production lot sizing and carbon emissions under cap and trade and carbon tax regulations cap and trade and carbon tax are two emission regulations widely used to curb the carbon emissions generated from firms based on economic order quantity eoq model this paper examines the production lot sizing issues of a firm under these two regulations respectively the optimal lot size and emissions under the two regulations are achieved we then investigate the impacts of production and regulation parameters on the optimal lot size and emissions furthermore we compare the firm s optimal carbon emissions under the two regulations it is found that under the cap and trade regulation the firm s decisions of the optimal emissions as well as permits trading depend on the differentiated permits trading prices if setup incurs the same cost as holding incurs per unit of generated emissions both regulations always lead to the same optimal emissions which is also equal to that without emission regulation otherwise neither regulation always leads to lower emissions than the other does

losses from effluent taxes and quotas under uncertainty recent theoretical papers by adar and griffin j environ econ manag 3 178 188 1976 fishelson j environ econ manag 3 189 197 1976 and weitzman rev econ studies41 477 491 1974 show that different expected social losses arise from using effluent taxes and quotas as alternative control instruments when marginal control costs are uncertain key assumptions in these analyses are linear marginal cost and benefit functions and an additive error for the marginal cost function to reflect uncertainty in this paper empirically derived nonlinear functions and more realistic multiplicative error terms are used to estimate expected control and damage costs and to identify empirically the mix of control instruments that minimizes expected losses

optimal mix of emissions taxes and cap and trade abstract in practice different emitters of a particular pollutant are sometimes subjected to different control mechanisms this paper focuses on the situation where a part of the economy is regulated by a cap and trade program while the rest is subjected to an emissions tax using an extended version of weitzman s prices vs quantities model m l weitzman prices vs quantities revi econ stud 41 1974 477 491 we analyze the conditions under which this is superior from an efficiency point of view to subjecting the whole economy to either of these control mechanisms the paper addresses a crucial trade off between two sources of efficiency loss one due to cost effectiveness issues and another due to emissions volume this trade off determines the optimal size of each sector it is shown that the size of the taxed sector at an optimum increases with the relative steepness of the aggregate marginal abatement cost function

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

trade ins and introductory offers in a monopoly we model the commonly used marketing practices of offering discounts to either repeat buyers trade ins or new buyers introductory offers of a quasi durable good we analyze these practices in terms of their potential for intertemporal and third degree price discrimination in our two period model the monopolist sets a first period price that segments the second period market optimally into holders and nonholders of the good in the second period different prices are quoted to the two market segments we present three versions of the model with varying assumptions on consumers rationality

stationary equilibrium in a market for durable assets this paper presents a dynamic model of consumer trading on the primary secondary and scrap markets for a stochastically deteriorating durable good in a stationary economy with perfect information and no transaction costs we explicitly model the trading process by tracking each durable from its birth in the primary market through its sequence of owners in the secondary market until its death in the scrap market we prove that a stationary equilibrium exists characterize the distribution of consumer holdings of durables and show that equilibrium asset prices are shadow prices to a particular regenerative optimal stopping problem we show that each heterogeneous agent equilibrium is observationally equivalent to a homogeneous agent equilibrium we derive a differential equation for equilibrium rental rates and a functional equation which links rental rates to asset prices these equations show precisely how the structure of durable prices and rental rates embody the functional form and population distribution of preferences and the technological characteristics of durable goods this abstract was borrowed from another version of this item

research advances in environmentally and socially sustainable operations abstract consumers and governments are pressuring firms to strike a balance between profitability and sustainability however this balance can only be maintained in the long run if the firm can take a holistic approach to sustain the financial flow profit resource flow planet and development flow people for the entire ecosystem comprising poor producers in emerging developing markets global supply chain partners consumers in developed countries and the planet by considering the flows associated with different entities within the ecosystem we classify and summarize recent operations research management science or ms research developments also we identify several gaps for future research in this important area

good things do not always come in threes on the excess cost of overlapping regulation in eu climate policy since the mid 1990 s the european union eu aims at pushing global climate policy the objective is to promote international cooperation by the adoption of substantial eu wide greenhouse gas emission reduction targets and their least cost implementation our quantitative impact assessment of the eu climate and energy package shows that the myriad of instruments used in the eu to curb greenhouse gas emissions is doomed to generate substantial excess cost we conclude that eu climate and energy policy should better disentangle its choices of objectives targets and policy instruments on rigorous economic grounds in order to improve the coherence and overall cost effectiveness of policy initiatives

operations research for green logistics an overview of aspects issues contributions and challenges the worldwide economic growth of the last century has given rise to a vast consumption of goods while globalization has led to large streams of goods all over the world the production transportation storage and consumption of all these goods however have created large environmental problems today global warming created by large scale emissions of greenhouse gasses is a top environmental concern governments action groups and companies are asking for measures to counter this threat operations research has a long tradition in improving operations and especially in reducing costs in this paper we present a review that highlights the contribution of operations research to green logistics which involves the integration of environmental aspects in logistics we give a sketch of the present and possible developments focussing on design planning and control in a supply chain for transportation inventory of products and facility decisions while doing this we also indicate several areas where environmental aspects could be included in or models for logistics

remanufacturing as a marketing strategy the profitability of remanufacturing systems for different cost technology and logistics structures has been extensively investigated in the literature we provide an alternative and somewhat complementary approach that considers demand related issues such as the existence of green segments original equipment manufacturer competition and product life cycle effects the profitability of a remanufacturing system strongly depends on these issues as well as on their interactions for a monopolist we show that there exist thresholds on the remanufacturing cost savings the green segment size market growth rate and consumer valuations for the remanufactured products above which remanufacturing is profitable more important we show that under competition remanufacturing can become an effective marketing strategy which allows the manufacturer to defend its market share via price discrimination

should sliding controls be the next generation of pollution controls abstract the desirability of imposing a set of sliding effluent charges is investigated in a stochastic multifirm model that explicitly includes not only emissions but also a positively valued product and the amount of pollution removed from the effluent before it is emitted drawing upon the intuition developed in the literature of comparative economics it is urgued that if the cost variables are positively correlated across firms then the best sliding control for each firm closely approximates a quantity standard when many firms are to be regulated other possibilities are also considered and the slope of the best sliding control is suggested in each case

menus of price quantity contracts for inducing the truth in environmental regulation abstract many authors have proposed mechanisms to induce regulated polluting firms to truthfully reveal their private information this paper proposes an alternative scheme in which the regulator offers each firm a menu of linear price quantity contracts faced with this menu each firm s dominant strategy is to truthfully report its private information and self select the contract that is ex post efficient the proposed menu schedule that is more elastic than the firm s residual marginal damage function engenders a positive quantity effect thereby counterbalancing the firm s incentive to misreport prompted by the linearity of price due to its built in price quantity structure the scheme performs as designed regardless of the elasticities of marginal damage and demand functions

revenue management for durable goods using trade ins with certified pre owned options abstract the economics research suggests that firms can use trade ins as a revenue management device for price discrimination between new and replacement buyers of durabprle goods offering different prices to different groups of customers creates a market segmentation effect this study examines such an effect by considering trade ins and certified pre owned options for a durable goods firm where certified pre owned cpo represents the used goods market generated from the return flow of trade in transactions the optimal pricing and or trade in rebate is determined and the strategic choice between the two options is examined an analytical model is developed that incorporates the key durable goods features into model formulation specifically the deterioration rate or durability in a reverse measure and the variation in quality of the used goods our research findings indicate that i the magnitude of trade in rebates increases with the deterioration rate and quality variation ii the segmentation effect outweighs the cannibalization effect when the deterioration rate is moderately high iii the strategic choice of trade ins and cpo options is critically dependent on these two features and iv the majority of profit improvement is generated from trade in provisions although the cpo option can serve as a second profit boosting device

more or less a model and empirical evidence on preferences for under and overpayment in trade in transactions abstract trade in transactions typically involve an exchange of an old used version for a new or newer version of the product when consumers trade in their used model for a new model the firm faces the choice of paying the consumer a relatively low price for the used model and charging a commensurately low price for the new model or paying a relatively high price for the used model and charging a commensurately high price for the new model the extant literature suggests that consumers always prefer to be overpaid in trade in transactions because they disproportionately value the gain associated with the revenues from the sale of the used version of the product the authors draw from the prospect theory value function to develop a simple analytical model that identifies a condition under which this preference for overpayment is reversed their model predicts that even when faced with economically equivalent price formats consumers prefer to be overpaid when the ratio of the price of their used product

exploring the effect of cap and trade mechanism on firm s production planning and emission reduction strategy abstract cap and trade mechanism has a significant effect on firm s production and operation decisions and carbon emissions this study develops a mathematical model to examine the effect of cap and trade mechanism on firm s production planning and emission reduction strategy based on the model the firm s critical production planning decisions such as the optimal production quantity optimal allowance selling price and the maximum profit under the cap and trade mechanism are derived firstly then based on the cost benefit analysis the conditions under which the firm makes the optimal emission reduction strategy between buying carbon allowance from the carbon trading market and conducting low carbon processing are identified the result suggests that when the low carbon processing cost is greater than the potential opportunity benefit the firm is inclined to purchase carbon allowance from the carbon trading market and vice versa finally a numerical analysis is conducted to investigate the effects of relevant factors such as carbon quotas carbon emission rate low carbon processing cost and transaction cost on firm s production and operation decisions the results indicate that under the cap and trade mechanism the transaction cost has a positive effect on allowance selling price the firm s optimal production quantity and maximum profit is positively related to carbon quotas while negatively related to carbon emission rate and low carbon processing cost this research contributes to enrich related literature and knowledge with regard to carbon emissions reduction at the firm level and highlight the critical importance of cap and trade mechanism in reducing carbon emissions

tax versus emissions trading scheme in the long run in this paper we compare the performance of emission taxes and tradable permits under free market entry when firms face idiosyncratic ex ante cost uncertainty we show that under auctioned permits insufficient entry occurs while under a linear emission tax scheme depending on parameters market entry can be either excessive or insufficient our long run analysis thus contrasts with spulber s 1985 equivalence result and also modifies weitzman s result in favor of an ets in that the superiority of a tax over an ets is not guaranteed even when the weitzman condition favors a tax we also show that an ets is superior to a tax scheme when the entry cost is low and the magnitude of uncertainty asymmetric information and the size of the output market are large

product and sales contract design in remanufacturing abstract we develop and analyze an economic model of remanufacturing to address two main research questions first we explore which market cost and product type conditions induce a profit maximizing firm to be a remanufacturer given a separate secondary remanufactured goods market such markets exist for consumer goods where newness is a differentiating factor second we describe what effect profitable remanufacturing has on the environment our stylized modeling framework for analyzing these issues incorporates three components lease contracting product design and remanufacturing volume to operationalize this framework we model and solve for the optimal decisions of two firm types a non remanufacturer which we call a traditional firm and a remanufacturer which we call a green firm we describe conditions under which remanufacturing is and is not profitable and demonstrate that under certain cost and market conditions remanufacturing has negative consequences for the environment our results have implications for firms and policy makers who would like to choose remanufacturing as a strategy to improve profitability and environmental performance given the existence of conditions under which neither might occur

a competitive carbon emissions scheme with hybrid fiscal incentives the evidence from a taxi industry abstract as two major approaches to reduce carbon emissions command and control instruments and market based carbon trading systems have their own weaknesses our paper first proposes a type of endogenous equilibrium methodology to dynamically derive the industrial carbon emissions standards at the equilibrium the sum of all carbon assets and liabilities is zero in the considered industry moreover the standards fall over time with low carbon technological advance most importantly combining pigou s and coase s ideas we construct a fiscal instrument accounting for both carbon taxes and allowances based on the dynamically improved emissions standards and carbon trading prices this no revenue for government method implements a self operated ecology for carbon trading market finally considering the waterloo recession of carbon prices we introduce an adjustment factor into the model which generates a negative feedback mechanism with carbon prices to support our idea we present the application to beijing taxi industry in detail and raise relative policy implications based on the evidence

prices vs quantities with multiple pollutants abstract we examine the choice of policy instruments price quantity or a mix of the two when two pollutants are regulated and firms abatement costs are private information whether abatement efforts are complements or substitutes is key determining the choice of policies when pollutants are complements a mixed policy instrument with a tax on one pollutant and a quota on another is sometimes preferable even if the pollutants are identical in terms of benefits and costs of abatement yet if they are substitutes the mixed policy is dominated by taxes or quotas

tradeable carbon permit auctions how and why to auction not grandfather abstract an auction of carbon permits is the best way to achieve domestic carbon caps designed to limit global climate change to minimize administrative costs permits would be required at the level of oil refineries natural gas pipe lines natural gas liquid sellers and coal processing plants to maximize liquidity in secondary markets permits would be fully tradable and bankable the government would conduct quarterly auctions a standard ascending clock auction in which price is gradually raised until there is no excess demand would provide reliable price discovery an auction is preferred to grandfathering giving companies permits based on historical output or emissions because it allows reduced tax distortions provides more flexibility in distribution of costs provides greater incentives for innovation and reduces the need for politically contentious arguments over the allocation of rents

tax versus trading and efficient revenue recycling as issues for greenhouse gas abatement abstract we give empirical welfare results for global greenhouse gas emission abatement using the first multi party model to include both tax versus trading under uncertainties and revenue recycling including multiple independent parties greatly reduces the welfare advantage of an emissions tax over emissions permit trading in handling abatement cost uncertainties from that shown by existing single party literature but a previously ignored and much bigger advantage of a tax from better handling uncertainties in business as usual emissions greatly boosts the overall tax versus trading advantage yet the degree to which each mechanism is used to raise and recycle revenue efficiently by lowering distortionary taxes rather than recycle revenue as lump sums or not raise revenue by giving tax thresholds or free permits may in turn dominate any tax versus trading advantage choosing the best greenhouse abatement mechanism should thus consider the issues of tax versus trading and efficient revenue recycling together

when can carbon abatement policies increase welfare the fundamental role of distorted factor markets abstract this paper employs analytical and numerical models to assess the welfare effects of a revenue neutral carbon tax and nonauctioned carbon emissions permits taking into account preexisting tax distortions in factor markets the presence of preexisting taxes significantly raises the general equilibrium costs of both policies this cost increase is much greater under emissions permits since this policy does not generate revenues to reduce distortionary taxes under our central estimates emissions permits cannot increase welfare unless environmental damages exceed about 18 per ton of carbon in contrast an appropriately scaled carbon tax is welfare improving so long as environmental damages are positive

environmental policy a la carte letting firms choose their regulation under uncertainty the optimal choice between price and quantity instruments depends on the technology of the regulated firms which is often private information we consider an environmental policy that delegates the prices versus quantities decision to the firms by offering them the choice between an emissions tax and permit trading such an approach is currently used in swiss climate policy we provide a detailed characterization of the optimal policy and show that this approach reduces expected social costs compared to a pure tax or permit trading regime we demonstrate that an optimal allocation of firms to instruments can be achieved despite substantial informational constraints and that all firms gain from the introduction of the instrument choice compared to optimally designed single instrument policies furthermore we discuss the conditions under which this approach is likely to be preferable to a hybrid regulation

a cap and trade commitment policy with allowance banking we examine the planner s dynamic regulation problem in an emission trading system ets with allowance banking the planner sets the emissions cap for the next period after the current period allowance market has cleared but before knowing the next period s abatement cost realization this creates a time consistency problem when banking is possible we examine two policies to overcome the consistency problem a commitment solution and the markov perfect solution we show that the endogenous price floor generated by the banking demand becomes an integral feature of the two policies hence they can be best described as hybrid policies that combine elements from emissions taxes and tradable allowances this reveals new welfare implications that have an influence on instrument choice in the traditional prices versus quantities setup we compare the expected welfare outcomes of four different policy instruments the commitment policy the markov policy a pigouvian tax and a no banking ets we show that allowing banking can yield welfare gains compared to tax and quantity regulation with or without commitment

policy interactions risk and price formation in carbon markets carbon pricing is an important mechanism for providing companies with incentives to invest in carbon abatement price formation in carbon markets involves a complex interplay between policy targets dynamic technology costs and market rules carbon pricing may under deliver investment due to r d externalities requiring additional policies which themselves affect market prices also abatement costs depend on the extent of technology deployment due to learning by doing this paper introduces an analytical framework based on marginal abatement cost mac curves with the aim of providing an intuitive understanding of the key dynamics and risk factors in carbon markets the framework extends the usual static mac representation of the market to incorporate policy interactions and some technology cost dynamics the analysis indicates that supporting large scale deployment of mature abatement technologies suppresses the marginal cost of abatement sometimes to zero whilst increasing total abatement costs however support for early stage r d may reduce both total abatement cost and carbon price risk an important aspect of the analysis is in elevating risk management considerations into energy policy formation as the results of the stochastic modelling indicate wide distributions for the emergence of carbon prices and public costs around the policy expectations

lemons hypothesis reconsidered an empirical analysis abstract this paper tests the hypothesis that there is no difference in the average maintenance expenditures required for cars acquired used and those acquired new the results showed no evidence that cars acquired used required more maintenance expenditures than those of a similar age acquired new

stages and determinants of fertilizer use in semiarid african agriculture the niger experience fertilization is a stepwise decision in niger survey data from a representative sample of 100 households were utilized with individual and joint estimation to evaluate the determinants of fertilizer use at its three different stages manure alone and two different types of inorganic fertilizer application the fertilizer price relative to the millet price was always a highly significant determinant of fertilizer adoption farmers experience in seeing the results of fertilization in the field was a principal factor influencing the use of manure and of the micro fertilization other studies in semiarid regions have emphasized risk liquidity or fertilizer responsiveness under harsh conditions but the shift to the micro doses of inorganic fertilizer was statistically associated here with the demonstration trials and the price ratios fertilizer millet a variable reflecting the millet price recovery approximately 6 months after harvest was the most important factor in the decision to raise further inorganic fertilizer use with side dressing policy implications were focused on the importance of demonstration trials and improvements in the economic conditions millet fertilizer price ratios