evaluating the impacts of priority dispatch in the european electricity market this paper compares the impact of the nodal pricing and european market coupling organizations on different economic agents of the power system under two main wind policies under the priority dispatch policy transmission system operators tsos must accommodate all wind energy produced which thus has the priority over energy produced by conventional plants in the no priority dispatch policy tsos can decide not to inject all potential wind power in the grid in order to limit congestion problems the effects of these two wind policies are measured by developing simple stochastic programming models that consider cases with different wind penetration levels existing capacities and endogenous investments as well as assumptions on the eu ets our computational experiments show that when there is priority dispatch nodal pricing and market coupling evolve in a similar way as long as wind penetration is not too high in contrast a significant increase of wind penetration causes the collapse of the market coupling organization while nodal pricing continues to perform well on the other hand no priority dispatch removes most of the problems resulting from market coupling which still exhibits a slightly lower efficiency than nodal pricing these outcomes do not depend on the contextual assumptions fixed capacities vs investment eu ets vs non eu ets that characterize the several cases analyzed this suggested that our policy conclusions are robust furthermore our models overestimate the flexibility of conventional plants which means that these conclusions would likely be reinforced with a more detailed model

impact of inter and intra regional coordination in markets with a large renewable component the establishment of the single european day ahead market has accomplished a crucial step towards the spatial integration of the european power system however this new arrangement does not consider any intra regional coordination of day ahead and balancing markets and thus may become counterproductive or inefficient under uncertain supply e g from weather driven renewable power generation in the absence of a specific target model for the common balancing market in europe we introduce a framework to compare different coordination schemes and market organizations the proposed models are formulated as stochastic equilibrium problems and compared against an optimal market setup the simulation results reveal significant efficiency loss in case of partial coordination and diversity of market structure among regional power systems

why are informal loans still a big deal evidence from north east thailand abstractthis article examines the use and benefit of informal loans for different income groups of rural households in north east thailand using a difference in differences estimation approach which is later complemented by propensity score matching the article shows that different household groups profit from informal loans in different ways poor households increase their asset endowment and in particular farming assets whereas rich households food consumption rises especially if households borrow due to a shock by showing that informal loans serve different households for different purposes this article provides an explanation why they still play an important role

interest free loans between villagers abstract interest free loans are a common feature of low income rural economies in much of the economics literature lending at zero and positive interest are viewed as being highly segmented in the community with interest free loans an essential component of long term mutual consumption agreements between households an alternative interpretation is that zero interest loans are a credit contract that in lieu of interest includes an option allowing the lender to tax the borrower at a future date this option can take a variety of forms including the provision of labor or draft animal services or possibly a future loan in this paper we develop and test a model of household contract choice between zero and positive interest rate loans that builds on this alternative perspective it highlights the role of borrower and lender attributes and the economic environment in which they interact in determining contract choice enforcement considerations are secondary we use a unique household level data set

on the long run effects of market splitting why more price zones might decrease welfare in liberalized electricity markets we observe different approaches to congestion management while nodal pricing is implemented in canada and some markets in the united states european markets are split up into a limited number of price zones with uniform prices in order to at least partially realize the benefits of regional price differentiation zonal boundaries often coincide with national borders but some countries are also split into multiple zones in this paper we shed light on possible negative welfare effects of market splitting that arise in a model where investment incentives in new generation capacity are taken into account if zones are misspecified we show that standard approaches to configure price zones on the basis of projected nodal price differences or congested transmission capacity may fail to suggest reasonable zone specifications also an adjustment of available transfer capacities atcs between zones or a switch to flow based market splitting does not ensure positive welfare effects our analysis suggests that a careful and detailed evaluation of the system is needed to ensure a reasonable zone configuration

cooperative action on greenhouse gas emissions and the distribution of global output and damage this paper compares the performance of two allowance allocation rules in an international climate change treaty i construct a model in which countries differ according to both gdp and an idiosyncratic damage parameter that links global emissions to damage for an individual country allowances are allocated to treaty members according to an allocation rule based on a single allocation parameter the model can be solved analytically to determine upper and lower bounds on this allocation parameter that ensure that a treaty of any given composition is internally and externally stable i focus on grand coalition treaties the first treaty examined uses a simple proportional rule in which allocations are set as some fraction of emissions in the non cooperative equilibrium the second treaty adds a coverage contingent element to the allocation rule such that the emissions reduction required of each treaty member is weighted by the fraction of global emissions that treaty members as a whole emit in the non cooperative equilibrium i show that the coverage contingent treaty outperforms the simpler treaty except when all countries have the same emissions intensity in the non cooperative equilibrium in which case neither treaty can reduce emissions

introduction imperfect information and rural credit markets puzzles and policy perspectives rural credit markets have been at the center of policy intervention in developing countries over the past forty years many governments supported by multilateral and bilateral aid agencies have devoted considerable resources to supplying cheap credit to farmers in a myriad of institutional settings the results of many of these interventions have been disappointing and one explanation for this must be that they were based on an inadequate understanding of the workings of rural credit markets the articles in this symposium issue are devoted to empirical and theoretical investigations of rural credit markets in the framework of the imperfect information paradigm the authors show how this framework is useful not only in explaining puzzling features of these markets but also in providing a policy perspective to assess the successes and failures of specific interventions

does microfinance reduce poverty in bangladesh new evidence from household panel data abstract the study examines whether loans from microfinance institutions mfi reduce poverty in bangladesh drawing upon the nationally representative household panel with four rounds from 1997 to 2004 the effects of general microfinance loans and loans for productive purposes on income food consumption and women s body mass index are estimated overall effects of mfi loans on income and food consumption were positive and the purpose of the loan is important in predicting which household welfare indicator is improved alternative estimation methods confirm a positive impact of mfi loans on food consumption growth which supports the poverty reducing effects of microfinance in bangladesh

rural development finance in vietnam a microeconometric analysis of household surveys abstract this study examines a the rural household participation in the vietnamese rural credit market b the behavior of a formal lender in response to the credit needs of households and c the impact of credit the rural credit market in vietnam is quite segmented the formal sector specializes in lending for production purposes whereas the informal sector s lending is quite diverse we show that rural households are rational in deciding which sources to ask for a particular kind of loan reputation the dependency ratio of households and the amount of credit applied for by the household are identified as the determinants of credit rationing by the bank credit is shown to have a significant impact on household production

the impact of group lending in northeast thailand abstract much of the literature on group lending focuses on its high repayment rates rather than its goal of promoting borrower welfare most studies that attempt to measure the impact of group lending neglect the issues of self selection and endogenous program placement thus leading to biased estimates of impact one reason for this neglect is the lack of data that would allow for identification of impact this paper surmounts these problems by using data from a quasi experiment conducted in northeast thailand in 1995 1996 program participants were identified in six control villages 1 year prior to receiving loans surveys were then conducted of these control members treatment members in eight older program villages and nonmembers in both types of village this survey design allows for straightforward estimation of impact the results indicate that program loans are having little impact although naive estimates of impact that fail to account for self selection and endogenous program placement significantly overestimate impact

should we be worried about the green paradox announcement effects of the acid rain program this paper presents the first empirical test of the green paradox hypothesis according to which well intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses we use the introduction of the acid rain program in the u s as a case study the theory predicts that owners of coal deposits expecting future sales to decline would supply more of their resource between the announcement of the acid rain program and its implementation moreover the incentive to increase supply would be stronger for owners of high sulfur coal this would all else equal induce an increase in sulfur dioxide emissions using data on prices heat input and sulfur content of coal delivered to u s power plants we find strong evidence of a price decrease and of an increase in the sulfur premium some indication that the amount of coal used might have increased and no evidence of fuel switching towards higher sulfur coal overall our evidence suggests that while the mechanism indicated by the theory might be at work market conditions and concurrent regulation largely prevented a green paradox from arising these results have implications for the design of climate policies

microfinance and poverty evidence using panel data from bangladesh micro finance supports mainly informal activities that often have low market demand it may be thus hypothesized that the aggregate poverty impact of micro finance in an economy with low economic growth is modest or nonexistent the observed borrower level poverty impact is then a result of income redistribution or short run income generation the author addresses these questions using household level panel data from bangladesh the findings confirm that micro finance benefits the poorest and has sustained impact in reducing poverty among program participants it also has positive spillover impact reducing poverty at the village level but the effect is more pronounced in reducing extreme rather than moderate poverty

formal and informal credit markets in egypt this paper examines empirically the markets for formal and informal credit in egypt using a dataset specifically collected for the purpose it examines what factors determine whether or not a person borrows from the informal sector using a probit analysis the paper then conducts a similar exercise for the informal financial sector and seeks to examine whether any link between borrowing in the formal and the informal financial sectors exists conclusions are then drawn as to the role of informal financial markets in the development process this abstract was borrowed from another version of this item

the impact of microcredit on the poor in bangladesh revisiting the evidence abstractwe replicate and reanalyse the most influential study of microcredit impacts m m pitt s r khandker s the impact of group based credit on poor households in bangladesh does the gender of participants matter published in the journal of political economy 106 1998 that study was celebrated for showing that microcredit reduces poverty a much hoped for possibility though one not confirmed by recent randomised controlled trials we show that the original results on poverty reduction disappear after dropping outliers or when using a robust linear estimator using a new program for estimation of mixed process maximum likelihood models we show how assumptions critical for the original analysis such as error normality are contradicted by the data we conclude that questions about impact cannot be answered in these data

european electricity market integration with mixed market designs part i formulation the integration of the day ahead electricity markets in europe shall lead to one multi area market that will substitute the local national ones in view of the target model that will be enforced in all european markets in conjunction with their forthcoming coupling integration a centralized market splitting algorithm is implemented in this paper respecting the standard market regulatory framework of power exchanges pxs and power pools including 1 block offers bids linked block offers bids flexible hourly offers bids and convertible block offers in power exchanges and 2 unit technical commitment constraints and system operating constraints in power pools the problem is formulated as a mixed integer linear programming milp model which can be solved using commercial milp solvers the performance and computational requirements of an implementation in pan european level is presented in the companion paper the model is tested in terms of problem solvability to its limits considering a day ahead market clearing time threshold equal to one hour

symbiosis vs crowding out the interaction of formal and informal credit markets in developing countries abstract it is a common observation in many developing countries that enterprises are active borrowers in both formal and informal credit markets we propose a model in which the formal sector s superior ability in deposit mobilization is traded off against the informational advantage that lenders in the informal sector enjoy the formal sector can screen borrowers by providing only partial financing for projects thereby forcing borrowers to resort to the informal sector for the remainder of the loan we use the model to predict how the market structure responds to changes in the environment and we consider the policy implications of various forms of government intervention

two price zones for the german electricity market market implications and distributional effects abstract we discuss the implications of two price zones i e one northern and one southern bidding area on the german electricity market in the northern zone continuous increases in capacity with low variable costs cause large regional supply surpluses in the market dispatch while in the southern zone conventional capacity decreases as the spatial imbalance of supply and load is increasing the current single bidding area more often results in technically infeasible market results requiring curative congestion management measures there is an ongoing discussion about the potential effects of introducing bidding zones in germany this paper applies an electricity sector model with network representation to analyze the system implications and the distributional effects of two bidding zones in the german electricity system in 2012 and 2015 results show a modest decrease in cross zonal re dispatch levels particularly in 2015 however overall network congestion and re dispatch levels increase in 2015 and also remain on a high level for two bidding zones results are very sensitive to more than two bidding zones and additional line investments illustrating the challenge to define stable price zones in a dynamic setting with two bidding areas prices in the model results increase in the southern zone and decrease in the northern zone the average price deviation grows from 0 4eur mwh in 2012 to 1 7eur mwh in 2015 with absolute values being significantly higher in hours when price differences occur stakeholders within zones are exposed to the price deviations to a different extent distributional effects are surprisingly small compared to the wholesale price or different network charges

an interim evaluation of sulfur dioxide emissions trading ide iv of the 1990 clean air act amendments established the first large scale long term environmental program to rely on tradable emissions permitscalled allowances in this program to control pollution this program was designed to cut acid rain by reducing sulfur dioxide so2 emissions from electric generating plants to about half their 1980 level beginning in 1995 it is of interest both as a response to an important environmental issue and as a landmark experiment in environmental policy this experiment comes at a particularly important time since emission trading is under serious consideration with strong u s backing for use to deal with global climate change by curbing emissions of carbon dioxide co2 the economic stakes in climate change surpass those in acid rain by several orders of magnitude intergovernmental panel on climate change 1996 this article summarizes the results to date of our ongoing empirical analysis of compliance costs and allowance market performance under the u s acid rain program

do village funds improve access to finance evidence from thailand summary this paper examines whether recently introduced village funds one of the largest microfinance programs ever implemented improve access to finance village funds are analyzed in a cross sectional approach in comparison to competing financial institutions we find first that they reach the target group of lower income households better than formal financial institutions second village funds provide loans to those kinds of borrowers who tend to be customers of informal financial institutions third village funds help to reduce credit constraints thus village funds provide services in the intended direction albeit to a seemingly limited degree

absolute abundance and relative scarcity environmental policy with implementation lags we study the effectiveness of environmental policy in a model with nonrenewable resources and an unavoidable implementation lag we find that a time lag between the announcement and the implementation of an emissions quota induces an increase in emissions in the period between the policy s announcement and implementation since a binding constraint on emissions restricts energy use during the implementation phase more of the resources must be extracted outside of it we call this the abundance effect in the case of multiple resources that differ in their pollution intensity a second channel emerges since cleaner sources are relatively more valuable when the policy is implemented it is optimal to conserve them before the cap is enforced this ordering effect tends to induce a switch to dirtier resources before the policy is implemented compounding the increase in emissions via the abundance channel using the announcement lag in title iv of the 1990 caaa as a case study we are able to empirically show that the abundance effect and ordering effect are both statistically and economically significant we discuss a number of alternative policy options to deal with these undesirable side effects of policy announcements

evaluating the market splitting determinants evidence from the iberian spot electricity prices abstract this paper aims to assess the main determinants on the market splitting behaviour of the iberian electricity spot markets iberia stands as an ideal case study where the high level deployment of wind power is observed together with the implementation of the market splitting arrangement between the portuguese and the spanish spot electricity markets logit and non parametric models are used to express the probability response for market splitting of day ahead spot electricity prices as a function of the explanatory variables representing the main technologies in the generation mix wind hydro thermal and nuclear power together with the available transfer capacity and electricity demand logit models give preliminary indications about market splitting behaviour and then notwithstanding the demanding computational challenge a non parametric model is applied in order to overcome the limitations of the former models results show an increase of market splitting probability with higher wind power generation or more generally with higher availability of low marginal cost electricity such as nuclear power generation the european interconnection capacity target of 10 of the peak demand of the smallest interconnected market might be insufficient to maintain electricity market integration therefore pro active coordination policies governing both interconnections and renewables deployment should be further developed

evaluating the application of different pricing regimes and low carbon investments in the european electricity market the eu ets is the first measure initiated by the eu to contribute to the decarbonization of the european energy sector it is a cap and trade system that requires industries participating to the program to procure allowances to cover their emissions electricity intensive industries eiis have complained that the system put their european plants at disadvantage compared to facilities located outside the eu they have asked for actions to mitigate this effect one of them is to have access to long term contracts with electricity suppliers ideally with those operating carbon free plants this paper presents and illustrates a method for assessing the impact of this measure on eiis participating to the eu cap and trade system we model a power market segmented in two consumer groups eiis and the rest of the market n eiis these two groups are subject to different price regimes eiis purchase electricity from dedicated base load power plants at average cost price while n eiis are supplied at marginal cost the french exeltium and the belgian blue sky consortia are existing examples of this market organization the expanse of the territories that can be covered by these systems depends on the organization of transmission organization and on national energy position relative to carbon free generation we examine two different types of long term average cost based contracts that differ by the organization of transmission and study their impact under different national energy policies we formulate the problem of operations and investment in this market as a spatial equilibrium model where generators can invest in new capacity subject to different regional constraints transmission is organized according to a flow based approach as foreseen by regulatory authorities and transmission system operators in europe we also examine the impact of nuclear policies co 2 emission allowances are auctioned and tradable we describe the models and discuss their policy implications through a stylized case study of the central western european electricity market mathematical properties are provided in the appendices published in the supplementary materials of this paper 2012 elsevier b v

strategy proof uniform effort sharing schemes for transfrontier pollution problems uniform effort sharing rules for transfrontier pollution problems like the popular equal percentage reduction arrangement do not result in a cost efficient allocation of emission abatement efforts in addition they may violate voluntary participation constraints if the uniform effort level is decided upon by means of ordinary majority vote in contrast to ordinary majority vote i consider in this paper the so called conservative mechanism by moulin 1994 which picks the smallest revealed effort level in stead of the median the conservative mechanism always respects a weak participation constraint moreover it is coalitionally strategy proof meaning that no individual player or group of players can achieve a better outcome by misrepresenting its preferences for environmental quality in order to remedy the cost inefficiency of the equal percentage arrangements i propose to apply the conservative mechanism to the choice of a uniform emission tax rate simulations for the greenhouse effect indicate that the latter mechanism does considerably better than the traditional equal percentage arrangement

where do all the windmills go influence of the institutional setting on the spatial distribution of renewable energy installation abstract promoting renewable energy sources is one policy response to climate change not only is there currently a debate over the best policy instrument it is also discussed whether the renewable energy production should be expanded centralized at locations with the highest production potential or decentralized close to load it is yet not fully understood what influences the spatial distribution of renewable energy installation i assess the effect of subsidy scheme and market design on the spatial distribution of wind energy installations by comparing a feed in tariffs versus market premiums and b uniform versus nodal pricing the analysis is based on theoretical considerations and using a six node test model that reflects the consumption and renewable resource distribution in several countries and regions the institutional setting has great influence on the spatial distribution and resulting system costs with uniform pricing a market premium only leads to a more decentralized expansion of renewable energy production than a tariff when sites share similar wind conditions spatially more distributed expansion of wind power performs better in terms of total costs and share of wind power in final demand when networks are restricted

tacking stock of the eu power target model and steering its future course abstract the european union took more than 20 years to start defining a common market design for its internal electricity market a european power target model and a further 10 years to fully implement it meanwhile the reference generation set of that model has shifted from ccgt burning gas to res plants transforming intermittent natural resources could the existing eu target model continue to work well for the short term operation and long term investment if not can the existing eu institutions easily produce an res resilient new power target model

renewables diffusion and contagion effect in italian regional electricity markets assessment and policy implications abstract in the electricity market sudden price jumps occur more frequently than in other markets due to the peculiarity of electricity furthermore the structural spot characteristics of the electricity market determine high price variability all these characteristics have been accentuated by the dramatic increase of renewable energy supply in italy starting in 2010 these features suggest the possibility of contagion effects across italian regional electricity markets considering contagion such as a sudden and significant increase in cross market links arising from a shock to a specific market in this paper we investigate whether such a renewable energy increase has affected the contagion behavior in the italian electricity spot market taking into account both the difference between interdependence and contagion and the direction of the shock we find empirical evidence with significant tests that no changes have occurred in interdependence mechanism nor in contagion effects due to renewable energy sources development in italy

high noon for microfinance impact evaluations re investigating the evidence from bangladesh recently microfinance has come under increasing criticism raising questions of the validity of iconic studies which have justified it such as pitt and khandker chemin applied propensity score matching to the pitt and khandker data finding different impacts but does not disaggregate by gender of borrower we first replicate chemin and extend his analysis in two ways we test the robustness of propensity score matching results to selection on unobservables using sensitivity analysis and we investigate propensity score matching estimates of impacts by gender of borrowers the mainly insignificant impacts of microfinance differ greatly by gender of borrower but are all vulnerable to selection on unobservables we are therefore not convinced that the relationships between microfinance and outcomes are causal with these data

risk wealth and sectoral choice in rural credit markets we model the role of the informal credit sector in developing countries the informational advantage of informal lenders is portrayed as the ability to monitor borrowers monitoring reduces the incentive problem and allows for contracts with lower collateral this enables informal lenders to serve both individuals who cannot post the collateral required by the formal sector and those who are able but do not want to post collateral the model is consistent with the conventional view of the informal sector as recipient of spillover demand from the formal sector it also shows that the informal sector may provide partial insurance as the lower collateral requirement implies greater consumption smoothing for borrowers

why do poor people co hold debt and liquid savings i examine the use of flexible savings and loan accounts offered by safesave a microfinance institution serving poor slum dwellers in dhaka bangladesh i find that 59 per cent of the clients co ho

ordering the extraction of polluting nonrenewable resources energy markets are often characterized by the use of multiple nonrenewable resources such as coal and natural gas with different pollution characteristics the same resource may have different qualities as when high and low sulfur coal is used to generate electricity multiple resources are used in providing transportation services such as cars running on gasoline or plug in hybrids that may be fueled by electricity produced from coal when these nonrenewable resources contribute differentially to pollution what is the opti mal sequence of extraction over time harold hotelling 1931 developed the classical theory of extraction of a nonrenewable resource orris c herfindahl 1967 extended the hotelling model by considering many resources with different unit costs of extraction and proposed the least cost first principle extraction must be ordered by cost with the cheapest resource used first others have examined whether herfindahl s model remains valid in a variety of situations in a general equilibrium setting see murray kemp and ngo v long 1980 tracy r lewis 1982 in the presence of setup costs g rard gaudet moreaux and stephen w salant 2001 under het erogeneous demands chakravorty and darrell l krulce 1994 and when the extraction rate is constrained jean pierre amigues et al 1998 stephen p holland 2003 in these studies following hotelling and herfindahl resources were differentiated by cost alone in this paper we abstract from cost considerations and focus on how the sequence of extraction may be affected when resources are differentiated only by their pollution character istics we consider two resources one more polluting than the other without loss of generality consider coal to be the dirty resource and natural gas the clean one both may be used to generate electricity environmental regulation is imposed through a cap on the stock of pollution this may be a stylized approximation of an international agreement such as the kyoto protocol which aims to stabilize the concentration of greenhouse gases in the atmosphere 1 with heterogeneity in pollution the results are nonintuitive and do not depend on the emis sion rates of the resources when the economy is already at its allowable stock of pollution the clean natural gas is used first and use of the dirty coal is postponed to the future this is what one would expect armed with insights from the herfindahl model however when the economy starts from below the ceiling and accumulates pollution coal may be used first and use of the clean natural gas is postponed the optimal strategy is to benefit from natural dilution by build ing the stock of pollution as quickly as possible this is done by burning coal rather than natural

the welfare implications of climate change policy abstract the response to three different climate change policies is measured within a general equilibrium model of world output technological change greenhouse gas emissions and climate driven changes in productivity the proposed policies including an approximation to the kyoto protocol are shown to differ greatly in how they mitigate climate change support economic growth and allocate rents across generations benefits of alternative policies relative to the status quo do not necessarily accrue to the generations that bear the costs the results also show that the chosen rent distribution rule has a profound effect on policy evaluation in particular policies which allocate rents on a per capita basis are shown to be systematically welfare preferred to situations where emissions rights are grandfathered to emitting firms this implies that both the optimal level of emissions and the welfare cost of reaching a given target of emissions or atmospheric concentration would be lower under a per capita allocation of emissions permits or carbon tax revenues

market splitting in germany new evidence from a three stage numerical model of europe abstract with the sharp increase in redispatch measures seen during recent years the importance of an efficient congestion management has increased particularly in germany as the current market design with a single bidding area ignores the physical constraints of the transmission grid there is an ongoing discussion about introducing price zones against this background we develop a three stage approach to model redispatch and market splitting for germany while considering interactions with interconnected countries we identify an increasing spatial imbalance between generation and load and delays in grid extension as being the main drivers for the increase of modeled redispatch volumes from 2012 to 2020 we show that market splitting reduces imminent congestion although results are sensitive to the zonal delimitation and corresponding net transfer capacities the overall welfare effect is negligible but price differences between the bidding areas investigated i e one northern and southern price zone result in considerable distributional effects while consumers in northern germany would benefit producer rents and in particular the value of wind energy would decrease the opposite is true for southern germany we conclude that market splitting constitutes a solution to reduce redispatch measures as long as transmission grid expansion is further delayed

climate policy and the optimal extraction of high and low carbon fossil fuels we study how restricting co2 emissions affcts resource prices and depletion over time we use a hotelling style model with two nonrenewable fossil fuels that differ in their carbon content e g coal and natural gas and that are imperfect substitutes in final good production we study both an unexpected constraint and an anticipated constraint both shocks induce intertemporal substitution of resource use when emissions are unexpectedly restricted it is cost effective to use high carbon resources relatively more less intensively on impact if this resource is relatively scarce abundant if the emission constraint is anticipated it is cost effective to use relatively more less of the low carbon input before the constraint becomes binding in order to conserve relatively more less of the high carbon input for the period when climate policy is active in case the high carbon resource is relatively scarce abundant

a little at a time the use of regularly scheduled repayments in microfinance programs abstract informal lenders appear to be thriving even in regions where microfinance institutions mfis such as the grameen bank have established lending programs we suggest that an explanation for this well documented observation lies in the ubiquitous use of regularly scheduled repayments by mfis borrowers are typically required to repay their loans in tightly structured installments beginning soon after loan disbursement this little remarked aspect of the repayment schedule is usually explained as inculcating fiscal discipline among borrowers we argue that an alternative rationale for this loan repayment structure lies in the difficulty of monitoring borrowers actions the potential for moral hazard leads mfis to use innovative mechanisms such as regularly scheduled repayments which indirectly coopt the better informed informal lenders conversely this installment repayment structure allows informal lenders to survive further we show that this linkage can not only expand the volume of informal lending but may also raise the interest rate in the informal sector

incentives to diffuse advanced abatement technology under the formation of international environmental agreements we analyse the incentives for polluting firms to diffuse and adopt advanced abatement technology in a framework in which governments negotiate an international environmental agreement these incentives crucially depend on whether the underlying environmental policy instrument is an emission tax or an emission quota the results for the international setting fundamentally differ from those for the national setting that have been elaborated upon in the earlier literature in particular equilibrium diffusion and adoption of advanced abatement technology are not necessarily optimal under the tax regime and may be even lower than those under the quota regime

market failures of market coupling and counter trading in europe an illustrative model based discussion the horizontal integration of the energy market and the organization of transmission services remain two open issues in the restructured european electricity sector the coupling of the french belgian and dutch electricity markets the trilateral market in november 2006 was a real success the extension of the system to germany in november 2010 also proceeded smoothly and the intent is to continue with the same market architecture but market coupling is based on a zonal system which has often failed in meshed grids this may cast doubts on what will happen in the future when electricity demand picks up again and wind develops the nodal system has generally been more successful than zonal architectures but its implementation is not currently foreseen in the eu this paper analyzes versions of market coupling that differ by the organization of counter trading while underplayed in current discussions counter trading could become a key element of market coupling as its geographic coverage expands and wind penetrates we simplify matters by assuming away strategic behavior between the energy and counter trading markets and conduct the analysis on a stylized six node example taken from the literature we simulate market coupling for different assumptions of zonal decomposition and coordination of transmission system operators tsos we show that these assumptions matter even in the absence of strategic behavior market coupling can be quite vulnerable to the particular situation on hand countertrading can work well or completely fail and it is not clear beforehand what will prevail our analysis relies on standard economic notions such as social welfare and generalized nash equilibrium but the use of these notions is probably novel the nodal organization is the reference first best scenario different zonal decompositions and degrees of coordination are then studied with respect to this first best solution

greenhouse gas emission controls in an open economy to examine how greenhouse gas emission controls affect a country s industrial and trade structures this article presents an open economy model that has both ricardian and heckscher ohlin features we specifically compare emission quotas emission taxes and emission standards the patterns of production and trade critically hinge on those policy tools it is shown that a domestic emission control may lead to carbon leakage and may not reduce the world emissions and that emission standards may work as a hidden production subsidy toward an emission intensive industry

segmentation in rural financial markets the case of nepal abstract based on a farm household survey in nepal this study found that farm size and irrigation are major determinants of borrowing from formal institutions whereas family size is the most decisive factor in borrowing from informal sources formal sector borrowing per hectare of cultivated area however initially increases and then decreases with farm size our analysis indicates that while very small farmers tend to be excluded from the formal financial market because of a lack of collateral very large farmers choose to borrow less from that source because of lower production efficiency

feasible climate targets the roles of economic growth coalition development and expectations the analysis presented here follows the design specified by the energy modeling forum emf transition scenarios study on achieving climate stabilization goals with delayed participation by developing countries we use the merge model to evaluate the core emf scenarios for both the international and the us specific studies our results indicate that a radiative forcing target equivalent to 450 ppmv co2 e cannot be met even allowing for full participation and overshoot during the entire 21st century with delayed participation of developing countries a target of 550 ppmv co2 e is only attainable with pessimistic assumptions about economic growth and even then only at very high cost a target of 650 ppmv co2 e can be met with delayed participation for a more affordable cost we highlight sensitivities to the core scenarios in two key dimensions i the effect of the unfolding global financial crisis on the rate of economic growth and ii the willingness of initially non participating countries to agree at the beginning of the next commitment period i e 2012 to join the coalition at a pre specified date in the future we find that while the recession does not fundamentally change the crucial role of developing country involvement advance agreement on their part to future targets could substantially reduce costs for all countries

carbon leakage the green paradox and perfect future markets policies of lowering carbon demand may aggravate instead of alleviate climate change green paradox in a two period three country general equilibrium model with finite endowment of fossil fuel one country enforces an emissions cap in the first or second periods when that cap is tightened the extent of carbon leakage depends on the interaction of various parameters and elasticities conditions for the green paradox are specified all determinants of carbon leakage resulting from tightening the first period cap work in the opposite direction when the second period cap is tightened tightening the second period cap does not necessarily lead to the green paradox

fossil fuels stock externalities and backstop technology the hotelling exhaustible resource model is extended to include stock pollution and nonpolluting backstop technology it is shown that an optimal energy consumption strategy typically includes a regime in which the two energy sources are consumed simultaneously along this regime fossil fuel consumption decreases and backstop consumption increases together fossil fuel and backstop consumption may form eleven optimal regime combinations a decrease in the backstop price decreases the initial level of optimal emission tax

the thai rural credit system public subsidies private information and segmented markets thailand has sought to increase farmers access to credit by government intervention in 1966 it created a government agricultural bank to lend solely to farm households and beginning in the late 1970s it required commercial banks to lend heavily in the rural sector either directly or by making deposits in the agricultural bank the result was an enormous expansion of credit in the rural sector but because formal lenders were either unable or unwilling to solve the information problems involved in the broad range of rural credit transactions the informal credit sector wbich charged interest rates many times higher than the formal sector continued to thrive using household surveys and surveys of moneylenders this article provides a detailed analysis of the ways in which lenders in the informal sector have solved the information problems of providing credit the authors argue that the informal sector is competitive and that high interest rates reflect high information costs not the scarcity of funds this article reports on a set of investigations of the impact of thai government policies to expand bank lending in the rural sector their purpose was to increase farmers access to capital and reduce their dependence on informal lenders fifteen years after the principal government measures were introduced we hope to be able to answer several questions how has the expansion of formal sector lending affected the informal sector did the increase in the supply of formal credit reduce the business of informal lenders and lower interest rates in the informal market what has been the performance of the formal credit system in terms of coverage efficiency and incidence lacking time series data on the informal sector we cannot give a direct answer to these questions but we can with confidence say that the informal lenders are still very much alive by examining the behavior of the rural credit market at the present time we can throw an indirect light on what transpired over the last fifteen years our main findings are the following on the basis of our 1984 85 survey of households and moneylenders

the impact of group based credit programs on poor households in bangladesh does the gender of participants matter this paper estimates the impact of participation by gender in the grameen bank and two other group based micro credit programs in bangladesh on labor supply schooling household expenditure and assets the empirical method uses a quasi experimental survey design to correct for the bias from unobserved individual and village level heterogeneity we find that program credit has a larger effect on the behavior of poor households in bangladesh when women are the program participants for example annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs compared with 11 taka for men

formal informal sector interaction in rural credit markets abstract the majority of small cultivators in the less developed countries are not regarded as credit worthy by the formal sector financial institutions and are forced to borrow from the moneylenders in the informal credit market this paper shows that when such borrowers differ in their likelihood of default and the moneylenders are asymmetrically informed about the client specific degree of risk the policy of providing cheap credit through the formal sector can generate adverse composition effects which worsen the terms of credit and the availability of loans in the informal sector

optimal early action on greenhouse gas emissions in this paper i argue that early action policies that focus on early actual emission reductions will tend to distort abatement investment decisions and thereby inflate the national compliance cost of a greenhouse gas emissions reduction target compliance cost savings stem from well planned early action that may or may not yield early actual emission reduc tions thus policies that target actual emission reductions such as credit for early action or an aggressive early cap and trade program have the potential to be highly distorting sim ulation results from a model calibrated to the canadian economy suggest that the associated welfare losses could be many billions of dollars action optimale dans les debuts quand il s agit de 1 effet de serre ce memoire suggere que des politiques qui tres tot s attaquent a la reduction des emissions de gas creant l effet de serre vont tendre a distorsionner les decisions d investissement pour les reduire et ce faisant accroitre le couit qu il y aura pour le pays a se conformer a des objectifs cibles de reduction des emissions de gas creant l effet de serre la reduction des couits qu il y a a se conformer vient d actions bien planifiees qui peuvent engendrer des reductions des emissions dans les debuts ou non ainsi des politiques qui visent des le depart des reductions au plus vite comme les programmes de credit pour action rapide ou cap and trade peuvent creer de fortes distorsions les resultats d un modele de simulation calibre pour s arrimer a l economie canadienne suggerent que les pertes de bien etre associees a ces distorsions pourraient s elever a des milliards de dollars

national strategic investment in european power transmission capacity abstract the transformation of the european electricity system requires substantial investment in transmission capacity to facilitate cross border trade and to efficiently integrate renewable energy sources however network planning in the eu is still mainly a national prerogative in contrast to other studies aiming to identify the pan european continental welfare optimal transmission expansion we investigate the impact of zonal planners deciding on network investment strategically with the aim of maximizing the sum of consumer surplus generator profits and congestion rents in their jurisdiction this reflects the inadequacy of current mechanisms to compensate for welfare re allocations across national boundaries arising from network upgrades we propose a three stage equilibrium model to describe the nash game between zonal planners i e national governments regulators or system operators each taking into account the impact of network expansion on the electricity spot market and the resulting welfare effects on the constituents within its jurisdiction we propose a novel way to solve the resulting gne epec type problem using a variation of a disjunctive constraints reformulation this allows to solve this problem without a priori assumptions on the relative valuation of shared constraints by each player using a four node sample network we identify several nash equilibria of the game between the zonal planners this example illustrates the failure to reach the first best welfare expansion in the absence of an effective framework for cross border cost benefit allocation

hybrid pricing in a coupled european power market with more wind power abstract in the european electricity market the promotion of wind power leads to more network congestion zonal pricing market coupling which does not take the physical characteristics of transmission into account is the most commonly used method to relieve network congestion in europe however zonal pricing fails to provide adequate locational price signals regarding scarcity of energy and thus creates a large amount of unscheduled cross border flows originating from wind generated power in this paper we investigate the effects of applying a hybrid congestion management model i e a nodal pricing model for one country embedded in a zonal pricing system for the rest of the market we find that compared to full nodal pricing hybrid pricing fails to fully utilize all the resources in the network and some wrong price signals might be given however hybrid pricing still outperforms zonal pricing the results from the study cases show that within the area applying nodal pricing better price signals are given the need for re dispatching is reduced more congestion rent is collected domestically and the unit cost of power is reduced

understanding the coexistence of formal and informal credit markets in piura peru summary this paper examines why farm households seek informal loans in piura peru where formal lenders offer loans at lower interest rates a panel data econometric analysis reveals that the informal sector serves various types of clients households excluded from the formal sector but also households that prefer informal loans because of lower transaction costs or lower risk an in depth examination of contract terms and loan technologies permits an accurate comparison of effective loan costs and contractual risk across sectors and reveals that proximity and economies of scope enjoyed by informal lenders enable them to substitute information intensive screening and monitoring for contractual risk and supply these various types of clients

international environmental agreements the case of costly monetary transfers most existing international environmental agreements to resolve transboundary pollution problems appear constrained in the sense that either monetary transfers accompany uniform abatement standards agreements based on a uniform standard with monetary transfers or differentiated abatement standards are established but without monetary transfers agreements based on differentiated standards for two asymmetric countries facing the challenge of a transboundary pollution problem we compare the relative efficiency of these two second best agreements we study especially the role of the costs associated with transfer payments across countries in the choice of these agreements to conduct this analysis we use a negotiation game and the generalized nash bargaining solution nash in econometrica 21 128 140 1953 as the equilibrium for total welfare our findings show that countries collectively prefer the uniform to the differentiated agreement if the cost of transfers is sufficiently low compared to the ratio for countries of the difference of the abatement costs between the two agreements in the analysis of individual welfare we also discuss the reluctance of one country to sign a specific type of agreement even if it is better off than in the case of non cooperation

credit availability and internal migration evidence from thailand this study investigates the relationship between borrowing and internal migration exploiting the micro finance scheme village fund in thailand it investigates the short and medium term effects o

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

congestion management through topological corrections a case study of central western europe the integration of an increasing amount of renewable generation within europe is posing operational challenges that require various balancing actions system operators therefore need to rely increasingly on the active control of the transmission network transmission topology control is a fast and economical option to add flexibility to the transmission system we model the current methodology for controlling congestion in the central western european cwe market and quantify the benefits of topology control we also compare the results with a nodal pricing model our computational results suggest that topology control can significantly reduce congestion management costs under the current market coupling regime whereas the benefits of topology control are limited under nodal pricing topology control emerges as an attractive and implementable means of managing congestion as it provides a significant percentage of the cost savings that would be achieved by overhauling the existing european market design and shifting to a nodal pricing regime

a hotelling model with a ceiling on the stock of pollution abstract environmental agreements such as the kyoto protocol aim to stabilize the amount of carbon in the atmosphere which is mainly caused by the burning of nonrenewable resources such as coal we characterize the solution to the textbook hotelling model when there is a ceiling on the stock of emissions we consider both increasing and decreasing demand for energy we show that when the ceiling is binding both the low cost nonrenewable resource and the high cost renewable resource may be used jointly a key implication is that if energy demand were to decline in the long run we may supplement energy supply through clean renewables to meet the environmental standard but then revert back to using only dirty fossil fuels in the future when the ceiling has become non binding that is the much heralded societal transition to clean energy resources may be short lived

transmission and generation investment in electricity markets the effects of market splitting and network fee regimes abstract we propose an equilibrium model that allows to analyze the long run impact of the electricity market design on transmission line expansion by the regulator and investment in generation capacity by private firms in liberalized electricity markets the model incorporates investment decisions of the transmission system operator and private firms in expectation of an energy only market and cost based redispatch in different specifications we consider the cases of one vs multiple price zones market splitting and analyze different approaches to recover network cost in particular lump sum generation capacity based and energy based fees in order to compare the outcomes of our multilevel market model with a first best benchmark we also solve the corresponding integrated planner problem using two test networks we illustrate that energy only markets can lead to suboptimal locational decisions for generation capacity and thus imply excessive network expansion market splitting heals these problems only partially these results are valid for all considered types of network tariffs although investment slightly differs across those regimes

strategic environmental disclosure evidence from the doe s voluntary greenhouse gas registry abstract although mandatory disclosure programs have been studied extensively strategic voluntary environmental disclosures by firms are not well understood we study the motivations for and impacts of firms strategic disclosure of greenhouse gas reductions to the us government we first model firms joint abatement and disclosure decisions incorporating both economic and political incentives we then use data from the department of energy s voluntary greenhouse gas registry to compare reported reductions to actual emissions we find that participants in the program engage in highly selective reporting in the aggregate they increase emissions over time but report reductions in contrast non participants decrease emissions over time participants tend to be large firms facing strong regulatory pressure pressure from environmental groups reduces the likelihood of participation suggesting such groups viewed the program as a form of greenwash participating in the 1605 b program had no significant effect on a firm s changes in carbon intensity over time

rethinking the effects of microcredit on household welfare in cambodia abstractthis article analyses the effects of microcredit on household welfare in terms of household expenditure per capita in cambodia with data from the cambodia socio economic survey carried out in 2014 the analysis describes the effects via formal and informal lending sectors accounting for endogenous selection bias arising from unobserved factors and for structural differences between borrowers and non borrowers in terms of expenditure functions the findings suggest that microcredit in both sectors reduces household expenditure

are uniform solutions focal the case of international environmental agreements the application of uniform solutions has several drawbacks notably their lack of cost efficiency and their inability to guarantee individual rationality a proper specification of uniform solutions however reveals that uniform solutions that satisfy individual rationality always exist when all countries hold private information about their own reduction costs there only exists one solution that always satisfies individually rationality without use of side payments and the requirement of dominant strategy implementation the solution that selects the smallest individually preferred uniform reduction which also give a theoretical explanation of the lowest common denominator effect

optimal adaptation strategies to face shocks on groundwater resources we consider an exogenous and reversible shock to a groundwater resource namely a decrease in the recharge rate of the aquifer we compare optimal extraction paths and the social costs of optimal adaptation in two cases under certainty i e when the date of occurrence of the shock is known and under uncertainty when the date of occurrence of the shock is a random variable we show that an increase in uncertainty leads to a decrease in precautionary behavior in the short run and to an increase in precautionary behavior in the long run we apply our model to the particular case of the western la mancha aquifer in spain we show that in this context it is advantageous for the water agency to acquire information on the date of the shock especially for high intensity and intermediate risk events

determinants of credit rationing a study of informal lenders and formal credit groups in madagascar abstract previous research on the determinants of credit rationing focused exclusively on the behavior of formal lenders who contract directly with an individual borrower based on survey data from madagascar this paper presents an analysis of credit rationing by informal lenders and by members of community based groups that allocate formal group loans among themselves the results show that group members are able to obtain and to use locally available information about the applicant s creditworthiness in much the same way as informal lenders do both types of lenders use the applicant s debt servicing obligations and income as the main criteria for credit rationing this paper therefore empirically confirms theoretical arguments that community based groups have an information advantage over distant formal bank agents

the benefits and costs of microfinance evidence from bangladesh abstract using the latest developments from the evaluation literature namely the technique of matching this paper shows a positive but lower than previously thought effect of microfinance on expenditure per capita supply of labour and level of school enrolment for boys and girls for instance participants spend 3 per cent more on average than non participants in control villages this paper also takes into account repayment delays to calculate the cost of credit provision it shows how a better investigation at the individual level of the benefits brought and the cost borne could help microfinance institutions to better select their customers jel classification c14 d10 g21 i38 o12 o16

formal and informal rural credit in four provinces of vietnam abstract this paper uses a survey of 932 rural households to uncover how the rural credit market operates in vietnam households obtain credit through formal and informal lenders formal loans are almost entirely for production and asset accumulation while informal loans are used for consumption smoothening the determinants of formal and informal credit demand are distinct while credit rationing depends on education and credit history in particular regional differences in the demand for credit are striking a one size fits all approach to credit policy in vietnam would be inappropriate