structural change in factor substitution in finnish manufacturing the possibility of structural change in finnish factor substitution relations between energy and nonenergy factors is analyzed the standard generalized leontief klemf cost function is modified so that the substitution parameters related to electricity and fuel factors may shift to new levels over time the initial point of transition is 1974 during which the first energy crises took place likelihood ratio tests confirm that there has indeed been a statistically significant change in energy versus nonenergy substitution our estimates imply stronger substitutability for most input pairs after the energy crisis

the determinants of an environmentally responsive firm an empirical approach abstract our empirical results indicate that a firm s formulation of an environmental plan is positively influenced by customer pressure shareholder pressure government regulatory pressure and neighborhood and community group pressure but negatively influenced by other lobby group pressure sources and a firm s sales to asset ratio firms which view environmental issues as important in the next 5 years are also more likely to have a plan relative to the manufacturing sector firms in the natural resource sector are more likely to formulate environmental plans while firms in the service sector are less likely to have plans our results provide insight into how firms react to environmental issues they also offer policymakers a list of determinants which can be used either as an alternative or complement to environmental regulation

industry self regulation without sanctions the chemical industry s responsible care program industry self regulation the voluntary association of firms to control their collective action has been proposed as a complement to government regulation proponents argue that the establishment of

valuing the beneficts of air pollution abatement using a health production function a case study of panipat thermal power station india the indian economy today is highly prone to industrial pollution and ismaking compliance decisions in order to meet environmental standards environmental regulations impose significant costs upon industry that arefairly high and therefore require economic justification this justificationcan be given by estimating the benefits associated with these costs whilethe scientific rationale behind air quality preservation is well understood its economic rationale for a developing country like india has to beverified the objective of the present paper is to estimate the economicvalue that people in an urban area in india panipat thermal power station ptps colony in panipat haryana place upon improving the air quality the dose response method based on the gerking and stanley 1986 model is used to estimate the economic benefits of air quality improvement theseestimates range from one to two percent of monthly income income andhealth status variables were significant determinants of peoples willingness to pay wtp for air quality improvements this lends supportto the neo conventional wisdom act now to protect the environment beforeit is too late these people are ready to pay for environmentalimprovements we do believe however that the relatively successfulapplication of the dose response method at ptps colony suggests that thetechnique can be more widely applied in developing countries like india

a dynamic analysis of interfuel substitution in u s industrial energy demand using data for 1960 92 to analyze interfuel substitution in the u s industrial sector a dynamic linear logit model is shown to provide superior global properties than a comparable dynamic translog model confirming earlier static results by t j considine 1989 the linear logit model provides a direct unbiased estimate of the rate of dynamic adjustment indicating a median response lag of less than two years excluding fuels used for nonenergy purposes yields larger estimates of the price elasticities for coal and oil and indicates generally greater potential for interfuel substitution than when using aggregate data

what determines the decision to implement emas a european firm level study empirical research on the characteristics of environmentally responsive companies has focussed on us and japanese companies for europe which is commonly considered as the greenest of the three major markets similar research is lacking this paper seeks to fill this gap by empirically investigating business and financial characteristics stakeholder pressures and public policies to distinguish companies that have implemented the european eco management and audit system emas from a unique firm level dataset of european publicly quoted companies we find that the emas participation decision is positively influenced by the solvency ratio the share of non current liabilities the average labour cost and the absolute company size as well as the relative size of a company compared to its sector average the profit margin exerts a negative influence we further find that companies whose headquarters is located in a country that actively encourages emas have a higher probability of participation finally this paper suggests that rather than attracting other kinds of companies a favourable institutional context succeeds in convincing more of the same kind of companies to participate

a complementarity model for the european natural gas market abstract in this paper we present a detailed and comprehensive complementarity model for computing market equilibrium values in the european natural gas system market players include producers and their marketing arms which we call traders pipeline and storage operators marketers lng liquefiers regasifiers tankers and three end use consumption sectors the economic behavior of producers traders pipeline and storage operators liquefiers and regasifiers is modeled via optimization problems whose karush kuhn tucker kkt optimality conditions in combination with market clearing conditions form the complementarity system the lng tankers marketers and consumption sectors are modeled implicitly via appropriate cost functions aggregate demand curves and ex post calculations respectively the model is run on several case studies that highlight its capabilities including a simulation of a disruption of russian supplies via ukraine

the demand for capital labor and energy in european manufacturing industry before and after the oil price shocks the price and substitution elasticities for factor inputs capital labor fuels and electricity are estimated for total manufacturing industry on the basis of a pooled crosscountry time series analysis for nine west european countries the impact of the economic disturbances in the 1970s on the price sensitivity of demand is analyzed by estimating a translog cost function for two separate periods 1960 72 and 1973 80 hicks neutral technical change is rejected for both periods the results indicate some quite significant changes in the elasticities over the two periods

the economic benefits of surface water quality improvements in developing countries a case study of davao philippines two nonmarket valuation techniques the contingent valuation method and travel cost model are used to estimate the economic value that people in davao philippines place on improving the water quality of the rivers and sea near their community the contingent valuation and travel cost estimates are very close to each other and are quite low both in absolute terms and as a percentage of household income these findings suggest that water pollution control is simply not a high priority for davao s residents and support the argument that households willingness to pay for environmental amenities such as improved water quality is low

an economic analysis of air pollution and health the case of st louis a health oriented choice model is developed in which individuals are viewed as producers of health and good health is desired for both consumption and investment purposes individuals are able to adjust their consumption of medical care in order to defend against reductions in air quality a compensating variation type marginal willingness to pay expression is derived for improved air quality and the model is tested using cross sectional data on employed adult residents of st louis missouri estimates of marginal willingness to pay for the average employed person are derived for a 30 reduction in ozone these values range from 18 45 to 24 48 per year

carbon capture and storage and transboundary pollution a differential game approach abstract we study the strategic behavior of two countries facing transboundary co2 pollution under a differential game setting in our model the reduction of co2 concentration occurs through the carbon capture and storage process rather than through the adoption of cleaner technologies furthermore we first provide the explicit short run dynamics for this dynamic game with symmetric open loop and a special markovian nash strategy then we compare these strategies at the games steady states and along some balanced growth paths our results show that if the initial level of co2 is relatively high state dependent emissions reductions can lead to higher overall environmental quality hence feedback strategy leads to less social waste

epa s voluntary 33 50 program impact on toxic releases and economic performance of firms abstract this paper examines the motivations for participation in the voluntary 33 50 program and the program s impact on the toxic releases and economic performance of firms in the u s chemical industry it demonstrates that the benefits due to public recognition and the potentially avoided costs of liabilities and compliance under mandatory environmental regulations provide strong incentives for participation after controlling for sample selection bias and the impact of other firm specific characteristics this paper shows that program participation led to a statistically significant decline in toxic releases over the period 1991 93 the program also had a statistically significant negative impact on the current return on investment of firms but its impact on the expected long run profitability of firms was positive and statistically significant

averting behavior and the benefits of reduced soiling abstract the individual s choice of cleaning frequency is examined theoretically under assumptions more general than those of previous authors the individual is assumed to maximize utility over cleanliness and a general commodity where cleanliness is determined by frequency of cleaning and ambient pollution allowance is made for the possibility that the cost per cleaning episode is positively affected by pollution and negatively affected by the frequency of cleaning the present framework is used to make comparisons and comments regarding the assumptions and results of watson and jaksch j environ econ manag 9 1982 248 262 and courant and porter j environ econ manag 8 1981 321 329

investment in energy efficiency do the characteristics of firms matter the literature on energy efficiency provides numerous examples of apparently profitable technologies that are not universally adopted yet according to the standard neoclassical theory of investment profit maximizing firms should undertake all investments with a positive net present value the standard theory also holds that the discount rate for computing the present value of a project should be the return available on other projects in the same risk class and therefore should not depend on characteristics of the firm this model as applied to energy saving investments is tested by examining whether firms characteristics influence their decision to join the environmental protection agency s voluntary green lights program a discrete choice regression is estimated over a large sample of participating and nonparticipating firms missing values in the data matrix are replaced with multiple imputations from a distribution estimated using the expectation maximization algorithm the results show that 1 sub

why japanese firms choose to certify a study of managerial responses to environmental issues abstract this paper examines empirically the determinants that led large japanese manufacturers to 1 incorporate environmental goals in their decisions 2 obtain environmental certification iso 14001 and 3 become early adopters of environmental certification we estimate two sets of models 1 models based on a profit maximization assumption and 2 models which incorporate utility maximization arguments recognizing that managers values attitudes and beliefs may also influence firms decisions the empirical analysis suggests that while the costs and benefits of voluntary actions to enhance or protect the environment and the capacity to act are significant determinants of voluntary environmental commitment so are the environmental values beliefs and attitudes of managers

the real time price elasticity of electricity the real time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices despite the importance empirical estimates of the real time elasticity are hardly available this paper provides a quantification of the real time relationship between total peak demand and spot market prices we find a low value for the real time price elasticity which may partly be explained from the fact that not all users observe the spot market price if we correct for this phenomenon we find the elasticity to be fairly low for consumers currently active in the spot market if this conclusion applies to all users this would imply a limited scope for government intervention in supply security issues

substitution and price elasticity estimates using inter country pooled data in a translog cost model pooled data across several developing countries and the u s were used to estimate long run substitution and price elasticities ina translog framework for the paper iron and steel and aggregatemanufacturing industries while the quality of the estimates variesacross the several industry specific models the results suggest highervalues for these elasticities than appear commonly used in integratedassessment models estimates of own price elasticities of energy rangefrom 0 80 to 1 76 and are comparable to estimates from previouseconometric studies in the context of developed countries 0 77 to 0 87 substitution elasticities show wider variation across countriesand industries for energy and capital they range from 1 96 to 9 80 forlabor and energy from 2 61 to 7 11 and for energy and material from 0 26 to 2 07

averting expenditure and the cost of pollution the paper considers the relationship between the willingness to pay for environmental quality and averting expenditures that is the costs of measures undertaken in efforts to counteract the consequences of pollution the models used assume perfect mobility among locations with different levels of environmental quality the major results are i averting expenditures are not in general a good measure of willingness to pay 2 averting expenditures are not always even a lower bound on willingness to pay 3 even when averting expenditures are a lower bound the difference between the level of such expenditures and willingness to pay carmot be attributed to the unavertible aesthetic consequences of pollution for almost every kind of environmental unpleasantness we face there are averting expenditures we can make to reduce and sometimes completely remove the damage for air pollution house paint air conditioners soap for water pollution wells bottled water purifiers for noise pollution storm windows thicker walls economists have long been aware that averting behavior is both possible and practiced and they have often suggested that expenditures on such behavior can be used as a measure of the costs imposed on society by various forms of pollution the literature on this subject is difficult to characterize but to the extent that a consensus has been reached it is that averting expenditures provide a lower bound estimate of the total costs imposed by pollution and the divergence between averting expenditures and the total costs of pollution arises from the fact that some consequences of pollution e g the simple unpleasantness of breathing dirty air cannot be averted 2 3 in this note we develop two simple models of the response of utility maximizing consumers to small changes in the level of pollution which they face in the first model we assume that environmental quality is desired solely because it reduces the need for averting expenditure we show that 1 the level of averting expenditure may be either a lower bound or an upper bound estimate of the consumer s

modeling market power by natural gas producers and its impact on the power system strategic behavior by natural gas producers may influence the operation as well as the development of an electricity system within this paper a computational game theoretic investment model is presented which allows assessing market power by natural gas producers and its effects on the electricity market under consideration of emission markets the model is formulated as a mixed complementarity problem it uses typical time segments to represent both seasonal load fluctuations on the natural gas market and load fluctuations within a day on the electricity market investment is possible in natural gas production and lng infrastructure as well as power plants a test case is presented covering three regions and simultaneously optimizing power plant dispatch and utilization of transmission lines on the power market as well as supply transport and storage on the natural gas market we compute prices production volumes and power plant utilization for two different market power specifications to show the impact of oligopolistic market behavior

efficient determination of cournot equilibria in electricity markets this paper analyzes the deregulated electricity market using game theory and investigates the properties of cournot equilibrium points a new algorithm for the calculation of the cournot equilibrium of an electricity market in the absence of transmission constraints is presented the algorithm is based on the transformation of the cournot game into a three level decision making scheme with economic signal exchange the algorithm is tested on a hypothetical market in order to demonstrate the effects of market concentration and demand elasticity case studies indicate that the algorithm is very efficient computationally and therefore suitable for use with multi period production scheduling models for the electricity market

measuring environmental efficiency of industry a case study of thermal power generation in india technical and environmental efficiency of some coal fired thermal power plants in india is estimated using a methodology that accounts for firm s efforts to increase the production of good output and reduce pollution with the given resources and technology the methodology used is directional output distance function estimates of firm specific shadow prices of pollutants bad outputs and elasticity of substitution between good and bad outputs are also obtained the technical and environmental inefficiency of a representative firm is estimated as 0 06 implying that the thermal power generating industry in andhra pradesh state of india could increase production of electricity by 6 while decreasing generation of pollution by 6 this result shows that there are incentives or win win opportunities for the firms to voluntarily comply with the environmental regulation it is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms this result calls for the use of economic instruments like pollution taxes instead of command and control regulation used currently in india to reduce air pollution

the response of small and medium size business customers to time of use tou electricity rates in israel this paper reports on the methodology data and results of the israeli time of use tou electricity pricing experiment in the industrial commercial sector we concentrate on the estimation of the demand functions for electricity under tou and the net welfare gains which result from applying tou rates to small and medium size business customers in israel this experiment which was preceded by a 15 month load research study to allow an optimal sample design was concluded in june 1992 the analysis yielded four major conclusions 1 the estimated gains of small and medium size customers in israel from tou rates are sufficient to justify investment in tou metering technology 2 there have been small but noticeable shifts of electricity from the peak to the mid peak if relevant and to the off peak periods during all seasons of the year and particularly during the winter 3 the structure and number of labour shifts during the day and weather are important factors in determining the response of business customers to the tou rates 4 price elasticities vary substantially over the seasons and across sic groups they do not vary with customer size

linear complementarity models of nash cournot competition in bilateral and poolco power markets two cournot models of imperfect competition among electricity producers are formulated as mixed linear complementarity problems lcps and a simple example is presented to illustrate their application the two models simulate bilateral markets the models include a congestion pricing scheme for transmission but other transmission pricing approaches can also be represented in this framework the two models differ from each other in that one has no arbitrage between nodes of the network while in the other model arbitragers erase any noncost based differences in price the latter bilateral model turns out to be equivalent to a cournot model of a poolco the models differ from other cournot market models in that they include both of kirchhoff s laws via a dc approximation can include arbitragers possess unique solutions and are readily solved by efficient lcp algorithms the key assumption that permits their formulation as lcps is that each producer naively assumes that its output will not affect transmission prices