future biodiesel policy designs and consumption patterns in latvia a system dynamics model abstract decarbonisation of transport has become central to european union policy biofuels are expected to represent a substantial part of the overall strategy towards diversifying europe s energy supplies and curbing greenhouse gas emissions in a cost effective way this research deals with the dynamic simulation modeling of a biodiesel market as a part of transportation fuel market and analyses of various policy support instruments on increasing the proportion of biofuel in total transport fuel demand the study is carried out for latvia s road transport sector after it had experienced generous financial support from the government allowing the industry to develop support was abruptly stopped creating stagnation in both biodiesel supply and demand this threatened the national transport policy goals the goal of this research is to find the most effective policy strategies for achieving the national transport policy goals by applying system dynamics modeling to the current market conditions of transport fuels specifically the primary focus of this paper is an attempt to gain insight into the long term dynamic behavior of the biodiesel market in latvia the principal policy tools and mechanisms implemented can be summarized as i state subsidies at different levels and stages i e the biodiesel production sector the agricultural sector and the end consumer sectors ii increasing the excise taxes on fossil fuels iii increasing the share of the biodiesel in the transportation fuel blend the results obtained from model simulations confirm that promoting biofuel acceptance among end users is the primary key issue

a decomposition analysis of the trend in uk income inequality post war britain has experienced a number of dramatic demographic and social changes that have undoubtedly influenced the distribution of income there has been a rise in the number of pensioners whose incomes are relatively low a considerable increase in the number of young and old households living on their own and a remarkable expansion in the proportion of working wives the potential importance of these structural changes suggests that their impact on the income distribution needs to be examined systematically before any attempt can be made to interpret the observed trend in overall income inequality adequately the method usually adopted for this purpose attempts to create a comparable time series of distributions based on the structural characteristics pertaining in one particular year for example if we wished to investigate the effect of shifts in the age structure of the population this approach would disaggregate the distribution in one year tl and estimate what the distribution would have been like if the age structure had been the same as that observed in some other year to on the assumption that other distributional characteristics such as ageincome differentials and inequality within age groups remain invariant to this demographic change the comparison between the actual distribution at t1 and the constructed distribution at t1 with to s age structure is taken to indicate the impact of changes in the age structure over the period concerned this comparison can be presented in terms of quantile shares summary measures of inequality or the entire lorenz curves this approach known as shift share analysis or standardising the inequality series see semple i975 love and wolfson i976 dinwiddy and reed i977 royal commission i977 rowley and henderson i978 macleod and horner i980 is perfectly adequate for simple and straightforward structural changes when several changes are occurring simultaneously however it becomes difficult to identify the contribution of the individual factors and to assess their relative importance to the overall trend in inequality furthermore the combined impact of several structural influences will not in general sum up to the inequality change requiring explanation the purpose of this paper is to propose an alternative method of analysing

an axiomatic characterization of yitzhaki s index of individual deprivation abstract this note presents and discusses a number of properties a measure of individual deprivation should satisfy the axioms we propose are necessary and sufficient to characterize yitzhaki s index of deprivation making the structure of the index more transparent

on the economic architecture of the workplace repercussions of social comparisons among heterogeneous workers we analyze the impact on a firm s profits and optimal wage rates and on the distribution of workers earnings when workers compare their earnings with those of coworkers we consider a low productivity worker who receives lower wage earnings than a high productivity worker when the low productivity worker derives dis utility not only from his own effort but also from comparing his earnings with those of the high productivity worker his response to the sensing of relative deprivation is to increase the optimal level of effort consequently the firm s profits are higher its wage rates remain unchanged and the distribution of earnings is compressed

optimal anti poverty programmes horizontal equity and the paradox of targeting the paper examines the problem of optimal targeting when households differ in needs additively decomposable poverty measures based on the households deprivation are employed needs are modelled carefully household size and needs are reflected by equivalence scales and weights the paradox of targeting corresponds to a situation in which the benefits given to a household type could decrease if the type s needs measured by the respective scale value are increased i find that poverty programmes are horizontally equitable if and only if the weight attached to each household type equals the respective equivalence scale value the paradox cannot then occur either differences in household size and needs the present paper deals with this topic considering optimal poverty alleviation programmes two questions are investigated first are optimal programmes horizontally equitable this question is related to the second one does an increase in needs lead to an increase in benefits in view of some results in the literature it seems that the answers can be negative for instance ebert 1997 demonstrates that the living standard of different household types may be different in an optimal income distribution given a social welfare function keen 1992 describes what he calls the paradox of targeting it may be that optimal targeting requires that an increase in the needs of some group be met by a reduction in the resources allocated to it thus the answers may be troubling it is obvious that the outcome of the analysis depends on the framework chosen and the researcher s objective there are several ingredients that determine optimal programmes given different needs and sizes a distribution of household income has to be adjusted in order to reflect these differences in practice incomes are often converted to equivalent incomes measured for a reference type and weights are attached furthermore the poverty lines of different groups have to be chosen appropriately an optimal outcome also

rethinking inequality decomposition with evidence from rural china we examine inequality decompositions by income source and describe a general regression based approach for decomposing inequality the approach provides an efficient and flexible way to quantify the roles of variables like education and age in a multivariate context we illustrate the method using survey data from china the empirical results demonstrate how sharply different conclusions can emerge for different decomposition rules we explain how these differences reflect the treatment of equally distributed sources of income and we discuss implications for how results from inequality decomposition are interpreted a renewed interest in economic growth political economy and the distribution of income has again placed the economics of income inequality firmly on the academic research agenda relatively poor performances in latin america have been contrasted with success stories in east asia and recent evidence on the changing income distributions of emerging economic giants like china has

economics of transaction costs saving forestry following the arguments concerning the problems of traditional forest economics in putz 2000 this article shows that transaction cost economics can overcome some of the shortcomings of the main stream forest economics the public forestry subsistence forestry non industrial private forestry china s share holding forestry and their revolutions are analyzed by the relative transaction costs of labor capital land and forest products potential implications of transaction cost economics in forest policy including regulated access to commons sustainable forestry criteria ecological certificates and land tenure decentralization have also been discussed 2001 elsevier science b v all rights reserved

an index of relative deprivation abstract this paper proposes an index of relative deprivation which unlike the earlier indices assumes that the deprivation of a person is sensitive to income transfers among those who are richer than him the proposed index is quite flexible in accomodating value judgements on the degree of envy felt by individuals in the society

how might china achieve its 2020 emissions target a scenario analysis of energy consumption and co2 emissions using the system dynamics model abstract according to the chinese government s co 2 reduction commitment the production and consumption of traditional and renewable energy in china from 2001 to 2012 this paper forecasts the energy consumption gross co 2 emissions and co 2 emission intensity in china from 2013 to 2020 via system dynamics simulation coupled with the energy system and renewable energy policy factors the effects of different economic growth rates and policy factors on the energy consumption were estimated the results showed that in different economic growth rates scenarios total energy consumption and co 2 emissions increased by 36 140 75 kwh and more than 10 000 billion kg in 10 gdp growth rate scenario than in the 7 scenario in 2020 the co 2 emission per gdp decreased by 52 in 2020 as compared to 2005 under the scenario of 10 gdp growth rate under different renewable energy policy factors scenarios the coal energy consumption decreased by 2 3 in scenario of 5 policy factor as compared to 1 policy factor scenario the co 2 emissions reduced by 3321 94 billion kg in 2020 under the scenario of 5 policy factor as compared to that in the scenario of 1 policy factor the co 2 emission per gdp reduced by 47 50 based on the 2005 level in different scenarios of renewable energy policies we found that with an increase in gdp total energy consumption and co 2 emissions increased in the base scenario higher economic growth rates led to an increase in energy consumption including both the traditional and renewable energy resources in stark contrast to total co 2 emission however co 2 emission intensity decreased with an increase in economic growth rate the renewable energy policy improved the renewable energy development reduced co 2 emissions and co 2 emission intensity it was more effective in energy saving and co 2 reduction than the high growth rate scenarios the results indicated that china is highly likely to achieve its co 2 emission reduction goal under different simulated scenarios besides the energy distribution was similar in different scenarios coal was the major energy source which amounted to more than 70 of the total energy consumption finally we conclude with important policy implications according to our simulations results

consumer expenditures and inequality an analysis based on decomposition inequality in u s consumption expenditures is examined using the lerman and yitzhaki covariance method for decomposing the gini coefficient by factors from the decomposition nonparametric estimates of elasticities with respect to total expenditures are derived using data from the 1987 u s consumer expenditure interview survey the overall gini based on total annual consumption expenditures is 0 33 consistent with parametric expenditure elasticities the gini expenditure elasticities for household operations apparel and services and entertainment are relatively high an implication of this result is that taxing such goods and services will increase the progressivity or reduce the regressivity of the tax system copyright 1993 by mit press

an investigation of renewable certificates policy in swedish electricity industry using an integrated system dynamics model abstract energy policy has a vital impact on the investment in renewable energy capacities and on the decommissioning of traditional ones currently sweden and norway aim to expand the renewable electricity production by 26 4 twh between 2012 and 2020 and subsequently to reduce co 2 emissions to achieve this the swedish energy agency issues to renewable producers electricity certificates which are sold on an open market to increase revenues meanwhile the electricity is priced based on a marginal cost principle and the price is highly reliant on the capacity profile and energy balance in the system and consequently on the expanding and decommissioning decisions the above price issues together with the intermittent availability of renewable energy sources and the uncertainty of future fuel costs will significantly affect the economic performance of the electricity producers it is only after understanding the interaction of those factors that we can define companies business models for achieving a sustainable development in the electricity sector this study applies a system dynamics approach and presents a model to integrate both strategic decisions such as capacity expansion decommission and operational features such as randomness and seasonal factors in electricity production the model highlights the complex and nonlinear interaction of important factors in the electricity sector the study results indicate that the energy policy should not be introduced in an isolated manner but rather need to incorporate the incentives of renewables with other decisions such as nuclear decommission additionally this study predicts an upcoming increase in electricity price as well as a more volatile price after the capacity profile has been changed and dominated by hydro biomass and wind this study provides guidelines for policy makers and managers to make better informed decisions for a healthy development of their businesses as well as of the entire electricity sector

external economies and trade an empirical analysis in recent international trade literature external economies are taking center stage as a determinant of comparative advantage in manufacturing industries several recent trade models have focused on learning or human capital development as the primary source of external economies a young develops a model of dynamic comparative advantage with external economies at the industry level based on learning curves r e lucas and n l stokey both focus on external effects of human capital accumulation at the societal level as an engine of growth and examine the trade and development implications 2 conducting empirical studies on models involving external effects of human capital poses the challenge of how to quantify such effects lucas suggests that the solution to this problem may be found by examining the urbanization economies inherent in cities 3 lucas is not alone in drawing a parallel between urban rural trade and international trade p r krugman exhorts trade economists to study local and regional trade as a guide to international specialization 4 like lucas krugman points to the possibilities of solving data problems if we want to understand international specialization a good place to start is with local specialization the data will be better and pose fewer problems of compatibility and the underlying economic forces will be less distorted by government policies 5 this study tests the ability of urban production data to explain international trade between the united states and developing countries a factor proportions model with external economies is used to explain trade patterns i use u s urban production data to measure the effect of differences in endowments of the factors generating external economies the model performs well the interesting result is the strength of the external factors as measured by the urban production variable in explaining international trade this result supports lucas s

reassessing the integration of european electricity markets a fractional cointegration analysis this study extends existing literature on the assessment of electricity market integration in europe by developing and testing hypotheses on the convergence of electricity wholesale prices and adopting a time varying fractional cointegration analysis in addition the potential impacts of some special events that may affect system capacity new interconnection market coupling increase in share of intermittent generation on spot and forward markets are considered and evaluated daily spot prices from february 2000 to march 2013 of nine european electricity spot markets apx uk apx nl belpex epex fr epex de ipex nordpool omel and ote and month ahead prices in four markets french british german and dutch from november 2007 to december 2012 are investigated results show that unit root tests which are generally used in the literature to test market integration are inadequate for assessing electricity spot market convergence because spot prices are found to be fractionally integrated and mean reverting time series furthermore spot price behaviour and their association with different markets change over time reflecting changes in the eu electrical system one month ahead prices by contrast were found to have become more resilient to shocks and to follow more stable trends

the impact of income components on the distribution of family incomes attempts have recently been made to assign inequality contributions to various components of income this paper discusses the issues involved in such assignments and highlights the problems that follow from having a number of possible decomposition rules u s data on the distribution of family incomes are used to examine the relative influence of these income components and to evaluate empirically the performance of different decomposition rules a wide range of inequality contributions can be obtained even when restricted to only naturally derived decomposition rules some of the results are plainly absurd and serve to warn against the indiscriminate use of decomposition formulae without first investigating their properties

deprivation and social exclusion social exclusion manifests itself in the persistent relative lack of an individual s access to functionings compared with other members of society and we model it as being in a state of deprivation over time we view deprivation as having two basic determinants the lack of identification with other members of society and the aggregate alienation experienced by an agent with respect to those having fewer functioning failures using an axiomatic approach we characterize new individual and aggregate measures of deprivation and social exclusion the aggregate measures are then applied to eu data for the period 1994 2001

a matrix approach to the gini index decomposition by subgroup and by income source the literature offers two main ways of decomposing the gini index decomposition by population subgroup and by income source this article proposes merging the two decomposition dimensions by suggesting a matrix formula for the gini index which permits the simultaneous decomposition by subgroup and by income source using this multi decomposition one can investigate the role of the interaction between the subgroup and the source components in determining the overall inequality we apply the methodology to sample data on italian household incomes collected in 2008

gauging the potential for social unrest it stands to reason that social unrest does not erupt out of the blue although there are a great many reasons why social dismay might descend into social disorder only few yardsticks or indices can plausibly be used to gauge the potential for social unrest psu if policy makers want to undertake public action to prevent social dismay escalating into social disruption they obviously need to draw on practical sensors this paper assesses critically the adequacy of two such measures the polarization p index and the total relative deprivation trd index the paper proposes a tentative guide to selecting between these two measures a review of three stylized scenarios suggests that where income redistributions reduce the number of distinct income groups and when each group is characterized by a strong sense of within group identity the p index surpasses the trd index as a basis for predicting psu when the within group identification is weak however it is better to use the trd index to predict psu

why and when do governments initiate public enterprise reform initiating public enterprise reform is a complex decision influenced by economic factors as well as the ideological biases and personalities of political leaders nevertheless the use of a contracting framework yields important generalizations about what drives the decision this article argues that the decision depends fundamentally on the potential efficiency gains from the reform and its associated transactions costs costs arise because of asymmetries in information and opportunism problems that usually plague contract negotiations the article identifies observable variables that may affect either the potential gains or the transactions costs uses them to construct a simple probit decision making model and tests the model using data from fifteen developing countries over a twenty year period

proximity sensitive individual deprivation measures we characterize a generalization of the linear index of individual deprivation our class allows for an income increase of a higher income individual to have a stronger impact the closer they occur to the income of the person under consideration

green energy market development in germany effective public policy and emerging customer demand this paper reviews the development of renewable energy in germany from 1973 to 2003 it investigates the relative importance of energy policy and green power marketing in shaping the renewable energy market more than a decade of consistent policy support for renewables under the feed in law streg and its successor eeg has been an important driver for increasing renewable electricity generation to date putting the country in a better position than most of its peers when it comes to achieving european union targets for renewable energy green power marketing driven by customer demand on the other hand is growing but has had limited measurable impact so far we discuss potential intangible benefits of green power marketing and scenarios for future market development the paper concludes with lessons that can be learned from the german case for policy design and market development in other countries

reference groups and individual deprivation abstract we provide an axiomatization of yitzhaki s index of individual deprivation our result differs from an earlier characterization due to ebert and moyes in the way the reference group of an individual is represented in the model

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

relative efficiency self containment and comparative costs of less developed countries international differences in comparative costs can in principle be attributed to three kinds of forces factor proportions economies of scale and relative efficiency to take a specific example the low relative price of certain services in less developed countries might be attributed to the fact that the services in question are not at all intensive in either physical or human capital the factor proportions account that economies of scale are unimportant in these services or that ldcs are relatively efficient in producing these services as compared to their efficiency in producing say manufactured products while it is obvious that differences in relative efficiency can affect comparative costs and trade patterns economists have tended to emphasize the factor proportions theory and economies of scale in their explanations part of the reason for this emphasis is that the relative efficiency explanation is rather empty unless one can come up with explanations for the patterns of relative efficiency the present article attempts to address these issues by looking at some data on relative product prices in a sample of less developed countries ldcs and more developed countries mdcs the data are taken from the purchasing power parities collected by the international comparison project in the course of the research project it was discovered that neither the factor proportions theory nor the economies of scale phenomenon could account for more than a rather small part of the observed variation in relative product prices the research was then directed toward explaining the remaining variation in relative product prices by looking at some product characteristics that were thought to affect relative efficiency there are many characteristics of goods that may be hypothesized to affect the relative efficiency of ldcs compared to mdcs these

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

factor proportions relative efficiency and developing countries trade abstract this study attempts to assess the extent to which ldc trade in manufactures can be explained by the factor proportions theory and the economies of scale account on the one hand and by commodity characteristics that affect relative efficiency on the other among the relative efficiency characterictics that affects trade patterns are r d intensity total factor productivity in the more developed countries factory size and some input output measures of the degree to which the industry interacts with the rest of the economy

a class of proximity sensitive measures of relative deprivation abstract we introduce a new class of generalized measures of relative deprivation the class takes the form of a power mean of order p a characteristic of the class is that depending on the value of the proximity sensitive parameter p the class is capable of accommodating both a decreasing weight the case of p 1 and an increasing weight the case of p 0 1 accorded to given changes in the incomes of the individuals who are wealthier than the reference individual depending on their proximity in the income distribution to the reference individual

income redistribution going awry the reversal power of the concern for relative deprivation abstract we demonstrate that a rank preserving transfer from a richer individual to a poorer individual can exacerbate income inequality when inequality is measured by the gini coefficient this happens when individuals preferences depend negatively not only on work time effort but also on low relative income it is rigorously shown that the set of preference profiles that gives rise to this perverse effect of a transfer on inequality is a non empty open subset of all preference profiles a robust example illustrates this result

poverty dominant program reforms the role of targeting and allocation rules we propose simple graphical methods to identify poverty reducing marginal reforms of transfer programs the methods are based on program dominance curves that display cumulative program benefits weighted by powers of poverty gaps these curves can be decomposed simply as sums of targeting dominance curves and allocation dominance ones and can serve to verify whether the assessment of marginal program reforms is sensitive to the choice of poverty lines and poverty measures as well as to differences across programs in revenue sources and incentive effects

roadways input sourcing and patterns of specialization abstract we propose a model where the internal transport network facilitates the sourcing of intermediate goods from geographically diffuse locations a denser internal transport network promotes thus the growth of industries that rely on a large variety of inputs the model shows that heterogeneities in internal transport infrastructures can become a key factor in shaping comparative advantage and specialization evidence based on industry level trade data grants support to the main prediction of the model countries with denser road networks export relatively more in industries that exhibit broader input bases we show that this correlation is robust to several possible confounding effects proposed by the literature such as the impact of institutions on specialization in complex goods furthermore we show that a similar correlation arises as well when the density of the local transport network is measured by the density of their internal waterways and also when road density is instrumented with measures of terrain roughness

technical regulations and specialization in international trade abstract it is widely acknowledged that while technical regulations can improve welfare and facilitate markets they can also impede trade the trade impeding effects of technical regulations are especially worrisome for developing countries they frequently lack the human and capital resources necessary to satisfy technical measures and thus are more likely to be excluded from markets by technical measures this paper uses highly disaggregated us data on agricultural mining and manufacturing imports to examine the impact of technical regulations on trade patterns using instrumental variables estimation to correct for the potential endogeneity of technical regulations the analysis suggests that technical regulations substantially impinge on poor countries exports their weaker capacities to satisfy technical regulations lead them to specialize away from industries with heavier regulatory burdens

who compares to whom the anatomy of income comparisons in europe this article provides unprecedented direct evidence from large scale survey data on both the intensity how much and direction to whom of income comparisons income comparisons are considered to be at least somewhat important by three quarters of europeans they are associated with both lower levels of subjective well being and a greater demand for income redistribution the rich compare less and are happier than average when they do which latter is consistent with relative income theory with respect to the direction of comparisons colleagues are the most frequently cited reference group those who compare to colleagues are happier than those who compare to other benchmarks

linking yitzhaki s and dagum s gini decompositions in this article we show that the gini coefficient is simultaneously decomposable both by sources of income and by populations of income receivers for nonoverlapping income distributions the so called first best gini multi decomposition we show that this multidimensional decomposition is useful for many reasons i it is related to the degree of inequality aversion of the decision maker ii it is especially well suited to study inequalities between poor and nonpoor people iii it enables one to measure the impact of marginal tax reforms on within and between group inequalities respectively