investment in cleaner technology and signaling distortions in a market with green consumers abstract i analyze the pricing and investment behavior of a firm that signals the environmental attributes of its production technology through its price to uninformed environmentally conscious consumers i then analyze the effect of change in environmental regulation on the signaling outcome and the firm s ex ante incentive to invest in cleaner technology when regulation is weak a firm signals cleaner technology through higher price in this case the firm earns lower profit when it has cleaner technology and thus has no incentive to invest in cleaner technology the price charged by the clean firm declines sharply beyond a critical level of regulation when regulation is sufficiently stringent the firm with cleaner technology charges lower price but earns higher signaling profit and ex ante the firm has positive incentive to invest in cleaner technology with weak regulation the incentive of the firm to directly disclose its environmental performance rather than signal it through price is increasing in the level of regulation the opposite holds when regulation is sufficiently stringent

eco labelling consequences in general equilibrium a graphical assessment international environmental groups propose to implement new standards of forest management through programs that certify producers who meet criteria to enhance biodiversity or sustainability these producers could earn an eco label that identifies their products for consumers we consider whether a market economy might generate feedbacks that produce undesirable side effects as consumers respond to price changes while the general case is ambiguous the theoretical framework shows the potential that certification may lead to a reallocation of land toward less ecologically sustainable uses with the possibility of sufficient impact to diminish global biodiversity or sustainability of forest products

oil price volatility and the asymmetric response of gasoline prices to oil price increases and decreases this paper analyzes the effect of volatility in oil prices on the degree of asymmetry in the response of gasoline prices to oil price increases and decreases several time series measures of the asymmetry between the responses of gasoline prices to oil price increases and decreases and several measures of the oil price volatility are constructed in all models the degree of asymmetry in gasoline prices declines with an increase in oil price volatility the results support the oligopolistic coordination theory as a likely explanation of the observed asymmetry and are not consistent with the standard search theory and the search theory with bayesian updating

retail fuel price adjustment in germany a threshold cointegration approach abstract consumers in germany often complain that retail fuel prices usually adjust quickly to crude oil price increases than decreases and characterize this pricing pattern as market power exploitation in this paper we use both weekly national and daily city specific berlin hamburg munich and cologne data to investigate the extent to which retail fuel prices in germany adjust to changes in the international crude oil price at the national level with weekly prices we find positive asymmetries for both gasoline and diesel within the period 2003 2007 reflecting that retail prices react more swiftly to crude oil price increases than decreases in contrast for 2009 2013 we observe symmetric adjustment and negative asymmetry for retail diesel and gasoline prices respectively the city level analysis supports our findings in the latter time period thus regulatory measures aimed at the retail fuel market over recent years seem to have been effective and contrary to consumers perception we find no evidence for excessive market power or collusion

price asymmetry in the dutch retail gasoline market abstract this article analyses the retail price adjustments in the dutch gasoline market we estimate an asymmetric error correction model on weekly price changes for the years 1996 2001 we construct five datasets one for each working day the conclusions on asymmetric pricing are shown to differ over these datasets suggesting that the choice of the day for which the prices are observed matters more than commonly believed in our view the insufficient robustness of the outcomes might explain the mixed conclusions found in the literature using these two approaches we also show that the effect of asymmetry on the dutch consumer costs is negligible

a political economy theory of trade agreements we develop a model where trade agreements in addition to correcting terms of trade externalities help governments to commit vis a vis domestic industrial lobbies the model allows us to explore how the characteristics of the political environment aect the structure of the trade agreement and the extent of trade liberalization the model also highlights the role of intersectoral capital mobility in determining trade liberalization in a dynamic extension of the model we explore the extent to which trade liberalization occurs gradually and how its speed depends on the fundamentals of the problem

asymmetric price adjustments a supply side approach using a model of dynamic price competition we provide an explanation from the supply side for the well established observation that output prices react faster in response to input cost increases than to decreases when costs decline the opportunity of profitable storing in anticipation of higher future costs allows competitive firms to coordinate on prices above current marginal costs the initial price response is only partial and profitable storing relaxes competition conversely when costs rise storing is not beneficial in anticipation of lower future costs and firms immediately adjust their prices to current marginal costs which entails the standard bertrand outcome our results shed new light on the empirical evidence about asymmetric pricing and can stimulate further empirical investigation on this puzzle

testing for asymmetric pricing in the canadian retail gasoline market abstract this paper applies a threshold regression model to test for asymmetric pricing in the retail gasoline market in canada using weekly data for the period january 1990 to december 1996 we present results for 13 canadian cities for both premium and regular gasoline within the context of an error correction model we test for the presence of asymmetric price behaviour using average changes in crude prices as well as various lags for the change in crude as possible thresholds we are unable to find any evidence to support this view

rockets and feathers the asymmetric speed of adjustment of uk retail gasoline prices to cost changes abstract the paper develops a quadratic quantity adjustment model to test the hypothesis put forward in the recent monopolies and mergers commission report that the speed of adjustment of uk retail gasoline prices to cost changes is more rapid when costs rise than when they fall and that the adjustment path is more concentrated around the mean value on the upswing using data from 1982 to 1989 evidence of faster and more concentrated responses to cost increases were found

intraplay communication in repeated games the paper examines repeated games where players have the possibly costly option of initiating bargaining over continuation payoffs between plays of the stage game a solution concept for these augmented games renegotiation perfectness is used to characterize concepts like subgame perfectness and pareto perfectness in the underlying repeated game and to extend pareto perfectness to infinite horizon games when bargaining is costly renegotiation may be indispensable off the equilibrium path for supporting renegotiation perfect outcomes sufficient conditions for a renegotiation perfect profile to support payoffs which are not supported by and not dominated by some subgame perfect profile are developed in the infinite horizon case journal of economic literature classification number c70

cointegration and threshold adjustment this article proposes an extension to the engle granger testing strategy by permitting asymmetry in the adjustment toward equilibrium in two different ways we demonstrate that our test has good power and size properties over the engle granger test when there are asymmetric departures from equilibrium we consider an application namely whether there exists cointegration among interest rates for instruments with different maturities this issue has been widely tested with mixed results we argue that either cautious policy or possibly opportunistic behavior on the part of the federal reserve implies that an equilibrium relationship between short and long term interest rates exists but that adjustments from disequilibrium are asymmetric in nature empirical tests using u s yields confirm the asymmetric nature of error correction among interest rates of different maturities

do meetings in smoke filled rooms facilitate collusion the sherman act prohibits firms from discussing prices in meetings traditional thought suggests that this prohibition makes it harder for firms to collude and economists have concluded that the sherman act operates in the public interest i provide an alternative explanation for the act that also accounts for the small sanctions chosen by the legislature when firms interact in a dynamic environment in which the law helps them to prevent renegotiation the firms may benefit from the law that makes it costly but not very costly to meet to discuss prices the sherman act may help firms to collude

pricing of eco labels with retailer heterogeneity abstract eco labels are important features of many natural resource and food markets they certify that a product has some desirable unobserved quality typically related to a public good such as being sustainably produced two issues that have received limited attention are whether pricing varies across different eco labels that may compete with each other and to what extent different retailers charge different prices using a unique data set of salmon prices in eight different united kingdom retail chains we investigate these issues by estimating a price attribute model that includes two eco labels and one country of origin label results show substantial variation in the prices of the different eco labels and that eco label premiums vary across retail chains specifically salmon certified with the marine stewardship council msc label has a high premium in low end retail chains but no statistically significant premium in the high end chains these findings question the ability of the msc label to transmit consumer willingness to pay for public goods through the supply chain to incentivize sustainable management in contrast premiums for organic certification are similar in magnitude across retailer types in general failure to account for retailer heterogeneity will over or under estimate a label s premium

a dynamic approach to voluntary environmental contributions in tourism abstract in an evolutionary game theoretical model of tourism firms that use an endogenous natural common pool resource cpr we show that stable equilibria with voluntary environmental initiatives may coexist with other equilibria where voluntary abatement is absent the basins of attraction of the equilibria are identified and a bifurcation analysis is carried out producing two results with policy implications first there is a highly non linear relationship between the cost of abatement required to be green and the share of green firms second increases in the number of the cpr s users will ultimately dissipate the incentives to make abatement beyond regulation

a theory of managed trade this paper proposes a theory that predicts low levels of protection during periods of normal trade volume coupled with episodes of special protection when trade volumes surge this dynamic pattern of protection emerges from a model in which countries choose levels of protection in a repeated game facing volatile trade swings high trade volume leads to a greater incentive to defect unilaterally from cooperative tariff levels therefore as the volume of trade expands the level of protection must rise in a cooperative equilibrium to mitigate the rising trade volume and hold the incentive to defect in check copyright 1990 by american economic association

modelling how much extra motorists pay on the road a cross sectional study of profit margins of unleaded petrol in australia abstract gross profitability margin difference between retail and wholesale prices for unleaded petrol exhibits substantial variations across 108 cities towns and regional centres in australia this paper examines if such variations averaged during 2007 2012 can be explained by a transport costs proxied by the distance between retailers and wholesalers b the size of the retail market c market competition proxied by the number of cars in the vicinity of the retailers d dummy variables capturing other qualitative attributes associated with the retailers locations three cross sectional regressions are estimated but only one successfully passes all diagnostic tests by identifying a number of locations exhibiting excessive profit margins the results of this paper enhance the efficiency and transparency of petrol pricing in the retail market it is found that the extent of excessive profiteering in western australia wa and south australia sa were lower than other australian states and territories this important finding can be explained by a strong presence of independent petrol stations in sa and the successful price monitoring performance of fuelwatch in wa

gradualism in free trade agreements a theoretical justification a notable feature of many recent trade agreements is the gradual rather than immediate reduction of trade barriers in this paper we model trade liberalization as a cooperative relationship that evolves gradually in a non cooperative environment we show that specialization capacity irreversibility and the development of trade partner specific capital increase the benefit of continuing the liberalizing relationship and decrease over time the lowest obtainable self enforcing tariff by increasing the penalty of future defection sunk costs ensure that the self enforcing trading relationship starts slowly but once in progress the level of cooperation continues to improve

economic determinants of the timing of preferential trade agreement formations and enlargements preferential trade agreements ptas have proliferated over the past 60 years while a small number of recent studies have examined empirically the economic determinants of the likelihood of a pair of countries having a pta this study explains empirically the timing of all pta formations and enlargements from 1950 through 2006 using duration analysis our main and novel goal is to predict in and out of sample a substantive share of these 1 560 pta events using a parsimonious model with mainly economic variables taking selection dynamics into account our analysis reveals that we can predict correctly in sample the actual year of entry into force for 26 of the 1 560 bilateral pta formations enlargements in the period 1950 2006 among 10 518 pairings of 146 countries using only a few economic and political variables moreover we can predict correctly in sample 57 of these pta events within a 10 year window leading up to the event using this model the model also performs well out of sample for the near term 82 but not if the out of sample period is very long we conclude with an evaluation of the model s ability to predict the timing of the north american free trade agreement the european union s formation and enlargements and the model s ten most likely post 2006 pta events jel f14 f15

on voluntary eco labeling and fiscal incentives abstract the conditions under which a government would initiate a fiscal incentive scheme to encourage the use of an eco label in a duopoly are determined the results reveal a scope for fiscal incentive provision in conjunction with the eco label scheme for highly polluting industries

eco labels as a multidimensional research topic trends and opportunities abstract this study analyzes the importance of ecolabels as an eco innovation tool that can contribute to the sustainable design production and consumption of products our research has a dual objective the first is to build a theoretical framework that explains the relationship between ecolabels and eco innovation their determinants demand supply and institutional and political influences and the dimensions that arise from them second according to this framework a systematic literature review was carried out to identify the trends and opportunities in ecolabeling as a multidimensional topic from empirical geographical and sectorial perspective the main contributions of this paper are a proposal for cyclical ecolabeling innovation process an understanding of the ecolabeling dimensions according to the studies analyzed and ecolabel performance in the market additionally the systematic literature review revealed that ecolabels have been mainly explored in food sectors and developed countries and researchers tend to assess their performance from the dimension of market dynamics

renegotiation proof equilibria in repeated prisoners dilemma abstract in this note it is shown that the requirement of weak renegatiation proofness does not eliminate any subgame perfect equilibrium outcome of the repeated prisoner s dilemma specifically it is demonstrated that when players are sufficiently patient any feasible and individually rational outcome can be sustained by means of an equilibrium in which the punishing player always profits by carrying out the punishment

petrol prices and subjective wellbeing abstract we examine the effect of petrol prices on subjective wellbeing swb using household panel data to do so we use 17 waves of the household income and labour dynamics in australia hilda survey based on our preferred instrumental variable estimates we find that a standard deviation increase in petrol prices leads to a decline of 0 0157 0 0245 standard deviations in swb the finding that increases in petrol prices significantly lower swb is robust to alternative measures of wellbeing and alternative ways of addressing endogeneity as well as employing different sources of fuel price data measured at a range of frequencies we also examine the channels through which petrol prices influence swb and find that maintaining social networks is an important way through which petrol prices influence swb

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

does limited punishment limit the scope for cross retaliation this paper analyzes two prominent institutional rules in the international trading system a limited cross retaliation rule characterized by the understanding on rules and procedures governing the settlement of disputes dsu article 22 3 and a limited punishment rule characterized by the general agreement on tariffs and trade gatt article xxviii in general both rules are designed to limit the countermeasures upon a violation however the former rule specifies the limits of composition in retaliation whereas the latter one designates the limits of retaliation magnitude we show that albeit seemingly unrelated the limited cross retaliation rule complements the limited punishment rule in permitting greater trade liberalization specifically we show how the limited cross retaliation rule also helps limit the incentives to violate the trade agreement when the limited punishment rule prevails jel f13 k33 c73

a threshold cointegration analysis of asymmetric price transmission from crude oil to gasoline prices abstract this study provides new supportive evidence for asymmetric adjustment in u s retail gasoline prices the asymmetric transmission is found to occur not just through the spot markets of crude oil and refinery gasoline but also through their future markets further evidence also shows that the observed asymmetry in price transmission primarily occurs downstream not upstream of the transmission process

managers investors and crises mutual fund strategies in emerging markets the authors address the trading strategies of mutual funds in emerging markets the data set they develop permits analyses of these strategies at the level of individual portfolios a methodologically novel feature of their analysis they disentangle the behavior of fund managers from that of investors for both managers and investors they strongly reject the null hypothesis of no momentum trading funds momentum trading is positive they systematically buy winners and sell losers contemporaneous momentum trading buying current winners and selling current losers is stronger during crises and stronger for fund investors than for fund managers lagged momentum trading buying past winners and selling past losers is stronger during noncrises and stronger for fund managers investors also engage in contagion trading selling assets from one country when asset prices fall in another these findings are based on data about mutual funds that represent only 10 percent of the market capitalization in the countries considered were it a larger share of the market finding counterparties for their trades the investors who buy when they sell and sell when they buy would be difficult and the premise that funds respond to contemporaneous returns rather than causing them would become tenuous

green greener greenest eco label gradation and competition abstract this paper analyzes two common features of markets in which eco label programs certify that products are green gradation single programs offering multiple certification standards e g platinum gold silver and competition multiple programs vying to certify to their respective standards we find that depending on whether programs are sponsored by industry environmental groups or a government they have strikingly different incentives to grade or compete industry sponsors are indifferent about both environmentalist sponsors optimally grade or compete with other environmentalist sponsors only if consumer preferences for green consumption are skewed in a specific way and government sponsors decisions depend on the relative importance of private vs public benefits generated by the green market we find also that it is no accident that green markets frequently have an environmentalist program competing with an industry one for each of the cases examined our analysis is consistent with casual empirical evidence

do gasoline prices exhibit asymmetry not usually previous studies have found evidence of asymmetric price adjustment in u s retail gasoline prices in that gasoline prices rise more rapidly in response to a cost increase than fall in response to a cost decrease by estimating a threshold cointegration model that allows for multiple regimes i am able to test how sensitive this result is to outlying observations in contrast to previous studies i find little evidence of asymmetry for the vast majority of observations and that the asymmetry is being driven by a small number of outlying observations

credence goods efficient labelling policies and regulatory enforcement we analyse the optimality of information revelation of hidden attributes of credence goods via alternative labelling procedures when consumers are heterogeneous in their willingness to pay for the hidden attribute producers can either self label their products or have them certified by a third party the government can impose self or third party labelling requirements on either the green or the brown producers our benchmark model develops a condition that links the optimal imposition of third party labelling to the relative market share of each type of the good under complete information we extend our analysis to incorporate asymmetric information and cheating by the producers when corrupt producers can affix spurious labels the government needs to supplement the labelling policy with costly monitoring activities we find that mandatory self labelling schemes generally dominate mandatory third party labelling unless the market share effect greatly exceeds the incentive to cheat effect

effects of carbon reduction labels evidence from scanner data we investigate the effects of carbon reduction labels using a detailed scanner data set using a difference in differences estimation strategy we find that having a carbon label has no impact on detergent prices or demand we also investigate possible heterogeneous effects of carbon labels using the synthetic control method we find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon labeled detergents we investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success jel d12 d83 l15 q54

information and the provision of quality differentiated products governments often enact information provision policies to overcome asymmetric information of product qualities we show that increasing awareness among consumers of the quality of a good can but will not always encourage firms to produce goods with higher levels of quality even if product qualities increase social welfare may fall as information provision results in too much product differentiation we show that the effectiveness of emission taxes and output subsidies are affected by the level of consumer knowledge of product quality and we identify conditions under which information provision is welfare enhancing relative to these price instruments jel l15 q58 i introduction in the past 20 years consumers have become increasinglyconscious ofthe undesirable health and safety attributes of the products they consume and surveys suggest that a growing percentage of consumers are willing to pay more for higher quality products such as organic foods and household cleaners and detergents that contain less toxic ingredients guber 2003 other high quality products facing higher demand include energy efficient products like extended life lightbulbs and improved home insulation often these highquality products provide private benefits that are excludable to buyers as well as public benefits that are nonrival and nonexcludable for example reduced pesticide and chemical residue on food may lower the risk of cancer while also reducing contaminated run off that degrades ground and surface water quality extended life lightbulbs and improved home insulation may reduce an individual s utility bill while also reducing greenhouse gas emissions from lower energy consumption although interest in these types of high quality productsisgrowing demand isoften relatively small market shares of organic produce for

idiosyncrasies in australian petrol price behaviour evidence of seasonalities it has been argued that there are certain idiosyncrasies in australian petrol price behaviour to the extent that these idiosyncrasies result in large magnitude differences in petrol prices they may be exploited by consumers to significantly reduce their household expenditure on the product similarly such seasonalities may influence retailers in their purchase and storage decision the objective of this paper is to test for seasonalities in the australian retail petrol market the approach adopted is similar to that for determining calendar anomalies as documented in the financial and commodity markets literature we find that a monthly seasonal effect is pronounced with petrol prices lower in the months of february may and highest in july and august a day of the week effect is also apparent and is manifest in all petrol prices for capital cities adelaide brisbane melbourne and sydney across various years however the half month effect as is common in stock returns is not observed moreover contrary to popular belief that petrol prices are higher surrounding holidays no evidence of the holiday effect is found in brisbane and melbourne petrol prices also have some relationship to the mood of consumers as proxied using weather conditions this is not observed in adelaide and sydney

is there an asymmetry in the response of diesel and petrol prices to crude oil price changes evidence from new zealand this paper examines how pre tax petrol and diesel prices in new zealand respond to changes in crude oil prices using an asymmetric error correction model our results show that oil companies adjust diesel prices upwards faster than they adjust them downwards and the difference is statistically significant however we find no statistical evidence for an asymmetry in the adjustment of petrol prices even though the magnitude of estimated coefficients suggests a faster response to rising prices as diesel pricing is not as competitive as petrol pricing calls for further government actions and monitoring of the oil market may be justified our findings also have important implications for the conduct of monetary policy as the pass through of crude oil price changes can affect cost push inflation

the gatt and gradualism abstract this paper shows how the institutional rules imposed on its signatories by the gatt created a strategic incentive for countries to liberalize gradually trade liberalization must be gradual and free trade can never be achieved if punishment for deviation from an agreement is limited to a withdrawal of equivalent concessions and if initial deviation from an agreement is also limited the paper shows how sufficiently patient countries have an incentive to deviate in a limited way when operating under gatt dispute settlement procedures

asymmetry in retail gasoline and crude oil price movements in the united states an application of hidden cointegration technique abstract there is a common belief that gasoline prices respond more quickly to crude oil price increases than decreases some economists and politicians believe that asymmetry in oil and gasoline price movements is the outcome of a non competitive gasoline market requiring that governments take policy action to address unfair pricing there is no consensus as to the existence or nature of the asymmetric relationship between prices of gasoline and crude oil much of this literature specifies asymmetry in the speed of adjustment and short run adjustment coefficients in contrast granger and yoon s granger c w and yoon g hidden cointegration university of california san diego department of economics working paper 2002 crouching error correction model cecm identifies asymmetry of the cointegrating vectors between components cumulative positive and negative changes of the series applying the cecm to retail gasoline and crude oil prices for the u s we find that there is only evidence of cointegration between positive components of crude oil prices and negative components of gasoline prices in contrast to the literature which attributes asymmetric price movements to market power of refiners these findings suggest that gasoline prices in the long run are more influenced by the technological changes on the demand side than crude oil price movements on the supply side

asymmetric responses in the timing and magnitude of changes in australian monthly petrol prices to daily oil price changes abstract this article investigates whether uncompetitive pricing tactics are being employed in the retail petrol market in australia through examining the effect of a change in daily oil prices on monthly petrol prices to do so we incorporate asymmetry into the coefficients of a normalised beta weighting function within an asymmetric mixed data sampling amidas framework this enables us to examine both the timing and the lagged marginal effects of a change in retail petrol prices in response to a change in the oil price we find evidence of asymmetries in both the timing and magnitude of retail petrol prices to a change in the oil price specifically we find that while price falls are slowly and symmetrically passed onto consumers price increases are more delayed but higher in intensity over time depending on the capital city when retailers eventually do increase petrol prices in response to an oil price rise with delay the price rise is between 2 1 and 3 4 times more than when retailers reduce petrol prices in response to a fall in the price of oil this finding is consistent with retailers delaying substantial petrol price rises in order to mask the existence of uncompetitive practices

the impact of climate information on milk demand evidence from a field experiment it has been suggested that carbon labelling of food on voluntary or non voluntary basis could reduce emissions of greenhouse gases however there is limited empirical evidence on the influence of such labels on consumer purchases the purpose of this study was to investigate whether voluntary carbon labelling affects the demand for milk a randomized field experiment was conducted in 17 retail stores in sweden where a sign provided consumers with qualitative information about the carbon impact of climate certified milk the results suggest that the sign increased the demand for the climate certified milk by approximately 6 8 and the result is robust to alternative model specifications the effect is entirely driven by large stores such as supermarkets we find no statistically significant impact on total milk sales and the dataset is too small to verify the consequences for other milk brands the effect on the demand for the labelled milk is short lived

testing for price response asymmetries in the spanish fuel market new evidence from daily data abstract in this work we use daily data to examine pattern asymmetries in the speed of transmission of international wholesale oil prices to spanish retail fuel prices results are robust to two alternative specifications of an asymmetric error correction model for which the presence of autoregressive conditional heteroskedasticity for disturbances is modeled by a garch 1 1 process evidence indicates that the short term transmission of wholesale prices to retail prices is quite symmetric for both gasoline and diesel fuel nevertheless in contrast to some of the results provided for an earlier period we did not find asymmetries in the speed of retail price responses toward long run equilibrium our evidence also suggests that the use of weekly or lower frequency data is one of the possible explanations for some of the seemingly contradictory results concerning this issue

new evidence on asymmetric gasoline price responses in a 1997 paper borenstein cameron and gilbert bcg claim that gasoline prices rise quickly following an increase in the price of crude oil but fall slowly following a decrease this note estimates an error correction model with daily spot gasoline and crude oil price data over the period 1985 1998 and finds no evidence of asymmetry in wholesale gasoline prices the sources of the difference in results are twofold first we use the standard engle granger two step estimation procedure whereas bcg used a nonstandard estimation methodology second even using bcg s nonstandard specification the use of daily rather than weekly data yields little evidence of price asymmetry

environmental cleanliness as a public good welfare and policy implications of nonconvex preferences abstract this paper explores the implications of a form of nonconvexity in individual preferences over the public good cleanliness the implications of this nonconvexity on equilibrium outcomes welfare analysis the process of development and optimal government policy are examined the nonconvexity can imply a role for government in providing a commitment to a clean environment even if the government has a cost disadvantage in cleaning compared with individuals by providing a credible commitment to a clean environment the government can induce private individuals to undertake optimal levels of cleaning on their own

price premiums for eco friendly commodities are green markets the best way to protect endangered ecosystems green markets represent a means through which public goods can be privately provided a green product is an impure public good consisting of a private good e g rain forest honey bundled with a jointly produced public good e g biodiversity protection in the context of ecosystem protection popular green commodities include eco tourism excursions coffee grown under forest canopies shade grown tagua nuts for buttons and ornaments rainforest nuts and oils for cosmetic products and rain forest honey we examine the dynamic efficiency of eco friendly price premiums in achieving ecosystem protection and rural welfare goals by contrasting the use of price premiums to the use of payments that are tied directly to ecosystem protection we demonstrate analytically and empirically that direct payments are likely to be more efficient as a conservation policy instrument depending on the available funds the direct payments may be better or worse than green price premiums in achieving rural welfare objectives if direct payments are not feasible for social or political reasons we demonstrate analytically and empirically that the price premium approach is likely to be more effective at achieving conservation and development objectives than the currently more popular policy of subsidizing capital acquisition in eco friendly commercial activities

optimum tariffs and retaliation revisited how country size matters in his seminal work on tariff retaliation johnson review of economic studies 21 1953 1954 showed that a country will win a bilateral tariff war if its relative monopoly monopsony power in world trade is sufficiently large however it is unclear from johnson s analysis and from subsequent research on the subject how this power is determined in general economic environments an important goal of this paper is to address this issue with the help of a neoclassical trade model in which country size is at centre stage it is shown that a sufficient condition for a country to prefer a non cooperative nash tariff equilibrium retaliation over free trade is that its relative size be sufficiently large the paper also refines the structure of the general trade model and generates additional characterization results on the importance of country size for best response tariff functions retaliatory tariffs and welfare

do petrol prices rise faster than they fall when the market shows significant disequilibria abstract this paper examines if the long run relationship between retail and wholesale petrol prices is subject to adjustment asymmetric behaviour using weekly australian data 2007 2012 across 111 locations a short run dynamic model is specified in which three feedback coefficients capture three different types of disequilibria large and positive large and negative small positive negative significant evidence of asymmetric behaviour is found in 28 locations which are mainly in tasmania queensland and new south wales in these locations when prices are conspicuously above the equilibrium path retailers sluggishly lower their prices but when prices are substantially below the equilibrium values the adjustment speed is significantly faster

optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements in this paper we report calculations of optimal tariffs both with and without retaliation in a sequence of 2 2 trade models we extend the earlier calculations by johnson 1954 1961 and gorman 1957 which assume constant elasticity offer surfaces by using functional forms from the cobb douglas ces les family for utility functions and by also incorporating production into our calculations results indicate that the most critical parameters in any such calculations for a 2 2 model are the import prices elasticities and we briefly survey the empirical evidence as to their values our major conclusion is that these models confirm the suggestion from casual inspection of reported trade elasticities that current levels of tariff protection are some distance from optimal tariffs and that the margin for tariff retaliation in a worldwide trade war is potentially large other implications of the results are explored in the text

competitive investment in clean technology and uninformed green consumers abstract in a market where consumers and the regulatory authorities are not fully informed about the actual production technology or environmental performance of firms that engage in strategic competition i study the effect of environmental consciousness of consumers on firms incentive to invest in cleaner technology firms compete in prices and may signal their environmental performance to uninformed consumers through prices i also analyze the effect of an expected liability on firms in this setting compared to full information incomplete information generates higher strategic incentive to invest in cleaner technology particularly when consciousness and or expected liability are not too high requiring mandatory disclosure of technology or environmental performance may discourage such investment even though consumers and the regulator are uninformed competition has a positive effect relative to monopoly on the incentive to invest

do petrol prices increase faster than they fall in market disequilibria abstract this paper tests the idea that petrol prices respond more quickly to price increases than to decreases we show that the results previously documented in the literature for australia are spurious due to failure to establish the stationarity property of the price series and the co integration relationship between retail and wholesale prices when neglecting to account for a regime shift in the data using a robust approach involving a threshold error correction model we find little evidence to support the contention that retail petrol price reverts asymmetrically to long run equilibrium asymmetric adjustments in retail prices are found only in four of the twenty eight retail gas stations in queensland these results cast doubt on the previously reported pervasiveness of this asymmetric price response phenomenon in australia we further caution on erroneous inference with the use of weekly rather than daily data and when failing to account for a regime shift in the data

rockets and feathers revisited an international comparison on european gasoline markets this paper re examines the issue of asymmetries in the transmission of shocks to crude oil prices onto the retail price of gasoline relative to the previous literature the distinguishing features of the present paper are i use of updated and comparable data to carry out an international comparison of gasoline markets ii two stage modeling of the transmission of oil price shocks to gasoline prices first refinery stage and second distribution stage in order to assess possible asymmetries at either one or both stages iii use of asymmetric error correction models to distinguish between asymmetries that arise from short run deviations in input prices and from the speed at which the gasoline price reverts to its long run level iv explicit possibly asymmetric role of the exchange rate as crude oil is paid for in dollars whereas gasoline sells for different sums of national currencies v bootstrapping of f tests of asymmetries in order to overcome the lowpower problem of conventional testing procedures in contrast to several previous findings the results generally point to widespread differences in both adjustment speeds and short run responses when input prices rise or fall

voluntary eco labeling and the price premium international environmental organizations propose voluntary eco labeling as a market incentive to promote industry to operate in an ecologically sustainable and environmentally friendly manner a microeconomic analysis questions whether voluntary eco labeling will cause producer profits in a competitive industry to decline and whether eco labeling will necessarily generate different prices for labeled and unlabeled product using wood product as an example results identify conditions that may exist when firms lose profits even under a voluntary system and where existing production constraints may lead to a single price regardless of labeling

a strategic and welfare theoretic analysis of free trade areas abstract we construct a three country model to determine how the formation of free trade areas ftas affects optimal tariffs and welfare we find that at constant rest of the world row tariffs the adoption of internal free trade induces union members to reduce their external tariffs below the kemp wan j int econom 6 1976 95 97 level and causes row s terms of trade to improve and its welfare to rise when row also behaves optimally its policy response to the formation of the fta is to raise tariffs generally fta members prefer to liberalize internal trade partially and find regional integration appealing only if their collective size is sufficiently large we also demonstrate how ftas may undermine the attainment of global free trade

a qualitative meta synthesis of the benefits of eco labeling in developing countries eco labeling or environmental certification is often promoted as a regulatory instrument capable of incentivizing sustainable resource use even in the absence of stringent government environmental regulations despite slow uptake in developing countries and high producer costs a growing body of case study evidence suggests that producers benefit in varied ways from certification a qualitative meta synthesis approach is applied to this body of evidence in order to assess the type and extent of producer benefits reported in case studies of forest stewardship council fsc and marine stewardship council msc certification in developing countries while benefits from price premiums and market access appear to be limited less tangible benefits were more common including learning governance community empowerment and reputational benefits these benefits may justify the cost of certification

retail price asymmetries in local gasoline markets the experience of the salt lake city retail gasoline market during the 1989 to 1993 period suggests that there was asymmetric adjustment wholesale and retail price data unique to the salt lake market are used to test for the existence of three types of price asymmetry during this period with respect to the magnitude of the pass through of wholesale price changes evidence of price asymmetry during periods of average weekly wholesale price changes is found however during market shocks the evidence points in the direction of retail price symmetry evidence of asymmetry with respect to the timing and pattern of the retail price response is found for periods of both average and market shock changes since gasoline is purchased by the consumer in local markets conclusions reached by studies of market pricing behaviour that rely on national data may not be relevant for local policy decisions this appears to be the case for the salt lake city market

seasonal patterns in daily prices of unleaded petrol across australia abstract this study addresses a very significant policy issue not previously examined at a disaggregated level for australia by identifying on which day s petrol is more expensive and in which locations discount days are non existent after conducting a time series analysis of the day of the week effect in retail prices of unleaded petrol in 114 locations across australia jan 2005 to apr 2012 it is observed that prices mostly peak on thursday friday and then decline until they hit their cyclical trough mainly on sunday tuesday however these daily differences are only statistically significant in capital cities or large regional centres a cross sectional analysis of the mean prices during the period nov 2007 to feb 2012 shows that a in remote and less populous locations where sales are presumably limited and overhead costs are high petrol is more expensive b petrol generally costs more in places which exhibit less price variability the disaggregated and location specific results can increase our understanding of australia s retail petrol market and can be beneficial to motorists as well as various government and non government organisations such as the accc australian competition and consumer commission aaa australian automobile association and fuelwatch

why are prices sticky the dynamics of wholesale gasoline prices the menu cost interpretation of sticky prices implies that the probability of a price change should depend on the past history of prices and fundamentals only through the gap between the current price and the frictionless price we find that this prediction is broadly consistent with the behavior of nine philadelphia gasoline wholesalers nevertheless we reject the menu cost model as a literal description of these firms behavior arguing instead that price stickiness arises from strategic considerations of how customers and competitors will react to price changes

specific and ad valorem tariffs are not equivalent in trade wars abstract this note argues that when two countries choose optimal tariffs in a trade war specific tariffs are not equivalent to ad valorem tariffs even if all markets are competitive in particular it shows that if a country s trading partner switches from a specific tariff to an ad valorem tariff that yields the same revenue at the initial trade point the former country has an incentive to lower its tariff when two identical countries choose the types and magnitudes of tariffs in a two stage game they will choose ad valorem tariffs making the trade war less severe

eco labels trade and protectionism eco labels are suspected to serve protectionist purposes we analyze the choice between an environmental standard and a voluntary eco label scheme in a partial trade model with one domestic firm and one foreign firm the environmental standard will only apply to the domestic firm while both firms can adopt the eco label pollution is production related and domestic consumers demand products that are produced in an environmentally friendly way our results show that it may be optimal for the domestic government to introduce an eco label and get both firms to adopt the label instead of setting an environmental standard however to what extent this policy serves protectionist purposes is ambiguous in particular if the willingness to pay for green products is sufficient to cover the pollution abatement costs of the foreign firm foreign firm profit will increase while domestic firm profit will decrease compared to the outcome with a domestic environmental standard on the other hand if the willingness to pay for green products is insufficient the foreign firm would be better off with a domestic environmental standard

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers

gradualism in trade agreements with asymmetric countries this paper uses recursive methods to characterize the payoff frontier of self enforcing trade agreements between countries of asymmetric size we show that at points on the frontier where only one country s incentive constraint binds the efficient agreement will be a non stationary one that starts with a positive trade distortion but eventually reaches free trade our analysis illustrates how i relative country size ii consumption smoothing incentives and iii sunk investments affect the form of efficient trade agreements in contrast to previous work on gradualism our results are obtained from a model in which the economic environment is stationary