learning your earning are labor income shocks really very persistent in this paper we examine the risk situation facing individuals in the labor market the current consensus in the literature is that the labor income process has a large random walk component we argue two points first the estimates of persistence from income data appear to be upward biased due to the omission of heterogeneity in income pro les across the population that would be implied for example by a human capital model with heterogeneity when we allow for dierences in pro les the estimated persistence falls from 0 99 to about 0 8 moreover the main evidence against pro le heterogeneity in the existing literature that the autocorrelations of income changes are small and typically negative is also replicated by the pro le heterogeneity model we estimate casting doubt on the previous interpretation of this evidence second we embed this process in a life cycle model to examine how it alters individuals consumption saving decision we assume that as seems plausible individuals do not know their pro les exactly at the beginning of life but learn in a bayesian way with successive income observations we nd that learning is very slow and aects consumption decision throughout the life cycle the model generates substantial rise in consumption inequality over the life cycle which matches empirical observations deaton and paxson 1994 moreover the shape of the age inequality pro le is non concave as in the data but unlike in a model with very persistent shocks finally the consumption pro les of college graduates are steeper than those of high school graduates in the model consistent with the data because they face a wider dispersion of and hence uncertainty about income growth rates overall this evidence indicates that income shocks may be signi cantly less persistent than what is currently assumed

why does the combination of the european union emissions trading scheme and a renewable energy target makes economic sense abstract the european climate and energy mix of targets and policies has been criticised by many economists in particular it is often argued that the renewable energy targets do not make economic sense because they represent an expensive option to reduce co2 emissions within a cap and trade scheme such as the european union emissions trading scheme eu ets in addition it has also been claimed that support for renewable electricity deployment negatively interacts with the eu ets having a dampening effect on the co2 price which favours the dirtiest technologies and is detrimental for the greener ones in this article we argue that this mainstream economic view is short sighted and that a multidisciplinary economic analysis of the climate and energy policy mix is required mainstream economic analysis is based on a narrow approach for the assessment of instrument combinations and neglects relevant insights from several economic disciplines including innovation economics and political economy approaches in reality economic theory supports the combination of an ets and renewable energy targets the existence of different policy goals and market failures the demand pull influence of renewable energy policies on innovation a political economy approach and the different risk exposure of renewable energy technologies call for a policy mix although policy combinations are not a panacea and bring problems on their own the aforementioned negative interaction between renewable energy deployment and the carbon price in the eu ets can be mitigated through appropriate coordination and or instrument choice and design

does market incompleteness matter this paper argues that incompleteness of intertemporal financial markets has little effect on welfare prices or consumption in an economy with a single consumption good provided that traders are long lived and patient a riskless bond is traded shocks are transitory and there is no aggregate risk in an economy with aggregate risk a similar conclusion holds provided traders share the same crra utility function and the right assets are traded examples demonstrate that these conclusions need not hold if the wrong assets are traded or if the economy has multiple consumption goods

green goals and full employment are they compatible abstract two empirical correlations are studied one between economic growth and environmental impacts and the other between the lack of economic growth and unemployment it is demonstrated that at a global level economic growth is strongly correlated with environmental impacts and barriers to fast decoupling are large and numerous on the other hand low or negative growth is highly correlated with increasing unemployment in most market economies and strategies to change this lead to difficult questions and tradeoffs the coexistence of these two correlations which have rarely been studied together in the literature on green growth degrowth and a growth justifies ambivalence about growth to make key environmental goals compatible with full employment the decoupling of environmental impacts from economic output has to be accompanied by a reduction of dependence on growth in particular strategies to tackle unemployment without the need for growth several of which are studied in this article need much more attention in research and policy

electricity prices and industrial competitiveness a case study of final assembly automobile manufacturing in the united states and canada this paper studies the real and perceived impacts of electricity pricing on competitiveness in the united states and canada financial analysis is combined with interviews to explore whether and how the cost of electricity affects competitiveness in one of north america s most important sectors automobile manufacturing the cost of electricity in top automobile manufacturing jurisdictions in canada and the us is captured over a six year period starting in 2010 at between approximately us 2 00 and 11 00 per vehicle the paper finds that the per vehicle gap between electricity costs in the most expensive automobile making jurisdiction in north america ontario and all others is quite small how then to explain the preoccupation of industry actors with electricity costs in ontario several reasons are suggested including media coverage the relatively narrow inventory of issues under local management control and mechanics of the pricing system itself the paper explains how the pricing system causes manufacturers to make decisions that depart from core mandates making things and generates the unintended effect of heightened scrutiny a combination of factors that has the effect of aggravating tension around electricity pricing and damaging perceived competitiveness

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

normal markets market imperfections and energy efficiency abstract the conventional distinction between economic and engineering approaches to energy analysis obscures key methodological issues concerning the measurement of the costs and benefits of policies to promote the adoption of energy efficient technologies the engineering approach is in fact based upon firm economic foundations the principle of lifecycle cost minimization that arises directly from the theory of rational investment thus evidence that so called market barriers impede the adoption of cost effective energy efficient technologies implies the existence of market failures as defined in the context of microeconomic theory problems of imperfect information and bounded rationality on the part of consumers for example may lead real world outcomes to deviate from the dictates of efficient resource allocation a widely held contrary view that the engineering view lacks economic justification is based on the fallacy that markets are normally efficient

supplementing an emissions tax by a feed in tariff for renewable electricity to address learning spillovers abstract in the presence of learning spillovers related to renewable energy technologies an optimal strategy to mitigate climate change should complement an emissions tax by a subsidy for renewables this article addresses the question how such subsidy should be designed it is shown that the widely used approach of a revenue neutral fixed feed in tariff can yield an optimal outcome under restrictive conditions only it has to be adapted continuously as the electricity price changes moreover funding the tariff by a surcharge on the electricity price has important implications for the design of the emission tax the optimal tax rate has to be below the pigovian level differentiated across fossil fuels and adapted over time as the patterns of technological development change these requirements may pose a formidable challenge for practical decision making however it is important to point out that the eventual choices made with respect to the design and funding of a feed in tariff have to be based on a careful and more comprehensive policy assessment including inter alia economic effects beyond the electricity sector and existing institutional constraints

the sources of divergent practices in china s nuclear power sector abstract unlike markets that were early developers of reactors which are dominated by single technologies china s nuclear power sector adopts and imports multiple technologies even after the chinese government introduced a policy to develop a standardized unified and technologically advanced nuclear power sector in the early 2000s different technologies continue to be imported this study uses an institutional lens to explore the decoupling of policy intentions and implementation the three phases of nuclear technology imports that occurred between the 1980s and 2010 are examined and compared data are collected from multiple sources including the diary of a major decision maker news articles project websites a regulation database domestic journal articles and interviews with industry experts using interactive content analysis this study identifies the multiple policy principles and goals of different domains that led to different import arrangements and interpretations of the available foreign technology new arrangements do not replace but overlap the existing ones that are perpetuated by the actors who benefit from them the results show that the multiplicity of china s nuclear power sector coupled with the government s late attempts at standardization contributes to diversified policy implementation they provide important policy implications for the sustainable development of the sector

equilibrium in securities markets with heterogeneous investors and unspanned income risk abstract in a finite time horizon incomplete market continuous time setting with dividends and investor incomes governed by arithmetic brownian motions we derive closed form solutions for the equilibrium risk free rate and stock price for an economy with finitely many heterogeneous cara investors and unspanned income risk in equilibrium the sharpe ratio is the same as in an otherwise identical complete market economy whereas the risk free rate is lower and consequently the stock price is higher the reduction in the risk free rate is highest when the more risk averse investors face the largest unspanned income risk

business actors political resistance and strategies for policymakers abstract existing energy policies remain well short of achieving a rapid transformation to a low carbon system of energy supply one of the principal reasons has been political resistance from incumbent fossil fuel industries while numerous studies have demonstrated the influence of business actors across multiple policy domains less work has examined the behaviour of business actors in individual energy centric industries namely the oil gas coal utility and renewable industries accordingly this paper examines the role of business actors in the us energy sector and asks what should policymakers do drawing on new empirical data primarily semi structured interviewers with business actors across the us energy sector this paper argues that there are specific strategies policymakers can employ to help overcome the resistance from incumbent fossil fuel industries specifically these are to entrench and build existing interests via targeted sector specific policies exploit inter industry and intra industry divisions and shift existing interests with policies that induce changes in industry investment and structure

optimal linear and two bracket income taxes with idiosyncratic earnings risk abstract this paper quantitatively characterizes optimal linear and two bracket income taxes we consider a dynamic stochastic general equilibrium model in which tax design involves redistributing income for both equity and social insurance substantive findings include i a significant fraction of agents supply zero labor or hold zero assets at the optimum ii neglecting tax distortion imposed on either of labor leisure and consumption saving decisions will lead to the prescription of tax codes that deviate substantially from the optimum and iii the optimal two bracket tax schedule will turn from regressivity to progressivity in the marginal tax rate once the volatility of idiosyncratic shocks becomes sufficiently large the last finding is consistent with the results in apps et al forthcoming and it also reconciles the contradictory results regarding the optimal two bracket tax schedule between slemrod et al 1994 and strawczynski 1998

institutional dynamics and technology legitimacy a framework and a case study on biogas technology legitimacy is central for both novel and established technologies to mobilize the resources necessary for growth and survival a loss of legitimacy in turn can have detrimental effects for an industry in this paper we study the rise and fall of technology legitimacy of agricultural biogas in germany over a period of more than 20 years 1990 2012 the field witnessed impressive growth and professionalization for many years and has become one of the key technologies in germany s energy transition in recent years however it has been confronted with major criticism which finally resulted in a substantial cut back of public and political support the aim of our study is twofold in empirical terms we will explain the technology s loss of legitimacy despite its compliance with original policy objectives growth and maturation in theoretical terms we work toward a more general framework to understand technology legitimacy and to explain the institutional dynamics of technological innovation systems

self insurance vs self financing a welfare analysis of the persistence of shocks abstract we study the welfare cost of market incompleteness in a generalized bewley model where idiosyncratic risk takes the form of entrepreneurial productivity shocks market incompleteness in our framework has two dimensions first in the bewley tradition only a limited set of instruments for consumption smoothing is available second entrepreneurs capital rental is subject to collateral constraints as is well known it is harder to self insure against more persistent shocks and the welfare cost of missing consumption insurance increases with shock persistence on the other hand with collateral constraints an increase in shock persistence leads to better allocation of production factors through entrepreneurs self financing and the welfare cost of imperfect capital rental markets decreases with shock persistence the overall welfare cost of market incompleteness can be increasing decreasing or even non monotone in shock persistence depending on the relative strengths of its two components the cost of missing insurance and the cost of imperfect capital markets

u s inequality debt constraints or incomplete asset markets abstract to examine the role of debt constraints and incomplete asset markets lack of insurance markets in explaining u s inequality we run horse races between competing models for a widely used model we decompose inequality into its fundamental driving forces the underlying source of inequality in all models is uninsurable idiosyncratic risk both debt constraints and incomplete asset markets are needed to account for inequality but asset market incompleteness is the key friction it better accounts for the concentration and dispersion of wealth and is the most costly friction in terms of welfare tight debt constraints are important for explaining the lower tail of the wealth distribution

innovation policy for directing technical change in the power sector this paper discusses policy instruments for redirecting technical change within the electricity sector to mitigate climate change first we unravel the mechanism behind directed technical change explaining why markets may underprovide innovations in expensive renewable technologies in comparison to innovations in energy efficient fossil fuel generators subsequently we characterize technical change in electricity generation technologies stressing the heterogeneity of knowledge spillovers both within and between clean electricity generation technologies we argue that there exists a rationale for a portfolio approach to innovation in the electricity sector i e optimal innovation policies are neither fully generic nor fully specific and they need to be adapted in response to new information learned by the government the existing innovation literature does not however provide a clear cut answer for designing such a policy we compare policy instruments and argue that public r d support to clean technologies either in the form of subsidies or prizes seems to be the prime candidate for implementing non generic innovation policy

the governance of sustainable socio technical transitions a quasi evolutionary model of socio technical transitions is described in which regimes face selection pressures continuously differentiated transition contexts determine the form and direction of regime change in response to these pressures the articulation of pressures and the degree to which responses are coordinated and based on resources available within the regime define the transition context four alternative contexts are described endogenous renewal re orientation of trajectories emergent transformation and purposive transitions agency and power in the governance of regime transformation are analysed power to affect change depends on regime membership the distribution of resources for change and expectations

uncertainties in future energy demand in uk residential heating fossil fuels are the main source of space heating in the uk and therefore climate mitigation implies a systemic change in space heating systems the challenge is difficult because of an inefficient building stock and high penetration of natural gas we present new quantified scenarios for residential energy use in the uk to 2050 with minimal policy intervention the uk will remain locked into a gas based heating system which would conflict with the policy goal of decarbonisation however there is a range of scenarios in which this is avoided a system heavily reliant on heat pumps powered by low carbon electricity is uk policy makers currently preferred alternative we conclude that some shift in this direction is likely to be required but complete reliance on this solution raises a number of problems greater use of energy efficiency and biomass can also play a significant role these options have different risks but a more diversified strategy would be more prudent we conclude that the future of uk residential space heating is very uncertain but meeting low carbon heating goals is better conceptualised as reducing reliance on gas rather than necessarily mass electrification our analysis has implications for any country with high use of fossil fuels in space heating and ambitious decarbonisation goals

the efficiency paradox bureaucratic and organizational barriers to profitable energy saving investments abstract the paradox of why profitable energy saving investments are not undertaken continues to provoke debate the underlying phenomenon might be called the efficiency paradox because it represents a case in which business firms which are often presumed or taken axiomatically to be economically efficient make decisions that do not maximize profits new data from one of the us environmental protection agency s voluntary pollution prevention programs enables this paradox to be explored statistically the data show that both the level and variation in returns to lighting upgrade investments cannot be explained by standard economic models substantial gains in energy efficiency can be achieved without sacrificing profitability both economic and organizational factors account for some of the variation in observed returns to these investments but the results suggest a need for improved and more comprehensive theories of the investment behavior of firms and other organizations

frictional wage dispersion in search models a quantitative assessment we propose a new measure of frictional wage dispersion the mean min wage ratio for a large class of search models we show that this measure is independent of the wage offer distribution but depends on statistics of labor market turnover and on preferences under plausible preference parameterizations observed magnitudes for worker flows imply that in the basic search model and in most of its extensions frictional wage dispersion is very small notable exceptions are some of the most recent models of on the job search our new measure allows us to rationalize the diverse empirical findings in the large literature estimating structural search models

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

the need for policy to address the food system lock in a case study of the finnish context abstract the introduction of synthetic fertilizers transformed the food system into the one we know today in the western world the present paper argues that this transformation has become an irreversible self feeding process referred to as food system lock in which threatens planetary boundaries of nitrogen and phosphorus hence the food security in the future a system in a lock in state can undermine its own existence by deteriorating the capacity to cope with upcoming crises of resource scarcity and environmental instability in this paper the roots of lock in are explored and empirically grounded in the historical narrative of the food system transition in finland in the past 60 years the theoretical framework builds on socio technical studies and the economic theory of increasing returns the aim of the paper is to identify through an evolutionary analysis the processes of increasing returns that have become path inefficient and have reinforced the lock in in the food system three separate but interdependent processes in the production in the policy and institutions and in the supply chain create systematic resistance towards sustainability transition these findings indicate that more attention should be paid at the public policies that are currently too narrow in their scope and do not effectively bridge the entire system from food production to consumption public intervention is critical for the unlocking but individuals in the various parts of the food system are those who create new paths

economic growth fossil fuel and non fossil consumption a pooled mean group analysis using proxies for capital this study employs a pooled mean group estimator to examine the nexus between economic growth and fossil and non fossil fuel consumption for 53 countries between 1990 and 2012 the global sample was divided into four categories developed exporters developed importers developing exporters and developing importers the purpose of these categories was to observe whether factors unique to these countries influence the relationship between energy consumption and economic growth with the exception of developing importers evidence of bi directional causality between fossil fuel consumption and real gdp across all subsamples is observed this leads to the conclusion that efforts to directly conserve fossil fuels may harm economic growth in terms of non fossil fuel use the results are more diverse bi directional causality between non fossil fuel use and real gdp is found in the long and short run for developed importers bi directional causality only in the long run for developed exporters negative long run causality from real gdp to non fossil fuels for developing exporters and long run causality from non fossil fuel use to real gdp for developing importers these results lead to the conclusion that other factors have been responsible for the progress seen in non fossil fuel use thus it is concluded that economic growth on its own is insufficient to promote clean energy development there is a need for policy makers to create an environment conducive to renewable energy investment

barriers to energy end use efficiency abstract recent findings indicate that some alternative energy promote equity efficiency and self reliance and are both economical and sustainable the asian development bank therefore initiated a case study to formulate energy strategies which could contribute to the solution of both local and global energy problems the study focuses on technical and economic details of energy end uses in india the conclusions some of which are surprising are supported by data from several studies the study recommends a shift to least cost electricity planning improving the available database for and information availability about energy rationalizing energy pricing and related fiscal policies and achieving energy efficiency by judicious investment in and support of energy forms which will be both sustainable and affordable in the long run

globalizing carbon lock in this paper extends the arguments surrounding carbon lock in elaborated in unruh energy policy 28 2000 817 30 2002 317 to countries currently undergoing industrialization it argues that for numerous reasons industrializing countries are unlikely to leapfrog carbon intensive energy development on the contrary carbon lock in may be globalizing and could further constrain climate change mitigation options it is then argued that many policy recommendations ignore carbon lock in possibly limiting their potential for successful implementation the paper then discusses four policy approaches that appear to have advantages given lock in conditions it is recognized however that relative ease of implementation does not necessarily equate with superiority instead it is merely a path dependent outcome of past development decisions pursuing policies on the basis of relative implementation ease may help address the issue of climate change but could also result in sub optimal outcomes along other dimensions of sustainable development

money as a mechanism in a bewley economy we study what features an economic environment might possess such that it would be pareto ecient for the exchange of goods in that environment to be conducted on spot markets where those goods trade for money we prove a conjecture that is essentially due to bewley 1980 1983 the gist is that monetary spot trading is nearly ecient ex ante in an environment where very patient agents can accumulate large enough money stocks to be completely self insured we also study examples where a nonmonetary mechanism is preferred ex ante to any monetary mechanism at least when the comparison is restricted to stationary equilibria and where an inflationary monetary mechanism is preferred ex ante to a laissez faire or deflationary monetary mechanism in an environment with impatient agents j e l classification e31 e42

the costs of mitigating carbon emissions a review of methods and findings from european studies abstract conventional wisdom has it that top down studies of mitigation costs are too pessimistic while bottom up studies are too optimistic in examining mitigation cost studies for western europe this paper finds this interpretation to be flawed the paper expands the analytical framework for interpreting mitigation cost studies evaluates the treatment of no regrets options and other input assumptions in the various studies and includes findings from recent integrated top down bottom up modeling assessments not covered in the ipcc report based on these new elements it is found that mitigation costs tend to be overestimated not only in top down studies but also in bottom up studies given this pervasive bias toward pessimism the body of existing mitigation cost assessments for western europe can be read as follows over the next three to four decades a combination of tax shifts market transformation instruments and policies to reform subsidies and internalize non climatic externalities could cut carbon emissions in western europe by 40 50 relative to the base year at no loss or at a gain in gdp averaged over the medium term and including a phase in period an economically optimal rate of implementing western europe s no regrets potentials is found to be in the neighborhood of 2 per year relative to base year levels

institutional resource regimes towards sustainability through the combination of property rights theory and policy analysis abstract although the concept of sustainable development is gaining increasing political acknowledgement despite the implementation of environmental policies specifically intended to solve problems in this area environmental degradation resulting from the recurrent problems associated with the over exploitation of natural resources remains an important concern for most countries how can this situation be explained this article postulates that a combination of approaches from the political sciences in particular policy analysis and institutional economics would enable the identification of the most relevant regulatory dimensions which can explain the un sustainable uses of resources based on this starting point it develops an innovative theoretical framework i e that of the institutional resource regime irr the adopted approach facilitates the analysis of the regulatory measures and resource management practices associated with complex and competitive heterogeneous use situations from a perspective of sustainability indeed the two dimensions of extent and coherence enable the definition and categorization of the irr of a given resource the extent of an irr refers to the total number of goods and services in use that are actually regulated by the regime at a given time while the coherence measures the degree of coordination of the various user actors within the regime one of the major contributions of the irr framework is its ability to describe the different configurations of regimes both theoretically and empirically and to predict their effect on the sustainability of a resource based on the hypothesis that high levels of regime extent and coherence are necessary preconditions for sustainability by doing this the irr framework also enables the analysis of the actual use rights to the goods and services provided by resources as the result of the political strategies of actors who mobilize different legal provisions which stem either from formal property rights to resources or from policies that regulate the use and protection of these resources having developed the central research hypotheses and the empirical research procedure we present the lessons drawn from the first campaign of field research which was mainly conducted in switzerland from 1999 based on the evidence from these initial findings it is suggested that the scope of the irr framework could be far broader than evidenced by its application in the case of switzerland where it was initially developed

creative destruction or mere niche support innovation policy mixes for sustainability transitions recently there has been an increasing interest in policy mixes in innovation studies while it has long been acknowledged that the stimulation of innovation and technological change involves different types of policy instruments how such instruments form policy mixes has only recently become of interest we argue that an area in which policy mixes are particularly important is the field of sustainability transitions transitions imply not only the development of disruptive innovations but also of policies aiming for wider change in socio technical systems we propose that ideally policy mixes for transitions include elements of creative destruction involving both policies aiming for the creation of new and for destabilising the old we develop a novel analytical framework including the two policy mix dimensions creation and destruction by broadening the technological innovation system functions approach and specifically by expanding the concept of motors of innovation to motors of creative destruction we test this framework by analysing low energy policy mixes in finland and the uk we find that both countries have diverse policy mixes to support energy efficiency and reduce energy demand with instruments to cover all functions on the creation side despite the demonstrated need for such policies unsurprisingly destabilising functions are addressed by fewer policies but there are empirical examples of such policies in both countries the concept of motors of creative destruction is introduced to expand innovation and technology policy debates to go beyond policy mixes consisting of technology push and demand pull instruments and to consider a wider range of policy instruments combined in a suitable mix which may contribute to sustainability transitions

the demand for environmental quality in driving transitions to low polluting energy sources the purpose of this paper is to understand the long run demand for energy related environmental quality its influence on legislation and on transitions to low polluting energy sources it starts by presenting a simple framework of the relationship between the demand for and supply of environmental quality environmental legislation and energy this forms the structure for presenting a series of episodes in british history where a demand for improvements in energy related environmental quality existed this analysis proposes that markets can drive transitions to low polluting energy sources in specific economic conditions however most probably governments will need to push them and this cannot be expected without strong and sustained demand for environmental improvements yet while demand is a prerequisite it is not enough it must also be spearheaded by strong creative and sustained pressure groups i e powerful lobbying and the weakening of the counter lobby to introduce legislation to enforce it and to avoid it being over turned by future governments

insurance and opportunities a welfare analysis of labor market risk abstract using a model with constant relative risk aversion preferences endogenous labor supply and partial insurance against idiosyncratic wage risk this paper provides an analytical characterization of three welfare effects a the welfare effect of a rise in wage dispersion b the welfare gain from completing markets and c the welfare effect from eliminating risk the analysis reveals an important trade off for these welfare calculations on the one hand higher wage uncertainty increases the cost associated with missing insurance markets on the other hand greater wage dispersion presents opportunities to raise aggregate productivity by concentrating market work among more productive workers welfare effects can be expressed in terms of the underlying parameters defining preferences and wage risk or alternatively in terms of changes in observable second moments of the joint distribution over individual wages consumption and hours

infinite horizon incomplete markets the model of general equilibrium with incomplete markets is a generalization of the arrow debreu model which provides a rich framework for studying problems of macroeconomics this paper shows how the model which has so far been restricted to economies with a finite horizon can be extended to the more natural setting of an open ended future thereby providing an extension of the finite horizon representative agent models of modern macroeconomics to economies with heterogeneous agents and incomplete markets there are two natural concepts of equilibrium over an infinite horizon which prevent agents from entering into ponzi schemes that is from indefinitely postponing the repayment of their debts the first is based on debt constraints which place bounds on debt at each date event the second is based on transversality conditions which limit the asymptotic rate of growth of debt the concept of an equilibrium with debt constraint is a natural concept of equilibrium for macroeconomic analysis however the concept of an equilibrium with transversality condition is more amenable to theoretical analysis since it permits the powerful techniques of arrow debreu theory to be carried over to the setting of incomplete markets in an economy in which agents are impatient expressed by the mackey continuity of their preference orderings and have a degree of impatience at each date event which is bounded below a concept defined in the paper we show that the equilibria of an economy with transversality condition coincide with the equilibria with debt constraints an equilibrium with transversality condition is shown to exist it follows that for each economy there is an explicit bound m such that an equilibrium with explicit debt constraint m exists in which the constraint is never binding this latter property ensuring that the debt constraint whose objective is to prevent ponzi schemes does not in itself introduce a new imperfection into the model over and above the incompleteness of the markets

not irrational but habitual the importance of behavioural lock in in energy consumption abstract a substantial body of literature has shown that our behaviour is often guided by habits the existence of habits not fully conscious forms of behaviour is important as it contradicts rational choice theory their presence thus calls for the setting of new instruments as they make it unlikely that consumers be capable of exercising control over their energy consumption in reaction to given incentives this is further increased in the evolutionary perspective where the current carbon based socio technical system constrains and shapes consumers choices through structural forces habits being potentially counterintentional they may explain the efficiency paradox in energy as well as the continued increase of energy consumption despite the rising environmental awareness among the population policies aiming at reducing energy consumption should thus specifically address the performance context of habits for instance targeting new residents has proven to be more effective given that their preceding habits have been disturbed the results of our empirical analysis confirm this idea by showing how a change of context makes people more receptive to a proposed measure our analysis of the role played by habits also suggests that individuals do not consider the need to change existing habits as an obstacle even though this is contradicted implicitly in the answers they provided to open questions this unconsciousness is one of the most delicate features of habits and it should thus be accounted for when designing measures given the other characteristics of habits the joint use of feedbacks and commitment strategies appears promising

the future role of photovoltaics a learning curve versus portfolio perspective the current cost disadvantage of photovoltaics pv risks to reduce its relevance in climate policy strategies depending on the used assumptions electricity from pv can become competitive between 2015 and 2040 cost competitiveness is however a conditional criterion and as an alternative to the learning curve perspective the future role of pv in electricity production is assessed from a portfolio theory or capital asset pricing model perspective in this analysis the focus is on the input price risks fossil fuel price volatility can strongly reduce the financial return of conventional generating technologies from a welfare perspective energy planners should try to minimise this risk by adding risk neutral or no risk technologies to their portfolio with an analysis for the year 2025 we illustrate how the addition of renewable capacity to an existing portfolio can lower total portfolio risk without a significant reduction of profitability pv then emerges as an attractive technology especially once the best locations for wind energy are already developed

disordering fantasies of coal and technology carbon capture and storage in australia abstract one of the main ways that continued use of coal is justified and compensated for is through fantasies of technology this paper explores the politics of carbon capture and storage ccs technologies in australia these technologies involve capturing co2 emissions usually to store them safely underground in a process called geo sequestration in australia the idea of clean coal has been heavily promoted and is a major part of co2 emissions reduction plans despite the technological difficulties the lack of large scale working prototypes the lack of coal company investment in such research and the current difficulties in detecting leaks this paper investigates the ways that the politics of clean coal have functioned as psycho social defence mechanisms to prolong coal usage assuage political discomfort and anxiety and increase the systemic disturbance produced by coal power

the journey towards decarbonization exploring socio technical transitions in the electricity sector in the province of ontario 1885 2013 and potential low carbon pathways this article employs the multi level perspective on socio technical transitions to explore the historical evolution of the electricity regime in the province of ontario from 1885 2013 and to interpret the potential for future movement towards decarbonization with an emphasis on the political and social dimensions of transitions this analysis traces the key features influencing change within ontario s electricity system over the past century this paper uses multiple criteria the phase of electrification role of the electricity system in economic development structures of ownership market and regulation dominant technologies and the relative stability of arrangements to characterize distinct regime configurations and periods of instability which separate relatively stable system orientations lessons are drawn from the historical case with implications for future decarbonization in the province including the importance of 1 residual momentum 2 embedded guiding principles and 3 politico economic coalitions

barriers within firms to energy efficient investments abstract many investments in energy efficiency fail to be made despite their apparent profitability internal hurdle rates are often set at levels higher than the cost of capital to the firm reasons for these practices include bounded rationality principal agent problems and moral hazard the policy implication is that government can simultaneously improve overall energy efficiency and increase private sector productivity by providing informational and organizational services that go beyond the traditional regulatory framework

evolving theories of sustainability and firms history future directions and implications for renewable energy research abstract sustainability has become a critical perspective in managing firms via a holistic approach by considering economic environmental and social dimensions of firms with the rising significance of sustainable development the theories of sustainability in firms have evolved during the past six decades this article offers a critical review of the evolving theories linking sustainability to firms and discusses their implications for future renewable energy research the relationships among different theories are critically analysed and the directions for future research are discussed the paper shows that the main theories linking sustainability to firms in a chronological order are 1 corporate social responsibility 2 stakeholder theory 3 corporate sustainability and 4 green economics currently various innovative approaches and new theories emerged such as co evolution theory and multi level perspective reflecting three directions of theory development namely 1 shifting from what to how 2 growing use of interdisciplinary approach and 3 towards broader systems renewable energy studies associated with firms and future research opportunities in this area are also critically analysed the comprehensive review offered in this paper provides a useful reference for policy makers corporate managers and researchers interested in corporate sustainability and renewable energy related studies

transition to a post carbon society linking environmental justice and just transition discourses abstract the hunter valley in new south wales australia is a globally significant coal mining and exporting region the hunter economy s strong basis in fossil fuel production and consumption is challenged by civil society campaigns employing environmental justice discourses this paper analyses how two civil society campaigns in the hunter region stop t4 and groundswell have countered the regional hegemony of fossil fuel interests from an environmental justice perspective however the discursive dominance of the jobs versus environment frame hinders efforts to build solidarity amongst local environmental justice goals on the one hand and workers and union aspirations for secure quality jobs on the other long term structural decline of global coal markets adds pressure for economic transition we argue that campaigns to open up possibilities for transition away from fossil fuel dependency to a post carbon society can be strengthened by engaging with the just transition discourses that are typically associated with organised labour doing so can create synergy for social change by aligning community and labour movement interests inclusive social movement partnerships around this synergy must address structural disadvantage that creates social and economic insecurity if communities are to prevail over the fossil fuel sector s hegemony

structuring a theory of moral sentiments institutional and organizational coevolution in the early thrift industry the authors investigate the coevolution of organizations and institu tions they study how institutional definitions rules and expectations unfold in tandem with the organizational structures and processes that embody those institutions the research site is the early thrift industry changes in thrifts technical environment the rise of a transient and heterogeneous population and institutional environment the rise of progressivism propelled this coevolutionary process the coevolution of thrift organizations and institutions proceeded primarily through selection adaptation was constrained by both institutional factors it was difficult to adopt a novel institutional logic and technical factors early thrifts were generally small so entry and exit were easy

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

the destabilisation of existing regimes confronting a multi dimensional framework with a case study of the british coal industry 1913 1967 because innovation studies are oriented towards novelty scholars in this field have paid less attention to the destabilisation of existing regimes this paper discusses four views on industry destabilisation and presents an encompassing conceptual framework which addresses interactions between the build up of external pressures industry response strategies and the gradual weakening of commitment to existing regime elements we confront the framework with an in depth longitudinal case study of the british coal industry 1913 1967 specific conclusions are developed about different degrees of regime inertia the ebb and flow of external pressures the relative importance of economic and socio political pressures and interactions between them

reply to commentary on the special issue scaling up biofuels a critical look at expectations performance and governance abstract the special issue scaling up bioenergy identifies major policy expectations attached to biofuels production worldwide and it provides systematic reviews of actual biofuel performance and governance in these areas papers address the extent to which policy expectations related to climate change mitigation energy security rural livelihoods and risk mitigation have been achieved and the effectiveness of public and private governance in advancing sector sustainability building on these findings the synthesis paper asks what next for countries wishing to advance national biofuel programmes as one option for the necessary divestment from fossil fuels among other sine qua nons the special issue highlights the urgent need to downscale global energy demand and to stop treating biofuels as an isolated sector goldemberg et al 2018 query several aspects of our approach from research design data collection to our recommendation to apply the precautionary principle in research as well as policy making unfortunately goldemberg et al 2018 incorrectly portray our main argument moreover they claim bias in our approach and mistakes in our empirical evidence however without bringing forward an evenhanded critique of research philosophy methodology or referencing different empirical literature we fully stand behind our research philosophy and findings presented

the economics of changing course implications of adaptability and inertia for optimal climate policy this paper reviews evidence that energy technologies and systems adapt over time to accommodate external pressures that technical innovation and systemic change in the energy sector is largely induced by need and restrained by potentially large transitional costs a simple integrated model of optimal greenhouse gas abatement over time is presented in which the abatement cost depends on both fixed and transitional elements it is shown that the optimal current response and long run prospects differ radically between the classical economic case in which the cost of a given cutback in emissions is fixed exogenously and the adaptive case in which the response is ultimately adaptive but heavily constrained by inertia ie low fixed but high transitional cost if energy systems are indeed to a large degree adaptive the results demonstrate that as compared with the classical non adaptive case long run stabilization of atmospheric co2 may be optimal even with moderate damages from climate change greater near term abatement efforts are justified and the cost of a given delay in response may be several times higher neglect of the issue of induced technical change and other adaptive responses may invalidate the policy implications drawn from most integrated assessment models developed to date

asset pricing puzzles and incomplete markets the representative agent theory of asset pricing is modified to incorporate heterogeneous agents and incomplete markets the model features two types of agents who differ up to a nontradable idiosyncratic component in their endowment processes numerical solutions indicate that individuals are able to diversify a substantial portion of their idiosyncratic income risk through riskless borrowing and lending alone restrictions on the variability of intertemporal marginal rates of substitution hansen and jagannathan 1991 are used to argue that incomplete markets as modeled here cannot account for the properties of asset returns that are anomalous from the perspective of representative agent theory a large literature in financial economics has investigated the extent to which variants of the lucas 1978 general equilibrium theory of asset pricing can account for the joint behavior of aggregate u s consumption and asset returns by and large this literature has concluded that a theory based upon frictionless arrow debreu markets and or a representative agent makes strongly counterfactual predictions regarding even the simple unconditional properties of this relationship mehra and prescott 1985 for instance show that the theory drastically underpredicts the average excess rate of return on u s stocks the so called equity premium puzzle weil 1989 points out as did mehra and prescott that the magnitude of the average risk free rate is far below that predicted by the theory this has been dubbed the risk free rate puzzle numerous authors including grossman melino and shiller 1987 and backus gregory and zin 1989 show that the theory cannot account for term premia inherent in the yield curve hodrick 1987 surveys a large literature which documents the theory s shortcomings in accounting for excess expected returns in foreign exchange markets the notion that the representative agent model cannot account for excess returns across a wide array of asset markets can be made more precise by using tools developed by hansen and jagannathan 1991 and shiller 1982

insurance and opportunities the welfare implications of rising wage dispersion this paper develops a series of heterogeneous agents economies in order to characterize analytically the welfare implications of changes in the uncertainty in individual labor productivity we perform two types of welfare calculations first we compute the welfare consequences of a rise in labor market risk given a particular asset market structure complete markets incomplete markets autarky second we compute the expected gain from completing markets starting from autarky or incomplete markets for a given level of wage dispersion we are able to derive intuitive closed form expressions for these welfare eects which depend only on preference parameters and the size of the change in wage dispersion a higher level of productivity dispersion has always two eects it tends to reduce welfare in presence of partial insurance but it also tends to improve production opportunities in presence of flexible labor supply we can separate analytically the insurance and the opportunity components we quantify the welfare consequences of the rise in wage inequality observed in the united states over the past three decades as roughly 3 of lifetime consumption moreover we calculate that completing the asset markets given the current level of inequality would lead to a welfare improvement equivalent to 35 of lifetime consumption

beyond chayanov a sustainable agroecological farm reproductive analysis of peasant domestic units and rural communities sentmenat catalonia 1860 abstract we present a sustainable agroecological farm reproduction analysis that links two methodologies kept separated so far optimization modelling and social metabolism accounting of the biophysical turnover from a fund flow approach this socio agro ecological model combines two scales at farm gate and municipal levels and formalizes all relevant flows interlinking three living funds that have to be reproduced over time the domestic unit livestock and soil fertility from the requirements and capacities of each fund constraints we run the model under different scenarios objective functions to see the different configurations that the landscape structure and the flow patterns can take variables ensuring the reproducibility of funds by changing the objectives we obtain an intensive optimum that minimizes the land required an extensive optimum that minimizes labour and a monetary optimum that maximizes a prevailing cash crop the model is applied to a past advanced organic farming of a catalan village c 1860 to generate a set of counterfactual scenarios that confronted with historical data help to reveal how institutional settings and landownership inequality played a role in maintaining the real socio agro ecological structure away from these optima and the existing potential of possible eco functional intensification practices aimed at reducing the land cost of agrarian sustainability

property rights regimes and natural resources a conceptual analysis the term common property resource is an example of a term repeatedly used to refer to property owned by a government or by no one it is also used for property owned by a community of resource users such usage leads to confusion in scientific study and policy analysis in this paper we develop a conceptual schema for arraying property rights regimes that distinguishes among diverse bundles of rights ranging from authorized user to claimant to proprietor and to owner we apply this conceptual schema to analyze findings from a variety of empirical settings including the maine lobster industry

determinants of renewable energy development in the eu countries a 20 year perspective abstract the objective of the paper is to identify factors which determine energy policy in the eu countries in the middle of 1990s this objective is achieved in three stages first the changes in the distribution of res in 26 eu countries in the period between 1995 and 2014 are investigated the analysis demonstrates that over the last 20 years the eu countries diversify the res they use which results in substantial changes in their distribution second the distribution of energy sources in 1995 is described as it is assumed that the distribution might be a crucial factor influencing energy policy in each country third several other factors related to energy security environmental concerns economy and politics are considered as potential determinants of renewable energy development two statistical methods of variable selection namely the best subset regression and the lars method reveal that the present in 2014 share of res in the energy mix significantly depends on the condition of the eu countries in the middle of 1990s the distribution of energy sources in 1995 is the crucial determinant of renewable energy development countries without their own fossil fuel sources are the ones which develop renewable energy to the greatest extent other important factors boosting re development include gdp per capita concentration of energy supply swi and the costs of consumption of energy obtained from fossil fuels in relation to gdp

a low carbon industrial revolution insights and challenges from past technological and economic transformations recent efforts to promote a transition to a low carbon economy have been influenced by suggestions that a low carbon transition offers challenges and might yield economic benefits comparable to those of the previous industrial revolutions this paper examines these arguments and the challenges facing a low carbon transition by drawing on recent thinking on the technological economic and institutional factors that enabled and sustained the first british industrial revolution and the role of general purpose technologies in stimulating and sustaining this and subsequent industrial transformation processes that have contributed to significant macroeconomic gains these revolutions involved profound long drawn out changes in economy technology and society and although their energy transitions led to long run economic benefits they took many decades to develop to reap significant long run economic benefits from a low carbon transition sooner rather than later would require systemic efforts and incentives for low carbon innovation and substitution of high carbon technologies we conclude that while achieving a low carbon transition may require societal changes on a scale comparable with those of previous industrial revolutions this transition does not yet resemble previous industrial revolutions a successful low carbon transition would however amount to a different kind of industrial revolution

government affiliated intermediary organisations as actors in system level transitions the article draws from two theoretical fields innovation intermediation and sustainability transitions to examine the role of government affiliated intermediary organisations in system level transitions the role of intermediaries working between actors producers and users entrepreneurs and adopters idea generators and funders has seldom been specifically addressed in the transitions literature thus the role of intermediary organisations in enacting change in socio technical regimes particularly of intermediaries falling between traditional public sector and private sector actors is of interest in this article empirical analyses of two finnish organisations sitra and motiva show that government affiliated intermediaries are likely to engage in strategic niche management processes in diverse ways each organisation having its own distinct characteristics the analysis also points out that to get from niches to transition sustained systemic intermediaries are crucial in articulating new visions and expectations government affiliated intermediaries may make an important contribution to sustainability transitions by initiating and managing new policy or market processes and by acting as an impartial contact point or voice for new networks of actors while independence from public administration is likely to facilitate networking too neutral a stance or limited temporal engagement may reduce the transition facilitating effects

regime destabilisation as the flipside of energy transitions lessons from the history of the british coal industry 1913 1997 this paper investigates a neglected aspect of the transitions literature the destabilisation of existing regimes and industries it presents an analytical perspective that integrates four existing views on destabilisation and conceptualizes the process as a multi dimensional and enacted phenomenon involving technical economic political and cultural processes this perspective is illustrated with two historical cases of the british coal industry 1913 1967 1967 1997 these cases are also used to articulate five lessons regarding the overall destabilisation process and five lessons regarding the economic and socio political environments of industries the conclusion section translates the historical lessons into insights with relevance for the contemporary challenge of climate change and transitions to low carbon energy systems

recent evolutionary theorizing about economic change this famous passage from marshall s principles of economics it first appeared in the fifth edition which came out in 1907 nicely brings out two issues which are as germane to economics today as they were when marshall wrote the first is the heavy reliance by economists in their formal theorizing on the notion of equilibrium the other is the appeal that biological conceptions3x201d have for many economists particularly when their focus is on economic change

how the global and national levels interrelate in climate policymaking foreign policy analysis and the case of carbon capture storage in norway s foreign policy abstract states struggle to develop adequate climate change mitigation policies especially when national energy interests conflict with collective environmental concerns it is therefore crucial to understand how viable solutions may find political support on these terms as one such case this paper examines norway s explicit foreign policy to promote carbon capture and storage ccs as a mitigation measure i suggest that a foreign policy analysis framework with a norm centered constructivist focus allows for new insights into how climate policies function as balancing strategies between external normative pressures and important domestic concerns it reveals how norway s ccs policy represents an extraordinary effort to bridge seemingly contradictory agendas the norwegian ccs case highlights how a state may engage in innovative foreign political engineering to promote solutions to its international climate commitments on terms that fit national energy needs it shows that climate political success may depend on successfully linking the international and domestic levels by simultaneously appealing to established norms within each system

long term diversification paths and energy transitions in europe the concentration of the energy mixes of eight european countries is measured latecomers historically enjoyed lower levels of concentration in their energy mixes early comers followed an inverted u path of concentration latecomers a u path a time effect and size effect explains the different patterns small energy consuming countries will be able to do faster transitions

concentration in the european electricity industry the internal market as solution abstract this article offers an analysis of the present competitive and regulatory framework of the european electricity sector and the results achieved with the liberalisation process considering the reactions of incumbents to the liberalisation the focus in this work is mainly on the problem of market concentration in the sector the new trends toward the creation of national champions as well as recent mergers between gas suppliers and electricity producers raise serious concerns about abuses of market power and risk of future collusion in particular the strategic linkage of existing markets and the expansion into new ones are analyzed in the light of the multimarket contact theory considering investment in interconnection among member states the internal market issue is investigated as a solution to the risks coming from liberalisation

the climate change challenge and transitions for radical changes in the european steel industry this paper presents ideas pertaining to transitions that are envisaged in the steel industry from cleaner production cp to systems innovation limits of the socio technical system and the climate change challenge will induce changes in the production distribution and consumption patterns of steel and other materials insights from industrial economics and evolutionary theory on innovation for sustainable development are needed to assess the rationale behind the adoption and diffusion of new breakthrough technologies named ultra low co2 steel making ulcos evolution in material consumption patterns deserves a special research agenda which focuses upon the long term evolution of the consuming sectors as major changes in the infrastructure and products that support our many energy dependent services mobility shelter heat light etc are expected these changes will be significantly amplified by greenhouse gas emission constraints

political competition and renewable energy transitions over long time horizons a dynamic approach abstract climate change mitigation requires sustainable energy transitions but their political dynamics are poorly understood this article presents a general dynamic model of renewable energy policy with long time horizons endogenous electoral competition and techno political path dependence we calibrate the model with data on the economics of contemporary renewable energy technologies in doing so we discover transition dynamics not present in economy energy models which ignore politics or in formal political economy models which ignore long term technological dynamics we show that the largest effects of partisan ideology on policy occur when the competing parties disagree on the importance of energy policy in these cases the less ideological party appeases the more ideological one while the more ideological party attempts to appease the electorate the results demonstrate that political dynamics could have large effects on the development of renewable energy and carbon dioxide emissions over time influencing the ability of countries to reach various climate mitigation trajectories

the socio technical transition of distributed electricity storage into future networks system value and stakeholder views whole system models for the gb electricity system suggest that distributed electricity storage has the potential to significantly reduce the system integration cost for future system scenarios from a policy perspective this poses the question why this value should not be realised within existing market structures opinion among stakeholders is divided some believe that storage deployment constitutes a special case in need of policy support others insist that markets can provide the necessary platform to negotiate contracts which reward storage operators for the range of services they could provide this paper seeks to inform this debate with a process of stakeholder engagement using a perspective informed by socio technical transition literatures this approach allows the identification of tensions among actors in the electricity system and of possibilities for co evolution in the deployment of storage technologies during a transition towards a low carbon electricity system it also draws attention to policy related challenges of technology lock in and path dependency resulting from poor alignment of incumbent regimes with the requirements for distributed electricity storage

current challenges of germany s energy transition project and competing strategies of challengers and incumbents the case of direct marketing of electricity from renewable energy sources electricity generated by renewable energies res e already accounts for 25 of germany s electricity supply this has led to recent discussions for a better market integration of res e the paper examines how competing actors and their ideas on market integration developed new services for direct marketing according to their respective origins and tried to shape the regulatory framework the paper analyses this process and explains the current shape of the field of direct marketing medium sized structured actors who favoured res e integration via the conventional wholesale power markets and who formed early close coalitions with res e power producers at the same time have been most successful in terms of market shares moreover they have been very successful for different reasons in building up coalitions with governance units and influencing the field rules and routines based on those findings the paper will conclude with some policy advices for the future adjustment of the current regulative frameworks as long as there is no evidence of how res e can be integrated most effectively and efficiently policies should maintain a competition between different direct marketing strategies to find out which strategies serve the best in terms of achieving a successful energy transition

decommodification as a foundation for ecological economics ecological economists have emphasized the study of commodification i e the development of market based exchange and valuation rather than decommodification processes i e the degree of immunization from market dependency this is surprising given the fact that large scale decommodification may be our best option for a post growth transition so dear to many ecological economists based on heinsohn and steiger s theory of ownership we seek to provide an institutional foundation to processes of de commodification these two authors distinguish between property and possession two bundles of rights generating different logics and consequences we illustrate this approach with three cases taken from an advanced capitalist economy switzerland showing how commodification and decommodification processes may appear together or vigorously oppose each other cooperatives forests and municipal land are examples of partial decommodified assets that follow a logic of possession and are therefore more likely to be sustainable it is high time that the study of decommodification becomes central to ecological economics

spite and development in a wide variety of settings spiteful preferences would constitute an obstacle to cooperation trade and thus economic development this paper shows that spiteful preferences the desire to reduce another s material payoff for the mere purpose of increasing one s relative payoff are surprisingly widespread in experiments conducted in one of the least developed regions in india uttar pradesh in a one shot trust game the authors find that a large majority of subjects punish cooperative behavior although such punishment clearly increases inequality and decreases the payoffs of both subjects in experiments to study coordination and to measure social preferences the findings reveal empirical patterns suggesting that the willingness to reduce another s material payoff either for the sake of achieving more equality or for the sake of being ahead is stronger among individuals belonging to high castes than among those belonging to low castes because extreme social hierarchies are typically accompanied by a culture that stresses status seeking it is plausible that the observed social preference patterns are at least partly shaped by this culture thus an exciting question for future research is the extent to which different institutions and cultures produce preferences that are conducive or detrimental to economic development

consumption dynamics in general equilibrium a characterisation when markets are incomplete we introduce a methodology for analysing infinite horizon economies with two agents one good and incomplete markets we provide an example in which an agent s equilibrium consumption is zero eventually with probability one even if she has correct beliefs and is marginally more patient we then prove the following general result if markets are effectively incomplete forever then on any equilibrium path on which some agent s consumption is bounded away from zero eventually the other agent s consumption is zero eventually so either some agent vanishes in that she consumes zero eventually or the consumption of both agents is arbitrarily close to zero infinitely often later we show that a for most economies in which individual endowments are finite state time homogeneous markov processes the consumption of an agent who has a uniformly positive endowment cannot converge to zero and b the possibility that an agent vanishes is a robust outcome since for a wide class of economies with incomplete markets there are equilibria in which an agent s consumption is zero eventually with probability one even though she has correct beliefs as in the example in sharp contrast to the results in the case studied by sandroni 2000 29 and blume and easley 2006 8 where markets are complete our results show that when markets are incomplete not only can the more patient agent or the one with more accurate beliefs be eliminated but there are situations in which neither agent is eliminated c 2010 elsevier inc all

the two faces of market support how deployment policies affect technological exploration and exploitation in the solar photovoltaic industry the recent years have seen a strong rise in policies aiming to increase the diffusion of clean energy technologies while there is general agreement that such deployment policies have been very effective in bringing technologies to the market it is less understood how these policies affect technological innovation to shed more light on this important question we conducted comparative case studies with a global sample of 9 firms producing solar photovoltaic pv modules complemented by in depth interviews with 16 leading pv industry experts we propose that on the one hand policy induced market growth serves as an important catalyst for innovative activity as it raises the absolute level of firm investments in technological exploration on the other hand however deployment policies create an incentive for firms pursuing more mature technologies to shift their balance between exploitation and exploration toward exploitation firms focusing on less mature technologies cannot tap the potentials of exploitative learning to the same extent as those with more mature technologies therefore stimulating strong market growth may raise the barrier to market entry for less mature technologies we conclude that when designing deployment policies great care should be taken to avoid adverse effects on technological diversity and a premature lock in into more established technologies

renewable electricity generation in germany a meta analysis of mitigation scenarios german energy policy targets envision a share of electricity from renewable energy sources res e of at least 80 in 2050 how can the transformation of the german electricity sector be achieved and at what costs this paper addresses these questions by means of a meta analysis of 10 recent model based mitigation scenarios for germany it turns out that the scenarios exploit the three basic strategic options of increasing the share of res e domestic res e generation electricity demand reductions and res e imports to substantially different extents domestic res e generation increases in all scenarios particularly from onshore and offshore wind scenarios that rely heavily on reducing electricity demand require a relatively low expansion of domestic res e generation despite detailed technical analyses insights on the costs of the transformation remain limited a discussion of underlying scenario assumptions reveals that it is unclear whether i res e and system integration technology development will be as cost competitive as postulated ii implicitly assumed institutional requirements will be realized and iii relevant actors in the transformation process will be incentivized accordingly therefore future research should pursue a thorough assessment of strategic options for transforming the german electricity system that consistently integrates technologies institutions and actors

bad eggs learning by doing and the choice of technology we model long run economic development through technology adoption under scientific uncertainty about environmental effects there are four possible long run equilibria in a socially planned economy high growth adopt rapidly but abandon damaging technologies once revealed ddt cfcs cautious brake the introduction of new technologies to avoid mistakes genetically modified organisms no growth halt technological progress to preserve secondary knowledge and collapse adopt rapidly without ever abandoning damaging technologies in the base parameterization a short sighted social planner chooses the cautious strategy a far sighted planner chooses the high growth strategy unless damages are irreversible in which case the cautious strategy again dominates regulatory options in the market economy are investigated pollution taxes do not affect the firm s level of precaution if they can only be applied after the adopting firm has reaped the benefits however they do encourage the abandonment of damaging technologies liability rules do affect precaution but may lead to excessive caution or even a no growth trap

from malthus to sustainable energy theoretical orientations to reforming the energy sector abstract the main purpose of this article is to consider macro level theories for understanding the urge for reform as well as the process of societal change both in general terms and more specifically within the energy sector the aim is also to consider the energy sector in a wider context and analyse its recent development as a potential part of this reform the scope and logical framework of this article is the following the state of the global environment is approaching a point where the whole of humankind is in danger the article reviews and discusses humankind s limits of existence and dialectics of the human nature relationship by contrasting malthusian and boserupian theoretical views this creates both practical and scientific needs the long societal process of change is discussed according to the three layer 3l model of societal chance the production of energy has traditionally been one of the core issues concerning the effect humankind has on the environment and with regards to potential change related to it reforming the energy sector is in a key position this article reviews and discusses the way the already established renewal of the energy sector corresponds to the 3l model and the diverse potentials of the anticipated further progress

developing pathways for energy storage in the uk using a coevolutionary framework abstract a number of recent techno economic studies have shown that energy storage could offer significant benefits to a low carbon uk energy system as it faces increased challenges in matching supply and demand however the majority of this work has not investigated the real world issues affecting the widespread deployment of storage this paper is designed to address this gap by drawing on the systems innovation and socio technical transitions literature to identify some of the most important contextual factors which are likely to influence storage deployment specifically it uses a coevolutionary framework to examine how changes in ecosystems user practices business strategies institutions and technologies are creating a new selection environment and potentially opening up the energy system to new variations of storage for both electricity and heat the analysis shows how these different dimensions of the energy regime can coevolve in mutually reinforcing ways to create alternative pathways for the energy system which in turn have different flexibility requirements and imply different roles for storage technologies using this framework three pathways are developed user led decentralised and centralised which illustrate potential long term trajectories for energy storage technologies in a low carbon energy system

geography urbanization and lock in considerations for sustainable transitions to decentralized energy systems the importance of moving towards sustainable energy systems is critical to achieving societal sustainability transitions theory is a useful approach to look at the potential and limitations of systemic transitions and has been applied in a number of alternative contexts in the current study we examine transitions theory and its implications for the progress of decentralized energy systems in japan in the period after the fukushima accident of 2011 empirical data from a targeted nation wide survey is used to examine the progress and change in consumer preference and behavior since the disaster as possible evidence for the potential transition paths likely to be occurring importantly this study utilizes data that examines a spectrum of urban rural and disaster non disaster areas in order to explore whether any differences in response patterns were present results indicate that although the desire of stakeholders has been to change the energy system there are barriers to transformation variation between rural and urban sites and between disaster affected and unaffected areas was examined indicating that at least under the chosen classification there was surprisingly little difference the results have implications for understanding transitions at a much broader level and imply that if the empirical data is a useful indicator japan is within a locked in or reorganization transition in order to move to a more radical conversion type change a new approach is likely to be required to nurture niche innovations effectively

socio technical inertia understanding the barriers to electric vehicles it is widely accepted that electrification of the transport sector is one of several technological trajectories that could redress some of the environmental issues associated with the growth in travel demand including climate change and oil demand at a global scale and air quality and noise pollution at the urban scale electric vehicles have been considered a promising technology at repeated intervals over the last century but this promise has not been realised this paper is a contribution to understanding the key tools and strategies that might enable the successful introduction of new technologies and innovations by exploring the key barriers to electric vehicles encountered in two countries uk and germany where the automobile industry has been historically significant the study evaluates stakeholders opinions on relevant regulation infrastructure investment r d incentives and consumer incentives the key findings of the research are that the introduction and penetration of evs is confronted by several barriers that inhibit a larger market penetration under current conditions which in turn casts doubt on the assumptions of strategic niche management and transitions theory