towards a science of sustainability improving the way ecological economics understands human well being abstract ecological economics seeks to recognize what traditional economics often ignores that the economy is embedded in wider social and biophysical systems to date ecological economics has focused on the biophysical dimensions of these interactions yet achieving sustainable development will require difficult decisions regarding which environmental and other assets should be preserved and in what form this emphasizes the importance of understanding why particular environmental resources and services are important to human well being and how social and economic institutions may be structured to make the best use of these and other forms of capital the paper thus examines a variety of approaches to well being characterizing these as interpreting well being as a state of mind as a state of the world as human capability or as the satisfaction of underlying needs the literature surveyed is drawn largely from political philosophy and psychology and includes classical utilitarianism and self evaluative approaches descriptive utilitarianism and preference based approaches the basic needs approach functional approaches and underlying needs based and virtue based approaches particular authors include michalos scitovsky easterlin hirsch galbraith rawls sen maslow boyden and max neef the ideas examined are found to have significant implications for economic theory and policy especially regarding the social construction of preferences the treatment of distributional issues the identification of universal underlying needs and the relationship between the satisfaction of these needs and perceived well being these insights suggest that rising real incomes are unlikely to result in improved community well being calling into question the traditional economic view of progress they also offer a new path to sustainable development in which the primary focus is on the cultivation of appropriate institutions and attitudes rather than on the better management of resources the paper concludes that important aspects of social economic and environmental systems are codetermined and thus that achieving sustainable development will require an expansion of the scope of analysis to encompass a wider system dynamic the most promising approaches to well being in this context are those that identify universal underlying human needs thus avoiding the commodity fetishism of mainstream economics

the effect of income choice on bias in policy decisions made using cost benefit analyses abstract cost benefit analysis cba is often used in policy decisions to determine the economic value of various choices although the effects of income disparity are well accepted one of the reasons for the success of this type of analysis is that many policy makers and analysts consider the results of a well crafted analysis to be largely free of partisan or political bias here i propose that tradeoffs between the benefits of various possible jobs or careers introduce a significant bias into values imputed based upon willingness to pay wtp measures in particular i demonstrate why we might expect the values of various segments of society to be differentially appreciated by cba empirical evidence is presented indicating that there is a significant negative correlation between the importance an individual places on income and the willingness of that individual to forgo consumption in favor of environmental improvement as well as a correlation between the importance of income and actual income these results suggest that cba as a tool of welfare economics is likely to be biased against environmental protection because concerned individuals are likely to choose careers which do not maximize consumption thus decreasing their ability to pay for both real and hypothetical environmental improvements moreover the size of this bias appears to be large

environmental values and the frame of reference abstract wants may be distinguished by the extent to which they are positional positional wants are determined by one s frame of reference defined by comparison with peer group consumption and by one s own previous consumption the growth in positional wants is not uniquely related to environmental resource depletion but the two do strongly overlap several implications follow first social reductions in positional consumption may yield environmental benefits at little cost to consumers the costs are however spread over time and depend on the rate of adaptation the strength of the social reference effect determines whether individuals are subject to an isolation or an assurance problem and hence the degree to which cuts need to be centrally imposed if they are to succeed it is suggested that the negative consequences of international positioning could be ameliorated by the replacement of conventional income accounts by a welfare index that more fully incorporates environmental costs secondly the neoclassical utility function can be regarded as a special case of the reference based welfare function provided that it is restricted to positive explanations of how momentary choices are made reference based preferences have more in common with the findings of psychologists and hence open a way to consilience between economics and natural science finally the frame of reference also allows a dynamic perspective to the debate on the commensurability of wants

trends in the development of ecological economics from the late 1980s to the early 2000s abstract as the contributions to ecological economics are very diverse recent years have seen some discussion on both how to delimit the field and in which direction it should develop the intention with this paper is to contribute to the discussion by outlining important trends in the development of the field from the late 1980s to the early 2000s the study is inspired by other studies in the sociology and history of science in particular by the theoretical framework regarding scientific fields as reputational organizations which draws attention to both cognitive and social aspects of the formation of a field the basis for the paper is a combination of literature studies interviews with key researchers in the field and participant observations the paper outlines the characteristic cognitive features of ecological economics at the time of the birth of the field it is then described how the development in ecological economics was influenced by broader social factors during the following years and how the field was shaped by the inflow and outflow of different groups of researchers the emergence of different research programmes is outlined as is the organizational development finally the characteristics of ecological economics are summarized and the future prospects are briefly assessed

a reexamination of the role of thermodynamics for environmental economics abstract as the discussion about the role of thermodynamics in environmental economics has not led to a conclusion yet a more fundamental approach seems to be necessary which also takes into consideration the relationship between economics and the natural sciences in general to this end value theory is chosen as a starting point because it is the centerpiece of every economic theory it is shown that neoclassical environmental economics suffers from serious deficiencies because of its value concept heedlessly copied from classical mechanics thermodynamics can be expected to be helpful to redress these defects because the economy can be thought of as a dissipative structure dependent on its environment the obvious way to integrate thermodynamics consists in the formulation of thermodynamic constraints to complement neoclassical environmental economics but this approach remains unsatisfactory because the neoclassical mechanical hardcore is incompatible with the entropy law and its implications evidently the neoclassical paradigm and its value concept have to be given up but the alternative of the energy theory of value must be rejected because its determinism cannot be reconciled with the richness of human behaviour as thermodynamic analogies offer no solution either there is a dilemma between the necessity and the apparent impossibility of adequately integrating thermodynamic concepts it turns out that a normative inconsistency is responsible which is due to the demand for intergenerational justice therefore the integration of thermodynamics into environmental economics hinges on a meta economic value decision if sustainability is adopted as the guiding principle the insights of thermodynamics call for a macro economic environmental policy setting absolute limits to the economy but this macro policy is incompatible with neoclassical economics so that a social reconstruction of economics based on a social theory of value becomes necessary in sum thermodynamics is important for environmental economics besides fulfilling a general heuristic function it also fulfils a decisive conceptual and an analytical function insofar as it helps to justify sustainability and to operationalize macro economic environmental policy

symmetric pass through of tariffs and exchange rates under imperfect competition an empirical test abstract this paper examines the effect of tariffs and exchange rates on u s prices of japanese cars trucks and motorcycles in particular we test whether the long run pass through of tariffs and exchange rates are identical the symmetry hypothesis we find that this hypothesis is easily accepted in our sample we also find that the pass through relation varies across products ranging from about 0 6 for trucks to unity for motorcycles these coefficients have very different implications for trade policy we explain the results based on demand cost and institutional conditions in each industry

sustainable homeservices toward household services that enhance ecological social and economic sustainability abstract the idea of services replacing products is increasingly offered as a solution to making the production and consumption patterns of the affluent consumers more sustainable however the discussion about sustainable services or sustainable product service systems tends to emphasize the eco efficiency perspective rather than explicitly capture all sustainability aspects social or socioeconomic considerations are often forgotten or by passed without scrutiny this paper argues that there is the need for a concept of sustainable services in which the social sustainability aspect is also recognized with equal attention since a major part of private consumption occurs in the household context living at home and moving to and from it this paper will put forth the concept of sustainable homeservices and will suggest a way to assess sustainability of services directed to households for assessing the sustainability of services directed to households a set of indicators relating to the ecological social and economic dimensions of sustainability is proposed with the aim of giving an idea of how to assess homeservices in practical terms the paper will also exemplify how one could operationalize these indicators on an ordinal rating scale the conclusion is that it is possible to assess the sustainability of a homeservice in a relative fashion using no service or the product alternative as the point of comparison households alone have a limited capacity to influence their consumption choices because other actors set the frame for this reason institutional arrangements for making services easily available to households are outlined it appears that housing organizations have a central role in the alternative option for organizing the supply of service provision they are involved in five of the seven alternative ways of supplying services that could be identified the role of the housing organization can vary from direct supply to lighter forms such as cooperative arrangements with external service providers or resident involvement

the adoption of new technology by the farmers in taiwan this study addresses the technologies the farmers adopted their reasons for adopting these technologies and the result of adopting these technologies the design and strategy used to collect the data needed are both qualitative and quantitative farmers who practised traditional farming methods and those who adopted the new technologies were both given survey questionnaires and were interviewed the result of the study shows that the technologies applied by the farmers are the use of tractors in tilling the ground the use of machinery in planting the practice of irrigation and the use of a combination of organic and commercial fertilizers the reasons for the adoption of the latter are the availability of chemicals and the convenience of their use and this is used to enhance the growth of plants the results of the new technology adoption are high yields of produce production of hybrid crops and the saving of labour thus increasing the income of the farmers

trade liberalization and productivity growth new evidence from the turkish rubber industry this paper empirically examines the effects of a change in foreign trade regime on productivity growth based on a generalized leontief factor demand function system total factor productivity growth tfpg rates are calculated for the turkish rubber industry during a substantial trade liberalization in the 1980s tfpg was significantly higher following trade liberalization technological change was the major contributor to this growth when a panel data estimation technique is used to explain technological change the effects of trade liberalization become clearer a one percentage point increase in the protection level led to more than a one percentage point 1 27 decline in the technological change rate

towards applied geographical economics modelling relative wage rates incomes and prices for the regions of great britain one of the key issues surrounding geographical economics is whether the theory can be made operational so that proper investigations can be made of the basic theoretical assumptions and practical use can be made of the model s predictions at a detailed spatial level in this paper the model formalized by fujita et al 1999 is developed in the context of 36 regions of great britain enabling direct comparisons with observed wage rate data that are used to calibrate the model iceberg transport costs are in the form of an exponential function and a power function for the range of parameters considered the power function gives a better fit between model and data suggesting scale economies in transportation the paper shows that in spite of the assumptions that have to be made quite realistic distributions of relative wages income and prices are attainable however caution is required in the interpretation of these simulations which in no way provide proof of new economic geography theory which cl

the social contingency of wants abstract economic models typically assume that individual wants are determined by forces exogenous to the economic system social psychology and consumer research in contrast support the view that the perceived benefits of goods and services are strongly affected by endogenously determined social norms we present a selective overview of the literature on the relationship between consumption and well being exploring the ways in which informal arguments from social science might be linked to formal models of economic behavior we find that the fixed preferences hypothesis leads to the systematic undervaluation of environmental services and the underprovisioning of environmental goods

the dynamics of willingness to consume abstract it is increasingly acknowledged that the growing consumption in the north constitutes an important part of global environmental problems to improve the possibilities of dealing with this aspect of the problems this paper explores some of the driving forces behind the growth in consumption the first section introduces the environmental debate on consumption including the relationship between final consumption and the consumption of resources the recent political acceptance of dealing with consumption and the fundamental conditions for consumption growth in the north in the following sections a cross disciplinary approach is applied in a broad search for the driving forces behind the willingness to consume throughout the exposition two questions are explored 1 why are productivity increases largely transformed into income increases instead of more leisure 2 why is such a large part of these income increases used for the consumption of goods and services with a relatively high materials intensity instead of less material intensive alternatives the explanations are divided into three groups first the economic explanations including socio economic aspects related to the institutional set up of the economy second socio psychological explanations focusing on consumption from the perspective of the human being embedded in specific social relations third historical and socio technological explanations focusing on different aspects of everyday life the paper concludes with some reflections on the political implications of the analysis

household work and energy consumption a degrowth perspective catalonia s case study the present work contributes to bringing visibility to the part of social work that is referred to as unpaid work this part of social work remains outside the market but it is necessary to structure and maintain households human relationships and communities and providing sustenance and care it represents a flow of hidden subsidies to the economy mostly shaped structured and experienced by women through an explorative case study in catalonia we relate the use of time in catalan society with the relative consumption of energy this research strategy allows us to see the dangers of substituting labour and skills from household based production to the commodity based economy in terms of an increase in energy demand in a context of the end of cheap oil on the contrary from a degrowth perspective we argue that the future adaptability might require policies reallocating resources towards the unpaid and the community

the extraction of natural resources the role of thermodynamic efficiency abstract the modelling of production in microeconomics has been the subject of heated debate the controversial issues include the substitutability between production inputs the role of time and the economic consequences of irreversibility in the production process a case in point is the use of cobb douglas type production functions which completely ignore the physical process underlying the production of a good we examine these issues in the context of the production of a basic commodity such as copper or aluminium we model the extraction and the refinement of a valuable substance which is mixed with waste material in a way which is fully consistent with the physical constraints of the process the resulting analytical description of production unambiguously reveals that perfect substitutability between production inputs fails if a corrected thermodynamic approach is used we analyze the equilibrium pricing of a commodity extracted in an irreversible way we force consumers to purchase goods using energy as the means of payment and force the firm to account in terms of energy the resulting market provides the firm with a form of reversibility of its use of energy under an energy numeraire energy resources will naturally be used in a more parsimonious way

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

firm outsourcing decisions evidence from u s foreign trade zones deborah l swenson this article examines the operations of firms located in u s foreign trade subzones to study the responsiveness of outsourcing to international cost changes i find that firms reduce their reliance on foreign inputs when dollar depreciation increases the relative price of imported inputs the effect is pervasive across industries and is economically significant in addition firms that rely more heavily on imported intermediate inputs reduce their overall shipments when dollar depreciation elevates their imported input costs however the magnitude of the shipments effect is economically small suggesting that firms respond to exchange rate movements by adjusting their operations on other dimensions jel f23 f1 i introduction during the nafta debates u s industry argued that it would be placed at a competitive disadvantage if it failed to gain access to mexican parts that benefited from tariff reductions in the absence of such benefits it was argued that u s firms might even move their production off shore at the same time u s trade unions expressed great concern that jobs and high levels of economic activity would be lost if nafta caused a rise in the outsourcing of intermediate inputs although these countervailing concerns have attracted much attention very little is known about the responsiveness of firm outsourcing to relative price changes or about its secondary effects on firm shipments since outsourcing decisions are made at the firm level and appropriate data is rarely available to researchers this article seeks to address this void by analyzing a data set that provides information on these purchasing and shipment decisions recent aggregate evidence indicates that firms are purchasing an increasing portion of their intermediate inputs from their foreign affiliates or from unrelated parties located abroad 1 it is argued that advances in transportation and communications have facilitated the trend toward the dispersion of production activities while the aggregate trends are striking little research has focused on individual firm decisions one exception is brainard and riker s 1997 examination of multinational firms employment choices as they respond to international wage changes brainard and riker conclude that the degree of firm substitution among a firm s numerous foreign affiliates is much higher than that between parent firms and their foreign affiliates which is relatively small this labor market evidence suggests that foreign affiliate labor is not easily substituted for home labor and that the two may even be complements 2 in contrast a higher degree of substitutability is implied by work including feenstra a nd hanson 1996 and irwin 1996 for the united states or campa and goldberg 1997 for the united states united kingdom japan and canada which documents that the usage of imported intermediate inputs has increased in almost all cases since the 1970s 3 this article studies the issue of input sourcing flexibility and its consequences by examining individual firm decisions the analysis is based on the activities of a set of firms located in u s foreign trade subzones i focus on this subset of firms since the u s foreign trade subzones program provides a unique opportunity to examine firm level decisions regarding inputs and shipments the reporting requirements of the foreign trade zones program enable us to view aspects of firm sourcing decisions that are usually unobservable i use two estimation methods to measure the general substitutability of inputs and outsourcing flexibility first i develop a constant elasticity of substitution ces model of input demand i then use nonlinear least squares techniques to estimate the underlying demand parameters implied by the structural equations i then perform a tobit analysis of firm sourcing decisions the benefit of the second form of analysis is that it allows me to study additional determinants of outsourcing and it does not require strong assumptions about the functional form of the production function

institutionalisation of sustainable consumption patterns based on shared use the product service system pss concept has been proposed as a way of dealing with unsustainable patterns of consumption in the business to consumer b2c domain existing alternatives to traditional consumption based on ownership such as car sharing communal washing centres and tool sharing schemes indicate that more sustainable patterns of consumption may be found for other household functions however the low profile of these examples in society and on the market calls for a query into factors that may facilitate or hinder broader acceptance of more sustainable alternatives in this study the aforementioned examples are analysed from institutional and product service system perspectives and it is suggested that the embodiment of alternative consumption patterns into every day routines depends on institutional arrangements regulatory and normative on how the product service systems are designed and applied in practice and oil the socio cultural background of the society the systems are implemented in c 2004 elsevier b v all rights reserved less

concepts of efficiency in ecological economics sisyphus and the decision maker abstract efficiency forms the bedrock of policy planning and business approaches to sustainable development but what do ecological economists mean by efficiency in the resource use context efficiency has a wide range of potential interpretations from the ratio of work output energy inputs to pareto efficiency despite the potential richness of the efficiency concept in practice efficiency is often narrowly conceived within disciplinary boundaries this appears to be the case even in ecological economics which purports to be transdisciplinary and pluralistic such narrow disciplinary perspectives essentially waste the richness of the efficiency concept this wasting could mean ecological economists and decision makers are destined to sisyphean toil in the pursuit of sustainable development this paper explores the efficiency concept and its interpretation it then reviews ecological economic literature to find that there is much room for improvement in the way ecological economists apply efficiency finally the paper presents a framework within which a truly ecological economic approach to efficiency can emerge armed with this framework policy makers and planners should be better prepared to make decisions leading to sustainable development

using monte carlo analysis to investigate the relationship between overconsumption and uncertain access to one s personal utility function abstract the failure of income and subjective well being to correlate strongly beyond subsistence levels has been well documented this is an important observation from an environmental perspective because it suggests that some excess consumption could be curbed without leading to a decline in subjective well being at the same time there is evidence that access to one s internal utility function is imperfect indicating that choices may approximate utility maximization but that the correspondence is unlikely to be exact here i use a monte carlo model to incorporate findings from hedonic psychology to investigate the question of how imperfect access to one s utility may lead to negatively affective overconsumption through asymmetries in how people are able to budget their time according to the model consumer debt leads to a compounding of this issue although it cannot return well being to the ideal level some hedonic costs of this overconsumption can be partially mitigated through required vacation in excess of what individuals would chose themselves in a fully functioning market perhaps along the line of the european model

services outsourcing and innovation an empirical investigation we provide a comprehensive empirical analysis of the links between international services outsourcing domestic outsourcing profits and innovation using plant level data we find a positive effect of international outsourcing of services on innovative activity at the plant level such a positive effect can also be observed for domestic outsourcing of services but the magnitude is smaller this makes intuitive sense as international outsourcing allows more scope for exploiting international factor price differentials therefore giving the establishment higher profits and more scope to restructure production activities towards innovation we also find that international outsourcing has a positive effect on profitability as predicted by theory while this is not true for domestic sourcing the results are robust to various specifications and an instrumental variables analysis

toward consilience between biology and economics the contribution of ecological economics abstract during its ten year history ecological economics has made a real difference in the way economists look at the natural world and in the way biologists look at the economy in this survey article we examine the contributions to the journal in terms of e o wilson s concept of consilience that is his argument that the methods and assumptions of any field of study should be consistent with the known and accepted facts in other disciplines in particular we examine the contributions of ecological economics to reconciling the economic theory of the consumer and producer with biophysical reality

consumption sustainable welfare and human needs with reference to uk expenditure patterns between 1954 and 1994 abstract this paper explores the complex relationship between economic consumption and human welfare or well being conventional economics suggests that increasing levels of economic consumption lead to increasing levels of well being however this view has been criticised on both environmental and social grounds on the one hand the material impacts of increasing consumption are environmentally unsustainable on the other hand material consumption can conflict with crucial social and psychological components of human welfare this paper develops a perspective on human welfare which is based on max neef s characterisation of human needs it discusses the implications of this alternative perspective for the conventional viewpoint and illustrates the importance of it with reference to patterns of consumer expenditure in the uk over the last 40 years the authors suggest that from this perspective modern societies may be seriously adrift in their pursuit of human well being however they also point out that addressing this situation provides far more opportunity for ecologically sustainable development than is generally recognised

comparing futures a positional approach to population ethics abstract major questions in environmental economics concern choices about the future sensible decisions thus require rules for comparing the well being of potentially different sets of people in terms of both numbers and identities under different futures the central problem of normative population theory is that basic ethical principles that individually claim widespread acceptance yield unpalatable conclusions when combined no approach currently on offer is able to overcome all theoretical objections but decision making goes on and needs ethical guidance this paper proposes a practical approach to the welfare comparison of competing futures as a matter of expedience it accepts that some choices may be incommensurable and therefore unrankable but its defining characteristic is its recognition that the evaluation of well being is typically a momentary phenomenon dependent on an individual s position or reference frame a critical positional change arises from the very act of being brought into existence social welfare thus has to be continually re evaluated and the welfare basis for new decisions is subject to a ratchet effect although this approach abandons time consistency it does so without apology and since time flows in one direction without inconsistency in decision making

choices without prices without apologies valuing is usually regarded as a process of compressing information about attributes into a single metric armed with this reduced form of compact information the consumer can consider a particular object with a particular price attached or implied and make an informed decision but the process of valuing is less straightforward than we ordinarily suppose when environmental goods and services become the object of information compaction it is possible that important information is lost we comment on the choice problem germane to environmental goods and services and challenge the presumption that environmental choices made without explicit pricing are inferior to those in which hypothetical valuation studies are undertaken

beyond the economics of more the place of consumption in ecological economics abstract the relation between consumption and welfare generally assumed by orthodox economists must be re examined by ecological economists present attitudes towards consumption among the latter are often ambiguous resulting in a modified form of consumerism yet questioning the often dubious benefits of consumption is as important for the environmental debate as emphasising its neglected costs beyond basic needs satisfaction it is at most one s consumption level relative to others which counts for welfare so that benefits from consumption cannot be increased in the aggregate thus there is much scope for reducing consumption and thus environmental costs while increasing or maintaining welfare identifying those goods the consumption of which adds little or nothing to welfare and assessing the effect of reducing their consumption on resource use natural and human should be a major concern of an ecological economics aimed at promoting sustainable welfare

collaboration and firm size some evidence from the uk defence industry this paper presents evidence on the relationship between collaboration and firm size derived from an empirical study of the uk defence industry the results indicate that size has a positive impact on collaboration and in particular with the propensity to collaborate with overseas firms however size has no impact on the propensity to collaborate with uk partners this lends support to theories which emphasize the resource constraints facing small firms in developing international collaboration there is a need for a policy debate concerning mechanisms to promote collaboration to assist small firms to realise the benefits of international collaboration

the role of social processes for sustainable consumption abstract rethinking the role consumption plays in individual well being and societal development is key for addressing pressing environmental problems we perceive the need to envision consumption as a social activity which requires the active engagement of consumers in order to better enhance their quality of life the paper focuses on the framework of product service systems one particular programme for more sustainable consumption after reviewing the potential benefits and limitations of this programme we explore the opportunities to learn from participatory and community based strategies like lets

country competition and us overseas assembly to examine the role of international competition in outsourcing production decisions i study the decisions of producers who used the u s overseas assembly program oap to conduct assembly operations in developing countries the evidence which is based on u s oap imports between 1991 to 2000 shows that production costs and corporate tax policies both shaped production decisions while increases in own country costs reduced the size of a developing country s oap shipments increases in competitor costs helped to increase a country s shipments the effects of competitor country cost changes were relatively large as the analysis suggests that a ten percent increase in competing country costs would increase a country s oap outsourcing activities by 5 8 percent while a ten percent increase in competitor country taxes would increase a country s oap exports by 1 6 percent

incomplete exchange rate pass through and imperfect competition the effect of local production extent to which product prices respond to exchange rate induced changes in costs this research has revealed that the percentage change in the prices of imported goods is smaller than the percentage change in exchange rates of the exporting country and that price responses differ across destinations a phenomenon termed pricing to market this finding may indicate market imperfections in international trade for example those that may arise in the case of segmented markets alternatively these empirical facts may reflect the sale of products whose production occurs in multiple locations when firms are able to shift their production across borders or alter their location of sourcing their costs will not change one for one with home country exchange rate movements and therefore their prices are unlikely to change one for one with exchange rate movements however this possibility has not been addressed empirically in the literature on pricing to market this study contributes to the literature by estimating exchangerate pass through while controlling for local production in the destination market we focus on the u s automobile market and the pricing of u s and japanese firms in particular for several reasons first we have product level information on pricing and content and there is substantial variation in destination country production across products and over time second existing studies have found evidence of pricing to market and incomplete exchange rate passthrough in automobile markets providing a useful comparison for our results and making this an appropriate market in which to study the effect of local production on exchange rate passthrough consistent with other studies we find that japanese firms partially pass through japanese cost changes to their u s customers in addition we find that this partial pass through characterizes not only japanese cost shocks but cost shocks that these japanese firms experience in their u s production this finding persists in a sample that includes both u s and japanese firms automobile firms generally do not pass through cost shocks in their entirety our data also show that those japanese auto

ecological economics as a policy science rhetoric or commitment towards an improved decision making process on sustainability abstract with sustainability issues currently attracting increasing political and policy attention this paper examines the impact of the rise of ecological economics in the policy world and its potential influence on the decision making process this study emphasises that ecological economics development is coevolved with and modified to fit specific social economic political and cultural contexts as a policy science ecological economics is context sensitive and action oriented explaining why it is so and what to do about it has become imperative for ecological economists this paper attempts to address the questions such as what are the macroeconomic conditions and political processes that make the formulation and implementation of ecological economic policy possible how should this alternative social reality engage with the dominant decision making process does ecological economics provide the necessary means for prescribing policy measures to achieve sustainable development endeavouring to understand these dimensions of ecological economics has been a dynamic social process and understanding this complex process might provide an opportunity to bridge the divide between policy rhetoric and reality in practice rather than maintain the status quo in order to achieve an improved decision making process on sustainability it highlights the imperative to explicitly study the institutional setting through which sustainable development policy discourse is mediated

the institutional framework and economic development the compound growth rates of per capita output and farrell type efficiency measures for 115 market economies over the period 1960 80 were compared with measures of political civil and economic liberty it was found that the institutional framework has significant and large effects on the efficiency and growth rate of economies politically open societies which subscribe to the rule of law to private property and to the market allocation of resources grow at three times the rate and are two and one half times as efficient as societies in which these freedoms are abridged

production and environmental resources a prelude to an evolutionary framework the paper advances a framework to study the evolution of technology and institutions it is based on two simple tenets first the quality and quantity of environmental resources are defined and constrained by the regime of technology and institutions second the character and extent of innovations are informed and limited by the regime as well the framework is contrasted with neoclassical and ecological economics while the framework assimilates ideas from both paradigms it departs from them by stressing the importance of the technological institutional regime tir the two views ignore in different ways the significance of tir 46 the neoclassical program conceives the flow of innovations as tir independent while the ecological agenda regards the fund of resources as tir independent 1 consequently both camps fail to provide an endogenous account of the observed punctuated character of the evolution of tir neoclassical economists maintain that as a resource depletes its price rises which induces switching to a cheaper one encourages exploration or spurs invention harold barnett and chandler morse 7 11 state that nature imposes particular scarcities not an inescapable general scarcity the responses to environmental resource limitation are supposedly singular activities stripped from any underpinning regime the neoclassical disregard of tir heuristically resembles the fable of marie antoinette s folly in response to the scarcity of bread at the eve of the french revolution she advised according to legend buying cake instead ecological economists offer a different view of resource limits 48 for herman daly 21 8 nature really does impose an inescapable general scarcity while neoclassical economists emphasize relative limitation scarcity pricing ecological economists stress malthusian general limitation for ecological economists substitution can solve relative allocation but cannot solve general limitation general limitation can be avoided only if economic activity proceeded within certain boundaries or as put by martin o connor 69 within appropriate cyclical structure of resource transformations under the motto sustainable development a low pace production activity supposedly enables a population to replicate indefinitely ecological economists conceive

ethics economics and environmental management individuals derive utility from their access to resources provided by the biosphere through the satisfaction of a number of needs and necessities these needs however cannot often be met simultaneously since they compete with each other this conflict is not just relevant at an individual or even intragenerational level indeed it implies a number of uncertainties and irreversibilities into the future which should not be left to oblivion from an extended anthropocentric ethical position in which only human beings have immanent value and are therefore subjects of moral consideration the identification of economic values can be of great use to allocate resources and make decisions on the environment economic analysis provides a number of decision tools than can be used to optimise efficiency and equity the purpose of this paper is to reflect on some of the ethical constraints to the ability of conventional economic valuation techniques to inform decision making processes affecting the environment it will be argued that depending on the stage of development some environmental and natural assets might well be seen as a common heritage either from a natural or a cultural viewpoint rather than just a pool of economic resources that could be used to satisfy basic needs and depleted or transformed accordingly whether directly or indirectly furthermore this boundary is not static the same environmental asset will be demanded as a resource at lower stages of development both individual and socially and as a part of the common heritage at a later stage again individual and socially in the former the use of conventional methods to value environmental goods and services will be warranted whereas this would not be the case in the latter we will also stress upon the fact that this is something quite different from the approach taken in social project appraisal where the introduction of efficiency prices and distributive factors also provides a move from individual to social welfare maximization but without breaking away from the market logic

eco efficient producer services what are they how do they benefit customers and the environment and how likely are they to develop and be extensively utilised abstract the potential environmental benefits of moving from a product based economy to a functional economy involving greater use of services is a subject of increasing interest and debate in the field of eco efficiency this paper provides a typology and fuller analysis of eco efficient producer services than hitherto reported three broad classes of service are described and assessed product based including product results product utility and product extension electronic substitution and information based examples of each are drawn from a major study on the successes and barriers of eco services in europe the paper concludes that while there are a number of areas of success there are considerable barriers to wider development and uptake of such services and that many of the more successful service applications are not necessarily driven by environmental considerations the paper warns that the shift from products to services cannot be assumed to be eco efficient and there are a number of rebound effects which need to be carefully analysed

investment in manufacturing exchange rates and external exposure abstract this paper introduces a new measure of external exposure which emphasizes exposure to external markets both through export sales and imported inputs into production and uses this measure to explore the linkage between exchange rates and investment in us industry on average manufacturing sectors have evolved to being primarily import exposed by the early 1980s in low price over cost markup sectors markups are relatively unresponsive to exchange rate changes whereas sectoral investment patterns are strongly affected by contrast high markup industries absorb much of the exchange rate fluctuations in markups and pass relatively little through to real investment

growing green money mapping community currencies for sustainable development abstract parallel sustainable monetary systems are being developed by civil society groups and non governmental organisations ngos informed by ecological economics perspectives on development value economic scale and growth and responding to the unsustainability of current global financial systems these parallel systems of exchange or community currencies are designed to promote sustainable development by localising economic development building social capital and substituting for material consumption valuing work which is marginalised in conventional labour markets and challenging the growth based monetary system however this international movement towards community based ecological economic practices is under researched this paper presents new empirical evidence from the first international study of the scope and character of community currencies it identifies the diversity scale geography and development trajectory of these initiatives discusses the implications of these findings for efforts to achieve sustainable development and identifies future research needs to help harness the sustainability potential of these initiatives

evolutionary psychology in ecological economics consilience consumption and contentment abstract this paper makes the case that if ecological economics seeks consilience with biology it must acquaint itself with evolutionary theories about social development and human behaviour the author reviews some of the literature in this area particular attention is paid to the newly emerging discipline of evolutionary psychology which sets out a neo darwinian view of human nature in which individual and social behaviour is dominated by the evolutionary strategies of the selfish gene the paper discusses the relevance of this perspective for two specific problem areas in ecological economics the first of these is the question of consumption and consumer behaviour the second is the problem of mismatch between the pursuit of economic growth and social well being or contentment these examples illustrate that evolutionary psychology may sometimes provide a natural ally for ecological economics in particular pointing up certain failures of conventional economics on the other hand it also offers harsh lessons concerning the difficulty of changing evolved behaviour patterns the paper suggests three possible avenues of response by ecological economists to the insights of evolutionary psychology

exchange rates and investment in united states industry the path of the dollar has significantly influenced investment activity in u s industry the effects of both exchange rate levels and exchange rate volatility have been more pronounced in the 1980s than in the 1970s although aggregate investment data mask some of these relationships the effects of exchange rates on investment are most pronounced in the disaggregate data for manufacturing durable goods sectors and nonmanufacturing sectors these relationships also have changed over time in contrast to the conventional wisdom in the 1980s real dollar depreciations appreciations were likely to be associated with investment contractions expansions copyright 1993 by mit press

explaining armington what determines substitutability between home and foreign goods for decades trade economists have modeled imperfect substitution between home and foreign goods in consumption often called the armington assumption with little analysis of what explains the wide variation in these substitution elasticities across sectors using a varying coefficients model the authors estimate armington elasticities between u s domestic and foreign goods across over one hundred industrial sectors from 1980 to 1988 and examine the role of product industry political and home bias factors as determinants they find strong support that the presence of foreign owned affiliates affects armington elasticities in important ways and some support that entry barriers and union presence have an effect

fdi trade and spillover efficiency evidence from china s manufacturing sector using firm data from the 1995 third industrial census of china this paper finds that the presence of foreign ownership has a positive and significant effect on domestic firms productivity moreover trading with more advanced countries helps china gain access to new technology and information which improves its productivity and enables it to compete in international markets it is found that china s imports from oecd and the four asian tigers and exports to oecd have positive effects on domestic firms productivity by dividing industries into high technology gap and low technology gap groups it is found that the spillover effects of fdi are larger for the low technology gap group than for the high technology gap group however the estimation results of the trade induced technology spillover effect support the technology gap learning theory and the significance of importing appropriate technology

introducing the all seeing eye of business a model for understanding the nature impact and potential uses of waste abstract at current rates of disposal there are nearly 8 years of remaining landfill capacity at permitted sites in england and wales industry encouraged by financial penalties from the government faces the challenges of cleaner and more sustainable production whilst trying to remain competitive in the market place this paper proposes fit thinking as a means by which waste can be reduced from the early design stages alongside the all seeing eye of business a model to illustrate potential sources of profit and loss in a manufacturing firm s output a literature review on waste and profitability reveals the basis for the model concepts from material flow cost accounting the kanthal effect and the kano model are combined together with industry case studies to develop the model the model is explained in detail demonstrating twelve types of relationships between a company s product outputs and the profitability of each output the model and the relationships it proposes are then tested against examples from literature ultimately fit thinking is shown to help companies prevent waste where waste is unavoidable the all seeing eye of business model can be used by companies in the understanding of their non product output waste providing insights into the nature of their waste and the impact on profitability it is hoped that this understanding will encourage them to see waste as a potential profit making co product rather than as a necessary evil

social problems of green buildings from the humanistic needs to social acceptance abstract in the past few decades scholars have conducted research and held discussions on green building to highlight their vital significance in addressing environmental economic and social challenges it is recognized that public attitudes and views towards green building may affect its application in daily lives although studies on consumers cognition are rarely carried out the social problems related to green building such as consumers basic understanding purchase intention social and humanistic needs public attitudes and behaviors rebound effects and furthermore social acceptance are therefore studied based on three research methods including literature review questionnaire and inductive analysis through the analysis following results can be obtained i green building s sustainable design has quite important influence over consumers decision making process the general public maintains a high regard for the advantages of green building where better ventilation and lighting is a major benefit saving energy and water are the second rated and then land and construction material saving ii although the general public is not being familiar with the concept of green building the majority of participants would pay more for green buildings over the standard building when they know the environmental impacts of them iii green building should not only be limited to energy performance oriented but also be user oriented the social and humanistic needs model is thus well established based on maslow s hierarchy of needs in the life cycle of green building social and humanistic needs show a trend of dynamics which means social processes with consumer engagement and participation needs to be considered in aspects of conceptual design planning and design operation and maintenance to improve users happiness and productivity iv current user oriented solutions to green building are always based on a hypothesis that consumers are readily motivated or prefer expensive goods for reducing energy use to really reflect preference and influenced actions social acceptance should be analyzed to fully gauge interest and perspective of the people v rebound effects of post occupant building performance including energy performance human comfort indoor environmental quality greenhouse gas emission and workplace productivity can be divided into two stages at present it is necessary to establish appropriate samples methods and parameters for an unbiased and valid post occupant evaluation system in addition the social acceptance of green building framework is established based on wustenhagen et al triangular model for renewable energy innovation all the explorations to social problems of green building in this article are expected to provide a healthy social basis for the development of this green strategy

exports and economic growth in central and east european countries during transition this paper quantifies the contribution of exports to economic growth in central and east european countries ceecs during transition two theoretical models are examined the first is based on an aggregate production function which includes exports as an additional input while the second is based on a two sector exports and non exports model where exports provide positive externalities in non export production each model is estimated with both fixed and random effects using panel data results show that the random effects model is preferred and that exports have a significant impact on economic growth

redefining innovation eco innovation research and the contribution from ecological economics while innovation processes toward sustainable development eco innovations have received increasing attention during the past years theoretical and methodological approaches to analyze these processes are poorly developed against this background the term eco innovation is introduced in this paper addressing explicitly three kinds of changes towards sustainable development technological social and institutional innovation secondly the potential contribution of neoclassical and co evolutionary approaches from environmental and innovation economics to eco innovation research is discussed three peculiarities of eco innovation are identified the double externality problem the regulatory push pull effect and the increasing importance of social and institutional innovation while the first two are widely ignored in innovation economics the third is at the least not elaborated appropriately the consideration of these peculiarities may help to overcome market failure by establishing a specific eco innovation policy and to avoid a technology bias through a broader understanding of innovation finally perspectives for a specific contribution of ecological economics to eco innovation research are drawn it is argued that methodological pluralism as established in ecological economics would be very beneficial for eco innovation research a theoretical framework integrating elements from both neoclassical and evolutionary approaches should be pursued in order to consider the complexity of factors influencing innovation decisions as well as the specific role of regulatory instruments and the experience gathered in ecological economics integrating ecological social and economic aspects of sustainable development is highly useful for opening up innovation research to social and institutional changes 2000 elsevier science b v all rights reserved

overseas assembly and country sourcing choices abstract this paper studies the cross country pattern of u s overseas assembly activities between 1980 and 2000 to examine how outsourcing decisions are affected by changes in country and competitor costs a number of interesting regularities emerge when a country s costs rise the share of u s overseas assembly activities in that location decline conversely a country s share grows when competitor country costs increase while own and competitor country costs affect overseas assembly in all countries the magnitude of these effects is larger for developing countries in many cases the measured cost responses appear to correspond with outsourcing theories that are based on search and customization costs

women nature and the social construction of economic man abstract this paper argues that the social construction economic man is the product of a hierarchical dualism in western society that has also created rational man and scientific man women and the natural world form the subordinated half of these dualisms central to this paper is the claim that this dualism is not only a cultural theoretical one but also a material one the social construction of economic man is the product of a bifurcated knowledge system and a materially divided society economic man reflects a society in which the embeddedness and embodiedness of humanity is hidden by the division of mind from body and science culture from the natural world for this reason it is not possible to incorporate women and nature into the economy through the commodity form by according them a value as price it is argued that the economic system can only exist if women and nature remain externalised as women form the bridge between an autonomous individualised man and the biological ecological underpinning of his existence central to this analysis is the distinction between social and natural biological time economic man lives in social time clock time while women are responsible for biological time this is not because women are closer to nature biology in an essential sense rather this relationship is imposed upon them by a male dominated society

entropy law and exhaustion of natural resources is nicholas georgescu roegen s paradigm defensible abstract i examine whether the entropy law dictates absolute limits to growth i distinguish the entropy law proper diffusion without coherent work from its application the carnot cycle diffusion with coherent work while the entropy law pertains to mechanistic systems the carnot cycle is the result of purposeful agency since the economic process is carried out by purposeful agency to generate coherent work it is not governed by the entropy law rather it resembles the carnot cycle resources hence cannot be defined objectively a la the entropy law resources can only be defined relative to the purposeful agency thus the prognosticators of doom like georgescu roegen cannot be bolstered by the entropy law

five capital impact assessment appraisal framework based on theory of sustainable well being abstract this paper sets out to formulate an appraisal approach in context with sustainable development in conventional project appraisal such as energy undertakings most emphasis is placed on financial flows and rate of return on infrastructure investments although current greenhouse gas emissions are estimated to pose large costs on future generations these emissions are generally not estimated as part of the investment cost other public goods may also be omitted because their value is not recognized we review conventional cost benefit assessment and propose a new broader evaluation this new evaluation approach is based on the theory that five capital value types support long term well being rather than economic growth alone the theory states that humans depend on the size of stocks and flows from natural manufactured human social and financial capital we describe the five capitals to illustrate the value categories and outline an approach to evaluate all these in the context of energy development

institutional framework and economic development international evidence this paper examines the effect of quality of the institutional framework on economic development our empirical results support the hypothesis that good institutions improve efficiency and accelerate growth the positive effect of institutional quality is more pronounced with mutually reinforcing support of economic freedom our results also indicate that good institutions help developing countries grow faster to achieve conditional convergence we infer from the results that economic development requires not only physical and human capital formation but also freedom to choose and institutional support

the evolution of preferences why sovereign preferences may not lead to sustainable policies and what to do about it abstract the conventional economic paradigm assumes that tastes and preferences are exogenous to the economic system and that the economic problem consists of optimally satisfying those preferences tastes and preferences usually do not change rapidly and in the short term this assumption makes sense sustainability is an inherently long term problem and in the long run it does not make sense to assume tastes and preferences are fixed and given if preferences are expected to change over time and under the influence of education advertising changing cultural assumptions etc the old assumption of consumer sovereignty is not adequate different criteria of optimality are needed how preferences change how they relate to the goal of sustainability and how they can or should be actively influenced to satisfy the new criteria needs to be determined ecological economics has emphasized the three rank ordered goals of ecological sustainability fair distribution and allocative efficiency this paper examines how preferences evolve and change over time and the implications of this for developing policies that meet these three goals in democratic societies

the usury debate the sustainability debate and the call for a moral economy abstract this article attempts to contribute ethical to perspectives on sustainability initiatives by comparing the relationship between economy and society in the usury debate in early modern england and the sustainability debate in the late 20th century this comparison highlights is the changing relationship between economy and society has been a self conscious and hotly debated struggle among various groups at various times in history the article concludes that if sustainability is going to be a viable ethical project it may have to reclaim access to social and political relations which have been increasingly privatized in market economy throughout the modern period

live long and prosper collective action social capital and social vision abstract to understand the social driving forces that lead to environmental change we must account for the role of social interactions the development of norms of behavior and the institutionalization of rules and norms the development of social capital this paper demonstrates the utility of social capital theory by articulating linkages between human decision making at individual and collective levels and social vision an important research focus within the emerging ecological economics research tradition social capital theory clarifies relationships between social interactions and outcomes that contribute to the production of environmental quality public peace and economic prosperity necessary factors for long term social and ecological sustainability

the environmental effect of car free housing a case in vienna abstract a case control study of the car free model housing project in vienna was conducted to evaluate whether people living in this settlement have more sustainable lifestyles than people living in comparable buildings in vienna another aim was to identify the lifestyle characteristics and household activities which significantly influence the environmental impact of the residents of the car free housing project and a control group the control group referred to as the reference settlement was chosen from a nearby building complex with similar characteristics but without the car free feature household consumption patterns were estimated based on interviews in combination with data from the austrian consumer expenditure survey and the national accounts the evaluation of household environmental impacts uses emissions estimates from the austrian national accounting matrices including environmental accounts and data from life cycle assessments households from the car free settlement have substantially lower environmental impacts in the categories of ground transportation and energy use their co 2 emissions of these two categories are less than 50 of those living in the reference settlement the households in the car free settlement have somewhat higher emissions in the categories air transport nutrition and other consumption reflecting the higher income per capita as a result the co 2 emissions are only slightly lower than in the reference settlement but the emissions intensity is 20 lower both household groups have significantly lower environmental impacts than the austrian average reflecting less car use and cleaner heating energy in vienna

the social shaping of household consumption abstract this paper deals with a recurrent theme in the sustainability debate the necessity of changing western consumption patterns and lifestyles unlike most accounts in which the principle mechanisms for ensuring this are top down approaches of government policies this paper focuses on the bottom up approaches of citizens seeking to develop less environmentally damaging technologies and ways of living the paper examines three scandinavian examples to illustrate how citizens are voluntarily seeking to internalise some of the externalities of everyday life and provide the collective good of improved environmental quality the paper discusses the importance of social relations in the shaping of people s preferences for environmental goods the paper draws out what lessons can be learned from these initiatives and focuses on three factors affecting the future growth and proliferation of citizen led initiatives upscaling the transferability of social experiments and the pervasive societal commitments to unsustainable behaviour

from the ground up ecofeminism and ecological economics abstract speaking from the margins ecofeminist analysis exposes many of the assumptions of neoclassical economics as gender biased and as anti ecological it identifies the abstract individual of neoclassical economics as a privileged male individual whose apparent autonomy is predicated on the oppression of women marginal people and nature thus ecofeminists tell a different story about economic man from the grounds of others experience up ecofeminism points to the limits of models of sustainability built on extending market rationality to non market spheres of life ecofeminist economics contains a creative tension between a commitment to social justice and a determination not to colonize the wild

determinants of foreign direct investment empirical evidence from eu accession candidates this study examines bilateral foreign direct investments fdi between the members of the european union and eight central and east european candidate ceec economies in transition awaiting accession into the european union eu crosssection data were obtained for bulgaria czech republic estonia hungary poland romania slovak republic and slovenia for 1997 once the main characteristics of fdi recipient and donor nations are identified in a bilateral framework it will be feasible to predict future fdi inflows this study reveals that the key determinants of fdi inflows in ceecs are size of the host economy host country risk labour costs in host country and openness to trade countries that are receiving fewer foreign investments could make themselves more attractive to potential donor nations by focusing on some of the key determinants identified by this study

vertical intra industry trade and fragmentation an empirical examination of the us auto parts industry the global auto industry has undergone a significant structural transformation in the last two decades as a result of the international fragmentation of production this increase in cross border production sharing activities in the auto industry led to intra industry trade iit in auto parts in this study the extent of iit in the us auto parts industry is examined by decomposing trade into inter industry trade vertical iit and horizontal iit then the development of vertical iit is analysed as an indicator of international fragmentation between the us and 29 trading partners several country specific hypotheses suggested by the fragmentation literature are tested for the period 1989 2006 the results indicate that a substantial portion of iit in the us auto parts industry is vertical iit and the econometric results generally support the hypotheses drawn from the theory in particular the findings show that the extent of the us vertical iit is positively correlated with average market size differences in market size differences in factor endowments and outward foreign direct investment while it is negatively correlated with distance and differences in per capita gdp

climate change economics and buddhism part 2 new views and practices for sustainable world economies abstract the evidence of impending and serious climate and other consequences of an expanding world economy based on fossil carbon energy continues to accumulate this two part paper examines the potential contribution of the world view and insights of buddhism to this search it presents both a conceptual and practical case that buddhism can help shape and move towards an alternative and effective paradigmatic basis for sustainable economies one capable of bringing about and maintaining genuine high welfare levels across the world s societies the first paper outlined a comprehensive analytical framework to identify the fundamental nature of anthropogenic climate change based on the integration of two of the most influential environmental analysis tools of recent decades the dpsir model and ipat equation the framework was then broadened to facilitate ideas from the buddhist world view by injecting two key missing aspects the interrelated role of 1 beliefs and values on goals and behavior and 2 the nature of well being or human happiness finally the principal linkages between this climate change analysis framework and buddhism were explored in this concluding paper the systems framework is used to demonstrate how buddhist and related world views can feed into appropriate and effective responses to the impending challenges of climate change this is undertaken by systematically presenting a specific if indicative list of relevant strategies informed by the understanding of interconnectedness and other basic principles about the nature of reality and human well being as proposed in buddhism

aggregate uncertainty investment and asymmetric adjustment in the uk manufacturing sector theory suggests that the level of uncertainty facing firms should affect both the rate of adjustment to and the steady state level of investment although there is ambiguity about the sign of the effect a non linear model of investment behaviour incorporating time varying adjustment speeds with threshold effects is estimated for the uk manufacturing sector the most general non linear specification is found to be most congruent with the data uncertainty has a large and significant effect on both levels and rates of adjustment

from microscopic to macroscopic theories entropic aspects of ecological and economic processes abstract the paper discusses the relevance of thermodynamics and related theories to ecological economics it is argued that it is not useful to apply the entropy term directly to economic processes physical entropy terms defined on a microscopic level for isolated systems are quite far from economic and ecological reality only theories that deal with the development of open systems far from thermodynamics equilibrium provide the important link between entropy and evolution towards higher complexity major new impulses for ecological economics come especially from evolutionary ecological theories these quite recent theoretical approaches incorporate the knowledge of far from equilibrium thermodynamics and explain dynamic changes in ecosystems on a macroscopic level from a thermodynamic perspective thermodynamic approaches provide a heuristic base for the analysis of economy environment interactions important implications of these approaches concern time irreversibility ecological efficiency and the interdependencies of environmental problems and evolution

exchange rates and prices the adjustment of relative prices to exchange rate movements is explained in an industrial organization approach given labor costs in the respective currencies exchange rate movements change costs for firms selling in the home market and thus disturb the industry equilibrium the extent of absolute and relative price adjustment is shown to depend on market integration product substitutability the relative number of domestic and foreign firms and the market structure the impact of exchange rates on prices is illustrated in a variety of approaches including the cournot a dixit and j stiglitz 1977 and s salop 1979 models some empirical evidence is offered in support of the theory copyright 1987 by american economic association