how do cartels use vertical restraints reflections on bork s the antitrust paradox abstractin the antitrust paradox robert bork discusses vertical restraints and policy responses to naked and ancillary price fixing empirical research finds that vertical restraints are generally welfare enhancing we examine cartels that used vertical restraints to support collusion we find that one quarter of a sample of convicted contemporary international cartels used vertical restraints some of these cartels used vertical restraints to control downstream firms who might otherwise have undermined collusion in other cases distributors themselves had market power and received a share of cartel rents in return for their willingness to exercise that power as part of a cartel this raises questions for antitrust policy toward vertical restraints in highly concentrated industries or in those with a history of cartel activity

excise taxes with multiproduct transactions i examine excise taxes levied on multiproduct retailers excise taxes reduce equilibrium output and decrease equilibrium product variety in the short run but taxes can raise output per product in the long run and induce entry excise taxes are overshifted into prices in a wide range of cases including under linear and concave demand conditions and excise taxes shift less than one for one into prices only when demand is highly convex multiproduct transactions substantively alter the efficiency of ad valorem and specific forms of excise taxes and affect the comparison of relative tax performance over short run and long run time horizons jel h25 h32 l11 l13 l81

project based mechanisms for emissions reductions balancing trade offs with baselines project based mechanisms for emissions reductions credits like the clean development mechanism pose important challenges for policy design because of several inherent characteristics participation is voluntary so it will not occur without sufficient credits evaluating reductions requires assigning an emissions baseline for a counterfactual that cannot be measured some investments have both economic and environmental benefits and might occur anyway uncertainty surrounds both emissions and investment returns and parties to the project are likely to have more information than the certifying authority the certifying agent is limited in its ability to design a contract that would reveal investment intentions as a result rules for benchmarking emissions may be systematically biased to overallocate and they also risk creating inefficient investment incentives this paper evaluates in a situation with asymmetric information the efficacy of the main baseline rules currently under consideration historical emissions an average industry emissions standard and expected emissions

preparing hydropower projects for the post paris regime an econometric analysis of the main drivers for registration in the clean development mechanism abstract the 2015 paris climate accords promises to reign in a new era in the fight against global climate change the agreement supports the establishment of new cooperative approaches including internationally transferred mitigation outcomes through which individual countries can meet their nationally determined contributions hydropower projects however are in danger of being left out in the new regime mainly due to its dubious position as a renewable energy source hydropower in the clean development mechanism cdm has been criticized for non conformance to additionality and sustainability objectives originally set out in the kyoto protocol to confirm such issues and to provide recommendations that may mitigate them this study conducted an econometric analysis of 2717 hydropower projects in the cdm pipeline leading up to 2016 specifically a logit model was constructed to identify the main drivers for registration success results of the analysis showed the capacity and expected carbon credits of hydropower projects to be the dominant factors for registration rather than their financial requirements or technological barriers most problematically large scale projects not requiring carbon credits were registered while their social and environmental impacts have not been extensively scrutinized policy recommendations to rectify the verification process are proposed so that when implemented the right hydropower projects may be included in the new market mechanisms of the post 2020 regime

the role of offsets in a post kyoto climate agreement the power sector in china abstract this paper considers how an offset scheme specific to the electricity generation sector could incentivize emissions cuts while avoiding the problems encountered by the clean development mechanism cdm it proposes an approach to project evaluation based on measures of additionality economic viability and contribution to sustainable development specific to this sector and re evaluates 460 registered cdm projects in china that generate electricity using wind natural gas or small hydro it concludes that many small hydro schemes would be viable without the cdm subsidy although these projects have zero emissions from operations offsets issued to projects that are viable without subsidy permit increased emissions in developed countries and lead to a net increase in global emissions to provide some indication of the sustainable development benefits that cdm projects bring to their host countries the paper includes estimates of the projects benefit to public health due to the reduced use of coal for generation the paper provides insights into the economics of projects and their value to host countries that are missed by the official cdm methodologies it contributes to the debate over the design of sector specific offset schemes that may be part of a new global agreement on combating climate change

vertical control of price and inventory this paper offers a simple approach to the theory of decentralizing inventory and pricing decisions along a supply chain we consider an upstream manufacturer selling to two outlets which compete as differentiated duopolists and face uncertain demand demand spillovers between the outlets arise in the event of stockouts the price mechanism in which each outlet pays a two part price and chooses price and inventory virtually never coordinates incentives efficiently contracts that can elicit first best decisions include resale price floors or buy back policies retailer held options to sell inventory back to the manufacturers

resale price maintenance in an oligopoly with uncertain demand abstract this paper considers a model where oligopolistic manufacturers sell to consumers through competitive retailers who face demand uncertainty the setup is a symmetric duopoly with product differentiation and a perfectly competitive retail market in the game with unconstrained price competition there is price dispersion in the retail market in the game with resale price maintenance rpm manufacturers profits are higher retail inventories are at least as high and total surplus is at least as high the effect of rpm on consumer surplus is ambiguous rpm also precludes possible coordination failure between the manufacturers

vertical antitrust policy as a problem of inference the legality of nonprice vertical practices in the u s is determined by their likely competitive effects an optimal enforcement rule combines evidence with theory to update prior beliefs and specifies a decision that minimizes the expected loss because the welfare effects of vertical practices are theoretically ambiguous optimal decisions depend heavily on prior beliefs which should be guided by empirical evidence empirically vertical restraints appear to reduce price and or increase output thus absent a good natural experiment to evaluate a particular restraint s effect an optimal policy places a heavy burden on plaintiffs to show that a restraint is anticompetitive

on the equivalence of resale price maintenance and quantity restrictions abstract when demand is known with certainty there is a clear mapping between a monopolist s pricing and output decisions this suggests an equivalence between a monopolist manufacturer specifying a minimum maximum retail price and imposing a maximum minimum quantity on its retailers this paper shows that while the effect of maximum rpm can always be replicated by an appropriate quantity floor the minimum rpm outcome cannot always be replicated by an appropriately chosen quantity ceiling as such the analysis provides one reason that manufacturers will choose a price floor rather than quantity ceiling even though a quantity ceiling would appear to lead to lower monitoring costs

rent extraction with a type by type scheme an instrument to incorporate sustainable development into the cdm although the cdm is supposed to assist developing countries in achieving sustainable development sustainable development is not incorporated into the market aspect of the cdm by participating in the cdm developing countries may end up losing all cheap emissions reduction possibilities while obtaining little sustainability benefits this paper proposes rent extraction with a type by type scheme as an instrument to incorporate sustainable development into the cdm the rent extraction with a type by type scheme makes it possible for the cdm host country government to discourage the low cost projects that have little sustainability benefits and to extract more rent from the projects that are developed the main challenge of implementing this instrument is the uncertainty of the opportunity cost but the host country government can adjust the scheme for the uncertainty to achieve its goal therefore the type by type scheme will better assist the host country in achieving sustainable development than a single rate scheme

technology adoption in nonrenewable resource management technological change has played an important role in models of nonrenewable resource management since its presence mitigates the depletion effect on extraction costs over time we formalize the problem of a competitive nonrenewable resource extracting firm faced with the possibility of technology adoption based on a quadratic extraction cost function our results show that the expected net benefits from adoption increase both with the size of the resource stock and with prices a boundary that separates the region where expected net benefits are positive from the one where they are negative is derived

lessons from the united states s antitrust history abstract the united states s antitrust policy spans more than 100 years for most of its history the united states has had the toughest antitrust laws and enforcement policies of any country in the world a shift to a more permissive attitude with regard to antitrust matters has occurred in recent years however this paper traces the changes in antitrust policy that have occurred and the concurrent shifts in thinking among economists on antitrust questions following this review the paper offers a critical appraisal of both the economic underpinning of the new learnings on antitrust matters and the changes in antitrust policy that have accompanied them it closes with a discussion of the implications of the analysis for european antitrust competition policy

unilateral climate policy and the green paradox extraction costs matter i analyze the effect of unilateral climate policies in a two country model where fossil fuel extraction costs depend on both current extraction and remaining stock and where a constant marginal cost clean substitute is available an intensification of climate policy in the country with an initially stricter policy does not increase early fossil fuel extraction i e there is no weak green paradox or the present value of pollution costs i e there is no strong green paradox if energy demand in that country is initially met with a mix of fossil fuel and a substitute whether a stricter climate policy in the country with an initially laxer policy causes a weak green paradox depends on the price elasticity of energy demand and the strength of the flow and stock dependence of extraction costs if the reduction of total extraction is sufficiently strong it overcompensates for a weak green paradox with respect to pollution costs thus a weak green paradox does not necessarily imply a strong green paradox due to stock dependence politique climatique unilaterale et paradoxe vert l incidence des couts d extraction l article analyse l effet des politiques climatiques unilaterales dans un modele a deux pays ou les couts d extraction de combustibles fossiles dependent a la fois de l extraction actuelle et du stock residuel et ou la disponibilite d un substitut energetique propre et constant a cout marginal demeure une intensification des politiques climatiques dans le pays de pair avec une politique initialement plus stricte n augmente ni l extraction precoce des combustibles fossiles c est a dire qu il n y a pas de paradoxe vert faible ni la valeur actuelles des couts de pollution c est a dire qu il n y a pas de paradoxe vert accru x00ab pour autant que la demande en energie dans ce pays est initialement satisfaite par une combinaison d un combustible fossile et d un substitut qu une politique climatique plus stricte dans ce pays dote d une politique initialement plus laxiste entrane un paradoxe vert moins prononce depend de l elasticite par rapport au prix de la demande d energie de l importance du flux et de la dependance en matiere de stock relativement aux couts d extraction si une reduction de l extraction totale est suffisamment forte elle surcompensera un paradoxe vert limite relativement aux couts de pollution ainsi un faible paradoxe vert n engendre pas necessairement un fort paradoxe vert en raison de la dependance au stock

an estimation of the swiss hydropower rent the electricity generation in switzerland is mostly based on hydropower 58 and nuclear power 38 the exploitation of water in the hydropower sector can generate significant economic rent one possibility to capture this rent is through royalties or fees this system has been used in switzerland since many decades however the actual water fee system is not flexible and does not take into consideration different production costs between the type and location of hydropower plants furthermore storage plants can sell electricity to a higher price than run of river plants a flexible system is needed in a liberalized electricity market to take into account these different production situations and the fact that prices may vary considerably over time the main goal of this paper is to calculate the potential economic rent that could be generated in the swiss hydropower sector under a future liberalized market based on the results of the paper it can be concluded that the introduction of a flexible fee system could improve the competitiveness of the hydropower sector and promote an energy system based on renewable energy sources

a real option based model for promoting sustainable energy projects under the clean development mechanism abstract the clean development mechanism cdm provides a way of assisting sustainable development in developing countries for developed countries to reduce greenhouse gas ghg emissions despite its intended benefits the primary cdm market decreased from us 5 8 billion in 2006 to us 1 5 billion in 2010 one of the primary reasons for the reduction of market size is that developed countries as investors have a high level of risks caused by the volatility of the market price for certified emission reductions cers another issue to be resolved is that developing countries as host countries cannot claim any right to the cers produced on their own land this paper presents a real option based model for both parties developed and developing countries to have their fair share of profits and risks by controlling the uncertainty associated with the future value of cers a case study illustrated that the proposed model can effectively attract investors to cdm projects leading to mitigation of climate change

climate policy design with correlated uncertainties in offset supply and abatement cost emission offsets within cap and trade systems are widely believed to contain system costs and stabilize allowance prices however trends in offsets supply are uncertain may be persistent and may be correlated with other sources of uncertainty in a dynamic stochastic model we find total costs increase as does variability in allowance prices and emissions as uncertainty in offsets becomes more persistent and to a lesser extent becomes negatively correlated with uncertainty in abatement costs these results are amplified with risk sensitivity larger annual offset limits and competitive offset purchasing imposing an allowance price collar can mitigate cost increases and price variability jel q54 q58

on the portents of peak oil and other indicators of resource scarcity economists have studied various indicators of resource scarcity but largely ignored the phenomenon of peaking due to its connection to non economic physical theories of resource exhaustion i consider peaking from the economic point of view where economic forces determine the shape of the equilibrium extraction path within that framework i ask whether the timing of peak production reveals anything useful about scarcity i find peaking to be an ambiguous indicator if someone announced the peak would arrive earlier than expected and you believed them you would not know whether the news was good or bad however i also show that the traditional economic indicators of resource scarcity price cost and rent fare no better and argue that previous studies have misconstrued the connection between changes in underlying scarcity and movements in these traditional indicators

technical efficiency and productivity change of china s iron and steel industry abstract the recent economic reform of china s iron and steel industry has resulted in its rapid expansion to become the largest in the world however the resultant increase in the use of energy and other resources has resulted in severe environmental degradation to further increase output while reducing emissions and waste will require increased productivity in this paper the technical efficiency and malmquist productivity indexes of a sample of 88 enterprises producing 72 percent of the industry s output were determined for the period 1989 1997 with the aim of gaining some insights into the policy options likely to achieve this

resale price maintenance an empirical analysis of uk firms compliance empirical evidence on resale price maintenance rpm is scarce this paper provides novel empirical evidence based on a unique database of rpm complaints lodged in the uk to the office of fair trading oft between 2007 and 2009 we describe the characteristics of the commodity being traded and of the relevant upstream and downstream firms and their sectors we then present an econometric analysis to assess how the probability of compliance to the oft request to withdraw the rpm can be affected by the specific features of the relevant economic context in which this restraint has taken place

intellectual property protection market orientation and location of overseas r d activities by multinational enterprises abstract this paper develops an analytical framework to explain the determinants of location of overseas research and development r d by multinational enterprises mnes in terms of the nature and extent of foreign direct investment fdi and host country resources and policy regimes empirical findings for us mnes suggest that mnes prefer to locate their r d activities in countries that are able to offer them among other things larger markets technological resources and infrastructure host market oriented affiliates are more likely to have r d units than the export oriented ones especially in developing countries the relative strength of the patent regime appears to affect the direction rather than the magnitude of r d investments made in a country

on the contribution of labelled certified emission reductions to sustainable development a multi criteria evaluation of cdm projects abstract the clean development mechanism cdm has a twofold objective to offset greenhouse gas emissions and to contribute to sustainable development in the host country the contribution to the latter objective seems marginal in most cdm activities also cdm activities are unevenly spread among developing countries in response to these concerns initiatives with the objective of promoting cdm projects with broad local sustainable development dividends have been launched such as the gold standard and the community development carbon fund the gold standard label rewards best practice cdm projects while the community development carbon fund focuses on promoting cdm activities in underprivileged communities using a multi criteria method the potential contribution to local sustainable development of those cdm projects with particular attributes is compared with ordinary ones this evaluation suggests that labelled cdm activities tend to slightly outperform comparable projects although not unequivocally

natural resource economics under the rule of hotelling abstract natural resource stocks held in situ are physical assets equilibrium in the assets market requires that their rates of return be such that their owners are just willing to hold on to them rather than invest elsewhere i discuss a number of factors relating to the evolution of extraction costs to the durability of the resource to market structure and to uncertainty that are important in correctly characterizing the rate of return on holding exhaustible natural resource stocks the emphasis is put on how those factors can potentially help bridge the gap between the basic hotelling s rule of natural resource exploitation and the historical behaviour of the flow price of a number of resources i also highlight some theoretical and empirical issues that need further attention

the monetary compensation mechanism an alternative to the clean development mechanism abstract one of the key challenges in resolving global warming problem is how to induce developing countries to reduce emissions the cdm was proposed in the kyoto protocol as a means of obtaining the cooperation of developing countries in controlling greenhouse gases but it has some intrinsic problems and has generated considerable controversy this paper presents an alternative mechanism the monetary compensation mechanism mcm i study the characteristics of this mechanism with a dynamic principal agent model by solving the model numerically i obtain the optimal solution for a scenario based on 1990 data the monetary compensation rate under the mcm is comparable to the price of cers in the cdm but the mcm has several advantages over the cdm

use value exchange value and resource scarcity abstract i review the literature on natural resource scarcity indicators scarcity indicators can be classified by what is being measured value of the resource stock or value of extracted resource commodities who s value is considered social vs private scarcity and by the mode of valuation considered exchange value and use value prices and rents are common measures of exchange value or indicators of exchange scarcity and unit costs can be seen as use value indicators or indicators of use scarcity the major aim of this paper is to demonstrate the links between productivity indicators such as unit costs and the classical concept of use value the two classes of indicator relate to john commons discussions of scarcity and efficiency and a marginal vs a non marginal approach to value and scarcity the classical use value concept also has wider relevance for issues of valuation in energy resource and environmental policy

presidential address antitrust restrictions on single firm strategies this article offers an overview of selected developments in the law and economics of antitrust regulation of single firm strategies the strategy generating the most cases historically is resale price maintenance here the law has moved sharply in both canada and the u s towards more solid economic foundations yet a gap between the law and economics remains the economics of resale price maintenance is reviewed within a framework that is much simpler and more general than the existing literature the law on a second strategy predatory pricing represents in my view a success story for the influence of economic theory in spite of the absence of a single accepted theory of predatory pricing the remaining single firm strategies are concerned largely with the exclusion by a dominant firm of rivals from a market i review with application to cases the two most basic questions concerning exclusionary strategies are exclusionary anticompetitive contracts ever entered into voluntarily by market participants on the other hand is complete or substantial foreclosure of a market through exclusionary strategies necessarily anticompetitive cette allocution presidentielle a l association canadienne d economique presente une vue d ensemble des developpements dans le droit et l economie de la reglementation antitrust sur les strategies d une firme unique la loi sur la strategie qui genere historiquement le plus de cas le maintien du prix de revente a change dramatiquement au canada et aux etats unis et derive vers une politique qui a des assises economiques solides mais il reste un ecart entre le droit et l economie on reexamine l economie du maintien du prix de revente a l aide d un cadre d analyse qui est a la fois plus simple et plus general que ce qui existe dans la litterature specialisee la loi pour ce qui est d une seconde strategie prix d eviction est a mon avis une grande reussite pour la science economique malgre l absence d une seule theorie du prix d eviction generalement acceptee un troisieme ensemble de strategies concerne l exclusion de ses rivaux d un marche par la firme dominante l auteur reexamine avec un recours extensif aux cas les deux questions de base pour ce qui est des strategies d exclusion est ce que les participants sur un marche entrent jamais volontairement dans un arrangement contractuel qui exclut et est anticoncurrentiel d autre part est ce que la saisie complete ou substantielle d un marche par des man uvres d exclusion est necessairement anticoncurrentielle

slotting allowances as a facilitating practice by food processors in wholesale grocery markets profitability and welfare effects slotting allowances which are lump sum transfers paid by food manufacturers to grocery retailers in return for various retail concessions are becoming increasingly common in wholesale grocery markets this article extends the literature on slotting allowances by considering two features that previously have been ignored the role of food processors in determining these pricing arrangements and the effect of slotting allowances on the size and distribution of economic surplus slotting allowances motivated by food processors increase procurement quantities and farm prices and this raises farm surplus increases total producer surplus and improves consumer welfare in the food system

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

vertical control and price versus nonprice competition this paper considers a manufacturer distributing a product through retailers who compete in price and service which reduces the time it takes to purchase a good the mix of these instruments that maximizes collective profit is determined by the tastes of consumers on the product margin whereas decentralized retailers consider as well the tastes of consumers on the interretailer margins given search or travel costs consumers with low time costs are overrepresented on the interretailer margins in considering customers on the wrong margin retailers are therefore biased toward price competition this distortion that can be corrected with vertical restraints

intellectual property rights licensing and innovation in an endogenous product cycle model abstract we develop a dynamic general equilibrium model of the product cycle to study the effects of stronger intellectual property rights iprs in the south on the incentives of firms in the north to innovate and to license advanced technologies innovation and licensing are random processes requiring resources stronger iprs increase the licensor s share of rents and reduce the costs of licensing contracts thus the returns to both licensing and innovation would rise while additional resources would be available for r d in consequence innovation and technology transfer would rise however the effect of stronger iprs on relative wages between regions is ambiguous

measuring macroeconomic performance in the oecd a comparison of european and non european countries abstract we study the macroeconomic performance of 19 oecd countries over the period 1970 1990 performance is defined in terms of the ability of a country s macroeconomic managers to provide four services to their citizens a high level of real gdp per capita a low rate of inflation a low rate of unemployment and a favorable trade balance we use linear programming techniques to construct a best practice macroeconomic performance frontier and to measure the performance of each country in each year relative to the frontier we then add two environmental disamenities carbon and nitrogen emissions to the service list and repeat the analysis to see if the performance rankings change throughout the analysis emphasis is placed on a comparison of the performance of 14 european oecd countries with that of five non european oecd countries we find that performance rankings do change and that the relative performance of the european countries declines when the environmental disamenities are added to the service list

untested hypotheses in non renewable resource economics the present paper reviews the literature on the empirical implications of the hotelling rule and suggests directions for further research in this area

demand uncertainty inventories and resale price maintenance we show that a manufacturer facing uncertain demand and selling through a competitive retail market may wish to support adequate retail inventories by preventing the emergence of discount retailers in our model discounters offer low prices made possible by low probability of being saddled with unsold inventories in the event of slack demand full price retailers are compensated for a higher probability of unsold inventories by a higher retail price when they sell we show that preventing discounting increases the manufacturer s wholesale demand and profits and we delineate demand conditions under which equilibrium inventory holding and consumer welfare increase

how to design and use the clean development mechanism under the kyoto protocol a developing country perspective under the kyoto protocol industrialized countries committed to emission reductions may fullfil part of their obligations by implementing emission reduction projects in developing countries in doing so they make use of the so called clean development mechanism cdm two important issues surround the implementation of the cdm first if the cheapest abatement measures are implemented for cdm projects developing countries may be left with only more expensive measures when they have to meet their own commitments in the future the so called low hanging fruits lhf issue second a choice must be made on the type of baseline against which emission reductions are measured an absolute baseline or a relative to output one the baseline issue the purpose of this paper is to study the interactions between these two issues from the point of view of the developing country two major results are obtained first when possible future commitments for developing countries and irreversibility of abatement measures are taken into account we show that the industry where cdm projects are implemented enjoys larger profits under an absolute baseline than under a relative one second concerning the lhf problem the financial compensation required by the developing country for implementing too many cdm projects is larger under the relative baseline

the price of launching a new product empirical evidence on factors affecting the relative magnitude of slotting allowances slotting allowances are a relatively recent trend particular to the retail food industry these allowances are lump sum up front transfer payments from manufacturer to retailer when the manufacturer launches a new product the practice has attracted some scrutiny because of uncertainty about its purposes and consequences we draw from the extant literature to identify factors that potentially influence the relative magnitude of slotting allowances based on analysis of primary survey data from retailers and manufacturers we observe that charging and paying of slotting allowances are affected by the relative strength of the players among retailers the relative magnitude of slotting fees increases with retailers informational advantage over the manufacturer about the likely success of the new product even when retailers recognize that the product is likely to be successful additionally and consistent with the first finding retailers with lower costs i e potentially more efficient and powerful retailers received higher slotting allowances furthermore retailers charge higher slotting fees even when concerns about manufacturers fulfilling postlaunch advertising commitments are minimal implying that relatively powerless manufacturers are asked to provide credible commitments regarding postlaunch activitiesand are asked to pay relatively high slotting fees among manufacturers the relative magnitude of slotting fees paid is lower for those who have a strong market share position we discuss the theoretical managerial and public policy implications of our findings

naked slotting fees for vertical control of multi product retail markets abstract slotting fees are fixed charges paid by food manufacturers to retailers for access to the retail market this note considers this practice in the context of multi product markets with imperfectly competitive retailers a monopoly supplier of one good and competitive suppliers of other goods we show how the monopolist and the retailers can use naked slotting fees charges imposed on the suppliers of other goods to obtain vertically integrated monopoly profits

demand signalling and screening in channels of distribution this paper examines two ways channel members at the manufacturing and retail ends deal with asymmetric information in the context of new product introduction a manufacturer who has private information that demand for a new product will be high can differentiate itself from a manufacturer less confident of demand by undertaking high levels of pre launch advertising and offering a high wholesale price a retailer for its part can screen potentially high demand from potentially low demand products by stipulating a take it or leave it slotting allowance the assumption being that the offer will be accepted only by manufacturers confident of sufficient demand to recover the high initial cost of slotting allowances it is shown that manufacturers prefer to signal demand through advance advertising and wholesale price retailers to screen demand through slotting allowances it is shown that unless advance advertising is sufficiently effective slotting allowances yield higher total channel profits and higher social welfare

the effects of resale price maintenance on shareholder wealth the consequences of schwegmann event study methodology is used to assess the effects of the 1951 u s supreme court schwegmann decision which severely weakened the enforcement of resale price maintenance contracts in the united states overall upstream industries with heavy resale price maintenance usage apparently were not adversely affected by the decision among large retailing groups a positive effect of the decision was found for department stores cross section tests of the motives for the adoption of resale price maintenance provide support for hypotheses based on free ridership dealer cartels and to a lesser extent protection of product reputation copyright 1994 by blackwell publishing ltd

wind farm investment risks under uncertain cdm benefit in china abstract china has set an ambitious target to increase its wind power capacity by 35 gw from 2007 to 2020 the country s hunger for clean power provides great opportunities for wind energy investors however risks from china s uncertain electricity market regulation and an uncertain energy policy framework mainly due to uncertain clean development mechanism cdm benefits prevent foreign investors from investing in china s wind energy the objectives of this paper are to 1 quantify wind energy investment risk premiums in an uncertain international energy policy context and 2 evaluate the impact of uncertain cdm benefits on the net present values of wind power projects with four scenarios this study simulates possible prices of certified emissions reductions cers from wind power projects project net present values npvs have been calculated the project risk premiums are drawn from different and uncertain cer prices our key findings show that uncertain cdm benefits will significantly affect the project npvs this paper concludes that the chinese government needs revising its tariff incentives most likely by introducing fixed feed in tariffs fits and re examining its cdm granting policy and its wind project tax rates to facilitate wind power development and enable china to achieve its wind energy target

long run implications for developing countries of joint implementation of greenhouse gas mitigation joint implementation ji calls for cooperation between industrialized and developing countries in the mitigation of greenhouse gas ghg emissions however a major concern of potential host countries is that if they utilize their low cost options for ji now they will be left with only high cost options in the future thereby penalizing them at a time when they may be obligated to mitigate ghgs themselves this paper formalizes this hypothesis by utilizing an optimal control framework analogous to the hotelling model of non renewable resource extraction the results are that cumulative abatement effects can impose costs on the future but that they can be offset by technological change market power or compensation

tying foreclosure and exclusion in recent years the leverage theory of tied good sales has faced heavy and influential criticism in an important sense though the models used by its critics are actually incapable of addressing the leverage theory s central concerns here the author reconsiders the leverage hypothesis and argues that tying can indeed serve as a mechanism for leveraging market power the mechanism through which this leverage occurs its profitability and its welfare implications are discussed in detail copyright 1990 by american economic association

inventory dynamics and supply chain coordination this paper extends the theory of supply chain incentive contracts from the static newsvendor framework of the existing literature to the simplest dynamic setting a manufacturer distributes a product through retailers who compete on both price and fill rates we show that inventory durability is the key factor in determining the underlying nature of incentive distortions and their contractual resolutions when the product is highly perishable retailers are biased toward excessive price competition and inadequate inventories vertical price floors or inventory buybacks subsidies for unsold inventory can coordinate incentives in both pricing and inventory decisions when the product is less perishable the distortion is reversed and vertical price ceilings or inventory penalties can coordinate incentives

demand uncertainty and price maintenance markdowns as destructive competition this paper offers a new theory of destructive competition the authors compare minimum resale price maintenance to retail market clearing in a model with a monopolistic manufacturer selling to competitive retailers in both the resale price maintenance and flexible price games retailers must order inventories before the realization of demand uncertainty the authors find that manufacturer profits and equilibrium inventories are higher under resale price maintenance than under market clearing surprisingly consumer surplus can also be higher in which case unfettered retail competition can legitimately be called destructive copyright 1997 by american economic association

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

should patent protection be extended to all developing countries he uruguay round has extended the scope of gatt multilateral trade negotiations well beyond the tariffs that had occupied most previous negotiations in addition to various non tariff barriers which had also been dealt with to a degree in the tokyo round as discussed in deardorff and stern 1983 and 1986 the uruguay round dealt with issues of trade in services international investment and intellectual property since these new issues have conceptually quite different characteristics than the tariffs of previous negotiations it is appropriate to examine them afresh to determine whether the objectives of the uruguay round negotiations can be considered economically sound this paper describes such an analysis for a particular aspect of the intellectual property negotiations patent rights and in the process voices some skepticism about this aspect of the uruguay round s objectives inclusion of trade related intellectual property issues or trips in the uruguay round agenda was done largely at the insistence of the united states firms in the united states have long been concerned that their position at the cutting edge of technological progress was being eroded by unauthorised copying of their intellectual property elsewhere in the world while export of such copied products back into the united states might be restricted under us law this would provide little help in competition with the pirate firms in third country markets

vertical price controls with uncertain demand a manufacturer distributes output before knowing demand and thus risks making more than its rivalrous independent retailers can sell at the monopoly price if demand is low retailers may therefore resell more than the joint profit maximizing output anticipating this they will not pay as much for the merchandise ex ante as they would if the manufacturer could commit to preventing rivalry the manufacturer has many options including vertical integration chain outlets restricted output buy backs just in time deliveries and minimum resale prices the article discusses each option s advantages and disadvantages and concludes that all roads lead to resale price maintenance the article closes with an alternative to the dealercartel hypothesis for minimum resale prices

slotting allowances as real options an alternative explanation this article offers an alternative explanation for slotting allowances using contingent claims analysis or real option pricing slotting allowances arise because retailers hold call options on their shelf space while suppliers must buy these options to introduce a new product a simulated model of new product introduction shows that stocking a new product contains a significant imbedded real option component we also show that advertising and promotional support can reduce the real option value

a strategic motivation for commodity bundling the analytical literature on commodity bundling explains the practice of selling two or more differentiated products in a single package as a surrogate for direct price discrimination in contrast this paper shows that imperfect competition creates a strategic incentive to bundle the profitability of bundling whether it adversely affects rival producers and whether it yields an overall efficiency gain depends inter alia on the nature of product market competition the role of complementarity in explaining why firms bundle is also explored copyright 1990 by blackwell publishing ltd

weak comparability of values as a foundation for ecological economics the main argument of this paper is that weak comparability of values should be seen as one characteristic feature of ecological economics the formal properties of the concepts of strong comparability implying strong or weak commensurability and weak comparability implying incommensurability will be clarified multicriteria evaluation offers the methodological and mathematical tools to operationalize the concept of incommensurability at both macro and micro levels of analysis the concept of incommensurability of values already has a long tradition in economics moreover we will show that analytic philosophy theories of complexity post normal science and the recent theories of rationality lead with different trajectories to a non algorithmic approach which in our view could be implemented by some forms of multicriteria evaluation 1998 elsevier science b v all rights reserved

which countries protect intellectual property the case of software piracy david g steel using data on software piracy we examine how protection of intellectual property varies across countries consistent with other studies we find that intellectual property receives greater protection in developed economies high income countries have lower piracy rates we also find that protection depends on cultural factors countries with an individualist culture have lower piracy rates than do countries with a collectivist culture piracy rates are also lower in countries that have strong institutions that enforce contracts and protect property from expropriation these results suggest that national policies toward intellectual property reflect not only economic concerns but also national culture and institutions jel 034 l86 i introduction intellectual property rights are a recurring focus of international negotiation developed nations argue that such rights are essential for promoting innovation and economic growth many developing nations on the other hand argue that intellectual property rights inhibit economic development by restricting use of existing knowledge a generation of theoretical research has demonstrated that there is truth in both arguments depending on circumstances individual countries may reasonably favor different levels of protection for intellectual property 1 surprisingly little is known however about how such protection is actually determined only a handful of previous studies have analyzed cross national variation in intellectual property rights 2 these studies relate patent rights as formalized in the laws of individual countries to a range of social and economic variables the main empirical finding is that developed countries provide stronger patent protection in this article we extend this line of research by examining cross national variation in piracy of computer software the business software alliance and the software publishers association 1998 have estimated piracy rates the ratio of illegally copied units to total units for business software in more than 70 countries for 1994 97 these rates vary substantially in some countries essentially all new software was pirated in other countries less than 40 of software was pirated what explains these differences consistent with previous studies we find that developed countries provide greater protection for intellectual property than do developing countries high income countries tend to have lower piracy rates this is true both in a simple comparison of piracy rates with per capita income and to a lesser extent in regressions that control for other factors as we discuss below the causal interpretation of this correlation is not obvious the correlation is consistent with the hypothesis that intellectual property rights promote economic development however it may also reflect reverse causality e g if developing nations offer less protection so that they can use the intellectual property of developed nations or common causation by other factors many commentators have suggested that culture may also explain differences in piracy rates western countries they argue have individualist cultures that naturally embrace individual ownership of intellectual property whereas many non western countries have collective cultures that emphasize sharing over individual ownership as a result these societies have been reluctant to adopt western conceptions of intellectual property rights to test whether differences in culture lead to differences in intellectual property rights we relate piracy rates to an index of individualism and collectivism developed by hofstede 1980 1983 we find strong evidence that culture matters 3 countries with a tradition of individualism pirate much less than do countries with a tradition of collectivism this is true both in simple comparisons of piracy rates with individualism and in regressions that control for other factors

classifying carbon credit buyers according to their attitudes towards and involvement in cdm sustainability labels abstract carbon markets are increasingly conscious of the social and environmental quality of credits delivered by cdm projects consequently carbon credits are no longer viewed as a homogenous good and buyers now differentiate between credits supplied by different types of cdm project the objective of this paper is to classify cer buyers according to their attitudes towards and preferences for cdm sustainability labels k means clustering was used to segment a sample of buyers into two clusters the results indicate that two clear clusters exist with distinct profile patterns moreover the results of discriminant analysis confirmed that the two cluster solution was valid finally the results of the chi square analysis and a cross tabulation showed that these two clusters were significantly different in organization type level of paid up capital perception of sustainable development benefits perception of return on investment perception of image of the sustainability labeling participation in the voluntary market the project priority knowledge in the sustainability label attitude towards the host country s duty and their willingness to pay

opportunism in multilateral vertical contracting nondiscrimination exclusivity and uniformity comment an input supplier selling to competing downstream firms would benefit from publicly committing at the outset to all contracts efficient commitment however would require complete contracts the authors study instead bilateral contracting without commitment regarding others terms each firm then fears that the supplier might opportunistically renegotiate another s contract to increase bilateral profit at the firm s expense the authors show that nondiscrimination clauses generally cannot curb such third party opportunism even with symmetric firms to reassure firms crude forms of commitment may be adopted this could explain the pervasiveness of exclusivity arrangements and the striking uniformity and intertemporal rigidity of franchise contracts copyright 1994 by american economic association

the clean development mechanism s low hanging fruit problem when might it arise and how might it be solved it is widely recognized that industrialized countries commitments under the kyoto protocol to reduce their greenhouse gas emissions will be far less costly to achieve if they can be met at least in part through investment in cheap abatement options available in developing countries as is permitted under the protocol s clean development mechanism developing country ngos and others involved in the policy debate on the cdm have frequently raised concerns however about the so called low hanging fruit problem the standard characterization of this problem is that if developing countries allow their cheap abatement options to be used now they may find themselves worse off in future when they take on emissions reduction commitments of their own because only expensive abatement options will remain we show that under plausible cdm market imperfections a low hanging fruit problem may indeed arise but that the standard characterization of the problem is incorrect we also present a potential solution based on mandating a virtual option clause in cdm investment contracts

market foreclosure and vertical merger a case study of the vertical merger between turner broadcasting and time warner abstract we employ an event study methodology the event being the vertical merger between time warner and turner broadcasting distribution and programming respectively in the cable television industry we assess the effects of the merger on final prices subscriptions and carriage and marketing decisions of time warner the analysis finds several interesting facts first foreclosure in time warner markets following the merger is observed for the rival channels that are not integrated with any cable distributors second the turner broadcasting channels that increased market shares because of this merger appeared to be foreclosed by time warner prior to the merger the preference for own channels by time warner persisted despite a lower quality of channel bundles in its markets efficiency gains from the merger were not passed on to consumers

emerging technologies and ethics a race to the bottom or the top does national success with an emerging technology require ethical sacrifices this question is considered through the simultaneous consideration of ethics investment and outcomes in the nine jurisdictions that are making the largest investments in nanotechnologies an important emerging technology it is found that while ethical environment has no notable effect on pure and applied research a more positive ethical environment is associated with measures associated with invention and commercialization in summary a race to the top supports invention and commercialization of emerging technologies a critical finding as it suggests that issues such as corruption and regulation could be critical in limiting the extraction of social and economic benefit from emerging technologies like nanotechnologies

the effect of corruption on japanese foreign direct investment in an effort to reduce risk and uncertainty we hypothesize that investors avoid countries where high corruption exists we investigate this issue by examining the relationship of levels of perceived corruption on japanese foreign direct investment fdi in both industrialized and emerging economies the analysis presented utilizes a sample of 29 546 investments in 59 countries results suggest that in emerging nations where comprehensive legal and regulatory frameworks do not exist to effectively curtail fraudulent activity corruption serves to reduce fdi managers need to consider the level of perceived corruption in their assessment of any market prior to potential investment

an economic theory of vertical restraints vertical restraints imposed by manufacturers on the prices locations and sales of retail firms represent a puzzling departure from the simple price mediated exchange of conventional markets in this article we analyze the theoretical basis for these restraints in a setting where retailers inform consumers and are imperfectly competitive and where a manufacturer has some monopoly power we identify three potential externalities affecting retailers decisions these externalities lead to the failure of simple uniform price contracts to coordinate the incentives of retailers with the objective of maximizing combined manufacturer and retailer profits we identify the packages of vertical restraints that are minimally sufficient under various conditions to neutralize the externalities and to achieve the joint profit maximum

productivity changes of asian economies by taking into account software piracy for the past two decades the fast developing asia has emerged as one of the most important economic regions however its economic growth is accompanied with severe software piracy this paper analyzes productivity changes of 11 asian economies and 4 non asian industrialized economies by taking into account software piracy using the malmquist productivity index and its two components efficiency change and technical change over the period 1994 2002 the results indicate that when software piracy is included productivity growth in asian developing economies regresses while productivity growth in the four non asian industrialized economies improves interpretation and implications are provided jel l86 o34

extracting the resource rent from the cdm projects can the chinese government do better the revenue generated from a cdm project in china will be shared by the government and the project owner and is also subject to the corporate income tax this paper studies the impacts of the revenue sharing policy and income tax on the cdm market the economic model presented in this paper shows that higher cost cdm projects will be more affected by the cdm policies than lower cost projects in addition the majority of cers will be generated from lower cost projects this kind of distribution of cers across different types of cdm projects which is in line with the current picture of the cdm market in china is not consistent with the goal of sustainable development a simulation shows that a type by type tax fee scheme would be more effective in assisting sustainable development than the current cdm policies the study also suggests the government use negative tax fee with the type by type scheme to subsidize the cdm projects that generate large sustainability benefits but would otherwise not be developed due to high costs if all of the revenue from the cdm is recycled it is estimated that cers generation will increase by 98 28 mtc mainly from the cdm projects that have substantial sustainability benefits for the host country

transaction costs institutional rigidities and the size of the clean development mechanism transaction costs and institutional rigidities will reduce the attractiveness of the kyoto protocol flexibility mechanisms compared to domestic greenhouse gas abatement options the clean development mechanism cdm in particular is likely to entail considerable costs of baseline development project registration verification and certification the activities implemented jointly pilot phase and the prototype carbon fund programme give indications about these costs there is evidence that projects with high implementation costs have high transaction costs as well moreover cdm projects have to be approved by host country institutions and so far only a small share of host countries has been able to set up these institutions several of the larger host countries intend to only approve projects if the market price is above a certain threshold some governments will also levy fees to finance costs of approval bodies we assess these issues using a quantitative model of the kyoto protocol permit market we conclude that while changes in demand from annex b countries remain the crucial factor the size of the cdm will depend to a significant degree on transaction costs and institutional barriers in host countries

the rise of economics in competition policy a canadian perspective competition policy in canada and elsewhere has changed remarkably over the last 50 yearsin large measure due to advances in economics in this article we trace the impact of developments in industrial organization on the three central areas of competition policy cartels single firm conduct and mergers we focus on canadian competition policy but draw comparisons with developments in the united states and europe

technological change and the dynamics of resource scarcity measures abstract within a general competitive model of resource extraction this paper investigates the effect of technological change on the time paths of resource scarcity measures cost price and rent and the possible relationship between them it shows that the effect of technological change depends crucially on whether it is extraction biased or depletion biased it derives conditions under which the three measures move together and when they do not it argues in favor of rent as a more reliable indicator of scarcity change the theoretical insights obtained here help to explain both the sharp contrast of empirical results regarding the time trend of a specific measure as well as the observed lack of harmony among the time paths of the measures

are vertical restraints pro or anticompetitive lessons from interstate circuit abstract at the heart of antitrust law is the prohibition on horizontal collusion to enforce this prohibition the law must accurately define what collusion entails one of the most controversial areas in antitrust is the issue of vertical restraints in the last 20 years economists have come up with any number of pro and anticompetitive rationales for such restraints given this perhaps one of the most important antitrust cases is interstate circuit v united states a case that combines issues of horizontal collusion and vertical restraints a review of the facts shows that collusion cannot be properly inferred from the behavior of the parties involved and that the relevant vertical restraints had efficiency enhancing properties we then use interstate circuit s behavior to generate a theory of vertical restraints that not only explains the events in the case but also addresses an important controversy in the vertical restraints literature

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

credible pretrial negotiation pretrial negotiation is a structured environment in which to study bargaining with incomplete information when a plaintiff believes that a defendant owes him damages he may first attempt to reach a private settlement before resorting to a costly court imposed judgment a central issue in their negotiations is whether the plaintiff s threat to litigate is credible it is possible for the plaintiff to undermine the credibility of his litigation threat by making a settlement demand that is insufficient as a result the plaintiff must raise his settlement demand to limit the amount of bad news he can learn if his offer is rejected when this credibility constraint is binding traditional comparative static results are reversed in addition even though the defendant is being sued he wants the plaintiff s threat to be credible

how to make the clean development mechanism sustainable the potential of rent extraction the clean development mechanism cdm should foster sustainable development and greenhouse gas emission reductions the design of the cdm and first experience suggest that it may not achieve these goals developing countries hosting cdm projects may lose cheap emission reduction possibilities for their own future use and sustainable development and technology transfer may not take place on the other hand the cdm has the potential to generate considerable rents if permit prices are high or costs low to account for equity and distributional issues a deliberate decision on how to distribute these rents could be taken and the potential failure of the cdm in meeting its goals calls for some further regulation i suggest to combine these two issues and to extract the rents by a profit tax ideally the tax revenues could contribute to national sustainable development strategies to offset external costs imposed by cdm projects and to extract part of the resource rent they may generate the international character of the cdm could offer a frame for internationally coordinated tax design this would hedge against a potential race to the bottom

the ethical wealth of nations michael porter argues that some nations manifest a competitive advantage deriving from key elements of their economic structure some nations are thus disposed by structure to possess what porter calls a competitive advantage of nations porter 1990 in this paper i examine the prospect of an ethical advantage of nations and in particular of a set of advantages that extend far beyond the simple dimension of trust so often discussed i consider further how such a range of ethical features would be structured and what the implications of those features would be three conclusions are reached 1 morality may create economic advantages for nations in ways that extend beyond the notion of an idealized market 2 in order for ethics to drive economic advantage ethical concepts must rise to the status of intrinsic value and 3 if claims for national ethical success factors are true then nations should attend to the issue of moral education

clean development mechanism cdm after the first commitment period assessment of the world s portfolio and the role of latin america abstract the clean development mechanism cdm represents the main effort to help developing countries develop sustainably and developed countries to reach their emission reductions targets set under the kyoto protocol with the ending of the first commitment period there is an opportunity to assess the state of the cdm portfolio 2008 2012 this article is the first effort to evaluate the cdm portfolio throughout the first commitment period as well as the first paper focused on latin america s cdm portfolio as a whole concentrating on renewable energy projects moreover a special analysis is performed for chile latin america s third most important cdm country after brazil and mexico 6th worldwide after china india korea brazil and mexico and first in cers registered among the small countries an ideal host because of its high political stability government effectiveness access to capital and regulatory quality in addition a study was performed on 180 renewable energy projects in latin america revealing that the additionality assessments performed under the cdm are too subjective hindering the validation of the projects and their transparency the main policy implication of this research is to expose the need for a radical change to the succeeding document to the kyoto protocol in order to reduce the inequality amongst host countries and ensure that cdm fulfills its sustainable development claim some of the proposed measures include establishing uniform benchmarks to be used against similar projects a thorough validation for declared barriers simplifying the registering process and providing international aid for the least developed countries that have historically lacked the ability to participate in the cdm

oligopoly intermediation relative rivalry and market conduct we consider two firms that compete against each other jointly in upstream and downstream markets under two pricing games purchasing to stock pts in which firms select input prices prior to setting consumer prices and purchasing to order pto in which firms sell forward contracts to consumers prior to selecting input prices the antitrust implications of the model depend on the relative degree of oligopoly rivalry in the upstream and downstream markets firms strategically precommit to setting prices in the less rivalrous market which serves to soften competition in the more rivalrous market resulting in anticompetitive effects bertrand prices emerge in equilibrium when the markets are equally rivalrous while cournot outcomes arise with upstream monopsony or downstream monopoly markets the slope of firm reaction functions depends on relative rivalry a feature we use to derive testable hypotheses for antitrust analysis of a wide variety of industry practices

capturing strategic rent full line forcing brand discounts aggregate rebates and maximum resale price maintenance this paper examines the implications of a retailer s shelf space stocking decisions on the optimal marketing strategy of an upstream multiproduct monopolist when the retailer s opportunity cost of shelf space is known full line forcing brand discounts and maximum resale price maintenance are sufficient to achieve the monopolist manufacturer s first best profit when these strategies are adopted the retailer s profit is reduced to the scarcity rents obtainable on her shelf space when the retailer s opportunity cost of shelf space is unknown the use of aggregate rebates can act as a screening device to maximize channel profit copyright 1991 by blackwell publishing ltd

contract bargaining with symmetric information this paper reviews a recent literature that extends the rubinstein stahl bargaining model to the case of contract bargaining theoretical issues such as the appropriate game form existence and uniqueness of equilibria are discussed the paper finishes with a brief overview of some applications of the framework