversity of thesystem by applying the integrated system toperth western australia in the context ofassessing their impacts on greenhouse gasemissions the model system is embedded withina decision support system to make it anattractive suite of tools for practitioners

short rate nonlinearities and regime switches abstract using non parametric estimation methods various authors have shown distinct non linearities in the drift and volatility function of the us short rate which are inconsistent with standard affine term structure models we document how a regime switching model with state dependent transition probabilities between regimes can replicate the patterns found by the non parametric studies to do so we use data from the uk and germany in addition to us data and include term spreads in some of our models we also examine the drift and volatility function of the term spread

improving behavioral realism in hybrid energy economy models using discrete choice studies of personal transportation decisions hybrid energy economy models combine top down and bottom up approaches to explore behaviorally realistic responses to technology focused policies this research uses empirically derived discrete choice models to inform key behavioral parameters in cims a hybrid model the discrete choice models are estimated for vehicle and commuting decisions from a survey of 1150 canadians with the choice models integrated into cims we simulate carbon taxes gasoline vehicle disincentives and single occupancy vehicle disincentives to show how different policy levers can motivate technological change we also use the empirical basis for the choice models to portray uncertainty in technological change costs and emissions

pass through of the policy induced e85 subsidy insights from hotelling s model abstract we build a structural model of imperfect competition for a retail market that supplies both low ethanol e10 and high ethanol e85 gasoline blends the model permits us to study some impacts of the e85 subsidy induced by the u s renewable fuel standard specifically how the pass through of this subsidy to retail prices is affected by market power the model is rooted in hotelling s horizontal differentiation framework which is extended to also represent the imperfect substitutability between e10 and e85 a vertical product differentiation attribute the model naturally captures two sources of imperfect competition in the fuel market refueling stations market power arising from their spatial location and limited availability of e85 stations we derive both analytical and numerical solutions for nash equilibrium outcomes under various scenarios in our baseline parameterization when the penetration of e85 stations is incomplete we find that the pass through rate is about 0 7 complete penetration of e85 stations leads to near complete pass through notwithstanding the market power enjoyed by stations because of their spatial location with monopolistic market power e g collusion however with full penetration of e85 stations the pass through rate is lower moreover when market power only arises from location differentiation duopoly model with full penetration of e85 the pass through rate converges to one as the subsidy gets large whereas it converges to zero if a station has exclusivity in selling e85 partial penetration of e85 or there is collusion monopoly power from collusion

cost effectiveness of greenhouse gas mitigation in transport a review of methodological approaches and their impact abstract a review is given of methodological practices for ex ante cost effectiveness analysis cea of transport greenhouse gas ghg mitigation measures e g fuel economy and co2 standards for road vehicles in the us and eu besides the fundamental differences between different types of policies and abatement options which inherently result in different cea outcomes differences in methodological choices and assumptions are another important source of variation in cea outcomes fourteen methodological issues clustered into six groups are identified on which thirty three selected studies are systematically reviewed the potential variation between lower and upper cost effectiveness estimates for ghg mitigation measures in transport resulting from different methodological choices and assumptions lies in the order of 400 per tonne co2 eq the practise of using cea for policy making could improve considerably by clearly indicating the specific purpose of the cea and its strengths and limitations for policy decisions another improvement is related to the dominant approach in transport ghg mitigation studies the bottom up financial technical approach which assesses isolated effects implying considerable limitations for policy making a shift to welfare economic approaches using a hybrid model has the potential to establish an improved assessment of transport ghg mitigation measures based on realistic market responses and behavioural change

ethanol demand in brazil regional approach abstract successive studies attempting to clarify national aspects of ethanol demand have assisted policy makers and producers in defining strategies but little information is available on the dynamic of regional ethanol markets this study aims to analyze the characteristics of ethanol demand at the regional level taking into account the peculiarities of the developed center south and the developing north northeast regions regional ethanol demand is evaluated based on a set of market variables that include ethanol price consumer s income vehicle stock and prices of substitute fuels i e gasoline and natural gas a panel cointegration analysis with monthly observations from january 2003 to april 2010 is employed to estimate the long run demand elasticity the results reveal that the demand for ethanol in brazil differs between regions while in the center south region the price elasticity for both ethanol and alternative fuels is high consumption in the north northeast is more sensitive to changes in the stock of the ethanol powered fleet and income these among other evidences suggest that the pattern of ethanol demand in the center south region most closely resembles that in developed nations while the pattern of demand in the north northeast most closely resembles that in developing nations

the energy efficiency gap what does it mean abstract as renewed attention has been given by policy makers to energy conservation issues it has frequently been asserted that an energy efficiency gap exists between actual and optimal energy use the critical questions is how to define the optimal level of energy efficiency this paper seeks to disentangle some confusing strands of argument that are frequently brought to bear on this question by identifying the major conceptual issues that determine the set of feasible answers we identify five separate and distinct notions of optimality the economists economic potential the technologists economic potential hypothetical potential the narrow social optimum and the true social optimum each of these has associated with it a corresponding definition of the energy efficiency gap our analysis demonstrates that necessary preconditions for identifying the right measure of the energy efficiency gap include understanding and disentangling market failure and non market failure explanations for the gradual diffusion of energy efficient technologies

how important is intertemporal risk for asset allocation how important is merton s intertemporal risk for asset allocation decisions to address this question we jointly estimate and test a conditional asset pricing model which includes long term interest rate risk as a potentially priced factor for four broad classes of assets large stocks small stocks long term treasury bonds and corporate bonds we find that the premium for long bond risk is the main component of the risk premiums of treasury bond and corporate bond portfolios while it represents a small fraction of total risk premiums for equities our results suggest that investors perceive stocks and especially small stocks as hedges against variations in the investment opportunity set since these four asset classes represent some of the most important for investors we proceed to use our estimates to compute the optimal asset allocations for investors who optimize with or without taking into account the intertemporal risk we provide a set of measures to investigate the importance of this risk we find that at average market volatility levels investors can earn annual premiums between 3 6 during expansions and 5 8 during recessions for bearing intertemporal risk alone these results underscore the importance of explicitly considering intertemporal risk in asset allocation decisions especially during down markets and business recessions

the neighbor effect simulating dynamics in consumer preferences for new vehicle technologies abstract understanding consumer behaviour is essential in designing policies that efficiently increase the uptake of clean technologies over the long run expert opinion or qualitative market analyses have tended to be the sources of this information however greater scrutiny on governments increasingly demands the use of reliable and credible evidence to support policy decisions while discrete choice research and modeling techniques have been applied to estimate consumer preferences for technologies these methods often assume static preferences this study builds on the application of discrete choice research and modeling to capture dynamics in consumer preferences we estimate canadians preferences for new vehicle technologies under different market assumptions using responses from two national surveys focused on hybrid gas electric vehicles and hydrogen fuel cell vehicles the results support the relevance of a range of vehicle attributes beyond the purchase price in shaping consumer preferences towards clean vehicle technologies they also corroborate our hypothesis that the degree of market penetration of clean vehicle technologies is an influence on people s preferences the neighbor effect finally our results provide behavioural parameters for the energy economy model cims which we use here to show the importance of including consumer preference dynamics when setting policies to encourage the uptake of clean technologies

how do regimes affect asset allocation international equity returns are characterized by episodes of high volatility and unusually high correlations coinciding with bear markets this article provides models of asset returns that match

product differentiation and oligopoly in international markets the case of the u s automobile industry this paper develops and estimates a model of the u s automobile industry on the demand side a discrete choice model is adopted that is estimated using micro data from the consumer expenditure survey the estimation results are used in conjunction with population weights to derive aggregate demand on the supply side the automobile industry is modelled as an oligopoly with product differentiation equilibrium is characterized by the first order conditions of the profit maximizing firms the estimation results are used in counterfactual simulations to investigate two trade policy issues the effects of the ver and exchange rate pass through

do green tech policies need to pass the consumer test the case of ethanol fuel abstract this paper investigates a question sometimes overlooked by policymakers and regulators namely the need of a robust value proposition for green technologies to successfully enter the market in particular results from consumer choice models are used to develop measures of consumer acceptance of ethanol blends and flex fuel vehicles is studied a fuel vehicle system that has received attention in a variety of federal and state policies the analysis suggests that under projected fuel prices and given the characteristics of the competing vehicle fuel systems consumers are unlikely to substitute ethanol blends for gasoline the analysis also highlights the need for further research in this area

analyzing the relationships between information technology inputs substitution and national characteristics based on ces stochastic frontier production models abstract this research examines four interrelated issues at the country level the value of information technology it inputs substitution and complement the complementarity phenomenon created by it and national characteristics and the productivity paradox jointly and critically from a global perspective using the so called productive efficiency as the performance measure to that end we develop the three factor constant elasticity of substitution ces stochastic production frontier model and apply it to a set of panel data from 15 countries over the period 1993 2003 along with the traditional two factor ces models within the one and two equation frameworks in the two equation setting six national characteristics are selected as the contributing factors of the productive efficiency the findings include i the value of it as measured by the productive efficiency is duly recognized ii the productivity paradox is found to be absent from the production process in a majority of developed and developing countries considered rejecting the existing argument that the paradox exists only in developing economies but does not exist in developed countries however the developed countries have used it capital in their production systems more productively efficiently than the developing nations iii traditional capital non it capital traditional labor and it capital are not pairwise substitutable contrary to the notion that they are pairwise substitutable at the firm level iv constant returns to scale as commonly assumed are not supported by the data v different national characteristics affect a country s output represented by gross domestic product or gdp and its productive efficiency differently and vi the complementarity phenomenon is observed in most of the countries developed and developing under study