how much damage will climate change do recent estimates two reasons to be concerned about climate change are its unjust distributional impact and its negative aggregate effect on economic growth and welfare although our knowledge of the impact of climate change is incomplete and uncertain economic valuation is difficult and controversial and the effect of other developments on the impacts of climate change is largely speculative the authors find that poorer countries and people are more vulnerable than are richer countries and people a modest global warming is likely to have a net negative effect on poor countries in hot climates but may have a net positive effect on rich countries in temperate climates if one counts dollars the world aggregate may be positive if one counts people the world aggregate is probably negative negative impacts would become more negative and positive impacts would turn negative for more substantial warming the marginal costs of carbon dioxide emissions are uncertain and sensitive to assumptions that partially reflect ethical positions but are unlikely to be larger than 50 per tonne carbon

trade policy in a super size me world abstract when a foreign monopolist sets a single market clearing price for its product the sign of the optimal tariff is determined by the extent of pass through also known as the terms of trade effect however when a foreign monopolist employs a second degree price discrimination mechanism in the domestic market the calculus of welfare maximization is very different while there are still terms of trade effects from the imposition of a tariff the existence of such effects are neither necessary nor sufficient to determine the sign of the optimal tariff instead the distribution of valuations within the population is the key determinant of the nature of policy intervention this result differs significantly from the uniform price case and is driven by the incentive compatibility constraint which places the distribution of types at the center of the analysis if there is a relatively large fraction of high valuation types in the population then domestic information rents may be increased by subsidizing imports thereby increasing the consumption of the low valuation types and moving the incentive constraint in favor of the high valuation types however if the share of high types in the population is relatively small then the increase in information rents will also be small but the fiscal implications of a subsidy will be large consequently the optimal policy will be to impose a trade tax

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

excise taxes on a non uniform pricing monopoly ad valorem and unit taxes compared in this paper ad valorem and unit taxation are compared on a model that allows for various monopolistic pricing policies including uniform pricing and all three types of pigouvian price discrimination it shows that for any given unit tax on a non uniform pricing monopoly 1 there exists an output neutral ad valorem tax rate that gives rise to a higher tax yield than the unit tax and 2 there exists an ad valorem tax rate that welfare dominates the unit tax not only in the aggregate sense but also in the pareto sense taxes d accise dans le cas d un monopole qui n a pas une tarification unique comparaison des taxes ad valorem et unitaire ce memoire compare la taxe ad valorem et la taxe par

product and process innovations in the life cycle of an industry abstract filson rev econ dyn 4 2001 uses industry level data on firm numbers price quantity and quality along with an equilibrium model of industry evolution to estimate the nature and effects of quality and cost improvements in the personal computer industry and four other new industries this paper studies the personal computer industry in more detail and shows that the model explains some peculiar patterns that cannot be explained by previous life cycle models the model s estimates are evaluated using historical studies of the evolution of the personal computer industry and patterns that require further model development are described

an illustration of the essential difference between individual and social learning and its consequences for computational analyses abstract drawing a conclusion from recent insights in evolutionary game theory we show that a so called spite effect implies that there is an essential difference between individual and social learning we illustrate its consequences for the choice of computational tools in economics and social settings in general by analyzing two variants of a genetic algorithm

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

optimal nonuniform prices we consider optimal nonuniform pricing schedules where the price depends upon the amount purchased such schedules are regularly used by public utilities and other services welfare optimal nonuniform prices are related to the theory of optimal uniform prices developed by ramsey we characterize situations in which upward or downward discontinuities in pricing schedules are optimal our results are applicable to a number of related problems including optimal taxation insurance and incentives economic theory has confined most of its attention to markets with uniform prices in which the price per unit charged is invariant to the level of a customer s purchases this focus is warranted when goods are resellable since any attempt to charge nonuniform prices could be circumvented by reselling amongst customers but when goods are not resellable nonuniform prices are not only possible but common public utilities have declining block pricing with lower unit charges for large levels of consumption many agencies providing services including communications transportation even education use two part pricing with a fixed entry or retainer charge and a further charge per unit consumption nonuniform price schedules can be expected to be ever more common as services become a larger fraction of total output the increasing prevalence of nonuniform pricing policies have made them the focus of recent public and economic attention oi 1971 feldstein 1972 and ng and weisser 1974 have examined optimal two part pricing policies leland and meyer 1976 examine block pricing and show by example that optimal welfare policies may require nonuniform prices if zero profit constraints are binding in this paper we consider arbitrary nonuniform pricing policies using variational techniques two part and block pricing schedules are of course special cases of the environment we consider the work most closely related to our examination is the seminal paper by spence 1978 and subsequent analysis by roberts 1979 spence however does not pay explicit attention to the key role played by constraints on optimal pricing schedules roberts considers upward price discontinuities which lead to bunching of consumers at a given level of consumption but not downward price discontinuities which lead to regions in which no consumer chooses to consume gaps bunching or gaps may appear in the optimal price schedule even when underlying demand and cost functions are smooth and well behaved the prevalence of discontinuous pricing schedules e g the block pricing structures of public utilities argues that these questions are of practical as well as theoretical interest

keith pavitt and the invisible college of the economics of technology and innovation this paper uses a database on scientific interaction in the field of the economics of technological change and innovation the database is used to address two issues first the network is shown to be approximately scale free this suggests that growth of the number of scholars active in the field and so called preferential attachment i e scholars entering the field prefer to attach themselves to highly reputable existing members of the network are characteristic of the nature of the underlying field thus increasing returns seem to govern mechanisms of reputation formation second the potential existence of cohesive subgroups of relatively strongly connected scholars is explored and the implications of this for the paradigmatic structure of the field are discussed

innovation and market structure in the dynamics of the pharmaceutical industry and biotechnology towards a history friendly model this paper is a first attempt at modelling the long term dynamics of market structure and innovation in the pharmaceutical industry in a history friendly way the model examines the relationships between the nature of the search space demand the patterns of competition and industry evolution in the age of random screening and in the age of molecular biology and shows that concentration in the pharmaceutical industry is shaped by lack of cumulativeness in innovative activities and market fragmentation the model conforms to our appreciative understanding and responds to changes in parameters concerning demand costs economies of scale opportunity conditions and the relative advantages of new biotechnology firms nbfs vis a vis incumbents with the exception of cost increases the model is quite robust to these changes in its essential features it is quite difficult to raise substantially concentration and to have nbfs displacing incumbents

social capital structural holes and the formation of an industry network the formation of a network is determined by the opposition of two forces the first is the reproduction of network structure as a general social resource for network members the second is the alteration of network structure by entrepreneurs for their own benefit the idea of reproduction is a conventional one in organizational sociology but has taken on increased importance due to the work of bourdieu and coleman in contrast burt stresses the entrepreneurship of individual agents in exploiting structural holes that lie between constrained positions though complementary the theories of social capital and structural holes have fundamentally different implications for network formation this paper investigates these theories by examining empirically the formation of the interorganizational network among biotechnology firms we propose that network structure determines the frequency with which a new biotechnology firm or startup establishes new relationships network structure indicates both where soci

the stern review a deconstruction using a simple model designed for transparency but nonetheless calibrated to support the much quoted damage estimates of the stern review of the economics of climate change we demonstrate significant sensitivity of those results to assumptions about the pure rate of time preference the time horizon and the rates of risk and equity aversion used to compute certainty and equity equivalent annuities most importantly we demonstrate enormous sensitivity to presumed constant regional vulnerability and underlying assumptions about adaptive capacity manipulation of any of these parameters one at a time across reasonable ranges can diminish damage estimates by as much as 84 or in the case of extending the time horizon with the review s low discount rate increase damage estimates by 900 we also confirm the usual result that limiting atmospheric concentrations to specific benchmarks above 400 ppm cannot eliminate all damages nonetheless we applaud the stern review author team for reconfirming that the climate problem can be approached productively as an economic problem whose solutions can be explored with the tools of decision analysis 2008 elsevier ltd all rights reserved

product innovation and the business cycle micreconomic data show two important facts about new products first some products are more important than others second it takes them years to penetrate the market significantly the authors calibrated model with these features overpredicts the autocovariance of u s gnp at long lags but underpredicts it at short lags the latter is not surprising since the model leaves out other obvious high frequency shocks the puzzle is why the u s gnp data do not show stronger autocorrelation at higher lags a surprising finding is that while the speed of diffusion has huge level effects it plays a minor role in shaping the business cycle copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the stern review and the costs of climate change mitigation responding to the dual critique and the tol and yohe paper in the previous issue of world economics professor anderson counters a number of assertions made in those papers including the claims that the stern review is alarmist or scaremongering biased in its estimates and was not reviewed by peers he points to a number of areas where the authors either got it wrong or seriously misrepresented the review

the influence of local search and performance heuristics on new design introduction in a new product market abstract this study develops and tests three sets of predictions concerning new design introduction during the initial period of ferment in a new product market we root our predictions most directly in the evolutionary economic concepts of local search and performance heuristics first we argue that new entrants will introduce most designs that are new to a product market during an initial period of ferment second we argue that local search will lead most product market incumbents that introduce second or subsequent designs after their entry to introduce designs that are similar to those incorporated in their existing products third we argue that firms selling products based on designs that are losing aggregate share in the market will be likely to introduce products based on new designs while firms losing market share to firms that are selling the same design are unlikely to introduce new designs our empirical analysis examines the magnetic resonance imaging mri subfield of the diagnostic imaging equipment industry between 1980 and 1986 a period that begins with the introduction of the first mri design and ends with the emergence of widely accepted design characteristics the results support the argument that local search and performance heuristics along with other market factors and business characteristics influence design introduction during a period of ferment

a complete solution to a class of principal agent problems with an application to the control of a self managed firm this paper considers a class of principal agent problems which have the following features 1 there is adverse selection because the principal ignores the value of one parameter of the agent s true characteristics 2 leaving aside the information parameter the principal s welfare as well as the agent s welfare depend on two types of variables observable to both of them the first ones possibly multidimensional are called action variable s and the second one which is one dimensional has in general the meaning of a money transfer 3 the principal is a stackelberg leader of the two person game he can commit himself to decision rules which are admissible on informational grounds he optimizes within the adequate class taking into account besides the agent s reaction one constraint which has generally the meaning of an individual rationality constraint and sometimes of a feasibility constraint the optimization is limited to the class of non stochastic mechanisms 4 the problem can also receive an alternative interpretation the principal faces a continuum of agents of unknown characteristics the distribution being known however stylized principal agent problems of this type have often been considered in the economic literature in particular the reader will later be able to recognize that the standard income tax model a la mirrlees 1971 the quality or quantity choice model of the monopolist a la mussa and rosen 1978 or maskin and riley 1982 and the model of government regulation of the private monopolist of baron and myerson 1982 all belong to

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

structure learning and the speed of innovating a two phase model of collective innovation using agent based modeling continual increase in the complexity of technologies and innovations has resulted in actors i e individuals or organizations becoming more dependent on other actor s knowledge and skills to complement their own skills in the innovation process as a result networks have become more and more prominent in affecting the innovation process conceptualizing innovation as a search and learning process that results in a successful product we introduce a two phase model of collective innovation that accounts for the deliberateness of the innovation process using agent based modeling we explore how interaction structure among a group of actors affects the speed at which the group can collectively innovate in addition we present results from counterfactual simulations to highlight the importance of deliberate search and changing realized connections in modeling collective innovation process moreover we discuss the effects of the structure under different mechanisms of learning and different levels of actor s learning capabilities copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

strong ties weak ties and islands structural and cultural predictors of organizational innovation how does the tendency of entrepreneurs to engage in innovation relate to their structural and cultural embeddedness using micro data on entrepreneurial teams and the organizational innovations they attempt to develop this article presents a predictive model of creative action to address this question capacity for creative action is seen to be a function of the ability of entrepreneurs to i obtain non redundant information from their social networks ii avoid pressures for conformity and iii sustain trust in developing novel and potentially profitable innovations probit analyses of over 700 organizational startups suggest that these mechanisms exercise effects on innovation via the network ties and enculturation of entrepreneurs

a framework linking intangible resources and capabilities to sustainable competitive advantage this article is concerned with the role of intangible resources in business strategy in particular it is concerned with identifying the intangible sources of sustainable competitive advantage sustainable competitive advantage results from the possession of relevant capability differentials regulatory and positional capabilities are concerned with intangible assets functional and cultural capabilities are concerned with competencies a framework linking intangible resources to capabilities has been devised and is used as the basis of a new technique for identifying the relative contribution which the different intangible resources make to competitive advantage the results of the use of this technique in six case studies are reported

the role of home country demand in the internationalization of new ventures international new ventures invs have been documented to exist all around the world but the literature is silent on the frequency of such companies in different countries we contend that the propensity of new ventures to internationalize by forming international partnerships is higher in small domestic demand countries because they have a greater motivation given their limited local demand after discussing the methodological challenges in testing this hypothesis we do such a test by studying alliances in the health segment of the biotech industry in relatively small domestic demand countries australia israel and taiwan and by comparing the results with five large domestic demand countries uk germany france us and japan we find that young firms in the countries with smaller domestic demand are at least 3 times more likely to enter into international partnerships than their counterparts in countries with larger domestic demand we further demonstrate that this difference can primarily be explained by the difference in the size of domestic healthcare markets rather than other underlying opportunity structure related factors

network structure and the diffusion of knowledge this paper models knowledge diffusion as a barter process in which agents exchange different types of knowledge this is intended to capture the observed practice of informal knowledge trading agents are located on a network and are directly connected with a small number of other agents agents repeatedly meet those with whom direct connections exist and trade if mutually profitable trades exist in this way knowledge diffuses throughout the economy we examine the relationship between network architecture and diffusion performance we consider the space of structures that fall between at one extreme a network in which every agent is connected to n nearest neighbours and at the other extreme a network with each agent being connected to on average n randomly chosen agents we find that the performance of the system exhibits clear small world properties in that the steady state level of average knowledge is maximal when the structure is a small world that is when most connections are local but roughly 10 percent of them are long distance the variance of knowledge levels among agents is maximal in the small world region whereas the coefficient of variation is minimal we explain these results as reflecting the dynamics of knowledge transmission as affected by the architecture of connections among agents

non uniform pricing output and welfare under monopoly which the price varies with the quantity purchased than by charging a uniform price in general the profit maximizing non uniform price schedule and the welfare maximizing schedule do not coincide thus there may be scope for improving market performance through regulation the paper considers a regulator who has limited information and authority the issues addressed centre around the question of whether the level of total market output can be taken as a measure of market performance conditions under which welfare is a monotonic function of the level of total output are derived

division of labor organizational coordination and market mechanisms in collective problem solving abstract this paper builds upon a view of economic organizations as problem solving arrangements and presents a simple model of adaptive problem solving driven by trial and error learning and collective selection institutional structures and in particular their degree of decentralization determine which solutions are tried out and undergo selection it is shown that if the design problem at hand is complex in terms of interdependencies between the elements of the system then a decentralized institutional structure is unlikely ever to generate optimal solutions and therefore no selection process can ever select them we also show that nearly decomposable structures have in general a selective advantage in terms of speed in reaching good locally optimal solutions