policy watch infrastructure investment and economic growth in the late 1980s david aschauer 1989 triggered a long overdue dialogue among economists and political leaders when he published a study arguing that much of the decline in u s productivity that occurred in the 1970s was precipitated by declining rates of public capital investment my own work confirmed these results munnell 1990a spending advocates seized on these findings as support for increased public investment the enthusiasm among policymakers for the early aschauer results was matched if not surpassed by skepticism on the part of many economists critics of these studies charged that the methodology was flawed that the direction of causation between public investment and output growth is unclear and that even if the historical empirical relationships were estimated correctly they provide no clear indications for current policy who s right what do we know and not know about the link between public infrastructure and productivity and what are the implications of these results for policy

a review of renewable investment and power system operational issues in bangladesh generation investments especially large scale variable renewable energy requires careful scrutiny of the state of the power system power system planning and operations in a developing country like bangladesh can often achieve significant improvements in economics and security of supply through modest and prudent investments a review of the bangladesh power sector is presented in this paper that highlights a changes to dispatch protocols to undertake fuel constrained dispatch optimization and ancillary services co optimization and pricing b issues related to the allocation of natural gas between sectors and c a technology neutral investment framework the study uses an hourly dispatch and ancillary services co optimization model that also optimizes short to medium term investment decisions the results demonstrate bangladesh can a reduce its production costs by 63 through more efficient dispatch b reduce production costs by 77 by using an additional natural gas quota of 212 mmcfd or a 23 increase and c should have invested in power import and baseload gas coal rather than expensive solar pv projects proposed in 2011 at substantially higher cost at the time when a carbon price is imposed in the model the implied break even cost to justify the solar program is very high in excess of 150 tonne

using contests to allocate pollution rights in this paper we advocate a new initial allocation mechanism for a tradable pollution permit market we outline a permit allocation contest pac that distributes permits to firms based on their rank relative to other firms this ranking is achieved by ordering firms based on an observable external action where the external action is an activity or characteristic of the firm that is independent of their choice of emissions in the tradable permit market we argue that this mechanism has a number of benefits over auctioning and grandfathering using this mechanism efficiently distributes permits allows for the attainment of a secondary policy objective and has the potential to be more politically appealing than existing alternatives

international emissions trading under the kyoto protocol credit trading abstract the kyoto protocol allows emissions trading between countries the protocol does however not specify how such trade is to take place so far two options have been discussed in the literature government trading and permit trading this paper discusses a third option credit trading credit trading is based on abatement projects but differs from joint implementation in that it does not require direct foreign investment furthermore credit trading can be implemented both domestically and internationally the main advantages of credit trading are that it excludes trading in hot air while it still makes trade between private entities possible however the environmental effectiveness is doubtful especially when it is based on relative targets the paper shows that several interest groups prefer credit trading based on relative targets to permit trading also governments may have reasons to prefer credit trading to permit trading hence the political acceptability of credit trading is larger than that of permit trading making it more likely that credit trading will be allowed than permit trading

greenhouse gas emission and renewable energy sources for sustainable development in bangladesh abstract bangladesh is an energy starving country the country will be on one of the fast growing power markets with its population and growing energy demand per person its fast growing urbanization and its socio economic development at present the potential demand of power is 5569 mw and the supply is below 4000 mw the country is dependent on the imported petroleum that is big burden on the economy the per capita emission is only 0 2667 tonne per person still much below the world leading countries 19 8 tonne per person for usa however bangladesh is one of the most vulnerable to climate change effect in the world in this regard renewable energy resources appear to be the one of the most efficient and effective solution for clean and sustainable energy development in bangladesh biomass is the dominating source of energy in bangladesh biomass energy is used in a very traditional way biomass conversion to energy in the form of liquid gaseous and solid pellet or briquette could be a viable option to reduce the pressure on the conventional fossil fuel the geographical location of bangladesh has several advantages for extensive use of grid connected solar electricity and stand alone solar pv system this article presents a review of the potential and utilization of the renewable energy sources in bangladesh

future demand scenarios of bangladesh power sector abstract data on the future electricity demand is an essential requirement for planning the expansion of a power system the purpose of this study is to provide a general overview of electricity consumption in bangladesh forecast sector wise electricity demand up to 2035 considering the base year 2005 and compare the results with official projections the long range energy alternative planning leap model with three scenarios namely low gross domestic product gdp growth average gdp growth and high gdp growth is applied in this study in the low to high gdp growth scenarios the extent of industrial restructuring and technical advancement is gradually increased the findings have significant implications with respect to energy conservation and economic development the study also compares the projected per capita electricity consumption in bangladesh with the historical growth in several other developing countries such an evaluation can create awareness among the planners of power system expansion in bangladesh to meet the high future demand

will markets direct investments under the kyoto protocol lessons from the activities implemented jointly pilots under the kyoto protocol countries can meet treaty obligations by investing in projects that reduce or sequester greenhouse gases elsewhere prior to ratification treaty participants agreed to launch country based pilot projects referred to collectively as activities implemented jointly aij to test novel aspects of the project related provisions relying on a ten year history of projects we investigate the determinants of aij investment our findings suggest that review agency preferences related to national political objectives and possibly deeper cultural ties influenced project selection and limited the number of aij projects bilateral ties also appear to have affected investment decisions directly possibly because of related transaction costs the results suggest an investment process different from the assumptions that underlie well known estimates of cost savings related to the protocol s flexibility mechanisms we conclude that if approaches developed under the aij programs to approve projects are retained the scale of investment under kyoto s flexibility provisions and their cost savings will be less than what is generally anticipated and the pattern of investment less driven by abatement costs

equilibrium price dynamics of emission permits this article presents a stochastic equilibrium model for environmental markets that allows us to study the characteristic properties of emission permit prices induced by the design of today s cap and trade systems we characterize emission permits as highly nonlinear contingent claims on economy wide emissions and reveal their hybrid nature between investment and consumption assets our model makes predictions about the dynamics and volatility structure of emission permit prices the forward price curve and the implications for option pricing in this market empirical evidence from existing emissions markets shows that the model explains the stylized facts of emission permit prices and related derivatives

transaction costs of tradable white certificate schemes the energy efficiency commitment as case study this paper analyses the nature and scale of transaction costs tcs borne by obliged parties under a tradable white certificate twc scheme taking the first phase of the energy efficiency commitment eecl in great britain as a case study several sources of tcs were considered such as search for information persuasion of customers negotiation with business partners and measurement and verification activities information was obtained through interviews and a questionnaire distributed to obliged parties results show that the most significant sources of tcs were related to search for information persuading customers and negotiating with managing agents contractors to implement energy efficiency measures perceived high tcs related to contract negotiation and liability risks slightly reduced the low trading level the scale of tcs was estimated to be around 10 and 30 of total investments costs for the lighting and insulation segments respectively the results indicate that despite the presence and scale of tcs the eecl scheme generated energy savings that yielded net societal benefits estimated financial benefits range from 0 6 to 6 p kwh for insulation and lighting savings respectively when avoided external costs due to electricity savings are included estimated economic benefits range from 3 to 8 p kwh several lessons from the eecl can be drawn for twc schemes among others it is found that informative policy instruments to raise awareness among end users are critical if a twc scheme is to deliver cost effective energy savings in all the nature and scale of tcs under twc schemes will differ because of a number of endogenous and exogenous determinants c 2007 elsevier ltd all rights reserved less

estimating the price of tradable permits for greenhouse gas emissions in 2008 12 abstract many attempts have been made recently to predict the prices of tradable permits for greenhouse gas ghg emissions in the first commitment period of the kyoto protocol 2008 12 in this paper we attempt to refine these price estimates based on i the results of economic models and identification of factors which influence prices but are not fully reflected in the models ii lessons from price forecasting experience in the us sulfur dioxide market and iii current price data from the nascent international market for ghg permits we expect ghg permit prices to be at the lower end of the broad spectrum of existing predictions this implies among other things that resource transfers to developing countries associated with emissions trading will be relatively low nevertheless even a modest price will have a significant influence on the decisions of consumers and investors in energy markets around the world

what can we learn from the grand policy experiment lessons from so2 allowance trading stable url http links jstor org sici sici 0895 3309 28199822 2912 3a3 3c69 3awcwlft 3e2 0 co 3b2 tthe journal of economic perspectives is currently published by american economic association your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals aea html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgtue jun 26 16 25 17 2007

fees and the efficiency of tradable permit systems an experimental approach the paper presents the results of an economic experiment in which the effects of fees on allocative efficiency of tradable utilization permits e g pollution permits are explored laboratory subjects university students play the roles of firms whose generic product requires a specific input or permits scarcity is exogenously introduced by a fixed supply of tradable production permits three treatments are compared no fee imposed n a fixed tax per permit t and partial retraction of permits and subsequent redistribution by auction a treatments t and a represent two different ways of imposing fees which are designed to be revenue equivalent our results indicate that after controlling for deviation of permit prices from a prediction based on fundamentals fees have an impact on distribution of permits interestingly a fixed tax enhances efficiency compared to the case of no fees while retraction and reallocation by auction tends to reduce efficiency apparently subjects decision making is affected by the imposition of fees but how and to what extent depends on the method used

an interim evaluation of sulfur dioxide emissions trading ide iv of the 1990 clean air act amendments established the first large scale long term environmental program to rely on tradable emissions permitscalled allowances in this program to control pollution this program was designed to cut acid rain by reducing sulfur dioxide so2 emissions from electric generating plants to about half their 1980 level beginning in 1995 it is of interest both as a response to an important environmental issue and as a landmark experiment in environmental policy this experiment comes at a particularly important time since emission trading is under serious consideration with strong u s backing for use to deal with global climate change by curbing emissions of carbon dioxide co2 the economic stakes in climate change surpass those in acid rain by several orders of magnitude intergovernmental panel on climate change 1996 this article summarizes the results to date of our ongoing empirical analysis of compliance costs and allowance market performance under the u s acid rain program

energy scarcity and potential of renewable energy in bangladesh abstract energy is one of the indispensable inputs for the survival of human being in the earth bangladesh has the very inadequate amount of indigenous non renewable energy resources even which is being diminished rapidly to increase the electricity generation although the installed electricity generation capacity has been increased to 10 709 mw still the amount is insufficient to meet the demand of the country in addition to this the insufficient power generation hinders the socio economic and industrial development this current problem in power generation of bangladesh can be removed by incorporating renewable energy into electricity generation recently utilization of renewable energy and renewable energy technologies rets is getting momentum in the country to achieve not only energy security but also to reduce environmental pollution and to limit the imminent depletion of the non renewable energy resources overall bangladesh has the vast potential of biomass solar hydro wind and tidal powers this paper outlines the present energy scenario of the country following this the potential of available renewable energy resources is also reviewed and presented in this paper

transactions costs of expanding nutrient trading to agricultural working lands a virginia case study abstract agricultural nonpoint sources nps figure prominently in the design of many water quality trading programs in concept water quality trading programs can create incentives for agricultural operators to supply low cost pollutant reductions while still keeping land in agricultural production in practice water quality trading programs in the united states have produced few trades involving agricultural nps transactions costs are a critical but poorly understood feature of water quality trading programs the objective of this study is to examine the transactions costs associated with expanding the use of nps credits in a water quality trading program in virginia united states to include credits generated from agricultural working lands best management practices bmps findings indicate that transactions costs for agricultural nps trades in virginia are currently relatively low due to the activity being credited simple land conversion based on best available evidence transactions costs of creating credits using management and structural bmps will be 2 to 16 times more costly on a per project basis than for land conversion credits compliance monitoring protocols are a significant driver of costs for working lands credits our results suggest an important cost risk tradeoff between verification costs and compliance certainty for program designers to consider

frictions in project based supply of permits emissions trading in climate change can entail large overall cost savings and transfers between developed and developing countries however the search for acceptable ji or cdm projects implies a deviation from the perfect market framework used in previous estimations our model combines the search market for projects with a frictionless permit market to quantify the supply side frictions in the co2 market we also decompose the effects of frictions into the effects of search friction bargaining and bilateralism a calibration using previous cost estimates of co2 reductions illustrate changes in cost savings and allocative implications

auctions or grandfathering the political economy of tradable emission permits despite the prevalence of grandfathered permits we still observe that a hybrid policy in which a fraction of initial emission permits is distributed through auctions is adopted in some cases we also observe that some polluting industries support auctioned permits and that most environmental groups support grandfathered permits this paper attempts to explain these phenomena from the perspective of political economy and investigates the conditions under which grandfathering auctions or a hybrid instrument will be the equilibrium policy by constructing a two stage lobbying game in which the type of policy instrument auction grandfathering or a hybrid instrument is determined in the first stage and then the number of permits is decided in the second stage we highlight the strategic interaction of the lobbying activities between the two stages in explaining the behavior of the lobbying groups

transaction costs and environmental policy design abstract this article synthesizes the growing empirical literature on transaction costs to identify pragmatic design recommendations for environmental and natural resource policies the new institutional economics literature recognizes that appropriate policy choice and design will be a function of the specific characteristics of the problem the physical and institutional determinants of both transaction costs and abatement costs should be considered in the policy design process due to potential interactions between them analysts also need to incorporate the extent to which the technologies institutional environment governance structures or policy designs can be changed some factors can only be adjusted to or designed around while others can be designed differently this framework highlights the importance of property rights since transaction costs will be incurred to obtain or retain property rights and since the rights assignment may affect both the magnitudes and distribution of costs another implication is that education and extension programs or use of behavioral economics concepts to affect choices can be cost effective in some circumstances policy design should take advantage of economies of scale and foster technical change appropriate sequencing of policy instruments may decrease transaction costs particularly if there is potential for technical change

infrastructure investment a review essay economists try not to be faddists but they often cannot help themselves while work on a topic should mirror the prospective importance of the topic that situation seems to occur with disappointing frequency instead the usual pattern is that some reasonably important topic will be totally ignored for the longest time then recognized and then the subject of a flurry of work all out of proportion to its likely long run importance nowhere has this speculative bubble of economic research been more clearly illustrated than with infrastructure investment macroeconomists havelong felt that the stock of public capital is an important factor input in the production of total output macroeconomists have known that u s productivity growth slowed dramatically in about 1973 and macroeconomists should have known that united states investment in public capital has been down since the late 1960s yet analysis of the u s productivity slowdown completely ignored infrastructure investment for the first fifteen years of this slowdown concentrating instead on energy prices social regulation the composition of the work force research and development different rates of obsolescence of the private capital stock and any number of other matters the public capital stock was hardly ever even mentioned as a potential factor in the productivity slowdown aschauer changed all that he wrote a series of papers 1989a 1989b 1989c that put these two movements together econometrically infrastructure investment turned down and aggregate productivity turned down slightly later both in the united states and in some other developed countries his work hit the magic button those who had worried about the productivity puzzle for fifteen years welcomed a new suspect those who were worried about low rates of u s national saving welcomed a new way to make their argument even more forcefully than with official figures on saving and investment which do not count infrastructure investment as investment political liberals and liberal politicians saw a way to rescue government spending and projects from the assaults of reaganism and even a way to avoid oth

permit trading and credit trading a comparison of cap based and rate based emissions trading under perfect and imperfect competition this paper compares emissions trading based on a cap on total emissions permit trading and on relative standards per unit of output credit trading two types of market structure are considered perfect competition and cournot oligopoly we find that output abatement costs and the number of firms are higher under credit trading allowing trade between permit trading and credit trading sectors may increase welfare with perfect competition permit trading always leads to higher welfare than credit trading with imperfect competition credit trading may outperform permit trading environmental policy can lead to exit but also to entry of firms entry and exit have a profound impact on the performance of the schemes especially under imperfect competition we find that it may be impossible to implement certain levels of total industry emissions under credit trading several levels of the relative standard can achieve the same total level of emissions

sulfur allowance trading and the regional clean air incentives market a comparative design analysis of two major cap and trade permit programs this paper investigates in detail the design parameters of the two mostprominent us cap and trade permit program the us epa sulfur allowancetrading program and the south californian regional clean air incentivesmarket reclaim in contrast to expectations the two programs turn out to be rather different in several important design parameter choices common elements emerge primarily in the existence of an ambitious quantifiedenvironmental target mandatory use of stringent emission monitoring methodsand stiff penalties for non compliance coexisting command and controlregulations the creation of a competitive permit market structure andsome distributional concessions in the initial permit allocation generalizing from these common features we find that provisions to assurepolitical acceptance functional interdependencies and overlapping regulation are the most important influences on the design of applied cap and trade permit programs

public versus private venture capital seeding or crowding out a pan european analysis abstract this paper analyzes the relationship between public and private sources of venture capital in europe and the development of the industry controlling for characteristics of the legal systems in 15 european countries over the period 1990 1996 large public participation is correlated with smaller vc industries but analyses do not support the view that public venture capitalists are acting to seed the industry or that are they crowd out private funds on the contrary public involvement seems to cause greater amounts of money to be invested in the industry as a whole we argue that the effects of public intervention whatever the motives are real and probably result from demonstrating sanctioning the social merit of venture capital and from signaling an enduring commitment to it

the problem of the commons still unsettled after 100 years the problem of the commons is more important to our lives and thus more central to economics than a century ago when katharine coman led off the first issue of the american economic review as the us and other economies have grown the carrying capacity of the planet in regard to natural resources and environmental quality has become a greater concern particularly for commonproperty and open access resources the focus of this article is on some important unsettled problems of the commons within the realm of natural resources there are special challenges associated with renewable resources which are frequently characterized by open access an important example is the degradation of openaccess fisheries critical commons problems are also associated with environmental quality a key contribution of economics has been the development of market based approaches to environmental protection these instruments are key to addressing the ultimate commons problem of the twenty first century global climate change jel q15 q21 q22 q25 q54

slack in the state owned enterprise an evaluation of the impact of soft budget constraints abstract in this paper slack in resource utilization is estimated using data envelopment analysis for a sample of 67 indian state owned 63 private sector and 27 foreign owned enterprises on a comparative basis the study is cross sectional and carried out for the year 1991 to assess how far the operation of soft budget constraints has had an impact on the economic performance of indian firms particularly operated as state owned enterprises specifically the presence of debt capital provided primarily by government owned financial institutions is strongly and negatively related to performance the results show that if firms turn out to be all equally efficient then average materials costs human capital usage costs costs associated with other operating items and physical capital usage by each state owned enterprise sampled can be reduced by rs 203 million rs 201 million rs 53 million and rs 255 million respectively if existing levels of inputs are used efficiently then the average addition to the value of output by each state owned enterprise can rise by rs 693 million the analyses reveal significant slack in resource utilization in indian state owned firms resulting from soft budget constraints and the implications of the existence of slack are discussed

state owned and privately owned firms an empirical analysis of profitability leverage and labor intensity for some it is an article of faith that governmentowned firms must be less efficient or at least less profitable than privately owned firms maxim boycko et al 1996 argue that politicians cause government owned firms to employ excess labor inputs anne o krueger 1990 suggests that such firms may be pressured to hire politically connected people rather than those best qualified to perform desired tasks more generally government owned firms are thought to forgo maximum profit in the pursuit of social and political objectives such as wealth redistribution in addition the residual cash flow claims of these firms are not readily transferable like the shares of a private corporation this impairs residual claimant incentives to monitor managers and ultimately degrades firm performance as a consequence one expects government owned firms to be technically less efficient and therefore less profitable than private firms the implication is that in competitive markets without significant externalities private ownership is the superior organizational form the view that government firms are inherently less efficient than private ones however remains controversial among economists john vickers and george yarrow 1991 among others point out that agency problems arise in private firms as well as public ones in most large private corporations managers own little of the stock because monitoring managers is costly a divergence arises between their objectives and those of private shareholders private shareholders typically hold a small stake in any one firm and it may not pay any shareholder to bear the cost of monitoring management it follows from this discussion that whether government firms are more or less efficient than private firms is primarily an empirical issue to date the body of empirical evidence is mixed in this paper we report further empirical evidence on the relative efficiency of public and private enterprises we build on previous work by studying larger samples over longer time periods and by allowing for additional factors that influence firm performance in particular our analysis controls for time series variation in the general level of economic activity that may otherwise confound performance comparisons between government and private firms 2 we approach the issue in two different ways first using accounting numbers we conduct a large sample cross sectional comparison of government owned and privately owned corporations this comparison is similar in design to that of boardman and vining 1989 but our sample is three times the size of theirs and includes three

designing climate mitigation policy this us paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs damage valuation policy instrument choice technological innovation and international climate policy the authors begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be both under cost effective stabilization of global climate and under net benefit maximization or pigouvian emissions pricing the remainder of the paper focuses on the appropriate scope of regulation issues in policy instrument choice complementary technology policy and international policy architectures

density dependence in the evolution of populations of newspaper organizations a model of density dependence is proposed to explain regularities in the growth and decline of organizational populations density the number of organizations is assumed to be a function of the social processes of legitimation and competition at low density the model predicts that the legitimation process will dominate and will lead to high organizational founding rates and low organizational mortality rates at high levels of density competition will dominate and consequently founding rates will decline and mortality rates will rise the model is tested with hazard function models using data from nine newspaper populations spanning the 19th and 20th centuries and covering over 5200 newspapers analysis offounding rates provides strong empirical support for the model analysis of mortality rates reveals that the model holds for large populations

stability of equilibria with externalities it is shown that in a class of models with multiple externalities one positive and one negative all stationary equilibria may be locally stable to perturbations in the sense that there exist perfect foresight trajectories leading back to the equilibrium thus scale diseconomies arising for example out of a common resource pool generally overturn the liviatan samuelson result that equilibria are either saddlepoints or sources

costly search and recruiting a labor market model with costly search and recruiting is constructed it incorporates many features found in other models and provides new insights into the effects of externalities and transaction costs the model possesses a continuum of equilibria some of which may be pareto ranked with different rates of unemployment despite the multiplicity of equilibria comparative statics results are obtained copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

business groups financing constraints and investment the case of india we examine the effect of business group affiliation on corporate investment behaviour in india more specifically we test whether group affiliation reduces financing constraints for the affiliated firms we use a data set containing 694 listed indian companies for the 1989 97 period we estimate a simple investment equation and find evidence that the investment cash flow sensitivity is much lower for group affiliates this suggests that business group affiliates have better access to external funds than stand alone firms

private saving in india this article studies the evolution of the private saving rate in india during 1960 9s its distinctive feature is that it proposes three new measures of private saving which are incremental improvements to the naive national accounts measure the improvements consist of accounting for capital losses to private net worth due to inflation including expenditures on durable goods as a form of saving and expanding the definition of saving to include human capital expenditures after examining descriptive trends and reviewing the related literature the article tests the hypothesis that households that save in india pierce the corporate veil the evidence shows that in fact changes in corporate saving are offset by changes in household saving indicating that the unit of analysis should be aggregate private saving the core analytical section of the article studies how the behavior of the private saving rate is related to the real interest rate per capita income the dependency ratio financial depth the government saving rate and the share of agriculture in gross domestic product the empirical analysis is done by estimating error correction models on aggregate annual data although most of the discussion centers on long run effects

an international policy architecture for the post kyoto era in february 2005 the kyoto protocol to the united nations framework convention on climate change came into force but without participation by the united states its impacts on emissions of greenhouse gases including carbon dioxide co2 the primary anthropogenic driver of climate change will be trivial but scientific robert t watson 2001 and economic charles d kolstad and michael a toman 2001 analyses point to the need for a credible international approach because the kyoto protocol s ambitious targets apply only to the short term 2008 2012 and only to industrialized nations the agreement will impose relatively high costs and generate only modest short term benefits while failing to provide a real solution joseph e aldy et al 2003 for these reasons most economists see the agreement as deeply flawed richard n cooper 1998 david g victor 2001 warwick j mckibbin and peter j wilcoxen 2002 although some see it as an acceptable first step axel michaelowa 2003 virtually all agree however that the protocol is not sufficient to the overall challenge we describe the basic features of a postkyoto international global climate agreement which addresses three crucial questions who when and how the respective elements are first a means to ensure that key nations industrialized and developing are involved second an emphasis on an extended time path of action employing a cost effective pattern over time and third inclusion of market based policy instruments i who expand participation to include all key countries

designing a climate change policy for the international maritime transport sector market based measures and technological options for global and regional policy actions abstract the international maritime transport sector has a significant abatement potential and some technical improvements that reduce ghg emissions would already be profitable without any policy in place this paper analyses in depth the limits and opportunities of policy options currently under consideration at the international level to stimulate the sector to reduce its ghg emissions in particular in order for the maritime transport sector to become more environmentally friendly the flexible nature of international market based measures and the european union emission trading scheme provide a definite window of opportunity without placing unnecessary high burden on the sector however the development of a regional policy such as at european level for the international maritime transport sector faces several obstacles allocation of emissions carbon leakage permit allocation treatment of the great variety in ship type size and usage and transaction cost global market based policies could overcome most of these challenges this paper provides an in depth analysis of the policy instruments currently under discussion to reduce the sector s burden on the environment and focuses on economic theory legal principles technological options and the political framework that together make up the basis of decision making regarding the international maritime transport sector s climate change policies

crowding out the role of state companies and the dynamics of industrial competitiveness in india this article examines growth patterns of government companies in india whether their presence has crowded out private entrepreneurial activity and whether there has been a decline in the competitiveness of india s industry measured as relative productive efficiency for a 45 year period from 1957 1958 to 2001 2002 there was a significant growth in the number of government companies in india that effectively crowded out the entry and growth of private enterprise this took place from the mid to late 1950s to the late 1980s and early 1990s correspondingly the amount of private equity capital invested in firms declined until the late 1980s and early 1990s when there was an upsurge of private investment activity another feature was that a small number of government companies absorbed most of the corporate sector equity investment in india the growth in the share of government companies in india that crowded out the entry and growth of private enterprises has had a significantly negative effect on india s industrial competitiveness after the introduction of reforms in 1991 there has been a significant crowding in by private enterprises displacing the government companies from their key position as holders of a very large portion of equity capital and also reversing the trend in the decline of competitiveness of indian industry as a whole copyright 2009 oxford university press

development of renewable energy sector in bangladesh current status and future potentials abstract bangladesh is a hugely populated country in south asia the country produces its electricity mainly from natural gas followed by liquid fuels although the installed electricity generation capacity of the country has been increased to 12 261 mw there is scarcity of electricity in the hot summer season which is a barrier to industrial development as well as socio economic development combustion of fossil fuels releases greenhouse gases ghgs into the atmosphere which causes global warming bangladesh can be badly affected by greenhouse effect and global warming these problems can be mitigated by incorporating renewable energy sources e g solar wind hydro biomass etc to the country s electricity generation renewable energy resources are considered as clean and can serve the electricity demand in the remote areas where grid connection is not possible the potential of solar energy and biomass is enormous in bangladesh and people have already started to harness energy from these sources the government and the policy makers should come forward to encourage the people of rural areas as well as urban areas to use renewable based electricity the government of bangladesh has set up a plan to generate 5 of the country s total electricity from renewable sources within 2015 and 10 within 2020 however within 2015 the country has been able to generate only 3 5 of the total electricity from renewable sources this paper presents a thorough review of the current status and future potentials of renewable energy sector in bangladesh in this paper the updated information is provided for the overall renewable energy sector of the country

further results on permit markets with market power and cheating abstract this paper examines a market for pollution permits in which one firm has market power and one or more firms is noncompliant i show that the firm with market power may choose to hold more permits than it needs effectively retiring permits from the market i also show that some noncompliance may be socially desirable because it can mitigate the distortion caused by market power similarly some degree of market power may be socially desirable because it can in turn mitigate the distortion caused by noncompliance

transaction costs and tradeable permits abstract tradeable permit systems are at the center of current interest and activity in market based reforms of environmental policy because these systems can offer significant advantages over conventional approaches to pollution control unfortunately claims made for their relative cost effectiveness have often been exaggerated transaction costs which may be significant in these markets reduce trading levels and increase abatement costs in some cases equilibrium permit allocations and hence aggregate control costs are sensitive to initial permit distributions providing an efficiency justification for politicians typical focus on initial allocations

thin versus thick co2 market abstract the idea that trading is more costly the thinner the market is is common in most studies of market exchange with frictions surprisingly this element is lacking from previous attempts to allow for frictions in pollution permit markets this paper considers a co 2 cap and trade model where trading costs develop endogenously as a function of the market size the pre trade allocation of permits determines whether the market size can be strongly influenced by expectations that have a role because of adjustment costs the pre trade allocation also sets preconditions for endogenously vanishing trading costs and thus has nonstandard effects on long run trading levels and market allocations

the debt wish rent seeking by business groups and the structure of corporate borrowing in india business groups play an important role in emerging economies the transactions cost perspective which has dominated our understanding of such groups argues that the emergence of business groups is a natural response to market failures in developing countries in this paper we propose an alternate theoretical perspective the rent seeking view that takes these groups as engaging in coordinated lobbying for the capture of rents created by governments we develop and implement an empirical strategy to test for the rent seeking view drawing from the property rights theory of corporate finance we find strong empirical support for the rent seeking view using a large cross sectional data set of firms in india

incremental and average control costs in a model of water quality trading with discrete abatement units this paper answers three questions related to the discrete nature of pollution abatement i does a source s incremental control cost as defined by the u s environmental protection agency necessarily exceed its average control cost ii is incremental control cost a better approximation of a source s willingness to pay for abatement credits than average control cost and iii exactly how does trading in discrete and continuous abatement markets differ we find that the answer to the first two questions are both no suggesting that the u s environmental protection agency needs to refine its reliance on incremental control cost as the sole measure upon which to assess the financial feasibility of water quality trading in answer to the third question we show that the outcome of bilateral trading in the presence of discrete abatement is determined by comparing the gains from trade associated with the full sequence of possible sunk cost trading scenarios for the most common case where trading partners average control cost curves cross the trading outcome with discrete abatement is inherently sensitive to the initial allocation of abatement responsibilities

assessing comparative efficiency of the state owned mixed and private sectors in indian industry this paper evaluates performance differences between government owned mixed sector and private sector enterprises in india for the period 1973 1974 to 1988 1989 the results establish that enterprises owned by the central government and state governments are less efficient than mixed or private sector enterprises while mixed sector enterprises are less efficient than those in the private sector the results contradict extant evidence finding no performance differences between government owned and private firms in india there have however been inter temporal efficiency gains for the sector as a whole perhaps resulting from reforms undertaken towards improving government owned enterprises performance

reconsidering the initial allocation of itqs the search for a pareto safe allocation between fishing and processing sectors advancement of rights based fishing is stymied by industry and congressional concern over distributional issues arising out of traditional itq design this paper examines the existence and policy feasibility of two alternative initial allocations intended to leave the two principal industry participants the fishers and processors no worse off while maximizing efficiency market structure is shown to be a critical consideration not only to avoid unintended wealth redistribution but also to achieve efficiency

implications of fossil fuel constraints on economic growth and global warming abstract energy security and global warming are analysed as 21st century sustainability threats best estimates of future energy availability are derived as an energy reference case erc an explicit economic growth model is used to interpret the impact of the erc on economic growth the model predicts a divergence from 20th century equilibrium conditions in economic growth and socio economic welfare is only stabilised under optimistic assumptions that demands a paradigm shift in contemporary economic thought and focused attention from policy makers fossil fuel depletion also constrains the maximum extent of global warming carbon emissions from the erc comply nominally with the b1 scenario which is the lowest emissions case considered by the ipcc the ipcc predicts a temperature response within acceptance limits of the global warming debate for the b1 scenario the carbon feedback cycle used in the ipcc models is shown as invalid for low emissions scenarios and an alternative carbon cycle reduces the temperature response for the erc considerably compared to the ipcc predictions our analysis proposes that the extent of global warming may be acceptable and preferable compared to the socio economic consequences of not exploiting fossil fuel reserves to their full technical potential

environmental regulation a value theoretic and class based analysis following a value theoretic and class based approach it is argued in this paper that ecological problems are inseparably linked to the process of extracting surplus value in capitalism and owing to their adverse impacts instigate struggles over the appropriation of nature these struggles fought within and outside the state by competing agents shape environmental regulation in particular taxes permits command and control measures and subsidies affect prices profits and rents and have class and other social implications evidence of current environmental regulation shows that it takes places under the great influence of capitalist concerns

a two level dynamic game of carbon emission trading between russia china and annex b countries this paper proposes a computable dynamic game model of the strategic competition between russia and developing countries dcs mainly represented by china on the international market of emission permits created by the kyoto protocol the model uses a formulation of i a demand function for permits from annex b countries and ii marginal abatement costs mac in russia and china provided by two detailed models gemini e3 is a computable general equilibrium model that provides the data to estimate annex b demand for permits and macs in russia poles is a partial equilibrium model that is used to obtain mac curves for china the competitive scenario is compared with a monopoly situation where only russia is allowed to play strategically the impact of allowing dcs to intervene on the international emission trading market is thus assessed

fishing quota markets abstract in 1986 new zealand responded to the open access problem by establishing the world s largest individual transferable quota itq system using a 15 year panel dataset from new zealand that covers 33 species and more than 150 markets for fishing quotas we assess trends in market activity price dispersion and the fundamentals determining quota prices we find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased we also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices ecological variability and market interest rates controlling for these factors our results show a greater increase in quota prices for fish stocks that faced significant reductions consistent with increased profitability due to rationalization overall this suggests that these markets are operating reasonably well implying that itqs can be effective instruments for efficient fisheries management

impacts of alternative allowance allocation methods under a cap and trade program in power sector emission trading is considered to be a cost effective environmental economic instrument for pollution control however the policy design of an emission trading program has a decisive impact on its performance allowance allocation is one of the most important policy design issues in emission trading not only for equity but also for policy performance in this research an artificial market for sulfur dioxide so2 emission trading was constructed by applying an agent based model the performance of the jiangsu so2 emission trading market was examined under different allowance allocation methods and transaction costs the results showed that the market efficiency of emission trading would be affected by the allocation methods when the transaction costs are positive the auction allowance allocation method was more efficient and had the lowest total emission control costs than the other three allocation methods examined however the use of this method will require that power plants pay for all of their allowance and doing so will increase the production costs of power plants on the other hand output based allowance allocation is the second best method

public transaction costs of agri environmental schemes and their determinants analysing stakeholders involvement and perceptions despite an overall budget increase for rural development in the new programming period 2007 2013 most older member states in the now expanded european union are facing a substantial reduction in their budget for rural development and thus for agri environmental schemes aess it can be assumed that in most countries none or at best only part of this loss can be offset by national funds therefore the design of more efficient national governance structures for aess which decrease public transaction costs tcs would be an appropriate solution to this problem the objective of this paper is to define the factors that influence these public tcs so that appropriate action can then be taken to reduce them a statistical analysis with a proxy for public tcs is combined with an analysis of stakeholder perceptions excluding farmers concerning public tc influencing factors the research showed that it is mainly scheme related factors that are perceived to be important although the governance structure institutional environment and level of trust also play a role finally the analysis of perceptions concerning tcs also showed that aes related actors have a limited knowledge of tcs

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

how vulnerable is the emissions market to transaction costs an abms approach abstract the impact of transaction costs on the early emissions trading market is examined by applying an agent based model and simulation abms approach for a realistic model set up bounded rationality stochastic characteristics and learning by doing are considered in our search processes marginal abatement cost parameters are obtained from yoo et al 2010 which is an experimental study on the emissions trading in the korean power sector sensitivity analyses are performed on market performance indices with regard to transaction cost parameters which represent scales and the learning elasticities of transaction costs a total of 960 simulations were run in this sensitivity analysis sensitivity analysis results consistently show that higher transaction costs worsen market performance the most remarkable finding in these results is that welfare performance of all the transactions decreases by up to 50 as the scale parameters of transaction costs increase implying that welfare gain from introducing emissions trading disappears significantly however with learning curve effect welfare performance could be regained by up to 26 in sum although transaction costs significantly encroach upon trade gains at the early stage based on our simulation results the welfare loss by way of transaction costs is lessened as the knowledge of market participants progresses

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

sequestration offsets versus direct emission reductions consideration of environmental co effects abstract atmospheric greenhouse gas accumulation and consequential temperature increase can be remedied by emission reductions or agricultural carbon sequestration both options have direct and external environmental effects this paper examines the magnitudes of existing estimates of corresponding external co effects and how they could affect optimal combination of emission reductions and agricultural carbon sequestration we discuss whether government intervention in the form of taxation subsidization is justified for internalizing the externalities considering their relative magnitudes implementation costs and potential benefits that could be derived from such intervention we conclude that the existing estimates of external benefits from sequestration and emission reduction do not provide enough support for allocating resources to alter the market mix of carbon sequestration and direct emission reduction strategies

buyer liability and voluntary inspections in international greenhouse gas emissions trading a laboratory study this paper reports a preliminary laboratory experiment in which traders make investments to increase the reliability of tradable instruments that represent greenhouse gas emissions allowances in one half of the sessions these investments are unobservable while in the other half traders can invite costless and accurate inspections that make reliability investments public we implement a buyer liability rule so that if emissions reductions are unreliable i e sellers default the buyer of the allowances cannot redeem them to cover emissions we find that allowing inspections significantly increases the reliability investment rate and overall efficiency prices of uninspected allowances usually trade at a substantial discount due to the buyer liability rule which provides a strong market incentive for sellers to invest in reliability

designing carbon markets part ii carbon markets in space this paper analyses the design of carbon markets in time i e intertemporally it is part of a twin set of papers that ask starting from first principles what an optimal global carbon market would look like by around 2030 our focus is on firm level cap and trade systems although much of what we say would also apply to government level trading and carbon offset schemes we examine the first principles of temporal design that would help to maximise flexibility and to minimise costs including banking and borrowing and other mechanisms to provide greater carbon price predictability and credibility over time

do transaction costs influence firm trading behaviour in the european emissions trading system this study is one of the first to empirically investigate firm trading behaviour and the importance of permit trading transaction costs such as information costs and search costs in the first phase of the european union s emissions trading system eu ets the signs and significance of our constructed transaction costs proxy variables indicate for a presence of these costs in the initial years of the eu ets in particular this paper shows that ets firms with the smaller number of installations and with less trading experience were less likely to participate in the european emissions trading market and traded the lower quantities of permits furthermore these firms chose to trade permits indirectly via third parties this study also supports the concerns that transaction costs could be excessive for smaller participants and firms operating in the new eu member states

planes ships and taxes charging for international aviation and maritime emissions international aviation and maritime transport account for a significant and growing share of global carbon emissions yet they are not only excluded from the kyoto agreement and all current carbon pricing schemes but do not even pay fuel excises of the type standard for other transport activities moreover each sector benefits from preferential tax treatment failure to charge vat on international aviation and the application of tonnage tax regimes rather than the normal corporate tax in maritime this paper considers the design of fuel charges in these sectors to address these distortions and quantifies their impact on emissions revenue and welfare showing amongst other things that the gain from offsetting the pre existing tax distortions may be as significant as those from reducing emissions it shows too how compensation schemes can be designed to protect the poorest countries a key ingredient in the politics of the issue given the practical need for wide applicability of such charges the real challenge is to amass the degree of international cooperation required especially strong for maritime failure of which to some degree explains their current under taxation and unsurprisingly to decide who gets the money technically these charges should if anything be rather easy to implement michael keen ian parry and jon strand

costs of a ceiling on kyoto flexibility this paper examines the potential costs of a ceiling on the use of flexibility mechanisms in the kyoto protocol using poles a partial equilibrium model of the world energy system the results suggest that if emission trading were restricted to annex i countries halving the traded volume would increase costs by 11 billion year if emission trading were to operate at a global level reducing the trade to half the perfect market volume would increase annual costs by 12 billion year global carbon emissions might however be 1 lower the sensitivity of the results is discussed c 2000 elsevier science ltd all rights reserved

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

efficient pollution regulation getting the prices right this paper argues for efficient environmental regulations that equate the mar ginal damage of pollution to marginal abatement costs across space the paper estimates the source specific marginal damages of air pollution and calculates the welfare gain from making the current sulfur dioxide allowance trading pro gram for power plants more efficient the savings from using trading ratios based on marginal damages are between 310 and 940 million per year the potential savings from setting aggregate emissions efficiently and from includ ing more sources of air pollution are many times higher jel h23 q53 q58

transitional politics emerging incentive based instruments in environmental regulation abstract this paper proposes a positive theory of environmental instrument choice we study a democratic society that seeks to lower the level of pollution from industrial sources to a pre specified target the target can be implemented by one of three instruments s uniform emission standards p tradeable permits and t emission taxes the conflict of interest between special interests representing polluters and the electorate is resolved by an elected politician we characterize when each of the three policy instruments is chosen in political equilibrium and show that the transition observed in many countries from s to either p or t can be understood as a natural consequence of increasingly ambitious environmental targets