two stage optimal control problems with an explicit switch point dependence optimality criteria and an example of delivery lags and investment abstract this paper provides necessary conditions for the solution of two stage optimal control problems where the switch point is a choice variable and where the switch point appears as an argument of the integrands in each integral which comprise the criterion index to be maximized problems of this variety have arisen in the exhaustible resource and neoclassical investment literature using the conditions necessary for the solution of these problems we analyze an example of optimal investment in the presence of delivery lags and show how the optimal switch point delivery lag responds to shifts in exogenous parameters

estimating price elasticities with theory based priors the authors show how price elasticity estimates can be improved in demand systems that involve multiple brands and stores they treat these demand models in a hierarchical bayesian framework unlik

economic efficiency effects of alternative policies for reducing waste disposal abstract reducing the amount of municipal solid waste that is disposed of has become an important policy goal previous research argued that a virgin material tax offered an efficient method of meeting this goal and it continues to be considered as a policy option today this paper demonstrates however that a virgin material tax is not an efficient method of reducing waste but that an alternative policy a combined disposal tax and reuse subsidy is the combined disposal tax and reuse subsidy is theoretically consistent with unit based household charges for waste disposal but may have advantages in some situations

resource and waste taxation in the theory of the firm with recycling activities the management of solid waste has become an urgent problem in nations with a great population density accordingly waste reduction through source reduction and recycling has become increasingly important our purpose is to show how prevention recycling and disposal of waste could be part of a theory of the firm we first derive efficient production functions from production processes with waste as a by product waste obtained as new scrap can partially be recycled by using additional inputs in order to cut back the purchase of virgin material waste not completely recyclable will leave the firm as disposal which also entails cost to the firm we use the dual cost function approach to develop a theory of the firm under solid residual management since the producer does not bear the full cost of disposal there will be a bias toward virgin materials and away from recycling the goal of the government is to stimulate the firms to recycle with respect to the preservation of exhaustible resources an incentive to recycle is a tax on resources or on waste in order to determine the tax levels the government maximizes welfare subject to the dynamic constraint for decumulation of land fill for waste deposits this gives the user cost and its time profile for taxing waste disposal or virgin material in a comparative statics analysis we compare the effect of taxes on waste vs virgin material on effort to produce in a resource saving manner on the quantity of recycled material on output and on the reduction of waste since the impact of environmental regulation on employment is important our model detects seven effects on labor demand as part of resource conservation policy we finally carry out a comparative statics analysis of waste intensive firms operating in different market structures of interest is the impact of a resource or waste taxation on market volume on the number of firms on resource saving effort and on profit

should we be worried about the green paradox announcement effects of the acid rain program this paper presents the first empirical test of the green paradox hypothesis according to which well intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses we use the introduction of the acid rain program in the u s as a case study the theory predicts that owners of coal deposits expecting future sales to decline would supply more of their resource between the announcement of the acid rain program and its implementation moreover the incentive to increase supply would be stronger for owners of high sulfur coal this would all else equal induce an increase in sulfur dioxide emissions using data on prices heat input and sulfur content of coal delivered to u s power plants we find strong evidence of a price decrease and of an increase in the sulfur premium some indication that the amount of coal used might have increased and no evidence of fuel switching towards higher sulfur coal overall our evidence suggests that while the mechanism indicated by the theory might be at work market conditions and concurrent regulation largely prevented a green paradox from arising these results have implications for the design of climate policies

economic analysis of paper recycling vis a vis wood as raw material abstract concerns for the environment has forced many firms define policies that protect the environment within which they operate this paper presents a linear optimization model for paper industry to compare total system cost of wood as a raw material with recycling of waste paper objective of the proposed model is to minimize the cost of paper in the supply chain costs included in the objective functions are costs for collection of raw material transportation inventory manufacturing segregation and disposal during recycling the model also includes the economic implications of using these alternative material sources on environment as well as quality of final product to gain further insights into system behavior sensitivity analysis shortage analysis and indifference curve analysis have been performed the analysis clearly reveals that the paper recycling is an economical option compared to wood as a raw material the paper analysis highlights various strategies that could be followed under different market conditions

antitrust and technological innovation in the us ideas institutions decisions and impacts 1890 2000 abstract the history of antitrust policy in the us as it relates to technological innovation exhibits major swings every few decades between favoring concentration and favoring deconcentration this paper sketches for each period the contending ideas that frame antitrust technology policy debates the salience of these ideas in the larger antitrust policy process the institutions for agenda setting and decision making in this area the policy decisions themselves and more speculatively the impacts of these decisions on technological innovation and industrial development the paper concludes with a preliminary attempt to identify the cyclical secular and static processes that have shaped the history of this policy area and to use this analysis to inform future policy makers

the refoundation of the symmetric equilibrium in schumpeterian growth models abstract we provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical r d driven growth models we argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research hence the problem of the allocation of r d investment across sectors is indeterminate by introducing an contamination of confidence in the expected distribution of r d investment we prove that the symmetric structure of r d investment is the unique rational expectations equilibrium compatible with ambiguity averse agents adopting a maxmin strategy

the role of spatial scale in the timing of uncertain environmental policy the spatial scale of an environmental problem is dictated by boundaries physical boundaries limit the extent of impacts while the scale of decision making creates perceived boundaries beyond which impacts are ignored by decision makers while it is well understood that uncertainty and irreversibility will alter policy decisions aimed at alleviating environmental impacts the effect of spatial scales both physical and perceived is less understood when spatial scale is included in a real options model of environmental policy adoption results indicate that the importance and influence of spatial considerations depends on the level of uncertainty stringency of the proposed policy and flexibility of the policy decision recognizing spatial scale may force policy adoption to take place within a window of current damage when spatial scale is small or uncertainty high this window for policy adoption can close precluding policy adoption entirely this undermines well known results demonstrating that changes in uncertainty will only alter the timing of policy adoption in other instances the policy adoption window remains open but the option value increases faster than the benefits of the policy creating a scenario where it is always preferable to delay here the inclusion of an option value can prevent adoption of policies that would be adopted according to traditional cost benefit analysis in general policy decisions will be most affected by spatial considerations when the spatial scale is small damage is spreading fast and the uncertainty in damage spread is high

uniqueness and indeterminacy on the dynamics of endogenous growth abstract in this paper we study the dynamics of endogenous growth both in the model of lucas and in a generalization that incorporates a labor leisure choice we characterize the regions of the parameter space that give rise to unique equilibria as well as the regions that yield a continuum of equilibria with positive growth rates we find that such multiple equilibria exist for empirically very plausible parameters in particular when the lucas model is modified to incorporate endogenous labor journal of economic literature numbers e00 e3 o40

the supply of non renewable resources there exists no formal treatment of non renewable resource nrr supply systematically deriving quantity as function of price we establish instantaneous restricted fixed reserves and unrestricted nrr supply functions the supply of a nrr at any date and location not only depends on the local contemporary price of the resource but also on prices at all other dates and locations besides the usual law of supply which characterizes the own price effect cross price effects have their own law they can be decomposed into a substitution effect and a stock compensation effect we show that the substitution effect always dominates a price increase at some point in space and time causes nrr supply to decrease at all other points this new but orthodox supply setting extends to nrrs the partial equilibrium analysis of demand and supply policies thereby it provides a generalization of many results about policy induced changes on nrr markets the properties of restricted and unrestricted supply functions are characterized for hotelling homogeneous as well as ricardian non homogeneous reserves for a single deposit as well as for several deposits that endogenously come into production or cease to be active

a model of creative destruction with undiversifiable risk and optimising households this paper studies optimal household behaviour in a model of creative destruction the saving technology is characterised by stochastic returns that follow a poisson process it is shown that equilibrium conditions with optimising households differ substantially from equilibrium conditions where investment in r d is determined by firms three out of four market failures disappear and a new market failure resulting from a complementarity in financing r d is identified studying the social optimum shows that it contains as the special case of risk neutrality the social optimum derived in the literature

natural resource economics under the rule of hotelling abstract natural resource stocks held in situ are physical assets equilibrium in the assets market requires that their rates of return be such that their owners are just willing to hold on to them rather than invest elsewhere i discuss a number of factors relating to the evolution of extraction costs to the durability of the resource to market structure and to uncertainty that are important in correctly characterizing the rate of return on holding exhaustible natural resource stocks the emphasis is put on how those factors can potentially help bridge the gap between the basic hotelling s rule of natural resource exploitation and the historical behaviour of the flow price of a number of resources i also highlight some theoretical and empirical issues that need further attention

a post consumer waste management model for determining optimal levels of recycling and landfilling the present study examines the optimal recycling rate for municipal solid waste first an optimal control model is developed to account for the physical costs of recycling the social costs of landfilling and consumers environmental preferences second an optimal solution is simulated using waste disposal data from the helsinki region in finland the benefits from recycling are included in the simulation using the results of a recent contingent valuation study the results of the present research suggest that mandates for achieving 50 recycling in municipalities are not far fetched and are both economically and environmentally justified

extraction capacity and the optimal order of extraction the least cost first extraction rule for deposits with different extraction costs previously has been shown to be invalid in general equilibrium this paper demonstrates that this rule also does not hold in partial equilibrium when extraction capacity is limited necessary and sufficient conditions for several surprising extraction orders are presented if extraction from a high cost resource is constrained it may be optimal to begin extraction from a high cost deposit or backstop strictly before extracting from a lower cost deposit if extraction from a low cost resource is limited it may be optimal to exhaust a high cost deposit strictly before the low cost deposit is exhausted or to abandon extraction temporarily from a high cost deposit and then to exhaust it later the analysis demonstrates how extraction constraints affect the order of extraction and shows that certain cost reversals are caused by limited extraction capacity rather than by the general equilibrium definition of extraction costs

a nonparametric approach to identifying latent relationships in hierarchical models this paper provides a method for nonparametrically modeling the relationship between consumer preference for product features such as reliability or durability and covariates that describe consumers and how they use the product this relationship is of interest to firms designing and delivering products to a market because the extent to which consumers are sensitive to particular features determines the potential profitability of product offerings and affects decisions relating to appropriate distribution outlets and advertising strategies the successful identification of these relationships also aids in efficiently targeting marketing activities to specific segments of the consumer population the relationship between consumer preference for product features and observable covariates is important but is typically unknown in addition these relationships are often deeply embedded in a model hierarchy and are not observed directly for example in models of household choice the observed outcomes are multinomial with probabilities driven by latent utilities or values that consumers place on the choice alternatives these utilities are in turn a function of characteristics such as price and product features which are differentially valued of primary interest is the relationship between consumer sensitivity to product characteristics and readily observed covariates such as household demographics or aspects of product usage because the relationships of interest are not directly observed it is difficult to draw inferences about them without formal statistical models this paper presents a three level hierarchical bayes model for modeling binary consumer preferences as a function of observable covariates the hierarchical model nonparametrically estimates the relationships between consumer preferences for product features and the covariates without assuming a specific functional form a nonparametric model is particularly useful in the exploratory analysis of consumer data in which the primary purpose of the analysis is to generate further questions rather than provide specific answers to well posed questions this type of analysis is frequently encountered in marketing where a series of studies are commissioned to better understand the nature of demand the first level of the hierarchy in the bayesian model relates the binary consumer choice to the sensitivities of the consumer to product attributes such as brand name price reliability and durability the second level of the hierarchy models the heterogeneity across consumers using functions that relate attribute sensitivities to observable covariates this level of the hierarchy also allows each respondent to have unique demand coefficients by introducing random effect components the third level of the hierarchy specifies a smoothness prior for each of the unknown functions used in the second level the approach is flexible and works well both when the unknown function can be closely approximated by a linear function and when it cannot be a bayesian model selection technique is used to determine which functions can be modeled using a linear function and which ones should be modeled nonparametrically to provide the necessary flexibility to estimate the function accurately the proposed methodology is illustrated using data from a survey of consumer preferences for features of marine outboard engines that was collected as part of a consulting project our analysis focuses on measuring consumer preferences for engine features and their relationships to two variables related to boat length and engine size consumer preferences for engine features were obtained through a national survey conducted over the telephone preferences were elicited by means of a pairwise evaluation in which respondents chose between two engines that were identical in every respect except for two engine features the methodology can be modified to allow for more complex comparisons such as conjoint data collected in full profiles the application of a bayesian model selection procedure indicates that 4 of the 28 covariate relationships in the model are nonlinear while the other 24 are linear the preferences associated with these four functions are involved in 56 of the pairwise comparisons in the study therefore in practice if the nonlinear functions are not properly estimated there is the potential to draw misleading inferences regarding 56 of the pairwise choices firms can use the estimates of the functions relating preferences to covariates in a number of ways first they can use the covariates to determine the total number of consumers who have high demand for a particular product feature and then they can target communication efforts to those individuals alternatively the empirical results can be used as a basis of subsequent analysis to obtain a more complete characterization of a market segment

accommodating heterogeneity and nonlinearity in price effects for predicting brand sales and profits abstract we propose a hierarchical bayesian semiparametric approach to account simultaneously for heterogeneity and functional flexibility in store sales models to estimate own and cross price response flexibly a bayesian version of p splines is used heterogeneity across stores is accommodated by embedding the semiparametric model into a hierarchical bayesian framework that yields store specific own and cross price response curves more specifically we propose multiplicative store specific random effects that scale the nonlinear price curves while their overall shape is preserved estimation is fully bayesian and based on novel mcmc techniques in an empirical study we demonstrate a higher predictive performance of our new flexible heterogeneous model over competing models that capture heterogeneity or functional flexibility only or neither of them for nearly all brands analyzed in particular allowing for heterogeneity in addition to functional flexibility can improve the predictive performance of a store sales model considerably while incorporating heterogeneity alone only moderately improved or even decreased predictive validity taking into account model uncertainty we show that the proposed model leads to higher expected profits as well as to materially different pricing recommendations

environmental and resource economics a canadian retrospective the paper reviews research contributions to environmental and resource economics by scholars in canada we focus mainly on work from the past 25 years but also highlight earlier pathbreaking work we begin by looking at broad trends in research both internationally and within canada we then review canadian contributions to various topics in the field canadians have played a leading role in the development of the field especially in resource economics international environmental economics and the valuation of environmental amenities

the alberta dilemma optimal sharing of a water resource by an agricultural and an oil sector we fully characterize the optimal time paths of production and water usage by an agricultural and an oil sector that share a limited water resource we show that for any given water stock if the oil stock is sufficiently large it will become optimal to have a phase during which the agricultural sector is inactive followed by a phase during which both sectors are active again the agricultural sector will always be active in the end as the oil stock is depleted if agriculture is not constrained by the given natural inflow of water then oil extraction will always end with a phase during which oil production follows a pure hotelling path otherwise oil production never follows a pure hotelling path because its full marginal cost must always reflect not only the imputed rent on the finite oil stock but also the positive opportunity cost of water usage the case of oil and agriculture sharing a water resource is but one example our analysis provides a framework to generalize the hotelling rule to other cases where the full marginal opportunity cost of extracting a nonrenewable resource depends on the endogenous activity of some other sector of the economy

an energy centric theory of agglomeration abstract this paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources affects the distribution of economic activity across geographic space by combining elements from energy economics and economic geography we link the productivity of energy resources to the incentives for economic activity to agglomerate we find a novel scaling law links the productivity of energy resources to population sizes while rivers and roads effectively magnify productivity we show how our theory s predictions concerning a single core aggregate to predictions over regional landscapes and city size distributions at the country level

ordering the extraction of polluting nonrenewable resources energy markets are often characterized by the use of multiple nonrenewable resources such as coal and natural gas with different pollution characteristics the same resource may have different qualities as when high and low sulfur coal is used to generate electricity multiple resources are used in providing transportation services such as cars running on gasoline or plug in hybrids that may be fueled by electricity produced from coal when these nonrenewable resources contribute differentially to pollution what is the opti mal sequence of extraction over time harold hotelling 1931 developed the classical theory of extraction of a nonrenewable resource orris c herfindahl 1967 extended the hotelling model by considering many resources with different unit costs of extraction and proposed the least cost first principle extraction must be ordered by cost with the cheapest resource used first others have examined whether herfindahl s model remains valid in a variety of situations in a general equilibrium setting see murray kemp and ngo v long 1980 tracy r lewis 1982 in the presence of setup costs g rard gaudet moreaux and stephen w salant 2001 under het erogeneous demands chakravorty and darrell l krulce 1994 and when the extraction rate is constrained jean pierre amigues et al 1998 stephen p holland 2003 in these studies following hotelling and herfindahl resources were differentiated by cost alone in this paper we abstract from cost considerations and focus on how the sequence of extraction may be affected when resources are differentiated only by their pollution character istics we consider two resources one more polluting than the other without loss of generality consider coal to be the dirty resource and natural gas the clean one both may be used to generate electricity environmental regulation is imposed through a cap on the stock of pollution this may be a stylized approximation of an international agreement such as the kyoto protocol which aims to stabilize the concentration of greenhouse gases in the atmosphere 1 with heterogeneity in pollution the results are nonintuitive and do not depend on the emis sion rates of the resources when the economy is already at its allowable stock of pollution the clean natural gas is used first and use of the dirty coal is postponed to the future this is what one would expect armed with insights from the herfindahl model however when the economy starts from below the ceiling and accumulates pollution coal may be used first and use of the clean natural gas is postponed the optimal strategy is to benefit from natural dilution by build ing the stock of pollution as quickly as possible this is done by burning coal rather than natural

monotonic regression based on bayesian p splines an application to estimating price response functions from store level scanner data generalized additive models have become a widely used instrument for flexible regression analysis in many practical situations however it is desirable to restrict the flexibility of nonparametric estimation in order to accommodate a presumed monotonic relationship between a covariate and the response variable for example consumers usually will buy less of a brand if its price increases and therefore one expects a brand s unit sales to be a decreasing function in own price we follow a bayesian approach using penalized b splines and incorporate the assumption of monotonicity in a natural way by an appropriate specification of the respective prior distributions we illustrate the methodology in an empirical application modeling demand for a brand of orange juice and show that imposing monotonicity constraints for own and cross item price effects improves the predictive validity of the estimated sales response function considerably

optimal pricing of depletable replaceable resources the case of landfill tipping fees abstract we develop a general model for pricing a depletable replaceable asset and discuss its application in determining optimal tipping fees for a sanitary landfill we show that the optimal fee includes a component that grows at the real interest rate as space in the landfill is depleted and then drops when a new landfill is built because the scarcity cost of landfill space increases as the landfill is filled it may be optimal to delay a waste reduction program such as recycling composting or incineration until the landfill is partially full

monopolistic competition business cycles and the composition of aggregate demand abstract we develop a dynamic general equilibrium model with monopolistically competitive firms and endogenous markups and show the possibility of equilibria with persistent fluctuations driven by self fulfilling revisions of expectations for some parameter values such fluctuations are characterized by time series properties similar to those observed in u s postwar business cycles in contrast with the existing literature our results do not rely on the presence of increasing returns or nominal rigidities a key ingredient of the model is the link between markups and the composition of aggregate demand some econometric evidence on the latter is also reported journal of economic literature classification number d43 d58 e32

the grey paradox how fossil fuel owners can benefit from carbon taxation abstract this paper considers the distributional impact of optimal carbon taxation on fossil fuel owners a carbon emitting exhaustible resource competes with a dirtier abundant resource and a clean backstop a time dependent carbon tax is set to optimally use these resources under a cap constraint over co 2 atmospheric concentration as the cap is tightened the dirtier resource becomes less competitive compared to the exhaustible resource the competition effect but the timing and duration of extraction of the exhaustible resource is modified the timing effect we provide analytical expressions of these effects and determine conditions over size of reserves pollution contents extraction costs and demand elasticity such that the exhaustible resource owners profits increase as the ceiling is tightened calibrations for the transport and power sectors suggest that the profits of conventional oil and natural gas owners increase compared to a baseline without regulation for plausible carbon ceiling values

optimal harvesting of stochastic spatial resources abstract we characterize the optimal harvest of a renewable resource in a generalized stochastic spatially explicit model despite the complexity of the model we are able to obtain sharp analytical results we find that the optimal harvest rule in general depends upon dispersal patterns of the resource across space and only in special circumstances do we find a modified golden rule of growth that is independent of dispersal patterns we also find that the optimal harvest rule may include closure of some areas to harvest either on a temporary or permanent basis biological reserves reserves alone cannot correct open access but may under sufficient spatial heterogeneity and connectivity increase profits if appropriate harvest controls are in place outside of reserves

does international harmonization of environmental policy instruments make economic sense harmonization of the instruments used in environmental policy has beenconsidered necessary to guarantee fair competition in internationalmarkets we examine the economic costs of harmonizing paper recyclingstandards in countries where the urgency of the waste disposal problemsdiffer using data of seven european countries we estimate thetechnologically feasible input combinations of pulp and waste paper forpaper production short term effects of two environmental policy measures minimum content requirement and utilization rate target are analyzed bytranslating the two administrative instruments into taxes and subsidies weshow that the shadow costs of the harmonization vary considerably betweencountries the difference in the domestic availability of waste may explainthe variation and a modification of the policy measures to incorporate thisaspect is suggested

semiparametric analysis to estimate the deal effect curve abstract the marketing literature suggests several phenomena that may contribute to the nature of the relationship between sales and price discounts these phenomena can produce complex nonlinearities and interactions in the deal effect curve that are best captured with a flexible approach because a fully nonparametric regression model suffers from the curse of dimensionality the authors propose a semiparametric regression model store level sales over time are modeled as a nonparametric function of own and cross item price discounts and a parametric function of other predictors the authors compare the predictive validity of the semiparametric model with that of two parametric benchmark models and obtain superior performance the results for three product categories indicate threshold and saturation effects for both ownand cross item temporary price cuts the authors also find that the nature of the own item curve depends on other items price discounts comparisons with restricted model specification

creating micro marketing pricing strategies using supermarket scanner data micro marketing refers to the customization of marketing mix variables to the store level this paper shows how prices can be profitably customized at the store level rather than adopting a uniform pricing policy across all stores historically there has been a trend by retailers to consolidate independent stores into large national and regional chains this move toward consolidation has been driven by the economies of scale associated with these larger operations however some of these large chains have lost the adaptability of independent neighborhood stores micro marketing represents an interest on the part of managers to combine the advantages of these large operations with the flexibility of independent neighborhood stores a basis for these customized pricing strategies is the result of differences in interbrand competition across stores these changes in interbrand competition are measured using weekly store level scanner data at the product level obviously this presents a huge estimation problem since we wish to measure substitution between each product at a store level for a chain with 100 stores and 10 products in a category we would need to estimate over 100 000 parameters to reliably estimate these individual store differences we phrase our problem in a hierarchical bayesian framework essentially each store level parameter can be thought of as a combination of chain level and random store specific effects the improvement in estimating this model comes from exploiting the common chain level component in addition we relate these store specific changes to demographic and competitive characteristics of the store s trading area which helps explain why these differences are present these estimated differences in price response are in turn used to set store level prices to simplify and focus the problem we limit our attention to everyday price changes i e the prices of products that are not advertised there are many marketing variables that can be adjusted at a storelevel e g promotions and product assortments the reason we concentrate upon everyday pricing is driven by its importance in the marketing mix that most profits are earned on products sold at their everyday price and the amenability of everyday prices to store level customizations a limitation of this approach is that it yields only a partial solution to the retailer s global optimization problem a challenge for the retailer in implementing micro marketing pricing strategies is to retain a consistent image while altering prices that adapt to neighborhood differences in demand our approach is to search for price changes that leave image unchanged we argue that a sufficient condition for holding the input to store image constant from everyday pricing is to hold average price and revenues at their current levels we implement this condition by introducing constraints into the profit maximization problem future research into store choice may yield more efficient conditions a benefit of holding the retailer s image constant is that it does not require costly new information about competitors and promotional activity instead retailers are able to derive these store level customizations based largely upon scanner data this is very advantageous since this information is already being collected and is readily available our results indicate that micro marketing pricing strategies would be profitable and could increase gross profit margins by 4 percent to 10 percent when these gross profit gains are considered after administrative and operating costs are taken into account they could increase operating profit margins by 33 percent to 83 percent these gains come from encouraging consumers through everyday price changes to switch to more profitable bundles of products and not through overall price changes at the chain level these results show that the information contained in the retailer s store level scanner data is an under utilized resource by exploiting this information using newer and more powerful computational techniques managers can better appreciate its value the implication is that profits could be increased and gains can be made by using this information as the basis for micro marketing

an empirical comparison of the validity of a neural net based multinomial logit choice model to alternative model specifications applications of choice models to brand purchase data as a rule specify a linear deterministic utility function we estimate deterministic utility by means of a neural net able to approximate any continuous multivariate function and its derivatives to a desired level of precision we compare this model to related alternatives both with linear and nonlinear utility functions alternatives with nonlinear utility functions are based on generalized additive modeling and taylor series expansion respectively we analyze purchase data of the six largest brands in terms of market share for two product groups neural choice models outperform the alternative models studied w r t posterior probabilities they also attain the best crossvalidated log likelihood values these results demonstrate that the increase in complexity caused by the neural choice model is justified by higher validity in the empirical study the neural choice models imply elasticities different from those obtained by linear utility multinomial logit models for several predictors neural choice models discover inversely s shaped saturation and interaction effects on utility

too much coal too little oil abstract our main message is that it is optimal to use less coal and more oil once one takes account of coal being a backstop which emits much more co2 than oil the way of achieving this is to have a steeply rising carbon tax during the initial oil only phase a less steeply rising carbon tax during the intermediate phase where oil and coal are used alongside each other and the following coal only phase and a flat carbon tax during the final renewables only phase the laissez faire outcome uses coal forever or starts with oil until it is no longer cost effective to do so and then switches to coal we also analyze the effects on the optimal transition times and carbon tax of a carbon free albeit expensive backstop solar or wind energy subsidizing renewables to just below the cost of coal does not affect the oil only phase the gain in green welfare dominates the welfare cost of the subsidy if the subsidy gap is small and the global warming challenge is acute without a carbon tax a prohibitive coal tax leads to less oil left in situ and substantially delays introduction of renewables but curbs global warming substantially as coal is never used finally we characterize under general conditions what the optimal sequencing oil and coal looks like

an economic analysis of household recycling of solid wastes the case of portland oregon abstract solid waste is one of the residuals generated by economic activities faced with rising disposal costs communities are implementing programs to encourage recycling activities this paper investigates the role of price incentives and other socio economic factors in household recycling participation in recycling is modeled as an ordered probit choice using a large sample of households from the portland oregon metropolitan area demand for solid waste collection is estimated using two stage least squares results indicate that increases in disposal fees encourage recycling although demand for solid waste collection services is not reduced substantially

a retail store sku promotions optimization model for category multi period profit maximization consumer promotions are an important element of competitive dynamics in retail markets and make a significant difference in the retailer s profits but no study has so far included all the elements that are required to meet retail business objectives we extend the existing literatures by considering all the basic requirements for a promotional decision support system dss reliance on operational store level data only the ability to predict sales as a function of prices and the inclusion of other promotional variables affecting the category the new model delivers an optimizing promotional schedule at stock keeping unit sku level which maximizes multi period category level profit under the constraints of business rules typically applied in practice we first develop a high dimensional distributed lag demand model which integrates both cross sku competitive promotion information and cross period promotional influences we estimate the model by proposing a two stage sign constrained regularization approach to ensure realistic promotional parameters based on the demand model we then build a nonlinear integer programming model to maximize the retailer s category profits over a planning horizon under constraints that model important business rules the output of the model provides optimized prices display and feature advertising planning together with sales and profit forecasts empirical tests over a number of stores and categories using supermarket data suggest that our model generates accurate sales forecasts and increases category profits by approximately 17 and that including cross item and cross period effects is also valuable

modeling nonrenewable resources use with multiple demands and multiple sources the theoretical literature following hotelling j polit econ 39 137 175 1931 assumed that all nonrenewable resource needs are satisfied by one type of resource e g oil extractible at different per unit costs this formulation implicitly assumes that all users are the same distance from each resource pool that all users can switch costlessly from one type of resource to another e g liquid fossil fuels to coal or vice versa and that all users are subject to the same regulations these assumptions imply as herfindahl extractive resources and taxation university of wisconsin press madison pp 63 90 1967 showed that in competitive equilibrium all users will exhaust a lower cost resource completely before beginning to extract a higher cost resource simultaneous extraction of different grades of oil or of oil and coal should never occur in trying to apply the single demand curve model during the last twenty years several teams of authors have independently found a need to generalize it to account for users differing in their 1 location 2 resource needs or 3 regulatory environment each research team found that herfindahl s strong unrealistic conclusion disappears in the generalized model in its place a weaker herfindahl result emerges since each research team focussed on a different application however it has not always been clear that everyone has been describing the same generalized model the goal in this paper is to integrate the findings of these teams and to present an easily accessible generalization of the nonrenewable resource model to multiple demand curves

strike when the force is with you optimal stopping with application to resource equilibria optimal investment in a nonrenewable resource project occurs when the rate of increase of the project s forward value falls to the force of interest this stopping rule yields a financial interpretation of resource quality as being a property of the project rather than of individual units of reserves it also leads to re interpretations of a rent as the present value of the project rather than of units of reserves and b hotelling s insight as not a rule for the path of rents but an equilibrium algorithm for price the analysis is extended to sequential development of pesticides antibiotics and forests

landfill construction and capacity expansion we study the optimal capacity and lifetime of landfills taking into account their sequential nature such an optimal capacity is characterized by the so called optimal capacity condition particular versions of this condition are obtained for two alternative settings first if all the landfills are to have the same capacity and second if each of them is allowed to have a different capacity in the second case we obtain an optimal control problem with mixed elements of both continuous and discrete time the resulting optimization problems involve dividing a time horizon of planning into several subintervals of endogenously decided length the results obtained may be useful to address other economic problems such as private and public investments consumption decisions on durable goods etc

self fulfilling prophecies in the quality ladders economy if r d difficulty increases as it accumulates as recent evidence suggests then there is a value in the diversification of the aggregate r d efforts over the whole range of industries in the economy however this paper proves that the quality ladders models allow for self fulfilling prophecies to divert r d from an arbitrary number of sectors with potentially dramatic effects on the dynamics of industry structure and on the long run aggregate growth performance moreover in developing countries perfect markets might allow stagnant monopolies to resist despite the removal of fundamental entry barriers to dynamic competition this kind of coordination failure implies potentially strong effects of socio cultural factors on growth and suggests a positive role for public r d policy even in a framework of semi exogenous growth

the economics of household solid waste generation and disposal abstract we develop a household production model of waste management that explicitly incorporates many of the technical and behavioral elements germane to current regulatory and non regulatory solid waste policy initiatives examination of first order conditions shows the interaction among household preferences these production options and external prices and fees a simplified simulation of our model illustrates these relationships showing that household response elasticities can vary widely over common price ranges and that relatively large household welfare gains may be obtained by adopting curbside recycling and unit pricing programs

intertemporal depletion of resource sites by spatially distributed users mineral deposits and other exhaustible resources are scattered around the globe as are their users yet the theory for analyzing depletion of such resources assumes that all resource sites and all users are located in the same place when applying the theory therefore one is forced to disregard what often seems to be an important real world consideration our purpose here is to generalize harold hotelling s 1931 theory of exhaustible resources to accommodate situations in which resource sites and their users are spatially distributed our analysis has many applications it can be applied to a conventional exhaustible resource like oil alternatively it can be applied to an unconventional exhaustible resource like scarce landfill space shipments of solid waste to landfills in other states or countries have become a prominent public policy issue eduardo ley et al 2000 finally our analysis can be applied in situations where the space reflects not geographical location but characteristics of the resource e g the sulfur content hardness and so forth of coal which users find distinctive 2 only two theoretical papers in resource economics have introduced spatial considerations 3 jean jacques laffont and michel moreaux 1986 studied the extraction of resources from sites located along a line segment with all users at one end charles kolstad 1994 was the first to consider spatially distributed users in his formulation consumers are distributed uniformly along a line segment with resource sites at each end kolstad s approach although innovative requires that the set of users be parti

specialization and non renewable resources ricardo meets ricardo abstract the one demand hotelling model fails to explain the observed specialization of non renewable resources we develop a model with multiple demands and resources to show that specialization of resources according to demand is driven by ricardian comparative advantage while the order of resource use over time is determined by ricardian absolute advantage an abundant resource with absolute advantage in all demands must be initially employed in all demands when each resource has an absolute advantage in some demand no resource may be used exclusively the two by two model is characterized resource and demand specific taxes are shown to have significant substitution effects

the efficient use of multiple sources of a nonrenewable resource under supply cost uncertainty whereas in a deterministic world leaving a high cost source of a nonrenewable resource untouched as long as a less costly source is available is always efficient this may not be the case in a stochastic world conditions are derived under which it can be efficient to use a risky supply source in order to conserve a cheaper nonrisky source or to use a costly nonrisky source while a less costly risky source is still available a supply embargo can be interpreted as a limiting case the nonrisky source can be reinterpreted as an artificial stockpile

municipal waste kuznets curves evidence on socio economic drivers and policy effectiveness from the eu waste generation and waste disposal are becoming increasingly prominent in the environmental arena from a policy perspective and in the context of delinking analysis in general waste generation is still increasing proportionally with income and economic and environmental costs associated to landfilling are also increasing this paper provides a comprehensive analysis of waste generation incineration and landfill dynamics based on panel data for the eu25 to assess the effects of different drivers economic structural policy and the eventual differences between western and eastern eu countries we show that for waste generation there is still no waste kuznets curve wkc trend although elasticity to income drivers appears lower than in the past landfill and other policy effects do not seem to provide backward incentives for waste prevention and in terms of landfill and incineration as expected they are respectively decreasing and increasing with policy acting as a strong driver eastern countries appear to be performing generally quite well thus benefiting from eu membership and related policies in terms of environmental performance we can conclude that although absolute delinking is far from being achieved for waste generation there are some first positive signs of an increasing relative delinking for waste generation and robust landfill diversion and varying evidence of a significant role of the eu waste policies implemented in the late 1990s and early 2000s our evidence suggests that if while landfill diversion is currently associated to a delinking partly explained by eu policies waste prevention must be the next objective of waste regulation efforts

determinants of store level price elasticity using weekly scanner data representing 18 product categories the authors estimated store specific price elasticities for a chain of 83 supermarkets they related these price sensitivities to a com

allocation of catalogs to collective customers based on semiparametric response models most approaches to the problem of catalog allocation focus on the decision to send one catalog to an addressee in practice there is the important group of collective customers who submit catalogs to acquaintances to collect their orders therefore collective customers should often obtain more than one catalog we propose a profit maximization approach based on semiparametric generalized additive models gam for these customers responses to the number of allocated catalogs response variables considered are purchase monetary value of purchase returning goods and monetary value of returned goods an exchange algorithm is developed and implemented to maximize the firm s profit given a fixed total number of catalogs

tactical sales forecasting using a very large set of macroeconomic indicators abstract tactical forecasting in supply chain management supports planning for inventory scheduling production and raw material purchase amongst other functions it typically refers to forecasts up to 12 months ahead traditional forecasting models take into account univariate information extrapolating from the past but cannot anticipate macroeconomic events such as steep increases or declines in national economic activity in practice this is countered by using managerial expert judgement which is well known to suffer from various biases is expensive and not scalable this paper evaluates multiple approaches to improve tactical sales forecasting using macro economic leading indicators the proposed statistical forecast selects automatically both the type of leading indicators as well as the order of the lead for each of the selected indicators however as the future values of the leading indicators are unknown an additional uncertainty is introduced this uncertainty is controlled in our methodology by restricting inputs to an unconditional forecasting setup we compare this with the conditional setup where future indicator values are assumed to be known and assess the theoretical loss of forecast accuracy we also evaluate purely statistical model building against judgement aided models where potential leading indicators are pre filtered by experts quantifying the accuracy cost trade off the proposed framework improves on forecasting accuracy over established time series benchmarks while providing useful insights about the key leading indicators we evaluate the proposed approach on a real case study and find 18 8 accuracy gains over the current forecasting process

flexible waste management under uncertainty in this paper we use stochastic dynamic programming to model the choice of a municipality which has to design an optimal waste management program under uncertainty about the price of recyclables in the secondary market the municipality can by undertaking an irreversible investment adopt a flexible program which integrates the existing landfill strategy with recycling keeping the option to switch back to landfilling if profitable we determine the optimal share of waste to be recycled and the optimal timing for the investment in such a flexible program we find that adopting a flexible program rather than a non flexible one the municipality i invests in recycling capacity under circumstances where it would not do so otherwise ii invests earlier and iii benefits from a higher expected net present value c 2013 elsevier b v all rights reserved less

endogenous growth without scale effects comment segerstrom 1998 demonstrates that the social optimum requires radical technological breakthroughs to be treated less favorably than incremental innovations in a growing economy the aim of this note is to assess the robustness of this welfare result on the basis of two levels of generalization i the elasticity of substitution between any two goods is allowed to be larger than one and ii inter industry spillovers are introduced we show that segerstrom s results can be reversed it is also shown that in contrast to segerstrom r d subsidies can be globally optimal irrespective of the size of innovation when inter industry spillovers are large

modeling the distribution of price sensitivity and implications for optimal retail pricing this article focuses on the distribution of price sensitivity across consumers we employ a random coefficient logit model in which brand specific intercepts and price slope coefficients are allowed to vary across households the model is estimated with panel data for two product categories the implications of the estimated model are deduced through an optimal retail pricing analysis that combines the panel data with chain level cost figures we test parametric distributional assumptions using semiparametric density estimates based on series expansions

chapter 11 pricing models in marketing publisher summary this chapter brings together a set of diverse efforts in the recent literature on the modeling of price decisions and related questions in marketing there has been an impressive growth in the array of topics investigated in the literature various trends in the development of pricing models are evident from the foregoing review first one trend has been to develop theoretical models to describe observed pricing strategies in the marketplace and to derive conditions under which certain strategies are optimal this trend is clearly evident when one considers the area of dynamic pricing models another trend is an attempt to develop pricing models in which certain aspects of consumer behavior e g asymmetric response to price increases versus price decreases are incorporated this development is quite recent and does offer a large potential a third dominant direction is the use of game theoretic models for developing equilibrium pricing strategies

hotelling rents in hotelling space product differentiation in exhaustible resource markets abstract using a hotelling spatial model this paper examines the interrelationship between resource rents in related exhaustible resource markets in a product space context we show that even if two exhaustible resources are not currently in the same market e g coal and oil differential scarcity will link their current scarcity rents this applies analogously in geographic markets another result is that monopoly accelerates depletion of substitutes and may not affect time to depletion of the monopolized resource

restricting the trash trade in early 1999 the mayor of new york city announced a plan for exporting most of his city s waste about 13 000 tons per day to other states the responses escalated an already growing war of words about interstate waste shipments a pennsylvania state legislator bluntly called the mayor s plan irresponsible and the governor of new jersey labeled it a direct assault on her state a spokesperson for new york city s department of sanitation coolly staked out the city s position you can t stop interstate commerce if virginia is the least expensive place to deliver this solid waste then that is where it is going to go the response was swift various legislators joined environmental activists to send 50 pounds of trash to the mayor s office led by the governor s efforts the virginia general assembly subsequently responded with proposed legislation to restrict significantly imports of waste see r h melton 1998 virginia s legislative proposal came on the heels of numerous similar proposals by other states to which large shipments of waste are transported interstate shipments of waste involve almost the entire nation 47 states export waste and 44 states import waste and represent nearly 1 billion annually in disposal and transportation fees since the early 1990 s these shipments have increased by more than 30 percent as officials in importing states have sought to curb these flows the u s supreme court has repeatedly struck down their proposed restrictions as violations of the interstate commerce clause in response the congress has advanced proposals to exempt waste from jurisdiction of that clause to date however very little is known about the positive and normative effects of the various proposals to restrict municipal solid waste transshipments how are the effects of restrictions likely to be distributed among the owners of waste disposal facilities and the users of these services given that the northeast is a net exporter and the midwest is a net importer of waste are the effects likely to differ among regions of the country in this paper we model the interstate market for municipal solid waste and evaluate the potential economic effects of public policies proposed to restrict waste flows these restrictions include local and state requirements stipulating where waste must be landfilled prohibitions on the import or export of waste across state boundaries quantitative limits on these flows and extra fees levied on imported waste to our knowledge this research is the first to evaluate these proposals quantitatively we develop both a conceptual and a computable economic model of the use over time of spatially differentiated resources characteristics which well describe the nation s landfill facilities landfills rather than recycling or other disposal options are the dominant destination of most interstate shipments the model characterizes the efficient intertemporal allocation of spatially distributed waste disposal capacity among users who are also spatially distributed in addition

animal spirits and the composition of innovation this paper shows that the schumpeterian model with both vertical and horizontal innovative research admits many more equilibria than the unique symmetric balanced growth path bgp usually highlighted in the literature each of a continuum of bgps is characterized by a different composition of aggregate r d vertical versus horizontal this appears if firms expect self fulfilling waves of enthusiasm in the newly introduced sectors as is very common in the real world pioneers are challenged by more outsiders and the first monopoly of every new good is likely to last less than in more mature industries by expecting this horizontal innovation is depressed while vertical innovation is more intense such waves of enthusiasm have a positive effect on growth rates and a negative effect on consumption levels

on nonrenewable resource oligopolies the asymmetric case we give a full characterization of the open loop nash equilibrium of a nonrenewable resource game between two types of firms differing in extraction costs we show that i there almost always exists a phase where both types of firms supply simultaneously ii when the high cost mines are exploited by a number of firms that goes to infinity the equilibrium approaches the cartel versus fringe equilibrium with the fringe firms acting as price takers and iii the cheaper resource may not be exhausted first a violation of the herfindahl rule that may be detrimental to social welfare

wasted waste an evolutionary perspective on industrial by products abstract every production process gives rise to unintended outputs we argue that whether an output is desired or undesired is not given per se but depends on the economic circumstances which change over time as a result by products of one industry first perceived as non marketable wastes may become desired inputs into other production processes by adopting an evolutionary perspective on economic dynamics in particular by exploiting the concept of niche exclusion we identify favorable circumstances for undesired outputs to become marketable to cope with the pace and unpredictability of economic evolution we argue for a flexible policy system which favors outcome over process oriented waste management policies and balances the responsibility between consumers and producers on the one side and the society as a whole on the other side

energy and depletable resources economics and policy 1973 1998 abstract this paper reviews the impact of the literature in depletable resources and energy economics over the period 1973 1998 particularly the initial period of publication of the journal of environmental economics and management 1974 1998 a discussion of prominent policy issues in this arena is provided along with an indication of what academic economics papers have contributed to that debate this is followed by a citation analysis of contributions in the fields of energy and exhaustible resource economics for each of these two fields a list of the top papers in each five year period from 1974 to 1998 is presented along with a list of the top journals in each decade based on average citations per article the top ten cited articles in the fields in the journal of environmental economics and management are also presented

government spending composition technical change and wage inequality in this paper we argue that government spending played a significant role in stimulating the wave of innovation that hit the u s economy in the late 1970s and in the 1980s as well as the simultaneous increase in inequality and in education attainments since the late 1970s u s policymakers began targeting commercial innovations more directly and explicitly we focus on the shift in the composition of public demand toward high tech goods which by increasing the market size of innovative firms functions as a de facto innovation policy tool we build a quality ladders non scale growth model with heterogeneous industries and endogenous supply of skills and show that an increase in the technological content of public spending stimulates r d raises the wage of skilled workers and at the same time stimulates human capital accumulation a calibrated version of the model suggests that government policy explains between 12 and 15 of the observed increase in wage inequality in the period 1976 1991 jel e62 j31 o33 o41

smooth quantile based modeling of brand sales price and promotional effects from retail scanner panels semiparametric quantile regression is employed to flexibly estimate sales response for frequently purchased consumer goods using retail store level data we compare the performance of models with and without monotonic smoothing for fit and prediction accuracy we find that a flexible models with monotonicity constraints imposed on price effects dominate both in sample and out of sample comparisons while being robust even at the boundaries of the price distribution when data is sparse b quantile based confidence intervals are much more accurate compared to least squares based intervals c specifications reflecting that managers may not have exact knowledge about future competitive pricing perform extremely well