incremental cost in the convention on biological diversity the convention on biological diversity stipulates the principle of incremental cost for the international financing of biodiversity conservation the international debate about the exact meaning of the concept and about its practical application focuses on the issues of baseline determination and treatment of incremental domestic benefits this paper uses some standard tools of partial equilibrium demand analysis to illustrate theoretical solutions to the indeterminacy of the convention the allocation of resources resulting from an incremental cost scheme is compared with a domestic optimum and with a hypothetical global optimum regarding the behaviour of the country hosting biodiversity a distinction is proposed between quantity and transfer taking behaviour the issue of price distortions in the baseline is also addressed it is shown that both the host country h and the rest of the world row will have incentives for agreeing on a transfer of resources that entails only partial deduction of domestic incremental benefits this transfer despite failing to reach the utilitarian global optimum still represents a pareto improvement over the pre convention status quo by imposing a particular multiplicative functional form on the utility of both host and row additional results can be obtained in particular the optimal transfer implies a clawback factor decreasing with relative income differentials and incremental cost financing dominates the domestic optimum even when price distortions are present in the host country if removal of price distortions is a precondition for incremental cost funding the analysis illustrates the magnitude of incentives necessary for the host to give up the distorted baseline

nonconvexities in the production of timber biodiversity and carbon sequestration abstract fixed logging costs and administrative constraints on logging regulations can create nonconvexities in forestry production sets that include timber and nontimber products managing forests to produce multiple values at a landscape level through the aggregation of stands that are completely or partially specialized in the production of timber or nontimber products can consequently be superior to management systems that treat all stands uniformly even when all stands are identical both fixed costs and administrative constraints are empirically important sources of nonconvexity in tropical rainforests the former is more important when the nontimber product is carbon sequestration while the latter is more important when the nontimber product is biodiversity protection uniform management appears to be superior for the joint production of timber and carbon sequestration while specialized management might often be superior for the joint production of timber and biodiversity at least at low discount rates

uncertainty and species recovery program design abstract this paper explores economic aspects of reintroducing large wide ranging mammalian carnivores such as wolves and grizzly bears to their native habitats the key tension is that such species can inflict transboundary damages for which managers are not liable with certainty we show that this tension can be offset by the manager s judicious choice of habitat as habitat contributes both directly to the likelihood of the species survival from a biological point of view and indirectly as precautionary capital that partially mitigates damages we show how uncertainty over liability for damages affects the likelihood of the species survival and we conclude with a discussion of optimal compensation mechanisms

financial mechanism and enforceability of international environmental agreements we examine how international coordination among countries generates a trend towards establishing an international institution for the provision of global public goods in the present model the forces creating international agreement are a politician s motive for re election and a financial mechanism for compliance if a politician expects another politician in a neighboring country to signal his good performance to his citizen by participating in the agreement and is aware that his ex post deviation will be deterred by the financial mechanism he too decides to participate in the agreement which then corrects externality problems

towards a characterization of assets and knowledge created in technological agreements some evidence from the automobile robotics sector this paper is an initial attempt to shed new light on the nature and dynamics of technological agreements based on some cognitive dimensions the main purpose of such agreements is to create new competencies and therefore we argue that the nature and characteristics of the knowledge bases that are at the origin of this type of learning process play an essential role in defining the directions and the outcome of learning in particular we examine some case studies of agreements between automobile and robotics firms which show a clear link between the degree of generality of the knowledge produced in the agreement and the capacity to explore new learning paths this explorative capacity also appears to he linked to the ability to generate meta rules of behaviour copyright 2000 by oxford university press

land degradation drought and food security in a less favoured area in the ethiopian highlands a bio economic model with market imperfections abstract this paper presents a bio economic model of andit tid a severely degraded crop livestock farming system with high population density and good market access in the highlands of ethiopia land degradation population growth stagnant technology and drought threaten food security in the area drought or weather risk appears to have increased in recent years the bio economic model is used to analyse the combined effects of land degradation population growth market imperfections and increased risk of drought on household production welfare and food security we find that the indirect effects of drought on household welfare through the impact on crop and livestock prices are larger than the direct production effects of drought provision and adoption of credit for fertiliser although risky in itself may lead to increased grain production and improved household welfare and food security provision of credit may have a negative effect on conservation incentives but this effect may be mitigated by linking a conservation requirement to the provision of credit for fertiliser

steam as a general purpose technology a growth accounting perspective the contribution of steam to british economic growth in the nineteenth century is estimated using growth accounting methods similar to those recently employed to examine the role of ict the results indicate that steam contributed little to growth before 1830 and had its peak impact about a hundred years after watt s famous invention only with the advent of highpressure steam after 1850 did the technology realise its potential compared with ict steam s impact on the annual rate of growth was modest it is unlikely that these conclusions are vulnerable to quantification of hitherto unmeasured tfp spillovers

the biodiversity supergame this paper considers the ability of developed countries to sustain a cooperative agreement to compensate developing countries for the incremental costs of biodiversity conservation it is shown that depending on certain parameter values and the model specification such an agreement could only codify the non cooperative outcome or achieve the full cooperative outcome where global net benefits are maximized however where the agreement can sustain the full cooperative outcome net benefits will be only slightly larger than in the noncooperative outcome

assessing the role of steam power in the first industrial revolution the early work of nick von tunzelmann this article considers the historiographical and theoretical significance of nicholas von tunzelmann s first book steam power and british industrialization to 1860 von tunzelmann assessed the quantitative impact of the watt steam engine and its pirate copies on the british economy using the social savings method pioneered by r w fogel showing that the impact was smaller and later than many historians had supposed these results are of more than quantitative significance because they call into question a dominant line in the history of industrialization that focuses on the steam engine as a key determinant of the dynamics of industrial growth in britain from the late eighteenth century this article discusses the origin of this line in the work of arnold toynbee and outlines its long term influence on economic history including contemporary debates on the question of why europe outpaced china and india from the seventeenth century these issues are important also for innovation studies which often describes the relation between innovation and growth in terms of such critical technologies as steam power these accounts are subject to the same weaknesses as technicist histories of industrialization von tunzelmann s early work is therefore of continuing theoretical and empirical significance as we seek an adequate theory of the links between innovation and growth

the arms trade the arms trade winners and losers the arms trade is highly controversial and raises difficult policy issues the controversies tend to concentrate on the moral military and political dimensions of arms exports decisions quite a lot of light can be shed on this murky market by asking basic economic questions and using standard economic models we begin with a structured economic description of the evolution of the international arms market in terms of the factors that influence demand and supply and thus prices and quantities then we review the policy issues faced by eu members in particular whether a common control regime is needed to harmonize their regulation of arms exports to address these policy issues we present some models of the market that we have developed and examine their implications for the interesting interactions that characterize the trade paul levine and ron smith

comparing the post earnings announcement drift for surprises calculated from analyst and time series forecasts post earnings announcement drift is the tendency for a stock s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks following an earnings announcement we show that the drift is significantly larger when defining the earnings surprise using analysts forecasts and actual earnings from i b e s than when using a time series model based on compustat earnings data neither compustat s policy of restating earnings nor the inclusion of special items in reported earnings contribute significantly to the disparity in drift magnitudes rather our results suggest that this disparity is attributable to differences between analyst forecasts and those of time series models or at least to factors correlated with these differences further we document that analyst forecasts lead to return patterns around future earnings announcements that differ from those observed when using time series models suggesting that the two types of surprises may capture somewhat different forms of mispricing

computational economics and economic theory substitutes or complements abstract this essay examines the idea and potential of a computational approach to theory discusses methodological issues raised by such computational methods and outlines the problems associated with the dissemination of computational methods and the exposition of computational results we argue that the study of a theory need not be confined to proving theorems that current and future computer technologies create new possibilities for theoretical analysis and that by resolving these issues we will create an intellectual atmosphere in which computational methods can make substantial contributions to economic analysis

technology diffusion and the rate of technical change the way in which the process of technical change is formulated at the macroeconomic level implies generally speaking immediate diffusion or adoption of new technologies whether primarily disembodied in nature accounting for any shift in the production function as in the early technology index formulations or embodied in new investment as in the subsequent vintage growth models technical progress will be identified with advances in inventiveness or best practice technologies at first this might well seem the most appropriate way to separate out the contribution of the technology production factor from the other production factors from a straightforward economic point of view though advances in technology or best practice productivity levels are only relevant to the extent that they have been translated in actual achieved productivity levels the issue is a well known one in most empirical research on the measurement of the contribution of technical change to economic growth and has received much attention in the recent productivity slowdown debate denison i 979 griliches i980 nordhaus i980 and i 98i in particular there it was generally agreed that other technology factors including a slowdown in the rate of the spread of technology to use kendrick s i 98i term were more important than the actual decline in r d expenditure in contributing to the overall slowdown in productivity the importance of the diffusion of innovation rather than the mere occurrence of innovations is of course the major factor underlying most of the microeconomic diffusion literature the fundamental reasons for delay in adopting the so called retardation factors have been found to relate both to uncertainty and lack of information about the new technology and the often proprietary nature of the new technology since griliches i957 and mansfield s i96i seminal papers most of this literature has focused on the theoretical arguments underlying the traditional s shaped epidemic diffusion curve in more recent research particularly the mechanical static nature of these diffusion models has been questioned and various alternative diffusion models suggested including dynamic supply models metcalfe 1981 i982 stoneman i983 in which both the economic characteristics of the innovation and its diffusion environment have been made endogenous to the diffusion process these latter models in particular allow for an interpretation of the diffusion of technology in a broader macroeconomic growth and structural change perspective

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

economic efficiency resource conservation and the ivory trade ban abstract the convention on international trade in endangered species cites trade ban on ivory remains controversial despite a recent decision to permit some exports by three african countries in this paper we examine arguments opposing and supporting the trade ban concluding that the case for maintaining the ban is strong we demonstrate that permitting some trade is not a panacea because of potential strategic behavior and that resuming restricted trade gives an impetus to illegal poaching by enhancing the possibility to launder illegal ivory analysis of the pre ban data and using the approach dynamics for a steady state indicates that when trade in ivory is allowed poaching could drive the african elephant to extinction the trade ban arrests this path of decline thus care should be taken before lifting the trade ban

patents brand generic competition and the pricing of ethical drugs in canada some empirical evidence from british columbia 1981 1994 this paper examines the impact of the 1987 changes in the canadian patent act on the pricing of ethical drugs from 1969 to 1987 canada opted to control pharmaceutical prices by using the compulsory licensing provisions of the act to promote competition between branded drugs and their generic equivalents in 1987 however the act was amended to guarantee patent holders an extended period 7 10 years of protection this reduced brand generic competition by retarding generic entry and suggests that ceteris paribus after 1987 pharmaceutical prices increased relative to pre 1987 prices this hypothesis is examined for the period 1981 1994 using a sample of 82 drugs from the british columbia pharmacare programme the major conclusions are despite evidence of significant first mover advantages which resulted in higher brand prices competition from generics succeeded in reducing overall market prices prior to 1987 but after 1987 the efficacy of generic competition was reduced and both brand and market p

economic growth and transboundary pollution in europe an empirical analysis the existing empirical evidence suggests that environmental kuznets curvesonly exist for pollutants with semi local and medium term impacts ansuategi and perrings 2000 have considered the behavioral basis for thecorrelation observed between different spatial incidence of environmentaldegradation and the relation between economic growth and environmentalquality they show that self interested planners following a nash typestrategy tend to address environmental effects sequentially addressingthose with the most immediate costs first and those whose costs aredisplaced in space later this paper tests such behavioral basis in thecontext of sulphur dioxide emissions in europe

the problem of global environmental protection what distinguishes global common property problems and global unidirectional externalities from the ones that arise under a single jurisdiction is that there is no global authority empowered to intervene and regulate use of global environmental resources cooperation is needed the paper discusses when cooperation is most needed and how it might be obtained cooperation might emerge from a noncooperative setting if supergames are played if the actions of any one country are explicitly contingent on the actions undertaken by other countries or if moral concerns lead countries to consider the consequences of their actions for others cooperation emerges in an explicit though limited form when countries commit to regulate themselves in signing international agreements in these cases the signatories cooperate but the agreements are self enforcing an attempt is made to relate these theoretical concepts to the practice of global environmental protection copyright 1990 by oxford university press

markets institutions and forestry the consequences of timber trade liberalization in ecuador abstract although barriers to international trade were removed during the 1990s log prices remain inefficiently low in ecuador oligopsonistic conditions which prevailed in the forestry sector under protectionism have not been relieved by increased competition the problem is that new investment is discouraged by weak property rights corruption and dated legislation that hinders forest dwellers participation in the market economy unless and until institutional reform is undertaken to stimulate investment and competition the prospects for ecuador s tropical forests which are among the most biodiverse in the world will continue to be bleak

bargaining to preserve a unique ecosystem the role of anticipatory investments to establish stronger bargaining positions abstract a forester and a conservation organization bargain over the commercial exploitation or preservation of a forested tract of land with unique ecological characteristics the forester can improve its bargaining position by preparing a portion of the land for future timber production prior to negotiations between the two however doing so decreases the preservation value of the forest as well as the compensation the conservation group is willing to pay to preserve the forest the analysis suggests that the forester will begin preparing the land for timber production prior to negotiations only when the value of the land in timber production is significantly lower than the preservation values of the conservation group

threat positions and the resolution of environmental conflicts in the classic externality problem of one polluting firm and a passive victim we consider bargaining when the firm has the prior right to pollute assuming that a threat made prior to bargaining is perceived to be credible the firm will commit itself to an output level that is higher than both the efficient and profit maximizing levels in an extension we assume that the firm makes an irreversible investment in production capability to give its threat credibility we show that a credible investment must be greater than or equal to the profit maximizing investment

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

renegotiation proof equilibria in a global emission game when players are impatient in a two country model in which countries differ with respect to the perception of environmental damages and abatement costs the stability of international environmental agreements is analyzed in a dynamic framework three types of agreements are considered a socially optimal solution a uniform emission tax a tax equally applied in both countries and a uniform emission reduction quota an equal percentage emission reduction from a base year stability is checked for these agreements according to the concept of renegotiation proofness it is shown that the stability requirements depend crucially on the parameters defining the interests of the two countries and the type of agreement moreover it is demonstrated that if punishment options are restricted for some reason the stability of an agreement may suffer one important result of the paper is that if countries exhibit asymmetric interests stability in the quota regime is higher than in the tax regime and in the social optimum this might explain why emission reduction quotas have been so popular in international politics despite recommendations of economists to use market based instruments

ownership structure speculation and shareholder intervention an institution holding shares in a firm can use information about the firm both for trading speculation and for deciding whether to intervene to improve firm performance intervention increases the value of the institution s existing shareholdings but intervention only increases the institution s trading profits if it enhances the precision of the institution s information relative to that of uninformed traders thus the ability to speculate can increase or decrease institutional intervention we examine key factors that affect the intervention decision the usefulness of short swing provisions and restricted shares in encouraging institutional intervention and implications for ownership structure across different firms institutional investors hold an ever greater fraction of corporate america s equity traditionally these institutions were stock pickers who tried to beat the market through trading if a firm whose stock they held seemed headed for trouble these investors headed for the door the wall street rule more recently some of these institutions have been using the ownership rights attached to their shares to pressure firms to act in the shareholders interest some have even argued that there is a synergy between gathering information for use in trading shares speculation and intelligently pressuring firms to improve performance intervention we argue that these motives can also conflict analyzing these motives allows us to predict which firms are most likely to attract institutional intervention which in turn has crosssectional implications for firm ownership structure recent examples suggest that institutional investors with large stakes sometimes intervene and sometimes follow the wall street rule so that there is indeed a choice to be studied in the early 1990s there was a wave of activism by a variety of large institutional investors among them calpers the california public employees pension fund putnam management a mutual fund manager and j p morgan a bank holding company these institu

environmental and distributional impacts of conservation targeting strategies abstract resource purchasing funds have become a major tool for environmental protection and resource conservation these funds use various strategies to target resources for conservation the choice of which may lead to striking differences in environmental performance this paper develops an analytical framework to analyze the impact of alternative targeting strategies on different interest groups including consumers producers labor and environmentalists we show that ignoring the output price effect of purchasing funds reduces environmental gain and in some cases may make a purchasing fund counterproductive and we argue that the optimal design of targeting criteria must consider the price feedback effect

differences and similarities between ecological and economic models for biodiversity conservation abstract in this paper we investigate an important obstacle which substantially complicates co operation between ecologists and economists but which has received little attention so far differences between the modelling approaches in economics and ecology to understand these differences 60 models addressing issues relevant to biodiversity conservation have been selected randomly from eight international economic and ecological journals the models have been compared according to a number of criteria including the models level of generality the mathematical techniques employed for formulation and solution of the models the level of complexity and the way time space and uncertainty are taken into account the economic models sampled are formulated and analysed analytically tend to be relatively simple and are mostly used to investigate general questions furthermore they often ignore space dynamics and uncertainty although some ecological models have similar properties there is also a substantial number of another type of ecological models that are relatively complex and analysed by simulation these models tend to be rather specific and often explicitly consider dynamics space and uncertainty the integrated ecological economic models are observed to lie in the middle between ecological and economic models an unexpected result is that they are not more complex than ecological and economic models as one could have expected from a simple merger of models from both disciplines but have an intermediate complexity

ownership structure limits to arbitrage and stock returns evidence from equity lending markets we examine how institutional ownership structure gives rise to limits to arbitrage through its impact on short sale constraints stocks with lower more concentrated short term and less passive ownership exhibit lower lending supply higher costs of shorting and higher arbitrage risk these constraints limit the ability of arbitrageurs to take short positions and delay the correction of mispricing stocks with more concentrated ownership exhibit smaller announcement day reactions larger post earnings announcement drift and an additional negative abnormal return of 0 47 in the week following a positive shorting demand shock received june 16 2014 accepted june 8 2016 by editor laura starks

balancing conservation and economic gain a dynamic programming approach abstract we optimize the trade off between economic and ecological concerns in conservation biology by using a novel method to link a spatially explicit individual based model to a dynamic programming model to date few optimality models have been presented to optimize this trade off especially when the common currency cannot be easily measured in dollars we use a population simulation model e g spatially explicit individual based model to model a hypothetical forest bird population s response to different cutting and planting regimes we then link these results to a dynamic programming model to determine the optimal choice a manager should make at each time step to minimize revenue foregone by not harvesting timber while maintaining a given population of birds our results show that if optimal management choices are made further back in time future terminal reward may be greater as the end of the management period approaches past management practices influence the terminal reward more than future practices can thus if past revenue lost is high the future reward will be low as compared to when past revenue lost is low the general strategy of setting some minimum viable population size and then using a population simulator linked to a dynamic programming model to ask how to maintain such a population size with minimum economic loss should have nearly universal applicability in conservation biology

the real effects of financial markets the impact of prices on takeovers using mutual fund redemptions as an instrument for price changes we identify a strong effect of market prices on takeover activity the trigger effect an interquartile decrease in valuation leads to a seven percentage point increase in acquisition likelihood relative to a 6 unconditional takeover probability instrumentation addresses the fact that prices are endogenous and increase in anticipation of a takeover the anticipation effect our results overturn prior literature that finds a weak relation between prices and takeovers without instrumentation these findings imply that financial markets have real effects they impose discipline on managers by triggering takeover threats does a low market valuation make a firm a takeover target in theory if acquisition prices are related to market prices acquirers can profit from taking over a firm whose market value is low relative to its peers due either to mispricing or mismanagement and restore it to its potential indeed in practice acquirers and other investors appear to track a firm s valuation multiples for indications on the potential for acquisition and managers strive to maintain high market valuations to prevent a hostile takeover understanding whether such a link exists is important because if so this would suggest that the market is not a sideshow but rather exerts a powerful disciplinary effect on firm management as suggested by marris 1964 manne 1965 a ndjensen 1993 despite the above logic existing empirical studies on takeovers fail to systematically uncover a meaningful relationship between market valuations

payoff complementarities and financial fragility evidence from mutual fund outflows the paper provides empirical evidence that strategic complementarities among investors generate fragility in financial markets analyzing mutual fund data we find that consistent with a theoretical model funds with illiquid assets where complementarities are stronger exhibit stronger sensitivity of outflows to bad past performance than funds with liquid assets we also find that this pattern disappears in funds where the shareholder base is composed mostly of large investors we present further evidence that these results are not attributable to alternative explanations based on the informativeness of past performance or on clientele effects we analyze the implications for funds performance and policies

the biodiversity bargaining problem we employ cooperative bargaining theory and nash s rational threats idea to cast light on the biodiversity bargaining problem the problem of global environmental negotiations is argued to be of the nature of a bargaining problem in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier we discuss the importance of both efficiency bargaining frontier and fairness recognition of characteristics of bargainers in the choice of the appropriate contract we show that the incremental cost contract used to resolve the biodiversity bargaining problem is of the form of an extreme point contract that fails to recognise the contributions of the south to the production of cooperative surplus a rational response to such a contract is the use of threats of biodiversity destruction contracts must evince both efficiency and fairness in order to represent lasting solutions

marginal valuation of charismatic species implications for conservation most contingent valuation studies focus on total willingness to pay wtp as a measure of welfare change for policy involving species preservation however it is important to distinguish between the benefits of preventing a species from going extinct and the benefits of preserving numbers above the minimum viable population mvp level once mvp is exceeded marginal wtp becomes relevant these propositions are illustrated for the case of one charismatic species whose management is much debated minke whales in the northeast atlantic ocean it is shown that for a given estimate of total preservation value strict conservation and extinction can both be optimal this finding highlights the importance of collecting marginal values in contingent valuation surveys

the biodiversity conservation game with heterogeneous countries biodiversity is an essential resource which we classify as conditionally renewable in order to achieve conservation and sustainable use of biodiversity virtually all nation states signed the united nations convention on biological diversity in this paper we investigate how the heterogeneity of countries in regard to ecosystems and wealth influences the stability of international biodiversity conservation agreements both without and with transfers we further examine the effect of different degrees of ecosystem substitutability we model a coalition formation game with players that have a continuous conservation choice the conservation benefit is dependent on wealth and ecosystem quality aggregation of global benefits respects differences in ecosystem substitutability in case of transfers a fund redistributes coalition benefits according to a sharing rule the main finding is that in the absence of transfers compared to the homogeneous situation heterogeneity in ecosystems and wealth reduces the size of a stable coalition the destabilising effect is stronger the higher the ecosystem substitutability optimal transfers facilitate a large stable coalition

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

biodiversity and optimal policies towards r d and the growth of genetically modified crops in this paper we provide a simple model illustrating the possible nature ofgovernment policy with regards to genetic modification taking into accountits impact on the environment we show that it is necessary not only tointervene in the growing of crops but also to intervene in r d througha tax on the adoption of new gm technology without intervention at bothlevels both the cultivation of gm crops and the rate of innovation in gm willexceed their socially optimal levels

a dynamic ecological economic modeling approach for aquaculture management article i nfo sustainable aquaculture ecosystem approach to aquaculture eaa ecological economic modelling integrated coastal management icm market model this paper presents a modeling approach to resource economics decision making in ecoaquaculture market model the market model was developed as a scenario testing tool to provide insights on the ecological and economic interactions which is a critical issue for sustainable aquaculture management as a case study the model was applied to simulate shellfish production in an embayment located in the east china sea a set of scenarios was used to compare the model outputs with expected trends and to test its capability to simulate relevant management scenarios the comparison of simulated scenarios indicates that the market model outputs followed the expected trends regarding both standard economic theory for consumption and production and ecological economic theory in all the scenarios we tested the area available for aquaculture was found to impose a limitation on production before it became less profitable to expand production as such in this case study the production in the long run does not meet increasing demand reduction of the maximum cultivation area was simulated in one of the scenarios as an example of a conservation measure as expected there was a reduction of the net profit of the farmers compared with the standard simulation on the other hand this scenario combined with an increase in price growth rate simulates a compensatory measure that led to a net profit in the same range as observed in the standard simulation overall the market model provides insights and raises questions useful for the implementation of an ecosystem approach to aquaculture further developments include the simulation of waste generated by cultivated species in order to better support sustainable management objectives

the reliance of northern economies on southern biodiversity biodiversity as information abstract this paper addresses the issue of how biodiversity is used as an input into important industrial research and development processes biodiversity should be seen as an important source of a stock of information on which these research and development processes are built this stock of information is of the nature of an economic asset that depreciates as the environment creates new problems creating the need for a continual and perpetual supply of new information results are reported from a survey of the agricultural research and development industry demonstrating how the environment engenders new problems in a systematic fashion and how the industry makes recourse to biological diversity for stocks of information to address those problems the rate at which biological diversity is input into the research and development process is indicative of the extent of the reliance of this northern based industry on southern based biodiversity this reliance is very substantial and the elimination of biodiversity could be disastrous for these important industries in the near term

foreign transfers and tropical deforestation what terms of conditionality the purpose of this paper is to propose a nonparametric interest rate term structure model and investigate its implications on term structure dynamics and prices of interest rate derivative securities the nonparametric spot interest rate process is estimated from the observed short term interest rates following a robust estimation procedure and the market price of interest rate risk is estimated as implied from the historical term structure data that is instead of imposing a priori restrictions on the model data are allowed to speak for themselves and at the same time the model retains a parsimonious structure and the computational tractability the model is implemented using historical canadian interest rate term structure data the parametric models with closed form solutions for bond and bond option prices namely the vasicek 1977 and cir 1985 models are also estimated for comparison purpose the empirical results not only provide strong evidence that the traditional spot interest rate models and market prices of interest rate risk are severely misspecified but also suggest that different model specifications have significant impact on term structure dynamics and prices of interest rate derivative securities

a simple valuation model and growth expectations a simple valuation model is presented in which a firm can invest in projects with positive net present values for a limited number of years although prior models have made this assumption this model can be simplified to a concise easy to use form the model can facilitate a broad understanding of the expectations implied by a firm s stock price for example growth patterns consistent with a firm s p e which can guide in depth analysis of prices

crossborder dividend taxation and the preferences of taxable and nontaxable investors evidence from canada abstract we consider how fund managers respond to the conflicting preferences of their investors we focus on the conflict between the taxable and retirement accounts of international funds which face different tradeoffs between dividends and capital gains in principle managers could resolve this conflict through dividend arbitrage but a proprietary database of dividend arbitrage transactions shows that in practice they cannot thus managers must resolve it through their investment policies we find robust evidence that managers with more retirement money favor the preferences of retirement investors and further evidence for this view in the difference between u s and canadian funds portfolio weights

resource utilization property rights and welfare wildlife and the local people abstract the paper analyses the conflict between wildlife conservation and the costs and benefits obtained from it in an east african context in the model there are two agents a park agency managing a national park of fixed size and a group of agropastoralists living in the vicinity of the park the park authority produces tourism services and sells hunting licences whereas the agropastoralists produce livestock products wildlife and livestock interact with each other and wildlife is a nuisance for livestock production the conflict is analysed under different market solutions as the agropastoralists to various degrees are given profit shares from the park activities it is demonstrated that a market solution where they are given property rights in the form of a fixed share of the harvesting profit will increase the nuisance on their production and therefore generally give no clear welfare gain for the local people on the other hand if they also receive a profit share from the tourist activity above that of the hunting benefit the nuisance from the roaming wildlife will decrease as this scheme gives incentives for the park manager to increase the offtake and thereby decrease the wildlife stock in the long term there will therefore be more livestock and a clear welfare gain for the agropastoralists compared to the situation where they have no property rights under certain conditions the stock sizes will also be closer to what is optimal from an overall point of view

optimal ecosystem management when species compete for limiting resources abstract resource based models of species competition have been introduced recently as an alternative to the classical theory based on the lotca volterra methodological approach to species competition we consider economic management of an ecosystem for a tilman model of mechanistic resource based species competition where the growth of species is limited by resource availability we analyze the equilibrium ecosystem state resulting from nature s equilibrium and two basic management problems the privately optimal management problem and the socially optimal management problem under private optimization agents do not take into account externalities associated with the effects of their management practices on ecosystem service flows while these effects are accounted for at the socially optimal management we show that in general three different equilibrium species specialization patterns emerge we completely characterize these patterns for the ecological economic model with linear structure and we provide policy rules so that the privately optimal state could be driven toward the socially optimal or the natural equilibrium we also develop an approach for unifying equilibrium price theory with tilman ecological modeling and we prove the existence and analyze the stability of a price equilibrium for a stochastic discrete choice model of species specialization finally we discuss equilibrium specialization and policy issues for a generalized model where species and resources interact among themselves as a conceptual basis for incorporating detailed ecological modeling into economic management

bargaining and international environmental agreements this article surveys game theoretic papers focused on the negotiation process that leads to an international environmental agreement most of the papers considered apply bargaining theory although other approaches have been considered as well among other issues the papers considered analyze the burden sharing rule that will result from a negotiation over a global public good the role of information asymmetries the impact of unilateral commitments delegation and ratification whether or not countries are going to form groups during the negotiation process and the influence of the expectation of a future bargaining process on investment decisions the basic bargaining model is optimistic as it predicts that countries will reach an efficient agreement immediately however all the developments of this model surveyed afterwards are rather pessimistic and even the basic model has perverse incentives for pre negotiation signals

pests plagues and patents the paper investigates the interaction between dynamic forms of incentive mechanisms patent systems and dynamic forms of problems adaptations of pests and pathogens since biological problems recur the design of the incentive mechanism must take into consideration a the need for investments into rd and b the impact of this impermanence on the anticipated lifespan of any patent awarded for an innovation the results indicate that patent systems must be carefully tailored to the nature of the problem under consideration jel c7 h0 h3 q38

the economic analysis of biodiversity an assessment biodiversity is complex difficult to define difficult to measure and often involves international and intergenerational considerations biodiversity loss presents significant economic challenges a great deal of economics is required to understand the issues but a simple and important observation is that most species and ecosystems are not traded in markets so prices are often absent and biodiversity is under provided despite the formidable obstacles to high quality economic analysis economics has plenty to offer to biodiversity policy first economic valuation techniques can be employed to roughly estimate the value of the benefits provided by biodiversity and ecosystems second assessing the optimum amount of biodiversity involves recognizing that the conversion of natural capital into manufactured and human capital has so far generated vast amounts of wealth while there may have been too much biodiversity in the past economic analysis suggests that this is a difficult position to hold now third econometric techniques and carefully designed policy studies can assist in determining what policies are most suited to different contexts to cost effectively reduce biodiversity loss fourth political economy is helpful because international coordination is often required ecosystems do not respect national borders and many biodiverse ecosystems are in poorer countries this paper synthesizes the issues and proposes a research agenda which includes improving the measurement and accounting of natural capital improving valuation techniques and theory to provide greater guidance as to the optimum biodiversity and developing our understanding of the merits of different alternatives for government intervention to reduce biodiversity loss

connecting two markets an equilibrium framework for shorts longs and stock loans abstract we analyze a reduced form framework for understanding the equity loan market s impact on share prices we show that hard to borrow stocks will have distinct return patterns responding more to shocks in the supply of shares available and to changes in the heterogeneity of investor beliefs than other stocks we conduct two empirical tests in which we find strong support for these equilibrium predictions in our first test we take advantage of a tax driven exogenous shock to share loan supply and find that when supply is reduced around dividend record dates prices of hard to borrow stocks increase 1 1 while prices of easy to borrow stocks are unaffected in our second test we find that hard to borrow stocks have 4 8 lower three month returns than other stocks with negative returns concentrated in stocks with high heterogeneity in investor beliefs thus we extend the diether malloy and scherbina 2002 result that stocks with a greater dispersion of investor beliefs have lower returns

the north s intellectual property rights standard for the south abstract we build a multi sectoral north south trade model to analyze international intellectual property rights ipr protection by comparing the nash equilibrium ipr protection standard of the south the developing countries with that of the north the developed countries we find that the former is naturally weaker than the latter moreover we show that both regions can gain from an agreement that requires the south to harmonize its ipr standards with those of the north and the north to liberalize its traditional goods market this demonstrates the merits of multi sectoral negotiations in the gatt wto

wto ministerial conference in singapore environmental diversity versus harmonization 1 introductionin december 1996 a newera of the international trade regime started with the rstwto ministerial conferencein singapore substantialprogress hasbeenachievedin freeing trade in information technology products and a north south collision oninternational labour standards has been averted however these successes over shadow the apparant stagnation in the area of trade and environment at last aftermanyyearsofintensivediscussions manyhadhopedthatthe rstwtoministerialconferencewouldaddressthissensitivepolicy eld outofthewiderangeofissuesthat can be dealt with under this heading two gure prominently trade measurespursuantto multilateral environmentalagreementsandeco labellingschemes thisnote rstly tries to explain why exactly these two issues draw most of the atten tion of policymakers and secondly discusses how these issues can be resolvedagainst the background of established welfare theory it also tries to make clearwhy the ministers in singapore pussyfooted around these issues and only decidedthat the wto committee on trade and environment has to continue its explora tory work to come to grisp with these issues insights from the literature on thetrade environment interface are rst summarized in eight propositions 2 propositions on trade and environmentbefore setting forth the propositions it is good to knowthat in analyticalstudies ontrade and environment the following distinctions are usually made first there areon the one hand local and national environmental problems and on the other handtransboundary i e international and global environmental problems the formerrefer to externalities caused by domestic environmental distortions that do notexpell beyond national borders the latter refer to environmental problems thataffect welfare both in the home country and in one or more foreign countries

efficiency and the bear short sales and markets around the world we analyze cross sectional and time series information from 46 equity markets around the world to consider whether short sales restrictions affect the efficiency of the market and the distributional characteristics of returns to individual stocks and market indices we find some evidence that prices incorporate negative information faster in countries where short sales are allowed and practiced a common conjecture by regulators is that short sales restrictions can reduce the relative severity of a market panic we find strong evidence that in markets where short selling is either prohibited or not practiced market returns display significantly less negative skewness

the incremental cost principle and the conservation of globally important habitats a critical examination abstract this paper examines the application of the incremental cost ic principle for the conservation of globally important habitats it first describes the characteristics of the ic and how it became an important financial modality in multilateral conservation efforts the application of the ic is then examined taking into account characteristics of successful collaboration efforts for the global environment the paper finds that as currently applied the ic fails to be a robust financial mechanism for protection of globally important habitats it also heavily skews the bulk of conservation costs from developed to developing countries the paper concludes with a description of suggested changes to make the ic an effective tool in global conservation efforts

arbitrage risk and post earnings announcement drift this study examines whether the magnitude of post earnings announcement drift is related to the risk faced by arbitrageurs who may view the anomaly as a trading opportunity consistent with this hypothesis the magnitude of the drift is strongly related to the arbitrage risk measure developed by wurgler and zhuravskaya 2002 the effect of arbitrage risk is statistically and economically significant in a range of specifications the results support the view of post earnings announcement drift as an underreaction to earnings information

regulating global biodiversity what is the problem we distinguish between local problems of biodiversity loss and global ones where international cooperation is required global biodiversity regulation involves choosing the optimal stopping rule regarding global land conversions in order to ensure that some areas of unconverted natural reserves remain to support the production sector that exists on converted lands the basic difficulty with implementing a solution to this global problem lies in the asymmetry in endowments between those states that have previously converted and those that have not we demonstrate that the fundamental problem of global biodiversity regulation is similar to the bargaining problem analysed by nash rubinstein and others there are benefits from global land conversion and there must be agreement on their distribution before the conversion process can be halted since the institutions addressing global biodiversity problems are either highly ineffectual benefit sharing agreements prior informed consent clauses or very extreme incremental cost contracts the biodiversity bargaining problem remains unresolved for this reason we anticipate that suboptimal conversions will continue to occur as a way of protesting the ineffective and unfair approaches employed in addressing this problem to date

the optimal allocation of conservation funds abstract this paper presents a framework to evaluate alternative designs of conservation programs and their implications for the allocation of conservation funds we show that the efficient allocation of conservation funds must consider two important pooling effects cumulative effects and interrelationships among alternative environmental benefits ignoring the cumulative effects of environmental benefits may cause conservation funds to be overly dispersed geographically and as a result may result in minimum environmental benefits when the budget is small ignoring the interrelationships among alternative environmental benefits may result in not only misallocation of conservation funds among geographical areas but also incorrect resources being targeted for conservation practices implications of these results for the design of conservation programs are discussed

on limiting or encouraging rivalry in technical progress the effect of patent scope decisions abstract this essay is on the effects of the scope of a patent e g how broad its allowed claims on subsequent inventing in a field it is argued that this depends on the topography of technical advance in a field in particular on how inventions are linked to each other and in the extent to which rapid technical advance requires a diversity of actors and minds as contrasted with being facilitated by express coordination of inventive activity technical advance is examined in several different fields with a focus on how patents influenced the pace and quality of development the authors conclude that allowing and enforcing broad patent claims tends to hinder technical progress

bioeconomics of spatial exploitation in a patchy environment abstract this paper presents a model of renewable resource exploitation that incorporates both intertemporal dynamics and spatial movement the model combines the h s gordon vernon smith hypothesis of a rent dissipation process with ricardian notions that resources are exploited across space in a pattern dependent upon relative profitabilities the population structure is characterized in a manner consistent with modern biological ideas that stress patchiness heterogeneity and interconnections among and between patches generally we find the equilibrium patterns of biomass and effort across the system to be dependent upon bioeconomic conditions within each patch and the nature of the biological dispersal mechanism between patches we use simple examples to illustrate how the distribution of effort throughout the system reflects the heterogeneity and the spatial biological linkages

the convention on biological diversity and agriculture implications and unresolved debates1 summary the convention on biological diversity addresses two controversies that surround plant genetic resources pgrs one debate has been over property rights governing pgrs and the distribution of benefits from their use the second has been over the adequacy of measures to maintain crop genetic diversity this paper examines how these two debates are linked and reviews previous multilateral attempts to address them the convention signals wider international acceptance of stricter property rights over pgrs and the need for multilateral assistance for pgr conservation however current proposals to implement the convention appear too limited in scope to achieve their stated conservation objectives while several areas of controversy remain these include debates over i intellectual property protection for biological inventions ii control over pgrs in international gene banks iii the international biosafety protocol regulating biotechnology iv mechanisms to finance pgr conservation and v the allocation of funds between in situ and ex situ conservation q 1998 elsevier science ltd all rights reserved

bargaining with surplus destruction in a two player alternating offer bargaining model if one player can destroy the surplus to be allocated then the value to bargain for is endogenous except at the beginning even with complete information the model has perfect equilibria with delayed agreement and or surplus destruction the model therefore explains inefficiency and destruction that may appear irrational we characterize the set of equilibrium payoffs and its limiting be haviour as the time between offers vanishes real time delay remains possible even in the limit we also consider the case of surplus destruction that is exogenously limited by the

conservation in the optimal use of rangelands abstract in previous papers we have considered the optimal mix of biodiversity in semi arid rangelands focusing on the steady state this paper addresses the question of conservation in the optimal use of rangelands where conservation is understood to mean maintenance of the system in a natural state we consider a rangeland that may exist in one of two states in the natural state its dynamics are regulated by fire in the managed state its dynamics are regulated by grazing pressure by livestock we show that the optimal use of rangelands may include its maintenance in both states at different points in time depending on initial conditions and the set of relative prices

capitalism as an engine of progress economists from marx to schumpeter have touted capitalism as an engine of technical progress but what kind of an engine is it what are its key components how does it work

an ecological economic modelling procedure to design compensation payments for the efficient spatio temporal allocation of species protection measures abstract using an interdisciplinary approach we present an ecological economic modelling procedure to design compensation payments for species protection we develop our procedure on the example of white stork protection in a spatio temporally structured landscape generated by human land use the proposed procedure is able to solve complex allocation problems such as the spatio temporal allocation of a budget among more than two areas with spatially differing species specific cost and benefit functions of any shapes furthermore the procedure delivers the efficient compensation payments not only qualitatively but quantitatively and is hence relevant to the implementation of species protection policies

species conservation and the principal agent problem abstract principal agent problems occur in contract or management contexts they arise out of the agent s desire to imperfectly follow the principal s preferences despite being under the authority of the principal principal agent problems may be present in biodiversity recovery programmes a principal agent model is constructed where rewards and sanctions are based on the change in a species status an optimal contract is derived but it is then argued that this contract will be impossible to implement principal agent problems may impose costs to recovery programmes both in terms of lower odds of persistence and the mix of species prioritised three institutional devices ecosystem management agent selection mechanisms and attaching economic returns to the change in species status may offset some of these costs

long lived private information and imperfect competition we develop a multi period auction model in which multiple privately informed agents strategically exploit their long lived information we show that such traders compete aggressively and cause most of their common private information to be revealed very rapidly in the limit as the interval between auctions approaches zero market depth becomes infinite and all private information is revealed immediately these results are in contrast to those of kyle 1985 in which the monopolistic informed trader causes his information to be incorporated into prices gradually and when the interval between auctions is vanishingly small market depth is constant over time fama 1970 defines a strong form efficient market as one in which security prices fully reflect all available information including both publicly and privately held information in a pioneering and influential article kyle 1985 develops a model in which a single privately informed trader with long lived information optimally exploits his monopoly power over time kyle s 1985 main results are i the informed trader trades in a gradual manner so that his information is incorporated into prices at a slow almost linear rate and ii when auctions are held continuously the depth of the market is constant over time however kyle s 1985 assumption of a single informed trader is strong in the sense that in actual financial markets it is reasonable to expect that at least a few players will have access to private information and will trade in the knowledge that they will face competition with other informed agents in the market 1 we develop a multi period auction model in which multiple strategic informed traders optimally exploit their long lived informational advantage we thus explore the restrictiveness of kyle s assumption of a single informed trader and also examine

collective invention during the british industrial revolution the case of the cornish pumping engine in this paper we argue that together with individual inventors and firms what robert c allen 1983 has termed as collective invention settings that is settings in which rival firms freely release each other pertinent technical information were also a crucial source of innovation in the industrial revolution period until now this has been very little considered in the literature this paper focuses on one of these cases the cornish mining district in cornwall during the early nineteenth century a notable collective invention setting gradually emerged this case is particularly remarkable because it was capable of generating a continuous and sustained flow of improvements in steam pumping technology which in the end greatly contributed to improve the thermodynamic efficiency of the steam engine in this paper we study in detail the specific economic circumstances that led to the formation of this collective invention setting and we analyses its consequences for the rate of technological innovation

manipulation and the allocational role of prices it is commonly believed that prices in secondary financial markets play an important allocational role because they contain information that facilitates the efficient allocation of resources this paper identifies a limitation inherent in this role of prices it shows that the presence of a feedback effect from the financial market to the real value of a firm creates an incentive for an uninformed trader to sell the firm s stock when this happens the informativeness of the stock price decreases and the beneficial allocational role of the financial market weakens the trader profits from this trading strategy partly because his trading distorts the firm s investment we therefore refer to this strategy as manipulation we show that trading without information is profitable only with sell orders driving a wedge between the allocational implications of buyer and seller initiated speculation and providing justification for restrictions on short sales

the cost of institutional equity trades presented are an overview of the findings from the recent literature on the cost of u s equity trades for institutional investors and new evidence on trading costs from a large sample of institutional trades the findings discussed have important implications for policymakers and investors implicit trading costs are economically significant equity trading costs vary considerably and vary systematically with trade difficulty and order placement strategy and whether a trade price represents best execution depends on detailed data for the trade s entire order submission process especially information on pretrade decision variables such as the trading horizon

the social value of biodiversity for r d the value of genetic resources for use in research and development r d activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search here we develop a moregeneralised framework in which genetic resources are used in r d at thebase of an industry that addresses recurring problems of resistance as inthe pharmaceutical or plant breeding industries the r d process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction schumpeterian competition andadaptive destruction natural selection and adaptation this frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena we then demonstrate the important differences between firm based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation there are six externalitiesin private patent based genetic resource valuation and five of theseindicate that private valuations will under estimate social values

spatially uniform versus spatially heterogeneous compensation payments for biodiversity enhancing land use measures the importance of compensation payments for biodiversity enhancing land use measures has grown over the past decade particularly in connection with agri environmental policy given that both the costs and the benefits of biodiversity enhancing land use measures are subject to spatial variation the criterion of cost effectiveness calls for spatially heterogeneous compensation payments however when deciding whether to implement uniform or heterogeneous compensation payments the regulator has to compare the disadvantage of uniform payments in terms of cost effectiveness with the disadvantages of spatially heterogeneous payments to help resolve this issue this paper provides a simple ecological economic model that allows the reduced cost effectiveness associated with uniform payments for biodiversity enhancing land use measures to be assessed for different types of benefit and cost functions

strategic enhancement and destruction of fisheries and the environment in the presence of international externalities abstract this paper considers enhancement of fisheries and the environment in the presence of international externalities by enhancement we refer to investments which affect the costs and benefits of controlling fish harvest rates or pollution emission levels in a two country two period model it is shown that enhancement may be used strategically to influence the behavior of rival governments and that the strategic effect may either offset or reinforce the standard free rider problem associated with such investment in some cases countries may have an incentive to invest in environmental destruction i e negative enhancement if policies are not coordinated internationally

the economics of technical change this paper reviews the recent rapidly growing literature on technical change in the economy it concentrates on innovations and their diffusion at firm and industry level since this was the area designated as relatively weak in earlier literature surveys the review argues that the extensive empirical evidence and theoretical analysis now available presents a basic challenge to neoclassical theory after indicating some weaknesses in the neo schumpeterian literature the paper concludes by advocating an experiment with a new form of assessment by neighboring disciplines to economics itself which would take full account of the fundamental issues at stake in this modern methodenstreit c 1994 academic press inc copyright 1994 by oxford university press

future lending income and security value i test the duffie g rleanu and pedersen hypothesis that security prices incorporate expected future securities lending income to determine whether institutional investors anticipate gains from future lending of securities i examine their trading behavior around loan fee increases the evidence suggests that institutions buy shares in response to an increase in lending fees and that this could explain the premium associated with high lending fee stocks expected future lending income affects stock prices although the effect seems to be attenuated by the negative information that arises from short selling