testing for evidence of adverse selection in the automobile insurance market a comment in 1994 puelz and snow presented empirical evidence of adverse selection in the market for automobile collision insurance using data from a private insurer they claimed to have found strong evidence of adverse selection in the insurer s portfolio their test was based on individuals choice of deductible in each risk class from the models of rothschild and stiglitz 1976 and wilson 1977 it is well known that if residual adverse selection is present in some risk classes insurers will offer menus of contracts from which insureds will self select at equilibrium higher risk individuals will choose the smaller deductible and will be charged the higher price per unit of insurance dionne doherty and fombaron 2000 an empirical test of the theory is to verify in each risk class whether lower deductibles are chosen by insureds with higher accident proba

an environmental performance index for products reflecting damage costs abstract several studies have demonstrated how to use dea data envelopment analysis based techniques to estimate environmental performance indices none of these studies however are taking information on the environmental damage costs of the pressure types considered into account this study is bridging a gap between environmental indices founded in physical pressures and damage costs founded in welfare economics the aim of the paper is twofold first to demonstrate how to implement the information on environmental damage costs within a dea based environmental performance index and second to estimate these indices at product level by using danish input output data and environmental data from 1997

testing for asymmetric information in insurance markets the first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context we also argue that insurance data are particularly well suited to such empirical investigations to illustrate this claim we use data on contracts and accidents to investigate the extent of asymmetric information in the french market for automobile insurance using various parametric and nonparametric methods we find no evidence for the presence of asymmetric information in this market

official intervention in the foreign exchange market in an article in this journal dean taylor 1982 proposes a simple statistical test of the significance of central bank losses in the exchange market would random intervention be likely to result in as large a loss this comment shows that as it stands his test statistic does not allow properly for the effect of the mean level of intervention there is in fact an element of ambiguity in the question taylor poses and this is illustrated with examples taken from his empirical work the connection between the taylor test and regression analysis is noted and explored

multidimensional private information market structure and insurance markets we investigate whether selection based on multidimensional private information in risks and risk preferences can under different market structures result in a negative correlation between insurance coverage and ex post realization of risk we show that under perfect competition selection based on multidimensional private information does not result in the negative correlation property unless there is a sufficiently high loading factor however it is possible to generate the negative correlation property under monopoly when risk and risk preference types are sufficiently negative dependent we also clarify the connections between important concepts such as adverse advantageous selection and positive negative correlation property

a non radial dea approach to measuring environmental performance data envelopment analysis dea has gained great popularity in environmental performance measurement because it can provide a synthetic standardized environmental performance index when pollutants are suitably incorporated into the traditional dea framework past studies about the application of dea to environmental performance measurement often follow the concept of radial efficiency measures in this paper we present a non radial dea approach to measuring environmental performance which consists of a non radial dea based model for multilateral environmental performance comparisons and a non radial malmquist environmental performance index for modeling the change of environmental performance over time a case study of oecd countries using the proposed non radial dea approach is also presented it is found that the environmental performance of oecd countries as a whole has been improved from 1995 to 1997

what are the effects of different tax policies on china s coal fired power generation industry an empirical research from a network slacks based measure perspective abstract data envelopment analysis dea has been widely applied to evaluate performance in the power generation industry nevertheless most studies view the production system as a black box few studies attempt to deal with the case of china s thermal power generation industry in the framework of network dea separating the overall power generation process into two internal stages the production stage and the pollutant abatement stage with the pollutant emissions as intermediate products this paper employs a network slacks based measure sbm model to research the production efficiency and environmental efficiency of china s coal fired power generation industry from 2006 to 2010 under two different tax policies these two tax policies are the pollution tax policy to negatively penalize for emissions of pollutants and the tax deductions or exemptions policy to positively encourage environmental protection the empirical results show that the effect of compulsory measures was better than that of self motivation measures for china s environmental protection in this observation period another important finding is that the year 2008 was a turning point in the five years statistical analysis shows that the effects of the two different policies were statistically independent

official intervention in the foreign exchange market or bet against the central bank evaluating official foreign exchange intervention during the 1970s using friedman s profit criterion shows that central banks have failed to stabilize the exchange markets and have lost billions of dollars the monetary authorities have resisted rate movements which results in a misallocation of resources when there is a shift in the equilibrium exchange rate counterspeculation by exchange traders reduces the destabilizing effect of central bank intervention and the consequent loss in economic welfare

selection in insurance markets theory and empirics in pictures government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention based on classic work from the 1970s has been the problem of adverse selection over the last decade empirical work on selection in insurance markets has gained considerable momentum this research finds that adverse selection exists in some insurance markets but not in others and it has uncovered examples of markets that exhibit advantageous selection a phenomenon not considered by the original theory and one that has different consequences for equilibrium insurance allocation and optimal public policy than the classical case of adverse selection advantageous selection arises when the individuals who are willing to pay the most for insurance are those who are the most risk averse and so have the lowest expected cost indeed it is natural to think that in many instances individuals who value insurance more may also take action to lower their expected costs drive more carefully invest in preventive health care and so on researchers have taken steps toward estimating the welfare consequences of detected selection and of potential public policy interventions in this essay we present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets this graphical approach provides both a useful and intuitive depiction of the basic theory of selection and its implications for welfare and public policy as well as a lens through which one can understand the ideas and limitations of existing empirical work on this topic

shadow pricing of undesirable outputs in nonparametric analysis abstract for three decades a growing interest in the modeling of desirable and undesirable outputs has led to a theoretical and methodological debate in the nonparametric literature on production technology and efficiency the first main discussion is about the way of modeling bad undesirables as inputs or outputs or by transformation functions the second debate concerns the implications of the weak disposability assumption in the modeling of bad outputs in particular the possibility of assigning unexpected signs to shadow prices of bad outputs in addition we point out a current error in the modeling of weak disposability under a variable returns to scale technology in this paper we introduce a hybrid model to ensure the economically meaningful jointness of good and bad outputs while constraining shadow prices of bad outputs to their expected sign we argue that it is a sound compromise to model undesirable outputs with a meaningful primal dual economic interpretation finally we propose an extension to define shadow prices for undesirable outputs following the law of one price loop rule

does environmental regulation affect energy efficiency in china s thermal power generation empirical evidence from a slacks based dea model abstract data envelopment analysis dea has gained much popularity in performance measurement of power industry this paper presents a slack based measure approach to investigating the relationship between fossil fuel consumption and the environmental regulation of china s thermal power generation we first calculate the total factor energy efficiency without considering environmental constraints an environmental performance indicator is proposed through decomposing the total factor energy efficiency the proposed approach is then employed to examine whether environmental regulation affects the energy efficiency of china s thermal power generation we find that the environmental efficiency plays a significant role in affecting energy performance of china s thermal generation sector decreasing the discharge of major pollutants can improve both energy performance and environmental efficiency besides we also have three main findings 1 the energy efficiency and environmental efficiency were relatively low 2 the energy and environmental efficiency scores show great variations among provinces 3 both energy efficiency and environmental efficiency are of obvious geographical characteristics according to our findings we suggest some policy implications

measuring ecological efficiency with data envelopment analysis dea abstract the measurement of ecological efficiency provides some important information for the companies environmental management ecological efficiency is usually measured by comparing environmental performance indicators data envelopment analysis dea shows a high potential to support such comparisons as no explicit weights are needed to aggregate the indicators in general dea assumes that inputs and outputs are goods but from an ecological perspective also bads have to be considered in the literature bads are treated in different and sometimes arbitrarily chosen ways this article aims at the systematic derivation of ecologically extended dea models starting from the assumptions of dea in production theory and activity analysis a generalisation of basic dea models is derived by incorporating a multi dimensional value function f extended preference structures can be considered by different specifications of f e g specifications for ecologically motivated applications of dea

efficiency and environmental regulation this paper proposes an extension of the enhancedefficiency indices of fare grosskopf lovell andpasurka 1989 that considers undesirable outputsasymmetrically by assuming that firms can freelydispose of some undesirable productions but areduction of other bad outputs generates a cost interms of desirable outputs this methodologicalapproach is used to analyse the relative efficiency ofa sample of spanish producers of wooden goods andfurnishings whose production process generates fourdifferent wastes we obtain efficiency indices thatserve to measure the impact on firm performance inseveral scenarios related to environmental regulationsaimed to reduce the production of wastes whenenvironmental regulations are assumed it is foundthat firms would have to sacrifice important amountsof potential desirable output in order to reallocateinputs into waste reduction secondly we find thatfirms associated with a technological institute aswell as firms located at a marshallian type industrialdistrict are likely to be less affected byregulations

regional green development level and its spatial relationship under the constraints of haze in china abstract this paper includes the new constraints of haze in the environmental efficiency research framework and the sbm undesirable and malmquist exponential models are used to measure and analyse the evolution characteristics and regional differences of regional green environmental efficiency of china and applied china s regional panel data and a spatial dubin model to deeply explore the impact of environmental regulation openness urbanisation industrial structure and technological innovation on regional green environmental efficiency the result show that under the constraints of smog the regional green environment efficiency of china is different with each area and shows strong spatial dependence and spatial differentiation the overall spatial distribution of the east middle northeast west gradient is decreasing environmental regulation had a major impact on the green environment efficiency of the region and demonstrated an inverted n type relationship the degree of openness urbanisation industrial structure and technological innovation play an active role in promoting regional green sustainable development economic growth corporate ownership structure fiscal policy and foreign investment dependence have hindered the progress of regional green sustainable development to a certain extent

a soil quality index and its relationship to efficiency and productivity growth measures two decompositions this article reconciles two notions of soil quality indexes with the economic concepts of technical efficiency and productivity growth an example uses data from the u s department of agriculture s experimental fields in maryland and data envelopment analysis techniques to estimate a soil quality index consistent with the notion of technical efficiency common regression techniques shed additional light on the role of individual soil quality properties in a very restricted linear approximation of the estimated soil quality index

a literature study for dea applied to energy and environment abstract this study systematically summarizes previous research efforts on data envelopment analysis dea applied to energy and environment in the past four decades including concepts and methodologies on dea environmental assessment industrial developments are very important for all nations in terms of their economic prosperities a problem is that the development produces various pollutions on air water and other types of contaminations all of which are usually associated with our health problems and climate changes thus it is necessary for us to consider how to make a balance between economic success and pollution mitigation to maintain a high level of social sustainability in the world it is widely considered that dea is one of the methodologies to examine the level of sustainability this study examines a recent research trend on dea applications from 1980s to 2010s nowadays many researchers have paid serious attention on how to combat various difficulties in the areas of energy and environment as a result the number of articles on dea applications on energy and environment has dramatically increased particularly after 2000s however it is true that dea has strengths and drawbacks in the applications therefore it is very important for us to carefully use dea for guiding large policy issues and business strategies such as the global warming and climate change an underlying premise of this study is that technology innovation in engineering and natural science may solve various problems by linking it with political and managerial efforts the use of dea provides a methodological linkage among them so enhancing the practicality in mitigating problems due to climate change and environmental pollutions this literature study along with a summary on conceptual and methodological developments provides us with guidelines for our future research works on dea on energy and environment issues

environmental regulations environmental governance efficiency and the green transformation of china s iron and steel enterprises abstract based on micro level enterprise panel data from 2005 to 2014 a slack based global data envelopment analysis dea model and a global malmquist luenberger index model are used to calculate the environmental governance efficiency ege of china s iron and steel enterprises ises then the different effects of two types of environmental regulation on ege of china s ises are analysed the results show that the overall level of ege for china s ises has remained low over the past 10 years the total factor environmental governance efficiency tfege presents a decreasing trend from 2005 to 2014 and the decline in tfege is mainly attributed to the technical progress change index gtpch moreover the bootstrap dea method is used for bias correction and the correction efficiency values are all within the confidence interval improving the accuracy of ege evaluation the regression analysis results show that different types of environmental regulations exert heterogeneous effects on tfege the relationship between market incentive environmental regulation and tfege has an inverted u shaped implying that although market incentive environmental regulation may improve the tfege in the short term continuously increasing this intensity would inhibit it however command control environmental regulation and tfege have a positive but not significant relationship

provision of environmental output within a multi output distance function approach this paper redefines technical efficiency by incorporating provision of environmental goods as one of the outputs of the farm the proportion of permanent and rough grassland to total agricultural land area is used as a proxy for the provision of environmental goods stochastic frontier analysis was conducted using a bayesian procedure the methodology is applied to panel data on 215 dairy farms in england and wales results show that farm efficiency rankings change when provision of environmental outputs by farms is incorporated in the efficiency analysis which may have important political implications

multiple dimensions of private information evidence from the long term care insurance market we demonstrate the existence of multiple dimensions of private information in the long term care insurance market two types of people purchase insurance individuals with private information that they are high risk and individuals with private information that they have strong taste for insurance ex post the former are higher risk than insurance companies expect while the latter are lower risk in aggregate those with more insurance are not higher risk our results demonstrate that insurance markets may suffer from asymmetric information even absent a positive correlation between insurance coverage and risk occurrence the results also suggest a general test for asymmetric information

equilibria in health exchanges adverse selection versus reclassification risk this paper studies equilibrium and welfare in a class of regulated health insurance markets known as exchanges we use detailed health plan choice and utilization data to model individual level i projected health risk and ii risk preferences we combine the estimated distributions of risk and risk preferences with a model of competitive insurance markets to predict allocations and prices

does the fed beat the foreign exchange market abstract this paper s estimates and tests of fed intervention profits are the first that explicitly adjust for foreign exchange risk premia failure to adjust may grossly affect estimated profits profits appear economically and statistically significant whether risk premia are modeled as time constant or as appreciation s market beta depending on fed intervention the estimates are sensitive to the method of risk adjustment and to the periods used because a key variable cumulative intervention is i 1 test statistics may have non standard distributions a problem affecting past tests this paper s tests account for non standard distributions possible explanations of these profits have mixed empirical support in the literature

advantageous selection in insurance markets this article reverses the standard conclusion that asymmetric information plus competition results in insufficient insurance provision risk tolerant individuals take few precautions and are disinclined to insure but they are drawn into a pooling equilibrium by the low premiums created by the presence of safer more risk averse types taxing insurance drives out the reckless clients allowing a strict pareto gain this result depends on administrative costs in processing claims and issuing policies as does the novel finding of a pure strategy partial pooling subgame perfect nash equilibrium in the insurance market copyright 2001 by the rand corporation

asymmetric information in insurance general testable implications several recent articles on empirical contract theory and insurance have tested for a positive correlation between coverage and ex post risk as predicted by standard models of pure adverse selection or pure moral hazard we show here that the positive correlationproperty can be extended to general setups competitive insurance markets and cases where risk aversion is public we test our results on a french dataset our tests confirm that the estimated correlation is positive they also suggest the presence of market power

multilateral productivity comparisons when some outputs are undesirable a nonparametric approach multilateral productivity comparisons of firms producing multiple outputs some of which are undesirable are obtained by making two modifications to the standard farrell approach to efficiency measurement the restriction that production technology satisfy strong disposability of outputs is relaxed to allow for the fact that undesirable outputs may be freely disposable and the efficiency measures are modified to allow for an asymmetric treatment of desirable and undesirable outputs performance measures that satisfy these requirements are calculated as solutions to programming problems the methodology is applied to a sample of mills producing paper and pollutants

imperfect competition in selection markets policies to correct market power and selection can be misguided when these forces coexist we build a model of symmetric imperfect competition in selection markets that parameterizes the degree of market power and selection we use graphical price theoretic reasoning to characterize the interaction between these forces using a calibrated model of health insurance we show that the risk adjustment commonly used to offset adverse selection can reduce coverage and social surplus conversely in a calibrated model of subprime auto lending realistic levels of competition can generate an oversupply of credit implying that greater market power is desirable

a conditional directional distance function approach for measuring regional environmental efficiency evidence from uk regions abstract this paper by using conditional directional distance functions as introduced by simar and vanhems j econometrics 166 2012 342 354 modifies the model by fare and grosskopf eur j operat res 157 2004 242 245 and examines the link between regional environmental efficiency and economic growth the proposed model using conditional directional distance functions incorporates the effect of regional economic growth on regions environmental efficiency levels the results from uk regional data reveal a negative relationship between regions gdp per capita and environmental inefficiency up to a certain gdp per capita level after that level it appears that the relationship becomes positive as an overall result the regional environmental inefficiency gdp per capita relationship appears to have a u shape form

asymmetric information and learning evidence from the automobile insurance market this paper tests the predictions of adverse selection models using data from the automobile insurance market i find that in contrast to what recent research suggests the evidence is consistent w

international regulations and environmental performance this article employs the data envelopment analysis dea approach to compute the environmental performance of all but two organisation for economic co operation and development oecd countries it is found that although the environmental performance of countries differs over time poland and hungary are the two best performers for all periods while italy japan austria and switzerland are ranked among the worst the effect of international regulations and some observed characteristics of countries on environmental performance are also investigated international regulations are reported to have a positive effect on environmental performance

multidimensional private value auctions we consider parametric examples of symmetric two bidder private value auctions in which each bidder observes her own private valuation as well as noisy signals about her opponent s private valuation we show that in such environments the revenue equivalence between the first and second price auctions spas breaks down and there is no definite revenue ranking while the spa is always efficient allocatively the first price auction fpa may be inefficient equilibria may fail to exist for the fpa we also show that auction mechanisms provide different incentives for bidders to acquire costly information about opponents valuation

aggregating capacity limiting separable inputs 1 introduction in many empirical studies on productivity researchers frequently need to use data on capital goods in their analyses unfortunately capital goods are extremely heterogeneous and data on them are difficult to capture in a single measure there are many different types and vintages of capital goods in the same firm it is very difficult to gather all information on all capital goods in practice capital goods are aggregated into one input named capital recent studies that aggregate capital goods are fare grosskopf and tyteca 1996 who used the installed generating capacity as capital acemoglu and zilibotti 2001 who applied the perpetual inventory method to recover capital from investment mathijs and swinnen 2001 who adopted the deflated book value of fixed assets as capital and taymaz and saatci 1997 who used the depreciation allowance as capital though each method has its merits there may be information loss during the process of aggregating capital goods five possible types of errors during the aggregation process are identified here they are i error of separability there is a close relation between input aggregation and separability when different capital goods are separable from other inputs it is possible to find an aggregate of capital goods without information loss in this case there is no error of separability if capital goods are not separable from other inputs however and we aggregate them then actually we are approximating the production function by a separable function mak 1988 noted that the success of approximating a nonseparable function depends on whether that function is close enough to a separable function thus when the technology is not separable the error of separability occurs when the production function is not close to a separable function the error of separability is even larger ii error of formula suppose the production function is approximated by a separable function then there is a way to aggregate capital goods if the formula we use to aggregate capital goods cannot give us an aggregation consistent with that separable function then we face the error of formula iii error of measuring opportunity costs some measures of capital require information about prices of capital goods in economic theories all prices of inputs are the opportunity costs of using those respective inputs if the prices used do not reflect opportunity costs then this error occurs iv error of the deflator when we need to add up capital goods bought in different periods by using price information we have to deflate the values if an inappropriate deflator is chosen then there is an error of the deflator v error of accounting practices information reported by firms follows bookkeeping rules the value of fixed assets for example may not be the same as the concept of capital in economics thus investment and fixed assets may be biased this problem is larger when firms in different industries or countries are compared whether or not there is the error of separability depends on the structure of the technology it is beyond the control of researchers though we must cope with the error of separability what we can do is to avoid the other four errors in this paper i link the literature on separability with that on maximum capacity in favor of using the output capacity of plants to aggregate heterogeneous capital goods we find that when some inputs are separable in the production function their maximum capacity can be used as an aggregate measure for them this aggregate measure is economically meaningful and empirically tractable this paper is organized as follows section 2 discusses the properties of capacity limiting inputs section 3 relates capacity limiting inputs to separability section 4 comments on some applications of aggregating captial goods section 5 concludes the paper

decomposition of the environmental inefficiency of the meta frontier with undesirable output abstract in this paper we present an alternative analysis framework to evaluate the effects of technology heterogeneities and undesirable output on environmental efficiency measurement the proposed framework combines the directional distance function and a meta frontier analysis it can be used to measure efficiency improvements brought about by enhanced technical management and technological advances for demonstration purposes we used the framework to measure the environmental efficiency in 90 countries worldwide for the 2003 2007 period the results showed that when the meta technology set is used as the evaluation basis the average environmental efficiency of high competitiveness countries is greater than that of lower middle low and upper middle competitiveness countries the upper middle competitiveness countries perform worse than the lower middle and low competitiveness countries because of the excessive labor force usage and carbon dioxide emissions in these countries we also found that the environmental inefficiency of the meta frontier for high competitiveness countries can be attributed to managerial failure in the production process whereas that for upper middle lower middle and low competitiveness countries can be attributed to technological differences

productivity growth and pollution in state manufacturing the directional output distance function chambers chung fare 1996 is used to construct a malmquist luenberger index of total factor productivity growth for manufacturing when both good and bad outputs are jointly produced the index is constructed using information on good and bad output quantities and input quantities circumventing the problem of recovering shadow price information for the bad output needed for the fisher or tornqvist type of productivity indices accounting for toxic releases in manufacturing productivity growth averages 1 4 an nually during 1988 1994 the findings also suggest that the failure to account for toxic releases in manufacturing results in a significant under statement of total factor productivity growth

analysis of environmental efficiency variations a nutrient balance approach recent literature has argued that environmental efficiency ee which is built on the materials balance mb principle is more suitable than other ee measures in situations where the law of mass conversation regulates production processes in addition the mb based ee method is particularly useful in analysing possible trade offs between cost and environmental performance identifying determinants of mb based ee can provide useful information to decision makers but there are very few empirical investigations into this issue this article proposes the use of data envelopment analysis and stochastic frontier analysis techniques to analyse variation in mb based ee specifically the article develops a stochastic nutrient frontier and nutrient inefficiency model to analyse determinants of mb based ee the empirical study applies both techniques to investigate mb based ee of 96 rice farms in south korea the size of land fertiliser consumption intensity cost allocative efficiency and the share of owned land out of total land are found to be correlated with mb based ee the results confirm the presence of a trade off between mb based ee and cost allocative efficiency and this finding favouring policy interventions to help farms simultaneously achieve cost efficiency and mp based ee

evidence on adverse selection equilibrium signaling and cross subsidization in the insurance market the configuration of equilibrium in the market for automobile collision insurance is examined empirically by representing the premium deductible menu and the demand function as a standard hedonic system using contractual data from a representative insurer we estimate a reduced form hedonic premium equation and the inverse of the marginal bid equation for insurance coverage the data reveal an equilibrium with adverse selection and market signaling but lead us to reject the hypothesis that high risks receive contracts subsidized by low risks

measurement of agricultural total factor productivity growth incorporating environmental factors a nutrients balance approach this article proposes to use nutrient orientated environmental efficiency ee measures to construct a nutrient total factor productivity index ntfp since nutrient orientated ee measures are consistent with the materials balance principle ntfp index is superior to other existing tfp indexes an empirical study on the environmental performance of an agricultural sector in 30 oecd countries from 1990 to 2003 yielded several important findings first these countries should be able to produce current outputs with at least 50 less aggregate eutrophying power implying that they should have been able to substantially reduce the potential for eutrophication second traditional tfp has grown by 1 6 per annum due to technical progress however there are lags in the responses of several countries to this technical progress third environmental tfp has grown at a slower rate than traditional tfp growth due to reductions in nutrient orientated allocative efficiency finally changes in input combinations could have significantly improved environmental efficiency and productivity these findings favor policy interventions and faster technological transfer to improve environmental performance

false diagnoses pitfalls of testing for asymmetric information in insurance markets established tests for asymmetric information in insurance markets are examined the most commonly used that information is symmetric if high and low cover contracts have the same loss rate is inconsistent with standard assumptions that imply that under symmetric information all contracts o er full cover incomplete cover and symmetric information can be reconciled if there are claim processing costs but now existing tests fare badly partly due to the divergence between marginal and average selection effects ignoring the nature of loading factors may cause recent studies to mismeasure the welfare costs of asymmetric information but these problems are remedial

selection on moral hazard in health insurance economic analysis of market failure in insurance markets tends to analyze selection and moral hazard as distinct phenomena in this paper we explore the potential for selection on moral hazard in insurance markets by this we mean the possibility that moral hazard effects are heterogenous across individuals and that individuals selection of insurance coverage is affected by their anticipated behavioral response to coverage we examine these issues empirically in the context of employer provided health insurance in the united states specifically we break down the general

efficiency productivity and environmental policy a case study of power generation in the eu this study uses the eu public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the european union s co2 emissions trading scheme eu ets in its first phase using data envelopment analysis methods we measure the environmental efficiency and the productivity growth registered in public power generation across the eu over the 1996 2007 period in the second stage of our analysis we attempt to explain changes in productivity and efficiency over time using econometric techniques our analysis suggests two conclusions carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier and the overly generous allocation of emission permits had a negative impact on both measures these results are shown to be robust to changes in controls and specifications

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

the foreign exchange costs of central bank intervention evidence from sweden abstract this study presents evidence on risk adjusted profits for the swedish central bank estimated profits can be quite sensitive as to whether rates of return are risk adjusted or not and how the risk adjustment is done various ways of adjusting for abnormal returns and extracting buy sell signals are tried results on daily data support the view that riksbank intervention did not make risk adjusted losses over the period 1986 1990 the results might be challenged as arising from inappropriate risk adjustment

the cost of a central bank leaning against a random walk abstract using a stochastic model we show that a central bank is expected to suffer a loss when it temporarily affects the exchange rate by sterilized intervention against a random walk we also demonstrate that the methodology used in several studies of the profitability of official central bank intervention biases their results towards finding positive profits this bias created by only observing periods where cumulative intervention sums to zero accounts for the seemingly contradictory empirical results of several intervention profitability studies

shadow prices of environmental outputs and production efficiency of household level paper recycling units in vietnam abstract the production efficiency and shadow prices of three environmental outputs bod cod and ss of 63 household level paper recycling units from a recycling craft village in vietnam are assessed a two stage procedure linear programming and stochastic estimation is used to estimate output distance function social capital as a production factor and environmental outputs are included in the output distance function results indicate that production efficiencies could potentially be improved by 28 there is a substantial variation in the shadow prices of environmental outputs among the production units of different types of paper products furthermore the average shadow prices of the three environmental outputs are all positive this indicates a potential for improving environmental quality though introducing pollution prevention methods to paper recycling production processes in vietnam e g recirculation of wastewater and suggests that it may be inappropriate to restrict the shadow prices of environmental outputs to be non positive for the analysis of some production processes

product design in selection markets insurers choose plan characteristics to sort for profitable consumers in a model with multidimensional types this sorting incentive is proportional to the covariance among marginal consumers between marginal willingness to pay and cost to the insurer standard forms of cost sharing successfully repel costly consumers but reducing plan comprehensiveness instead alienates the risk averse in a perfectly competitive equilibrium the sorting incentive must vanish market power increases insurance quality and welfare nonetheless a competitive equilibrium with positive insurance is possible when insurance value is suciently negatively correlated with cost however in a calibration to handel hendel and whinston 2013 s data equilibrium still fails to exist

a new frontier approach to model the eco efficiency in european countries abstract this study aims to evaluate the resource and environment efficiency problem of european countries we specify a new stochastic frontier model where gross domestic product gdp is considered as the desirable output and greenhouse gases ghg emissions as the undesirable output capital labor fossil fuels and renewable energy consumption are regarded as inputs gdp ghg ratio is maximized given the values of the other four variables the study is divided into two distinct periods 2000 2004 and 2005 2011 this division is related to the implementation of the kyoto protocol in 2005 and will allow us to evaluate the difference between the levels of efficiency before and after the establishment of environmental targets since stochastic frontier models are typically ill posed a new maximum entropy approach to assess technical efficiency which combines information from the data envelopment analysis and the structure of composed error from the stochastic frontier approach without requiring distributional assumptions is presented in this work

perfect competition in markets with adverse selection this paper proposes a perfectly competitive model of a market with adverse selection prices are determined by zero profit conditions and the set of traded contracts is determined by free entry crucially for applications contract characteristics are endogenously determined consumers may have multiple dimensions of private information and an equilibrium always exists equilibrium corresponds to the limit of a differentiated products bertrand game we apply the model to establish theoretical results on the equilibrium effects of mandates mandates can increase efficiency but have unintended consequences with adverse selection an insurance mandate reduces the price of low coverage policies which necessarily has indirect effects such as increasing adverse selection on the intensive margin and causing some consumers to purchase less coverage

an empirical examination of information barriers to trade in insurance this paper uses direct evidence to evaluate whether asymmetric information is a barrier to trade in the largest market for private insurance in the world life insurance we report several findings that seem difficult to reconcile with the conventional theory of insurance under asymmetric information we conjecture that sellers may know their costs of production better than consumers in this market as in those for most other products

is the environmental performance of industrialized countries converging a sure approach to testing for convergence abstract in this paper we test for convergence in the environmental performance of a sample of oecd countries with data ranging from 1971 to 2002 first we use data envelopment analysis dea to compute two environmental performance indicators epis in the production theory framework second we propose the use of a sequential multivariate approach to test for convergence in environmental performance these tests allow us to reconcile the time series literature with the cross sectional dimension which is basic when testing for convergence in regional blocs the sure technique is used which allows for the existence of correlations across the series without imposing a common speed of mean reversion the empirical results show that the group of countries as a whole as well as the majority of countries considered on an individual basis results for some countries vary between epis are catching up with switzerland the benchmark country

do environmental regulations hamper productivity growth how accounting for improvements of plants environmental performance can change the conclusion abstract many economists maintain that environmental regulations hamper productivity growth a view supported by several empirical studies on industry or state level data however there is little research of the relationship between the stringency of environmental regulation and productivity growth at the plant level and the results of the few existing studies are ambiguous moreover the measures of productivity growth applied in previous studies do not credit plants for emission reductions and this may result in understatement of productivity growth we perform regression analyses of productivity growth on regulatory stringency using plant level data to credit a plant for emission reductions we include emissions as inputs when calculating an environmental malmquist productivity index emi and do not include emissions when calculation the traditional malmquist productivity index mi the regression analyses show that the overall effect of the regulatory stringency faced by plants on plants productivity growth is statistically insignificant when mi is applied to measure productivity growth however when we apply emi the effect is positive and statistically significant this indicates that not accounting for emission reductions when measuring productivity growth can result in too pessimistic conclusions regarding the effect of regulatory stringency on productivity growth

measuring and decomposing sustainable efficiency in agricultural production a cumulative exergy balance approach environmental efficiency measures constructed using the materials balance principle have two important shortcomings 1 the ambiguity in the treatment of immaterial inputs and the various types of energy and 2 the lack of universally accepted weights for various material inputs these two limitations are primarily caused by the fact that the materials balance condition is strictly regulated by the law of mass energy conservation and that mass energy content cannot be a good physical common unit of various inputs the use of cumulative exergy content overcomes these problems the use of cumulative exergy content allows the inclusion of life cycle assessment hence facilitates the analysis of the cumulative pollution and total affects on natural resources the present study uses cumulative exergy content to construct new efficiency sustainable measures and decomposes them into technical efficiency and cumulative exergy allocative efficiency in agricultural production empirical applications on oecd agriculture yielded a number of important findings 1 oecd has the potential to save 72 3 of cumulative exergy consumption and improvements can be achieved by being more technically efficient and choosing a better combination of inputs 2 the sustainable efficiency varied enormously across countries and 3 the efficiency levels in 2003 was lower than in 1990 copyright 2010 elsevier b v all rights reserved

do central banks lose on foreign exchange intervention a review article abstract estimates of central bank intervention losses or profits vary widely some estimates find substantial losses others profits in most cases estimated profits are not risk adjusted and risk adjustment can have large effects furthermore profit estimates involve variables integrated of order one and because of this test statistics may have nonstandard distributions few studies take this into account estimates of risk adjusted profits for the us fed and the swedish riksbank with allowances for possible nonstandard distributions suggest that neither made losses and might have made significant profits

does foreign exchange intervention matter the portfolio effect until recently there was an unusual degree of consensus among economists that intervention by central banks in the foreign exchange market did not offer an effective or lasting instrument for affecting the exchange rate at least not independently of monetary policy this consensus was largely shared among policymakers and participants in the financial markets as well the 1982 g 7 economic summit at versailles commissioned a study of intervention known as the jurgenson report which found that the effects were small and transitory at most we think that the time is ripe for new statistical testing of the question many policymakers and foreign exchange traders believe that the intervention operations that have taken place since the plaza agreement of september 1985 have had an effect especially when operations are coordinated moreover the theoretical case against the effectiveness of intervention is not as clear as a reading of the economics literature might suggest the academic literature is predicated on the distinction between intervention operations that are sterilized and those that are allowed to affect the money supply we study the intervention operations that actually took place between 1982 and 1988 regardless of whether they were sterilized however we do begin in section i with a review of the issues involved 2 there are two possible channels through which intervention whether sterilized or not can influence the foreign exchange rate the portfolio and the expectations channels intervention can even if sterilized influence exchange rates through the portfolio channel provided foreign and domestic bonds are considered imperfect substitutes in investors portfolios intervention operations that for example increase the current relative supply of mark to dollar assets which private investors are obliged to accept into their portfolios will force a decrease in the relative price of mark assets 3 intervention can also influence exchange rates regardless of whether foreign and domestic bonds are imperfect substitutes through the expectations channel the public information that central banks are intervening in support of a currency or are planning to intervene in the future may under certain conditions cause speculators to expect an increase in the price of that currency in the future speculators react to this information by buying the currency today bringing about the change in the exchange rate today in sections ii and iii we describe the econometric problems that arise in the standard portfolio balance estimation equation we derive an alternative portfolio balance dominguez kennedy school of government harvard university 79 j f kennedy street cambridge ma 02138 frankel department of economics university of california 787 evans hall berkeley ca 94720 we thank three anonymous referees for valuable comments and suggestions julia marsh and julia lowell for research assistance and franz scholl at the bundesbank jean pierre roth at the swiss national bank and officials at the u s treasury and the board of governors of the federal reserve system for making the daily intervention data available 1many of the econometric results finding little or no effect were reported in kenneth s rogoff 1984 and dale w henderson and stephanie sampson 1983 2for authoritative statements see henderson 1984 or maurice obstfeld 1990 3the exchange rate reaction to an increase in the relative supply of outside foreign assets may be reduced if there is an increase in their expected rate of return that induces a corresponding increase in demand

banks efficiency and credit risk analysis using by production approach the case of iranian banks abstractthis article uses a by production approach that integrates credit risk to monitor bank efficiency the method overcomes the possible misspecification issues of the commonly assumed weak disposability wda of undesirable outputs in addition our measure extends the classic by production approach by including statistical aspects through subsampling techniques we have also provided an algorithm to correct related infeasibilities using this approach we investigate the performance of iranian banks and credit risk management in the sector for the period 1998 2012 non performing loans npls have been used as an undesirable output and proxy for credit risk in our models based on our empirical results although the banks generally exhibited efficiency improvements over time their credit risk performance deteriorated considerably after the regulatory changes introduced in 2005 these findings confirm that credit quality can be monitored more actively across iranian banks

the life insurance market asymmetric information revisited abstract this paper finds evidence for the presence of asymmetric information in the life insurance market a conclusion contrasting with the existing literature in particular we find a significant and positive correlation between the decision to purchase life insurance and subsequent mortality conditional on risk classification individuals who died within a 12 year time window after a base year were 19 more likely to have taken up life insurance in that base year than were those who survived the time window moreover as might be expected when individuals have residual private information we find that the earlier an individual died the more likely she was to have initially bought insurance the primary factor driving the difference between our and the prior literature s findings is that we focus on a sample of potential new buyers rather than on the entire cross section to address the sample selection problem induced by potential mortality differences between those with and those without coverage

the co2 emission gini index and the environmental efficiency an analysis for 60 leading world economies abstract the aim of this study was to analyze the co 2 emission gini index and the environmental efficiency for 60 leading world economies in 2010 we consider the technological heterogeneity dividing the sample into similar groups and estimating environmental efficiency indicators into metafrontier and group frontiers despite the fact that pollution concentration is more prominent in developed countries the results showed that this group is more efficient on the other hand lower income group and medium technology countries present the worst indicators we could conclude that the inefficiency observed in developed countries group was attributed to mismanagement while in the developing countries group the inefficiency could be related to technological differences

measuring technical efficiency in the presence of pesticide spillovers and production uncertainty the case of dutch arable farms pesticides dynamic effects and production uncertainty play an important role in farmers production decisions pesticides have a current production impact through reducing crop damage in the current period and a future impact through impacting the farm biodiversity which alters the future production environment this study presents the difference in inefficiency arising from models that ignore the dynamic effects of pesticides in production decisions and the impact of production uncertainty a dynamic data envelopment analysis dea model is applied to outputs inputs and undesirables of dutch arable farms over the period 2003 2007 a bootstrap approach is used to explain farmers performance providing empirical representations of the impact of stochastic elements on production these empirical representations are used to adjust firms inefficiency scores to incorporate production uncertainty in efficiency evaluation we find that efficiency increased dramatically when a production technology representation that considers both pesticides dynamic impacts and production uncertainty is adopted

a dea approach for estimating the agricultural energy and environmental efficiency of eu countries this study attempts to evaluate the energy and environmental efficiency of the primary sectors of the eu member state countries the evaluation is based on a non radial data envelopment analysis dea model which allows for non proportional adjustments to energy inputs and undesirable outputs and thus it provides different estimations for energy and environmental efficiency scores the 2001 2008 time period was selected for this research one of the most important findings is that countries like germany sweden or austria with strong environmental protection standards appear to be less energy and environmentally efficient compared with countries like denmark belgium spain france or ireland in addition a series of eastern european countries achieve low efficiency scores which can be characterized as expectable due to low technology level being implemented in the primary production process there are also two sub periods for this research the first one 2001 2006 covers the fully coupled with specific cultivations period for subsidy administation and the second 2007 2008 where the new decoupled subsidy scheme was implemented there are significant hints for considerable changes of energy and environmental efficiency after the implementation of the the new cap with the new member states siginificantly differ of both energy and environmental efficiency copmared with the older ones

on the existence of positive equilibrium profits in competitive screening markets abstract frictionless consumer choices and price competition are often associated with competitive markets and vanishing equilibrium profits we discuss vanishing profits in competitive screening markets like insurance we assume symmetric firms which exhibit constant returns to scale consumer heterogeneity creates the possibility of adverse selection firms can offer multiple contracts in equilibrium and importantly in any deviation nash equilibrium profits vanish if each consumer has a unique optimizing bundle at equilibrium prices or more generally if there exists a linear ordering of contracts that dictates the preferences of firms whenever consumers are indifferent between multiple optimal contracts of particular interest equilibrium profits vanish if for each agent indifference curves are steeper than iso profit curves the results extend to miyazaki wilson spence equilibria we provide examples of economies where there exists an equilibrium with strictly positive profit and show that these examples are robust hold for an open set of economies

environmental cost benefit analysis of alternative timing strategies in greenhouse gas abatement a data envelopment analysis approach assessing the benefits of climate policies is complicated due to ancillary benefits abatement of greenhouse gases also reduces local air pollution the timing of the abatement measures influences both the economic costs and ancillary benefits this paper conducts efficiency analysis of ten alternative timing strategies taking into account the ancillary benefits we apply the approach by kuosmanen and kortelainen valuing environmental factors in cost benefit analysis using data envelopment analysis ecological economics 62 2007 56 65 which does not require prior valuation of the environmental impacts the assessment is based on synthetic data from a dynamic applied general equilibrium model calibrated to the netherlands our assessment shows that if one is only interested in ghg abatement at the lowest economic cost then equal reduction of ghgs over time is preferred if society is willing to pay a premium for higher ancillary benefits an early mid intensive reduction strategy is optimal

valuing environmental factors in cost benefit analysis using data envelopment analysis abstract environmental cost benefit analysis ecba is used for the social evaluation of investment projects and policies that involve significant environmental impacts economic valuation of environmental impacts forms one of the critical steps of ecba we develop a new method for this purpose which does not require price estimation for environmental impacts using stated or revealed preference methods our approach is based on data envelopment analysis dea which is modified to ecba by using absolute shadow prices instead of relative prices we also discuss how the method can be used for sensitive analysis in ecba we illustrate the method by means of a hypothetical numerical example

pesticide use environmental spillovers and efficiency a dea risk adjusted efficiency approach applied to dutch arable farming pesticides are widely used by crop producers in developed countries to combat risk associated with pests and diseases however their indiscriminate use can lead to various environmental spillovers that may alter the agricultural production environment thus contributing to production risk this study utilises a data envelopment analysis dea approach to measure performance of arable farms incorporating pesticides environmental spillovers and output variance as undesirable outputs in the efficiency analysis and taking explicitly into account the effect of pesticides and other inputs on production risk the application focuses on panel data from dutch arable farms over the period 2003 2007 a moment approach is used to compute output variance providing empirical representations of the risk increasing or decreasing nature of the used inputs finally shadow values of risk adjusted inputs are computed we find that pesticides are overused in dutch arable farming and there is a considerable evidence of the need for decreasing pesticides environmental spillovers

energy efficiency in swedish industry a firm level data envelopment analysis this paper assesses energy efficiency in swedish industry using unique firm level panel data covering the years 2001 2008 the efficiency estimates are obtained for firms in 14 industrial sectors by using data envelopment analysis dea the analysis accounts for multi output technologies where undesirable outputs are produced alongside with the desirable output the results show that there was potential to improve energy efficiency in all the sectors and relatively large energy inefficiencies existed in small energy use industries in the sample period also we assess how the eu ets the carbon dioxide co2 tax and the energy tax affect energy efficiency by conducting a second stage regression analysis to obtain consistent estimates for the regression model we apply a modified input oriented version of the double bootstrap procedure of simar and wilson 2007 the results of the regression analysis reveal that the eu ets and the co2 tax did not have significant influences on energy efficiency in the sample period however the energy tax had a positive relation with the energy efficiency

an activity analysis model of the environmental performance of firms application to fossil fuel fired electric utilities the productivity of firms when some outputs pollution are undesirable has been studied in the literature for some time in this paper we introduce an environmental performance indicator based on the decomposition of overall factor productivity into a pollution index and an input output efficiency index this indicator is compared to the more conventional jaggi and freedman 1992 model results are given for illustrative purposes using data from u s fossil fuel fired electric utilities the rankings of the utilities obtained with the two models show significant divergence which is due to the different ways in which the undesirable outputs are dealt with as well as due to the different possible tradeoffs between the pollutants released into the atmosphere and the resources used as inputs

an economic approach to environmental indices abstract this study uses the directional output distance function from economic productivity theory as an alternative approach to environmental index construction we use the directional output distance function to aggregate multiple environmental objectives into one measure of environmental performance we apply this method to a set of watershed data and compare our results to the existing u s environmental protection agency epa index values when modeling the same set of objectives the directional output distance function and the existing epa index yield similar measures of environmental performance we discuss the mathematical properties of both indices using the axioms of economic index theory and explore the possible advantages to our approach the mathematical properties of the directional output distance function are well established and this approach provides a nonparametric way to aggregate individual characteristics this advances the standard use of a priori weighted summation and circumvents the often contentious selection of index weights

slacks based efficiency measures for modeling environmental performance we develop two slacks based efficiency measures for modeling environmental performance on the basis of environmental dea technology of the two measures one is a composite index with a higher discriminating power for modeling economic environmental performance and the other can be used to estimate the impacts of environmental regulations we apply the proposed measures to model the co2 emissions of 30 oecd countries from 1998 to 2002 and present the results obtained

eco efficiency analysis of power plants an extension of data envelopment analysis abstract in public discussion on environmental policy the notion of eco efficiency is often used the joint production of goods and undesirable outputs such as pollutants which may not be freely disposable without costs causes difficulties to measure the overall performance of the firm because of the absence of market prices for the undesirable outputs we are not able to estimate the environmental costs some of the measurement and evaluation difficulties can be overcome by employing data envelopment analysis dea as the efficiency measurement vehicle we propose the use of two different approaches in the first approach we start by decomposing the problem into two parts 1 the problem of measuring technical efficiency as the relation of the desirable outputs to the inputs and 2 the problem of measuring so called ecological efficiency as the relation of the desirable outputs to the undesirable outputs separately those two efficiency indicators are then combined in the second approach we treat pollutants as the inputs in the sense that we wish to increase desirable outputs and decrease pollutants and inputs the approaches are applied to the problem of measuring the efficiency of 24 power plants in a european country

justifying the incorporation of the materials balance principle into frontier based eco efficiency models frontier based models are an alternative to traditional eco efficiency ratio indicators this paper considers two different types environmentally adjusted production efficiency models and frontier eco efficiency models and tries to find justification for incorporating the materials balance principle mbp in them similar importance is attached to the economic and environmental outcomes of a production process like economic outcomes can be derived from inputs and outputs and respective prices some cases allow for deriving environmental outcomes from the production function with the mbp after an overview of attempts to incorporate environmental issues in production efficiency models and some reflections why mbp has been neglected in environmental economics and production efficiency analysis the paper gives basic principles to incorporate the mbp in conventional production efficiency methods and shows how this adjustment leads to a more diversified diagnosis of eco efficiency finally potentialities and bottlenecks are discussed exploiting the mbp in production efficiency and eco efficiency analysis will facilitate more pro active eco efficiency research

towards indicators of sustainable development for firms a productive efficiency perspective sustainable development can be reflected by various economic social and environmental factors that are closely interconnected with each other and with the additional dimension of time which stresses the long term perspective of several factors due to their central role in human activities and development firms should play an important part in the attainment of sustainability goals the purpose of this paper is to contribute to the methodology of indicators that allow for the assessment of business participation into sustainable development a fundamental standpoint adopted is to view economic social and environmental efficiency as a necessary but not sufficient step towards sustainability to work out indicators we build on both the concepts of cost benefit analysis and the principles of productive efficiency we assume that we have observations on economic social and environmental factors for a set of decision making units dmus e g firms in an industrial sub sector the efficiency of each dmu is computed from a set of observed data using mathematical programming techniques resulting in dmus that are efficient and define the efficiency frontier among the set of dmus and dmus that are inefficient to cope with the multidimensionality of sustainable development it is important not to base decisions on one unique aggregate sustainability indicator instead it is suggested to develop two or three partial indicators that stress different aspects of the problem the proposed indicators could be used as an aid to detect so called factors of unsustainability and hence to provide for recommendations as to the regulations and incentives or managerial practices that will contribute to overall sustainability c 1999 elsevier science b v all rights reserved