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

bargaining power of smaller states in germany s landerfinanzausgleich 1979 90 in this paper we explore the impact of politicalfactors on redistribution across the states in thegerman landerfinanzausgleich from a public choiceperspective the smaller states are supposed to have ahigher influence on decisions in the secondlegislative chamber due to a lower shadow price oftheir votes which implies a higher bargaining power as the federal government s policy depends on amajority in the second chamber there is an incentiveto buy smaller states votes controlling for gdp percapita we find statistically significant support forour hypotheses

renegotiation of concession contracts in latin america evidence from the water and transport sectors abstract high rates of contract renegotiation have raised serious questions about the viability of the concession model to attract private participation in infrastructure in developing countries after extending in reduced form a standard regulation model in which renegotiation occurs due to the imperfect enforcement of concession contracts we use a unique data set of 307 concessions awarded in latin america from 1989 to 2000 covering the sectors of transport and water to analyze the determinants of this high incidence of renegotiations of infrastructure contracts we look in details at the impact on the probability of renegotiation of a concession of regulatory institutions institutional features economic shocks and of the characteristics of the concession contracts themselves we then derive some policy implications of our work

decentralisation and accountability in infrastructure delivery in developing countries many developing countries are experimenting with decentralisation of public service delivery to elected local governments instead of bureaucrats appointed by a central government we study the resulting implications in a theoretical model in which the central government is uninformed about local need and unable to monitor service allocations bureaucrats charge bribes for services as monopoly providers resulting in underprovision of services especially for the poor local governments are directly responsive to their citizens needs but may be subject to capture by elites effects of decentralisation on service volumes efficiency and equity are analysed under different financing arrangements for local governments the theme of the 2004 world development report is summarised by its opening paragraph too often services fail poor people in access in quantity in quality but the fact that there are strong examples where services do work means governments and citizens can do better how by putting poor people at the center of service provision by enabling them to monitor and discipline service providers by amplifying their voice in policymaking and by strengthening the incentives for providers to serve the poor problems of accountability associated with traditional modes of delivery involving centralised bureaucracies include cost padding service diversion limited responsiveness to local needs limited access and high prices charged especially to the poor 1 many developing countries have thus begun to experiment with initiatives to increase accountability of service providers by providing greater control rights to citizen groups these include decentralisation of service delivery to local governments community participation direct transfers to households and contracting out delivery to private providers and ngos the programmes include a wide range of infrastructure services water sanitation electricity telecommunications roads and social services education health and welfare programmes countries where such trends have gathered

renegotiation design with unverifiable information this paper considers a buyer seller relationship with observable but unverifiable investments and or random utility parameters in such situations it is known that contract renegotiation may prevent the implementation of first best outcomes in this paper we show however that efficient investments and optimal risk sharing can typically be achieved provided the initial contract is able to monitor the ex post renegotiation process specifically we focus on the following two features of renegotiation design first default options in case renegotiation breaks down second the allocation of all bargaining power to either contracting party moreover we show that these two features can be obtained in standard rubinstein bargaining games through contractual provisions such as specific performance clauses and penalties for delay or equivalently financial hostages refundable without interest

concessions of infrastructure in latin america government led renegotiation this paper analyzes government led renegotiations in infrastructure concession contracts in latin america based on the same sample used in guasch laffont and straub 2003 to examine firm led renegotiations after extending the theoretical framework to a multiple period context in which both pareto improving and rent shifting renegotiations at the initiative of the government can occur we develop an original instrumental variable strategy to address the issue of contract endogeneity and derive empirical results while some of the main insights concerning the importance of having a regulator in place when awarding concessions and the fragility of price cap regulatory schemes are unchanged significant differences arise with respect to the effect of investment and financing as well as the corruption variables we provide evidence that a good regulatory framework is especially important in contexts with weak governance and political opportunism copyright 2007 john wiley sons ltd

privatization in latin america what does the evidence say privatization is under attack criticisms run from corrupt deals to abuse of market power and social welfare losses we evaluate the empirical record on privatization relying on recent comprehensive studies from latin america the paper presents four main results first the increased profitability of privatized firms is not explained by sample selection biases second in the quest to identify the sources of increased profitability after privatization we find little evidence that validates concerns of generalized market power abuses exploitation of workers and lack of fiscal benefits third the manner in which privatization is carried out matters transparency and homogeneity in procedures speed and limited restructuring prior to privatization lead to better outcomes and less room for corruption and discretion finally privatization s success is enhanced by two complementary policies deregulation or reregulation of industries previously shielded from competitive forces and an effective corporate governance framework that facilitates privatized firms access to capital at lower cost overall the empirical record shows that privatization leads to increased profitability and productivity firm restructuring fiscal benefits output growth and even quality improvements most cases of privatization failure can be linked to poor contract design opaque processes with heavy state involvement lack of reregulation and a poor corporate governance framework

who wants to redistribute the tunnel effect in 1990s russia abstract support for governmental redistribution tended to be greater for the poor than the rich in a representative sample of russian adults in 1996 however support for redistribution is higher amongst those who expect their welfare to fall and this effect is strongest amongst the currently well off a rising trajectory inhibits demand for redistribution support is also stronger in rural areas amongst those with less schooling those who fear losing their job the elderly and amongst women our results are consistent with albert hirschman s idea of a tunnel effect whereby prospects of mobility in both directions influence demand for governmental redistribution

technology learning for fuel cells an assessment of past and potential cost reductions abstract fuel cells have gained considerable interest as a means to efficiently convert the energy stored in gases like hydrogen and methane into electricity further developing fuel cells in order to reach cost safety and reliability levels at which their widespread use becomes feasible is an essential prerequisite for the potential establishment of a hydrogen economy a major factor currently obviating the extensive use of fuel cells is their relatively high costs at present we estimate these at about 1100 2005 kw for an 80 kw fuel cell system but notice that specific costs vary markedly with fuel cell system power capacity we analyze past fuel cell cost reductions for both individual manufacturers and the global market we determine learning curves with fairly high uncertainty ranges for three different types of fuel cell technology afc pafc and pemfc each manufactured by a different producer for pemfc technology we also calculate a global learning curve characterised by a learning rate of 21 with an error margin of 4 given their respective uncertainties this global learning rate value is in agreement with those we find for different manufacturers in contrast to some other new energy technologies r d still plays a major role in today s fuel cell improvement process and hence probably explains a substantial part of our observed cost reductions the remaining share of these cost reductions derives from learning by doing proper since learning by doing usually involves a learning rate of typically 20 the residual value for pure learning we find for fuel cells is relatively low in an ideal scenario for fuel cell technology we estimate a bottom line for specific 80 kw system manufacturing costs of 95 2005 kw although learning curves observed in the past constitute no guarantee for sustained cost reductions in the future when we assume global total learning at the pace calculated here as the only cost reduction mechanism this ultimate cost figure is reached after a large scale deployment about 10 times doubled with respect to the cumulative installed fuel cell capacity to date

renegotiation and information revelation over time the case of optimal labor contracts the paper analyzes the issue of commitment in grossman and hart s model of optimal labor contracts under asymmetric information about firm profitability we extend their framework by allowing employment to vary over time at equidistant intervals when both parties can precommit ex ante not to renegotiate the contract this replicates the grossman hart outcome each subperiod when precommitment is not possible information revealed through the contract can create pareto improving renegotiation opportunities and the issue of optimal information revelation arises the paper analyzes the impact of ex post pareto improving renegotiations on the optimal contract

infrastructure privatization and changes in corruption patterns the roots of public discontent abstract this paper offers a theory of how the degree of corruption that prevails in a society responds to changes in the ownership structure of major public service providers we show that there are cases in which privatization even though it fosters investments in infrastructure also opens the door to more corruption the public dissatisfaction towards privatization is then crucially affected by the changes in the degree and pattern of corruption our model thus helps understand the seemingly paradoxical situation prevailing in latin america where most studies find that privatizations have been efficiency enhancing and have fostered investments and at the same time popular dissatisfaction with the process is extremely high especially among the middle class we show that this line of explanation is consistent with the evidence from surveys in the region

social mobility and redistributive politics just like economists voters have conflicting views about redistributive taxation because they estimate its incentive costs differently we model rational agents as trying to learn from their dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs in the long run left wing dynasties believing less in individual effort and voting for more redistribution coexist with right wing dynasties this allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries

the benefits of privatization evidence from mexico critics of privatization often argue that its benefits come at a high cost to society the authors test the validity of this criticism for mexico s privatization program one of the world s largest case by case programs assessing the performance of newly privatized firms in such areas as profitability and efficiency they find that these firms quickly close the gap with their peers in the private sector their findings suggest that the firms profit gains come from productivity gains 52 percent layoffs 33 percent and higher prices 15 percent

is consumption growth consistent with intertemporal optimization evidence from the consumer expenditure survey in this paper we show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in u s household level data we propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations we estimate preference parameters using the only u s micro data set with complete consumption information we show that previous rejections can be explained by the simplifying assumptions made in previous studies we also show that results obtained using good consumption or aggregate data can be misleading

adverse selection and renegotiation in procurement as was shown by dewatripont optimal long term contracts are generally not sequentially optimal the parties ex post renegotiate them to their mutual advantage this paper fully characterizes the equilibrium of a simple two period procurement situation and studies the extent to which renegotiation reduces ex ante welfare i a central result is that like in the non commitment case the second period allocation is optimal for the principal conditionally on his posterior beliefs about the agent ii the first period allocation exhibits an increasing amount of pooling when the discount factor grows iii with a continuum of types it is never optimal to induce full separation the paper also analyzes whether renegotiated long term contracts yield outcomes resembling those under either unnegotiated long term contracts or a sequence of short term contracts and it links the analysis with the multiple unit durable good monopoly problem

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

when information dominates comparison abstract we propose a micro econometric evaluation of the relation between life satisfaction and income distribution using a balanced panel survey of the russian population russian longitudinal monitoring survey rlms running from 1994 to 2000 covering 4685 individuals we show that in the context of the very volatile russian environment hirschman s q j econ 87 1973 544 tunnel effect conjecture seems to be confirmed variables reflecting income distribution do not influence satisfaction through social comparisons individuals rather seem to use their informational content in order to form their expectations the reference group s income thereby exerts a positive influence on individual satisfaction which contrasts with other studies on the subject inequality indices do not affect individual welfare

contract renegotiation and coasian dynamics consider a long term relationship between a seller and a buyer whose valuation for a per period service or a durable good is private as trade progresses the valuation will be partially revealed and it may be impossible for the parties to commit ex ante not to take advantage of this we analyse this situation first by supposing that the parties can sign a sequence of short term contracts and secondly by supposing that they can sign a long term contract but cannot commit not to renegotiate it later we find a close relationship in the second case between the optimal long term contract and the non commitment outcome in the standard coasian durable good model our results also have implications for hidden information principal agent models

regulation asymmetric information and auditing this article analyzes a model of a regulated firm that is better informed about its cost function than is the regulator by auditing at a cost however the regulator is assumed to be able to observe the realized cost of the firm if the regulator finds that the firm had misrepresented its costs at the time at which prices were set he can order a refund to consumers in the optimal policy the regulator audits when the firm reports for pricing purposes that its costs will be high and orders a refund when the auditfinds that realized costs are lower than anticipated given the original report a separation result that obtains for an important case indicates that the initial pricing decision is independent of the auditing decision the auditing decision however depends on the price that was initially set the optimal auditing strategy is characterized and the nature of the welfare gains are identified the methodology used in the analysis involves the characterization of an equilibrium of a revelation game with an ex post observable

water for life the impact of the privatization of water services on child mortality while most countries are committed to increasing access to safe water and thereby reducing child mortality there is little consensus on how to actually improve water services one important proposal under discussion is whether to privatize water provision in the 1990s argentina embarked on one of the largest privatization campaigns in the world including the privatization of local water companies covering approximately 30 percent of the country s municipalities using the variation in ownership of water provision across time and space generated by the privatization process we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest 26 percent in the poorest areas we check the robustness of these estimates using cause specific mortality while privatization is associated with significant reductions in deaths from infectious and parasitic diseases it is uncorrelated with deaths from causes unrelated to water conditions

privatisation discontent and utility reform in latin america abstract privatisation faces strong and increasingly popular opposition in latin america this paper uses individual data on social attitudes socioeconomic status and demographic information from three waves of latinobarometro surveys 1998 2000 and 2002 in 17 countries to study the role of privatisation of utilities and its distributional impact we find that disagreement with privatisation is most likely when the respondent is on a low to middle income and when it involves a high proportion of public services such as water and electricity this complements recent empirical research that points to distributional concerns in the implementation of privatisation in latin america particularly because of inadequate regulation of utilities

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

experience curve for natural gas production by hydraulic fracturing abstract from 2007 to 2012 shale gas production in the us expanded at an astounding average growth rate of over 50 yr and thereby increased nearly tenfold over this short time period alone hydraulic fracturing technology or fracking as well as new directional drilling techniques played key roles in this shale gas revolution by allowing for extraction of natural gas from previously unviable shale resources although hydraulic fracturing technology had been around for decades it only recently became commercially attractive for large scale implementation as the production of shale gas rapidly increased in the us over the past decade the wellhead price of natural gas dropped substantially in this paper we express the relationship between wellhead price and cumulative natural gas output in terms of an experience curve and obtain a learning rate of 13 for the industry using hydraulic fracturing technology this learning rate represents a measure for the know how and skills accumulated thus far by the us shale gas industry the use of experience curves for renewable energy options such as solar and wind power has allowed analysts practitioners and policy makers to assess potential price reductions and underlying cost decreases for these technologies in the future the reasons for price reductions of hydraulic fracturing are fundamentally different from those behind renewable energy technologies hence they cannot be directly compared and hydraulic fracturing may soon reach or maybe has already attained a lower bound for further price reductions for instance as a result of its water requirements or environmental footprint yet understanding learning by doing phenomena as expressed by an industry wide experience curve for shale gas production can be useful for strategic planning in the gas sector as well as assist environmental policy design and serve more broadly as input for projections of energy system developments

empirical evidence on satisfaction with privatization in latin america since the 1980s privatization of formerly state owned firms has been extensively implemented by governments across latin america despite the fact that most evaluations of the process fail to find significant adverse efficiency and welfare effects there has been a strong surge in public discontent with such policy in the region this paper performs a systematic empirical analysis of the determinants of such dissatisfaction using survey data from latinobarometro covering 17 countries over the period 1998 2008 complemented by country level data on macroeconomic political and institutional aspects as well as data on privatization dissatisfaction appears to respond to absolute and relative welfare effects and the authors find a robust u shaped effect in term of education and income levels with individuals in the middle of such distributions being more critical with the outcome of privatizations

how to decarbonize the transport sector this article investigates possible evolution pathways for the transport sector during the 21st century globally and in europe under a climate change control scenario we attempt to shed light on the question how the transport sector should best be decarbonized we perform our study with the global bottom up energy systems model tiam ecn a version of the tiam model that is broadly used for the purpose of developing energy technology and climate policy scenarios which we adapted for analyzing in particular the transport sector given the global aggregated perspective of tiam ecn that in its current version yields at every point in time a single co2 price for different forms of energy use across geographic regions and economic sectors it generates a decarbonization process that for the transport sector occurs later in time than for the power sector this merely reflects that emission reductions are generally cheaper for electricity production than for transportation and that it is thus cost minimizing to spend limited financial resources available for co2 emissions abatement in the power sector first in our scenarios the use of hydrogen in internal combustion engines and fuel cells rather than electricity as energy carrier and batteries to store it gradually becomes the dominant transport technology this outcome is in agreement with some recent publications but is at loggerheads with the current popularity of the electric car based on sensitivity analysis we conclude that even if the establishment of a hydrogen infrastructure proves about an order of magnitude more costly than modeled in our base case electricity based transportation only broadly emerges if simultaneously also the costs of electric cars go down by at least 40 with respect to our reference costs one of the explanations for why the electric car is today by e g entrepreneurs often considered the supposed winner amongst multiple future transportation options is that the decision horizon of many analysts is no more than a few decades instead of a full century electric cars fit better the current infrastructure than hydrogen fueled vehicles so that from a short time perspective covering the next decade or two investments are not optimally spent by establishing an extensive hydrogen distribution network hence the path dependency created by the present existence of a vast power transmission and distribution network can make electricity the most efficient choice for transportation but only if the time frame considered is short electric transportation generally proves the more expensive alternative in our long term perspective except when electric car costs are assumed to drop substantially

a critical assessment of transaction cost theory and governance of public services with special reference to water and sanitation this is a pre copyedited author produced version of an article accepted for publication in cambridge journal of economics following peer review the version of record hulya dagdeviren and simon a robertson a critical assessment of transaction cost theory and governance of public services with special reference to water and sanitation cambridge journal of economics vol 40 6 1707 1724 january 2016 is available online at https doi org 10 1093 cje bev079

the mirrlees approach to mechanism design with renegotiation with applications to hold up and risk sharing the paper studies the implementation problem first analyzed by maskin and moore 1999 in which two agents observe an unverifiable state of nature and may renegotiate inefficient outcomes following play of the mechanism we develop a first order approach to characterizing the set of implementable utility mappings in this problem paralleling mirrlees s 1971 first order analysis of standard mechanism design problems we use this characterization to study optimal contracting in hold up and risk sharing models in particular we examine when the contracting parties can optimally restrict attention to simple contracts such as noncontingent contracts and option contracts where only one agent sends a message

distributional consequences of political representation abstract we investigate both theoretically and empirically the effect of the geographic concentration of representatives on the geographic distribution of fiscal transfers our theoretical model predicts that more representatives residing in a geographic area leads to higher government funds to that area our empirical analysis uses the fact that in germany due to germany s electoral rules in state elections the number of representatives varies across electoral districts controlling for various socio economic demographic and political variables and using a variety of estimation methods we find that districts with a greater number of representatives receive more government funds

fiscal decentralization and government size an extension this paper analyzes one method governments employ to circumvent the discipline of a competitive system of fiscal federalism intergovernmental collusion in the form of intergovernmental grants grants it is argued serve to encourage the expansion of the public sector by concentrating taxing powers in the hands of the central government and by weakening the fiscal discipline imposed on governments forced to self finance their expenditures the results reported suggest that intergovernmental grants do encourage growth in the public sector the results offer further support for the use of monopoly government assumptions in public sector modeling

dynamics of energy technologies and global change technological choices largely determine the long term characteristics of industrial society including impacts on the natural environment however the treatment of technology in existing models that are used to project economic and environmental futures remains highly stylized based on work over two decades at iiasa we present a useful typology for technology analysis and discuss methods that can be used to analyze the impact of technological changes on the global environment especially global warming our focus is energy technologies the main source of many atmospheric environmental problems we show that much improved treatment of technology is possible with a combination of historical analysis and new modeling techniques in the historical record we identify characteristic l such network e ects yield high barriers to entry even for superior competitors these simple observations allow three improvements to modeling of technological change and its consequences for global environmental change one is that the replacement of long lived infrastructures over time has also replaced the fuels that power the economy to yield progressively more energy per unit of carbon pollution from coal to oil to gas such replacement has d they also include endogenous generation of s we show that doing so can yield projections with lessened environmental impacts without necessarily incurring negative e ect on the economy arriving on that path by the year 2100 depends on intervening actions such as incentives to promote greater diversity in technology and lower barriers to entry for new infrastructures that could accelerate historical trends of decarbonization 1999 elsevier science ltd all rights reserved