explaining metropolitan housing price differences abstract housing prices differ substantially among metropolitan areas the rent and house price indexes used here measure this variation among 54 metropolitan areas a model of metropolitan housing price determination is presented and used to identify the sources of intermetropolitan price variation reduced form equations explain close to 90 of the variation in rental prices and close to 60 of the variation in house prices

state lotteries and consumer behavior abstract this paper investigates two central issues regarding state lotteries first analyses of multiple sources of micro level data demonstrate that household lottery spending is financed primarily by a reduction in non gambling expenditures not by a reduction in expenditures on other forms of gambling the introduction of a state lottery is associated with an average decline of 46 per month or 2 4 percent in household non gambling expenditures low income households reduce non gambling household expenditures by 2 5 percent on average 3 1 percent when the state lottery includes instant games these households experience statistically significant declines in expenditures on food and on rent mortgage and other bills second consumer demand for lottery products responds positively to the expected value of the gamble controlling for other statistical moments and product characteristics including the nominal top prize amount this finding is consistent with informed choice among consumers of lottery products although other forms of irrational or misinformed choice cannot be ruled out

on the measurement of risk aversion from experimental data attitudes towards risk are measured for households in northern zambia using an experimental gambling approach with real payoffs that at maximum were equal to 30 of average total annual income per capita the results of the experiment show decreasing absolute risk aversion and increasing partial risk aversion determinants of risk aversion are investigated using random effects interval regression model exploiting the panel data structure of the repeated experiments wealth indicator variables are found to be significant and partial relative risk aversion decreases as wealth increases females are found to be more risk averse than males

losing money on the margin abstract margin trading is popular with retail investors around the world to limit the scale of these investors potential losses regulators impose a system of collateral requirements and margin calls we show in this paper however that the collateral requirement imposed by margin calls results in negative expected returns for these traders whilst also inducing positive skew in the returns distribution investments in assets with symmetric returns when traded on margin instead offer limited losses and a small chance of a large gain much like lottery stocks and other gambles we demonstrate this theoretically and then show empirically using a unique database of account data from a chinese retail brokerage that the realized losses of margin traders are often substantial this leads us to question whether current regulation is appropriate

progress in renewable energy under clean development mechanism in india abstract kyoto protocol was the first agreement regarding control of climate change problems clean development mechanism cdm was included in the kyoto protocol to promote sustainable development in developing countries non annex i countries and assist developed countries annex i countries to achieve their emission reduction targets cdm allows trading of emissions reductions and helps to increase sustainable development in a developing country and reduce global emissions in developed country renewable energy sources are the appropriate alternatives for sustainable development through cdm india is one of the emerging nations in renewable energy sector government of india is trying to enhance energy generation through renewable and carbon trading this paper shows the current status and progress of renewable energy through cdm in india

a theory of growth controls a microeconomic model of individual decision making that illustrates how growth controls might arise is developed the emergence of growth controls is analyzed under a variety of assumptions about the local governmental environment including congestion effects different cost conditions and pricing schemes for public services and property tax limitations some welfare consequences of growth controls are also presented

housing price land supply and revenue from land sales in a recent study peng and wheaton empirically examine the effect of restrictive land supply on hong kong house prices however we argue that the impact of the supply of new land by the hong kong government is not as important as they maintain in accounting for the volatile house prices in hong kong we show that there is no causal relationship between land supply and housing prices our estimations based on the annual data of hong kong s public land sales find that the government acts to maximise land revenue maximisation of revenue from land sales is however consistent with the efficient allocation of resources we also show that the amount of land sales by the government and land in developers land banks tend to decrease when market interest rates increase land banking behaviour is governed by economic conditions long term land holding costs should cover interest costs

on the optimal design of lotteries is globally concave since thearguments against the plausibility of a convex utility function advanced in the previous sectionin relation to eu theory apply with equal force to the rdeu model by contrast as is shownbelow these arguments do not apply to risk seeking behavior associated with the possibility that

why people choose negative expected return assets an empirical examination of a utility theoretic explanation using a theoretical extension of the friedman and savage 1948 utility function developed in bhattacharyya 2003 we predict that for assets with negative expected returns such as state lottery games expected return will be a declining and convex function of skewness that is lottery players trade off expected return for skewness using two samples of lottery game data we find that our theoretical conclusions are supported by the empirical results the findings obtained here not only contribute to the literature on why individuals may participate in unfair gambles the framework could be extended to an analysis of the stock market where higher returns cannot be solely explained by risk variance

can expected utility theory explain gambling we investigate the ability of expected utility theory to account for simultaneous gambling and insurance contrary to a previous claim that borrowing and lending in perfect capital markets rules out a demand for gambles we show that expected utility theory with non concave utility functions can still explain gambling when the rates of interest and time preference are equal agents will seek to gamble unless income falls in a finite set of exceptional values when these rates differ there will be a range of incomes for which gambles are desired in both cases repeated gambling is not explained but market imperfections such as different borrowing and lending rates can account for persistent gambling provided the rates span the rate of time preference

the impact of a state mandated expenditure floor on aggregate property values abstract using a test of allocative efficiency in the local public sector developed by brueckner journal of public economics 19 1982 311 331 this study empirically examines the impact of a state minimum education expenditure requirement on aggregate property values in connecticut communities the empirical results reveal that the typical community in connecticut spends less on education and municipal services than the level that maximizes aggregate property values the results further indicate that spending on education falls further below the property maximization level in those communities constrained by the state expenditure floor it follows from the analysis that some state expenditure floors can raise aggregate property values and promote efficiency

leviathan in the crosshairs following in the spirit of the leviathan hypothesis this paper empirically examines how the degree of local government market power influences efficiency in the local public sector market power is measured by the number and relative size distribution of similar government units in the same market area to avoid confusing market power with the comparative efficiency or superiority of larger sized organizations the relative size distribution of the individual government unit is held constant in the empirical analysis in the empirical test aggregate property values serve as the measure of efficiency the empirical results suggest that aggregate property values are lower and thus efficiency suffers in more concentrated municipal market areas ceteris paribus thus providing some evidence for leviathan type governments in connecticut

cdm potential of spv pumps in india so far the cumulative number of renewable energy systems such as solar photovoltaic spv irrigation pumps in the agriculture sector in india is far below their theoretical potential despite government subsidy programmes one of the major barriers are the high costs of investments in these systems the clean development mechanism cdm provides industrialized countries with an incentive to invest in emission reduction projects in developing countries to achieve a reduction in co2 emissions at lowest cost that also promotes sustainable development in the host country solar photovoltaic spv irrigation pumps could be of interest under the cdm because they directly displace greenhouse gas emissions while contributing to sustainable rural development however there is only one spv project under the cdm so far

assessing the relative merits of development charges and transferable development rights in an uncertain world traditionally regulatory instruments have been used to achieve planning objectives however emerging market based policy instruments such as transferable development rights a quantity based app

allocative inefficiency and local government abstract j k brueckner journal of public economics 19 311 331 1992 11 223 245 1979 demonstrated that hedonic estimates of property values can be used to test for allocative efficiency in local government however previous applications of his technique have incorporated data from multiple labor markets introducing the possibility that governmental amenities might have been capitalized into wages differentials rather than property values this analysis applies his approach to data from a single metropolitan area the estimation suggests that local governments do not systematically overprovide any public services and may underprovide highway services

a test for allocative efficiency in the local public sector abstract this paper develops a test for pareto efficiency in the local public sectorusing the analytical result that aggregate property value is maximized at the public output level which satisfies the samuelson condition for efficiency by using cross section data it is possible to deduce whether a representative community provides its public goods in a property value maximizing and hence efficient fashion the empirical results show no systematic tendency to either under or over provide public goods in a sample of massachusetts communities

review of barriers to the dissemination of decentralized renewable energy systems abstract this paper reviews the available literature dealing with the barriers to the dissemination of decentralized renewable energy systems decentralized renewable energy systems may face a range of technical economic institutional socio cultural and environmental barrier to their dissemination in the paper barriers impeding the dissemination of decentralized renewable energy systems have been identified and assessed in addition appropriate remedial measures and corresponding responsibility centers as reported in the literature have also been discussed inappropriateness of technology unavailability of skilled manpower for maintenance unavailability of spare parts high cost lack of access to credit poor purchasing power and other spending priorities unfair energy pricing lack of information or awareness and lack of adequate training on operation and maintenance of decentralized renewable energy systems are found to be the most critical barriers long term conducive policies appropriate regulatory framework financial incentives capital subsidies and soft loans to users technology and skill development internalization of externalities in the cost of energy withdrawal of subsidies presently being given to fossil fuels development of specialized institutions cooperation with international agencies participation of local community and awareness generation have been recommended for increased dissemination of decentralized renewable energy systems

an examination of the monopoly zoning hypothesis there have been several studies that have investigated the effect of zoning on housing prices one hypothesis is that the restrictiveness of zoning laws will vary with the monopoly power of a town the degree of monopoly power varies with the number of towns in the urban area urban areas with few zoning jurisdictions are likely to have higher housing prices than more fragmented urban areas previous research on this topic has shown mixed results the results in this article suggest that towns with more monopoly power do tend to have significantly higher housing prices than more fragmented urban areas

carbon abatement potential of solar home systems in india and their cost reduction due to carbon finance about 78 million rural households in india reportedly lack access to grid electricity about 67 million of them use kerosene for lighting government of india is promoting the use of solar home systems shs as one of the options for meeting lighting requirements in households in remote and less inhabited villages about 363 399 shs were reportedly disseminated across the country by december 2007 apart from meeting the basic lighting need of the households shs also help in abating the emissions of green house gases ghgs by directly displacing the use of kerosene in households that currently use it for lighting this study has attempted at estimating the co2 mitigation potential of shs in india by studying the potential for their diffusion and the appropriate baseline subsequently the scope for cost reduction to the user due to carbon finance if received is also studied it is found that carbon finance could reduce the effective burden of shs to the user by 19 if carbon prices were 10 tco22 and no transaction costs were involved in getting the carbon revenues these benefits are also estimated for scenarios where transaction costs are incurred by the project proponent in getting the carbon benefits

transaction costs institutional rigidities and the size of the clean development mechanism transaction costs and institutional rigidities will reduce the attractiveness of the kyoto protocol flexibility mechanisms compared to domestic greenhouse gas abatement options the clean development mechanism cdm in particular is likely to entail considerable costs of baseline development project registration verification and certification the activities implemented jointly pilot phase and the prototype carbon fund programme give indications about these costs there is evidence that projects with high implementation costs have high transaction costs as well moreover cdm projects have to be approved by host country institutions and so far only a small share of host countries has been able to set up these institutions several of the larger host countries intend to only approve projects if the market price is above a certain threshold some governments will also levy fees to finance costs of approval bodies we assess these issues using a quantitative model of the kyoto protocol permit market we conclude that while changes in demand from annex b countries remain the crucial factor the size of the cdm will depend to a significant degree on transaction costs and institutional barriers in host countries

the marginal utility of income does not increase borrowing lending and friedman savage gambles there has been a great deal of discussion about whether the marginal utility of income rises with income most notably milton friedman and leonard j savage argued in their classic paper that the willingness to gamble implies that the marginal utility of income is rising over a range the discussions of rising marginal utility and of friedman savage gambles have proceeded independently of the literature on time preference although the issues are in fact related logically drawing on this logical relationship we shall show 1 that at least when intertemporal utility is separable the stable levels of consumption that are usually observed imply that the marginal utility of income decreases as income rises 2 even if the marginal utility of income does increase friedman savage gambles normally will not maximize utility saving and dissaving can attain the levels of consumption which generate the most utility per dollar of income at a lower cost than gambles unless imperfections in the capital market are severe 3 even when the utility function is not temporally separable repeated gambling cannot be a rational way of dealing with a rising marginal utility of income we therefore conclude that observed gambling is seldom if ever explained by the logic set out in friedman and savage s seminal paper in view particularly of the stability of consumption levels and the lack of friedmansavage gambles we conclude that marginal utility of income does not rise with income i a conceptual framework

do financial markets reward buying or selling insurance and lottery tickets selling financial investments with insurance or lottery characteristics should earn positive long run premiums if investors like positive skewness enough to overpay for these characteristics the empirical evidence is unambiguous selling insurance and selling lottery tickets have delivered positive long run rewards in a wide range of investment contexts conversely buying financial catastrophe insurance and holding speculative lottery like investments have delivered poor long run rewards thus bearing small risks is often well rewarded bearing large risks not see comments and response on this article

do investors overpay for stocks with lottery like payoffs an examination of the returns of otc stocks abstract we study returns on over the counter stocks and find that these returns are extremely negative on average the distribution of otc stock returns is highly positively skewed while many of the stocks in our sample become worthless a few do extremely well we investigate whether this negative return premium can be rationalized by investors preference for positively skewed payoffs we show that the equilibrium model of barberis and huang 2008 provides a plausible explanation for the negative returns we also show that otc stocks that once traded on the regular exchanges perform much better than stocks that originate in the otc markets