Template-Type: ReDIF-Paper 1.0 Number: 2004.1 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-001.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.1 Title: Empirical Analysis of National Income and So2 Emissions in Selected European Countries Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: FEEM and World Bank Author-Name: Suzette Pedroso Author-X-Name-First: Suzette Author-X-Name-Last: Pedroso Author-WorkPlace-Name: World Bank Author-Name: Alexander Golub Author-X-Name-First: Alexander Author-X-Name-Last: Golub Author-WorkPlace-Name: Environmental Defense Abstract: Data on GDP per capita and sulfur emissions for twelve European countries were analyzed to determine the relationship between emissions and income in these countries. As a whole, the relationship between sulfur emissions and per capita income is a fourth order polynomial and not a quadratic one as found in most studies. When countries were examined individually, seven out of the twelve countries depicted the same relationship. Looking closely at the regulations restricting sulfur emissions in the UK, the impact of all regulations supported the inverted U-shaped Kuznets curve. Individually, however, it is found that only two regulations have statistically significant impacts: Smoke Abatement Act in 1926 (reduced the amount of sulfur associated with a given level of GDP); and Clean Air Act in 1956 (increased the amount of sulfur emissions associated with a given level of GDP). Keywords: Environmental Kuznet’s Curve, Europe, Sulfur dioxide emission Classification-JEL: C33, Q53, Q58 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.2 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-002.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.2 Title: Strategic Immigration Policies and Welfare in Heterogeneous Countries Author-Name: Masahisa Fujita Author-X-Name-First: Masahisa Author-X-Name-Last: Fujita Author-WorkPlace-Name: Department of Economics, Southern Methodist University and CORE, Catholic University of Louvain Author-Name: Shlomo Weber Author-X-Name-First: Shlomo Author-X-Name-Last: Weber Author-WorkPlace-Name: Southern Methodist University Abstract: In this paper we consider a model with two industrialised countries and immigrants that come from “the rest of the world”. The countries are distinguished on the basis of three parameters: population size, bias towards immigrants, and production complementarity between native population and immigrants. We consider a non-cooperative game where each country makes a strategic choice of its immigration quotas. We first show that our game admits a unique pure strategy Nash equilibrium and then study the welfare implications of countries’ choices. It turns out that a county with a higher degree of production complementarity and a higher level of tolerance towards immigrants would allow a larger immigration quota and achieve a higher welfare level. Our results call for coordinated and harmonised immigration policies that may improve the welfare of both countries. Keywords: Immigration quotas, Heterogeneity, Production complementarity, Welfare, Policy Harmonisation Classification-JEL: C72, F22, O3, R1 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.3 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-003.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.3 Title: Do Privatizations Boost Household Shareholding? Evidence from Italy Author-Name: Ottavio Ricchi Author-X-Name-First: Ottavio Author-X-Name-Last: Ricchi Author-WorkPlace-Name: Ministry of the Economy and Finance, Government of the Republic of Italy Author-Name: Adolfo Di Carluccio Author-X-Name-First: Adolfo Author-X-Name-Last: Di Carluccio Author-WorkPlace-Name: Ministry of the Economy and Finance, Government of the Republic of Italy Author-Name: Cecilia Frale Author-X-Name-First: Cecilia Author-X-Name-Last: Frale Author-WorkPlace-Name: Ministry of the Economy and Finance, Government of the Republic of Italy Abstract: It is believed that privatizations substantially contributed to boost stock markets through the 1980s and 1990s. However, trough which channels did that materialize? We test whether privatizations –improving households’ acquaintance with the risk and return characteristics of stocks through the massive accompanying advertising campaigns– boosted demand for stocks by enlarging the set of households willing to invest in shares. We use a unique micro-data set collected for a large sample of Italian households on Public Offerings (PO) during 1995-99, the climax of privatizations in Italy. We show that advertising increased the notoriety of the incoming PO at households, and through this furthered households’ propensity to subscribe that PO. Furthermore, the propensity to subscribe the incoming PO also increased as households became better informed about past privatizations. Thus, privatizations expanded households’ share participation in Italy. Keywords: Household portfolio choice, Information, Privatizations Classification-JEL: D140, D820, E440, G110 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.4 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-004.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.4 Title: Languages Disenfranchisement in the European Union Author-Name: Shlomo Weber Author-X-Name-First: Shlomo Author-X-Name-Last: Weber Author-WorkPlace-Name: Southern Methodist University, Dallas and Center of Operation Research and Econometrics, Louvain Author-Name: Victor Ginsburgh Author-X-Name-First: Victor Author-X-Name-Last: Ginsburgh Author-WorkPlace-Name: ECARES, University Libre de Bruxelles and Centre of Operation Research and Econometrics, Louvain Abstract: We introduce the notion of language disenfranchisement which arises if the number of EU working languages is reduced. We use the data on language proficiency in EU and show that, in spite of the widespread knowledge of English, the retention of French and German as working languages in essential to avoid a too large degree of disenfranchisement of citizens. The picture, however, becomes somewhat different if we consider the population under age of 40. We also argue that even though French is the second leading language within the EU, the situation is likely to be reversed after the enlargement. Keywords: Languages, Disenfranchisement, European Union Classification-JEL: D70, O52, Z13 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.5 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-005.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.5 Title: Growth, Congestion of Public Goods, and Second-Best Optimal Policy Author-Name: Romano Piras Author-X-Name-First: Romano Author-X-Name-Last: Piras Author-WorkPlace-Name: Dipartimento di Economia, Università di Cagliari Abstract: This paper presents a general equilibrium endogenous growth model in which public spending is divided between public productive services and public consumption. A distinguishing feature of the model is the assumption that both components of public spending can be over used and, thus, congested by the private agents. We study the second-best dynamics of the model and prove that it is determinate. Moreover, we show that the optimal second-best policy could be not unique. Finally, the relationship between congestion and the optimal second-best policy, on the one hand, and congestion and the long run growth rate, on the other, is established. Keywords: Endogenous growth, Congestion, Public spending, Second-Best Classification-JEL: H3, H5, O4 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.6 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-006.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.6 Title: Lessons from the Polder: Is Dutch CO2-Taxation Optimal? Author-Name: Herman Vollebergh Author-X-Name-First: Herman Author-X-Name-Last: Vollebergh Author-WorkPlace-Name: Erasmus University Rotterdam Abstract: This paper evaluates energy tax reform in the Netherlands between 1988 and 2002 from a climate change perspective. A tax on fuels and the so-called regulatory energy tax since 1996 are examples of indirect and non-uniform taxation of emissions. The overall tax base and rate structure corroborates recent theoretical findings that heterogeneity in production processes and transaction costs may justify optimal departures from the Pigovian corrective tax rule. Surprisingly, the Dutch revenue-raising tax matches the (modified) Pigovian policy prescription rather well, whereas the regulatory energy tax mainly follows the revenue raising Ramsey logic. Further improvements of the energy tax structure are also discussed, such as targeting the energy tax base and linking the tax rate more precisely to fuel characteristics. Keywords: Climate change, Energy taxes, Optimal indirect taxation, Specific and ad valorem taxation Classification-JEL: H30, Q48 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.7 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-007.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.7 Title: Merger Mechanisms Author-Name: Sandro Brusco Author-X-Name-First: Sandro Author-X-Name-Last: Brusco Author-WorkPlace-Name: Department of Economics, SUNY at Stony Brook, and Departamento de Economía de la Empresa, Universidad Carlos III de Madrid Author-Name: Giuseppe Lopomo Author-X-Name-First: Giuseppe Author-X-Name-Last: Lopomo Author-WorkPlace-Name: The Fuqua School of Business, Duke University Author-Name: S. Viswanathan Author-X-Name-First: S. Author-X-Name-Last: Viswanathan Author-WorkPlace-Name: The Fuqua School of Business, Duke University Abstract: A firm can merge with one of n potential partners. The owner of each firm has private information about both his firm’s stand-alone value and a component of the synergies that would be realized by the merger involving his firm. We characterize incentive-efficient mechanisms in two cases. First, we assume that the value of any newly formed partnership is verifiable, hence transfers can be made contingent on the new information accruing after the merger. Second, we study the case of uncontingent rules. In the first case, we show that it is not optimal, in general, to redistribute shares of non-merging firms, and identify necessary and sufficient conditions for the implementability of efficient merger rules. In the second case, we show that the first-best can be obtained i) always, if the synergy values are privately known but the firms’ stand-alone values are observable; ii) only with sufficiently large synergies, if the firms’ stand-alone are privately known; and iii) never, if the set of feasible mechanisms is restricted to “auctions in shares”. Keywords: Mechanism design, Merger Classification-JEL: C72, D44, G34 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.8 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-008.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.8 Title: IPO Pricing with Bookbuilding and a When-Issued Market Author-Name: Alex Stomper Author-X-Name-First: Alex Author-X-Name-Last: Stomper Author-WorkPlace-Name: Department of Business Studies, University of Vienna Author-Name: Wolfgang Aussenegg Author-X-Name-First: Wolfgang Author-X-Name-Last: Aussenegg Author-WorkPlace-Name: Department of Finance, Vienna University of Technology Author-Name: Pegaret Pichler Author-X-Name-First: Pegaret Author-X-Name-Last: Pichler Author-WorkPlace-Name: Department of Finance and Economics, Sloan School of Management Massachusetts Institute of Technology Abstract: This paper examines the German IPO pricing process which combines bookbuilding with a liquid pre-IPO when-issued market. We find no partial adjustment phenomenon, as has been documented for U.S. IPOs. We thus find no evidence that bookbuilding provides information for IPO pricing, beyond the information that is required to set preliminary price ranges. Once price ranges are set, when-issued trading commences and indicates how IPOs should be priced in the primary market. However, the evidence suggests that such trading does not fully supplant information gathering through bookbuilding. Keywords: Initial public offerings, Bookbuilding, When-issued trading Classification-JEL: G32 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.9 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-009.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.9 Title: Primary Market Design: Direct Mechanisms and Markets Author-Name: Alex Stomper Author-X-Name-First: Alex Author-X-Name-Last: Stomper Author-WorkPlace-Name: Department of Business Studies ,University of Vienna Author-Name: Pegaret Pichler Author-X-Name-First: Pegaret Author-X-Name-Last: Pichler Author-WorkPlace-Name: Department of Finance and Economics, Sloan School of Management Massachusetts Institute of Technology Abstract: We develop a model that allows for the coexistence of bookbuilding and when-issued trading. We show that, due to interactions between these two processes, allowing for when-issued trading is for the most part beneficial for issuers. When-issued trading may interfere with information gathering thorough bookbuilding, in the case that informative bookbuilding is not needed. However, informative bookbuilding may be a prerequisite for the when-issued market to function. In this case the existence of a liquid when-issued market will not interfere with information gathering through bookbuilding, and will strictly benefit the issuer. Keywords: Initial public offerings, Information gathering mechanisms, When-issued trading Classification-JEL: G32 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.10 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-010.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.10 Title: The Chopstick Auction: A Study of the Exposure Problem in Multi-Unit Auctions Author-Name: Sander Onderstal Author-X-Name-First: Sander Author-X-Name-Last: Onderstal Author-WorkPlace-Name: Bureau for Economic Policy Analysis, CPB Netherlands Author-Name: Florian Englmaier Author-X-Name-First: Florian Author-X-Name-Last: Englmaier Author-WorkPlace-Name: Economics Department, University of Munich Author-Name: Pablo Guillen Author-X-Name-First: Pablo Author-X-Name-Last: Guillen Author-WorkPlace-Name: Autonoma Barcelona, CSIC Author-Name: Loreto Llorente Author-X-Name-First: Loreto Author-X-Name-Last: Llorente Author-WorkPlace-Name: Departamento de Economía, Universidad Pública de Navarra Author-Name: Rupert Sausgruber Author-X-Name-First: Rupert Author-X-Name-Last: Sausgruber Author-WorkPlace-Name: Department of Public Economics, University of Innsbruck Abstract: Multi-unit auctions are sometimes plagued by the so-called exposure problem. In this paper, we analyze a simple game called the ‘chopstick auction’ in which bidders are confronted with the exposure problem. We analyze the chopstick auction with incomplete information both in theory and in a laboratory experiment. In theory, the chopstick auction has an efficient equilibrium and is revenue equivalent with the second-price sealed-bid auction in which the exposure problem is not present. In the experiment, however, we find that the chopstick auction is slightly less efficient but yields far more revenue than the second-price sealed-bid auction. Keywords: Chopstick auction, Exposure problem, Laboratory experiment, Second-price sealed-bid auction Classification-JEL: C9, D44 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.11 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-011.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.11 Title: Nonparametric Identification and Estimation of Multi-Unit, Sequential, Oral, Ascending-Price Auctions With Asymmetric Bidders Author-Name: Harry J. Paarsch Author-X-Name-First: Harry J. Author-X-Name-Last: Paarsch Author-WorkPlace-Name: Department of Economics, University of Iowa Author-Name: Bjarne Brendstrup Author-X-Name-First: Bjarne Author-X-Name-Last: Brendstrup Author-WorkPlace-Name: Department of Economics, University of Aarhus Abstract: Within the independent private-values paradigm, we derive the data-generating process of the winning bid for the last unit sold at multi-unit sequential English auctions when bidder valuations are draws from different distributions; i.e., in the presence of asymmetries. When the identity of the winner as well as the number of units won by each bidder in previous stages of the auction are observed, we demonstrate nonparametric identification and then propose two estimation strategies, one based on the empirical distribution function of winning bids for the last unit sold and the other based on approximation methods using orthogonal polynomials. We apply our methods to daily data from fish auctions held in Grenå, Denmark. For single-unit supply, we use our estimates to compare the revenues a seller could expect to earn were a Dutch auction employed instead. Keywords: Asymmetric, Multi-unit, Sequential, Oral, Ascending-price fish auctions, Dutch auctions, Nonparametric identification and estimation Classification-JEL: C14, D44, L1, Q22 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.12 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-012.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.12 Title: Equilibrium in the Two Player, k-Double Auction with Affiliate Private Values Author-Name: Ohad Kadan Author-X-Name-First: Ohad Author-X-Name-Last: Kadan Author-WorkPlace-Name: John M. Olin School of Business, Washington University in St. Louis Abstract: We prove the existence of an increasing equilibrium, and study the comparative statics of correlation in the k-double auction with affiliated private values. This is supposedly the simplest bilateral trading mechanism that allows for dependence in valuations between buyers and sellers. In the case k ?{0 ,1} there exists a unique equilibrium in non-dominated strategies. Using this equilibrium we show that correlation has a dual effect on strategic bidding. It might impose bidders to become more or less aggressive depending on their private valuation, and on the level of correlation. In the case k ? (0 ,1), we prove the existence of a family of strictly increasing equilibria, and demonstrate them using examples. Moreover, we show that equilibria in the case of independent private values are pointwise limits of equilibria with strictly affiliated private values. Keywords: Double auctions, Affiliation Classification-JEL: C72, D44 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.13 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-013.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.13 Title: Auctions as Coordination Devices Author-Name: Maarten C.W. Janssen Author-X-Name-First: Maarten C.W. Author-X-Name-Last: Janssen Author-WorkPlace-Name: Department of Economics, Erasmus University Abstract: This paper develops an economic argument relating auctions to high market prices. At the core of the argument is the claim that market competition and bidding in an auction should be analyzed as part of one game, where the pricing strategies in the market subgame depend on the bidding strategies during the auction. I show that when there are two licenses for sale the only equilibrium in the overall game that is consistent with the logic of forward induction is the one where firms bid an amount (almost) equal to the profits of the cooperative market outcome and follow a cooperative pricing strategy in the market game resulting in high prices. With three or more licenses the auction format determines whether the forward induction argument works. Keywords: Auctions, Market prices, Coordination Classification-JEL: L50 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.14 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-014.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.14 Title: All-Pay Auctions with Weakly Risk-Averse Buyers Author-Name: Gadi Fibich Author-X-Name-First: Gadi Author-X-Name-Last: Fibich Author-WorkPlace-Name: School of Mathematical Sciences, Tel Aviv University Author-Name: Arieh Gavious Author-X-Name-First: Arieh Author-X-Name-Last: Gavious Author-WorkPlace-Name: School of Industrial Engineering and Management, Faculty of Engineering Sciences, Ben-Gurion University Author-Name: Aner Sela Author-X-Name-First: Aner Author-X-Name-Last: Sela Author-WorkPlace-Name: Department of Economics, Ben-Gurion University Abstract: We use perturbation analysis to study independent private-value all-pay auctions with weakly risk-averse buyers. We show that under weak risk aversion: 1) Buyers with low values bid lower and buyers with high values bid higher than they would bid in the risk neutral case. 2) Buyers with low values bid lower and buyers with high values bid higher than they would bid in a first-price auction. 3) Buyers' expected utilities in an all-pay auction are lower than in a first-price auction. 4) The seller's expected payoff in an all-pay auction may be either higher or lower than in the risk neutral case. 5) The seller's expected payoff in an all-pay auction may be either higher or lower than in a first-price auction. Keywords: Private-value auctions, Risk aversion, Perturbation analysis Classification-JEL: D44, D72, D82 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.15 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-015.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.15 Title: Competition and Cooperation in Divisible Good Auctions: An Experimental Examination Author-Name: Orly Sade Author-X-Name-First: Orly Author-X-Name-Last: Sade Author-WorkPlace-Name: Jerusalem School of Business, Hebrew University of Jerusalem Author-Name: Charles Schnitzlein Author-X-Name-First: Charles Author-X-Name-Last: Schnitzlein Author-WorkPlace-Name: College of Business, University of Central Florida Author-Name: Jaime F. Zender Author-X-Name-First: Jaime F. Author-X-Name-Last: Zender Author-WorkPlace-Name: Leeds School of Business, University of Colorado at Boulder Abstract: An experimental approach is used to examine the performance of three different multi-unit auction designs: discriminatory, uniform-price with fixed supply, and uniform-price with endogenous supply. We find that the strategies of the individual bidders and the aggregate demand curves are inconsistent with theoretically identified equilibrium strategies. The discriminatory auction is found to be more susceptible to collusion than are the uniform-price auctions, and so contrary to theoretical predictions and previous experimental results, the discriminatory auction provides the lowest average revenue. Consistent with theoretical predictions, bidder demands are more elastic with reducible supply or discriminatory pricing than in the uniform-price auction with fixed supply. Despite a lack of a priori differences across bidders, the discriminatory auction results in significantly more symmetric allocations. Keywords: Divisible good, Auctions, Experimental economics Classification-JEL: C90, D44 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.16 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-016.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.16 Title: Late and Multiple Bidding in Competing Second Price Author-Name: Marta Stryszowska Author-X-Name-First: Marta Author-X-Name-Last: Stryszowska Author-WorkPlace-Name: Department of Economics, Tilburg University Abstract: Internet auctions, such as those on eBay, are known for multiple bidding and sniping. Buyers send bids in the closing seconds of an auction, knowing that bids arriving after the closure of the auction are not counted. They also bid several times at the same auction. We model Internet auction as a dynamic multi-unit auction. This let us explain the rationality of both sniping and multiple bidding. By submitting multiple bids, buyers co-ordinate between auctions, so that all objects are finally sold and no-one has to pay too high a price. When bidders submit multiple bids, they might bid very late in the end. Keywords: Auctions, Electronic Commerce, Internet Classification-JEL: D44 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.17 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-017.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.17 Title: R&D in Cleaner Technology and International Trade Author-Name: Slim Ben Youssef Author-X-Name-First: Slim Ben Author-X-Name-Last: Youssef Author-WorkPlace-Name: LAREQUAD and Faculté des Sciences Economiques et de Gestion de Mahdia Abstract: We consider a dynamic three-stage game played by two regulator-firm hierarchies to capture the scale and technological effects of opening markets to international trade. Each firm produces one good sold on the market. Firms can invest in R&D in order to lower their fixed emission/output ratio and are regulated with costly public funds. We take the context of sufficiently high market sizes and investment cost parameters. Opening markets to international trade yields more investment in R&D, more production and a lower emission ratio. When the market size is low enough and the investment cost parameter is high enough, pollution in common market is higher than in autarky. International trade reduces the social welfare. Keywords: R&D, Cleaner technology, Common market, Social welfare Classification-JEL: D62, F12, O32 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.18 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-018.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.18 Title: Biodiversity and Economic Growth: Stabilization Versus Preservation of the Ecological Dynamics Author-Name: Simone Borghesi Author-X-Name-First: Simone Author-X-Name-Last: Borghesi Author-WorkPlace-Name: Dept. of Political Economy, University of Siena Author-Name: Angelo Antoci Author-X-Name-First: Angelo Author-X-Name-Last: Antoci Author-WorkPlace-Name: University of Sassari Author-Name: Paolo Russu Author-X-Name-First: Paolo Author-X-Name-Last: Russu Author-WorkPlace-Name: University of Sassari Abstract: This work examines the impact that economic growth can have on biodiversity and on the ecological dynamics that would naturally emerge in the absence of human activity. The loss of biodiversity may induce policy-makers to implement defensive actions that prevent single species from extinction. These defensive actions, however, may deeply alter the natural dynamics of interaction between species, leading to an ecological equilibrium that is completely different from the one that would exist in the absence of human intervention. This suggests that there might exist a conflict between preserving biodiversity (through stabilization of the ecological system) and preserving the intrinsic features of the ecological dynamics. To investigate this issue more deeply, we analyze the impact that different objective functions and defensive technologies can have on the natural ecological dynamics, and show that human action can modify the stability of the ecological fixed points. From the simple analytical formulations adopted in the paper, it emerges that it is possible to stabilize the ecological fixed point and consequently to avoid the extinction of a species, even in the absence of defensive expenditures specifically finalized at the protection of that species. The stabilizing. effect of human intervention, however, turns out to be enhanced when specific defensive expenditures are implemented. Finally, numerical simulations suggest that human activity can have an even deeper impact on the ecological dynamics, substantially modifying not only the stability of the fixed points, but also their number. Keywords: Biodiversity, Growth, Defensive actions, Ecological dynamics Classification-JEL: C61, C62, Q20 Creation-Date: 200401 Template-Type: ReDIF-Paper 1.0 Number: 2004.19 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-019.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.19 Title: Information and Willingness to Pay in a Contingent Valuation Study: The Value of S. Erasmo in the Lagoon of Venice Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland and Fondazione Eni Enrico Mattei Author-Name: Paolo Rosato Author-X-Name-First: Paolo Author-X-Name-Last: Rosato Author-WorkPlace-Name: Dipartimento di Ingegneria Civile, Università degli Studi di Trieste Author-Name: Alberto Longo Author-X-Name-First: Alberto Author-X-Name-Last: Longo Author-WorkPlace-Name: Università di Venezia Ca’ Foscari and Fondazione Eni Enrico Mattei Author-Name: Valentina Zanatta Author-X-Name-First: Valentina Author-X-Name-Last: Zanatta Author-WorkPlace-Name: Dipartimento Casa Città, Politecnico di Torino Abstract: This paper reports on a contingent valuation study eliciting willingness to pay for a public program for the preservation of lagoon, beach and infrastructure in the island of S. Erasmo in the Lagoon of Venice. A referendum dichotomous choice approach with a follow-up question is used to obtain information about willingness to pay from a sample of residents of the Veneto Region in Italy. We use split samples to investigate the effect of providing different levels of information to respondents before asking the payment questions. Our experimental treatment is a reminder of possible reasons for voting in favor or against the proposed program before the referendum question. We find that reminding respondents of the reasons for voting for or against the public works increases WTP among less highly educated respondents, and decreases WTP among more highly educated respondents. Keywords: Contingent valuation, Effects of information Classification-JEL: Q0, Q3, Q26 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.20 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-020.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.20 Title: Investment in Tourism Market: A Dynamic Model of Differentiated Oligopoly Author-Name: Roberto Cellini Author-X-Name-First: Roberto Author-X-Name-Last: Cellini Author-WorkPlace-Name: Dipartimento di Economia e Metodi Quantitativi, Università di Catania Author-Name: Guido Candela Author-X-Name-First: Guido Author-X-Name-Last: Candela Author-WorkPlace-Name: Dipartimento di Scienze Economiche, Università di Bologna Abstract: We present a theoretical model in tourism economics, assuming that the market for tourism is an oligopoly with differentiated products. Destinations (i.e., countries, regions, sites or even firms) can invest in order to improve their carrying capacity that can be interpreted as the stock of physical, natural or cultural resources. Tourism flows yield current revenues, but they are usually detrimental for the cultural or natural resource stock over time. We find the solution of the dynamic model, and in particular we find the open-loop Nash equilibrium of the game among the destinations, under alternative settings, depending on whether the arrivals are exogenous or endogenous, and depending on whether the degree of differentiation among destinations is exogenous or endogenous. The model is rather general, and it can provide answers to different specific questions, like the choice between mass- vs. elite-tourism development strategies; the effect of the number of competing products upon profits; the optimal degree of product differentiation. Keywords: Tourism, Differentiated games, Reservation price Classification-JEL: D43, D92, L83 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.21 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-021.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.21 Title: Climate and the Destination Choice of German Tourists Author-Name: Jacqueline M. Hamilton Author-X-Name-First: Jacqueline M. Author-X-Name-Last: Hamilton Author-WorkPlace-Name: Centre for Marine and Climate Research, Hamburg University Abstract: The attractiveness of a tourist destination is partly dependent on its environmental and climatic resource base. Climate change can be expected to have an effect on this attractiveness and will subsequently alter patterns of demand. An application of the pooled travel cost model using survey data on the destination choices of German tourists is presented in this study. Data on the climate, beach length and indicators of cultural, natural resource and economic attractiveness of the destination countries are used in the regression analysis. Optimal climate values were calculated and a climate index was used to examine the change in climatic attractiveness under an arbitrary scenario of climate change. It was found that, for European countries during the summer months, there would be an increase in attractiveness. However, the northern European countries become relatively more attractive closing the gap on the currently popular southern European countries. Keywords: Tourism demand, Climate change, Travel cost model Classification-JEL: L83, Q26, Q54 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.22 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-022.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.22 Title: Land, Environmental Externalities and Tourism Development Author-Name: Javier Lozano Ibáñez Author-X-Name-First: Javier Author-X-Name-Last: Lozano Ibáñez Author-WorkPlace-Name: Department of Applied Economics, University of the Balearic Islands and Centre de Recerca Econòmica (CRE) Author-Name: Javier Rey-Maquieira Palmer Author-X-Name-First: Javier Rey Author-X-Name-Last: Maquieira Palmer Author-WorkPlace-Name: Department of Applied Economics, University of the Balearic Islands and Centre de Recerca Econòmica (CRE) Author-Name: Carlos Mario Gómez Gómez Author-X-Name-First: Carlos Mario Author-X-Name-Last: Gómez Gómez Author-WorkPlace-Name: Department of Economic Foundations and Economic History, University of Alcalá de Henares Abstract: In a two sectors dynamic model we analyze the process of tourism development based on the accumulation of capital (building of tourism facilities) and the reallocation of land from traditional activities to the tourism sector. The model incorporates the conflict between occupation of the territory by the tourism facilities, other productive activities and availability of cultural, natural and environmental assets that are valued by residents and visitors. We characterize the process of tourism development in two settings: the socially optimal solution and a situation where the costs of tourism expansion are external to the decision makers, where externalities on residents as well as intraindustry externalities are considered. Regarding the optimal solution, we show that it is optimal to limit tourism expansion before it reaches its maximum capacity even in a context where the economic attractiveness of tourism relative to other productive sectors rise continuously. However, in this context and when all the costs of tourism development are externalities the only limit to tourism quantitative expansion is its maximum capacity determined by the availability of land. Finally, we show that excessive environmental degradation from the future generations’ point of view is not a problem of discounting the future but rather a problem of externalities that affects negatively the current and future generations. Keywords: Intertemporal land allocation, Structural economic change, Tourism industry Classification-JEL: O41, Q24 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.23 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-023.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.23 Title: Profiling Tourists for Balanced Utilization of Tourism-Based Resources in Kenya Author-Name: Pius Odunga Author-X-Name-First: Pius Author-X-Name-Last: Odunga Author-WorkPlace-Name: Department of Tourism, Moi University Author-Name: Henk Folmer Author-X-Name-First: Henk Author-X-Name-Last: Folmer Author-WorkPlace-Name: Department of Economics of Consumer & Household Studies, Wagenigen University Abstract: Kenya is predominantly a nature-based tourism destination with wildlife (concentrated in the southern part of the country) and beaches (along the Indian Ocean) accounting for over 85% of the international tourists visiting the country. Other attractions are based on the physical landscape of the country and the culture of the people. Unfortunately, the full potential of culture-based attractions has not been exploited. The over-concentration of tourism activities in wildlife protected areas and on the coastal zone has had inherent problems that include severe environmental degradation. The less visited attractions stand the risk of neglect and could be eroded from the nation’s heritage with time. There is need to diversify tourism activities and spread them to other parts of the country by putting more emphasis on non-traditional ones such as cultural excursions. This research profiles tourists based on their preferences as assessed from the number of days they spend at different attraction sites. By associating the characteristics of tourists with various attractions, consumer preference profiles were established. Length of stay, presence of children, travel party size and gender are some of the significant factors that determined the profiles. Profiles can be used in encouraging proportionately more tourists with greater affinity for non-traditional attractions. Besides gender, other factors such as socio-economic status and whether one is travelling as a couple or not, turned out to be significant variables in influencing the resulting expenditure levels. Keywords: Tourist profiles, Attractions, Culture, Expenditure, LISREL, Kenya Classification-JEL: Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.24 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-024.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.24 Title: Tourism, Trade and Domestic Welfare Author-Name: Pasquale M. Sgro Author-X-Name-First: Pasquale M. Author-X-Name-Last: Sgro Author-WorkPlace-Name: Deakin University Author-Name: Jean-Jacques Nowak Author-X-Name-First: Jean-Jacques Author-X-Name-Last: Nowak Author-WorkPlace-Name: Université Lille Author-Name: Mondher Sahli Author-X-Name-First: Mondher Author-X-Name-Last: Sahli Author-WorkPlace-Name: Victoria University of Wellington Abstract: Tourism has been regarded as a major source of economic growth and a good source of foreign exchange earnings. Tourism has also been considered as an activity that imposes costs on the host country. Such costs include increased pollution, congestion and despoliation of fragile environments and intra-generational inequity aggravation. One aspect that has been ignored is the general equilibrium effects of tourism on the other sectors in the economy. These effects can be quite substantial and should be taken into account when assessing the net benefits of a tourism boom on an economy. This paper presents a model which captures the interdependence between tourism and the rest of the economy, in particular agriculture and manufacturing. We examine the effect of a tourist boom on structural adjustment, commodity and factor prices and more importantly resident welfare. An important result obtained is that the tourist boom may “immiserize” the residents. This occurs because of two effects. The first, a favourable effect due to an increase in the relative price of the non-traded good which is termed the secondary terms of trade effect. The second, a negative effect due to an efficiency loss that occurs in the presence of increasing returns to scale in manufacturing. If this second effect outweighs the first effect, resident immiserization occurs. Keywords: Tourism, Trade welfare Classification-JEL: F10, F22 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.25 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-025.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.25 Title: Country Risk Ratings of Small Island Tourism Economies Author-Name: Riaz Shareef Author-X-Name-First: Riaz Author-X-Name-Last: Shareef Author-WorkPlace-Name: Department of Economics, University of Western Australia Abstract: Over the last twenty years, there has been a growing fascination within public and academic circles about the livelihood of islands with small populations and territory which are present in each of the world’s great oceans. The Small Island Tourism Economies analysed in this paper vary profoundly in their size, land area, and location. Moreover, they have depended heavily on financial aid from their former colonists for infrastructure development, which has declined dramatically since the collapse of Communism. These economies also differ in their narrow natural resource bases on land and in water, in their prospects for self reliance in economic development, and their overwhelming reliance on tourism as a source of exports. These economies are developing countries which need a consistent inflow of foreign direct investment to maintain economic growth. Such sovereign island economies differ in the extent to which they are home to a multitude of ethnic diversity, political systems, historical experience, economic and environmental vulnerability, ecological fragility, the types of risks facing private investors, and in the extent to which they are perceived as, or perceive themselves to be, insular and peripheral. In spite of the vast diversity as well as similarities, researchers are fascinated by the world of small island economies, and are intrigued by their unique features which cannot be addressed through a generalised set of rules. This paper analyses the geographical, historical, economic, tourism-oriented and institutional characteristics, as well as vulnerability to changes in the international economic, financial and political climates, of twenty Small Island Tourism Economies. The snapshot images provide a comparative assessment of the international country risk ratings, and highlight the importance of economic, financial and political risk ratings as components of a composite risk rating for Small Island Tourism Economies. Keywords: Small size, Tourism, Volatility, Vulnerability, Country risk ratings, Economic risk, Financial risk, Political risk, Composite risk Classification-JEL: F00, R14 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.26 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-026.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.26 Title: Tourism and Economic Growth in Latin American Countries: A Panel Data Approach Author-Name: Juan Luis Eugenio-Martín Author-X-Name-First: Juan Luis Author-X-Name-Last: Eugenio-Martín Author-WorkPlace-Name: Christel DeHaan Tourism and Travel Research Institute, University of Nottingham Author-Name: Noelia Martín Morales Author-X-Name-First: Noelia Author-X-Name-Last: Martín Morales Author-WorkPlace-Name: Departamento de Análisis Económico Aplicado, Universidad de Las Palmas de Gran Canaria Author-Name: Riccardo Scarpa Author-X-Name-First: Riccardo Author-X-Name-Last: Scarpa Author-WorkPlace-Name: Environment Department, University of York Abstract: We consider the relationship between tourism and economic growth for Latin American countries since 1985 until 1998. The analysis proposed is based on a panel data approach and the Arellano-Bond estimator for dynamic panels. We obtain estimates of the relationship between economic growth and growth in tourists per capita conditional on main macroeconomic variables. We show that the tourism sector is adequate for the economic growth of medium or low-income countries, though not necessarily for developed countries. We then invert the causality direction of the analysis. Rather than explaining economic growth, we try to explain tourism arrivals conditional on GDP and other covariates such as safety, prices and education level, and investment in infrastructures. We employ a generalised least squares AR(1) panel data model. The results provide evidence that low-income countries seem to need adequate levels of infrastructures, education and development to attract tourists. Medium-income countries need high levels of social development like health services and high GDP per capita levels. Finally, the results disclose that price of the destination, in terms of exchange rate and PPP is irrelevant for tourism growth. Keywords: Tourism, Economic growth, Panel data Classification-JEL: L83, O40, C33, O54 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.27 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-027.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.27 Title: Impact of Tourism Consumption on GDP. The Role of Imports Author-Name: Raúl Hernández Martín Author-X-Name-First: Raúl Author-X-Name-Last: Hernández Martín Author-WorkPlace-Name: Department of Applied Economics, University of La Laguna Abstract: The aim of this paper is to analyse the effects of tourism consumption on imports. The basic idea is that conversion of tourism expenditure into value added and GP depends on the effect of the former on imports. Imports are leakages that reduce the economic impact of tourism in a destination and this seams to be especially important in the case of small islands. After finding some stylised facts about the evolution of tourism consumption and imports in the Canary Islands, the paper presents two different methodologies, Keynesian multipliers and input-output analysis. The Canary Islands are used as a case study for estimating the impact of consumption made by tourists on imports. Keywords: Economic impact, Imports, Keynesian multiplier, Input-output model, Canary Islands Classification-JEL: L83, F10, R15 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.28 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-028.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.28 Title: Cross-Country Ethical Dilemmas in Business: A Descriptive Framework Author-Name: Nicoletta Ferro Author-X-Name-First: Nicoletta Author-X-Name-Last: Ferro Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: As businesses span the globe, multinational and translational companies conduct their business operations in foreign settings, especially in developing countries and in countries in transition from Communist regimes. This poses new challenges to expatriate managers and to home-based staff in charge of foreign affiliates. They are called on to determine the right versus the wrong, the good versus the bad over international business transactions, negotiations, advertisement and supply chain management taking place in foreign settings. As most of the time, businessmen lack a certain degree of cultural awareness and knowledge, managing ethical diversity over cross-country business transactions ends up to be a major challenge for business people. This paper’s aim is to provide an introductory sketch on the cross-country issues facing international business, through detailed description of their level of disclosure (Political, Corporate, Internal) diverse areas and connected situations. The pros and cons of the traditional paradigms used by business people in dealing with such circumstances (Universalism and Relativism) will be weighed. In addition examples of “irresponsible business practices” resulting from cultural misunderstandings, ignorance and lack of contextualization on the behalf of business people will be provided. Keywords: Business ethics, Cross-country ethical dilemmas, Corporate Social responsibility, Diversity Classification-JEL: M1, M14 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.29 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-029.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.29 Title: Assessing the Effectiveness of Tradable Landuse Rights for Biodiversity Conservation: An Application to Canada's Boreal Mixedwood Forest Author-Name: Marian Weber Author-X-Name-First: Marian Author-X-Name-Last: Weber Author-WorkPlace-Name: Sustainable Ecosystems, Alberta Research Council Abstract: Ecological reserve networks are an important strategy for conserving biodiversity. One approach to selecting reserves is to use optimization algorithms that maximize an ecological objective function subject to a total reserve area constraint. Under this approach, economic factors such as potential land values and tenure arrangements are often ignored. Tradable landuse rights are proposed as an alternative economic mechanism for selecting reserves. Under this approach economic considerations determine the spatial distribution of development and reserves are allocated to sites with the lowest development value, minimizing the cost of the reserve network. The configuration of the reserve network as well as the biodiversity outcome is determined as a residual. However cost savings can be used to increase the total amount of area in reserve and improve biodiversity outcomes. The appropriateness of this approach for regional planning is discussed in light of key uncertainties associated with biodiversity protection. A comparison of biodiversity outcomes and costs under ecological versus economic approaches is undertaken for the Boreal Forest Natural Region of Alberta, Canada. We find a significant increase in total area protected and an increase in species representation under the TLR approach. Keywords: Biodiversity conservation, Reserve design, Tradable landuse rights Classification-JEL: Q28, Q21, H41 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.30 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-030.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.30 Title: Output Substitution in Multi-Species Trawl Fisheries: Implications for Quota Setting Author-Name: Phoebe Koundouri Author-X-Name-First: Phoebe Author-X-Name-Last: Koundouri Author-WorkPlace-Name: Department of Economics, University of Reading and Department of Economics and CSERGE, University College London Author-Name: Trond Bjorndal Author-X-Name-First: Trond Author-X-Name-Last: Bjorndal Author-WorkPlace-Name: CEMARE, Department of Economics, University of Portsmouth Author-Name: Sean Pascoe Author-X-Name-First: Sean Author-X-Name-Last: Pascoe Author-WorkPlace-Name: CEMARE, Department of Economics, University of Portsmouth Abstract: In most multi-species fisheries managed through output controls, total allowable catches (TACs) are set primarily on the basis of biological considerations, usually on a species by species basis. An implicit assumption of management is that fishers are able to adjust their product mix in line with these quotas. If this is not the case, then over-quota catch occurs, leading to either illegal landings or discards. In either case, the effectiveness of the TAC in conserving the resource is reduced. In this paper we show that in the case of multi-species fisheries that exhibit jointness in production, setting TACs on an individual species’ basis is inappropriate. In particular, we quantify technical interactions through the estimation of a multi-output distance function for the UK North Sea beam and otter trawl fisheries, and find that in most cases, the potential of substitutability between the main and alternative species is relatively small. We argue that failure to quantify and integrate these technical interactions in the construction of management instruments for fisheries regulation, may result in increased discarding, illegal fishing and potentially lower than expected future yields. Keywords: Multi-output fishery, Multi-output distance function, Elasticities of substitution, Efficiency Classification-JEL: Q22 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.31 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-031.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.31 Title: Weather Impacts On Natural, Social And Economic System (WISE) Part I: Sectoral Analysis of Climate Impacts in Italy Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and Fondazione Eni Enrico Mattei Author-Name: Alessandra Goria Author-X-Name-First: Alessandra Author-X-Name-Last: Goria Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Paolo Mombrini Author-X-Name-First: Paolo Author-X-Name-Last: Mombrini Author-WorkPlace-Name: University of Bergamo Author-Name: Evi Spantidaki Author-X-Name-First: Evi Author-X-Name-Last: Spantidaki Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: This paper focuses on the results of the research work carried out by Fondazione Eni Enrico Mattei (FEEM) within the WISE project. This project aims at investigating the effects and the impacts of extreme weather events, particularly very warm summers, mild winters and storms, on the socio-economic systems of European countries. The output consists of a series of empirical studies, both of quantitative and qualitative-descriptive nature. The work of FEEM in the WISE project covers the quantitative analysis of the impacts of climate extremes on the socio-economic system in Italy and the analysis of individuals’ perception of climate extremes based on results from individuals’ surveys. In this paper is presented the statistical modelling of the impact of weather, through quantitative analysis of activity time series. In particular, the core sectors analysed include fires, health, energy use, tourism and agriculture. Keywords: Climate change, Extreme events, Impacts Classification-JEL: Q2, Q250 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.32 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-032.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.32 Title: Weather Impacts On Natural, Social And Economic System (WISE) Part II: Individual Perception of Climate Extremes in Italy Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and Fondazione Eni Enrico Mattei Author-Name: Alessandra Goria Author-X-Name-First: Alessandra Author-X-Name-Last: Goria Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Paolo Mombrini Author-X-Name-First: Paolo Author-X-Name-Last: Mombrini Author-WorkPlace-Name: University of Bergamo Author-Name: Evi Spantidaki Author-X-Name-First: Evi Author-X-Name-Last: Spantidaki Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: This paper focuses on the results of the research work carried out by Fondazione Eni Enrico Mattei (FEEM) within the WISE project. This project aims at investigating the effects and the impacts of extreme weather events, particularly very warm summers, mild winters and storms, on the socio-economic systems of European countries. The output consists of a series of empirical studies, both of quantitative and qualitative-descriptive nature. The work of FEEM in the WISE project covers the quantitative analysis of the impacts of climate extremes on the socio-economic system in Italy and the analysis of individuals’ perception of climate extremes based on results from individuals’ surveys. In this paper is considered the study of the perception of weather impacts through questionnaire survey to the general public. With regard to the individuals’ perception survey, a sample of 300 individuals were interviewed by telephone: 150 extracted from the North of Italy and 150 from the South of Italy. Individuals were asked general questions about their perception of climate extremes, and about the impacts of weather extremes on their daily habits at work, at home, in their leisure activities, on their transport patterns, on their health and tourism choices. Keywords: Climate change, Weather extremes, Perception, Impacts Classification-JEL: Q2, Q250 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.33 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-033.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.33 Title: Divide and Conquer: Noisy Communication in Networks, Power, and Wealth Distribution Author-Name: Wilson Perez Author-X-Name-First: Wilson Author-X-Name-Last: Perez Author-WorkPlace-Name: Department of Economics, Cornell University Abstract: In a society composed of a ruler and its citizens: what are the determinants of the political equilibrium between these two? This paper approaches this problem as a game played between a ruler who has to decide the distribution of the aggregate income and a group of agents/citizens who have the opportunity to revolt if they are unhappy with the distribution. Nevertheless, if too few revolt, the agents become defeated and receive zero consumption, while a successful revolt increases the consumption level of the rebels whereas the ruler receives nothing. Coordinated action by citizens is possible because they form nodes in a communication network. However, communication through the network is noisy, which removes common knowledge about the endowments and could preclude the emergence of collective action among citizens. In this paper, I argue that the network structure and the noise level are determinants of the political equilibrium and wealth distribution. The model explains how the ruler could use propaganda, cooptation and repression to increase his expected utility. The formalization of the game is accomplished using such concepts as p-beliefs and p-dominant strategy (Monderer and Samet, 1989, and Morris and Shin, 2002). Finally, I illustrate the model by applying it to cases in Nigeria and Zaire/Congo. Keywords: Non cooperative Games, Networks, Political economy, Development, Political processes, Rent-seeking, Conflict, Alliances, Coalitions Classification-JEL: C72, D72, D74, D81, D82, N4 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.34 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-034.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.34 Title: The Economic Value of Cultural Diversity: Evidence from US Cities Author-Name: Gianmarco I.P. Ottaviano Author-X-Name-First: Gianmarco I.P. Author-X-Name-Last: Ottaviano Author-WorkPlace-Name: Università di Bologna, FEEM and CEPR Author-Name: Giovanni Peri Author-X-Name-First: Giovanni Author-X-Name-Last: Peri Author-WorkPlace-Name: UC Davis and CESifo Abstract: We use data on wages and rents in different U.S. cities to assess the amenity effects on production and consumption of cultural diversity as measured by diversity of countries of birth of city residents. We show that US-born citizens living in metropolitan areas where the share of foreign-born increased between 1970 and 1990 have experienced a significant average increase in their wage and in the rental price of their housing. Such finding is economically significant and robust to omitted variable bias and endogeneity bias. We then present a model in which cultural diversity may have both production and consumption amenity or disamenity effects. As people and firms are mobile across cities in the long run, the model implies that the joint results from the wage and rent regressions are consistent with a dominant production amenity effect of cultural diversity. Keywords: Cultural diversity, Productivity, Local amenities, Urban economics Classification-JEL: O4, R0, F1 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.35 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-035.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.35 Title: Immigration and Local Urban Participatory Democracy: A Boston-Paris Comparison Author-Name: Linda Chaib Author-X-Name-First: Linda Author-X-Name-Last: Chaib Author-WorkPlace-Name: Université Paris-Sorbonne (Paris IV) Abstract: This paper deals with a comparison of two governmental initiatives in the direction of immigrants – the Mayor’s Office of New Bostonians (Boston, 1998) and Conseil de la Citoyenneté des Parisiens Non-Communautaires (Paris, 2001). In both cities, local political leaders justify their politics by referring to “participatory democracy” as a way to facilitate the inclusion of immigrants into city policy-making. Beyond this rhetorical convergence, we find crucial divergences about these politicians’ respective actual goals and method of functioning : the experience is relatively positive in Boston, whereas the Parisian one is a patent failure. We can underline these differences notably by advancing the following hypothesis: MONB, as a city department, has managed to build a partnership with civil society, particularly with ethnic grassroots organisations, whereas in Paris, the Socialist Party's top-down CCPNC - a consultative council - is part of a political communication that is destined to its Green political allies and to public opinion at large. Keywords: Urban politics, Immigration, USA/France Classification-JEL: Z10 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.36 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-036.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.36 Title: Foreigners, Immigrants, Host Cities: The Policies of Multi-Ethnicity in Rome. Reading Governance in a Local Context Author-Name: Claudio Rossi Author-X-Name-First: Claudio Author-X-Name-Last: Rossi Author-WorkPlace-Name: Municipality of Rome Author-Name: Franca Eckert Coen Author-X-Name-First: Franca Author-X-Name-Last: Eckert Coen Author-WorkPlace-Name: Municipality of Rome Abstract: This paper reviews the experience of Rome in dealing with the challenges posed by a multi-ethnic society. A central feature of the local political strategy is the “Pact of Integration”. The adoption of the Pact proposes governance as a model of participation including many actors, namely immigrant communities, in the comprehensive development of the quality of life of the city and not only in the decision-making mechanisms of local powers. The Pact represents a contract by which the social and political acceptance of foreigners in the local environment is perceived as benefiting both the foreign and autochthonous communities. On one hand, immigrants are incorporated into their local environment, following from the recognition of foreigners’ rights and needs for solidarity. On the other hand, foreigners are considered agents of local development insofar as they are both consumers and producers. The multiethnic society can then be a source of development. The preface by Franca Eckert Coen provides an overview of the city’s experiences in managing religious differences. Keywords: Immigration, Governance, Multi-ethnicity Classification-JEL: Z10 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.37 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-037.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.37 Title: Governing Migration: Immigrant Groups' Strategies in Three Italian Cities - Rome, Naples and Bari Author-Name: Kristine Crane Author-X-Name-First: Kristine Author-X-Name-Last: Crane Author-WorkPlace-Name: Istituto Psicoanalitico per le Ricerche Sociali (IPRS) Abstract: Ethnic networks constitute an important component of immigrants’ integration in their host societies. This has been a particularly important strategy in Italy, where institutional assistance for immigrants is often paltry and problematic. This paper examines three ethnic communities in Italy that have been particularly successful in using their ethnic social capital for integrating into Italian society at the city level: the Mauritians in Bari, Filipinos in Rome and Chinese in Naples. Sending countries’ policies and programs, as well as the socio-historical context of ethnic relations within the countries has also influenced the patterns of these networks. The psychological or motivational element behind these groups’ migration project is also critical to their integration, and is often manifested on a group level. Keywords: Migration, Immigrant, Ethnic group Classification-JEL: Z10 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.38 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-038.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.38 Title: Mind in Africa, Body in Europe: The Struggle for Maintaining and Transforming Cultural Identity - A Note from the Experience of Eritrean Immigrants in Stockholm Author-Name: Kiflemariam Hamde Author-X-Name-First: Kiflemariam Author-X-Name-Last: Hamde Author-WorkPlace-Name: Umeå School of Business and Economics, Department of Business Administration, Umeå University Abstract: This paper describes how individuals and groups who had crossed ‘physical, national boundaries’, and who live in a different social context make sense of their lives make sense of their lives by re-constructing their identities - of the sense of who they are, and who they want to be, which is an ongoing process. This is done by narrating the experiences of African men and women who live in Sweden and who struggle to both maintain their cultural identity and at the same time change aspects in their culture due to the context in which they find themselves. Maintaining cultural identity and transforming aspects of that identity therefore constitute the main thrust of the paper. Some of the ways through which immigrants claim to maintain their identity are practices and routines that they repeatedly and consistently perform as if these were uniform both in the host country and in the country of origin. But it is exactly within this premise that ‘maintaining’ an identity is defined in this paper. However, the routines, or practices may have different meanings or significance to different actors, different audience, and especially for the main beneficiaries, in a particular context. In this paper, I will narrate how ‘maintaining’ cultural identity is understood and practiced by Blin (Eritrean) immigrants in Stockholm, Sweden, when they solemnly perform a cultural rite called blessing (gewra) in weddings. The paper is based on a participant observation of weddings from 1992 to 2001 in Stockholm, Sweden, when the Blin speaking people perform the blessing rite, enjoy doing it, show to the audience how they maintain ‘who they are’, and perhaps symbolically confirm their unity with the Blin community. The main actors are the elderly and the bridegroom, both sine qua non if the rite is to get its legitimacy. Thus, the blessing rite is an example of being Eritrean in Sweden for its performers. The concept of identity and identity construction has become an important concept to deal with such demands for ‘maintaining’ and 'transforming' identities. Even though maintaining identity is encouraged in the Swedish social policy, transformation of that identity comes through demands that are widely accepted as modern values, such as egalitarianism, gender equality and individualism – leading to issues of diversity at different levels. If one strictly defines the meaning of the blessing rite, one can find that the meaning sometimes may not be consonant with the so-called modern values but that the people then provide symbolic significance to the rite. Keywords: Blessing rite, Blin community, Culture maintenance, Identity construction, Immigrant Classification-JEL: Z10 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.39 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-039.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.39 Title: Price Competition with Information Disparities in a Vertically Differentiated Duopoly Author-Name: Alberto Cavaliere Author-X-Name-First: Alberto Author-X-Name-Last: Cavaliere Author-WorkPlace-Name: Università degli Studi di Pavia Abstract: In this paper we extend the model of vertical product differentiation to also consider information disparities about the extent of quality differences. Equilibrium prices turn out to depend not only on the share of informed consumers but also on uninformed consumers beliefs about quality differences. If uninformed consumers overestimate vertical differentiation, informed consumers exert a positive externality on the purchasers of the high quality good as its price decreases when the share of informed consumers decreases. Considering also that the price of the low quality good increases with the share of informed consumers, higher prices can-not signal high quality goods. If uninformed consumers have pessimistic beliefs and underestimate the extent of vertical differentiation, informed consumers can exert a positive externality on firms. In fact either market demands are inelastic to prices and the profits of the high quality firm increase with the share of informed consumers or market demands are elastic to prices and the profits of both firms increase with the share of informed consumers. In the latter case prices are also equal to those that would prevail with perfect information. In the case of optimistic consumers we can then find some theoretical foundation concerning the fact that information undermines brand, while with pessimistic consumers we can explain demand collapses and insensitivity to price changes due to consumer suspicions about product quality. Keywords: Vertical product differentiation, Asymmetric information, Quality uncertainty, Prices as quality signals Classification-JEL: L13, L15 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.40 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-040.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.40 Title: The Opening of the European Electricity Market and Environmental Policy: Does the Degree of Competition Matter? Author-Name: Andrea Bigano Author-X-Name-First: Andrea Author-X-Name-Last: Bigano Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, the Abdus Salam Center for Theoretical Physics and the Center for Economic Studies, Katholieke Universiteit Leuven Author-Name: Stef Proost Author-X-Name-First: Stef Author-X-Name-Last: Proost Author-WorkPlace-Name: Center for Economic Studies, Katholieke Universiteit Leuven Abstract: This paper studies the relevance of strategic trade effects in the environmental policy for the European electricity sector. The production, investment and trade of electricity are modelled for four European countries. Three market regimes are distinguished: perfect competition, price regulation and Cournot competition. The model is used to examine the effect of the degree of competition on the state of the environment and to study the strategic trade effects of unilateral environmental policies. Keywords: Electricity, Trade and the Environment Classification-JEL: L94, F18, D43 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.41 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-041.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.41 Title: International Cooperation to Resolve International Pollution Problems Author-Name: Micheal Finus Author-X-Name-First: Micheal Author-X-Name-Last: Finus Author-WorkPlace-Name: Department of Economics, University of Hagen Abstract: This article provides a non-technical overview of important results of the game theoretical literature on the formation and stability of international environmental agreements (IEAs) on transboundary pollution control. It starts out by sketching features of first and second best solutions to the problem of transboundary pollution. It then argues that most actual IEAs can be considered at best as third best solutions. Therefore, three questions are raised: 1) Why is there a difference between actual IEAs and first and second best solutions? 2) Which factors determine this difference? 3) Which measures can help to narrow this difference? This article attempts to answer these questions after giving an informal introduction to coalition models. Keywords: International pollution, International environmental agreements, Treaty design, Coalition theory Classification-JEL: C7, H41, Q2 Creation-Date: 200402 Template-Type: ReDIF-Paper 1.0 Number: 2004.42 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-042.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.42 Title: Notes on the Determinants of Innovation: A Multi-Perspective Analysis Author-Name: Francesco Crespi Author-X-Name-First: Francesco Author-X-Name-Last: Crespi Author-WorkPlace-Name: Department of Economics, University of Roma Tre Abstract: The study of innovation and technological change is an increasing field of economic enquire because innovation can be considered a major engine of growth. This paper is concerned with the determinants of innovation and technological change. Different theoretical approaches present in the literature are systematically considered. The aim of this work is to offer an overview of contributions emerging from different perspectives trying to place them in their proper theoretical framework. The paper will be divided in different subsections in which each determinant is individually treated through the presentation of the most relevant results achieved by the literature on the specific issue. Policy considerations and hints for further research are also provided. Keywords: Determinants of innovation, Innovation and knowledge, National systems of innovation, Intellectual property rights, Technology policy Classification-JEL: O31, O33, O34, O38 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.43 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-043.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.43 Title: Coalition Formation in Games without Synergies Author-Name: Marco Marini Author-X-Name-First: Marco Author-X-Name-Last: Marini Author-WorkPlace-Name: Istituto di Scienze Economiche, Università degli Studi di Urbino Author-Name: Sergio Currarini Author-X-Name-First: Sergio Author-X-Name-Last: Currarini Author-WorkPlace-Name: Dipartimento di Scienze Economiche, Università Ca’ Foscari di Venezia Abstract: This paper establishes sufficient conditions for the existence of a stable coalition structure in the ”coalition unanimity” game of coalition formation, first defined by Hart and Kurz (1983) and more recently studied by Yi (1997, 2000). Our conditions are defined on the strategic form game used to derive the payoffs the game of coalition formation. We show that if no synergies are generated by the formation of coalitions, a stable coalition structure always exists provided that players are symmetric and either the game exhibits strategic complementarity or, if strategies are substitutes, the best reply functions are contractions. We illustrate the role of synergies in a Cournot oligopoly example with cost reducing R&D. Keywords: Coalition formation, Synergies, Strong Nash equilibrium Classification-JEL: C7 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.44 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-044.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.44 Title: Cartel Sustainability and Cartel Stability Author-Name: Marc Escrihuela-Villar Author-X-Name-First: Marc Author-X-Name-Last: Escrihuela-Villar Author-WorkPlace-Name: Department of Economics, University of Alicante and Center for Financial Studies Abstract: The paper studies how does the size of a cartel affect the possibility that its members can sustain a collusive agreement. I obtain that collusion is easier to sustain the larger the cartel is. Then, I explore the implications of this result on the incentives of firms to participate in a cartel. Firms will be more willing to participate because otherwise, they risk that collusion completely collapses, as remaining cartel members are unable to sustain collusion. Keywords: Collusion, Partial cartels, Trigger strategies, Optimal punishment Classification-JEL: L11, L13, L41, D43 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.45 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-045.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.45 Title: Appraising Diversity with an Ordinal Notion of Similarity: An Axiomatic Approach Author-Name: Nicolas Gravel Author-X-Name-First: Nicolas Author-X-Name-Last: Gravel Author-WorkPlace-Name: IDEP-GREQAM and Université de la Méditerranée Author-Name: Sebastian Bervoets Author-X-Name-First: Sebastian Author-X-Name-Last: Bervoets Author-WorkPlace-Name: IDEP-GREQAM and Université de la Méditerranée Abstract: This paper provides an axiomatic characterization of two rules for comparing alternative sets of objects on the basis of the diversity that they offer. The framework considered assumes a finite universe of objects and an a priori given ordinal quadernary relation that compares alternative pairs of objects on the basis of their ordinal dissimilarity. Very few properties of this quadernary relation are assumed (beside completeness, transitivity and a very natural form of symmetry). The two rules that we characterize are the maxi-max criterion and the lexi-max criterion. The maxi-max criterion considers that a set is more diverse than another if and only if the two objects that are the most dissimilar in the former are weakly as dissimilar as the two most dissimilar objects in the later. The lexi-max criterion is defined as usual as the lexicographic extension of the maxi-max criterion. Some connections with the broader issue of measuring freedom of choice are also provided. Keywords: Diversity, Measurement, Axioms, Freedom of choice Classification-JEL: D63, D69, Q20 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.46 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-046.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.46 Title: Optimal Afforestation Contracts with Asymmetric information on Private Environmental Benefits Author-Name: Signe Anthon Author-X-Name-First: Signe Author-X-Name-Last: Anthon Author-WorkPlace-Name: Royal Agricultural and Veterinarian University Author-Name: Bo Jellesmark Thorsen Author-X-Name-First: Bo Jellesmark Author-X-Name-Last: Thorsen Author-WorkPlace-Name: Danish Forest and Landscape Research Institute Abstract: We investigate the problem of subsidising afforestation when private information exists with respect to the level of private utility derived from the project. We develop a simple model that allows for an intelligent design of contracts when information is asymmetric. The model involves the Principal and two groups of agents (landowners): a ‘green’ group deriving high private utility from the projects and a ‘conventional’ group deriving lower utility. Afforestation projects may be produced in different environmental quality, and we distinguish between two cases, a high quality and a low quality project. We find that the optimal set of contracts under asymmetric information involves two different contracts. One in which green landowners are somewhat overcompensated for projects of high quality, and one where conventional landowners are offered contracts including lower quality projects, compared to the symmetric case, but with compensation equal to his indifference payment. It is the ability to reduce quality requirements along with subsidies offered that allows for revelation of the private information. Finally, we discus how the results obtained may be used in the implementation of incentive schemes. Keywords: Principal-agent theory, Incentive schemes, Revelation principle, Environmental economics Classification-JEL: D82, H23, Q23 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.47 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-047.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.47 Title: Wildlife Conservation and Management in Kenya: Towards a Co-management Approach Author-Name: John Mburu Author-X-Name-First: John Author-X-Name-Last: Mburu Author-WorkPlace-Name: Center for Development Research (ZEF), University of Bonn Abstract: The co-management approach of managing natural resources has increasingly become popular among conservationists and development practitioners since it overcomes the shortcomings of both the centralised management and community-based approaches that hinder harmonization of conflicting interests among diverse stakeholder groups. Considering criteria developed from theoretical advancements on co-management and drawing on empirical studies conducted in Kenya, the paper examines how successful the co-management approach has been in terms of meeting the needs and interests of local communities and conservationists. Further, it analyses some of the factors or conditions that contribute towards the emergence and subsequent adoption of the co-management approach in the conservation and management of wildlife. These factors, which may also be important in other developing countries, include the provision of a favourable policy framework, institutional capacity of organized user groups to co-manage wildlife resources, land tenure conditions and accessibility to wildlife resources. It is emphasised that the co-management approach has had, so far, mixed results and there are certain important factors challenging its successful implementation in Kenya. Keywords: Kenya, Co-management, Wildlife management, Conditions for co-management, Sustainable management Classification-JEL: R00, Q20 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.48 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-048.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.48 Title: Agri-Environmental Policies in a Transition Economy: Using a Choice Experiment to Value Agricultural Biodiversity on Hungarian Small Farms Author-Name: Ekin Birol Author-X-Name-First: Ekin Author-X-Name-Last: Birol Author-WorkPlace-Name: University College London and International Plant Genetic Resources Institute Author-Name: Ágnes Gyovai Author-X-Name-First: Ágnes Author-X-Name-Last: Gyovai Author-WorkPlace-Name: Institute of Environmental Management, Szent István University and Institute for Agrobotany Author-Name: Melinda Smale Author-X-Name-First: Melinda Author-X-Name-Last: Smale Author-WorkPlace-Name: International Food Policy Research Institute Abstract: Agricultural biodiversity is a crucial environmental resource. Much of the agricultural biodiversity remaining today is found on the semi-subsistence farms of poorer countries and on the small-scale farms and home gardens of more industrialised nations. The traditional Hungarian home gardens, which serve as small farms, are an example. Historically, these home gardens have served important functions related to food security, diet quality, and local culture. Some policies related to European Union accession threaten the survival of traditional home gardens in Hungary’s transitional economy. This paper applies the choice experiment method to estimate the value farmers themselves attach to the agricultural biodiversity still found in these micro-agroecosystems. One of several related studies, its aim is to enhance policy understanding of the role of Hungarian small farms and home gardens in the National Agri-Environmental Programme. The analysis is based on primary data collected in three environmentally sensitive areas of Hungary where pilot agri-environmental programmes have been initiated. Findings demonstrate the variation in values farmers assign to home gardens across regions and households, with implications for the design of efficient public conservation programmes. Keywords: Agricultural biodiversity, Conservation, Choice experiment method, Hungary, Home garden Classification-JEL: Q12, Q18, Q26 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.49 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-049.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.49 Title: The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects Author-Name: Gernot Klepper Author-X-Name-First: Gernot Author-X-Name-Last: Klepper Author-WorkPlace-Name: Kiel Institute for World Economics Author-Name: Sonja Peterson Author-X-Name-First: Sonja Author-X-Name-Last: Peterson Author-WorkPlace-Name: Kiel Institute for World Economics Abstract: The upcoming European Emissions Trading Scheme (ETS) is one of the more controversial climate policy instruments. Predictions about its likely impact and its performance can at present only be made to a certain degree. As long as the National Allocations Plans are not finally settled the overall supply of allowances is not determined. In this paper we will identify key features and key impacts of the EU ETS by scanning the range of likely allocation plans using the simulation model DART. The analysis of the simulation results highlights a number of interesting details in terms of allowance trade flows between member countries, of allowance prices, and in terms of the role of the accession countries in the ETS. Keywords: EU Emissions trading scheme, Kyoto targets, Computable general equilibrium model, DART Classification-JEL: D58, F18, Q48, Q54 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.50 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-050.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.50 Title: Optimal Disease Eradication Author-Name: Michael Hoel Author-X-Name-First: Michael Author-X-Name-Last: Hoel Author-WorkPlace-Name: Department of Economics, University of Oslo Author-Name: Scott Barrett Author-X-Name-First: Scott Author-X-Name-Last: Barrett Author-WorkPlace-Name: School of Advanced International Studies, Johns Hopkins University Abstract: Using a dynamic model of the control of an infectious disease, we derive the conditions under which eradication will be optimal. When eradication is feasible, the optimal program requires either a low vaccination rate or eradication. A high vaccination rate is never optimal. Under special conditions, the results are especially stark: the optimal policy is either not to vaccinate at all or to eradicate. Our analysis yields a cost-benefit rule for eradication, which we apply to the current initiative to eradicate polio. Keywords: Eradication of infectious diseases, Vaccination, Control theory, Cost-benefit analysis, Poliomyelitis Classification-JEL: D61, H41, I18 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.51 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-051.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.51 Title: Simple Priorities and Core Stability in Hedonic Games Author-Name: Dinko Dimitrov Author-X-Name-First: Dinko Author-X-Name-Last: Dimitrov Author-WorkPlace-Name: Center and Department of Econometrics and Operations Research, Tilburg University Author-Name: Peter Borm Author-X-Name-First: Peter Author-X-Name-Last: Borm Author-WorkPlace-Name: Center and Department of Econometrics and Operations Research, Tilburg University Author-Name: Ruud Hendrickx Author-X-Name-First: Ruud Author-X-Name-Last: Hendrickx Author-WorkPlace-Name: Center and Department of Econometrics and Operations Research, Tilburg University Author-Name: Shao Chin Sung Author-X-Name-First: Shao Author-X-Name-Last: Chin Sung Author-WorkPlace-Name: School of Information Science, Japan Advanced Institute of Science and Technology Abstract: In this paper we study hedonic games where each player views every other player either as a friend or as an enemy. Two simple priority criteria for comparison of coalitions are suggested, and the corresponding preference restrictions based on appreciation of friends and aversion to enemies are considered. It turns out that the first domain restriction guarantees non-emptiness of the strong core and the second domain restriction ensures non-emptiness of the weak core of the corresponding hedonic games. Moreover, an element of the strong core under friends appreciation can be found in polynomial time, while finding an element of the weak core under enemies aversion is NP-hard. We examine also the relationship between our domain restrictions and some sufficient conditions for non-emptiness of the core already known in the literature. Keywords: Additive separability, Coalition formation, Core stability, Hedonic games, NP-completeness, Priority Classification-JEL: C71, A14, D20 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.52 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-052.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.52 Title: Channels of Transmission of Environmental Policy to Economic Growth: A Survey of the Theory Author-Name: Francesco Ricci Author-X-Name-First: Francesco Author-X-Name-Last: Ricci Author-WorkPlace-Name: THEMA,Université de Cergy-Pontoise Abstract: Economists generally hold that environmental regulations impose constraints on the production possibilities set and are therefore potentially harmful to economic growth. In recent years, however, it has been recognized that environmental regulation can enhance the prospects for growth if improved environmental quality increases the productivity of inputs or the efficiency of the education system. It is also held that environmental regulation promotes pollution abatement activity and can lead to the exploitation of increasing returns to scale in abatement. Furthermore, expectations of a better environment may encourage households to save. Finally, it has been conjectured that environmental regulations can stimulate innovation because R&D s a relatively clean activity and because the market share of clean innovations increases. Keywords: Environmental policy, Endogenous growth Classification-JEL: Q280, O410, O130, H230 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.53 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-053.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.53 Title: Willingness to Pay for Mortality Risk Reductions: Does Latency Matter? Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland and Fondazione Eni Enrico Mattei Author-Name: Maureen Cropper Author-X-Name-First: Maureen Author-X-Name-Last: Cropper Author-WorkPlace-Name: University of Maryland and the World Bank Author-Name: Alan Krupnick Author-X-Name-First: Alan Author-X-Name-Last: Krupnick Author-WorkPlace-Name: Resources for the Future Author-Name: Nathalie B. Simon Author-X-Name-First: Nathalie B. Author-X-Name-Last: Simon Author-WorkPlace-Name: US Environmental Protection Agency Abstract: Using results from two contingent valuation surveys conducted in Canada and the U.S., we explore the effect of a latency period on willingness to pay (WTP) for reduced mortality risk using both structural and reduced form approaches. We find that delaying the time at which the risk reduction occurs by 10 to 30 years reduces WTP by more than half for respondents in both samples aged 40 to 60 years. Additionally, we estimate implicit discount rates equal to 8% for Canada and 4.5% for the U.S. – both well within the range established previously in the literature. Keywords: Value of a statistical life, Mortality risks, Benefit-cost analyris Classification-JEL: Q51, Q58 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.54 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-054.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.54 Title: Valuation of Ecosystem Services Provided by Biodiversity Conservation: An Integrated Hydrological and Economic Model to Value the Enhanced Nitrogen Retention in Renaturated Streams Author-Name: Ingo Bräuer Author-X-Name-First: Ingo Author-X-Name-Last: Bräuer Author-WorkPlace-Name: Department of Agricultural Economics, Environmental and Resource Economics Research Unit, Georg-August University Author-Name: Rainer Marggraf Author-X-Name-First: Rainer Author-X-Name-Last: Marggraf Author-WorkPlace-Name: Department of Agricultural Economics, Environmental and Resource Economics Research Unit, Georg-August University Abstract: The importance of ecosystem functions for humankind is well known. But only few attempts have been undertaken to estimate the economic value of these ecosystem services. In particular, indirect methods are rarely used, even though they are most suitable for the task. This discrepancy is because quantitative knowledge of changes in ecosystem functions is scarce. This paper presents a user-friendly procedure to quantify the increased N-retention in a renaturated river using easily available data. In a case study of the renaturated River Jossa (Germany) the benefits of increased nitrogen retention caused by beaver reintroduction are determined by using the replacement cost method. The quantification of chemical processes is discussed in detail, as well as the problems of defining an adequate reference scenario for the substitute costs. Results show that economic benefits from the evaluated ecosystem service (€12,000/annum) equal 12% of the total costs of the corresponding conservation scheme. Keywords: Biodiversity conservation programmes, Cost-benefit-analysis, Replacement cost method, Ecosystem services, Nutrient retention Classification-JEL: D61, D62, Q2, Q25 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.55 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-055.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.55 Title: Biodiversity Conservation on Private Lands: Information Problems and Regulatory Choices Author-Name: Tun Lin Author-X-Name-First: Tun Author-X-Name-Last: Lin Author-WorkPlace-Name: Department of Economics, University of Cambridge Author-Name: Timo Goeschl Author-X-Name-First: Timo Author-X-Name-Last: Goeschl Author-WorkPlace-Name: Department of Land Economy, University of Cambridge Abstract: This survey paper examines various information insufficiencies in biodiversity conservation and their impact of regulatory choices. We surveyed the literature in the field and identified four major types of informational insufficiencies in making efficient biodiversity conservation decisions: 1) biological uncertainty 2) natural uncertainty 3) individual information, and 4) monitoring problem. The consequences of these four types of information insufficiencies on the choice of regulatory tools are explored. We discuss in this context three types of regulatory tools: land takings, environmental fees/charges, and contracts. The efficiency of each type of regulatory tools is shown dependent on the specific informational constraints that the regulatory faces. Keywords: Biodiversity conservation, Information, Regulatory tools Classification-JEL: Q20, Q28, D82, D83 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.56 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-056.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.56 Title: Bioprospection: From the Economics of Contracts to Reflexive Governance Author-Name: Tom Dedeurwaerdere Author-X-Name-First: Tom Author-X-Name-Last: Dedeurwaerdere Author-WorkPlace-Name: Centre for Philosophy of Law, Université Catholique de Louvain Abstract: Bioprospection practices have proliferated as biotechnological and pharmaceutical companies engage in the collection and genetic screening of biological and genetic resources throughout the world. The purpose of this article is to examine the competing proposals for the institutional framing of bioprospection based on the provisions of access and benefit-sharing embodied in the Convention on Biological Diversity. In particular, through evaluating the contribution of neo-institutionalist and evolutionist propositions in economic theory our aim is to define the conditions of a more reflexive approach to governance in the context of the problem of the emergent regime on access and benefit sharing. Keywords: Bioprospection, Access and benefit sharing, Neo-Institutionalist economics, Genetic resources, Governance, Biodiversity Classification-JEL: B52, O30, Q21 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.57 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-057.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.57 Title: The Amenity Value of Climate to German Households Author-Name: Katrin Rehdanz Author-X-Name-First: Katrin Author-X-Name-Last: Rehdanz Author-WorkPlace-Name: Centre for Marine and Climate Research, Hamburg University Author-Name: David Maddison Author-X-Name-First: David Author-X-Name-Last: Maddison Author-WorkPlace-Name: Institute of Economics, University of Southern Denmark Abstract: This study uses the hedonic approach to measure the amenity value of climate in Germany. Unlike in earlier research separate hedonic wage and house price regressions are estimated for relatively small geographic areas and formal tests undertaken to determine whether the coefficients describing the impact of climate variables are homogenous across these areas. Evidence suggests that German households are compensated for climate amenities mainly through hedonic housing markets. Given that climate is largely unproductive to industry and few industries spend more on land than labour this is consistent with what theory would predict. Throughout Germany house prices are higher in areas with higher January temperatures, lower July temperatures and lower January precipitation. In East Germany wages are higher in areas with higher January precipitation. The full implicit price of climate variables however is very uncertain. Keywords: Climate change, Germany, Hedonic pricing Classification-JEL: Q29, R29 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.58 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-058.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.58 Title: Environmental Externalities of Geological Carbon Sequestration Effects on Energy Scenarios Author-Name: Bob van der Zwaan Author-X-Name-First: Bob Author-X-Name-Last: van der Zwaan Author-WorkPlace-Name: Energy Research Centre of the Netherlands (ECN), Policy Studies Department and Harvard University, John F. Kennedy School of Government Author-Name: Koen Smekens Author-X-Name-First: Koen Author-X-Name-Last: Smekens Author-WorkPlace-Name: Energy Research Centre of the Netherlands (ECN), Policy Studies Department Abstract: Geological carbon sequestration seems one of the promising options to address, in the near term, the global problem of climate change, since carbon sequestration technologies are in principle available today and their costs are expected to be affordable. Whereas extensive technological and economic feasibility studies rightly point out the large potential of this ‘clean fossil fuel’ option, relatively little attention has been paid so far to the detrimental environmental externalities that the sequestering of CO2 underground could entail. This paper assesses what the relevance might be of including these external effects in long-term energy planning and scenario analyses. Our main conclusion is that, while these effects are generally likely to be relatively small, carbon sequestration externalities do matter and influence the nature of future world energy supply and consumption. More importantly, since geological carbon storage (depending on the method employed) may in some cases have substantial external impacts, in terms of both environmental damage and health risks, it is recommended that extensive studies are performed to quantify these effects. This article addresses three main questions: (i) What may energy supply look like if one accounts for large-scale CO2 sequestration in the construction of long-term energy and climate change scenarios; (ii) Suppose one hypothesizes a quantification of the external environmental costs of CO2 sequestration, how do then these supposed costs affect the evolution of the energy system during the 21st century; (iii) Does it matter for these scenarios whether carbon sequestration damage costs are charged directly to consumers or, instead, to electricity producers? Keywords: Geological carbon storage, External costs, Energy scenarios Classification-JEL: O33, O38, Q43 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.59 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-059.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.59 Title: Using Data Envelopment Analysis to Evaluate Environmentally Conscious Tourism Management Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: DISCo, Università di Milano Bicocca and Fondazione Eni Enrico Mattei Author-Name: Mariaester Cassinelli Author-X-Name-First: Mariaester Author-X-Name-Last: Cassinelli Author-WorkPlace-Name: DISCo, Università di Milano Bicocca and Fondazione Eni Enrico Mattei Author-Name: Alessandro Lanza Author-X-Name-First: Alessandro Author-X-Name-Last: Lanza Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CRENoS Abstract: This paper discusses a methodology to assess the performances of tourism management of local governments when economic and environmental aspects are considered as equally relevant. In particular, the focus is on the comparison and efficiency assessment of Italian municipalities located on the costal areas. In order to assess the efficiency status of the considered management units, Data Envelopment Analysis (DEA), a methodology for evaluating the relative efficiency of decision making units, is applied. The efficiency index measure used in DEA analysis accounts for both environmental and economic features correlated to the tourism industry. Further, potential managerial improvements for those areas resulting far from the efficiency frontier can be investigated. Keywords: Data envelopment analysis, Sustainable tourism Classification-JEL: L83, M40, Q01 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.60 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-060.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.60 Title: Property Rights Conservation and Development: An Analysis of Extractive Reserves in the Brazilian Amazon Author-Name: Danilo Camargo Igliori Author-X-Name-First: Danilo Author-X-Name-Last: Camargo Igliori Author-WorkPlace-Name: Department of Land Economy, University of Cambridge Author-Name: Timo Goesch Author-X-Name-First: Timo Author-X-Name-Last: Goesch Author-WorkPlace-Name: Department of Agricultural and Applied Economics, University of Wisconsin at Madison Abstract: The economic literature of property rights has been assessing the impact of different community based arrangements on the efficiency of natural resource management of specific areas. Differently, other strands of development economics and policy-oriented research have been concerned with issues such as poverty alleviation, technological progress and the capability to compete in market economies, which go beyond the local areas where traditional communities live and include the wider economy. The extractive reserves in the Brazilian Amazon offer perhaps one of the most interesting cases for investigating the connections between these two approaches in the context of tropical forests. It is based on the idea that the combination of public property with collective use in particular forest areas can generate competitive and, at the same time, sustainable exploitation of its natural resources. This paper aims to analyse whether the existing property rights support the joint objective of conservation and development. Our main result is that current property rights systems are efficient only with respect to competition in markets for existing extractive products. This finding points out to a fundamental contradiction between the static structure of the property rights systems and the dynamic nature of two most promising development paths, namely the discovery of new products and the supply of biological inputs for plantations. The current model of extractive reserves based on the design of internal property rights fails to taken into account the broader economic context where the reserves must generate a viable revenue stream. We conclude therefore that under the current set of institutions, the development objectives inherent in the extractive reserves model are likely to face probably considerable challenges to be accomplished in the future. Keywords: Property rights, Extractive reserves, Environment and Development Classification-JEL: O13, Q23 Creation-Date: 200403 Template-Type: ReDIF-Paper 1.0 Number: 2004.61 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-061.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.61 Title: Economic and Environmental Effectiveness of a Technology-based Climate Protocol Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: University of Venice, Fondazione Eni Enrico Mattei, CEPR, CEPS, CESifo Author-Name: Barbara Buchner Author-X-Name-First: Barbara Author-X-Name-Last: Buchner Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The present stalemate in climate negotiations has led policy analysts and economists to explore the possible emergence of alternative climate regimes. This paper explores the idea of replacing international cooperation on greenhouse gas emission control with international cooperation on climate-related technological innovation and diffusion. This idea – recently proposed among others by Barrett (2001) and Benedick (2001) – is based on the insight that incentives to free-ride are much smaller in the case of technological cooperation than in the case of cooperation on emission control. This paper provides a first applied game theory analysis of a technology-based climate protocol by assessing: (i) the self-enforcingness (namely, the absence of incentives to free ride) of the coalition that would form when countries negotiate on climate-related technological cooperation; (ii) the environmental effectiveness of a technology-based climate protocol. The analysis is carried out by using a model in which endogenous and induced technical change are explicitly modelled and in which international technological spillovers are also quantified. The results of our analysis partly support Barrett’s and Benedick’s conjecture. On the one hand, a self-enforcing agreement is more likely to emerge when countries cooperate on environmental technological innovation and diffusion than when they cooperate on emission abatement. However, technological cooperation – without any commitment to emission control – may not lead to a sufficient abatement of greenhouse gas concentrations. Keywords: Agreements, Climate, Incentives, Technological change, Policy Classification-JEL: C7, H0, H4, O3 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.62 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-062.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.62 Title: Resource-Abundance and Economic Growth in the U.S. Author-Name: Elissaios Papyrakis Author-X-Name-First: Elissaios Author-X-Name-Last: Papyrakis Author-WorkPlace-Name: IVM, Institute for Environmental Studies, Vrije Universiteit Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: IVM, Institute for Environmental Studies, Vrije Universiteit Abstract: It is a common assumption that regions within the same country converge to approximately the same steady-state income levels. The so-called absolute convergence hypothesis focuses on initial income levels to account for the variability in income growth among regions. Empirical data seem to support the absolute convergence hypothesis for U.S. states, but the data also show that natural resource-abundance is a significant negative determinant of growth. We find that natural resource abundance decreases investment, schooling, openness, and R&D expenditure and increases corruption, and we show that these effects can fully explain the negative effect of natural resource abundance on growth. Keywords: Natural resources, Growth, Transmission channels Classification-JEL: C21, O13, O51, Q33 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.63 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-063.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.63 Title: Conserving Crop Genetic Resources on Smallholder Farms in Hungary: Institutional Analysis Author-Name: Györgyi Bela Author-X-Name-First: Györgyi Author-X-Name-Last: Bela Author-WorkPlace-Name: Institute of Environmental Management, St. István University Author-Name: György Pataki Author-X-Name-First: György Author-X-Name-Last: Pataki Author-WorkPlace-Name: Institute of Environmental Management, St. István University and Department of Business Economics, Budapest University of Economic Sciences Author-Name: Melinda Smale Author-X-Name-First: Melinda Author-X-Name-Last: Smale Author-WorkPlace-Name: International Food Policy Research Institute (IFPRI) and International Plant Genetic Resources Institute (IPGRI) Author-Name: Mariann Hajdú Author-X-Name-First: Mariann Author-X-Name-Last: Hajdú Author-WorkPlace-Name: Faculty of Law Eötvös, Loránd University Abstract: Hungary is home to a great diversity of plant and animal species, whose preservation is of global value. This paper focuses on the institutional aspects of the research project on on-farm conservation of crop genetic resources in three Environmentally Sensitive Areas of Hungary (Dévaványa, Orség-Vendvidék, Szatmár-Bereg). Implemented by the Institute of Environmental Management, St. István University and the Institute for Agrobotany in partnership with the International Plant Genetic Resources Institute, the project consists of an interdisciplinary institutional, economic, and scientific analysis. The main goal of the project is to develop a scientific understanding about the current and potential socio-economic role of agrobiodiversity maintained in home gardens. The first aim of the institutional analysis carried out by this paper is to identify the institutions and organisations that have significant impact on the seed choices and seed maintenance practices of farmers, and hence, on their access to genetic resources. The second aim is to identify and analyse different stakeholders’ perceptions of the issue at hand, as well as their interests and the values they ascribe to them. Keywords: Crop genetic resources, Agro-biodiversity, Institutional analysis, Stakeholder analysis, New institutional economics, Qualitative research methods Classification-JEL: Q18, Q28, Q38 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.64 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-064.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.64 Title: The Socio-Economic Value of Natural Riverbanks in the Netherlands Author-Name: E.C.M. Ruijgrok Author-X-Name-First: E.C.M. Author-X-Name-Last: Ruijgrok Author-WorkPlace-Name: Witteveen+Bos Author-Name: E.E.M. Nillesen Author-X-Name-First: E.E.M. Author-X-Name-Last: Nillesen Author-WorkPlace-Name: Witteveen+Bos Abstract: Ecologists and economists both use a different approach to determine the value of nature. Its ecological value can be measured using criteria like rarity and diversity of species in an ecosystem. The economic value can be determined using non-market valuation techniques. This paper focuses on an empirical application of the Contingent Valuation Method (CVM) to find out whether this valuation method is a suitable method to estimate the economic value of natural riverbanks in the Netherlands. Natural riverbanks will provide habitat for species that particularly depend on the land water transit area. Since common riverbanks do not provide this habitat, natural river banks increase biodiversity in the Netherlands. On the basis of technical and ecological characteristics nine different types of natural riverbanks were distinguished. For each type a laymen description was made. This description served as a basis for economic valuation by means of CVM. The results of the CVM study shows that the average willingness to pay for non-use of a natural riverbank varied between 16 and 25 Dutch guilders per household year. The willingness to pay for recreational use ranged from 1,07 to 2,50 guilders per visit. The generated outcomes proved to be consistent with results from other studies. At first sight, the economic value of natural riverbanks seemed to be higher than their construction and maintenance cost. Keywords: Nature friendly river banks, Land water interactions, Economic value, Nature, CVM, Non-use value Classification-JEL: R14, Q25 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.65 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-065.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.65 Title: Reducing Acidification: The Benefits of Increased Nature Quality. Investigating the Possibilities of the Contingent Valuation Method Author-Name: E.C.M. Ruijgrok Author-X-Name-First: E.C.M. Author-X-Name-Last: Ruijgrok Author-WorkPlace-Name: Witteveen+ Bos Abstract: In order to complete cost benefit analyses of acidification policies, an attempt was made to monetarize the benefits of increased nature quality. So far, several benefits of acidification abatement, such as reduced health risks, had been determined, but the benefits of increased nature quality were lacking, although nature is actually one of the most important reasons for abating acidification in the Netherlands. This study shows that CVM can be used to estimate two specific benefits of increased nature quality due to acidification abatement: the non-use value and the recreational perception value. For other benefits, other valuation methods are needed. This study also shows that CVM is not suited for specifying benefits of different acidification scenarios, which differ little in physical effects on ecosystems. If abatement scenarios are rather extreme, it may be possible to differentiate benefits per scenario. A CVM questionnaire was designed to determine the difference between the welfare generation of healthy ecosystems not suffering from acidification and unhealthy ecosystems affected by acidification. A striking result of the pre test was that all respondents were familiar with the environmental theme of acidification. The results of the pre test suggest that the benefits of nature may be quite large and that they should therefore not be overlooked. Keywords: Acidification, Biodiversity, Economic value, Nature, CVM, Non use value Classification-JEL: Q20 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.66 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-066.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.66 Title: Uncertainty Aversion, Robust Control and Asset Holdings Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Department of Economics, University of Crete Author-Name: Giannis Vardas Author-X-Name-First: Giannis Author-X-Name-Last: Vardas Author-WorkPlace-Name: Department of Economics, University of Crete Abstract: Optimal portfolio rules are derived under uncertainty aversion by formulating the portfolio choice problem as a robust control problem. The robust portfolio rule indicates that the total holdings of risky assets as a proportion of the investor’s wealth could increase as compared to the holdings under the Merton rule, which is the standard risk aversion case. With two risky assets an increase in the holdings of the one risky asset is accompanied by a reduction in the holdings of the other asset. Furthermore, in the optimal robust portfolio the investor may increase the holdings of the asset for which there is or less ambiguity, and reduce the holding of the asset for which there is more ambiguity, a result that might provide an explanation of the home bias puzzle. Keywords: Uncertainty aversion, Model misspecification, Robust control, Portfolio choice models Classification-JEL: G11, D81 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.67 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-067.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.67 Title: Participation in and Compliance with Public Voluntary Environmental Programs: An Evolutionary Approach Author-Name: Constadina Passa Author-X-Name-First: Constadina Author-X-Name-Last: Passa Author-WorkPlace-Name: Department of Economics, University of Crete Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Department of Economics, University of Crete Abstract: The joint evolution of participating and complying firms in a public VA, along with the evolution of the pollution stock is examined. Replicator dynamics modeling participation and compliance are combined with pollution stock dynamics. Fast-slow selection dynamics are used to capture the fact that decisions to participate in and further comply with the public VA evolve in different time scales. Evolutionary stable (ES) equilibria depend on the structure of the legislation and auditing probability. Partial participation and partial compliance can be ES equilibria, with possible multiplicities, in addition to the monomorphic equilibria of full (non) compliance. Convergence to these equilibria could be monotonic or oscillating. Full participation and compliance can be attained if the regulator is pre-committed to certain legislation and inspection probabilities, or by appropriate choices of the legislatively set emission level and the non-compliance fine. Keywords: Voluntary agreements, Participation, Compliance, Evolutionary stability, Replicator dynamics Classification-JEL: Q2, L5 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.68 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-068.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.68 Title: Modesty Pays: Sometimes! Author-Name: Michael Finus Author-X-Name-First: Michael Author-X-Name-Last: Finus Author-WorkPlace-Name: Department of Economics, University of Hagen Abstract: Standard non-cooperative game theoretical models of international environmental agreements (IEAs) draw a pessimistic picture of the prospective of successful cooperation: only small coalitions are stable that achieve only little. However, there also exist IEAs with higher participation and more success. In order to explain this phenomenon, this paper departs from the standard assumption of joint welfare maximization of coalition members, implying ambitious abatement targets and strong free-riding. Instead, it considers that countries agree on modest emission reduction targets. This may sufficiently raise participation so that the success of treaties improves in terms of global emission reduction and global welfare. Thus, modesty may pay, though the first best optimum cannot be achieved. Keywords: International environmental agreements, Internal&external stability, Modest emission reduction Classification-JEL: C72, H41, Q20 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.69 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-069.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.69 Title: The Northern Atlantic Bluefin Tuna Fisheries: Management and Policy Implications Author-Name: Trond Bjørndal Author-X-Name-First: Trond Author-X-Name-Last: Bjørndal Author-WorkPlace-Name: Imperial College, London and University of Portsmouth Author-Name: Ana Brasão Author-X-Name-First: Ana Author-X-Name-Last: Brasão Author-WorkPlace-Name: Universidade Lusófona de Humanidades e Tecnologias Abstract: In this paper, a discrete time, multi-gear and age structured bio-economic model is developed for the Northern Atlantic Bluefin Tuna, which is a paradigmatic example of the difficulties faced in managing highly migratory fish stocks. The 1995 U.N. Fish Stocks Agreement provides guidance as to the sustainable management of straddling and highly migratory fish stocks, maintaining that coastal states and distant water fishing nations should cooperate in the management of these stocks through Regional Fisheries Management Organisations (RFMO). The objective of this paper is to propose alternative management strategies that could be taken into account by the RFMO managing this fishery, and to investigate some of the policy implications. Keywords: Bioeconomic model, Bluefin tuna, Optimal management recommendations Classification-JEL: Q22 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.70 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-070.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.70 Title: On Coalition Formation with Heterogeneous Agents Author-Name: Alejandro Caparrós Author-X-Name-First: Alejandro Author-X-Name-Last: Caparrós Author-WorkPlace-Name: Department of Economics, Institute of Economics and Geography (IEG), Spanish Council for Scientific Research (CSIC) Author-Name: Abdelhakim Hammoudi Author-X-Name-First: Abdelhakim Author-X-Name-Last: Hammoudi Author-WorkPlace-Name: Université Panthéon - Assas, ERMES, CNRS Author-Name: Tarik Tazdaït Author-X-Name-First: Tarik Author-X-Name-Last: Tazdaït Author-WorkPlace-Name: CNRS, EHESS, CIRED Abstract: We propose a framework to analyze coalition formation with heterogeneous agents. Existing literature defines stability conditions that do not ensure that, once an agent decides to sign an agreement, the enlarged coalition is feasible. Defining the concepts of refraction and exchanging, we set up conditions of existence and enlargement of a coalition with heterogeneous agents. We use the concept of exchanging agents to give necessary conditions for internal stability and show that refraction is a sufficient condition for the failure of an enlargement of the coalition. With heterogeneous agents we can get a situation where a group of members of an unstable coalition does not deviate, neither within the coalition nor within the extended coalition. Hence, the possibilities of agreement are richer than in the standard analysis with homogeneous agents. Examples of industrial economics are used for illustration, and an application to climate change negotiations is discussed in more detail. Keywords: Heterogeneity, Coalition, Exchanging, Refraction, Global Externalities Classification-JEL: C72, D74, Q28 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.71 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-071.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.71 Title: Conditional Correlations in the Returns on Oil Companies Stock Prices and Their Determinants Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: Department of Statistics, University of Milan-Bicocca and Fondazione Eni Enrico Mattei Author-Name: Massimo Giovannini Author-X-Name-First: Massimo Author-X-Name-Last: Giovannini Author-WorkPlace-Name: Department of Economics, Boston College Author-Name: Margherita Grasso Author-X-Name-First: Margherita Author-X-Name-Last: Grasso Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Alessandro Lanza Author-X-Name-First: Alessandro Author-X-Name-Last: Lanza Author-WorkPlace-Name: Eni S.p.A. and Fondazione Eni Enrico Mattei Abstract: The identification of the forces that drive stock returns and the dynamics of their associated volatilities is a major concern in empirical economics and finance. This analysis is particularly relevant for determining optimal hedging strategies based on whether shocks to the volatilities of returns of oil companies stock prices, relevant stock market indexes and oil spot and futures prices are high or low, and positively or negatively correlated. This paper investigates the correlations of volatilities in the stock price returns and their determinants for the most important integrated oil companies, namely Bp (BP), Chevron-Texaco (CVX), Eni (ENI), Exxon-Mobil (XOM), Royal Dutch (RD) and Total-Fina Elf (TFE). We measure the actual co-risk in stock returns and their determinants “within” and “between” the different oil companies, using multivariate cointegration techniques in modelling the conditional mean, as well as multivariate GARCH models for the conditional variances. We focus first on the determinants of the market value of each company using the cointegrated VAR/VECM methodology. Then we specifiy the conditional variances of VECM residuals with the Constant Conditional Correlation (CCC) multivariate GARCH model of Bollerslev (1990) and the Dynamic Conditional Correlation (DCC) multivariate GARCH model of Engle (2002). The “within” and “between” DCC indicate low to high/extreme interdependence between the volatilities of companies’ stock returns and the relevant stock market indexes or Brent oil prices. Keywords: Constant conditional correlations, Dynamic conditional correlations, Multivariate GARCH models, Stock price indexes, Brent oil prices, Spot and futures prices, Multivariate cointegration, VECM Classification-JEL: C32, G10, Q40 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.72 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-072.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.72 Title: Modelling Dynamic Conditional Correlations in WTI Oil Forward and Futures Returns Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: Department of Statistics, University of Milan-Bicocca and Fondazione Eni Enrico Mattei Author-Name: Alessandro Lanza Author-X-Name-First: Alessandro Author-X-Name-Last: Lanza Author-WorkPlace-Name: Eni S.p.A. and Fondazione Eni Enrico Mattei Author-Name: Michael McAleer Author-X-Name-First: Michael Author-X-Name-Last: McAleer Author-WorkPlace-Name: School of Economics and Commerce, University of Western Australia Abstract: This paper estimates the dynamic conditional correlations in the returns on WTI oil one-month forward prices, and one-, three-, six-, and twelve-month futures prices, using recently developed multivariate conditional volatility models. The dynamic correlations enable a determination of whether the forward and various futures returns are substitutes or complements, which are crucial for deciding whether or not to hedge against unforeseen circumstances. The models are estimated using daily data on WTI oil forward and futures prices, and their associated returns, from 3 January 1985 to 16 January 2004. At the univariate level, the estimates are statistically significant, with the occasional asymmetric effect in which negative shocks have a greater impact on volatility than positive shocks. In all cases, both the short- and long-run persistence of shocks are statistically significant. Among the five returns, there are ten conditional correlations, with the highest estimate of constant conditional correlation being 0.975 between the volatilities of the three-month and six-month futures returns, and the lowest being 0.656 between the volatilities of the forward and twelve-month futures returns. The dynamic conditional correlations can vary dramatically, being negative in four of ten cases and being close to zero in another five cases. Only in the case of the dynamic volatilities of the three-month and six-month futures returns is the range of variation relatively narrow, namely (0.832, 0.996). Thus, in general, the dynamic volatilities in the returns in the WTI oil forward and future prices can be either independent or interdependent over time. Keywords: Constant conditional correlations, Dynamic conditional correlations, Multivariate GARCH models, Forward prices and returns, Futures prices and returns, WTI oil prices Classification-JEL: C32, G10, Q40 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.73 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-073.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.73 Title: The Copula Approach to Sample Selection Modelling: An Application to the Recreational Value of Forests Author-Name: Elisabetta Strazzera Author-X-Name-First: Elisabetta Author-X-Name-Last: Strazzera Author-WorkPlace-Name: DRES and CRENoS, University of Cagliari Author-Name: Margarita Genius Author-X-Name-First: Margarita Author-X-Name-Last: Genius Author-WorkPlace-Name: Dept. of Economics, University of Crete Abstract: The sample selection model is based upon a bivariate or a multivariate structure, and distributional assumptions are in this context more severe than in univariate settings, due to the limited availability of tractable multivariate distributions. While the standard FIML estimation of the selectivity model assumes normality of the joint distribution, alternative approaches require less stringent distributional hypotheses. As shown by Smith (2003), copulas allow great flexibility also in FIML models. The copula model is very useful in situations where the applied researcher has a prior on the distributional form of the margins, since it allows separating their modelling from that of the dependence structure. In the present paper the copula approach to sample selection is first compared to the semiparametric approach and to the standard FIML, bivariate normal model, in an illustrative application on female work data. Then its performance is analysed more thoroughly in an application to Contingent Valuation data on recreational values of forests. Keywords: Contingent valuation, Selectivity bias, Bivariate models, Copulas Classification-JEL: C34, C51, H41, Q26 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.74 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-074.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.74 Title: Pollution Abatement in the Netherlands: A Dynamic Applied General Equilibrium Assessment Author-Name: Rob Dellink Author-X-Name-First: Rob Author-X-Name-Last: Dellink Author-WorkPlace-Name: Environmental Economics and Natural Resources Group,Wageningen University Author-Name: Ekko van Ierland Author-X-Name-First: Ekko Author-X-Name-Last: van Ierland Author-WorkPlace-Name: Environmental Economics and Natural Resources Group,Wageningen University Abstract: This paper deals with an assessment of the economic costs of environmental policies in the Netherlands, using a dynamic Applied General Equilibrium model with bottom-up information on abatement techniques. Empirical abatement cost curves are used to determine substitution possibilities between pollution and abatement and the characteristics of abatement goods. The results show that an absolute decoupling of economy and environment is possible. Smog formation is the most costly environmental theme, due to the absence of technical abatement options. For all environmental themes, the least-cost way to reduce emissions is via a combination of technical abatement measures and substantial economic restructuring. Keywords: Applied general equilibrium, Pollution abatement, Dynamics, Environmental policy, Netherlands Classification-JEL: D58, H23, O41, Q28 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.75 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-075.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.75 Title: Investment in Hospital Care Technology under Different Purchasing Rules: A Real Option Approach Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: Dipartimento di Scienze Economiche, University of Brescia Author-Name: Rosella Levaggi Author-X-Name-First: Rosella Author-X-Name-Last: Levaggi Author-WorkPlace-Name: Dipartimento di Scienze Economiche, University of Brescia Abstract: In this article, we analyse the optimal investment decision in a new health care technology of a representative hospital that maximises its surplus in an uncertain environment. The new technology allows the hospital to increase the quality level of the care provided, but the investment is irreversible. The article uses the framework of the real option literature to show how the purchasing rules might influence the level of investment. We show that the investment in new technology is best incentivate within a long term contract where the number of treatments reimbursed depends on the level of investment made in the period when the technology is new. In this way, asymmetry of information does not affect the outcome of the contract. In our model in fact the purchaser can verify the level of the investment only at the end of each period but the purchasing rule has an anticipating effect on the decision to invest. Keywords: Health care technologies, Medical quality, Irreversible investments, Real options Classification-JEL: I11, D18 Creation-Date: 200404 Template-Type: ReDIF-Paper 1.0 Number: 2004.76 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-076.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.76 Title: On the Weights of Nations: Assigning Voting Weights in a Heterogeneous Union Author-Name: Salvador Barbera Author-X-Name-First: Salvador Author-X-Name-Last: Barbera Author-WorkPlace-Name: CODE, Departament d’Economia i d'Historia Economica, Universitat Autònoma de Barcelona Author-Name: Matthew O. Jackson Author-X-Name-First: Matthew O. Author-X-Name-Last: Jackson Author-WorkPlace-Name: Division of Humanities and Social Sciences, California Institute of Technology Abstract: Consider a voting procedure where countries, states, or districts comprising a union each elect representatives who then participate in later votes at the union level on their behalf. The countries, provinces, and states may vary in their populations and composition. If we wish to maximize the total expected utility of all agents in the union, how to weight the votes of the representatives of the different countries, states or districts at the union level? We provide a simple characterization of the efficient voting rule in terms of the weights assigned to different districts and the voting threshold (how large a qualified majority is needed to induce change versus the status quo). Next, in the context of a model of the correlation structure of agents preferences, we analyze how voting weights relate to the population size of a country. We then analyze the voting weights in Council of the European Union under the Nice Treaty and the recently proposed constitution, and contrast them under different versions of our model, and compare them to the weights derived from poll data. Keywords: Majority rule, Voting, Weighted voting, European Union Classification-JEL: D71, D72 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.77 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-077.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.77 Title: Optimal Information Transmission in Organizations: Search and Congestion Author-Name: Antonio Cabrales Author-X-Name-First: Antonio Author-X-Name-Last: Cabrales Author-WorkPlace-Name: Departament d’Economia i Empresa, Universitat Pompeu Fabra Author-Name: Àlex Arenas Author-X-Name-First: Àlex Author-X-Name-Last: Arenas Author-WorkPlace-Name: Departament d’Enginyeria Informàtica i Matemàtiques, Universitat Rovira i Virgili Author-Name: Albert Díaz-Guilera Author-X-Name-First: Albert Author-X-Name-Last: Díaz-Guilera Author-WorkPlace-Name: Departament de Física Fonamental, Universitat de Barcelona Author-Name: Roger Guimerà Author-X-Name-First: Roger Author-X-Name-Last: Guimerà Author-WorkPlace-Name: Department of Chemical Engineering, Northwestern University Author-Name: Fernando Vega-Redondo Author-X-Name-First: Fernando Author-X-Name-Last: Vega-Redondo Author-WorkPlace-Name: Departament de Fonaments de l’Anàlisi Econòmica, Universitat d’Alacant Abstract: We propose a stylized model of a problem-solving organization whose internal communication structure is given by a fixed network. Problems arrive randomly anywhere in this network and must find their way to their respective “specialized solvers” by relying on local information alone. The organization handles multiple problems simultaneously. For this reason, the process may be subject to congestion. We provide a characterization of the threshold of collapse of the network and of the stock of floating problems (or average delay) that prevails below that threshold. We build upon this characterization to address a design problem: the determination of what kind of network architecture optimizes performance for any given problem arrival rate. We conclude that, for low arrival rates, the optimal network is very polarized (i.e. star-like or “centralized”), whereas it is largely homogenous (or “decentralized”) for high arrival rates. We also show that, if an auxiliary assumption holds, the transition between these two opposite structures is sharp and they are the only ones to ever qualify as optimal. Keywords: Networks, information transmission, search, organization design. Keywords: Networks, Information transmission, Search, Organization design Classification-JEL: D20, D24, D83, L22, L23 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.78 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-078.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.78 Title: Contracting with Externalities and Outside Options Author-Name: Francis Bloch Author-X-Name-First: Francis Author-X-Name-Last: Bloch Author-WorkPlace-Name: Ecole Supérieure de Mécanique de Marseille and GREQAM Author-Name: Armando Gomes Author-X-Name-First: Armando Author-X-Name-Last: Gomes Author-WorkPlace-Name: Department of Finance, the Wharton School, University of Pennsylvania Abstract: This paper proposes a model of multilateral contracting where players are engaged in two parallel interactions: they dynamically form coalitions and play a repeated normal form game with temporary and permanent decisions. This formulation encompasses many economic models with externalities and outside options. We show that when outside options are pure (i.e. independent of the actions of other players), there exists a Markov Perfect equilibrium resulting in efficient outcomes when players become perfectly patient. If outside options are not pure, all Markov perfect equilibria may be inefficient. The distribution of coalitional gains and the dynamics of coalition formation are characterized in four illustrative applications. Keywords: Outside options, Externalities, Coalitional bargaining Classification-JEL: C71, C72, C78, D62 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.79 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-079.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.79 Title: Merger Performance under Uncertain Efficiency Gains Author-Name: Licun Xue Author-X-Name-First: Licun Author-X-Name-Last: Xue Author-WorkPlace-Name: Department of Economics, University of Aarhus Author-Name: Rabah Amir Author-X-Name-First: Rabah Author-X-Name-Last: Amir Author-WorkPlace-Name: CORE and Department of Economics, UCL Author-Name: Effrosyni Diamantoudi Author-X-Name-First: Effrosyni Author-X-Name-Last: Diamantoudi Author-WorkPlace-Name: Department of Economics, University of Aarhus Abstract: In view of the uncertainty over the ability of merging firms to achieve efficiency gains, we model the post-merger situation as a Cournot oligopoly wherein the outsiders face uncertainty about the merged entity’s final cost. At the Bayesian equilibrium, a bilateral merger is profitable provided that non-merged firms sufficiently believe that the merger will generate large enough efficiency gains, even if ex post none actually materialize. The effects of the merger on market performance are shown to follow similar threshold rules. The findings are broadly consistent with stylized facts, and provide a rationalization for an efficiency consideration in merger policy. Keywords: Horizontal merger, Bayesian Cournot equilibrium, Efficiency gains, Market performance Classification-JEL: D43, L11, L22 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.80 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-080.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.80 Title: The Formation of Networks with Transfers among Players Author-Name: Matthew O. Jackson Author-X-Name-First: Matthew O. Author-X-Name-Last: Jackson Author-WorkPlace-Name: Division of Humanities and Social Sciences, California Institute of Technology Author-Name: Francis Bloch Author-X-Name-First: Francis Author-X-Name-Last: Bloch Author-WorkPlace-Name: GREQAM, Université d'Aix-Marseille Abstract: We examine the formation of networks among a set of players whose payoffs depend on the structure of the network. We focus on games where players may bargain by promising or demanding transfer payments when forming links. We examine several variations of the transfer/bargaining aspect of link formation. One aspect is whether players can only make and receive transfers to other players to whom they are directly linked, or whether they can also subsidize links that they are not directly involved in. Another aspect is whether or not transfers related to a given link can be made contingent on the full resulting network or only on the link itself. A final aspect is whether or not players can pay other players to refrain from forming links. We characterize the networks that are supported under these variations and show how each of the above aspects is related either to accounting for a specific type of externality, or to dealing with the combinatorial nature of network payoffs. Keywords: Networks, Network games, Network formation, Game theory, Efficient networks, Side payments, Transfers, Bargaining, Externalities Classification-JEL: A14, C71, C72 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.81 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-081.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.81 Title: Bicameralism and Government Formation Author-Name: Antonio Merlo Author-X-Name-First: Antonio Author-X-Name-Last: Merlo Author-WorkPlace-Name: Department of Economics, University of Pennsylvania and CEPR. Author-Name: Daniel Diermeier Author-X-Name-First: Daniel Author-X-Name-Last: Diermeier Author-WorkPlace-Name: MEDS, Kellogg School of Management, Northwestern University Author-Name: Hülya Eraslan Author-X-Name-First: Hülya Author-X-Name-Last: Eraslan Author-WorkPlace-Name: Finance Department, Wharton School, University of Pennsylvania Abstract: In this paper we present a structural approach to the study of government formation in multi-party parliamentary democracies. The approach is based on the estimation of a stochastic bargaining model which we use to investigate the effects of specific institutional features of parliamentary democracy on the formation and stability of coalition governments. We then apply our methodology to estimate the effects of governmental bicameralism. Our main findings are that eliminating bicameralism does not affect government durability, but does have a significant effect on the composition of governments leading to smaller coalitions. These results are due to an equilibrium replacement effect: removing bicameralism affects the relative durability of coalitions of different sizes which in turn induces changes in the coalitions that are chosen in equilibrium. Keywords: Political stability, Government formation, Government dissolution, Bicameralism, Comparative constitutional design Classification-JEL: D72, H19, C73 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.82 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-082.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.82 Title: Potential Maximization and Coalition Government Formation Author-Name: Rod Garratt Author-X-Name-First: Rod Author-X-Name-Last: Garratt Author-WorkPlace-Name: Department Economics, University of California Author-Name: Cheng-Zhong Qin Author-X-Name-First: Cheng-Zhong Author-X-Name-Last: Qin Author-WorkPlace-Name: Department Economics, University of California Author-Name: James E. Parco Author-X-Name-First: James E. Author-X-Name-Last: Parco Author-WorkPlace-Name: Department of Management, United States Air Force Academy Author-Name: Amnon Rapoport Author-X-Name-First: Amnon Author-X-Name-Last: Rapoport Author-WorkPlace-Name: Department of Management and Policy, University of Arizona Abstract: A model of coalition government formation is presented in which inefficient, non-minimal winning coalitions may form in Nash equilibrium. Predictions for five games are presented and tested experimentally. The experimental data support potential maximization as a refinement of Nash equilibrium. In particular, the data support the prediction that non-minimal winning coalitions occur when the distance between policy positions of the parties is small relative to the value of forming the government. These conditions hold in games 1, 3, 4 and 5, where subjects played their unique potential-maximizing strategies 91, 52, 82 and 84 percent of the time, respectively. In the remaining game (Game 2) experimental data support the prediction of a minimal winning coalition. Players A and B played their unique potential-maximizing strategies 84 and 86 percent of the time, respectively, and the predicted minimal-winning government formed 92 percent of the time (all strategy choices for player C conform with potential maximization in Game 2). In Games 1, 2, 4 and 5 over 98 percent of the observed Nash equilibrium outcomes were those predicted by potential maximization. Other solution concepts including iterated elimination of dominated strategies and strong/coalition proof Nash equilibrium are also tested. Keywords: Coalition formation, Potential maximization, Nash equilibrium refinements, Experimental study, Minimal winning Classification-JEL: C72, C78, D72 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.83 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-083.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.83 Title: Group Decision-Making in the Shadow of Disagreement Author-Name: Debraj Ray Author-X-Name-First: Debraj Author-X-Name-Last: Ray Author-WorkPlace-Name: Department of Economics, New York University and Instituto de Análisis Económico (CSIC) Author-Name: Kfir Eliaz Author-X-Name-First: Kfir Author-X-Name-Last: Eliaz Author-WorkPlace-Name: Department of Economics, New York University Author-Name: Ronny Razin Author-X-Name-First: Ronny Author-X-Name-Last: Razin Author-WorkPlace-Name: Department of Economics, New York University Abstract: A model of group decision-making is studied, in which one of two alternatives must be chosen. While group members differ in their valuations of the alternatives, everybody prefers some alternative to disagreement. Our model is distinguished by three features: private information regarding valuations, varying intensities in the preference for one out-come over the other, and the option to declare neutrality in order to avoid disagreement. We uncover a variant on the “tyranny of the majority": there is always an equilibrium in which the majority is more aggressive in pushing its alternative, thus enforcing their will via both numbers and voice. However, under very general conditions an aggressive minority equilibrium inevitably makes an appearance, provided that the group is large enough. This equilibrium displays a “tyranny of the minority": it is always true that the increased aggression of the minority more than compensates for smaller number, leading to the minority outcome being implemented with larger probability than the majority alternative. In all cases the option to remain neutral ensures that the probability of disagreement is bounded away from one (as group size changes), regardless of the supermajority value needed for agreement, as long as it is not unanimity. Keywords: Collective decision-making, Groups, Disagreements, Decision rules Classification-JEL: D71, D78, D82 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.84 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-084.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.84 Title: Economics: An Emerging Small World? Author-Name: Sanjeev Goyal Author-X-Name-First: Sanjeev Author-X-Name-Last: Goyal Author-WorkPlace-Name: University of Essex and Tinbergen Institute Author-Name: Marco van der Leij Author-X-Name-First: Marco Author-X-Name-Last: van der Leij Author-WorkPlace-Name: Tinbergen Institute, Erasmus University Rotterdam Author-Name: José Luis Moraga-Gonzàlez Author-X-Name-First: José Luis Author-X-Name-Last: Moraga-González Author-WorkPlace-Name: Erasmus University Rotterdam, Tinbergen Institute and CESifo Abstract: The structures of social interaction affect individual behavior and economic performance in important ways. This leads us to ask: does the architecture of social interaction exhibit particular patterns and are these patterns stable over time? We examine interaction among economists by looking at the evolution of co-authorship relations over a thirty year period. We find that in the 1970's this world was quite fragmented with the largest interconnected group { the giant component { covering only 15% of the population. However, by the 1990's economics was much more integrated, with the giant component covering over 40% of the population. The average distance between individuals was small and declined over the period, leading us to conclude that economics is an emerging small world. A crucial stable feature of the network over this period is the existence of several stars (economists with many co-authors each of whom have few collaborators and rarely work among themselves). The world of economics is thus a collection of inter-linked stars. We also find that a growth in the average number of co-authors is the main reason behind the growth in the giant component and the fall in average distances within it. The second part of the paper develops a simple theoretical model of collaboration in economics. We find that an unequal distribution of collaborations and inter- linked stars arise naturally in this environment. Falling costs of communication and increasing credit for joint research lead to greater co-authorship and this supports a larger giant component. Keywords: Small worlds, Networks, Global village Classification-JEL: C7, A11 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.85 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-085.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.85 Title: Learning to Play Approximate Nash Equilibria in Games with Many Players Author-Name: Edward Cartwright Author-X-Name-First: Edward Author-X-Name-Last: Cartwright Author-WorkPlace-Name: Department of Economics, University of Warwick Abstract: We illustrate one way in which a population of boundedly rational individuals can learn to play an approximate Nash equilibrium. Players are assumed to make strategy choices using a combination of imitation and innovation. We begin by looking at an imitation dynamic and provide conditions under which play evolves to an imitation equilibrium; convergence is conditional on the network of social interaction. We then illustrate, through example, how imitation and innovation can complement each other; in particular, we demonstrate how imitation can .help. a population to learn to play a Nash equilibrium where more rational methods do not. This leads to our main result in which we provide a general class of large game for which the imitation with innovation dynamic almost surely converges to an approximate Nash, imitation equilibrium. Keywords: Imitation, Best replay, Convergence, Nash equilibrium Classification-JEL: C70, C72, C73 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.86 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-086.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.86 Title: Properties of a Non-Competitive Electricity Market Dominated by Hydroelectric Power Author-Name: Michael Hoel Author-X-Name-First: Michael Author-X-Name-Last: Hoel Author-WorkPlace-Name: Department of Economics, University of Oslo Author-Name: Finn R. Førsund Author-X-Name-First: Finn R. Author-X-Name-Last: Førsund Author-WorkPlace-Name: Department of Economics, University of Oslo Abstract: An important conclusion from the literature on hydropower is that if there are no other constraints than the available water reservoirs for a year, and operating costs are ignored, the competitive (and socially optimal) outcome is characterized by the (present value) price being constant through the year. A second important conclusion is that the outcome under monopoly generally will differ from this, provided that the demand functions differ across different days (or other sub-periods) of the year. We show that even if the demand function is the same all days of the year, the monopoly outcome will generally differ from the competitive outcome. The difference is caused by the profit function of a price-setting producer of hydropower being non-concave. This non-concavity can be caused by short-run capacity limits either on exports and imports of electricity, or on the supply of alternative electricity sources. Keywords: Electricity prices, Hydropower Classification-JEL: L12, L13, L94, Q25 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.87 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-087.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.87 Title: Natural Resources, Investment and Long-Term Income Author-Name: Dlisraios Papyrakis Author-X-Name-First: Elissaios Author-X-Name-Last: Papyrakis Author-WorkPlace-Name: IVM, Institute for Environmental Studies, Vrije Universiteit Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: IVM, Institute for Environmental Studies, Vrije Universiteit Abstract: We study the negative correlation between natural resource-abundance and long-term income focusing on the savings-investment channel. We first present empirical evidence on this channel and then develop an OverLapping-Generations (OLG) model to study the issue. In this model, savings adjust downwards to income from natural resources, and investment in capital contributes to knowledge creation, a feature based on endogenous growth theory. We analyze the link from resource income future income through savings and investment. Natural resources have two counteracting effects on income. In the short term, resource wealth augments income, but in the long-term, it decreases income through a crowding-out effect on capital and knowledge. We discuss different scenarios under which the resource curse is most likely to take place. Keywords: Natural resources, Growth, Investment, OLG models Classification-JEL: E22, O13 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.88 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-088.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.88 Title: Interactions between Climate and Trade Policies: A Survey Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: Università di Milano and Fondazione Eni Enrico Mattei Author-Name: Claudia Kemfert Author-X-Name-First: Claudia Author-X-Name-Last: Kemfert Author-WorkPlace-Name: Humboldt University of Berlin and German Institute for Economic Research Abstract: Economic globalization affects the environment and sustainable development in several ways and through various channels. The purpose of this paper is to review the key links between globalization and the environment. The paper intends to consider the major issues in multilateral economic agreements in trade and finance that affect environmental sustainability. Major policy issues addressed by these agreements are considered from the perspective of trade liberalization, international investment and finance, and technology diffusion. The concept of trade reflected here is thus broader than international exchange of goods and services. Keywords: International climate policy, Sustainable development, Technical change Classification-JEL: H23, O33, Q01, Q25, Q28 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.89 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-089.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.89 Title: Energy Efficiency in Transition Economies: Is There Convergence Towards the EU Average? Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: The World Bank, Fondazione Eni Enrico Mattei and University of Bath Author-Name: Suzette Pedroso Author-X-Name-First: Suzette Author-X-Name-Last: Pedroso Author-WorkPlace-Name: The World Bank Author-Name: Dalia Streimikiene Author-X-Name-First: Dalia Author-X-Name-Last: Streimikiene Author-WorkPlace-Name: Lithuanian Energy Institute Abstract: This paper investigates the relationship between energy intensity in the 12 countries of Eastern Europe that can be considered as in transition to a full market economy, and that of the present EU members. The raw data shows some evidence of convergence, and a carefully estimated econometric model of lagged adjustment confirms this. On average, a 1% decrease in the per capita income gap between developed and transition economies leads to a decrease in the energy intensity growth rate of a transition country by 0.7%. There are differences in the rate of convergence across countries, and these depend on two parameters that are allowed to vary across countries: ?, the elasticity of desired energy intensity with respect to the per capita income gap; and µ, the rate at which actual energy intensity adjusts to the desired energy intensity. The countries with the fastest convergence rates given these parameters are the Czech Republic, Bulgaria, Croatia and Turkey. The forecast values for energy intensity and actual energy demand levels of seven transition countries were estimated. Results show that the energy intensities of transition countries except Estonia converge to EU levels significantly. On the other hand, actual energy demand levels between 2000 and 2020 show an increasing demand in all 7 countries despite the reductions in energy intensity. Therefore, it will not be feasible to use as a target a non-increasing level of total energy consumption. Keywords: Energy, Convergence, Transition Classification-JEL: C33, Q49 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.90 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-090.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.90 Title: Climate Agreements and Technology Policy Author-Name: Michael Hoel Author-X-Name-First: Michael Author-X-Name-Last: Hoel Author-WorkPlace-Name: Department of Economics, University of Oslo Author-Name: Rolf Golombek Author-X-Name-First: Rolf Author-X-Name-Last: Golombek Author-WorkPlace-Name: Frisch Centre Abstract: We study climate policy when there are technology spillovers within and across countries, and the technology externalities within each country are corrected through a domestic subsidy of R&D investments. We compare the properties of international climate agreements when the inter-country externalities from R&D are not regulated through the climate agreement. With an international agreement controlling abatements directly through emission quotas, the equilibrium R&D subsidy is lower that the socially optimal subsidy. The equilibrium subsidy is even lower if the climate agreement does not specify emission levels directly, but instead imposes a common carbon tax. Social costs are higher under a tax agreement than under a quota agreement. Moreover, for a reasonable assumption on the abatement cost function, R&D investments and abatement levels are lower under a tax agreement than under a quota agreement. Total emissions may be higher or lower in a second-best optimal quota agreement than in the first-best optimum. Keywords: Climate policy, International environmental agreements, R&D Policy, Technology spillovers Classification-JEL: O30, H23, Q20, Q28, Q48 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.91 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-091.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.91 Title: Multi-Unit Open Ascending Price Efficient Auction Author-Name: Sergei Izmalkov Author-X-Name-First: Sergei Author-X-Name-Last: Izmalkov Author-WorkPlace-Name: Department of Economics, MIT Abstract: This paper presents an open ascending price mechanism that allocates efficiently M units of the same good among N bidders with interdependent values The mechanism consists of a number of sequential English auctions with reentry and has the following attributes. In each of the individual auctions all the bidders compete simultaneously in the open ascending price format. The most distinctive feature of the mechanism is that winners are determined first, and then additional auxillary auctions are conducted to determine prices. The total number of auctions depends only on the number of goods to be allocated and not on the number of bidders. Keywords: Multiple units, Interdependent values, Sequential auctions, Ascending price auction Classification-JEL: C72, D44 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.92 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-092.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.92 Title: Cities and Cultures Author-Name: Gianmarco I.P. Ottaviano Author-X-Name-First: Gianmarco I.P. Author-X-Name-Last: Ottaviano Author-WorkPlace-Name: Università di Bologna, Fondazione Eni Enrico Mattei and CEPR Author-Name: Giovanni Peri Author-X-Name-First: Giovanni Author-X-Name-Last: Peri Author-WorkPlace-Name: UC Davis and CESifo Abstract: We investigate the existence of wage premium due to cultural diversity across US cities. Using census data from 1970 to 1990, we find that at the urban level richer diversity is systematically associated with higher average nominal wages for white US-born males. We measure cultural diversity in a city using the variety of languages spoken by city-residents. While the positive correlation between wages and diversity survives a battery of robustness checks, it seems to be larger once foreign cultures have been assimilated. Finally, instrumental variable estimation hints at causation going from diversity to wages. Comparing real and nominal wages across cities, we interpret these results as evidence that diversity enhances productivity. Keywords: Cultural diversity, Productivity, Wages, Metropolitan areas Classification-JEL: O4, R0, F1 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.93 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-093.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.93 Title: Agglomeration, Integration, and Territorial Authority Scale in a System of Trading Cities. Centralisation versus Devolution Author-Name: Massimo Del Gatto Author-X-Name-First: Massimo Author-X-Name-Last: Del Gatto Author-WorkPlace-Name: Faculty of Economics, University of Bologna Abstract: This paper emphasises the importance of the political-institutional dimension in the understanding of the spatial distribution of economic activity. We introduce the notion of Territorial Authority Scale, which refers to the degree of devolution (towards sub-national tiers of government) involved in the authority to decide on Spatial Policy, and propose a model of 'agglomeration in a system of cities' in which both intra-city trade and inter-city trade are considered. Enriching both the literature on integration/agglomeration and that on city size and formation, we show that: i) devolution results in over-agglomeration (fewer cities, which tend to be over-sized) and low welfare; ii) the higher the level of spatial (i.e. transport costs) and economic (i.e. intensity of trade) integration, the higher is the magnitude of the inefficiency. From a theoretical point of view, the paper represents an attempt to import, into geographical economics, a 'scale approach', which is an established approach to the notion of space in sociology. Keywords: Agglomeration, Integration, Cities, Devolution, Economic geography, Transport costs, Spatial policy, Trade, Product variety, Linkages Classification-JEL: F12, F15, L11, L13, R12, R13, R59 Creation-Date: 200405 Template-Type: ReDIF-Paper 1.0 Number: 2004.94 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-094.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.94 Title: Equilibrium with a Market of Permits Author-Name: Gilles Rotillon Author-X-Name-First: Gilles Author-X-Name-Last: Rotillon Author-WorkPlace-Name: SEGMI Université Paris X-Nanterre Author-Name: Pierre-André Jouvet Author-X-Name-First: Pierre-André Author-X-Name-Last: Jouvet Author-WorkPlace-Name: GREQAM, Université de la Méditerranée and GAINS, Université du Maine Author-Name: Philippe Michel Author-X-Name-First: Philippe Author-X-Name-Last: Michel Author-WorkPlace-Name: GREQAM, Université de la Méditerranée et EUREQua, Université Paris I Abstract: In this paper we present the main results of three original studies on the equilibrium with a market of tradeable permits in a static framework. In first study, we have considered an international equilibrium of two countries which depend on the quantity of permits to each country. The allocation is efficient if and only if it is proportional to efficient labor. A redistribution in favor of the less developed country implies a redistribution to this country but leads to a dilemma with efficiency. In the second study, we analyze the consequences of the choice between giving free permits to firms and other possibilities. We show that for equalizing incomes of production factors with there marginal productivities, each factor should receive a quantity of free permits proportional to its contribution to production. In the third study, we consider the partial equilibrium of an industry where each firm is characterized by a parameter combining production efficiency and pollution effect. We define a theoretical indicator of environmental efficiency and we analyze its properties. Keywords: Pollution permits, Capital allocation, International equilibrium, Factor income, Environmental efficiency Classification-JEL: D50, F02, F18 Creation-Date: 200406 Template-Type: ReDIF-Paper 1.0 Number: 2004.95 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-095.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.95 Title: Climate Uncertainty and the Necessity to Transform Global Energy Supply Author-Name: Bob van der Zwaan Author-X-Name-First: Bob Author-X-Name-Last: van der Zwaan Author-WorkPlace-Name: Policies Studies Department, Energy research Centre of the Netherlands and John F. Kennedy School of Government, Harvard University Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: IVM, Vrije Universiteit Abstract: This paper analyses the policy relevance of the dominant uncertainties in our current scientific understanding of the terrestrial climate system, and provides further evidence for the need to radically transform - this century - our global infrastructure of energy supply, given the global average temperature increase as a result of anthropogenic carbon dioxide emissions. We investigate the effect on required CO2 emission reduction efforts, both in terms of how much and when, of our uncertain knowledge today of the climate sensitivity to a doubling in them atmospheric CO2 concentration. Also the roles of carbon-free energy and energy savings, and their evolutions over time, are researched, as well as their dependence on some of our characteristic modelling features. We use a top-down model in which there are two competing energy sources, fossil and non-fossil. Technological change is represented endogenously through learning curves, and modest but non-zero demand exists for the relatively expensive carbon-free energy resource. Keywords: Global warming, CO2 emissions, Climate sensitivity, Fossil to non-fossil transition, Carbon-free power, Energy savings Classification-JEL: Q25, Q42, Q43, Q48 Creation-Date: 200406 Template-Type: ReDIF-Paper 1.0 Number: 2004.96 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-096.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.96 Title: Economy-Wide Estimates of the Implications of Climate Change: Sea Level Rise Author-Name: Roberto Roson Author-X-Name-First: Roberto Author-X-Name-Last: Roson Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, The Abdus Salam International Centre for Theoretical Physics and ca’ Foscari Unversity of Venice Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and The Abdus Salam International Centre for Theoretical Physics Author-Name: Marco Lazzarin Author-X-Name-First: Marco Author-X-Name-Last: Lazzarin Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and The Abdus Salam International Centre for Theoretical Physics Author-Name: Richard S.J. Tol Author-X-Name-First: Richard S.J. Author-X-Name-Last: Tol Author-WorkPlace-Name: Centre for Marine and Climate Research, Hamburg University, Institute for Environmental Studies, Vrije Universiteit and Center for Integrated Study of the Human Dimensions of Global Change, Carnegie Mellon University Abstract: The economy-wide implications of sea level rise in 2050 are estimated using a static computable general equilibrium model. Overall, general equilibrium effects increase the costs of sea level rise, but not necessarily in every sector or region. In the absence of coastal protection, economies that rely most on agriculture are hit hardest. Although energy is substituted for land, overall energy consumption falls with the shrinking economy, hurting energy exporters. With full coastal protection, GDP increases, particularly in regions that do a lot of dike building, but utility falls, least in regions that build a lot of dikes and export energy. Energy prices rise and energy consumption falls. The costs of full protection exceed the costs of losing land. Keywords: Impacts of climate change, Sea level rise, Computable general equilibrium Classification-JEL: C68, D58, Q25 Creation-Date: 200406 Template-Type: ReDIF-Paper 1.0 Number: 2004.97 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-097.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.97 Title: Defining Rules in Cost Spanning Tree Problems Through the Canonical Form Author-Name: Juan J. Vidal-Puga Author-X-Name-First: Juan J. Author-X-Name-Last: Vidal-Puga Author-WorkPlace-Name: Departamento de Estatística, Universidade de Vigo Author-Name: Gustavo Bergantiños Author-X-Name-First: Gustavo Author-X-Name-Last: Bergantiños Author-WorkPlace-Name: Research Group in Economic Analysis, Universidade de Vigo Abstract: We define the canonical form of a cost spanning tree problem. The canonical form has the property that reducing the cost of any arc, the minimal cost of connecting agents to the source is also reduced. We argue that the canonical form is a relevant concept in this kind of problems and study a rule using it. This rule satisfies much more interesting properties than other rules in the literature. Furthermore we provide two characterizations. Finally, we present several approaches to this rule without using the canonical form. Keywords: Cost spanning tree, Rules, Canonical form Classification-JEL: C71, D70, D85 Creation-Date: 200406 Template-Type: ReDIF-Paper 1.0 Number: 2004.98 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-098.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.98 Title: Party Formation and Coalitional Bargaining in a Model of Proportional Representation Author-Name: Siddhartha Bandyopadhyay Author-X-Name-First: Siddhartha Author-X-Name-Last: Bandyopadhyay Author-WorkPlace-Name: Department of Economics, University of Birmingham Author-Name: Mandar Oak Author-X-Name-First: Mandar Author-X-Name-Last: Oak Author-WorkPlace-Name: Department of Economics, Williams College Abstract: We study a game theoretic model of a parliamentary democracy under proportional representation where `citizen candidates' form parties, voting occurs and governments are formed. We study the coalition governments that emerge as functions of the parties' seat shares, the size of the rents from holding office and their ideologies. We show that governments may be minimal winning, minority or surplus. Moreover, coalitions may be `disconnected'. We then look at how the coalition formation game affects the incentives for party formation. Our model explains the diverse electoral outcomes seen under proportional representation and integrates models of political entry with models of coalitional bargaining. Keywords: Proportional representation, Party formation, Coalitions Classification-JEL: C72, D72, H19 Creation-Date: 200406 Template-Type: ReDIF-Paper 1.0 Number: 2004.99 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-099.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.99 Title: The Impact of Surplus Sharing on The Stability of International Climate Agreements Author-Name: Hans-Peter Weikard Author-X-Name-First: Hans-Peter Author-X-Name-Last: Weikard Author-WorkPlace-Name: Department of Social Sciences, Environmental Economics and Natural Resources Group, Wageningen University Author-Name: Juan-Carlos Altamirano-Cabrera Author-X-Name-First: Juan-Carlos Author-X-Name-Last: Altamirano-Cabrera Author-WorkPlace-Name: Department of Social Sciences, Environmental Economics and Natural Resources Group, Wageningen University Author-Name: Michael Finus Author-X-Name-First: Michael Author-X-Name-Last: Finus Author-WorkPlace-Name: Department of Economics, Hagen University Abstract: This paper analyses stability of coalitions for greenhouse gas abatement for different sharing rules applied to the gains from co-operation. We use a 12-regions model designed to examine internal and external stability of coalitions (STACO). We compare different sharing rules like, for example, grandfathering (i.e. sharing proportional to emissions) and a number of so-called equitable rules like, for example, sharing proportional to population or according to historical responsibilities. Due to strong free-rider incentives we find only small stable coalitions for all sharing rules examined. As a general pattern we observe that coalitions consist of regions with low marginal abatement costs, which are attractive partners in any coalition, and regions which have the highest claims according to the respective sharing rule. Furthermore, we find that a grandfathering scheme leads to the largest and – in terms of greenhouse gas abatement – most successful coalition, while many of the equitable rules achieve very little. Keywords: International environmental agreements, Sharing rules, Stability of coalitions Classification-JEL: D62, D63, Q25 Creation-Date: 200406 Template-Type: ReDIF-Paper 1.0 Number: 2004.100 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-100.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.100 Title: Willingness to Pay for Agricultural Environmental Safety: Evidence from a Survey of Milan, Italy, Residents Author-Name: Chiara M. Travisi Author-X-Name-First: Chiara M. Author-X-Name-Last: Travisi Author-WorkPlace-Name: Department of Management Economics and Industrial Engineering, Polytechnic of Milan and Fondazione Eni Enrico Mattei Author-Name: Peter Nijkamp Author-X-Name-First: Peter Author-X-Name-Last: Nijkamp Author-WorkPlace-Name: Department of Spatial Economics, Free University and Tinbergen Institute Abstract: The widespread use of pesticides in agriculture provides a particularly complex pattern of multidimensional negative side-effects, ranging from food safety related effects to the deterioration of farmland ecosystems. The assessment of the economic implications of such negative processes is fraught with many uncertainties. This paper presents results of an empirical study recently conducted in the North of Italy aimed at estimating the value of reducing the multiple impacts of pesticide use. A statistical technique known as conjoint choice experiment is used here in combination with contingent valuation techniques. The experimental design of choice modelling provides a natural tool to attach a monetary value to negative environmental effects associated with agrochemicals use. In particular, the paper addresses the reduction of farmland biodiversity, groundwater contamination and human intoxication. The resulting estimates show that, on average, respondents are prone to accept substantial willingness to pay premia for agricultural goods (in particular, foodstuff) produced in environmentally benign ways. Keywords: Pesticide risks, Food safety, Willingness-to-pay, Choice modeling, Contingent valuation Classification-JEL: C42, H23, I12, Q24 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.101 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-101.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.101 Title: A Meta-Analysis of the Willingness to Pay for Reductions in Pesticide Risk Exposure Author-Name: Chiara M. Travisi Author-X-Name-First: Chiara M. Author-X-Name-Last: Travisi Author-WorkPlace-Name: Department of Management Economics and Industrial Engineering, Polytechnic of Milan Author-Name: Peter Nijkamp Author-X-Name-First: Peter Author-X-Name-Last: Nijkamp Author-WorkPlace-Name: Department of Spatial Economics, Free University and Tinbergen Institute Author-Name: Raymond J. G. M. Florax Author-X-Name-First: Raymond J. G. M. Author-X-Name-Last: Florax Author-WorkPlace-Name: Department of Spatial Economics, Free University and Department of Agricultural Economics, Purdue University Abstract: The use of environmental policy instruments such as eco-labelling and pesticide taxes should preferably be based on disaggregate estimates of the individuals’ willingness to pay (WTP) for pesticide risk reductions. We review the empirical valuation literature dealing with pesticide risk exposure and develop a taxonomy of environmental and human health risks associated with pesticide usage. Subsequently, we use meta-analysis to investigate the variation in WTP estimates for reduced pesticide risk exposure. Our findings show that the WTP for reduced risk exposure is approximately 15% greater for medium, and 80% greater for high risk-levels, as compared to low risk levels. The income elasticity of pesticide risk exposure is generally positive, although not overly robust. Most results indicate that the demand for human health and environmental safety is highly elastic. We also show that geographical differences, characteristics of the survey, and the type safety device (eco-labelling, integrated management, or bans) are important drivers of the valuation results. Keywords: Pesticide risk, Willingness to pay, Meta-analysis Classification-JEL: D18, H23, I12, Q25 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.102 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-102.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.102 Title: Fondazione Eni Enrico Mattei Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: David Tomberlin Author-X-Name-First: David Author-X-Name-Last: Tomberlin Author-WorkPlace-Name: NOAA, National Marine Fisheries Service, Southwest Fisheries Science Center Abstract: This paper develops and tests a dynamic optimization model of fishermen’s investment behavior in a limited-entry fishery. Because exit from limited-entry fisheries may be irreversible, the fisherman has an incentive to maintain the right to fish (whether by actually fishing or by purchasing an annual license) even when the fishery is not profitable, in the hope that conditions may improve. This incentive provides at least a partial explanation for excess capacity in fishing fleets, one of the most pressing fisheries management issues in limited-entry (and other) fisheries around the world. To assess the ability of simple financial models to explain observed investment behavior, we develop a two-factor (price and catch) real options model of the decision problem faced by an active fisherman who has the option to exit a fishery irrevocably. The immediate reason for adopting a two-factor model is the hope of achieving greater predictive power, since obviously both price and catch are important to fishermen’s decisions. Another advantage to this approach is that it provides a mechanism by which investment behavior can be linked in a real options framework to exogenous factors that affect price and catch separately. For example, international market forces are likely to affect price while having a negligible effect on a local fish stock, while local fish stock dynamics may affect catch directly but have little influence on prices (assuming the demand for a particular fish is relatively elastic). In a comparison of model predictions about fishermen’s exit decisions to 5059 observed decisions in the California salmon fishery in the 1990s, 65% of the model’s predictions are correct, suggesting this approach may be useful in the analysis of fishing fleet dynamics. Keywords: Real option investment, Numerical methods, Fisheries Classification-JEL: Q22, D8 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.103 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-103.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.103 Title: Economic Evaluation of Climate Change Impacts and Adaptation in Italy Author-Name: Alessandra Goria Author-X-Name-First: Alessandra Author-X-Name-Last: Goria Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Gretel Gambarelli Author-X-Name-First: Gretel Author-X-Name-Last: Gambarelli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The paper deals with the social and economic dimensions of climate change impacts and adaptation in Italy. The ultimate aim of the paper is to provide policy makers and experts with a conceptual framework, as well as methodological and operational tools for dealing with climate change impacts and adaptation from an economic perspective. In order to do so, first a conceptual and theoretical framework of the economic assessment of climate change impacts is presented and the state of the art about impact assessment studies is briefly analysed. Then, the Italian case is taken into account, by underlying the main impacts and adaptation challenges that are likely to be implied by climate change in the next decades. The analysis of the Italian case is particularly addressed through the description of the methodology and results of two case studies. The first one, dealing mainly with impact assessment, is carried out at the national level and is part of a EC funded project on Weather Impacts on Natural, Social and Economic Systems (WISE). The second one is carried out at the local level and focuses on sea level rise impacts and adaptation in a plane south of Rome. The two case studies allow to propose simple and flexible methodologies for the economic impact assessment and the economic valuation of adaptation strategies. Keywords: Climate change, Economic impact assessment, Adaptation, Cost benefit analysis Classification-JEL: Q25, C5, C42 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.104 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-104.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.104 Title: The Missing Shock: The Macroeconomic Impact of British Privatisation Author-Name: Massimo Florio Author-X-Name-First: Massimo Author-X-Name-Last: Florio Author-WorkPlace-Name: Department of Economics, University of Milan Author-Name: Mara Grasseni Author-X-Name-First: Mara Author-X-Name-Last: Grasseni Author-WorkPlace-Name: Department of Economics, University of Milan Abstract: The privatisation policy pursued in the UK by Mrs Thatcher's government (1979-1990) and subsequently by Mr Major's government (1990-1997) was the largest experiment in public divestitures among capitalist economies. It had a deep impact on economic policy-making world wide, and was vastly imitated, in Western Europe, in the former planned economies, in a number of less developed countries. In this paper we test the impact of privatisation on macroeconomic performance in the United Kingdom using quarterly data from 1979 to 1999. In the econometric model, we use privatisation proceeds as an explanatory variable and we control for several other variables. Testing for cointegration the results show that there is a long run equilibrium relationship between GDP growth and the variables used in the model. However, in our empirical analysis we find a weak evidence that privatisation generated an aggregate shock on output in the UK. This result is consistent with empirical literature on microeconomic evidence that shows that in the UK ownership change per se had little impact on long term productivity trends. Keywords: Corporate governance, Privatization, Transition, Ownership structure Classification-JEL: H32, H82, L16, L33 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.105 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-105.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.105 Title: Privatisation Methods and Economic Growth in Transition Economies Author-Name: John Bennett Author-X-Name-First: John Author-X-Name-Last: Bennett Author-WorkPlace-Name: Brunel University Author-Name: Saul Estrin Author-X-Name-First: Saul Author-X-Name-Last: Estrin Author-WorkPlace-Name: London Business School Author-Name: James Maw Author-X-Name-First: James Author-X-Name-Last: Maw Author-WorkPlace-Name: University of Wales Swansea Author-Name: Giovanni Urga Author-X-Name-First: Giovanni Author-X-Name-Last: Urga Author-WorkPlace-Name: Cass Business School Abstract: We investigate the impact of differences in privatisation method on national economic performance in transition economies. Our approach is to estimate, using dynamic panel data methods, a growth equation over 23 countries for the period 1990-2001. Among our results, we find that mass privatisation has significant positive effect on growth across a wide variety of definitions and specifications. This result holds with particular force after 1995, i.e., once the period of early transition and recession was over. Our analysis suggests that an advantage of mass privatisation was that it led spontaneously to development of the capital market, which is significantly correlated with economic growth. Keywords: Privatization, Method, Economic Growth, Transition Classification-JEL: L33, O40, P27, P31 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.106 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-106.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.106 Title: The Political Economy of Privatization: Why Do Governments Want Reforms? Author-Name: Kira Boerner Author-X-Name-First: Kira Author-X-Name-Last: Boerner Author-WorkPlace-Name: Department of Economics, University of Munich Abstract: International organizations promote privatization as precondition for economic development. But is there really too little privatization? This political economy model asks for the incentives of governments to privatize or restructure a state-owned firm. Different government types are compared to identify the political and institutional determinants of privatization. Under privatization, governments commit not to in influence the profit-maximizing employment choice by private investors. With respect to the social optimum, both voter-oriented and egoistic governments can have inefficiently high incentives to privatize. When this is the case, outside pressure to privatize is detrimental. An improving institutional environment reduces these inefficiencies. Keywords: Political incentives, Privatization, Restructuring, Employment Classification-JEL: D72, D73, H82, L33 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.107 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-107.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.107 Title: Privatization and Restructuring in Concentrated Markets Author-Name: Pehr-Johan Norback Author-X-Name-First: Pehr-Johan Author-X-Name-Last: Norback Author-WorkPlace-Name: Research Institute of Industrial Economics Author-Name: Lars Persson Author-X-Name-First: Lars Author-X-Name-Last: Persson Author-WorkPlace-Name: Research Institute of Industrial Economics and CEPR Abstract: This paper examines the restructuring of state assets in markets deregulated by privatizations and investment liberalizations. We show that the government has a stronger incentive to restructure than the buyer: A firm restructuring only takes into account how much its own profit will increase. The government internalizes that restructuring increases the sales price not only from the increase in the acquirer’s profit, but also from a reduced profit for the non-acquirer, whose profits decrease due to its rival’s restructuring. We also identify situations where a slow sale can significantly reduce the sales price because of strategic investment and product market effects. Keywords: Privatization, Asset ownership, Restructuring Classification-JEL: D44, L1, L33, L4, P31 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.108 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-108.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.108 Title: Comparison between Artisanal Fishery and Manila Clam Harvesting in the Venice Lagoon by Using Ecosystem Indicators: An Ecological Economics Perspective Author-Name: Angela Granzotto Author-X-Name-First: Angela Author-X-Name-Last: Granzotto Author-WorkPlace-Name: Dipartimento di Scienze Ambientali, Università Ca' Foscari Author-Name: Fabio Pranovi Author-X-Name-First: Fabio Author-X-Name-Last: Pranovi Author-WorkPlace-Name: Dipartimento di Scienze Ambientali, Università Ca' Foscari Author-Name: Simone Libralato Author-X-Name-First: Simone Author-X-Name-Last: Libralato Author-WorkPlace-Name: Dipartimento di Scienze Ambientali, Università Ca' Foscari Author-Name: Patrizia Torricelli Author-X-Name-First: Patrizia Author-X-Name-Last: Torricelli Author-WorkPlace-Name: Dipartimento di Scienze Ambientali, Università Ca' Foscari Author-Name: Danilo Mainardi Author-X-Name-First: Danilo Author-X-Name-Last: Mainardi Author-WorkPlace-Name: Dipartimento di Scienze Ambientali, Università Ca' Foscari Abstract: Artisanal fishery in the Venice lagoon is a multi-target activity with a long tradition. It was the main fishing activity till the late ’80s when, after the introduction and spread of the Manila clam (Tapes philippinarum), the mechanical clam harvesting started. A mass-balance model of the lagoon ecosystem was developed using the Ecopath with Ecosim software. 73 scenarios, obtained by changing the fishing effort of the two different types of fishery, were used to explore their impact on the ecosystem. A set of indicators was applied in order to compare the two fishing activities. The results obtained showed that the two activities are strongly interlinked, even through they don’t exploit the same resources. The mechanical clam harvesting could reasonably be considered to be the driving force; it is capable of determining the state of lagoon ecosystem. The above mentioned factors create a lot of conflict between the two types of fishery. Keywords: Artisanal fishery, Indicators, Dynamic model, Venice Lagoon, Fishing impact, Social and economic value Classification-JEL: Q01, Q22 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.109 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-109.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.109 Title: The Cooperative Theory of Two Sided Matching Problems: A Re-examination of Some Results Author-Name: Somdeb Lahiri Author-X-Name-First: Somdeb Author-X-Name-Last: Lahiri Author-WorkPlace-Name: School of Economic and Business Sciences, University of Witwatersrand Abstract: We show that, given two matchings of which say the second is stable, if (a) no firm prefers the first matching to the second, and (b) no firm and the worker it is paired with under the second matching prefer each other to their respective assignments in the first matching, then no worker prefers the second matching to the first. This result is a strengthening of a result originally due to Knuth (1976). A theorem due to Roth and Sotomayor (1990), says that if the number of workers increases, then there is a non-empty subset of firms and the set of workers they are assigned to under the F – optimal stable matching, such that given any stable matching for the old two-sided matching problem and any stable matching for the new one, every firm in the set prefers the new matching to the old one and every worker in the set prefers the old matching to the new one. We provide a new proof of this result using mathematical induction. This result requires the use of a theorem due to Gale and Sotomayor (1985 a,b), which says that with more workers around, firms prefer the new optimal stable matchings to the corresponding ones of the old two-sided matching problem, while the opposite is true for workers. We provide an alternative proof of the Gale and Sotomayor theorem, based directly on the deferred acceptance procedure. Keywords: Two-sided matching, Stable Classification-JEL: C71 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.110 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-110.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.110 Title: Natural Resources Dynamics: Another Look Author-Name: Giuseppe Di Vita Author-X-Name-First: Giuseppe Author-X-Name-Last: Di Vita Author-WorkPlace-Name: Giuseppe Di Vita, Faculty of Law, University of Catania Abstract: In this paper we study the problem of exhaustible resources and renewable resources in a theoretical endogenous growth framework, under various assumptions. In particular, we consider the hypotheses that those two inputs are or are not technologically perfect substitutes of each other. Moreover, we develop the starting model accounting for the negative externality of waste accumulation. Finally, a comparative analysis is made between Pigouvian tax and waste recycling as an environmental policy to internalize the negative externality represented by refuse accumulation. Keywords: Economic growth, Endogenous technological progress, Exhaustible resources, Pigouvian taxes, Renewable natural inputs, Technological substitutability Classification-JEL: Q32, O11 Creation-Date: 200407 Template-Type: ReDIF-Paper 1.0 Number: 2004.111 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-111.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.111 Title: Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland and Fondazione Eni Enrico Mattei Author-Name: Alistair Hunt Author-X-Name-First: Alistair Author-X-Name-Last: Hunt Author-WorkPlace-Name: University of Bath Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: The World Bank, University of Bath and Fondazione Eni Enrico Mattei Abstract: Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Because the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Persons of age 40 and older were asked questions about their willingness to pay for a specified risk reduction. We use their responses to these questions to estimate the willingness to pay (WTP) for such a risk reduction and VSL. Our results suggest that the VSL ranges between €1.052 and €2.258 million. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to the hospital or emergency room for cardiovascular and respiratory problems. These results suggest that there is no evidence supporting that VSL should be adjusted to reflect the age of the beneficiaries of environmental policy. They are also partly inconsistent with the QALY-based practice of imputing lower values for persons with a compromised health status. We also find that income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are typically between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. We find that the value of a month’s extension in life expectancy increases with age and with serious cardiovascular and respiratory illnesses experienced by the respondent. The value of a loss of one year’s life expectancy is between €55,000 and €142,000. Keywords: Value of a statistical life, Willingness to pay, Life expectancy, Risk reduction, Contingent valuation Classification-JEL: H41, H51, I18, I31, J17 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.112 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-112.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.112 Title: Scientific Advice to Public Policy-Making Author-Name: Valeria Papponetti Author-X-Name-First: Valeria Author-X-Name-Last: Papponetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Dino Pinelli Author-X-Name-First: Dino Author-X-Name-Last: Pinelli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: A feature of policy-making today is its dependence on scientific advice to deliver public policies that are robust, credible, and effective. This paper discusses how policy-making profits from scientific advice in areas where science and technology are significant. Particular attention is given to issues holding a high level of uncertainty, either because of inherent variability, because science is incomplete or controversial, or because data are inadequate to support a definitive answer. First, we analyse the social context that characterises the relationship between science and policy-making, with a focus on the decrease of public confidence in politicians and scientists. Second, we compare three different sets of guidelines on the collection and use of expertise in policy-making (issued by the UK, Canada and the European Commission, respectively) and identify two different approaches to scientific advice in policy-making. Third, based on a set of cross-national and multi-disciplinary case studies, we look at how the relationship between science and policy-making works in practice and propose a set of recommendations towards the establishment of a more robust and effective policy-making process. Keywords: Scientific advice, Policy-making, Expertise Classification-JEL: D70, D81 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.113 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-113.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.113 Title: The Profile of a “Warm-Glower”: A Note on Consumer’s Behavior and Public Policy Implications Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: University Ca' Foscari of Venice and Fondazione Eni Enrico Mattei Author-Name: Laura Onofri Author-X-Name-First: Laura Author-X-Name-Last: Onofri Author-WorkPlace-Name: Department of Economics, University of Bologna and University Ca' Foscari of Venice Abstract: The paper focuses on the ongoing debate on non-market valuation, including the valuation environmental goods, and the opportunity to use contingent valuation for policy guidance. In fact, contingent valuation critics argue that reported willingness to pay answers do not reflect real economic preferences and, for this reason, should not be used in cost-benefit analysis The attempt to contravene such critique finds many supporters. This paper starts from the latter stream of research and adds two original contributions. First, it sheds light on the individual warm glow motivational profile, exploring the empirical relationship between individual’s socio-economic characteristics and warm glow. Second, it discusses some implications of the presence of warm glow for public policy. Keywords: Economic value, Contingent valuation, Willingness to pay; Latent factor, Consumer motivations, Warm glow, Ego driven warm glow, Social oriented warm glow, Public policy design Classification-JEL: D11, D12, Q26 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.114 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-114.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.114 Title: Investments in Gas Pipelines and Liquefied Natural Gas Infrastructure. What is the Impact on the Security of Supply? Author-Name: Patrick Cayrade Author-X-Name-First: Patrick Author-X-Name-Last: Cayrade Author-WorkPlace-Name: Beicip Franlab Abstract: This paper addresses the question of the infrastructure investment required for gas pipeline and liquefied natural gas (LNG) connections to meet growing gas demand in an enlarged EU over the next 20 years. Several issues are presented, bearing in mind the major objective of the security of supply for EU countries. First, to set the scene, recent projections of gas demand in an enlarged EU are presented along with the corresponding need for additional imports. Then a scenario is developed showing possible supply routes to meet the import gap, relying on increasingly remote routes. An impressive bill of $150 to 200 billion will have to be paid for extending and building the required infrastructure in pipeline links and LNG-receiving facilities. The expected major development of LNG markets is subject to a particular discussion, as far as the progressive globalisation of this market and its inherent flexibility provide major advantages in terms of the security of supply, despite more costly infrastructure than pipeline links. The impact of technological progress is expected to reduce both capital investment and unit transport costs, offering access to new supply opportunities. Finally, the question of major obstacles to the realisation of the required huge investments in gas infrastructure over the next 20 years is addressed, opening hot debate on the subjects of future gas price, market liberalisation and financing issues. Keywords: Investment, Gas pipelines, Liquefied natural gas, Security of supply Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.115 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-115.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.115 Title: Oil Security Short- and Long-Term Policies Author-Name: Valeria Costantini Author-X-Name-First: Valeria Author-X-Name-Last: Costantini Author-WorkPlace-Name: ENEA and Fondazione Eni Enrico Mattei Author-Name: Francesco Gracceva Author-X-Name-First: Francesco Author-X-Name-Last: Gracceva Author-WorkPlace-Name: ENEA and Fondazione Eni Enrico Mattei Abstract: Increasing oil security represents one of the most important policy actions, especially within IEA countries. Short and long term mechanisms could help such goal. On the short term side, revision of IEA emergency response oil stock system has been discussed. The attention is mainly focused on three issues: the high costs of stock management for private industries, the possible use of strategic reserves to smooth price when no high supply disruption has taken, the extension of IEA emergency system to non-OECD countries. The main actions specifically proposed by the European Commission are: an harmonisation of national storage systems, with the institution of public and private agency, a wider co-ordinated use of security stocks, and an increase in the physical amount of oil stocks. Long term measures for enhancing oil supply security can be seen on the demand-side and the supply-side. Main demand-side policies could be the following: energy saving and efficiency, investments in research and technology, and reduction of oil price inelasticity especially for transport sector. Main supply-side policies can be summarized into co-operation and institutional promotion for supply diversification of suppliers/routes. Main factors that could affect described policies could be the liberalization of international trade even in the energy sector and the increasing role of oil demand from developing countries. Keywords: Oil, Security, Energy Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.116 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-116.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.116 Title: Social Costs of Energy Disruptions Author-Name: Valeria Costantini Author-X-Name-First: Valeria Author-X-Name-Last: Costantini Author-WorkPlace-Name: ENEA and Fondazione Eni Enrico Mattei Author-Name: Francesco Gracceva Author-X-Name-First: Francesco Author-X-Name-Last: Gracceva Author-WorkPlace-Name: ENEA and Fondazione Eni Enrico Mattei Abstract: The costs of energy supply disruptions for industrialised economies go well beyond the economic measures of national accounts. According to different kinds of risks, physical shortages or price shocks, there are several categories of negative effects. Oil disruptions have both a direct and an indirect impact, (at global and local levels) and have a short- and a medium-term horizon. The economic effects of electricity shortages are also direct and indirect, but the temporal lag is shorter than for oil disruptions. In this paper, we summarise the different ways an economy is affected by an oil shock or a power black-out. Oil crises in the past produced high inflation rates, trade and payments imbalances, high unemployment, and weak business and consumer confidence. The social costs of electricity shortages have immediate negative results, and relatively small, indirect effects – depending on the extension of the disruption, the duration, the availability of advance warning and information. A specific assessment of the social costs of an electricity shortage remains a research task for the future. Keywords: Social costs, Energy disruption Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.117 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-117.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.117 Title: Market-based Options for Security of Energy Supply Author-Name: Christian Egenhofer Author-X-Name-First: Christian Author-X-Name-Last: Egenhofer Author-WorkPlace-Name: CEPS Author-Name: Kyriakos Gialoglou Author-X-Name-First: Kyriakos Author-X-Name-Last: Gialoglou Author-WorkPlace-Name: CEPS Author-Name: Giacomo Luciani Author-X-Name-First: Giacomo Author-X-Name-Last: Luciani Author-WorkPlace-Name: CEPS Author-Name: Maroeska Boots Author-X-Name-First: Maroeska Author-X-Name-Last: Boots Author-WorkPlace-Name: ECN Author-Name: Martin Scheepers Author-X-Name-First: Martin Author-X-Name-Last: Scheepers Author-WorkPlace-Name: ECN Author-Name: Valeria Costantini Author-X-Name-First: Valeria Author-X-Name-Last: Costantini Author-WorkPlace-Name: ENEA and Fondazione Eni Enrico Mattei Author-Name: Francesco Gracceva Author-X-Name-First: Francesco Author-X-Name-Last: Gracceva Author-WorkPlace-Name: ENEA and Fondazione Eni Enrico Mattei Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: World Bank and Fondazione Eni Enrico Mattei Author-Name: Giorgio Vicini Author-X-Name-First: Giorgio Author-X-Name-Last: Vicini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: Energy market liberalization and international economic interdependence have affected governments’ ability to react to security of supply challenges. On the other side, whereas in the past security of supply was largely seen as a national responsibility, the frame of reference has increasingly become the EU in which liberation increases security of supply mainly by increasing the number of markets participants and improving the flexibility of energy systems. In this logic, security of supply becomes a risk management strategy with a strong inclination towards cost effectiveness, involving both the supply and the demand side. Security of supply has two major components that interrelate: cost and risk. This paper focus the attention on costs in the attempt to develop a market compatible approach geared towards security of supply. Keywords: Energy supply, Market-based options Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.118 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-118.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.118 Title: Transport Energy Security. The Unseen Risk? Author-Name: David Fisk Author-X-Name-First: David Author-X-Name-Last: Fisk Author-WorkPlace-Name: Imperial College, London Abstract: The decline in significance given to energy security in recent years can be associated with increasing trust in the self-balancing security of a global-trading economy. After the events of the first years of the 21st century, that framework now looks more problematic, at least for oil supplies. The underlying level of risk that characterised the oil market of the late 20th century has changed, exacerbated by the increasing inelasticity of demand for oil-based products in the transport sector of the world’s economies, which in its turn reflects the strategic dominance of transport within economies. The prudent course for the international community is to reduce the underlying causes of possible geopolitical constraints by making them more manageable through normal channels. One such constraint that is within every nation’s capability (and self-interest) to reduce is the upward drift in the price inelasticity of domestic oil consumption. This could involve increasing the ability to divert oil used within the domestic economy to transport. Yet for many industrial economies, this option has largely been exhausted and a more radical approach of opening up new energy vectors to supply the transport sector may be needed. Taking preventative action after a security event is generally more straightforward than taking precautionary action to ensure that it never happens. The latter course may only be successful through a coincidence with other interests. The current environment agenda is such a coincident interest with transport fuel security. Keywords: Transport energy security, Risk Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.119 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-119.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.119 Title: Security of Supply for Natural Gas Markets. What is it and What is it not? Author-Name: Giacomo Luciani Author-X-Name-First: Giacomo Author-X-Name-Last: Luciani Author-WorkPlace-Name: Robert Schuman Centre, European University Institute Abstract: The issue of security of gas supplies is frequently discussed on the basis of intuitive and non-systematic arguments. Greater import dependence is normally equated with greater insecurity, and strategic stocks are the risk management tool most commonly considered. This paper strives to offer a systematic framework of analysis and shows that import dependence does not necessarily entail greater insecurity – actually, the opposite may well be the case. It also discusses several alternatives to strategic stocks for risk management, which are more interesting and promising. Keywords: Natural gas market, Security of supply Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.120 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-120.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.120 Title: The Question of Generation Adequacy in Liberalised Electricity Markets Author-Name: L.J. de Vries Author-X-Name-First: L.J. Author-X-Name-Last: de Vries Author-WorkPlace-Name: Delft University of Technology Author-Name: R.A. Hakvoort Author-X-Name-First: R.A. Author-X-Name-Last: Hakvoort Author-WorkPlace-Name: Delft University of Technology Abstract: This paper presents an overview of the reasons why unregulated markets for the production of electricity cannot be expected to invest sufficiently in generation capacity on a continuous basis. Although it can be shown that periodic price spikes should provide generation companies with sufficient investment incentives in theory, there are a number of probable causes of market failure. A likely result is the development of investment cycles that may affect the adequacy of capacity. The experience in California shows the great social costs associated with an episode of scarce generation capacity. Another disadvantage is that generation companies can manipulate price spikes. This would result in large transfers of income from consumers to producers and reduce the operational reliability of electricity supply during these price spikes. We end this paper by outlining several methods that have been proposed to stabilise the market, which provide better incentives to generation companies and consumers alike. Keywords: Generation adequacy, Liberalised electricity market Classification-JEL: Q41, Q43 Creation-Date: 200409 Template-Type: ReDIF-Paper 1.0 Number: 2004.121 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-121.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.121 Title: Asset Accumulation, Fertility Choice and Nondegenerate Dynamics in a Small Open Economy Author-Name: Alberto Petrucci Author-X-Name-First: Alberto Author-X-Name-Last: Petrucci Author-WorkPlace-Name: Università del Molise and LUISS G. Carli Abstract: This paper shows that the assumption of elastic fertility choices represents an unconsidered way of introducing nondegenerate dynamics within an immortal small open economy, facing perfect capital mobility and no adjustment costs associated with capital accumulation, and having a fixed discount rate. The transient dynamics are obtained since fertility, which enters the Euler equation, renders the growth of the marginal utility of wealth strictly interconnected with wealth accumulation. The comparative dynamics are studied for two exogenous shocks: an increase in thrift, which changes fertility and capital formation permanently, and an increase in government spending, which alters fertility and capital stock temporarily. Keywords: Endogenous population, Capital accumulation, Current account, Transitional dynamics Classification-JEL: E21, E62, H22 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.122 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-122.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.122 Title: An Integrated Assessment Framework for Water Resources Management: A DSS Tool and a Pilot Study Application Author-Name: Anita Fassio Author-X-Name-First: Anita Author-X-Name-Last: Fassio Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Carlo Giupponi Author-X-Name-First: Carlo Author-X-Name-Last: Giupponi Author-WorkPlace-Name: Università di Milano and Fondazione Eni Enrico Mattei Author-Name: Jaroslaw Mysiak Author-X-Name-First: Jaroslaw Author-X-Name-Last: Mysiak Author-WorkPlace-Name: UFZ Centre for Environmental Research Abstract: Decision making for the management of water resources is a complex and difficult task. This is due to the complex socio-economic system that involves a large number of interest groups pursuing multiple and conflicting objectives, within an often intricate legislative framework. Several Decision Support Systems have been developed but very few have indeed proved to be effective and truly operational. MULINO (Multisectoral, Integrated and Operational Decision Support System for Sustainable Use of Water Resources at the Catchment Scale) is a project funded under the Fifth Framework Programme of the European Research and the key action line dedicated to operational management schemes and decision support system for sustainable use of water resources. The MULINO DSS (mDSS) integrates hydrological models with multi-criteria decision methods and adopts the DPSIR (Driving Force – Pressure – State – Impact – Response) framework developed by the European Environment Agency. The DPSIR was converted from a static reporting scheme into a dynamic framework for integrated assessment modelling (IAM) and multi-criteria evaluation procedures. This paper presents the methodological framework and the intermediate results of the mDSS tool through its application in a pilot study area located in the Watershed of the Lagoon of Venice. Keywords: Integrated water resources management, Spatial decision-making, Decision support system, Catchment, Environmental modelling Classification-JEL: C63, Q25 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.123 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-123.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.123 Title: Evaluation of Urban Improvement on the Islands of the Venice Lagoon: A Spatially-Distributed Hedonic-Hierarchical Approach Author-Name: Anita Fassio Author-X-Name-First: Anita Author-X-Name-Last: Fassio Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Margaretha Breil Author-X-Name-First: Margaretha Author-X-Name-Last: Breil Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Carlo Giupponi Author-X-Name-First: Carlo Author-X-Name-Last: Giupponi Author-WorkPlace-Name: Università di Milano and Fondazione Eni Enrico Mattei Author-Name: Paolo Rosato Author-X-Name-First: Paolo Author-X-Name-Last: Rosato Author-WorkPlace-Name: University of Trieste and Fondazione Eni Enrico Mattei Abstract: This paper presents a model for the evaluation of environmental and urban improvements on the islands of the Venetian lagoon. The model simulates the changes in residential real estate values using a value function integrated in a geographical database which provides spatial distributions of values changes. The fairly weak market signals, fragmented demand and strong externalities, and the scarcity of market data available do not permit the use of econometric models for value appraisal. Appropriate hedonic-hierarchical value functions are calibrated on the basis of a set of indicators of the characteristics of the buildings and the location. Some applications of the model are illustrated simulating two scenarios of future interventions which are actually being discussed or realised and involving the island of Murano, Burano and S. Erasmo in the Venice Lagoon. The interventions considered are: subway beyond the lagoon connecting Murano with Venice and the mainland, and the solution of “high water” problems on Murano, Burano and S. Erasmo. Keywords: Public work assessment, Property value, Hierarchical analysis Classification-JEL: R21, R31 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.124 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-124.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.124 Title: Instant Efficient Pollution Abatement under Non-Linear Taxation and Asymmetric Information: The Differential Tax Revisited Author-Name: Paul Mensink Author-X-Name-First: Paul Author-X-Name-Last: Mensink Author-WorkPlace-Name: Independent Abstract: This paper analyzes incentives for polluting firms to exchange abatement cost information under the non-linear pollution tax scheme (‘differential tax’) introduced by Kim and Chang [J. Regul. Econom. 5, 1993, 193-197]. It shows that polluting firms have - under mild conditions - an incentive to join a coalition whose members mutually truthfully exchange information as well as commit themselves with respect to their abatement decisions. As a result, the differential tax triggers instantly - i.e. no abatement adaptation is needed – efficient abatement levels without the regulator knowing marginal abatement costs. Consequently, this paper shows that differential taxation results in lower social costs than traditional non-linear taxation which triggers efficient emissions only after a period of non-efficient abatement. Keywords: Externalities, Pollution taxes, Coalition formation, Non-linear taxation, Asymmetric information, Co-operative game theory Classification-JEL: C71, D62, D82, Q20 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.125 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-125.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.125 Title: Integrated Environmental Study for Beach Management: A Methodological Approach Author-Name: Francesca Palmisani Author-X-Name-First: Francesca Author-X-Name-Last: Palmisani Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Mauro Fabiano Author-X-Name-First: Mauro Author-X-Name-Last: Fabiano Author-WorkPlace-Name: Genoa University Author-Name: Gabriella Camarsa Author-X-Name-First: Gabriella Author-X-Name-Last: Camarsa Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Rosanna Dursi Author-X-Name-First: Rosanna Author-X-Name-Last: Dursi Author-WorkPlace-Name: Author-Name: Fondazione Eni Enrico Mattei Author-Name: Roberta Ivaldi Author-X-Name-First: Roberta Author-X-Name-Last: Ivaldi Author-WorkPlace-Name: Genoa University Author-Name: Valentina Marin Author-X-Name-First: Valentina Author-X-Name-Last: Marin Author-WorkPlace-Name: Genoa University Abstract: This paper aims to present a project convened by the University of Genoa and Fondazione Eni Enrico Mattei (FEEM), in collaboration with Local Authorities, concerning the development of tools for beach management in the Riviera del Beigua (Liguria Region, Italy). The aim of the first step of the project is to assess the environmental state of resort beaches examining them interdisciplinary, through a data analysis based on a sound understanding of the components of the physical and the human system. The following step will be the treatment of the data, through the use of various instruments, which use a synthesis analysis, such as the traditional SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, and the use of a set of environmental and socio-economic indicators. Finally, our ultimate target is to propose guidelines, which will supply an instrument to back up policies concerning beach planning and management. Keywords: Costal management, Sustainable tourist, Integrated assessment, Indicators Classification-JEL: Q20, Q26 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.126 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-126.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.126 Title: The Emergence of Large Shareholders in Mass Privatized Firms: Evidence from Poland and the Czech Republic Author-Name: Irena Grosfeld Author-X-Name-First: Irena Author-X-Name-Last: Grosfeld Author-WorkPlace-Name: Delta-Fédération Jourdan, CNRS Author-Name: Iraj Hashi Author-X-Name-First: Iraj Author-X-Name-Last: Hashi Author-WorkPlace-Name: Staffordshire University Abstract: Mass privatization offers a particularly suitable framework to study the change in ownership concentration as the extent of change is unusual for a stable market economy. Focusing on two different mass privatization schemes in two transition economies, Poland and the Czech Republic, we find that despite important differences in the design of the two programmes and despite different quality of legal and regulatory framework, ownership structure in the two countries has rapidly evolved and the emerging ownership patterns are remarkably similar. This suggests that private benefits of control are large and the quality of investor protection regime is low in both countries. However, looking at the relationship between the change in ownership concentration and firm performance, we find an interesting difference between the two countries: in the Czech Republic the increase in ownership concentration seems to be less likely in poorly performing firms while in Poland the quality of past performance does not affect investors' willingness to increase their holdings. This effect may be interpreted in the light of the theory stressing the importance of the quality of investors' protection. It could be argued that if Czech investors are more risk averse and more concerned with diversification this is largely due to the weakness of the legal protection they face. Keywords: Ownership concentration, Mass privatisation, Corporate governance, Transition Classification-JEL: G3, L2, P3, P5 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.127 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-127.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.127 Title: A General Equilibrium Analysis of Climate Change Impacts on Tourism Author-Name: Andrea Bigano Author-X-Name-First: Andrea Author-X-Name-Last: Bigano Author-WorkPlace-Name: Abdus Salam International Centre for Theoretical Physics, Fondazione Eni Enrico Mattei and Centre for Economic Studies, Katholieke Universiteit Leuven Author-Name: Maria Berrittella Author-X-Name-First: Maria Author-X-Name-Last: Berrittella Author-WorkPlace-Name: Abdus Salam International Centre for Theoretical Physics, "La Sapienza" University and University of York Author-Name: Roberto Roson Author-X-Name-First: Roberto Author-X-Name-Last: Roson Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Università Ca’ Foscari di Venezia Author-Name: Richard S.J. Tol Author-X-Name-First: Richard S.J. Author-X-Name-Last: Tol Author-WorkPlace-Name: Centre for Marine and Climate Research, Hamburg University, Institute for Environmental Studies, Vrije Universiteit, and Center for Integrated Study of the Human Dimensions of Global Change, Carnegie Mellon University Abstract: This paper studies the economic implications of climate-change-induced variations in tourism demand, using a world CGE model. The model is first re-calibrated at some future years, obtaining hypothetical benchmark equilibria, which are subsequently perturbed by shocks, simulating the effects of climate change. We portray the impact of climate change on tourism by means of two sets of shocks, occurring simultaneously. The first shocks translate predicted variations in tourist flows into changes of consumption preferences for domestically produced goods. The second shocks reallocate income across world regions, simulating the effect of higher or lower tourists’ expenditure. Our analysis highlights that variations in tourist flows will affect regional economies in a way that is directly related to the sign and magnitude of flow variations. At a global scale, climate change will ultimately lead to a welfare loss, unevenly spread across regions. Keywords: Climate change, Computable general equilibrium models, Tourism Classification-JEL: D58, L83, Q51, Q54 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.128 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-128.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.128 Title: A Climate-Change Policy Induced Shift from Innovations in Energy Production to Energy Savings Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: IVM, Institute for Environmental Studies, Vrije Universiteit Abstract: We develop an endogenous growth model with capital, labor and energy as production factors and three productivity variables that measure accumulated innovations for energy production, energy savings, and neutral growth. All markets are complete and perfect, except for research, for which we assume that the marginal social value exceeds marginal costs by factor four. The model constants are calibrated so that the model reproduces the relevant trends over the 1970-2000 period. The model contains a simple climate module, and is used to assess the impact of Induced Technological Change (ITC) for a policy that aims at a maximum level of atmospheric CO2 concentration (450 ppmv). ITC is shown to reduce the required carbon tax by about a factor 2, and to reduce costs of such a policy by about factor 10. Numerical simulations show that knowledge accumulation shifts from energy production to energy saving technology. Keywords: Induced technological change, Environmental taxes, Partial equilibrium Classification-JEL: H23, O31, O41, Q42, Q43 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.129 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-129.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.129 Title: Natural Resources, Innovation, and Growth Author-Name: Elissaios Papyrakis Author-X-Name-First: Elissaios Author-X-Name-Last: Papyrakis Author-WorkPlace-Name: IVM/VU Institute for Environmental Studies, Vrije Universiteit Abstract: This paper investigates the connection between resource abundance and innovation, as a transmission mechanism that can elucidate part of the resource curse hypothesis; i.e. the observed negative impact of resource wealth on income growth. We develop a variation of the Ramsey-Cass-Koopmans model with endogenous growth to explain the phenomenon. In this model, consumers trade off leisure versus consumption, and firms trade off innovation efforts versus manufacturing. For this model, we show that an increase in resource income frustrates economic growth in two ways: directly by reducing work effort and indirectly by inducing a smaller proportion of the labor force to engage in innovation. Keywords: Natural resources, Growth, Innovation Classification-JEL: O13, O31, Q33 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.130 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-130.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.130 Title: Reluctant Privatization Author-Name: Bernardo Bortolotti Author-X-Name-First: Bernardo Author-X-Name-Last: Bortolotti Author-WorkPlace-Name: Università di Torino and Fondazione Eni Enrico Mattei Author-Name: Mara Faccio Author-X-Name-First: Mara Author-X-Name-Last: Faccio Author-WorkPlace-Name: Vanderbilt University, Owen Graduate School of Management Abstract: We study the evolution of the control structure of 141 privatized firms from OECD countries over the period from 1996 through 2000. We find that governments do not relinquish control after “privatization.” We show that the market-to-book ratios of privatized firms converge through time to those of a control sample. However, this convergence does not depend on whether governments relinquish their control rights. In fact, large government stakes have no negative effect on either adjusted market value or stock price performance. Keywords: Privatization, Corporate governance Classification-JEL: L33, D72, G15, H6, K22 Creation-Date: 200410 Template-Type: ReDIF-Paper 1.0 Number: 2004.131 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-131.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.131 Title: Destination Choice Models for Rock Climbing in the Northeast Alps: A Latent-Class Approach Based on Intensity of Participation Author-Name: Riccardo Scarpa Author-X-Name-First: Riccardo Author-X-Name-Last: Scarpa Author-WorkPlace-Name: University of York Author-Name: Mara Thiene Author-X-Name-First: Thiene Author-X-Name-Last: Mara Author-WorkPlace-Name: University of Padua Abstract: Practitioners of outdoor sports, such as rock-climbers, are likely to exhibit preference heterogeneity that depends on the ‘keenness’ with which such sports are practiced. Such an intuition is born out in at least one study using latent class discrete choice modelling (Provencher et al. 2002). Preference heterogeneity has a reflection on the population’s structure of recreational values assigned to rock-climbing destinations, to their attributes and ultimately to land management policies addressing such attributes. In this study such hypothesis is tested on a panel of destination choices by a sample of rock-climbers members of the Veneto Chapter of the Italian Alpine Club. Preliminary estimates of latent-class (finite-mixing) specifications provided evidence that intensity of participation explained heterogeneity in taste. This motivated our splitting of the sample in a ‘high’ and a ‘low’ intensity of participation sub-samples, each of which is in turn analysed for the presence of endogenous preference classes using latent-class random utility based approaches. We find evidence in support of the hypothesis that there are at least four statistically well-defined classes in each sub-sample, thereby revealing a considerable richness in the structure of preference, which would otherwise be unobservable in more conventional approaches. From the model estimates, we first focus on the derivation of posterior individual specific welfare measures for some key destination attributes, and then for a welfare neutral land management policy. One emerging feature is the strong evidence of multi-modal distribution of values, a feature that is more difficult to capture when preference heterogeneity is modelled by other means. The results also show how the proposed policy is progressive in terms of benefit distribution in the sample, and that the distribution of individual welfare changes shows markedly different patterns between high and low demand sub-samples. Keywords: Travel cost model, Preference heterogeneity, Non-market valuation, Random utility model, Latent class analysis, Rock-climbing, Destination choice modelling Classification-JEL: Q26, H41 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.132 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-132.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.132 Title: Comparing Individual-Specific Benefit Estimates for Public Goods: Finite Versus Continuous Mixing in Logit Models Author-Name: Riccardo Scarpa Author-X-Name-First: Riccardo Author-X-Name-Last: Scarpa Author-WorkPlace-Name: University of York Author-Name: Kenneth G. Willis Author-X-Name-First: Kenneth G. Author-X-Name-Last: Willis Author-WorkPlace-Name: School of Architecture Landscape and Planning, University of Newcastle Upon Tyne Author-Name: Melinda Acutt Author-X-Name-First: Melinda Author-X-Name-Last: Acutt Author-WorkPlace-Name: Yorkshire Water Abstract: Multi-attribute stated preference data, derived through choice experiments, is used to investigate the consequence of a finite number of preference groups in a sample of Yorkshire Water residential customers on the conditional distributions of willingness to pay in the sample. The research focuses on ‘public good’ values, and retrieves the implicit customer specific welfare measures conditional on a sequence of four observed choices. We assess and contrast the sample evidence for the presence of a finite number of 2, 3, 4 and 5 latent preference groups (classes), and contrast these with the presence of a continuous distribution of parameter estimates using mixed logit models. The main focus is the conditional valuations in the form of marginal values for the consequence of waste water handling and treatment, namely: river water quality, area flooding by sewage, presence of odour and flies, and other water related amenities. Keywords: Choice experiments, Mixed logit, Latent classes, Individual-specific estimates, Non-market valuation Classification-JEL: C25, C42, H41 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.133 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-133.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.133 Title: On Capturing Oil Rents with a National Excise Tax Revisited Author-Name: Santiago J. Rubio Author-X-Name-First: Santiago J. Author-X-Name-Last: Rubio Author-WorkPlace-Name: University of Valencia Abstract: In this paper the scope of Bergstrom’s (1982) results is studied. Moreover, his analysis is extended assuming that extraction cost is directly related to accumulated extractions. For the case of a competitive market it is found that the optimal policy is a constant tariff if extraction is costless. However, with depletion effects, the optimal tariff must ultimately be decreasing. For the case of a monopolistic market the results depend crucially on the kind of strategies the importing country governments can play and on whether the monopolist chooses the price or extraction rate. For a price-setting monopolist it is shown that the importing countries cannot use a tariff to capture monopoly rents if they are constrained to use open-loop strategies, even if the governments sign a tariff agreement. This result is drastically modified if the importing countries in the tariff agreement use Markov (feedback) strategies. For a quantity-setting monopolist the nature of the game changes and the importing country governments find it advantageous to set a tariff on resource importations. Moreover, in this case the importing countries in a tariff agreement enjoy a strategic advantage which allows them to behave as a leader. Keywords: Tariffs, Tariff agreements, Non renewable resources, Depletion effects, Price-setting monopolist, Quantity-setting monopolist, Differential games, Open-loop strategies, Linear strategies, Markov-perfect Nash equilibrium, Markov-perfect Stackelberg equilibrium Classification-JEL: C73, D41, D42, F02, H20, Q38 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.134 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-134.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.134 Title: Political Competition when Media Create Candidates’ Charisma Author-Name: Ascensión Andina Díaz Author-X-Name-First: Ascensión Author-X-Name-Last: Andina Díaz Author-WorkPlace-Name: Universidad de Alicante Abstract: This paper studies the location decisions of political parties. We propose a game where agents vote according to ideology and valence, and media create candidates’ charisma. The results we obtain show that candidates realize the power of media and therefore locate themselves at some point between the position and the mediam voter and that of the media. However, and more importantly, we further obtain that depending on the media outlets the voters choose to attend, the equilibrium location of candidates may differ. Thus, when voters choose among the outlets, candidates may differentiate their platforms. On the other hand, when voters are exposed to all the outlets in the economy, candidates tend more to moderate their ideology, in an attempt to get the favor of all the media. This result suggests that political competition may end in differentiation if voters only attend to the media that are ideologically close to their convictions. In contrast, political moderation is more easily reached if voters get information from various sources and therefore make more balanced judgements. Keywords: Charisma, Exposure to media, Political competition Classification-JEL: D72 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.135 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-135.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.135 Title: Robustness of VSL Values from Contingent Valuation Surveys Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland Abstract: This paper examines factors that may influence the estimates of the Value of a Statistical Life obtained from contingent valuation surveys that elicit the willingness to pay (WTP) for mortality risk reductions. We examine the importance of distributional assumptions, the choice of the welfare statistics of interest, the procedure for computing them, outliers, undesirable response effects, and internal validity of the WTP responses. We illustrate the importance of these factors using dichotomous-choice and open-ended WTP data from four recent contingent valuation surveys. Keywords: Contingent valuation, VSL, WTP, Risk reductions, Robustness, Outliers, Endogeneity Classification-JEL: H41, H51, I18, I31, J17 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.136 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-136.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.136 Title: Marginal Abatement Cost Curves in General Equilibrium: The Influence of World Energy Prices Author-Name: Gernot Klepper Author-X-Name-First: Gernot Author-X-Name-Last: Klepper Author-WorkPlace-Name: Kiel Institute for World Economics Author-Name: Sonja Peterson Author-X-Name-First: Sonja Author-X-Name-Last: Peterson Author-WorkPlace-Name: Kiel Institute for World Economics Abstract: Marginal abatement cost curves (MACCs) are one of the favorite instruments to analyze the impacts of the implementation of the Kyoto Protocol and emissions trading. As shown in this paper one important factor that influences MACCs are energy prices. This leads to the question of how to define MACCs in a general equilibrium context where the overall abatement level world wide influences energy prices and thus national MACCs. We first discuss the mechanisms theoretically and then use the CGE model DART to quantify the effects. The result is, that changes in energy prices resulting from different world wide abatement levels do indeed affect the national MACCs. Also, we compare different possibilities of defining MACCs - of which some turn out to be robust against changes in energy prices while others vary considerably. Keywords: Climate change, Marginal abatement cost, Energy price, Computable general equilibrium model Classification-JEL: C68, D58, F18, Q41 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.137 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-137.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.137 Title: Cheap Talk, Gullibility, and Welfare in an Environmental Taxation Game Author-Name: Christophe Deissenberg Author-X-Name-First: Christophe Author-X-Name-Last: Deissenberg Author-WorkPlace-Name: University of Aix-Marseille II Author-Name: Herbert Dawid Author-X-Name-First: Herbert Author-X-Name-Last: Dawid Author-WorkPlace-Name: University of Bielefeld Author-Name: Pavel Sevcik Author-X-Name-First: Pavel Author-X-Name-Last: Sevcik Author-WorkPlace-Name: GREQAM and University of Aix-Marseille II Abstract: We consider a simple dynamic model of environmental taxation that exhibits time inconsistency. There are two categories of firms, Believers, who take the tax announcements made by the Regulator to face value, and Non-Believers, who perfectly anticipate the Regulator's decisions, albeit at a cost. The proportion of Believers and Non- Believers changes over time depending on the relative profits of both groups. We show that the Regulator can use misleading tax announcements to steer the economy to an equilibrium that is Pareto superior to the solutions usually suggested in the literature. Depending upon the initial proportion of Believers, the Regulator may prefer a fast or a low speed of reaction of the firms to differences in Believers/Non-Believers profits. Keywords: Environmental policy, Emissions taxes, Time inconsistency, Heterogeneous agents, Bounded rationality, Learning, Multiple equilibria, Stackelberg games Classification-JEL: H23, H3, Q5, C69, C79, D62 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.138 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-138.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.138 Title: The World Bank’s Prototype Carbon Fund and China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Research Program, East-West Center Abstract: As the first global carbon fund, the World Bank’s Prototype Carbon Fund (PCF) aims to catalyze the market for project-based greenhouse gas emission reductions while promoting sustainable development and offering a learning-by-doing opportunity to its stakeholders. Since the inception in 2000, the PCF has engaged in a dialogue with China to get it to sign up as a host country, because the World Bank and other international and bilateral donors expect great potential of the clean development mechanism (CDM) in China and feel the significant need for building CDM capacity in China to enable it to gain more insight into the CDM and increase its capacity to initiate and undertake CDM projects. This paper first discusses why China had hesitated to sign up as a host country of PCF projects until September 2003. Then the paper explains what has led China to endorse the PCF projects. The paper ends with discussions on the implications of the PCF’s offering prices for the emerging global carbon market. Keywords: Carbon prices, Carbon market, China, Prototype Carbon Fund, The World Bank Classification-JEL: Q54, Q58, Q52, Q48 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.139 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-139.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.139 Title: Time Profile of Climate Change Stabilization Policy Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: Institute for Environmental Studies, Faculty of Earth and Life Sciences, Vrije Universiteit Author-Name: Marjan W. Hofkes Author-X-Name-First: Marjan W. Author-X-Name-Last: Hofkes Author-WorkPlace-Name: Institute for Environmental Studies, Faculty of Earth and Life Sciences, Vrije Universiteit Abstract: We develop an economic model for fossil-fuel and carbon-free energy supply and demand with capital and labor as production factors, and endogenous technological change through learning by research and learning by doing. We use the model to study inter-temporally efficient carbon taxes for climate stabilization targets. Calculations show an inverted U-curve with an initial rise of carbon-taxes that sets in motion the transition from fossil-fuels to carbon-free energy sources, followed by a drop in carbon taxes when the carbon-free energy sources have grown mature. Keywords: Induced technological change, Environmental taxes, Partial equilibrium, Learning by doing Classification-JEL: H23, O31, O41, Q42, Q43 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.140 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-140.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.140 Title: The Value of Flexibility in the Italian Water Service Sector: A Real Option Analysis Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: University of Brescia Author-Name: Chiara D’Alpaos Author-X-Name-First: Chiara Author-X-Name-Last: D’Alpaos Author-WorkPlace-Name: University of Brescia Abstract: We analyze the optimal investment strategy of a monopolist which has subscribed a concession contract to provide a public utility, i.e. water service. We present a strategic model in which a monopolist chooses both the timing of the investment and the capacity. We focus not only on the value of the immediate investment, but rather on the value of the investment opportunity. We then extend the model to two interdependent projects, where investing in the first project provides the opportunity to acquire the benefits of the new investment by making a new outlay. We show that flexibility to defer an investment may generate, ceteris paribus, additional profits which may induce positive effects in terms of policy and consumers surplus. Keywords: Irreversible investment, Flexibility to defer, Capacity expansion choice Classification-JEL: D81, G31, L95 Creation-Date: 200411 Template-Type: ReDIF-Paper 1.0 Number: 2004.141 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-141.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.141 Title: Bidding for Incompete Contracts Author-Name: Patrick Bajari Author-X-Name-First: Patrick Author-X-Name-Last: Bajari Author-WorkPlace-Name: Duke University and NBER Author-Name: Stephanie Houghton Author-X-Name-First: Stephanie Author-X-Name-Last: Houghton Author-WorkPlace-Name: Duke University Author-Name: Steven Tadelis Author-X-Name-First: Steven Author-X-Name-Last: Tadelis Author-WorkPlace-Name: Stanford University Abstract: When procurement contracts are incomplete, they are frequently changed after the contract is awarded to the lowest bidder. This results in a final cost that differs from the initial price, and may involve significant transaction costs due to renegotiation. We propose a stylized model of bidding for incomplete contracts and apply it to data from highway repair contracts. We estimate the magnitude of transaction costs and their impact using both reduced form and fully structural models. Our results suggest that transactions costs are a significant and important determinant of observed bids, and that bidders strategically respond to contractual incompleteness. Our findings point at disadvantages of the traditional bidding process that are a consequence of transaction costs from contract adaptations. Keywords: Procurement, Construction Classification-JEL: D23, D82, H57, L14, L22, L74 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.142 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-142.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.142 Title: Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions Author-Name: Jonathan Levin Author-X-Name-First: Jonathan Author-X-Name-Last: Levin Author-WorkPlace-Name: Stanford University Author-Name: Susan Athey Author-X-Name-First: Susan Author-X-Name-Last: Athey Author-WorkPlace-Name: Stanford University and NBER Author-Name: Enrique Seira Author-X-Name-First: Enrique Author-X-Name-Last: Seira Author-WorkPlace-Name: Stanford University Abstract: We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic effects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We propose a model, which extends the theory of private value auctions with heterogeneous bidders to capture participation decisions, that can account for these qualitative effects of auction format. We then calibrate the model using parameters estimated from the data and show that the model can explain the quantitative effects as well. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice. Keywords: Auctions, Timber Classification-JEL: Q23, D44 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.143 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-143.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.143 Title: Behavioral Biases of Dealers in U.S. Treasury Auctions Author-Name: David Goldreich Author-X-Name-First: David Author-X-Name-Last: Goldreich Author-WorkPlace-Name: London Business School and CEPR Abstract: This paper provides evidence of bounded rationality by large dealers in U.S. Treasury auctions. I argue that these dealers use a heuristic of yield-space bidding which leads to biases manifested in three ways: they submit dominated bids, i.e., those that could be improved without raising the bidding price; they bid in a manner that disregards the unevenly spaced price grid; and they round bids in yield space. Consistent with bounded rationality, I show that bidders are less susceptible to bias when the cost of suboptimal bidding is high. While the literature provides substantial evidence of behavioral biases among individual investors, they are less well documented for large sophisticated institutions that are likely to be important for setting asset prices. These primary bond dealers who regularly bid for billions of dollars in Treasury bill auctions are precisely such economic agents. Keywords: Treasury auctions, Behavioral finance Classification-JEL: H63, H74, D44 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.144 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-144.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.144 Title: Optimal Procurement Auction for a Buyer with Downward Sloping Demand: More Simple Economics Author-Name: Roberto Burguet Author-X-Name-First: Roberto Author-X-Name-Last: Burguet Author-WorkPlace-Name: Institut d’Anàlisi Econòmica, CSIC Abstract: A buyer with downward slopping demand faces a number of unit supply sellers. The paper characterizes optimal auctions in this setting. For the symmetric case, a uniform auction (with price equal to lowest rejected offer) is optimal when complemented with reserve prices for different quantities acquired. For asymmetric sellers, the optimal distortions are familiar. The problem is similar to the third degree discriminating monopsonist problem, just as in the unit (flat) demand case (Bulow-Roberts, 1989), and when the number of sellers (and the demand) grows their outcomes approach at the speed of the law of large numbers. Keywords: Auctions, Monopsony Classification-JEL: D44, D42 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.145 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-145.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.145 Title: Order Flow and the Formation of Dealer Bids: An Analysis of Information and Strategic Behavior in the Government of Canada Securities Auctions Author-Name: Samita Sareen Author-X-Name-First: Samita Author-X-Name-Last: Sareen Author-WorkPlace-Name: Duke University Author-Name: Ali Hortacsu Author-X-Name-First: Ali Author-X-Name-Last: Hortacsu Author-WorkPlace-Name: University of Chicago Abstract: Using data on Government of Canada securities auctions, this paper shows that in countries where direct access to primary issuance is restricted to government securities dealers, Order-flow" information is a key source of private information for these security dealers. Order-flow information is revealed to a security dealer through his interactions with customers, who can place bids in the auctions only through the security dealer. Since each dealer interacts with a different set of customers, they, in effect, see different portions of the market demand and supply curves, leading to differing private inferences of where the equilibrium price might. Keywords: Treasury auctions, Behavioural finance Classification-JEL: D82, G14, L88 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.146 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-146.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.146 Title: How to Win Twice at an Auction. On the Incidence of Commissions in Auction Markets Author-Name: Victor Ginsburgh Author-X-Name-First: Victor Author-X-Name-Last: Ginsburgh Author-WorkPlace-Name: How to Win Twice at an Auction. On the Incidence of Commissions in Auction Markets Author-Name: Patrick Legros Author-X-Name-First: Patrick Author-X-Name-Last: Legros Author-WorkPlace-Name: ECARES, Université Libre de Bruxelles and CEPR Author-Name: Nicolas Sahuguet Author-X-Name-First: Nicolas Author-X-Name-Last: Sahuguet Author-WorkPlace-Name: ECARES, Université Libre de Bruxelles Abstract: We analyze the welfare consequences of an increase in the commissions charged by the organizer of an auction. Commissions are similar to taxes imposed on buyers and sellers and the economic problem that results looks similar to the question of tax incidence in consumer economics. We argue, however, that auction markets deserve a separate treatment. Indeed we show that an increase in commissions makes sellers worse off, but some (or all) buyers may gain. The results are therefore strikingly different from the standard result that all consumers lose after a tax or a commission increase. We apply our results to comment on the class action against Christie’s and Sotheby’s and argue that the method used to distribute compensations was misguided. Keywords: Auction, Intermediation, Commissions, Welfare Classification-JEL: D44, D80 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.147 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-147.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.147 Title: Sequential vs. Single-Round Uniform-Price Auctions Author-Name: Claudio Mezzetti Author-X-Name-First: Claudio Author-X-Name-Last: Mezzetti Author-WorkPlace-Name: University of North Carolina Author-Name: Aleksandar Pekec Author-X-Name-First: Aleksandar Author-X-Name-Last: Pekec Author-WorkPlace-Name: The Fuqua School of Business, Duke University Author-Name: Ilia Tsetlin Author-X-Name-First: Ilia Author-X-Name-Last: Tsetlin Author-WorkPlace-Name: INSEAD Abstract: We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 in the second round, with and without revelation of the first-round winning bids. We demonstrate that auctioning objects in sequence generates a lowballing effect that reduces first-round revenue. Thus, revenue is greater in a single-round, uniform auction for k = k1 + k2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, we also identify two informational effects: a positive effect on second-round price and an ambiguous effect on first-round price. The expected first-round price can be greater or smaller than with no bid announcement, and greater or smaller than the expected price in a single-round uniform auction. As a result, total expected revenue in a sequential uniform auction with winning-bids announcement can be greater or smaller than in a single-round uniform auction. Keywords: Multi-unit auctions, Sequential auctions, Uniform-price auction, Affiliated values, Information revelation Classification-JEL: D44, D42 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.148 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-148.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.148 Title: Equilibrium in Scoring Auctions Author-Name: John Asker Author-X-Name-First: John Author-X-Name-Last: Asker Author-WorkPlace-Name: Harvard University Author-Name: Estelle Cantillon Author-X-Name-First: Estelle Author-X-Name-Last: Cantillon Author-WorkPlace-Name: Harvard Business School Abstract: This paper studies multi-attribute auctions in which a buyer seeks to procure a complex good and evaluate offers using a quasi-linear scoring rule. Suppliers have private information about their costs, which is summarized by a multi-dimensional type. The scoring rule reduces the multidimensional bids submitted by each supplier to a single dimension, the score, which is used for deciding on the allocation and the resulting contractual obligation. We exploit this idea and obtain two kinds of results. First, we characterize the set of equilibria in quasi-linear scoring auctions with multi-dimensional types. In particular, we show that there exists a mapping between the class of equilibria in these scoring auctions and those in standard single object IPV auctions. Second, we prove a new expected utility equivalence theorem for quasi-linear scoring auctions. Keywords: Auctions, Procurement Classification-JEL: H57, D44 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.149 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-149.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.149 Title: Nonparametric Tests for Common Values in First-Price Sealed-Bid Auctions Author-Name: Philip A. Haile Author-X-Name-First: Philip A. Author-X-Name-Last: Haile Author-WorkPlace-Name: Yale University Author-Name: Han Hong Author-X-Name-First: Han Author-X-Name-Last: Hong Author-WorkPlace-Name: Duke University Author-Name: Matthew Shum Author-X-Name-First: Matthew Author-X-Name-Last: Shum Author-WorkPlace-Name: Johns Hopkins University Abstract: We develop tests for common values at first-price sealed-bid auctions. Our tests are nonparametric, require observation only of the bids submitted at each auction, and are based on the fact that the “winner’s curse” arises only in common values auctions. The tests build on recently developed methods for using observed bids to estimate each bidder’s conditional expectation of the value of winning the auction. Equilibrium behavior implies that in a private values auction these expectations are invariant to the number of opponents each bidder faces, while with common values they are decreasing in the number of opponents. This distinction forms the basis of our tests. We consider both exogenous and endogenous variation in the number of bidders. Monte Carlo experiments show that our tests can perform well in samples of moderate sizes. We apply our tests to two different types of U.S. Forest Service timber auctions. For unit-price (“scaled”) sales often argued to fit a private values model, our tests consistently fail to find evidence of common values. For “lumpsum” sales, where a priori arguments for common values appear stronger, our tests yield mixed evidence against the private values hypothesis. Keywords: First-price auctions, Common values, Private values, Nonparametric testing, Winner’s curse, Stochastic dominance, Endogenous participation, Timber auctions Classification-JEL: C14, D44 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.150 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-150.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.150 Title: Quid Pro Quo in IPOs: Why Book-building is Dominating Auctions Author-Name: François Degeorge Author-X-Name-First: François Author-X-Name-Last: Degeorge Author-WorkPlace-Name: University of Lugano Author-Name: François Derrien Author-X-Name-First: François Author-X-Name-Last: Derrien Author-WorkPlace-Name: Rotman School of Management, University of Toronto Author-Name: Kent L. Womack Author-X-Name-First: Kent L. Author-X-Name-Last: Womack Author-WorkPlace-Name: Tuck School of Business, Dartmouth College Abstract: The book-building procedure for selling initial public offerings to investors has captured significant market share from auction alternatives in recent years, despite significantly lower costs in both direct fees and initial underpricing when using the auction mechanism. This paper shows that in the French market, where the frequency of book-building and auctions was about equal in the 1990s, the ostensible advantages to the issuer using book-building were advertising-related quid pro quo benefits. Specifically, we find that book-built issues were more likely to be followed and positively recommended by the lead underwriters and were also more likely to receive “booster shots” post issuance if the shares had fallen. Even non-underwriters’ analysts appear to promote book-built issues more, but only when their underwriters stood to gain from acquiring shares in future issues from the recommended firm’s lead underwriter. Bookbuilt issues also appeared to garner more press in general (but only after they had chosen book-building, not before). Yet, we do not observe valuation or return differentials to suggest that these types of promotion have any value to the issuing firm. We conclude that underwriters using the book-building procedure have convinced issuers of the questionable value of advertising and promotion of their shares. Keywords: Auction, IPOs Classification-JEL: D44, D42 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.151 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-151.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.151 Title: Russia: The Long Road to Ratification. Internal Institution and Pressure Groups in the Kyoto Protocol’s Adoption Process Author-Name: Barbara Buchner Author-X-Name-First: Barbara Author-X-Name-Last: Buchner Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Silvia Dall’Olio Author-X-Name-First: Silvia Author-X-Name-Last: Dall’Olio Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The Russian Federation played a crucial role in the ratification of the Kyoto Protocol. Indeed, after the US decision not to comply with the treaty, its ratification turned out to be indispensable for the Protocol to become legally binding. In early 2002, the Russian government decided to initiate the ratification process. However, notwithstanding this initial commitment, the country long hesitated to fulfil its promises, and for the last two years it sent numerous contradictory signals with respect to its position on climate policy. As a consequence, the factors that shape Russia’s behaviour in the context of climate negotiations received increasing attention. The main focus has been on the economic and international aspects motivating the Russian strategy. This paper attempts to complete this analysis by concentrating on a further feature that significantly contributed to Russia’s final decision, namely domestic forces. These factors have often been overlooked in the discussion of the Russian strategy. In order to fill this gap, this paper reconstructs the Russian ratification process, trying to identify the main domestic players and their role. Our findings provide various indications on the reasons of the recent developments in Russia, confirming the key role of the Russian President. Keywords: Agreements, Climate, Incentives, Negotiations, Policy Classification-JEL: H11, P27, P28, Q28, Q58 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.152 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-152.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.152 Title: Does Endogenous Technical Change Make a Difference in Climate Policy Analysis? A Robustness Exercise with the FEEM-RICE Model Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: Università di Milano and Fondazione Eni Enrico Mattei Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: Università di Venezia and Fondazione Eni Enrico Mattei Abstract: Technical change is generally considered the key to the solution of environmental problems, in particular global phenomena like climate change. Scientists differ in their views on the thaumaturgic virtues of technical change. There are those who are confident that pollution-free technologies will materialize at some time in the future and will prevent humans from suffering the catastrophic consequences of climate change. Others believe that there are inexpensive technologies already available and argue the case for no-regret adoption policies (e.g. subsidies). Others again believe that the process of technological change responds to economic stimuli. These economic incentives to technological innovation are provided not only by forces that are endogenous to the economic system, but also by suitably designed environmental and innovation policies. In this paper, we consider and translate into analytical counterparts these different views of technical change. We then study alternative formulations of technical change and, with the help of a computerized climate-economy model, carry out a number of optimization runs in order to assess what type of technical change plays a role (assuming it does) in the evaluation of the impact of climate change and of the policies designed to cope with it. Keywords: Climate policy, Environmental modeling, Integrated assessment, Technical change Classification-JEL: H0, H2, H3 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.153 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-153.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.153 Title: Multidimensional Mechanism Design: Revenue Maximization and the Multiple-Good Monopoly Author-Name: Alejandro M. Manelli Author-X-Name-First: Alejandro M. Author-X-Name-Last: Manelli Author-WorkPlace-Name: W.P. Carey School of Business, Arizona State University Author-Name: Daniel R. Vincent Author-X-Name-First: Daniel R. Author-X-Name-Last: Vincent Author-WorkPlace-Name: University of Maryland Abstract: The seller of N distinct objects is uncertain about the buyer’s valuation for those objects. The seller’s problem, to maximize expected revenue, consists of maximizing a linear functional over a convex set of mechanisms. A solution to the seller’s problem can always be found in an extreme point of the feasible set. We identify the relevant extreme points and faces of the feasible set. With N = 1, the extreme points are easily described providing simple proofs of well-known results. The revenue-maximizing mechanism assigns the object with probability one or zero depending on the buyer’s report. With N > 1, extreme points often involve randomization in the assignment of goods. Virtually any extreme point of the feasible set maximizes revenue for a well-behaved distribution of buyer’s valuations. We provide a simple algebraic procedure to determine whether a mechanism is an extreme point. Keywords: Extreme point, Exposed point, Faces, Non-linear pricing, Monopoly pricing, Multidimensional, Screening, Incentive compatibility, Adverse selection, Mechanism design Classification-JEL: D44 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2009.154 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-154.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2009.154 Title: Is There any Scope for Corporatism in Stabilization Policies? Author-Name: Giovanni Di Bartolomeo Author-X-Name-First: Giovanni Author-X-Name-Last: DI Bartolomeo Author-WorkPlace-Name: University of Rome La Sapienza Author-Name: Nicola Acocella Author-X-Name-First: Nicola Author-X-Name-Last: Acocella Author-WorkPlace-Name: University of Rome La Sapienza Author-Name: Wilfried Pauwels Author-X-Name-First: Wilfried Author-X-Name-Last: Pauwels Author-WorkPlace-Name: University of Antwerp Abstract: This paper studies corporatism as the outcome of bargaining between the government and a representative labor union. When negotiations between these two parties only relate to macroeconomic stabilization, we show that corporatism can never be beneficial to both parties. As corporatist policies are nevertheless commonly observed in this context, we also discuss in an informal way possible explanations that reconcile the theory with actual observations. The policy implications of these explanations are also discussed. Keywords: Social pacts, Axiomatic bargaining, Unions, Issue linkage Classification-JEL: E00, E58, E61, J50 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.155 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-155.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.155 Title: An Almost Ideal Sharing Scheme for Coalition Games with Externalities Author-Name: Johan Eyckmans Author-X-Name-First: Johan Author-X-Name-Last: Eyckmans Author-WorkPlace-Name: Europese Hogeschool Brussel EHSAL and Katholieke Universiteit Leuven, Centrum voor Economische Studiën Author-Name: Michael Finus Author-X-Name-First: Michael Author-X-Name-Last: Finus Author-WorkPlace-Name: Institute of Economic Theory, Department of Economics, University of Hagen Abstract: We propose a class of sharing schemes for the distribution of the gains from cooperation for coalition games with externalities. In the context of the partition function, it is shown that any member of this class of sharing schemes leads to the same set of stable coalitions in the sense of d’Aspremont et al. (1983). These schemes are “almost ideal” in that they stabilize these coalitions which generate the highest global welfare among the set of “potentially stable coalitions”. Our sharing scheme is particularly powerful for economic problems that are characterized by positive externalities from coalition formation and which therefore are likely to suffer from severe free-riding. Keywords: Coalition games, Partition function, Externalities, Sharing schemes Classification-JEL: C70, C71 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.156 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-156.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.156 Title: Environmental Innovation, War of Attrition and Investment Grants Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: University of Brescia Author-Name: Cesare Dosi Author-X-Name-First: Cesare Author-X-Name-Last: Dosi Author-WorkPlace-Name: University of Padova Abstract: The paper analyses the timing of spontaneous environmental innovation when second-mover advantages, arising from the expectation of declining investment costs, increase the option value of waiting created by investment irreversibility and uncertainty about private payoffs. We then focus on the design of public subsidies aimed at bridging the gap between the spontaneous time of technological change and the socially desirable one. Under network externalities and incomplete information about firms’ switching costs, auctioning investment grants appears to be a cost-effective way of accelerating pollution abatement, in that it allows targeting grants instead of subsidizing the entire industry indiscriminately. Keywords: Environmental innovation, Investment irreversibility, Network externalities, Investment grants, Second-price auction Classification-JEL: Q28, O38 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.157 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-157.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.157 Title: How Consistent are Alternative Short-Term Climate Policies with Long-Term Goals? Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: Università di Milano and Fondazione Eni Enrico Mattei Author-Name: Alessandro Lanza Author-X-Name-First: Alessandro Author-X-Name-Last: Lanza Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Eni S.p.A., and CreNos Abstract: Choosing long-term goals is a key issue in the climate policy agenda. Targets should be easily measurable and feasible, but also effective in damage control. Once goals are set globally, given the uncertainty affecting long-term strategies and region-specific preferences for different policy instruments, policies will be better represented by a diversified portfolio to be revised over time, rather than “once and forever” decisions. It therefore becomes crucial to understand to what extent different strategies (or policy portfolios) are consistent with long-term targets, that is, when they imply emission paths which do not irreversibly diverge from globally set goals. The present paper aims to investigate emission paths implied by plausible policy scenarios against those derived by imposing alternative long-term targets, comparing, for example, differences in peak periods. Plausible policy scenarios are for instance Kyoto-type targets with or without participation by the U.S. and/or by developing countries. Different long-term targets considered focus on stabilisation of CO2 concentrations, radiative forcing and the increase in atmospheric temperature relative to pre-industrial levels. In order to account for the uncertainty surrounding the climate cycle, for each long-term goal multiple paths of emission - the most probable, the optimistic and the pessimistic ones - are considered in the comparison exercise. Comparative analysis is performed using a newly developed version of the FEEM-RICE model, a regional economy-climate model of optimal economic growth which is based on Nordhaus and Boyer’s RICE model crucially extended in order to account for induced technical change. In particular, both carbon and energy intensity are affected by a new endogenous variable – Technical Progress – which captures both the role of Learning by Researching and of Learning by Doing. These are in turn determined by the optimal levels of Research and Development and of Emission Abatement. Keywords: Climate policy, Long-term climate targets, Climate sensitivity uncertainty, Capping radiative forcing Classification-JEL: H0, H2, H3 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.158 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-158.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.158 Title: Non-pecuniary Value of Employment and Individual Labor Supply Author-Name: Y. Hossein Farzin Author-X-Name-First: Y. Hossein Author-X-Name-Last: Farzin Author-WorkPlace-Name: University of California Author-Name: Ken-Ichi Akao Author-X-Name-First: Ken-Ichi Author-X-Name-Last: Akao Author-WorkPlace-Name: School of Social Sciences, Waseda University Abstract: Recognizing that people value employment not only to earn income to satisfy their consumption needs but also as a means of community involvement that provides socio-psychological (non-pecuniary) benefits, we show that once the non-pecuniary benefits of employment are incorporated in the standard individual’s utility function, then at very low income levels employment can be a source of utility, inducing individuals to supply labor to the extent possible. We also show the conditions under which a greater non-pecuniary effect of employment generates a larger individual labor supply. Keywords: Non-pecuniary effects, Employment value, Labor supply Classification-JEL: D62, J22, I31 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.159 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-159.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.159 Title: Spatial Analysis: Development of Descriptive and Normative Methods with Applications to Economic-Ecological Modelling Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: University of Crete Author-Name: William Brock Author-X-Name-First: William Author-X-Name-Last: Brock Author-WorkPlace-Name: University of Wisconsin Abstract: This paper adapts Turing analysis and applies it to dynamic bioeconomic problems where the interaction of coupled economic and ecological dynamics over space endogenously creates (or destroys) spatial heterogeneity. It also extends Turing analysis to standard recursive optimal control frameworks in economic analysis and applies it to dynamic bioeconomic problems where the interaction of coupled economic and ecological dynamics under optimal control over space creates a challenge to analytical tractability. We show how an appropriate formulation of the problem reduces analysis to a tractable extension of linearization methods applied to the spatial analog of the well known costate/state dynamics. We illustrate the usefulness of our methods on bioeconomic applications, but the methods have more general economic applications where spatial considerations are important. We believe that the extension of Turing analysis and the theory associated with dispersion relationship to recursive infinite horizon optimal control settings is new. Keywords: Spatial analysis, Economic-ecological modelling Classification-JEL: Q2, C6 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.160 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-160.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.160 Title: On the Incidence of a Tax on Pure Rent with Infinite Horizons Author-Name: Alberto Petrucci Author-X-Name-First: Alberto Author-X-Name-Last: Petrucci Author-WorkPlace-Name: LUISS G. Carli Abstract: This paper studies the incidence of a tax on pure rent within an intertemporal optimizing model of capital accumulation and endogenous labor with infinite-lived agents. Two cases are considered for the labor market: the neoclassical theory, characterized by perfectly competitive wages and no unemployment, and the incentive-wage theory of the labor-turnover type, characterized by real wage rigidity and structural unemployment. In the neoclassical equilibrium, the land rent tax is unshifted when consumers are lump-sum compensated for the tax. If tax revenues are used to finance government spending, pure rent taxation increases employment, boosts capital accumulation and reduces real wage as well as land yield. In the incentive-wage economy, the land rent tax, regardless of the way in which tax proceeds are employed, always increases employment, capital stock, and land reward, but exerts an ambiguous effect on the wage rate. Keywords: Pure rent taxation, Capital formation, Land, Structural unemployment Classification-JEL: E21, E62, H22 Creation-Date: 200412 Template-Type: ReDIF-Paper 1.0 Number: 2004.161 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2004-161.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2004.161 Title: Microsimulating the Effects of Household Energy Price Changes in Spain Author-Name: Miguel Rodríguez Author-X-Name-First: Miguel Author-X-Name-Last: Rodríguez Author-WorkPlace-Name: Universidade de Vigo Author-Name: José M. Labeaga Author-X-Name-First: José M. Author-X-Name-Last: Labeaga Author-WorkPlace-Name: Analysis II, UNED Abstract: In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in depth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of such price changes, their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change, we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households, sizeable emission reductions, tax revenues, welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains. Keywords: In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in depth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of such price changes, their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change, we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households, sizeable emission reductions, tax revenues, welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains. Classification-JEL: C33,H23,H31 Creation-Date: 200412