diversification and equilibrium in securities markets abstract diversification is the strategy of investing small fractions of wealth in each of a large number of securities and thereby reducing risk the basic argument in support of diversification is an appeal to the law of large numbers a portfolio in which an investor s wealth is invested in equal fractions in each ofnsecurities with i i d returns has a return that converges to a riskless return asnincreases indefinitely any risk averse investor would prefer the limit riskless return to the return of any portfolio in this paper we use the space ba of all finitely additive signed measures on the set of natural numbers the index set for securities to model the set of portfolios from which an investor may choose this portfolio space contains arbitrary finite portfolios and a nontrivial portfolio which is the limit of the sequence of portfolios having the fraction of wealth 1 ninvested in each ofnsecurities we identify a class of portfolios which we call perfectly diversified these portfolios are described by purely finite additive measures in a perfectly diversified portfolio wealth invested in each individual security is a negligible fraction of the total wealth of the portfolio we show that the return of every perfectly diversified portfolio of securities with uncorrelated returns is riskless it is shown that modeling of the portfolio space as the space ba makes possible a rigorous derivation of a general equilibrium version of the arbitrage pricing theorem apt the apt provides a good illustration of the implications of diversification for equilibrium prices of securities journal of economic literatureclassification numbers d52 g20

overlapping risk adjusted sets of priors and the existence of efficient allocations and equilibria with short selling the theory of existence of equilibrium with short selling is reconsidered under risk and ambiguity modelled by risk averse variational preferences no arbitrage conditions are given in terms of risk adjusted priors a sufficient condition for existence of efficient allocations is the overlapping of the interiors of the risk adjusted sets of priors or the inexistence of mutually compatible trades with non negative expectation with respect to any risk adjusted prior these conditions are necessary when agents are not risk neutral at extreme levels of wealths it is shown that the more uncertainty averse or risk averse the agents the more likely are efficient allocations and equilibria to exist

farmers perceptions of developing forest based bioenergy in china abstract farmers awareness of forest based bioenergy developments will greatly determine the direction and succession of forestry projects to obtain a better understanding of this awareness a logistic regression model was applied to analyze the factors influencing farmers willingness to participate in the construction of bioenergy bases the model was developed based on a survey of 573 household farmers in eight chinese provinces this study found that a majority of households have increased their daily use of commercial fuel moreover a significant number of farmers are either uncertain about or unfamiliar with the concept of forest based bioenergy the model found that households with young and educated individuals a higher forestland endowment and a higher cognition and understanding of fossil fuels have a higher willingness to learn about and participate in forest based bioenergy issues the findings of this study will be useful for bioenergy forest cultivators extension foresters forest landowners and policy makers

on equilibrium in hart s securities exchange model in this paper we use a no unbounded arbitrage condition to give a very direct proof of the existence of equilibrium in hart s unbounded securities exchange model j econ theory 9 1974 293 311 we also examine the relationship between the no unbounded arbitrage condition and the sufficiency conditions of hart ibid and hammond j econ theory 31 1983 170 175 we present an example to show that if traders are not sufficiently risk averse then hammond s overlapping expectations condition is not in general equivalent to the no unbounded arbitrage condition or hart s sufficiency conditions and therefore is not sufficient to guarantee the existence of equilibrium we also present an example to show that it is possible for the no unbounded arbitrage condition to hold without overlapping expectations and therefore it is possible for equilibrium to exist without overlapping expectations

overlapping expectations and hart s conditions for equilibrium in a securities model hart j econ theory 9 1974 293 311 gave conditions for equilibrium to exist in a securities model where each agent undertakes asset transactions to maximize expected utility of wealth these conditions rule out agents wanting to undertake unbounded balanced transactions to reach a pareto superior allocation given their expectations with mild extra assumptions to make agents unwilling to risk incurring unbounded losses on their portfolios hart s conditions become equivalent to an assumption of overlapping expectations which is comparable to a much weaker form of green s common expectations econometrica 41 1973 1103 1124

a necessary and sufficient condition for the compactness of individually rational and feasible outcomes and the existence of an equilibrium abstract in an economy with arbitrary closed and convex consumption sets we show that page s journal of economic theory 1987 41 392 404 condition of no unbounded arbitrage is necessary and sufficient for compactness of the set of individually rational and feasible allocations in strictly reconcilable economies in which at most one agent may have half lines in his indifference surfaces we show that page s condition is necessary and sufficient for compactness of the set of individually rational utility possibilities for the existence of an equilibrium for non emptiness of the core and for the existence of a pareto optimal allocation these results allow one agent to be risk neutral not permitted by werner s econometrica 1987 55 1403 1418 assumption of no half lines in indifference surfaces our proofs that no unbounded arbitrage is necessary and sufficient for the existence of an equilibrium and for a pareto optimal allocation both rely on the result that non emptiness of the core implies no unbounded arbitrage

forest based bioenergy in china status opportunities and challenges forest based bioenergy is gaining global popularity due to its multiple benefits and increased global energy needs in this study the current status of forest based bioenergy in china was reviewed and the opportunities and challenges were analyzed the latest national development plan for forest based bioenergy was also discussed it can be concluded from the study that forest based bioenergy is still in the beginning stage in china but will grow rapidly in the next decade due to abundant resources and strong government support however there are major constraints that need to be addressed including unstable feedstock supply low market interest and investments inadequate r d and competition from other forest products the national development plan sets up a mid term goal for developing forest based bioenergy but more supporting policies are required to guarantee its successful implementation

residential energy consumption in urban china a decomposition analysis abstract residential energy consumption rec is the second largest energy use category 10 in china and urban residents account for 63 of the rec understanding the underlying drivers of variations of urban rec thus helps to identify challenges and opportunities and provide advices for future policy measures this paper applies the lmdi method to a decomposition of china s urban rec during the period of 1998 2007 at disaggregated product activity level using data collected from a wide range of sources our results have shown an extensive structure change towards a more energy intensive household consumption structure as well as an intensive structure change towards high quality and cleaner energy such as electricity oil and natural gas which reflects a changing lifestyle and consumption mode in pursuit of a higher level of comfort convenience and environmental protection we have also found that china s price reforms in the energy sector have contributed to a reduction of rec while scale factors including increased urban population and income levels have played a key role in the rapid growth of rec we suggest that further deregulation in energy prices and regulatory as well as voluntary energy efficiency and conservation policies in the residential sector should be promoted

software industry entry strategies for developing countries a walking on two legs proposition abstract two themes run through the following analysis first countries without a relatively active and up to date software sector will find it increasingly difficult to catch up in terms of capital outlays labor skills and the growing importance of technology changes organization and management in software production they will not have for example software management experience to undertake increasingly large and complex software development projects a quality consciousness and the institutional and support infrastructure for marketing and forming product development alliances with dominant international firms in the sector second the learning curves for domestic and international market activities are quite different the domestic software market being an important base for skills experience and establishing a track record that may later be applied to exports two developing countries india and brazil have used different development strategies for their software industries and as could be expected with disparate results both the brazilian and the indian software industries are trying to walk on one leg the domestic leg in the case of brazil and the export leg in the case of india both countries have at least some potential for moving to a two legged model assessment of these two industries suggests that countries need to pay more attention to domestic opportunities since these have high returns in terms of gaining experience and innovation in software production and provide training that allows a broadening of software exports

arbitrage and the flattening effect of large numbers abstract in a model of an exchange economy with a continuum of individuals we show that competitive equilibrium can be regarded as resulting from the elimination of arbitrage opportunities generically the elimination of such opportunities results in a phenomenon we call the flattening effect of large numbers the flattening effect provides a precise meaning to the statement that under perfect competition individuals cannot influence prices they face perfectly elastic demands and supplies the attractive geometry associated with arbitrage and the flattening effect is highlighted in several figures we also link the demonstration of equilibrium through arbitrage with the logic of marginalism journal of economic literature classification number d51

asset market equilibrium with short selling this paper presents simple conditions and a simple proof of the existence of equilibrium in asset markets where short selling is allowed and satiation is possible unlike standard non satiation assumptions the one used here is weak enough to be reasonable in the mean variance capital asset pricing model and in asset market models where investors maximize expected utility and where total returns to individual assets may be negative this paper analyses the existence of equilibrium in exchange economy models where choice sets may be unbounded below and satiation is likely there are two main examples of such models one is an asset market model where investors maximize expected utility and the total return to individual assets may be negative with positive probability the other is the mean variance capital asset pricing model capm where investors do not necessarily maximize expected utility but instead maximize a function of only the mean and variance of return to their portfolios in both of these models the investors choice sets will be unbounded if short selling is allowed to short sell a share of an asset means to borrow it and sell it promising to buy it back and return it to the lender at a later date formally short selling corresponds to holding a negative number of shares if unlimited short selling is allowed then there is no limit to how large negative numbers of shares can be held and therefore the choice sets are unbounded satiation can also occur both in the mean variance model and in the expected utility model unless there is a riskless asset in the expected utility model there may be satiation if the individual assets have negative returns with positive probability as the investor gets more and more shares the potential positive returns get larger and larger but so do the potential negative returns if the investor is very averse to large negative returns then he may eventually be satiated and not want any more shares in the mean variance model the expected return to an investor s portfolio increases as he holds more and more shares of the assets but so does the variance of return it may be that at some point the additional expected return gained from adding more shares to the portfolio is not sufficient to compensate for the increase in variance if so then there will be satiation satiation in the mean variance model iie analysed in nielsen 1987 1988 the expected utility model with short selling has been used in many specific analyses of portfolio selection and asset pricing to name but one connor 1984 studies arbitrage pricing in a general equilibrium model where there are no short sales restrictions the mean variance capm is of course very prominent in the finance literature because the

bioenergy consumption in rural china evidence from a survey in three provinces abstract biomass in the form of crop residues and firewood is a major energy source for rural households in china a survey conducted in the provinces of shanxi zhejiang and guizhou shows that 37 percent of rural households use bioenergy for heating and cooking and that bioenergy accounts for 18 percent of their total energy consumption most of the biomass used for energy is burned in traditional stoves contributing to indoor air pollution in rural homes crop residues also are commonly burned in the fields contributing to the high level of outdoor air pollution in china our econometric analysis of the key determinants of bioenergy use shows that bioenergy consumption falls modestly with income growth increased time required for biomass collection and less farmland hence open burning of some biomass is an optimal choice and is likely to become more of a problem without policy intervention these findings suggest that a more sustainable use of biomass requires policies that promote cleaner more efficient bioenergy combustion technologies and increase the economic value of biomass such that local households can benefit from biomass collection

temporary equilibrium with storable commodities abstract this paper fills a gap in temporary equilibrium theory by establishing necessary conditions and sufficient conditions for the existence of temporary equilibrium in a sequential economy with spot and incomplete futures markets for storable commodities and with heterogeneous expectations an important realistic feature of the model is an uncertain storage technology overlapping expectations and the usual sufficient conditions guarantee the existence of equilibrium inventory speculation implies a lower bound on current spot prices in terms of futures prices and the storage technology these results extend to an economy in which observed aggregate inventories influence expectations in a well behaved manner

relaxing the sure solvency conditions in temporary equilibrium models abstract the usual temporary equilibrium results hold when sure solvency conditions are appropriately relaxed preferences over potentially bankrupt states are represented by an extension of the indirect utility function for negative wealth for models without institutional constraints such as margin requirements sure solvency can be replaced by unbounded aversion to bankruptcy for models with institutional constraints sure solvency can be replaced by a weaker limit on maximum loss or expected loss

on the different notions of arbitrage and existence of equilibrium in this paper we first prove an equilibrium existence theorem for finite dimensional economies with unbounded below consumption sets we only assume that the individually rational utility set is compact and use the demand approach instead of the standard negishi s approach we next compare the different concepts of no arbitrage that have been used in the literature and give conditions for equivalence between absence of arbitrage and existence of equilibrium lastly we introduce the concept of strong unbounded arbitrage and show that the absence of strong unbounded arbitrage implies the compactness of the individually rational utility set journal of economic literature classification numbers c62 d50

household biogas use in rural china a study of opportunities and constraints as a renewable energy biogas is not only an important part of the development of rural new energy but also an important aspect of sustainable development in china the development process and present status of household biogas specifically the opportunities and constraints of household biogas in rural china are discussed in this paper only about 19 of the biogas potential has been utilized in rural china there are several opportunities for household biogas development in rural china including the problem of rural household energy consumption the availability of biogas fermentation materials national financial subsidies legal and international clean development mechanisms also more research needs to be done in straw fermentation and cold fermentation technology training should be conducted to raise the level of biogas customers in comprehensive biogas utilization measures should be taken to improve the follow up services and management of biogas plants the information presented in this paper will be helpful not only to the sustainable development of household biogas in rural china but also to the development of biogas in similar countries around the world

energy consumption in rural china a household model for three villages in jiangxi province abstract in china fuelwood and coal are the most important energy sources for rural households in poor areas along with population and economic growth excessive fuelwood collection is a major cause of deforestation burning coal contributes to environmental problems such as air pollution acid rain and greenhouse gas emissions the purpose of this article is to analyze factors determining choice of energy source and labor input into fuelwood collection in poor forest rich regions and to provide policy recommendations on ways to affect these choices to this end a nonseparable household model reflecting choices in labor allocation and energy demand of rural households is estimated from available data for three villages in a poor forest rich region in jiangxi province southeast china innovative aspects of this article are the analyses of factors driving household substitution between forest and non forest fuels and of dissimilarities in household responses under different market access conditions

the partnered core of an economy and the partnered competitive equilibrium abstract an allocation is partnered if it admits no asymmetric dependencies between players we introduce the partnered core of an economy and the partnered competitive equilibrium in an economy with unbounded consumption sets and local non satiation we show that no unbounded arbitrage is sufficient for non emptiness of the partnered core with strictly concave utility functions we obtain a second welfare theorem for the partnered competitive equilibrium and show that no unbounded arbitrage is necessary and sufficient for non emptiness of the partnered core and the existence of a partnered competitive equilibrium