Template-Type: ReDIF-Paper 1.0 Number: 2010.1 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-001.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.1 Title: Migrants’ International Transfers and Educational Expenditure: Empirical Evidence from Albania Author-Name: Cristina Cattaneo Author-X-Name-First: Cristina Author-X-Name-Last: Cattaneo Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of Sussex Abstract: The present paper analyses the expenditure behavior of Albanian families. The objective is to cast some light upon the relationship between education expenditure and the volume of remittances, sent from abroad by household members. To assess the existence of an education enhancing effect of remittances, an Engel curve framework is employed, where heterogeneity in interests or in bargaining power among the members within the households is assumed. The empirical estimation accounts for the censored nature of the education expenditure through using Heckman two-step as well as a semiparametric model for sample selection. Finally, quintile regression analysis is employed to investigate whether migrants’ remittances have a differentiated effect on various quantiles of the conditional distribution of the education consumption. Keywords: Migrant Remittances, Engel Curves, Education expenditure Classification-JEL: R, J Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.2 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-002.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.2 Title: Tradable Permits vs Ecological Dumping Author-Name: Panos Hatzipanayotou Author-X-Name-First: Panos Author-X-Name-Last: Hatzipanayotou Author-WorkPlace-Name: Athens University of Economics and Business and CES-ifo Author-Name: Fabio Antoniou Author-X-Name-First: Fabio Author-X-Name-Last: Antoniou Author-WorkPlace-Name: Athens University of Economics and Business Author-Name: Phoebe Koundouri Author-X-Name-First: Phoebe Author-X-Name-Last: Koundouri Author-WorkPlace-Name: Athens University of Economics and Busines Abstract: In this paper we examine an alternative policy scenario, where governments allow polluting firms to trade permits in a strategic environmental policy model. We demonstrate, among other things, that with no market power in the permits market, governments of the exporting firms do not have an incentive to under-regulate pollution in order to become more competitive. This strategic effect is reversed and leads to a welfare level closer to the cooperative one and strictly higher to that when permits are non-tradable. Allowing for market power in the permits market, the incentive to under-regulate pollution re-appears regardless of whether permits are tradable or not. With tradable permits, however, the incentive to under-regulate pollution is comparatively weaker relative to the case of non-tradable permits. This entails potential benefits for the exporting firms and countries since the prisoners’ dilemma is moderated. Keywords: Strategic Environmental Policy, Tradable Permits, Race to the top Classification-JEL: Q58, F12, F18 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.3 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-003.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.3 Title: Second Best Environmental Policies under Uncertainty Author-Name: Panos Hatzipanayotou Author-Name: Panos Hatzipanayotou Author-X-Name-First: Panos Author-X-Name-Last: Hatzipanayotou Author-WorkPlace-Name: Athens University of Economics and Business and CES-ifo Author-Name: Fabio Antoniou Author-X-Name-First: Fabio Author-X-Name-Last: Antoniou Author-WorkPlace-Name: Athens University of Economics and Business Author-Name: Phoebe Koundouri Author-X-Name-First: Phoebe Author-X-Name-Last: Koundouri Author-WorkPlace-Name: Athens University of Economics and Busines Abstract: We construct a strategic trade model of an international duopoly, whereby production by exporting firms generates a local pollutant. Governments use environmental policies, i.e., an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to their firm, however, governments are unable to perfectly foresee the actual level of demand, the cost of abatement and the damage caused from pollution. Under these modes of uncertainty we derive sufficient conditions under which the governments optimally choose an emissions tax over an emissions standard. Keywords: Strategic Environmental Policy, Pollution, Choice of Policy Instrument, Uncertainty Classification-JEL: F12, F18, Q58 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.4 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-004.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.4 Title: Modeling Biased Technical Change. Implications for Climate Policy Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei 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, CESifo and CMCC Author-Name: Lea Nicita Author-X-Name-First: Lea Author-X-Name-Last: Nicita Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: Climate-economy models aiming at quantifying the costs and effects of climate change impacts and policies have become important tools for climate policy decision-making. Although there are several important dimensions along which models differ, this paper focuses on a key component of climate change economics and policy, namely technical change. This paper tackles the issues of whether technical change is biased towards the energy sectors, the importance of the elasticity of substitution between factors in determining this bias and how mitigation policy is likely to affect it. The analysis is performed using the World Induced Technical Change model, WITCH. Three different versions of the model are proposed. The starting set-up includes endogenous technical change only in the energy sector. A second version introduces endogenous technical change in both the energy and non-energy sectors. A third version of the model embodies different sources of technical change, namely R&D and human capital. Although different formulations of endogenous technical change have only a minor influence on climate policy costs, the macroeconomic effects on knowledge and human capital formation can vary greatly. Keywords: Technical Change, Climate Policy, Stabilization Cost Classification-JEL: C72, H23, Q25, Q28 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.5 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-005.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.5 Title: Profit Sharing under the Threat of Nationalization Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Swedish University of Agricultural Sciences Abstract: A government bargains a mutually convenient agreement with a multinational corporation to extract a natural resource. The corporation bears the initial investment and earns as a return a share on the profits. The host country provides access and guarantee conditions of operation. Being the investment totally sunk, the corporation must account in its plan not only for uncertainty on market conditions but also for the threat of nationalization. In a real options framework where the government holds an American call option on nationalization we show under which conditions a Nash bargaining is feasible and leads to attain a cooperative agreement maximizing the joint venture surplus. We find that the threat of nationalization does not affect the investment time trigger but only the feasible bargaining set. Finally, we show that the optimal sharing rule results from the way the two parties may differently trade off rents with option value. Keywords: Real Options, Nash Bargaining, Expropriation, Natural Resources, Foreign Direct Investment Classification-JEL: C7, D8, K3, F2, O1 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.6 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-006.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.6 Title: Optimal Emission Tax with Endogenous Location Choice of Duopolistic Firms Author-Name: Masako Ikefuji Author-X-Name-First: Masako Author-X-Name-Last: Ikefuji Author-WorkPlace-Name: nstitute of Social and Economic Research Osaka University Author-Name: Jun-ichi Itaya Author-X-Name-First: Jun-ichi Author-X-Name-Last: Itaya Author-WorkPlace-Name: Hokkaido University Author-Name: Makoto Okamura Author-X-Name-First: Makoto Author-X-Name-Last: Okamura Author-WorkPlace-Name: Hiroshima University Abstract: This paper explores optimal environmental tax policy under which duopoly firms strategically choose the location of their plants in a simple three-stage game. We examine how the relationship between the optimal emission tax and the choice of location of duopoly firms affects the welfare of the home country. We characterize the relationship between the optimal emission tax and the fixed cost, depending on the degree of environmental damage from production. Finally, we show the existence of asymmetric equilibrium in which either firm chooses relocation of its plant even if the duopoly firms are identical ex ante. Keywords: Environmental policy, Relocation, Welfare Classification-JEL: H23, L13 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.7 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-007.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.7 Title: Potentials and Limits of Bayesian Networks to Deal with Uncertainty in the Assessment of Climate Change Adaptation Policies Author-Name: Michela Catenacci Author-X-Name-First: Michela Author-X-Name-Last: Catenacci Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Carlo Giupponi Author-X-Name-First: Carlo Author-X-Name-Last: Giupponi Author-WorkPlace-Name: Ca' Foscari University Centre for Environmental Economics and Management, and Fondazione Eni Enrico Mattei Abstract: Bayesian networks (BNs) have been increasingly applied to support management and decision-making processes under conditions of environmental variability and uncertainty, providing logical and holistic reasoning in complex systems since they succinctly and effectively translate causal assertions between variables into patterns of probabilistic dependence. Through a theoretical assessment of the features and the statistical rationale of BNs, and a review of specific applications to ecological modelling, natural resource management, and climate change policy issues, the present paper analyses the effectiveness of the BN model as a synthesis framework, which would allow the user to manage the uncertainty characterising the definition and implementation of climate change adaptation policies. The review will let emerge the potentials of the model to characterise, incorporate and communicate the uncertainty, with the aim to provide an efficient support to an informed and transparent decision making process. The possible drawbacks arising from the implementation of BNs are also analysed, providing potential solutions to overcome them. Keywords: Adaptation to Climate Change, Bayesian Network, Uncertainty Classification-JEL: Q54 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.8 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-008.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.8 Title: Changes in Beliefs and Perceptions about the Natural Environment in the Forest-Savanna Transitional Zone of Ghana: The Influence of Religion Author-Name: Paul Sarfo-Mensah Author-X-Name-First:Paul Author-X-Name-Last: Sarfo-Mensah Author-WorkPlace-Name: Kwame Nkrumah University of Science and Technology (KNUST) Author-Name: William Oduro Author-X-Name-First: William Author-X-Name-Last: Oduro Author-WorkPlace-Name: Faculty of Renewable Natural Resources, CANR, KNUST Abstract: The potential of traditional natural resources management for biodiversity conservation and the improvement of sustainable rural livelihoods is no longer in doubt. In sub-Saharan Africa, extensive habitat destruction, degradation, and severe depletion of wildlife, which have seriously reduced biodiversity and undermined the livelihoods of many people in rural communities, have been attributed mainly to the erosion of traditional strategies for natural resources management. In Ghana, recent studies point to an increasing disregard for traditional rules and regulations, beliefs and practices that are associated with natural resources management. Traditional natural resources management in many typically indigenous communities in Ghana derives from changes in the perceptions and attitudes of local people towards tumi, the traditional belief in super natural power suffused in nature by Onyame, the Supreme Creator Deity. However, this is closely entwined with ecological, demographic and economic factors. Whilst these factors have driven the need to over-exploit natural resources, a situation which threatens the sustainability of community forests including sacred groves, religion has been used to justify such actions. This paper explores changes in tumi and the sustainability of sacred groves in the forest-savanna transitional zone in Ghana. It would confirm that changes in traditional animist beliefs, such as tumi, which informs the worldview of local people and underlies traditional natural resources management, is mainly due to the advances made by Christianity and Islam. Keywords: Tumi, Sacred Groves, Forest-Savanna Transition, Sustainability, Traditional, Christianity, Islam Classification-JEL: Z1 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.9 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-009.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.9 Title: Do Competition and Ownership Matter? Evidence from Local Public Transport in Europe Author-Name: Marcella Nicolini Author-X-Name-First: Marcella Author-X-Name-Last: Nicolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Andrea Boitani Author-X-Name-First: Andrea Author-X-Name-Last: Boitani Author-WorkPlace-Name: Catholic University Author-Name: Carlo Scarpa Author-X-Name-First: Carlo Author-X-Name-Last: Scarpa Author-WorkPlace-Name: University of Brescia and Fondazione Eni Enrico Mattei Abstract: This paper investigates how the ownership and the procedure for the selection of firms operating in the local public transport sector affect their productivity. In order to compare different institutional regimes, we carry out a comparative analysis of 72 companies operating in large European cities. This allows us to consider firms selected either through competitive tendering or negotiated procedures. The analysis of the data on 77 European firms over the period 1997-2006 indicates that firms operate under constant returns to scale. Retrieving the residuals we obtain a measure of total factor productivity, which we regress on firm and city characteristics. We find that when firms are totally or partially in public hands their productivity is lower. Moreover, firms selected through competitive tendering display higher total factor productivity. Keywords: Local Public Transport, Public Ownership, Translog Production Function Classification-JEL: C33, K23, L25, L33, L91 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.10 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-010.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.10 Title: European Forests and Carbon Sequestration Services: An Economic Assessment of Climate Change Impacts Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: University of Venice Author-Name: Helen Ding Author-X-Name-First: Helen Author-X-Name-Last: Ding Author-WorkPlace-Name: Ca’ Foscari University of Venice and Fondazione Eni Enrico Mattei Author-Name: Sonja Teelucksingh Author-X-Name-First: Sonja Author-X-Name-Last: STeelucksingh Author-WorkPlace-Name: ondazione Eni Enrico Mattei and University of the West Indies Abstract: This paper reports an original economic valuation of the impact of climate change on the provision of forest regulating services in Europe. To the authors’ knowledge the current paper represents the first systematic attempt to estimate human well-being losses with respect to changes in biodiversity and forest regulating services that are directly driven by climate change. First, selected 34 European countries are grouped by their latitude intervals to capture the differentiated regional effects of forests in response to climate change. Moreover, the future trends of forest areas and stocked carbon in 2050 are projected through the construction and simulation of global circulation models such as HADMC3 following four different future developing paths described by the four IPCC scenarios. Finally, the valuation exercise is anchored in an ecosystem service based approach, involving the use of general circulation models and integrated assessment models. Our findings address two dimensions in the evaluation of climate impacts on European forests: Firstly, future projections yield different states of the world depending upon the IPCC scenario adopted. Secondly, spatial issues matter in an assessment of the distributional impacts of climate change, as these impacts are not distributed in a uniform way across the European countries under consideration. Keywords: Economic Valuation, Forest Ecosystem, Carbon Sequestration, Climate Change Impacts Classification-JEL: Q23, Q51, Q57 Creation-Date: 201001 Template-Type: ReDIF-Paper 1.0 Number: 2010.11 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-011.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.11 Title: Loving Cultural Heritage Private Individual Giving and Prosocial Behavior Author-Name: Giovanni Signorello Author-X-Name-First: Giovanni Author-X-Name-Last: Signorello Author-WorkPlace-Name: University of Catania Author-Name: Enrico Bertacchini Author-X-Name-First: Enrico Author-X-Name-Last: Bertacchini Author-WorkPlace-Name: University of Torino Author-Name: Walter Santagata Author-X-Name-First: Walter Author-X-Name-Last: Santagata Author-WorkPlace-Name: University of Torino Abstract: The aim of this paper is to analyse patterns of private individual giving to Cultural Heritage institutions in Italy. Based on the emerging economic literature on pro-social behavior, we carried out a Contingent Valuation survey to assess individuals’ willingness to donate to museums and heritage organizations according to different conditions and set of incentives. Our findings reveal that intrinsic motivations and accountability of the recipient institutions may be more effective drivers for eliciting charitable giving than the usually proposed fiscal incentives. The results provide avenues for future empirical research and policy suggestions for fund raising cultural institutions. Keywords: Charitable Giving, Cultural Heritage, Contingent Valuation, Pro-social Behavior Classification-JEL: D11, D12, H4, Z1 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.12 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-012.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.12 Title: What Drives the International Transfer of Climate Change Mitigation Technologies? Empirical Evidence from Patent Data Author-Name: Matthieu Glachant Author-X-Name-First: Matthieu Author-X-Name-Last: Glachant Author-WorkPlace-Name: CERNA, Mines ParisTech Author-Name: Antoine Dechezleprêtre Author-X-Name-First: Antoine Author-X-Name-Last: Dechezleprêtre Author-WorkPlace-Name: Mines Paris Tech, CERNA Author-Name: Yann Ménière Author-X-Name-First: Yann Author-X-Name-Last: Ménière Author-WorkPlace-Name: Mines Paris Tech, CERNA Abstract: Using patent data from 66 countries for the period 1990–2003, we characterize the factors which promote or hinder the international diffusion of climate-friendly technologies on a global scale. Regression results show that technology-specific capabilities of the recipient countries are determinant factors. In contrast, the general level of education is less important. We also show that restrictions to international trade—e.g., high tariff rates—and lax intellectual property regimes negatively influence the international diffusion of patented knowledge. A counter-intuitive result is that barriers to foreign direct investments can promote transfers. We discuss different possible interpretations. Keywords: Climate Change, Technology Diffusion, Technology Transfer Classification-JEL: O33, O34, Q54 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.13 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-013.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.13 Title: Investments and Financial Flows Induced by Climate Mitigation Policies Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Alice Favero Author-X-Name-First: Alice Author-X-Name-Last: Favero Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: In this paper we use the hybrid integrated model WITCH to quantify and analyze the investments and financial flows stimulated by a climate policy to stabilize Greenhouse Gases concentrations at 550ppm CO2-eq at the end of the century. We focus on investments to decarbonize the power sector and on investments in knowledge creation. We examine the financial flows associated with the carbon market and the implications for the international trade of oil. Criticalities in investment requirements will emerge when coal power plants with carbon capture and sequestration and nuclear power plants are deployed around 2020-2040, both in high and low income regions. Investments in energy related R&D increase sharply and might cause stress in the short term. However, the transition to a low-carbon world, although costly, appears to be manageable from a financial point of view. In particular, R&D financial needs can easily be accommodated using revenues from the carbon market, which is expected to eventually become more important than the oil market in terms of traded value. Keywords: Climate Change, Mitigation, Carbon Finance, Emission Trading, Energy Investments Classification-JEL: Q01, Q43, Q54, O32, O11 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.14 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-014.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.14 Title: Too Much Oil Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: Tilburg University Abstract: Fear for oil exhaustion and its consequences on economic growth has been a driver of a rich literature on exhaustible resources from the 1970s onwards. But our view on oil has remarkably changed and we now worry how we should constrain climate change damages associated with oil and other fossil fuel use. In this climate change debate, economists have pointed to a green paradox: when policy makers stimulate the development of non-carbon energy sources to (partly) replace fossil fuels in the future, oil markets may anticipate a future reduction in demand and increase current supply. The availability of ‘green’ technologies may increase damages. The insight comes from the basic exhaustible resource model. We reproduce the green paradox and to facilitate discussion differentiate between a weak and a strong version, related to short-term and long-term effects, respectively. Then we analyze the green paradox in 2 standard modifications of the exhaustible resource model. We find that increasing fossil fuel extraction costs counteracts the strong green paradox, while with imperfect energy substitutes both the weak and strong green paradox may vanish. Keywords: Green Paradox, Climate Change, Exhaustible Resources, Fossil Fuels Classification-JEL: Q31, Q54 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.15 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-015.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.15 Title: A Simple Theory of Predation Author-Name: Chiara Fumagalli Author-X-Name-First: Chiara Author-X-Name-Last: Fumagalli Author-WorkPlace-Name: Università Bocconi, CSEF and CEPR Author-Name: Massimo Motta Author-X-Name-First: Massimo Author-X-Name-Last: Motta Author-WorkPlace-Name: Università di Bologna and CEPR Abstract: We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it needs, thus making monopoly profits on later buyers. Several extensions are considered, including markets where scale economies exist because of demand externalities or two-sided market effects, and where markets are characterised by common costs. Conditions under which predation may take place in actual cases are also discussed. Keywords: Anticompetitive Behaviour, Exclusion, Below-Cost Pricing, Antitrust Classification-JEL: K21, L12, L40 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.16 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-016.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.16 Title: Tourism and Development: A Recent Phenomenon Built on Old (Institutional) Roots? Author-Name: Francesco Pigliaru Author-X-Name-First: Francesco Author-X-Name-Last: Pigliaru Author-WorkPlace-Name: Università di Cagliari and CRENoS Author-Name: Rinaldo Brau Author-X-Name-First: Rinaldo Author-X-Name-Last: Brau Author-WorkPlace-Name: Università di Cagliari and CRENoS Author-Name: Adriana Di Liberto Author-X-Name-First: Adriana Author-X-Name-Last: Di Liberto Author-WorkPlace-Name: Università di Cagliari and CRENoS Abstract: Is tourism an opportunity for lagging countries in the elusive quest for growth (Easterly, 2002)? Recent empirical evidence suggests that the answer is a cautious yes. Aggregate cross-country data show that tourism specialization is likely to be associated with higher per capita GDP growth rates than those observed in industrialized countries. However, this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems. In this paper we frame our starting question within the general debate about the importance of good/bad institutions as fundamental determinants of economic growth (Acemoglu et al., 2001) and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth enhancing institutions. Our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables. By means of descriptive statistics and some simple cross-country regressions we confirm that the quality of institutions is important for growth. Yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher-than-average growth. Keywords: Economic Development, Tourism Specialization, Institutions Classification-JEL: O11, O50, O47, F43, L83 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.17 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-017.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.17 Title: An Economic Assessment of the Impacts of the MOSE Barriers on Venice Port Activities Author-Name: Lucia Vergano Author-X-Name-First: Lucia Author-X-Name-Last: Vergano Author-WorkPlace-Name: ECCET, IPTS, JRC, European Commission Author-Name: Georg Umgiesser Author-X-Name-First: Georg Author-X-Name-Last: Umgiesser Author-WorkPlace-Name: ISMAR-CNR Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Ca’ Foscari University of Venice Abstract: Due to its hydro-geological features, the lagoon of Venice is especially vulnerable to climate change. In particular, it is strongly affected by gradual global warming that brings about the so-called ‘acqua alta’ (high water) phenomenon with greater frequency and intensity. In order to protect the city of Venice from the more and more frequent phenomenon of flooding, some protective measures have been adopted. Among them, the system of mobile barriers commonly known as MOSE: however, by separating the lagoon from the Adriatic Sea, it interferes with ship traffic and has negative impacts on port activities. Against this background, the aim of the present work is to provide an estimate of the direct costs of ship traffic interruption due to the functioning of the MOSE, i.e. the additional costs resulting from longer waiting time for ships passing through the Venice lagoon. The estimate uses inputs from the application of a specific hydrodynamic model and the elaboration of ship traffic data during the period 2000-2002. Results indicate that the additional costs would range between 347,943 and 1,288,067 €/year, depending on the hypothesis assumed. Keywords: Climate Change, ‘Acqua Alta’, MOSE, Ship Traffic, Direct Costs Classification-JEL: Q51, Q54 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.18 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-018.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.18 Title: Climate Change Meets Trade in Promoting Green Growth: Potential Conflicts and Synergies Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Senior Fellow Research Program East-West Center Abstract: To date, border adjustment measures in the form of emissions allowance requirements (EAR) under the U.S. proposed cap-and-trade regime are the most concrete unilateral trade measure put forward to level the carbon playing field. If improperly implemented, such measures could disturb the world trade order and trigger a trade war. Because of these potentially far-reaching impacts, this paper focuses on this type of unilateral border adjustment, which requires importers to acquire and surrender emissions allowances corresponding to the embedded carbon contents in their goods from countries that have not taken climate actions comparable to that of home country. This discussion is mainly on the legality of unilateral EAR under the WTO rules. Given that the inclusion of border carbon adjustment measures is widely considered essential to secure passage of any U.S. legislation capping its greenhouse gas emissions, the paper argues that, on the U.S. side, in designing such trade measures, WTO rules need to be carefully scrutinised, and efforts need to be made early on to ensure that the proposed measures comply with them. After all, a conflict between the trade and climate regimes, if it breaks out, helps neither trade nor the global climate. The U.S. needs to explore, with its trading partners, cooperative sectoral approaches to advancing low-carbon technologies and/or concerted mitigation efforts in a given sector at an international level. Moreover, to increase the prospects for a successful WTO defence of the Waxman-Markey type of border adjustment provision, there should be: 1) a period of good faith efforts to reach agreements among the countries concerned before imposing such trade measures; 2) consideration of alternatives to trade provisions that could be reasonably expected to fulfill the same function but are not inconsistent or less inconsistent with the relevant WTO provisions; and 3) trade provisions that can refer to the designated special international reserve allowance pool, but should allow importers to submit equivalent emission reduction units that are recognized by international treaties to cover the carbon contents of imported products. The paper concludes by arguing that the major developing countries being targeted by such border carbon adjustment measures should make the best use of the forums provided under the United Nations Framework Convention on Climate Change and its Kyoto Protocol to effectively deal with the proposed border adjustment measures to their advantage. Keywords: Post-2012 climate negotiations, Border carbon adjustments, Carbon tariffs, Emissions allowance requirements, Cap-and-trade regime, Lieberman-Warner bill,Waxman-Markey bill, World Trade Organization, Kyoto Protocol, Developing countries, United States Classification-JEL: F18, Q48, Q54, Q56, Q58 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.19 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-019.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.19 Title: Capital Malleability and the Macroeconomic Costs of Climate Policy Author-Name: Elisa Lanzi Author-X-Name-First: Elisa Author-X-Name-Last: Lanzi Author-WorkPlace-Name: School of Advanced Studies in Venice (SSAV) and Fondazione Eni Enrico Mattei (FEEM) Author-Name: Ian Sue Wing Author-X-Name-First: Ian Author-X-Name-Last: Sue Wing Author-WorkPlace-Name: Dept. of Geography & Environment, Boston University and Joint Program on the Science & Policy of Global Change, MIT Abstract: This paper argues for introducing the role of capital malleability into the analysis of environmental policies. The issue is explored by means of a theoretical model, a numerical analysis and a computable general equilibrium (CGE) model. Considering the three approaches together is fundamental in obtaining theory-compatible policy-relevant results. The model outcomes reveal differences between results under separate assumptions regarding the malleability of capital. When capital is imperfectly malleable a carbon policy is less effective than under the assumption of perfect malleability of capital. Therefore, it is important that, especially for the analysis of short-term environmental regulations, the issue of capital malleability is taken into consideration. Keywords: General Equilibrium, CGE Models, Climate Change Policy Classification-JEL: C68, D58, H22, Q43 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.20 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-020.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.20 Title: Second-Best Optimal Taxation of Oil and Capital in a Small Open Economy Author-Name: Alberto Petrucci Author-X-Name-First: Alberto Author-X-Name-Last: Petrucci Author-WorkPlace-Name: LUISS University Abstract: This paper analyzes the efficient taxation of oil and capital income in an oil-dependent infinite-lived economy facing perfect capital mobility. Two cases are examined: one with product market imperfections and free tax choice, one with perfect competition and tax restrictions. The optimal tax rates on oil and capital strictly depend on the international tax system implemented; however, they are also affected by the degree of market power and the extent to which monopoly profits are taxed, the type of tax restrictions and the use of oil (as an input or a consumer good). Under the residence-based system, capital income should always be exempted from taxation, while the optimal tax on productive oil may differ from zero. Under the source-based system, second-best taxes on capital and oil are non-zero. Keywords: Optimal Factor Taxation, Oil, Capital Income, Residence-based System, Source-Based System Classification-JEL: E62, H21, Q43, Q48 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.21 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-021.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.21 Title: Fairness, Credibility and Effectiveness in the Copenhagen Accord: An Economic Assessment Author-Name: Alice Favero Author-X-Name-First: Alice Author-X-Name-Last: Favero Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of Venice Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of Venice Abstract: State-of-the-art literature on climate change policies has proposed numerous approaches for the Post-Kyoto agreement. However, in analysing the outcome of negotiations, the feeling is that a huge gap exists between policy makers and scientists. This paper tries to bridge this gap by providing a critical and comparative analysis of the Copenhagen Accord provisions, linking them to a part of the climate-economy literature. It assesses Copenhagen outcome in terms of economic efficiency, environmental effectiveness and political credibility. Our conclusion suggests that the Copenhagen Accord succeeded in considering some of the climate policy principles, namely credibility, equity and fairness. First, the change in political leadership indicates a more collaborative mood. Regarding equity and fairness, developing countries obtained an explicit commitment by developed countries for technology, but especially financial transfers, though on a conditional basis. The major limitation of the Accord is the way it addresses the trade-off between politically viability, thus implicitly fairness, and economic and environmental effectiveness. Therefore, future negotiations should deal with the eventuality of a global temperature increase above the 2 degrees, even in the presence of successful global mitigation. Keywords: International Climate Policy Architecture, Integrated Assessment Model, Post-Kyoto Classification-JEL: Q54,Q56, Q43 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.22 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-022.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.22 Title: Adaptation, Mitigation and “Green” R&D to Combat Global Climate Change. Insights From an Empirical Integrated Assessment Exercise Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: University of Milan, Fondazione Eni Enrico Mattei and Euromediterranean Center on Climate Change (CMCC) Abstract: This work develops a framework for the analysis at the macro-level of the relationship between adaptation and mitigation policies. The FEEM-RICE growth model with stock pollution, endogenous R&D investment and emission abatement is enriched with a planned-adaptation module where a defensive capital stock is built through adaptation investment. Within this framework the optimal path of planned adaptation, the optimal inter and intra temporal mix between adaptation, mitigation and investment in R&D, and the sensitivity of a strategy to each other is identified. The major conclusions of this research show that adaptation, mitigation and R&D are strategic complements as all concur together to the solution of the climate change problem; nonetheless the possibility to adapt reduces the need to mitigate and partly crowds out other forms of investment like those in R&D. The optimal intertemporal distribution of strategies is also described: it requires to anticipate mitigation effort that should start already when climate damages are low and postpone adaptation intervention until they are substantial. Thus the possibility to adapt is not a justification to delay abatement activities. A sensitivity analysis demonstrates the robustness of these results to different parameterizations, in particular to changes in expected climate-change damages and in the discount rates. Keywords: Climate Change Impacts, Mitigation, Adaptation, Integrated Assessment Classification-JEL: Q25, Q28 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.23 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-023.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.23 Title: Individual and Corporate Social Responsibility Author-Name: Jean Tirole Author-X-Name-First: Jean Author-X-Name-Last: Tirole Author-WorkPlace-Name: Toulouse School of Economics Author-Name: Roland Bénabou Author-X-Name-First: Roland Author-X-Name-Last: Bénabou Author-WorkPlace-Name: Princeton University Abstract: Society’s demands for individual and corporate social responsibility as an alternative response to market and distributive failures are becoming increasingly prominent. We first draw on recent developments in the “psychology and economics” of prosocial behavior to shed light on this trend, which reflects a complex interplay of genuine altruism, social or self image concerns, and material incentives. We then link individual concerns to corporate social responsibility, contrasting three possible understandings of the term: the adoption of a more long-term perspective by firms, the delegated exercise of prosocial behavior on behalf of stakeholders, and insider-initiated corporate philanthropy. For both individuals and firms we discuss the benefits, costs and limits of socially responsible behavior as a means to further societal goals. Keywords: Corporate Social Responsibility, Socially Responsible Investment, Image Concerns, Shareholder Value Classification-JEL: D64, D78, H41, L31 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.24 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-024.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.24 Title: Licences, "Use or Lose" Provisions and the Time of Investment Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: University of Padova Author-Name: Cesare Dosi Author-X-Name-First: Cesare Author-X-Name-Last: Dosi Author-WorkPlace-Name: University of Padova, and CRIEP - Centro Universitario Abstract: Exclusive rights granted by public authorities, like concessions to develop natural resources or electromagnetic spectrum licences, often have option-like features. However, to avoid licences being unused for lengthy periods, regulators sometimes set time limits, after which the exclusive right of exercise may be revoked. In this paper we analyse the impact of use or lose ("UOL") provisions upon the private time of investment. We find that the risk of losing the licence because of inaction generally increases the probability of early investment. However, when capital costs are expected to decline over time, UOL provisions may involve a "perverse effect", by increasing, rather than reducing, the expected time of investment, with respect to a situation where the date of investment is left entirely to the licencee’s discretion. Keywords: Licences, Real Options, Use or Lose Provisions, Time of Investment Classification-JEL: L51, D44, D92 Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.25 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-025.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.25 Title: Returns to Migration, Education, and Externalities in the European Union Author-Name: Andrés Rodríguez-Pose Author-X-Name-First: Andrés Author-X-Name-Last: Rodríguez-Pose Author-WorkPlace-Name: London School of Economics Author-Name: Vassilis Tselios Author-X-Name-First: Vassilis Author-X-Name-Last: Tselios Author-WorkPlace-Name: University of Newcastle upon Tyne, and Spatial Economics Research Centre (SERC), London School of Economics Abstract: Relatively little attention has been paid to the role that externalities play in determining the pecuniary returns to migration. This paper addresses this gap, using microeconomic data for more than 100,000 individuals living in the European Union (EU) for the period 1994-2001 in order to analyse whether the individual economic returns to education vary between migrants and nonmigrants and whether any observed differences in earnings between migrants and locals are affected by household and/or geographical (regional and interregional) externalities. The results point out that while education is a fundamental determinant of earnings., European labour markets – contrary to expectations – do not discriminate in the returns to education between migrants and non-migrants. The paper also finds that household, regional, and interregional externalities influence the economic returns to education, but that they do so in a similar way for local, intranational, and supra-national migrants. The results are robust to the introduction of a large number of individual, household, and regional controls. Keywords: Individual Earnings, Migration, Educational Attainment, Externalities, Household, Regions, Europe Classification-JEL: J Creation-Date: 201002 Template-Type: ReDIF-Paper 1.0 Number: 2010.26 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-026.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.26 Title: Spatial Development Author-Name: Klaus Desmet Author-X-Name-First: Klaus Author-X-Name-Last: Desmet Author-WorkPlace-Name: Universidad Carlos III de Madrid Author-Name: Esteban Rossi-Hansberg Author-X-Name-First: Esteban Author-X-Name-Last: Rossi-Hansberg Author-WorkPlace-Name: Princeton University Abstract: We present a theory of spatial development. A continuum of locations in a geographic area choose each period how much to innovate (if at all) in manufacturing and services. Locations can trade subject to transport costs and technology diffuses spatially across locations. The result is an endogenous growth theory that can shed light on the link between the evolution of economic activity over time and space. We apply the model to study the evolution of the U.S. economy in the last few decades and find that the model can generate the reduction in the employment share in manufacturing, the increase in service productivity in the second part of the 1990s, the increase in land rents in the same period, as well as several other spatial and temporal patterns. Keywords: Dynamic Spatial Models, Growth, Innovation, Land Rent Evolution, Structural Transformation, Technology Diffusion, Trade Classification-JEL: E32, O11, O18, O33, R12 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.27 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-027.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.27 Title: Waste Generation and Landfill Diversion Dynamics: Decentralised Management and Spatial Effects Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara Author-Name: Anna Montini Author-X-Name-First: Anna Author-X-Name-Last: Montini Author-WorkPlace-Name: University of Bologna Author-Name: Francesco Nicolli Author-X-Name-First: Francesco Author-X-Name-Last: Nicolli Author-WorkPlace-Name: University of Ferrara Abstract: This paper provides analyses of municipal waste generation and landfill diversion dynamics based on an 8-year panel dataset for Italy covering 103 provinces. Although absolute declining for waste generation is a long way off, there are some first signals of increasing relative delinking and robust average landfill diversion. Spatial effects seem to be negligible, probably due to the strong decentralisation of waste management and policies: local, economic, policy and structural factors contribute to explaining the waste dynamics. Though North-South waste performances are showing some signals of convergence, greater efforts towards convergence of waste performances in a decentralised policy scenario are needed. Keywords: Waste Generation, Waste Management, Landfill Diversion, Decentralised Waste Policies, Landfill Tax, Separated Collection, Spatial Effects, Convergence Classification-JEL: C23, Q38, Q56 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.28 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-028.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.28 Title: A Participatory Approach to Assess the Effectiveness of Responses to Cope With Flood Risk Author-Name: Lucia Ceccato Author-X-Name-First: Lucia Author-X-Name-Last: Ceccato Author-WorkPlace-Name: Ca’ Foscari University Author-Name: Valentina Giannini Author-X-Name-First: Valentina Author-X-Name-Last: Giannini Author-WorkPlace-Name: Ca’ Foscari University and Fondazione Eni Enrico Mattei Author-Name: Carlo Giupponi Author-X-Name-First: Carlo Author-X-Name-Last: Giupponi Author-WorkPlace-Name: Ca’ Foscari University and Fondazione Eni Enrico Mattei Abstract: This work illustrates the preliminary findings of a participatory research process aimed at identifying responses for sustainable water management in a climate change perspective, in two river basins in Europe and Asia. The paper describes the methodology implemented through local workshops, aimed at eliciting and evaluating possible responses to flood risk. Participatory workshops allowed for the identification of four categories of possible responses and a set of nine evaluation criteria, three for each of the three pillars of sustainable development. The main outcome of such activities consists in the ranking of broad response categories instrumental to the objective of the Brahmatwinn research project, i.e. the identification of Integrated Water Resource Management Strategies (IWRMS) based upon the issues and preferences elicited from local experts. The mDSS tool was used to facilitate transparent and robust management of the information collected through Multi-Criteria Decision Analysis (MCDA) and communication of the outputs. Keywords: Participatory Process, Climate Change, Flood Risk, Decision Support System, Multi Criteria Analysis, MCA, Eliciting Responses, Evaluating Responses, Integrated Water Resources Management, IWRM, Mulino Decision Support System, mDSS Classification-JEL: C61, Q01, Q54, Q56, Q58 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.29 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-029.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.29 Title: Politics and Economics of Second-Best Regulation of Greenhouse Gases: The Importance of Regulatory Credibility Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: FEEM and CMCC, Italy. Visiting Fellow at Princeton Environmental Institute Author-Name: David G. Victor Author-X-Name-First: David G. Author-X-Name-Last: Victor Author-WorkPlace-Name: International Law & Regulation (ILAR) at UC San Diego, School of International Relations and Pacific Studies Abstract: Modellers have examined a wide array of ideal-world scenarios for regulation of greenhouse gases. In this ideal world, all countries limit emissions from all economic sectors; regulations are implemented by intelligent, well-informed forward-looking agents; all abatement options, such as new energy technologies and forestry offsets, are available; trade in goods, services and emission credits is free and unfettered. Here we systematically explore more plausible second-best worlds. While analysts have given inordinate attention to which countries participate in regulation—what we call “variable geometry”—which has a strikingly small impact on total world cost of carbon regulations if international trade in emission credits allows economies to equilibrate. Limits on emission trading raise those costs, but by a much smaller amount than expected because even modest amounts of emission trading (less than 15% of abatement in a plausible scenario that varies the geometry of effort) have a large cost-reducing impact. Second best scenarios that see one sector regulated more aggressively and rapidly than others do not impose much extra burden when compared with optimal all-sector scenarios provided that regulations begin in the power sector. Indeed, some forms of trade regulation might decrease the financial flows associated to a carbon policy thus increasing political feasibility of the climate agreement. Much more important than variable geometry, trading and sectors is another factor that analysts have largely ignored: credibility. In the real world governments find it difficult to craft and implement credible international regulations and thus agents are unable to be so forward-looking as assumed in ideal-world modelling exercises. As credibility declines the cost of coordinated international regulation skyrockets—even in developing countries that are likely to delay their adoption of binding limits on emissions. Because international institutions such as treaties are usually weak, governments must rely on their own actions to boost regulatory credibility—for example, governments might “pre-commit” international regulations into domestic law before international negotiations are finally settled, thus boosting credibility. In our scenarios, China alone would be a net beneficiary of pre-commitment that advances its carbon limits two decades (from 2030, in our scenario, to today) if doing so would make international regulations more credible and thus encourage Chinese firms to invest with a clearer eye to the future. Overall, low credibility is up to 6 times more important in driving higher world costs for carbon regulations when compared with variable geometry, limits on emission trading and variable sectors. In this paper, we have not explored the other major dimension to the second-best: the lack of timely availability of the full range of abatement options, although our results suggest that even this will be less consequential than credibility. Keywords: Greenhouse Gases, Second-best Regulation Classification-JEL: Q5, Q58 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.30 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-030.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.30 Title: Monitoring Managers: Does it Matter? Author-Name: Francesca Cornelli Author-X-Name-First: Francesca Author-X-Name-Last: Cornelli Author-WorkPlace-Name: London Business School and CEPR Author-Name: Zbigniew Kominek Author-X-Name-First: Zbigniew Author-X-Name-Last: Kominek Author-WorkPlace-Name: European Bank for Reconstruction and Development (EBRD) Author-Name: Alexander Ljungqvist Author-X-Name-First: Alexander Author-X-Name-Last: Ljungqvist Author-WorkPlace-Name: Stern School of Business, New York University, ECGI and CEPR Abstract: We test under what circumstances boards discipline managers and whether such interventions improve performance. We exploit exogenous variation due to the staggered adoption of corporate governance laws in formerly Communist countries coupled with detailed ‘hard’ information about the board’s performance expectations and ‘soft’ information about board and CEO actions and the board’s beliefs about CEO competence in 473 mostly private-sector companies backed by private equity funds between 1993 and 2008. We find that CEOs are fired when the company underperforms relative to the board’s expectations, suggesting that boards use performance to update their beliefs. CEOs are especially likely to be fired when evidence has mounted that they are incompetent and when board power has increased following corporate governance reforms. In contrast, CEOs are not fired when performance deteriorates due to factors deemed explicitly to be beyond their control, nor are they fired for making ‘honest mistakes.’ Following forced CEO turnover, companies see performance improvements and their investors are considerably more likely to eventually sell them at a profit. Keywords: Corporate Governance, Large Shareholders, Boards of Directors, CEO Turnover, Legal Reforms, Transition Economies, Private Equity Classification-JEL: G34, G24, G32, K22, O16, P21 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.31 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-031.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.31 Title: “Google it!”Forecasting the US Unemployment Rate with a Google Job Search index Author-Name: Francesco D’Amuri Author-X-Name-First: Francesco Author-X-Name-Last: D’Amuri Author-WorkPlace-Name: Economic Research Department Author-Name: Juri Marcucci Author-X-Name-First: Juri Author-X-Name-Last: Marcucci Author-WorkPlace-Name: Bank of Italy Abstract: We suggest the use of an Internet job-search indicator (the Google Index, GI) as the best leading indicator to predict the US unemployment rate. We perform a deep out-of-sample forecasting comparison analyzing many models that adopt both our preferred leading indicator (GI), the more standard initial claims or combinations of both. We find that models augmented with the GI outperform the traditional ones in predicting the monthly unemployment rate, even in most state-level forecasts and in comparison with the Survey of Professional Forecasters. Keywords: Google Econometrics, Forecast Comparison, Keyword search, US Unemployment, Time Series Models Classification-JEL: C22, C53, E27, E37, J60, J64 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.32 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-032.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.32 Title: Climate Policy and the Optimal Balance between Mitigation, Adaptation and Unavoided Damage Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Unversity of Milan and Fondazione Eni Enrico Mattei Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: University of Venice, CEPR, CESifo and Fondazione Eni Enrico Mattei Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: University of Venice and Fondazione Eni Enrico Mattei Abstract: It has become commonly accepted that a successful climate strategy should compound mitigation and adaptation. The accurate combination between adaptation and mitigation that can best address climate change is still an open question. This paper proposes a framework that integrates mitigation, adaptation, and climate change residual damages into an optimisation model. This set-up is used to provide some insights on the welfare maximising resource allocation between mitigation and adaptation, on their optimal timing, and on their marginal contribution to reducing vulnerability to climate change. The optimal mix between three different adaptation modes (reactive adaptation, anticipatory adaptation, and investment in innovation for adaptation purposes) within the adaptation bundle is also identified. Results suggest that the joint implementation of mitigation and adaptation is welfare improving. Mitigation should start immediately, whereas adaptation somehow later. It is also shown that in a world where the probability of climate-related catastrophic events is small and where decision makers have a high discount rate, adaptation is unambiguously the preferred option. Adaptation needs, both in developed and developing countries, will be massive, especially during the second half of the century. Most of the adaptation burden will be on developing countries. International cooperation is thus required to equally distribute the cost of adaptation. Keywords: Climate Change Impacts, Mitigation, Adaptation, Integrated Assessment Model Classification-JEL: Q54, Q56, Q43 Creation-Date: 201003 Template-Type: ReDIF-Paper 1.0 Number: 2010.33 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-033.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010. Title: The Role of International Carbon Offsets in a Second-best Climate Policy: A Numerical Evaluation Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of Venice Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Princeton Environmental Institute, Fondazione Eni Enrico Mattei, and Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC) Abstract: International carbon offsets have been promoted since the Kyoto Protocol and an increasing number of countries have implemented or proposed cap-and-trade schemes with international trading, even though with quantitative or qualitative restrictions. Those limits reflect the trade-off between economic efficiency, distributional issues, and the need for additionality of foreign mitigation measures. Ceilings are also justified on the ground that international offsets undermine the capability of climate policy to induce and diffuse technological change. This paper addresses these issues in a second-best setting that explicitly considers the interplay between multiple externalities. We evaluate numerically how limits to the size, the timing, and the participation in an international carbon market affect the macroeconomic costs of climate policy, international financial transfers, and the incentive to carry out innovation. Results indicate that when constraints on international offsets are moderate, such as limiting their use to at most 15% of regional abatement, efficiency losses are small because they are partly compensated by more technological change and energy market effects, although specific regional patterns are identified. Regarding financial outflows from OECD countries, already a 15% ceiling would limit financial transfers significantly. Provisions of this kind are in line with some of the most recent policy proposals in OECD countries. Keywords: Energy-economy Modelling, Climate Policy, Technology Spillovers Classification-JEL: Q54, Q55, Q43, H23 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.34 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-034.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.34 Title: The U.S. Proposed Carbon Tariffs, WTO Scrutiny and China’s Responses Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: With countries from around the world set to meet in Copenhagen to try to hammer out a post-2012 climate change agreement, no one would disagree that a U.S. commitment to cut greenhouse gas emissions is essential to such a global pact. However, despite U.S. president Obama’s recent announcement to push for a commitment to cut U.S. greenhouse gas emissions by 17% by 2020, in reality it is questionable whether U.S. Congress will agree to specific emissions cuts, although they are not ambitious at all from the perspectives of both the EU and developing countries, without the imposition of carbon tariffs on Chinese products to the U.S. market, even given China’s own recent announcement to voluntarily seek to reduce its carbon intensity by 40-45% over the same period. This dilemma is partly attributed to flaws in current international climate negotiations, which have been focused on commitments on the two targeted dates of 2020 and 2050. However, if the international climate change negotiations continue on their current course without extending the commitment period to 2030, which would really open the possibility for the U.S. and China to make the commitments that each wants from the other, the inclusion of border carbon adjustment measures seems essential to secure passage of any U.S. legislation capping its own greenhouse gas emissions. Moreover, the joint WTO-UNEP report indicates that border carbon adjustment measures might be allowed under the existing WTO rules, depending on their specific design features and the specific conditions for implementing them. Against this background, this paper argues that, on the U.S. side, there is a need to minimize the potential conflicts with WTO provisions in designing such border carbon adjustment measures. The U.S. also needs to explore, with its trading partners, cooperative sectoral approaches to advancing low-carbon technologies and/or concerted mitigation efforts in a given sector at the international level. Moreover, to increase the prospects for a successful WTO defence of the Waxman-Markey type of border adjustment provision, there should be: 1) a period of good faith efforts to reach agreements among the countries concerned before imposing such trade measures; 2) consideration of alternatives to trade provisions that could reasonably be expected to fulfill the same function but are not inconsistent or less inconsistent with the relevant WTO provisions; and 3) trade provisions that should allow importers to submit equivalent emission reduction units that are recognized by international treaties to cover the carbon contents of imported products. Meanwhile, being targeted by such border carbon adjustment measures, China needs to, at the right time, indicate a serious commitment to address climate change issues to challenge the legitimacy of the U.S. imposing carbon tariffs by signaling well ahead that it will take on binding absolute emission caps around the year 2030, and needs the three transitional periods of increasing climate obligations before taking on absolute emissions caps. This paper argues that there is a clear need within a climate regime to define comparable efforts towards climate mitigation and adaptation to discipline the use of unilateral trade measures at the international level. As exemplified by export tariffs that China applied on its own during 2006-08, the paper shows that defining the comparability of climate efforts can be to China’s advantage. Furthermore, given the fact that, in volume terms, energy-intensive manufacturing in China values 7 to 8 times that of India, and thus carbon tariffs have a greater impact on China than on India, the paper questions whether China should hold the same stance on this issue as India as it does now, although the two largest developing countries should continue to take a common position on other key issues in international climate change negotiations. Keywords: Post-2012 Climate Negotiations, Border Carbon Adjustments, Carbon Tariffs, Emissions Allowance Requirements, Cap-And-Trade Regime, Lieberman-Warner Bill, Waxman-Markey Bill, World Trade Organization, Kyoto Protocol, China, United States Classification-JEL: F18, Q48, Q54, Q56, Q58 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.35 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-035.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.35 Title: Leadership Cycles Author-Name: Vincenzo Denicolò Author-X-Name-First: Vincenzo Author-X-Name-Last: Denicolò Author-WorkPlace-Name: University of Bologna Author-Name: Piercarlo Zanchettin Author-X-Name-First: Piercarlo Author-X-Name-Last: anchettin Author-WorkPlace-Name: University of Leicester Abstract: We study a quality-ladder model of endogenous growth that produces stochastic leadership cycles. Over a cycle, industry leaders can innovate several successive times in the same industry, gradually increasing the magnitude of their technological lead before being replaced by a new entrant. Initially, new leaders are eager to enlarge their lead and do much of the research, but if they innovate repeatedly, their propensity to invest in R&D decreases. Eventually they stop doing research altogether, and as they are overtaken a new cycle starts. The model generates a skewed firm size distribution and a deviation from Gibrat’s law that accord with the empirical evidence. We also consider various policy measures, showing that in some cases policy should favour R&D by incumbents, not outsiders, and that stronger patent protection may reduce innovation and growth. Keywords: Technological Lead, Innovation, R&D Classification-JEL: O32, O4 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.36 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-036.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.36 Title: How to Design a Border Adjustment for the European Union Emissions Trading System? Author-Name: Stéphanie Monjon Author-X-Name-First: Stéphanie Author-X-Name-Last: Monjon Author-WorkPlace-Name: Centre International de Recherche sur l’Environnement et le Développement (CIRED), CNRS Author-Name: Philippe Quirion Author-X-Name-First: Philippe Author-X-Name-Last: Quirion Author-WorkPlace-Name: Centre International de Recherche sur l’Environnement et le Développement (CIRED), CNRS Abstract: Border adjustments are currently discussed to limit the possible adverse impact of climate policies on competitiveness and carbon leakage. We discuss the main choices that will have to be made if the European Union implements such a system alongside with the EU ETS. Although more analysis is required on some issues, on others some design options seem clearly preferable to others. First, the import adjustment should be a requirement to surrender allowances rather than a tax. Second, the general rule to determine the amount of allowances per ton imported should be the product-specific benchmarks that the European Commission is currently elaborating for a different purpose (i.e. to determine the amount of free allowances). Third, this obligation should apply when the exported product is registered at the EU border, and not after the end of the year as is the case for domestic emitters. Fourth, the export adjustment should take the form of a rebate on the amount of allowances a domestic emitter has to surrender. Five, this rebate should equal the above-mentioned product-specific benchmarks, not the emissions of the particular exporting plant or firm. Finally, the adjustment does not have to apply to consumer products but mostly to basic products. Keywords: Carbon Leakage, Border Adjustment, Border Tax Adjustment, EU ETS, Competitiveness Classification-JEL: Q38 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.37 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-037.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.37 Title: Sectoral Targets for Developing Countries: Combining "Common but Differentiated Responsibilities" with "Meaningful participation" Author-Name: Meriem Hamdi-Cherif Author-X-Name-First: Meriem Author-X-Name-Last: Hamdi-Cherif Author-WorkPlace-Name: CIRED, Chaire Paris-Tech «Modélisation Prospective au service du Développement Durable» Author-Name: Céline Guivarch Author-X-Name-First: Céline Author-X-Name-Last: Guivarch Author-WorkPlace-Name: CIRED, Ecole des Ponts Paris-Tech Author-Name: Philippe Quirion Author-X-Name-First: Philippe Author-X-Name-Last: Quirion Author-WorkPlace-Name: CIRED, CNRS and LMD-IPSL Abstract: Although a global cap-and-trade system is seen by many researchers as the most cost-efficient solution to reduce greenhouse gas emissions, developing countries governments refuse to enter into such a system in the short term. Hence, many scholars and stakeholders, including the European Commission, have proposed various types of commitments for developing countries that appear less stringent, such as sectoral approaches. In this paper, we assess such a sectoral approach for developing countries. More precisely, we simulate two policy scenarios in which developed countries continue with Kyoto-type absolute commitments, whereas developing countries adopt an emission trading system limited to electricity generation and linked to developed countries' cap-and-trade system. In a first scenario, CO2 allowances are auctioned by the government, which distributes the auctions receipts lump-sum to households. In a second scenario, the auction receipts are used to reduce taxes on, or to give subsidies to, electricity generation. Our quantitative analysis, led with a hybrid general equilibrium model, shows that such options provide almost as much emission reductions as a global cap-and-trade system. Moreover, in the second sectoral scenario, GDP losses in developing countries are much lower than with a global cap-and-trade system and so is the impact on the electricity price. Keywords: Sectoral Approach, Sectoral Target Classification-JEL: Q38 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.38 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-038.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.38 Title: What is Different about Government-Controlled Acquirers in Cross-Border Acquisitions? Author-Name: G. Andrew Karolyi Author-X-Name-First: G. Andrew Author-X-Name-Last: Karolyi Author-WorkPlace-Name: Johnson Graduate School of Management, Cornell University Author-Name: Rose C. Liao Author-X-Name-First: Rose C. Author-X-Name-Last: Liao Author-WorkPlace-Name: Rutgers Business School, Rutgers University Abstract: We examine the motives for and consequences of 5,317 failed and completed cross-border acquisitions constituting $619 billion of total activity that were led by government-controlled acquirers over the period from 1990 to 2008. We benchmark this activity at the aggregate country level and also at the deal level with cross-border acquisitions involving corporate acquirers over the same period. We find that government-led deal activity is relatively more intense for geographically-closer countries, but also relatively less sensitive to differences in the level of economic development of the acquirer’s and target’s home countries, in the quality of their legal institutions and accounting standards, and to how stringent are restrictions on FDI flows in their countries. Government-led acquirers are more likely to pursue larger targets with greater growth opportunities and more financial constraints. But, the share-price reactions to the announcements of such acquisitions are not different. Among those deals involving government-controlled acquirers, we do find important differences involving sovereign wealth funds (SWFs). SWF-led acquisitions are less likely to fail, they are more likely to pursue acquirers that are larger in total assets and with fewer financial constraints, and the market reactions to SWF-led acquisitions, while positive, are statistically and economically much smaller. We discuss policy implications in terms of recent regulatory changes in the U.S. and other countries that seek to restrict foreign acquisitions by government-controlled entities. Keywords: Government-controlled Acquirers, Cross-Border Acquisitions Classification-JEL: G15, G34 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.39 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-039.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.39 Title: Rent Seekers in Rentier States: When Greed Brings Peace Author-Name: Kjetil Bjorvatn Author-X-Name-First: Kjetil Author-X-Name-Last: Bjorvatn Author-WorkPlace-Name: Norwegian School of Economics and Business Administration Author-Name: Alireza Naghavi Author-X-Name-First: Alireza Author-X-Name-Last: Naghavi Author-WorkPlace-Name: University of Bologna and Fondazione Eni Enrico Mattei Abstract: Are natural resources a source of conflict or stability? Empirical studies demonstrate that rents from natural resources, and in particular oil, are an important source of civil war. Allegedly, resource rents attract rent seekers, which destabilize society. However, there is a large literature on how so-called rentier states manage to pacify opposition groups by handing out special favors. The present paper attempts to bridge the gap between the rent-seeking view of resource rents as a source of conflict and the rentier state view which emphasizes the role of resource rents in promoting peace and stability, and show how one may lead to the other. The mechanism that we highlight relies on the notion that higher rents may activate more interest groups in a power struggle. We demonstrate that the associated increased cost of conflict may in fact promote social stability. The peaceful solution is upheld by a self reinforcing transfer program, in the form of patronage employment. The chance of conflict and rent dissipation in our model is highest for intermediate levels of resource rents, where the government cannot make credible commitments to the opposition groups. Keywords: Rent Seeking, Rentier States, Resource Rents, Conflict, Patronage Employment Classification-JEL: D74, Q34 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.40 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-040.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.40 Title: Parallel Imports and Innovation in an Emerging Economy Author-Name: Andrea Mantovani Author-X-Name-First: Andrea Author-X-Name-Last: Mantovani Author-WorkPlace-Name: University of Bologna Author-Name: Alireza Naghavi Author-X-Name-First: Alireza Author-X-Name-Last: Naghavi Author-WorkPlace-Name: niversity of Bologna and Fondazione Eni Enrico Mattei Abstract: This paper studies the consequences of parallel import (PI) on process innovation of firms heterogeneous in their production technology. In an international setting where foreign markets differ with respect to their intellectual property rights regime, a move by a technologically inferior firm to exploit a new unregulated market can result in imitation and PI. The impact of PI on innovation is determined by the degree of heterogeneity between firms and trade costs. Increasing trade costs shifts from the market share losses brought by PI from the more to the less productive firm. This induces the former to invest more in R&D. At this point, sales in the foreign market become a determinant of the R&D decision by the technologically inferior firm. For low levels of firm heterogeneity, PI increases output by this firm targeted for the unregulated market, hence increases its innovation efforts. A tariff policy accompanied by opening borders to PI only increases welfare when the technological gap between the two firms is sufficiently large. Keywords: Intellectual Property Rights, Parallel Imports, Innovation, Trade Costs, Welfare Classification-JEL: F12, F13, L11 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.41 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-041.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.41 Title: Scaling up Ecosystem Services Values: Methodology, Applicability and a Case Study Author-Name: Luke Brander Author-X-Name-First: Luke Author-X-Name-Last: Brander Author-WorkPlace-Name: Institute for Environmental Studies Author-Name: Andrea Ghermandi Author-X-Name-First: Andrea Author-X-Name-Last: Ghermandi Author-WorkPlace-Name: FEEM Author-Name: Onno Kuik Author-X-Name-First: Onno Author-X-Name-Last: Kuik Author-WorkPlace-Name: Institute for Environmental Studies Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: BC3 Basque Centre for Climate Change Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: FEEM, Università Ca' Foscari di Venezia Author-Name: Marije Schaafsma Author-X-Name-First: Marije Author-X-Name-Last: Schaafsma Author-WorkPlace-Name: Institute for Environmental Studies Author-Name: Alfred Wagtendonk Author-X-Name-First: Alfred Author-X-Name-Last: Wagtendonk Author-WorkPlace-Name: Institute for Environmental Studies Abstract: The approach of using existing data on economic values of local ecosystem services for an assessment of these values at a larger geographical scale can be called “scaling up”. In a scaling-up exercise, economic values from a particular study site are transferred to another geographical setting, for instance to the regional, national or global scale. This paper proposes a methodology for scaling up ecosystem service values to a European level, assesses the availability of data for conducting this method, and illustrates the procedure with a case study on wetland values. The proposed methodology makes use of meta-analysis to produce a value function that is subsequently applied to individual European wetland sites. Site-specific, study-specific and context-specific variables are used to define a price vector that captures differences between sites and over time. The proposed method is shown to be practicable and to produce reasonably reliable aggregate value estimates. Keywords: Ecosystem Services, Value Transfer, Meta-Analysis, Wetland Values Classification-JEL: C81, Q24, Q57 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.42 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-042.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.42 Title: What Should We Expect from Innovation? A Model-Based Assessment of the Environmental and Mitigation Cost Implications of Climate-Related R&D Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC Author-Name: Romain Duval Author-X-Name-First: Romain Author-X-Name-Last: Duval Author-WorkPlace-Name: OECD Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Princeton Environmental Institute and CMCC Abstract: This paper addresses two basic issues related to technological innovation and climate stabilisation objectives: i) Can innovation policies be effective in stabilising greenhouse gas concentrations? ii) To what extent can innovation policies complement carbon pricing (taxes or permit trading) and improve the economic efficiency of a mitigation policy package? To answer these questions, we use an integrated assessment model with multiple externalities and an endogenous representation of technical progress in the energy sector. We evaluate a range of innovation policies, both as a stand-alone instrument and in combination with other mitigation policies. Even under fairly optimistic assumptions about the funding available for, and the returns to R&D, our analysis indicates that innovation policies alone are unlikely to stabilise global concentration and temperature. The efficiency gains of combining innovation and carbon pricing policies are found to reach about 10% for a stabilisation target of 535 ppm CO2eq. However, such gains are reduced when more plausible (sub-optimal) global innovation policy arrangements are considered. Keywords: Climate Change, Environmental Policy, Energy R&D Fund, Stabilisation Costs Classification-JEL: H0, H2, H3, H4, O3, Q32, Q43, Q54 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.43 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-043.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.43 Title: Reinforcing the EU Dialogue with Developing Countries on Climate Change Mitigation Author-Name: Frank Vöhringer Author-X-Name-First: Frank Author-X-Name-Last: Vöhringer Author-WorkPlace-Name: Ecole Polytechnique Fédérale de Lausanne Author-Name: Alain Haurie Author-X-Name-First: Alain Author-X-Name-Last: Haurie Author-WorkPlace-Name: ORDECSYS Author-Name: Dabo Guan Author-X-Name-First: Dabo Author-X-Name-Last: Guan Author-WorkPlace-Name: University of Cambridge Author-Name: Maryse Labriet Author-X-Name-First: Maryse Author-X-Name-Last: Labriet Author-WorkPlace-Name: KANLO Consultants Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Pryadarshi R. Shukla Author-X-Name-First: Pryadarshi R. Author-X-Name-Last: Shukla Author-WorkPlace-Name: Indian Institute of Management Ahmedabad Author-Name: Philippe Thalmann Author-X-Name-First: Philippe Author-X-Name-Last: Thalmann Author-WorkPlace-Name: Ecole Polytechnique Fédérale de Lausanne Abstract: The FP6 TOCSIN project has evaluated climate change mitigation options in China and India and the conditions for strategic cooperation on research, development and demonstration (RD&D) and technology transfer with the European Union. In particular, the project investigated the strategic dimensions of RD&D cooperation and the challenge of creating incentives to encourage the participation of developing countries in post-2012 GHG emissions reduction strategies and technological cooperation. This paper summarizes the main policy-relevant results of the project, including the requests for: (I) almost immediate decisions on ambitious mitigation; (II) a strong increase in Annex I support regarding R&D spending and technology transfer; (III) a well-designed mix of instruments and targets in an effective climate deal that addresses manifold national interests and concerns. Keywords: Climate Policy, Technology Transfers Classification-JEL: Q54, Q55 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.44 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-044.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.44 Title: Public Security vs. Private Self-Protection: Optimal Taxation and the Social Dynamics of Fear Author-Name: Angelo Antoci Author-X-Name-First: Angelo Author-X-Name-Last: Antoci Author-WorkPlace-Name: DEIR, University of Sassari Author-Name: Pier Luigi Sacco Author-X-Name-First: Pier Luigi Author-X-Name-Last: Sacco Author-WorkPlace-Name: IUAV Ricerche, IUAV University Author-Name: Mauro Sodini Author-X-Name-First: Mauro Author-X-Name-Last: Sodini Author-WorkPlace-Name: University of Pisa Abstract: In this paper, we develop a simple model of social dynamics governing the evolution of strategic self-protection choices of boundedly rational potential victims facing the threat of prospective offenders in a large population with random matching. We prove that individual (and socially transmitted) fear of exposure to criminal threats may actually condition choices even in the face of objective evidence of declining crime rates, and thereby cause the eventual selection of Pareto inefficient equilibria with self-protection. We also show that a suitable strategy of provision of public security financed through discriminatory taxation of self-protective expenses may actually overcome this problem, and drive the social dynamics toward the efficient no protection equilibrium. In our model, we do not obtain, as in Cressman et al. (1998), a crowding-out result such that the net impact of public spending on the actual social dynamics is neutral and the economy keeps on cycling between phases of high and low criminal activity with varying levels of self-protection; quite to the contrary, it can be extremely effective in implementing the social optimum, in that it acts primarily on the intangible dimension, that is, on the social dynamics of fear. We claim that this kind of result calls for more interdisciplinary research on the socio-psycho-economic determinants of fear of crime, and for consequent advances in modelling approaches and techniques. Keywords: Self-Protection, Fear of Crime, Cultural Selection Dynamics, Replicator Dynamics Classification-JEL: C73, H23, K49 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.45 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-045.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.45 Title: European Takeover Law: The Case for a Neutral Approach Author-Name: Luca Enriques Author-X-Name-First: Luca Author-X-Name-Last: Enriques Author-WorkPlace-Name: Consob, University of Bologna, Faculty of Law, and European Corporate Governance Institute (ECGI) Abstract: This paper argues that in revising the Takeover Bid Directive, EU policymakers should adopt a neutral approach toward takeovers, i.e. enact rules that neither hamper nor promote them. The rationale behind this approach is that takeovers can be both value-creating and value-decreasing and there is no way to tell ex ante whether they are of the former or the latter kind. Unfortunately, takeover rules cannot be crafted so as to hinder all the bad takeovers while at the same time promoting the good ones. Further, contestability of control is not cost-free, because it has a negative impact on managers’ and block-holders’ incentives to make firm-specific investments of human capital, which in turn affects firm value. It is thus argued that individual companies should be able to decide how contestable their control should be. After showing that the current EC legal framework for takeovers overall hinders takeover activity in the EU, the paper identifies three rationales for a takeover-neutral intervention of the EC in the area of takeover regulation (pre-emption of “takeover-hostile,” protectionist national regulations, opt-out rules protecting shareholders vis-à-vis managers’ and dominant shareholders’ opportunism in takeover contexts, and menu rules helping individual companies define their degree of control contestability) and provides examples of rules that may respond to such rationales. Keywords: Takeover Bid Directive, Board Neutrality, Mandatory Bid Rule, Market for Corporate Control Classification-JEL: K22, G34, G38 Creation-Date: 201004 Template-Type: ReDIF-Paper 1.0 Number: 2010.46 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-046.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.46 Title: Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program Author-Name: Maureen L. Cropper Author-X-Name-First: Maureen L. Author-X-Name-Last: Cropper Author-WorkPlace-Name: University of Maryland and Resources for the Future Author-Name: Yi Jiang Author-X-Name-First: Yi Author-X-Name-Last: Jiang Author-WorkPlace-Name: Asian Development Bank Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland Author-Name: Patrick Baur Author-X-Name-First: Patrick Author-X-Name-Last: Baur Author-WorkPlace-Name: National Academy of Sciences Abstract: Ground level ozone remains a serious problem in the United States. Because ozone non-attainment is a summer problem, episodic rather than continuous controls of ozone precursors are possible. We evaluate the costs and effectiveness of an episodic scheme that requires people to buy permits in order to drive on high ozone days. We estimate the demand function for permits based on a survey of 1,300 households in the Washington, DC metropolitan area. Assuming that all vehicle owners comply with the scheme, the permit program would reduce VOCs by 50 tons and NOx by 42 tons per Code Red day at a permit price of $75. Allowing for non-compliance by 15% of respondents reduces the effectiveness of the scheme to 39 tons of VOCs and 33 tons of NOx per day. The cost per ozone season of achieving these reductions is approximately $9 million (2008 USD). This compares favorably with permanent methods of reducing VOCs that cost $645 per ton per year. Keywords: Ground-Level Ozone, Episodic Pollution Control Schemes, Mobile Sources, Volatile Organic Compounds (Vocs), Cost Per Ton of Vocs Removed Classification-JEL: Q52, Q53, Q58 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.47 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-047.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.47 Title: The Circulation of Ideas in Firms and Markets Author-Name: Thomas Hellman Author-X-Name-First: Thomas Author-X-Name-Last: Hellman Author-WorkPlace-Name: University of British Columbia Author-Name: Enrico Perotti Author-X-Name-First: Enrico Author-X-Name-Last: Perotti Author-WorkPlace-Name: University of Amsterdam Abstract: Novel early stage ideas face uncertainty on the expertise needed to elaborate them, which creates a need to circulate them widely to find a match. Yet as information is not excludable, shared ideas may be stolen, reducing incentives to innovate. Still, in idea-rich environments inventors may share them without contractual protection. Idea density is enhanced by firms ensuring rewards to inventors, while their legal boundaries limit idea leakage. As firms limit idea circulation, the innovative environment involves a symbiotic interaction: firms incubate ideas and allow employees to leave if they cannot find an internal fit; markets allow for wide circulation of ideas until matched and completed; under certain circumstances ideas may be even developed in both firms and markets. Keywords: Ideas, Innovation, Entrepreneurship, Firm Organization, Start-Ups Classification-JEL: D83, L22, M13, O31 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.48 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-048.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.48 Title: Resistance to Change Author-Name: James Dow Author-X-Name-First: James Author-X-Name-Last: Dow Author-WorkPlace-Name: LBS Author-Name: Enrico Perotti Author-X-Name-First: Enrico Author-X-Name-Last: Perotti Author-WorkPlace-Name: University of Amsterdam Abstract: Established firms often fail to maintain leadership following disruptive market shifts. We argue that such firms are more prone to internal resistance. A radical adjustment of assets affects the distribution of employee rents, creating winners and losers. Losers resist large changes when strong customer goodwill cushions the consequences. Partial adaptation may lead winners to depart to form new firms with no goodwill, but no internal resistance. Keywords: Resistance to Change, Leadership, Adaptation Classification-JEL: D21 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.49 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-049.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.49 Title: (Anti-) Coordination in Networks Author-Name: Jaromir Kovarik Author-X-Name-First: Jaromir Author-X-Name-Last: JKovarik Author-WorkPlace-Name: University of the Basque Country Author-Name: Friederike Mengel Author-X-Name-First: Friederike Author-X-Name-Last: Mengel Author-WorkPlace-Name: Maastricht University Author-Name: José Gabriel Romero Author-X-Name-First: José Gabriel Author-X-Name-Last: Romero Author-WorkPlace-Name: University of Santiago de Chile Abstract: We study (anti-) coordination problems in networks in a laboratory experiment. Partici- pants interact with their neighbours in a fixed network to play a bilateral (anti-) coordination game. Our main treatment variable is the extent to which players are heterogeneous in the number of connections (neighbors) they have. Other network characteristics are held constant across treatments. We find the following results. Heterogeneity in the number of connections dramatically improves the rate of successful coordination. In addition, even though there is a multiplicity of Nash equilibria theoretically, a very sharp selection is observed empirically: the most connected player can impose her preferred Nash equilibrium almost always and observed Nash equilibria are such that all links are coordinated. As a second treatment variation we let agents decide endogenously on the amount of information they would like to have and find that local (endogenous) information is equally efficient in ensuring successful coordination as full information. We provide an intuitive explanation of these facts which is supported by our data. Keywords: Game Theory, Networks, Coordination Problems, Experiments Classification-JEL: C72, C90, C91, D85 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.50 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-050.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.50 Title: A Hybrid Approach to the Valuation of Climate Change Effects on Ecosystem Services: Evidence from the European Forests Author-Name: Helen Ding Author-X-Name-First: Helen Author-X-Name-Last: Ding Author-WorkPlace-Name: University of Venice and FEEM Author-Name: Silvia Silvestri Author-X-Name-First: Silvia Author-X-Name-Last: Silvestri Author-WorkPlace-Name: University of Venice Author-Name: Aline Chiabai Author-X-Name-First: Aline Author-X-Name-Last: Chiabai Author-WorkPlace-Name: FEEM Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: University of Venice and FEEM Abstract: In this paper we present a systematic attempt to assess economic value of climate change impact on forest ecosystems and human welfare. In the present study, climate change impacts are downscaled to the different European countries, which in turn constitute the elements of our analysis. First, we anchor the valuation exercise in the Millennium Ecosystem Assessment (MEA) Approach and therefore the link between the different forest ecosystem goods and services, including provisioning, regulating and cultural services, human well-being and climate change. Second, climate change is operationalized by exploring the different storylines developed by the International Panel on Climate Change (IPCC) and applied, downscaled, for each of the European countries under consideration. Third, and bearing in mind the different nature of the benefits provided by the different types of forest ecosystems under examination, we shall explore different economic valuation methodologies so as to shed light on the magnitude of the involved welfare changes. According to the estimation results the four different IPCC scenarios, i.e. A1F1, A2, B1 and B2, are associated to different welfare impacts. First, these reveal to depend on both the nature of the forest ecosystem service. For example, cultural values reveal to be more sensitive to the four IPCC scenarios than the other ones, with the wood forest products being more resilient to climate change. Second, the distributional impacts of climate change on the provision of these goods and services do also depend on the geo-climatic regions under consideration. For the Scandinavian group of countries, B1 is ranked with the highest level of provision of carbon sequestration services, amounting to 46.3 billion dollars. In addition, we can see that cultural services provided by forest ecosystems have their highest levels in the Mediterranean countries, ranging from 8.4 to 9.0 million dollars, respectively in the B2 and B1 scenarios. Finally, we can see that the total value of wood forest products ranges between 41.2 and 47.5 million dollars for Central Europe to 5.4 and 7.2 million dollars in Northern Europe, respectively A1 and A2 scenarios. For this service, Mediterranean Europe provides a relatively weak role in the provision with values ranging from 6.4 million dollars in A1 scenario to 8.7 million dollars in the B2. In short, and to conclude, the valuation results (1) may contribute to a better understanding of the potential welfare loss in the context of climate change and the economic trade-offs between potential mitigation or adaptation strategies; and (2) confirm that climate change will be responsible for a re-distribution of welfare among the European countries, signalling the potential for a(n) agreement(s) among these same countries focus on the re-allocation of potential trade-offs among the countries. Keywords: Wood Products, Biodiversity, Climate Change, Market and Non-market Valuation Methods, Ecosystem Goods and Services, Millennium Ecosystem Assessment Classification-JEL: Q57 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.51 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-051.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.51 Title: A History of Violence: Testing the ‘Culture of Honor’ in the US South Author-Name: Pauline Grosjean Author-X-Name-First: Pauline Author-X-Name-Last: Grosjean Author-WorkPlace-Name: University of San Francisco Abstract: Using historical data on early settlers to the United States, this paper tests and confirms the “Culture of Honor” hypothesis by socio-psychologists Dov Cohen and Richard Nisbett (1994, 1996). This hypothesis argues that the high prevalence of homicides in the US South stems from the fact that it was a frontier region settled by people whose economy was based on herding: the Scotch-Irish. Herding societies develop cultures of honors for reasons having to do with their precariousness: violence is a necessary condition to preserve a reputation for toughness and deter animal theft. Using historical census data on waves of settlers from Europe and relating contemporaneous violence to early Scotch-Irish settlers, this paper provides a test of the link between Scotch-Irish settlers and the culture of honor. The results confirm that high numbers of Scotch-Irish immigrants to the US South by 1790 are associated with higher homicide rates today, including homicides by white offenders. Similar results do not hold for different origins of migrants or other violent crime or offenses. The effect is stronger in counties with high headcounts of pigs and sheep in the 19th century, confirming the herding origin of the culture of honor. An important contribution of this paper is to suggests an instrument for violence, based on past economic occupations and ecological suitability for herding vs. farming. Keywords: Cuture of honor, US South Classification-JEL: K4, Z, Z13 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.52 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-052.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.52 Title: Advocatus, et non latro? Testing the Supplier-Induced-Demand Hypothesis for Italian Courts of Justice Author-Name: Paolo Buonanno Author-X-Name-First: Paolo Author-X-Name-Last: Buonanno Author-WorkPlace-Name: University of Bergamo Author-Name: Matteo M. Galizzi Author-X-Name-First: Matteo M. Author-X-Name-Last: Galizzi Author-WorkPlace-Name: University of Brescia Abstract: We explore the relationship between litigation rates and the number of lawyers, in a typical supplier-induced demand (SID) frame. Drawing on an original panel dataset for the 169 Italian courts of justice between 2000 and 2007, we first document that the number of lawyers is positively correlated with different measures of litigation rate. Then, using an instrumental variables strategy we find that a 10 percent increase of lawyers over population is associated with an increase between 1.6 to 6 percent in civil litigation rates. Thus, our empirical analysis supports the SID hypothesis for the Italian lawyers: following an increase in their relative number, lawyers may exploit their informational advantage to induce clients to access to courts even when litigation is unnecessary or ineffective. Keywords: Lawyers, Litigiosity, Causality Classification-JEL: F22, J15, K42, R10 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.53 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-053.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.53 Title: Religious Organizations Author-Name: Gilat Levy Author-X-Name-First: Gilat Author-X-Name-Last: Levy Author-WorkPlace-Name: LSE Author-Name: Ronny Razin Author-X-Name-First: Ronny Author-X-Name-Last: Razin Author-WorkPlace-Name: LSE Abstract: We propose a model of religious organizations which relies on the ability of such organi-zations and personal utility shocks. We show how religious organizations arise endogenously and characterize their features. Specifically, we find that members of the religious organization share similar beliefs and are more likely to cooperate with one another in social interactions. We identify a "spiritual" as well as a "material" payoff for members of the religious organization. Our results explain and shed light on empirical phenomena such as the effects of secularization and economic development on religious beliefs and participation, the relation between the size of the religion and the intensity of its members’ beliefs, religious segregation and religious conflicts. Keywords: Economics of Religion, Religion, Organizations, Beliefs Classification-JEL: L30, D71 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.54 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-054.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.54 Title: ”Thou shalt not covet ...”: Prohibitions, Temptation and Moral Values Author-Name: Matteo Cervellati Author-X-Name-First: Matteo Author-X-Name-Last: Cervellati Author-WorkPlace-Name: University of Bologna and IZA Bonn Author-Name: Paolo Vanin Author-X-Name-First: Paolo Author-X-Name-Last: Vanin Author-WorkPlace-Name: University of Bologna Abstract: We propose a theory studying temptation in presence of both externally and internally sanctioned prohibitions. Moral values that (internally) sanction prohibited actions and their desire may increase utility by reducing self-control costs, thereby serving as partial commitment devices. We apply the model to crime and study the conditions under which agents would optimally adhere to moral values of honesty. Incentives to be moral are non- monotonic in the crime premium. Larger external punishments increase temptation and demand for morality, so that external and internal sanctions are complements. The model helps rationalizing stylized facts that proved difficult to explain with available theories. Keywords: Prohibitions, Temptation, Self-Control, Moral Values, Crime Classification-JEL: D03, K42, Z13 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.55 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-055.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.55 Title: Conscription and Crime: Evidence from the Argentine Draft Lottery Author-Name: Sebastian Galiani Author-X-Name-First: Sebastian Author-X-Name-Last: Galiani Author-WorkPlace-Name: Washington University in St. Louis Author-Name: Martín A. Rossi Author-X-Name-First: Martín A. Author-X-Name-Last: Rossi Author-WorkPlace-Name: Universidad de San Andrés Author-Name: Ernesto Schargrodsky Author-X-Name-First: Ernesto Author-X-Name-Last: Schargrodsky Author-WorkPlace-Name: Universidad Torcuato Di Tella Abstract: We estimate the causal effect of mandatory participation in the military service on the involvement in criminal activities. We exploit the random assignment of young men to military service in Argentina through a draft lottery to identify this causal effect. Using a unique set of administrative data that includes draft eligibility, participation in the military service, and criminal records, we find that participation in the military service increases the likelihood of developing a criminal record in adulthood. The effects are not only significant for the cohorts that performed military service during war times, but also for those that provided service at peace times. We also find that military service has detrimental effects on future performance in the labor market. Keywords: Military Service, Violent behavior, Crime Classification-JEL: K42 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.56 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-056.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.56 Title: Family Values and the Regulation of Labor Author-Name: Alberto Alesina Author-X-Name-First: Alberto Author-X-Name-Last: Alesina Author-WorkPlace-Name: Harvard and Igier Author-Name: Yann Algan Author-X-Name-First: Yann Author-X-Name-Last: Algan Author-WorkPlace-Name: Sciences Po, Ofce Author-Name: Pierre Cahuc Author-X-Name-First: Pierre Author-X-Name-Last: Cahuc Author-WorkPlace-Name: Ecole Polytechnique, Crest Author-Name: Paola Giuliano, UCLA Author-X-Name-First: Paola Author-X-Name-Last: Giuliano Author-WorkPlace-Name: UCLA Abstract: Flexible labor markets requires geographically mobile workers to be efficient. Otherwise, firms can take advantage of the immobility of workers and extract monopsony rents. In cultures with strong family ties, moving away from home is costly. Thus, individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of firms, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. There are also positive cross-country correlations between the strength of family ties and labor market rigidities. Finally, we find positive correlations between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, which suggests that labor market regulations have deep cultural roots. Keywords: Family Values, Regulation of Labor, Labor Markets Classification-JEL: J, J2, J4 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.57 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-057.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.57 Title: Women’s Rights and Development Author-Name: Raquel Fernández Author-X-Name-First: Raquel Author-X-Name-Last: Fernández Author-WorkPlace-Name: NYU Abstract: Why has the expansion of women’s economic and political rights coincided with economic development? This paper investigates this question, focusing on a key economic right for women: property rights. The basic hypothesis is that the process of development (i.e., capital accumulation and declining fertility) exacerbated the tension in men’s conflicting interests as husbands versus fathers, ultimately resolving them in favor of the latter. As husbands, men stood to gain from their privileged position in a patriarchal world whereas, as fathers, they were hurt by a system that afforded few rights to their daughters. The model predicts that declining fertility would hasten reform of women’s property rights whereas legal systems that were initially more favorable to women would delay them. The theoretical relationship between capital and the relative attractiveness of reform is non-monotonic but growth inevitably leads to reform. I explore the empirical validity of the theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920. Keywords: Women’s Rights, Property Rights, Economic Development Classification-JEL: D1, O1, Z13 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.58 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-058.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.58 Title: Social Capital and Political Accountability Author-Name: Tommaso Nannicini Author-X-Name-First: Tommaso Author-X-Name-Last: Nannicini Author-WorkPlace-Name: Bocconi University, IGIER & IZA Author-Name: Andrea Stella Author-X-Name-First: Andrea Author-X-Name-Last: Stella Author-WorkPlace-Name: Harvard University Author-Name: Guido Tabellini Author-X-Name-First: Guido Author-X-Name-Last: Tabellini Author-WorkPlace-Name: Bocconi University, IGIER, CEPR & CIFAR Author-Name: Ugo Troiano Author-X-Name-First: Ugo Author-X-Name-Last: Troiano Author-WorkPlace-Name: Harvard University Abstract: In this paper, we empirically investigate a channel through which social capital may improve economic wellbeing and the functioning of institutions: political accountability. The main idea is that voters who share norms of generalized morality demand higher standards of behavior on their elected representavtives, are more willing to bear the cost of acquiring information, and are more likely to base their vote on criteria of social welfare rather than (narrow) personal interest. We take this conjecture to the data using information on the Italian members of Parliament in the postwar period (1948–2001). The empirical evidence shows that the electoral punishment of political misbehavior is considerably larger in electoral districts with high social capital, where social capital is measured by blood donation, and political misbehavior refers to receiving a request of criminal prosecution or shirking in parliamentary activity. Accordingly, episodes of political misbehavior are less frequent in electoral districts with high social capital. Keywords: Social Capital, Culture, Political Agency Classification-JEL: D72, D73, Z10 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.59 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-059.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.59 Title: Juvenile Delinquency and Conformism Author-Name: Eleonora Patacchini Author-X-Name-First: Eleonora Author-X-Name-Last: Patacchini Author-WorkPlace-Name: Università di Roma “La Sapienza” and IZA Author-Name: Yves Zenou Author-X-Name-First: Yves Author-X-Name-Last: Zenou Author-WorkPlace-Name: Stockholm University and Research Institute of Industrial Economics (IFN), IZA, GAINS and CEPR Abstract: This paper studies whether conformism behavior affects individual outcomes in crime. We present a social network model of peer effects with ex-ante heterogeneous agents and show how conformism and deterrence affect criminal activities. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. A novel social network-based empirical strategy allows us to identify peer effects for different types of crimes. We find that conformity plays an important role for all crimes, especially for petty crimes. This suggests that, for juvenile crime, an effective policy should not only be measured by the possible crime reduction it implies but also by the group interactions it engenders. Keywords: Social Networks, Linear-in-means Model, Spatial Autoregressive Model, Social Norms Classification-JEL: A14, C21, D85, K42, Z13 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.60 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-060.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.60 Title: Using the Law to Change the Custom Author-Name: Gani Aldashev Author-X-Name-First: Gani Author-X-Name-Last: Aldashev Author-WorkPlace-Name: University of Namur and CRED Author-Name: Imane Chaara Author-X-Name-First: Imane Author-X-Name-Last: Chaara Author-WorkPlace-Name: University of Namur and CRED Author-Name: Jean-Philippe Platteau Author-X-Name-First: Jean-Philippe Author-X-Name-Last: Platteau Author-WorkPlace-Name: University of Namur and CRED Author-Name: Zaki Wahhaj Author-X-Name-First: Zaki Author-X-Name-Last: Wahhaj Author-WorkPlace-Name: University of Namur and CRED Abstract: We build a simple model of legal dualism in which a pro-poor legal reform, under certain conditions, causes the conflicting custom to go some way toward producing the change intended by the legislator. It then acts as an "outside anchor" that exerts a "magnet effect" on the custom. We illustrate this insight using examples on inheritance, marriage, and divorce issues in Sub-Saharan Africa and India. We also characterize the conditions under which a moderate pro-poor reform is more effective than a radical reform. Keywords: Custom, Statutory Law, Inequality, Legal Reform Classification-JEL: K40, O17, D74 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.61 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-061.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.61 Title: The Right Amount of Trust Author-Name: Jeffrey Butler Author-X-Name-First: Jeffrey Author-X-Name-Last: Butler Author-WorkPlace-Name: Einaudi Institute for Economics and Finance, EIEF Author-Name: Paola Giuliano Author-X-Name-First: Paola Author-X-Name-Last: Giuliano Author-WorkPlace-Name: UCLA, NBER, CEPR and IZA Author-Name: Luigi Guiso Author-X-Name-First: Luigi Author-X-Name-Last: Guiso Author-WorkPlace-Name: European University Institute, EIEF and CEPR Abstract: We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump-shaped in a measure of intensity of trust beliefs. Heterogeneity of trust beliefs in the population, coupled with the tendency of individuals to extrapolate beliefs about others from their own levels of trustworthiness, could generate this non-monotonic relationship: highly trustworthy individuals tend to form overly optimistic beliefs, to assume too much social risk and to be cheated more often, ultimately performing less well than those with a belief close to the mean trustworthiness of the population. On the other hand, less trustworthy individuals form overly pessimistic beliefs and avoid being cheated, but give up profitable opportunities, therefore underperforming. The cost of either too much or too little trust is comparable to the income lost by foregoing college. Our findings in large-scale survey data are supported and extended with experimental findings. We show that in the trust game, own trustworthiness and beliefs about others’ trustworthiness are strongly correlated and persistent and that patterns in earnings lost due to incorrect beliefs are comparable to those in the survey data. Keywords: Trust, Trustworthiness, Economic Performance, Culture, False Consensus Classification-JEL: A1, A12, D1, O15, Z1 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.62 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-062.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.62 Title: Alternative Paths toward a Low Carbon World Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, CESifo and CMCC Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Princeton University and CMCC Abstract: This paper analyzes the economic and investment implications of a series of climate mitigation scenarios, characterized by different levels of ambition in terms of long term stabilization goals and the transition to attain them. In particular, the implications of fairly ambitious scenarios are investigated for the first time by means of the model WITCH. Although milder climate objectives can be achieved at moderate costs, our results show that stringent stabilization paths, compatible with the target of the European Union and the G8, might have important economic repercussions. The timing of mitigation action influences the cost of meeting a target as well the stringency of the targets we can aspire to. To contain costs it is crucial to rely on a wide mitigation portfolio. Strong reductions in energy consumption through enhanced energy efficiency and life style changes are needed to achieve stringent climate policies. The analysis carried out in the present paper contains several idealistic assumptions that could be violated in the real world where some technologies may not be fully available, technology transfers and diffusion are imperfect, some world regions may not accept to reduce their GHG emissions, trading might be limited to some sectors or to a fraction of the total abatement effort, etc. This would increase the challenge of climate protection and the costs of reducing GHG emissions. Keywords: Climate Policy, Stabilization Costs Classification-JEL: C72, H23, Q25, Q28 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.63 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-063.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.63 Title: International Cooperation on Climate Change Adaptation from an Economic Perspective Author-Name: Kelly C. de Bruin Author-X-Name-First: Kelly C. Author-X-Name-Last: de Bruin Author-WorkPlace-Name: Environmental Economics and Natural Resources Group Wageningen University Author-Name: Rob B. Dellink Author-X-Name-First: Rob B. Author-X-Name-Last: Dellink Author-WorkPlace-Name: Environmental Economics and Natural Resources Group, Wageningen University Author-Name: Richard S.J. Tol Author-X-Name-First: Richard S.J. Author-X-Name-Last: Tol Author-WorkPlace-Name: Institute for Environmental Studies, Vrije Universiteit Economic and Social Research Institute, and Department of Spatial Economics, Vrije Universiteit Abstract: This paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects. Keywords: Climate Change, Adaptation Funding, Integrated Assessment Modeling Classification-JEL: H41, Q4, Q54 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.64 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-064.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.64 Title: The Linkages between Energy Efficiency and Security of Energy Supply in Europe Author-Name: Andrea Bigano Author-X-Name-First: Andrea Author-X-Name-Last: Bigano Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Ramon Arigoni Ortiz Author-X-Name-First: Ramon Author-X-Name-Last: Arigoni Ortiz Author-WorkPlace-Name: Basque Centre for Climate Change Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: Basque Centre for Climate Change Author-Name: Emanuela Menichetti Author-X-Name-First: Emanuela Author-X-Name-Last: Menichetti Author-WorkPlace-Name: Observatoire Méditerranéen de l'Energie Author-Name: Roberta Pierfederici Author-X-Name-First: Roberta Author-X-Name-Last: Pierfederici Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: It can be argued that one way to reduce the dependence from external energy sources, is simply to reduce the demand for energy. Energy savings may thus be considered a policy priority when concerns for energy security are particularly strong. Drawing on an original econometric approach, we check whether policies and measures that affect indicators of energy efficiency performance have an analogous effect on security of supply indicators, both at the whole economy level and within the main sectors of energy use in the EU 15 countries and Norway. Our analyses show that the indicators studied are affected by a number of policies and measures; however very few of them seem able to tackle effectively and simultaneously, energy efficiency, carbon efficiency and energy security. The main lesson to be drawn from this analysis is therefore that there is a number of energy efficiency policies in the EU that do work, but there is no silver bullet able to successfully address different policy objectives. Taking a more general perspective, what seems to work is the policy mix rather than this or that policy in insulation. Keywords: Energy Efficiency, Energy Security, Policy Effectiveness, Europe Classification-JEL: Q40, Q48, Q58, C33 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.65 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-065.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.65 Title: Eastern Europe and the Former Soviet Union since the Fall of the Berlin Wall: Review of the Changes in the Environment and Natural Resources Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: University of Bath, UK and Basque Centre for Climate Change Author-Name: Wan-Jung Chou Author-X-Name-First: Wan-Jung Author-X-Name-Last: Chou Author-WorkPlace-Name: University of Bath Abstract: This paper reviews the environmental record of the transition countries of Eastern Europe and Central Asia since the fall of the Berlin Wall, with a focus on areas of key concern to public policy at the present time. With the impacts of environment on public health being given the highest priority, we examined several associated health indicators at the national level, as well as looking at important environmental issues at the local level. In this respect, we focus on environmental problems related to air and water quality, land contamination, and solid waste management. Despite showing a highly differentiated performance across the region, the results suggest that inadequate environmental management seen in several of the transition countries in the past 20 years has put people’s health and livelihood under huge threats. Moreover, this paper looks at the development of policy responses and resources, i.e. environmental expenditures, in these countries, during the process of transiting from centrally planned economies to market-based one. Similarly, we identify various degrees of progress across the region. The findings reinforce the need for better coherence between national environmental expenditure and international environmental assistance, as well as the actual enforcement of national regulations and international agreements in those non-EU transition countries. Keywords: Eastern Europe, Environmental Record, Public Health Classification-JEL: N34, N54, I18 Creation-Date: 201005 Template-Type: ReDIF-Paper 1.0 Number: 2010.66 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-066.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.66 Title: Context and the VSL: Evidence from a Stated Preference Study in Italy and the Czech Republic Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland and FEEM Author-Name: Milan Šcasný Author-X-Name-First: Milan Author-X-Name-Last: Šcasný Author-WorkPlace-Name: Charles University Prague Abstract: We report on the results of a survey based on conjoint choice experiments that was specifically designed to investigate the effect of context on the Value of a Statistical Life (VSL), an important input into the calculation of the mortality benefits of environmental policies that reduce premature mortality. We define “context” broadly to include i) the cause of death (respiratory illness, cancer, road traffic accident), ii) the beneficiary of the risk reduction (adult v. child), and iii) the mode of provision of the risk reduction (public program v. private good). The survey was conducted following similar protocols in Italy and the Czech Republic. When do not distinguish for the cause of death, child and adult VSL are not significantly different from one another in Italy, and the difference is weak in the Czech sample. When we distinguish for the cause of death, we find that child and adult VSLs are different at the 1% level for respiratory illnesses and road-traffic accidents, but do not differ for cancer risks. We find evidence of a “cancer premium” and a “public program premium.” In both countries, the marginal utility of income is about 20% lower among wealthier people, which makes the VSL about 20% higher among respondents with incomes above the sample average. The discount rate implicit in people‘s choices is effectively zero. We conclude that there is heterogeneity in the VSL, and that such heterogeneity is primarily driven by risk characteristics and mode of delivery of the risk reduction, rather than by individual characteristics of the respondent (e.g., income and education). For the most part, our results do not disagree with environmental policy analyses that use the same VSL for children and adults, and that apply a cancer premium. Keywords: VSL, Conjoint Choice Experiments, Mortality Risk Reductions, Cost-benefit Analysis, Forced Choice Questions Classification-JEL: I18, J17, K32, Q51 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.67 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-067.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.67 Title: The Economic and Environmental Effects of an EU Ban on Illegal Logging Imports. Insights from a CGE Assessment Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Milan and Euromediterranean Center for Climate Change (CMCC) Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euromediterranean Center for Climate Change (CMCC) Author-Name: Renato Rosa Author-X-Name-First: Renato Author-X-Name-Last: Rosa Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euromediterranean Center for Climate Change (CMCC) Abstract: Illegal logging is widely recognized as a major economic problem and one of the causes of environmental degradation. Increasing awareness of its negative effects has fostered a wide range of proposals to combat it by major international conservation groups and political organizations. Following the 2008 US legislation which prohibits the import of illegally harvested wood and wood products, the European Union (EU) is now discussing a legislation proposal which would ban illegal timber from the EU market. In this study we use the ICES computable general equilibrium model to estimate the reallocation of global demand and timber imports following the pending EU legislation. With this exercise our final objective is to assess the economic impacts and measure the potential emission reduction resulting from the introduction of this type of policy. Results show that while the EU ban does not seem particularly effective in reducing illegal logging activities, its main effect will be the removal of illegal logs from the international markets. In addition, the unilateral EU ban on illegal logs increases secondary wood production in illegal logging countries as their exports become relatively more competitive. Through this mechanism, part of the banned, illegal timber will re-enter the international trade flows, but it will be “hidden” as processed wood. This effect is, however, limited. Finally, given the limited effect on overall economic activity, effects on GHG emissions are also limited. Direct carbon emissions from logging activities can decrease from 2.5 to 0.6 million tons per year. Keywords: Forestry, Illegal Logging, International Trade, Economy and Environment, Computable General Equilibrium Models Classification-JEL: D58, Q23, Q56, R13 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.68 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-068.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.68 Title: Optimal Investment and Financial Strategies under Tax Rate Uncertainty Author-Name: Alessandro Fedele Author-X-Name-First: Alessandro Author-X-Name-Last: Fedele Author-WorkPlace-Name: University of Brescia Author-Name: Paolo M. Panteghini Author-X-Name-First: Paolo M. Author-X-Name-Last: Panteghini Author-WorkPlace-Name: University of Brescia and CESifo Author-Name: Sergio Vergalli Author-X-Name-First: Sergio Author-X-Name-Last: Vergalli Author-WorkPlace-Name: University of Brescia and FEEM Abstract: In this paper we apply a real-option model to study the effects of tax rate uncertainty on a firm's decisions. In doing so, we depart from the relevant literature, which focuses on fully equity-financed investment projects. By letting a representative firm borrow optimally, we show that debt finance not only encourages investment activities but can also substantially mitigate the effect of tax rate uncertainty on investment timing. Keywords: Capital Levy, Corporate Taxation, Default Risk, Real Options Classification-JEL: H2 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.69 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-069.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.69 Title: Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt Author-Name: Carlo Cambini Author-X-Name-First: Carlo Author-X-Name-Last: Cambini Author-WorkPlace-Name: Politecnico di Torino, IMT Lucca and FEEM Author-Name: Laura Rondi Author-X-Name-First: Laura Author-X-Name-Last: Rondi Author-WorkPlace-Name: Politecnico di Torino and FEEM Abstract: This paper examines the investment and financial decisions of a sample of 92 EU regulated utilities, taking into account key institutional features of EU public utilities, such as: a) regulation by agencies with various degrees of independence; b) partial ownership of the state in the regulated firm; and c) the government’s political orientation, which may ultimately influence the regulatory climate to be either more pro-firm or more pro-consumers. Our results show that regulatory independence matters for both investment and financial decisions. Investment increases under an Independent Regulatory Agency (IRA), while ownership has no effect. Leverage also increases when the IRA is in place, especially so if the regulated firm is privately controlled. Finally political orientation does matter, as firm investment increases under more conservative (pro-firm) governments, but this effect appears to revert when the IRA is in place. Keywords: Regulated Utilities, Investment, Capital Structure, Private and State Ownership, Regulatory Independence, overnment’s Political Orientation Classification-JEL: G31, G32, L33, L51, L90 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.70 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-070.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.70 Title: Environmental Policy, Education and Growth with Finite Lifetime: the Role of Abatement Technology Author-Name: Xavier Pautrel Author-X-Name-First: Xavier Author-X-Name-Last: Pautrel Author-WorkPlace-Name: Université de Nantes, Laboratoire d’Économie et de Management de Nantes (LEMNA), Institut d’Économie et de Management de Nantes - IAE Abstract: This note shows that the assumptions about the abatement technology modify the impact of the environmental taxation (both the size and the “direction”) on the long-run growth driven by human capital accumulation à la Lucas (1988), when the source of pollution is private consumption and lifetime is finite. When the human capital’s share in the abatement services production is higher (respectively lower) than in the final output production, a higher environmental tax reduces (resp. increases) the allocation of human capital in production sectors (abatement service and final output) and boostes (resp. decreases) the BGP rate of growth. When abatement services are produced with the final output, the environmental taxation does not influence growth. Keywords: Growth, Environment, Overlapping Generations, Human capital, Finite Lifetime, Abatement Classification-JEL: Q5 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.71 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-071.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.71 Title: Agricultural Insurances Based on Meteorological Indices: Realizations, Methods and Research Agenda Author-Name: Antoine Leblois Author-X-Name-First: Antoine Author-X-Name-Last: Leblois Author-WorkPlace-Name: CIRED (Centre International de Recherche sur l’Environnement et le Développement) Author-Name: Philippe Quirion Author-X-Name-First: Philippe Author-X-Name-Last: Quirion Author-WorkPlace-Name: CIRED, CNRS, LMD-IPSL (Laboratoire de Météorologie Dynamique – Institut Pierre-Simon Laplace) Abstract: In many low-income countries, agriculture is mostly rain-fed and yields highly depend on climatic factors. Furthermore, farmers have little access to traditional crop insurance, which suffers from high information asymmetry and transaction costs. Insurances based on meteorological indices could fill this gap since they do not face such drawbacks. However their implementation has been slow so far. In this article, we first describe the most advanced projects that have taken place in developing countries using these types of crop insurances. We then describe the methodology that has been used to design such projects, in order to choose the meteorological index, the indemnity schedule and the insurance premium. We finally draw an agenda for research in economics on this topic. In particular, more research is needed on implementation issues, on the assessment of benefits, on the way to deal with climate change, on the spatial variability of weather and on the interactions with other hedging methods. Keywords: Agriculture, Insurance, Climatic Risk Classification-JEL: G21, O12, Q12, Q18, Q54 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.72 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-072.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.72 Title: The Causes of Corruption: Evidence from China Author-Name: Bin Dong Author-X-Name-First: Bin Author-X-Name-Last: Dong Author-WorkPlace-Name: The School of Economics and Finance, Queensland University of Technology Author-Name: Benno Torgler Author-X-Name-First: Benno Author-X-Name-Last: Torgler Author-WorkPlace-Name: The School of Economics and Finance, Queensland University of Technology, CREMA – Center for Research in Economics, Management and the Arts and CESifo Abstract: In this study we explore in detail the causes of corruption in China using two different sets of data at the regional level (provinces and cities). We observe that regions with more anti-corruption efforts, histories of British rule, higher openness, more access to media and relatively higher wages of government employees are markedly less corrupt; while social heterogeneity, regulation, abundance of resource and state-owned enterprises substantially breed regional corruption. Moreover, fiscal decentralization is discovered to depress corruption significantly, while administrative decentralization fosters local corruption. We also find that there is currently a positive relationship between corruption and economic development in China that is mainly driven by the transition to a market economy. Keywords: Corruption, China, Government, Decentralization, Deterrence, Social Heterogeneity Classification-JEL: D730, H110, K420 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.73 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-073.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.73 Title: The Consequences of Corruption: Evidence from China Author-Name: Bin Dong Author-X-Name-First: Bin Author-X-Name-Last: Dong Author-WorkPlace-Name: The School of Economics and Finance, Queensland University of Technology Author-Name: Benno Torgler Author-X-Name-First: Benno Author-X-Name-Last: Torgler Author-WorkPlace-Name: The School of Economics and Finance, Queensland University of Technology, CREMA – Center for Research in Economics, Management and the Arts and CESifo Abstract: With complementary Chinese data sets and alternative corruption measures, we explore the consequences of corruption. Adopting a novel approach we provide evidence that corruption can have both, positive and negative effects, on economic development. The overall impact of corruption might be the balance of the two simultaneous effects within a specific institutional environment (“grease the wheels” and “sand the wheels”). Corruption is observed to considerably increase income inequality in China. We also find that corruption strongly reduces tax revenue. Looking at things from an expenditure point of view we observe that corruption significantly decreases government spending on education, R&D and public health in China. We also observe that regional corruption significantly reduces inbound foreign direct investment in Chinese regions, which indicates that the pollution haven hypothesis may not hold in China. This finding sheds a new light on the “China puzzle” that China is the largest developing host of FDI while it is appears to be very corrupt. Finally we observe that corruption substantially aggravates pollution probably through loosening environment regulation, and that it modifies the effects of trade openness and FDI on the stringency of environmental policy in a manner opposite to that observed in literature to date. Keywords: Corruption, China, Government, Economic Development, Inequality, Environment Classification-JEL: D720, H110, K420 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.74 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-074.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.74 Title: The Oil-Based Economies International Research Project. The Case of Iran Author-Name: Fereydoun Verdinejad Author-X-Name-First: Fereydoun Author-X-Name-Last: Verdinejad Author-WorkPlace-Name: Faculty of Management, University of Tehran & Economic History Department, Faculty of Letters and Philosophy, University of Milan, Fondazione Eni Enrico Mattei Author-Name: Yasaman Gorji Author-X-Name-First: Yasaman Author-X-Name-Last: Gorji Author-WorkPlace-Name: Faculty of Management, University of Tehran & Economic History Department, Faculty of Letters and Philosophy, University of Milan, Fondazione Eni Enrico Mattei Abstract: In order to activate the cycle of wealth production, promote social justice and eliminate poverty and inequality, developing countries are currently faced with a multiplicity of structural problems. According to some economic theories, this is mainly due to inefficient or lack of access to financial resources, which has proved a major obstacle in activating the cycle of wealth production in such countries. On this assumption, countries with huge oil reserves including Iran, should not encounter obstacles in terms of creating and accelerating the national cycle of wealth production. However, the fact is almost all major oil-producing countries and the main exporters of petroleum products in the world are dealing with serious structural issues in establishing a natural cycle of wealth production and a cycle of wealth and income distribution. In order to examine the dependence of Iran’s economic systems (as one of the major exporters of petroleum products) on oil revenues, the paper shall first present an overview of the energy sector in these countries by expounding on their conditions and features and redefine the issue. Thus, in addition to an overview of Iran’s unique geographical and demographic features and a brief account of its history of oil discovery and its effects on the country’s continuum of social and historical events, the paper is going to elaborate on its oil and gas reserves and resources. In the end, considering the huge effect of petroleum export on Iran’s annual budget and its economy and the country’s necessities and obligations, the paper explains some strategies for reducing the economy’s dependence on oil and gas resources in the future and the main obstacles to implementation of these strategies. Keywords: Oil-Based Economies, Iran, Wealth Production, Income Distribution Classification-JEL: O, O43, Q43, Q48 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.75 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-075.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.75 Title: Trade and Geography in the Economic Origins of Islam: Theory and Evidence Author-Name: Stelios Michalopoulos Author-X-Name-First: Stelios Author-X-Name-Last: Michalopoulos Author-WorkPlace-Name: Tufts University Author-Name: Alireza Naghavi Author-X-Name-First: Alireza Author-X-Name-Last: Naghavi Author-WorkPlace-Name: University of Bologna and FEEM Author-Name: Giovanni Prarolo Author-X-Name-First: Giovanni Author-X-Name-Last: Prarolo Author-WorkPlace-Name: University of Bologna and FEEM Abstract: This research examines the economic origins of Islam and uncovers two empirical regularities. First, Muslim countries, virtual countries and ethnic groups, exhibit highly unequal regional agricultural endowments. Second, Muslim adherence is systematically larger along the pre-Islamic trade routes in the Old World. The theory argues that this particular type of geography (i) determined the economic aspects of the religious doctrine upon which Islam was formed, and (ii) shaped its subsequent economic performance. It suggests that the unequal distribution of land endowments conferred differential gains from trade across regions, fostering predatory behavior from the poorly endowed ones. In such an environment it was mutually beneficial to institute a system of income redistribution. However, a higher propensity to save by the rich would exacerbate wealth inequality rendering redistribution unsustainable, leading to the demise of the Islamic unity. Consequently, income inequality had to remain within limits for Islam to persist. This was instituted via restrictions on physical capital accumulation. Such rules rendered the investments on public goods, through religious endowments, increasingly attractive. As a result, capital accumulation remained low and wealth inequality bounded. Geography and trade shaped the set of economically relevant religious principles of Islam affecting its economic trajectory in the preindustrial world. Keywords: Religion, Islam, Geography, Physical Capital, Human Capital, Land Inequality, Wealth Inequality, Trade Classification-JEL: O10, O13, O16, O17, O18, F10, Z12 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.76 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-076.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.76 Title: China in the Transition to a Low-Carbon Economy Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Research Program East-West Center Abstract: China, from its own perspective cannot afford to, and from an international perspective, is not allowed to continue on the conventional path of encouraging economic growth at the expense of the environment. The country needs to transform its economy to effectively address concern about a range of environmental problems from burning fossil fuels and steeply rising oil import and international pressure to exhibit greater ambition in fighting global climate change. This paper first discusses China’s own efforts towards energy saving and pollutants cutting, the widespread use of renewable energy and participation in clean development mechanism, and puts carbon reductions of China’s unilateral actions into perspective. Given that transition to a low carbon economy cannot take place overnight, the paper then discusses China’s policies on promoting the use of low-carbon energy technologies and nuclear power and efforts to secure stable oil and gas supplies during this transition period. Based on these discussions, the paper provides some recommendations on issues related to energy conservation and pollution control, wind power, nuclear power, clean coal technologies, and overseas oil and gas supplies, and articulates a roadmap for China regarding its climate commitments to 2050. Keywords: Energy Saving, Renewable Energy, Clean Development Mechanism, Nuclear Power, Power Generation, Oil and Gas, Post-Copenhagen Climate Negotiations, China Classification-JEL: Q42, Q48, Q52, Q54, Q58 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.77 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-077.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.77 Title: Are You SURE You Want to Waste Policy Chances? Waste Generation, Landfill Diversion and Environmental Policy Effectiveness in the EU15 Author-Name: Valentina Iafolla Author-X-Name-First: Valentina Author-X-Name-Last: Iafolla Author-WorkPlace-Name: University of Ferrara Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara, University of Bologna and the National Research Council CERIS-CNR DSE Milan Author-Name: Francesco Nicolli Author-X-Name-First: Francesco Author-X-Name-Last: Nicolli Author-WorkPlace-Name: University of Ferrara Abstract: We empirically test delinking of waste dynamics with regard to economic growth and the effectiveness of environmental and specific waste-related policies, by exploiting a newly constructed, integrated waste-economic-policy dataset based on official data for the EU15 for 1995-2007. We find that absolute delinking for waste generation is far from being achieved in the EU despite fairly stringent and longstanding policy commitment that goes back to the mid 1990s, but which however is biased towards waste management and waste disposal rather than waste prevention. Policy as well as country structural factors seem to impact instead on landfill diversion. Nevertheless, country heterogeneity matters: SURE based analyses show that EU average figures often hide high variance. Their results provide food for thought for a future most comprehensive EU waste policy strategy, which is now aimed mainly at landfill diversion, within a framework strongly oriented to allowing countries to decide about the implementation of EU directives. Keywords: Waste Generation, Landfill Diversion, SUR, EU Waste Policy, Environmental Policy, Delinking Classification-JEL: C23, Q38, Q56 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.78 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-078.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.78 Title: Illiquidity and all its Friends Author-Name: Jean Tirole Author-X-Name-First: Jean Author-X-Name-Last: Tirole Author-WorkPlace-Name: Toulouse School of Economics Abstract: The recent crisis was characterized by massive illiquidity. This paper reviews what we know and don't know about illiquidity and all its friends: market freezes, fire sales, contagion, and ultimately insolvencies and bailouts. It first explains why liquidity cannot easily be apprehended through a single statistics, and asks whether liquidity should be regulated given that a capital adequacy requirement is already in place. The paper then analyzes market breakdowns due to either adverse selection or shortages of financial muscle, and explains why such breakdowns are endogenous to balance sheet choices and to information acquisition. It then looks at what economics can contribute to the debate on systemic risk and its containment. Finally, the paper takes a macroeconomic perspective, discusses shortages of aggregate liquidity and analyses how market value accounting and capital adequacy should react to asset prices. It concludes with a topical form of liquidity provision, monetary bailouts and recapitalizations, and analyses optimal combinations thereof; it stresses the need for macro-prudential policies. Keywords: Liquidity, Contagion, Bailouts, Regulation Classification-JEL: E44, E52, G28 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.79 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-079.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.79 Title: International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help? Author-Name: Michael Finus Author-X-Name-First: Michael Author-X-Name-Last: Finus Author-WorkPlace-Name: University of Exeter Author-Name: Pedro Pintassilgo Author-X-Name-First: Pedro Author-X-Name-Last: Pintassilgo Author-WorkPlace-Name: University of Algarve Abstract: Na and Shin (1998) showed that the veil of uncertainty can be conducive to the success of self-enforcing international environmental agreements. Later papers confirmed this negative conclusion about the role of learning. In the light of intensified research efforts worldwide to reduce uncertainty about the environmental impact of emissions and the cost of reducing them, this conclusion is intriguing. The purpose of this paper is threefold. First, we analyze whether the result carries over to a more general setting without restriction on the number of players and which considers not only no and full learning but also partial learning. Second, we test whether the conclusion also holds if there is uncertainty about abatement costs instead of uncertainty about the benefits from global abatement. Third, we propose a transfer scheme that mitigates the possible negative effect of learning and which may even transform it into a positive effect. Keywords: Transnational Cooperation, Self-enforcing International Environmental Agreements, Uncertainty, Learning Classification-JEL: C72, D62, D81, H41, Q20 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.80 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-080.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.80 Title: The Effect of Allowance Allocations on Cap-and-Trade System Performance Author-Name: Robert W. Hahn Author-X-Name-First: Robert W. Author-X-Name-Last: Hahn Author-WorkPlace-Name: University of Manchester and University of Oxford Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: John F. Kennedy School of Government, Harvard University Resources for the Future National Bureau of Economic Research Abstract: We examine an implication of the “Coase Theorem” which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature – such as the U.S. Congress – to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold – both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications. Keywords: Cap-and-Trade System, Tradable Permits, Coase Theorem, Allowance Allocation Classification-JEL: Q580, H110, L510 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.81 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-081.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.81 Title: The Effect of Risk, Ambiguity and Coordination on Farmers’ Adaptation to Climate Change: A Framed Field Experiment Author-Name: Francisco Alpizar Author-X-Name-First: Francisco Author-X-Name-Last: Alpizar Author-WorkPlace-Name: Environment for Development Center, Tropical Agricultural and Higher Education Center Author-Name: Fredrik Carlsson Author-X-Name-First: Fredrik Author-X-Name-Last: FCarlsson Author-WorkPlace-Name: Göteborg University Author-Name: Maria Naranjo Author-X-Name-First: Maria Author-X-Name-Last: Naranjo Author-WorkPlace-Name: Environment for Development Center, Tropical Agricultural and Higher Education Center Abstract: The risk of losses of income and productive means due to adverse weather associated to climate change can significantly differ between farmers sharing a productive landscape. It is important to learn more about how farmers react to different levels of risk, under measurable and unmeasurable uncertainty. Moreover, the costs associated to investments in reduced vulnerability to climatic events are likely to exhibit economies of scope. We explore these issues using a framed field experiment that captures realistically the main characteristics of production, and the likely weather related losses of premium coffee farmers in Tarrazu, Costa Rica. Given that the region recently was severely hit by an extreme, albeit very infrequent, climatic event, we expected to observe, and found high levels of risk aversion, but we do observe farmers making trade-offs under different risk levels. Although hard to disentangle at first sight given the high level of risk aversion, we find that farmers opt more frequently for safe options in a setting characterized by unknown risk. Finally, we find that farmers to a large extent are able to coordinate their decisions in order to achieve a lower cost of adaptation, and that communication among farmers strongly facilitates coordination. Keywords: Risk Aversion, Ambiguity Aversion, Technology Adoption, Climate change, Field Experiment Classification-JEL: C93, D81, H41, Q16, Q54 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.82 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-082.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.82 Title: Assessing the Role of Microfinance in Fostering Adaptation to Climate Change Author-Name: Shardul Agrawala Author-X-Name-First: Shardul Author-X-Name-Last: Agrawala Author-WorkPlace-Name: OECD Environment Directorate Author-Name: Maëlis Carraro Author-X-Name-First: Maëlis Author-X-Name-Last: Carraro Author-WorkPlace-Name: OECD Environment Directorate Abstract: Much of the current policy debate on adaptation to climate change has focussed on estimation of adaptation costs, ways to raise and to scale-up funding for adaptation, and the design of the international institutional architecture for adaptation financing. There is however little or no emphasis so far on actual delivery mechanisms to channel these resources at the sub-national level, particularly to target the poor who are also often the most vulnerable to the impacts of climate change. It is in this context that microfinance merits a closer look. This paper offers the first empirical assessment of the linkages between microfinance supported activities and adaptation to climate change. Specifically, the lending portfolios of the 22 leading microfinance institutions in two climate vulnerable countries – Bangladesh and Nepal - are analysed to assess the synergies and potential conflicts between microfinance and adaptation. The two countries had also been previously examined as part of an earlier OECD report on the links between macro-level Official Development Assistance and adaptation. This analysis provides a complementary “bottom-up” perspective on financing for adaptation. Insights from this analysis also have implications for OECD countries. This is because microfinance is also being increasingly tapped to reduce the vulnerability of the poor in domestic OECD contexts as well and may therefore have the potential to contribute to adaptation. The paper identifies areas of opportunity where microfinance could be harnessed to play a greater role in fostering adaptation, as well as its limitations in this context. It also explores the linkage between the top-down macro-financing for adaptation through international financial mechanisms and the bottom-up activities that can be implemented through microfinance. Keywords: Microfinance, Climate Change, Financing, Adaptation, Bangladesh, Nepal Classification-JEL: Q56, Q54, R51 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.83 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-083.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.83 Title: Improving Education as Key to Enhancing Adaptive Capacity in Developing Countries Author-Name: Wolfgang Lutz Author-X-Name-First: Wolfgang Author-X-Name-Last: Lutz Author-WorkPlace-Name: International Institute for Applied Systems Analysis (IIASA), Vienna Institute of Demography (VID) of the Austrian Academy of Sciences, and Vienna University of Economics and Business (WU) Abstract: This paper summarizes new scientific evidence supporting the hypothesis that among the many factors contributing to international development, the combination of education and health stands out as a root cause on which other dimensions of development depend. Much of this recent analysis is based on new reconstructions and projections of populations by age, sex and four levels of educational attainment for more than 120 countries using the demographic method of multi-state population dynamics. It also refers to a series of systems analytical population–development–environment case studies that comprehensively assess the role of population and education factors relative to other factors in the struggle for sustainable development. The paper also claims that most concerns about the consequences of population trends are in fact concerns about human capital, and that only by adding the ‘quality’ dimension of education to the traditionally narrow focus on size and age structure can some of the long-standing population controversies be resolved. Keywords: Human Capital, Education, Health, Root cause of development, ‘Quality’ dimension in population analysis Classification-JEL: I18, I28 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.84 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-084.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.84 Title: Community-based Adaptation: Lessons from the Development Marketplace 2009 on Adaptation to Climate Change Author-Name: Rasmus Heltberg Author-X-Name-First: Rasmus Author-X-Name-Last: Heltberg Author-WorkPlace-Name: The World Bank Author-Name: Radhika Prabhu Author-X-Name-First: Radhika Author-X-Name-Last: Prabhu Author-WorkPlace-Name: The World Bank Author-Name: Habiba Gitay Author-X-Name-First: Habiba Author-X-Name-Last: Gitay Author-WorkPlace-Name: The World Bank Abstract: The Development Marketplace 2009 focused on adaptation to climate change. This paper identifies lessons from the Marketplace and assesses their implications for adaptation support. Our findings are based on: statistical tabulation of all proposals; in-depth qualitative and quantitative analysis of the 346 semi-finalists; and interviews with finalists and assessors. Proposals were fuelled by deep concerns that ongoing climate change and its impacts undermine development and exacerbate poverty, migration and food insecurity. Proposals addressed both local poverty and climate change challenges, and offered a wide range of approaches to render local development more resilient to current climate variability. Therefore, support to community-based adaptation should: exploit its strong local grounding and synergies with development; help connect local initiatives to higher levels; and use complementary approaches to address policy issues. Keywords: Community-based Adaptation, Development Marketplace, Adaptation, Climate Change Classification-JEL: O1, Q5 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.85 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-085.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.85 Title: What is the Value of Hazardous Weather Forecasts? Evidence from a Survey of Backcountry Skiers Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland, Fondazione Eni Enrico Mattei and the School of Biological Sciences, Queen’s University Author-Name: Christoph M. Rheinberger Author-X-Name-First: Christoph M. Author-X-Name-Last: Rheinberger Author-WorkPlace-Name: WSL Institute for Snow and Avalanche Research SLF Author-Name: Andrea Leiter Author-X-Name-First: Andrea Author-X-Name-Last: Leiter Author-WorkPlace-Name: University of Innsbruck Author-Name: Charles A. McCormick Author-X-Name-First: Charles A. Author-X-Name-Last: McCormick Author-WorkPlace-Name: AREC, University of Maryland, College Park Author-Name: Andrew Mizrahi Author-X-Name-First: Andrew Author-X-Name-Last: Mizrahi Author-WorkPlace-Name: AREC, University of Maryland, College Park Abstract: What is the value of hazardous weather warnings? To answer this question, we focus on the avalanche bulletin for Switzerland issued by the WSL Institute for Snow and Avalanche Research (SLF). We take a survey-based, non-market valuation approach to estimating the value of hypothetical improvements in avalanche forecasting. We focus on backcountry skiers because (i) safety is arguably the most important type of benefit associated with the avalanche bulletin, (ii) they voluntarily undertake risks, and (iii) they perceive themselves and are generally perceived by others as skilled in avoiding risks. The respondents’ willingness to pay (WTP) for the improved services ranges between CHF 42 to 46, implying a mean value of statistical life (VSL) of CHF 1.75 million. We find that WTP increases with income and is higher among Swiss nationals and those who rate the current bulletin “useful.” Risk-tolerant individuals, persons who assessed their personal risk as lower than average, professional guides, and those who perceive themselves as proficient in using the existing bulletin report lower WTP figures. This suggests that the monetized value that people place on the enhanced bulletin reflects how productive these individuals are (or think they are) in using information to avoid avalanche risks. Keywords: Avalanche Risk, Mortality, Value of Hazardous Weather Forecasts, Contingent Valuation, Value of a Statistical Life Classification-JEL: D81, J17, Q26 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.86 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-086.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.86 Title: The Benefits of Contaminated Site Cleanup Revisited: The Case of Naples and Caserta, Italy Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland, Fondazione Eni Enrico Mattei and the School of Biological Sciences, Queen’s University Author-Name: Milan Šcasný Author-X-Name-First: Milan Author-X-Name-Last: Šcasný Author-WorkPlace-Name: Environment Center, Charles University Author-Name: Dennis Guignet Author-X-Name-First: Dennis Author-X-Name-Last: Guignet Author-WorkPlace-Name: University of Maryland Author-Name: Stefania Tonin Author-X-Name-First: Stefania Author-X-Name-Last: Tonin Author-WorkPlace-Name: University of Venice-IUAV Abstract: Guerriero and Cairns (2009) recently estimate that contaminated sites and improper waste management result in 848 excess deaths per year in the provinces of Naples and Caserta in Southern Italy, 403 of which are fatal cancers. In the absence of estimates of the Value of a Prevented Fatality (VPF) in Italy or specific to the hazardous waste context, they use figures recommended by DG-Environment. Contrary to their claims, estimates of the VPF are available for Italy that are specific to the hazardous waste context, and for causes of death that have been linked to contaminated site exposures. We review them in this paper. We also produce new estimates of the cancer VPF using data from a recent survey conducted in Milan, Italy, in late November to mid-December 2008. The evidence points to much higher VPF figures than the ones used by Guerriero and Cairns, and hence to much larger estimates of the reduced mortality benefits of remediating the hazardous waste in the Naples and Caserta areas. We also examine the importance of the discount rates, since the mortality benefits of remediation begin in 20 years and are assumed to continue over 30 years. Keywords: Value of a Prevented Fatality, Stated Preferences, Hazardous Waste Sites, Contaminated Sites, Cancer, Mortality Benefits, Cost-Benefit Analysis Classification-JEL: I18, J17, K32, Q51, Q53 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.87 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-087.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.87 Title: Traditional Representations of the Natural Environment and Biodiversity Conservation: Sacred Groves in Ghana Author-Name: Paul Sarfo-Mensah Author-X-Name-First: Paul Author-X-Name-Last: Sarfo-Mensah Author-WorkPlace-Name: Bureau of Integrated Rural Development, College of Agriculture and Natural Resources (CANR), Kwame Nkrumah University of Science and Technology (KNUST) Author-Name: William Oduro Author-X-Name-First: William Author-X-Name-Last: Oduro Author-WorkPlace-Name: Wildlife and Range Management, Faculty of Renewable Natural Resources, CANR, KNUST Author-Name: Fredrick Antoh Fredua Author-X-Name-First: Fredrick Author-X-Name-Last: Antoh Fredua Author-WorkPlace-Name: Bureau of Integrated Rural Development, College of Agriculture and Natural Resources (CANR), Kwame Nkrumah University of Science and Technology (KNUST) Author-Name: Stephen Amisah Author-X-Name-First: Stephen Author-X-Name-Last: Amisah Author-WorkPlace-Name: Wildlife and Range Management, Faculty of Renewable Natural Resources, CANR, KNUST Abstract: Local cosmologies and traditional perceptions of the natural environment, especially forests, have been a major influence in the management of the natural resources and biodiversity amongst rural communities in the transitional zone of Ghana. Sacred groves, which are typical outputs of traditional conservation practices, derive from indigenous religious beliefs and perceptions of forest. Sacred groves are believed to be the abode of local gods, ancestral spirits and other super natural beings. These beliefs and perceptions have in the past strongly supported the conservation of biodiversity. However, changes in local cosmologies threaten the protection of rare species, habitats and ecological processes. Data from the study confirm evidence from several studies in Ghana and elsewhere in West Africa that the tremendous ecological, social, institutional, religious and economic changes in communities that have protected sacred groves threaten the survival of these cultural artefacts. The paper demonstrates that in contemporary natural resources management, the sacred grove model may still be used as a means of restoring and protecting landscapes in indigenous communities. Even in communities where population explosion and economic pressures have reached thresholds that undermine the natural landscape, the model may still be useful to keep pockets of forests within the landscape. Keywords: Sacred Grove, Cultural Artefact, Communal Resource, Degradation, Sustainability and Biodiversity Classification-JEL: Q5 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.88 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-088.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.88 Title: A Theory of Firm Decline Author-Name: Gian Luca Clementi Author-X-Name-First: Gian Luca Author-X-Name-Last: Clementi Author-WorkPlace-Name: New York University and RCEA Author-Name: Thomas Cooley Author-X-Name-First: Thomas Author-X-Name-Last: Cooley Author-WorkPlace-Name: New York University and NBER Author-Name: Sonia Di Giannatal Author-X-Name-First: Sonia Author-X-Name-Last: Di Giannatal Author-WorkPlace-Name: Centro de Investigación y Docencia Económicas Abstract: We study the problem of an investor that buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter’s operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of repeated moral hazard. In particular, our framework generates a rationale for firm decline. As young firms accumulate capital, the claims of both investor (outside equity) and entrepreneur (inside equity) increase. At some juncture, however, even as the latter keeps on growing, invested capital and firm value start declining and so does the value of outside equity. The reason is that incentive provision is costlier the wealthier the entrepreneur (the greater is inside equity). In turn, this leads to a decline in the constrained–efficient level of effort and therefore to a drop in the return to investment. Keywords: Principal Agent, Moral Hazard, Hidden Action, Incentives, Survival, Firm Dynamics Classification-JEL: D82, D86, D92, G32 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.89 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-089.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.89 Title: Executive Compensation: Facts Author-Name: Gian Luca Clementi Author-X-Name-First: Gian Luca Author-X-Name-Last: Clementi Author-WorkPlace-Name: New York University and RCEA Author-Name: Thomas Cooley Author-X-Name-First: Thomas Author-X-Name-Last: Cooley Author-WorkPlace-Name: New York University and NBER Abstract: In this paper we describe the important features of executive compensation in the US from 1993 to 2006. Some confirm what has been found for earlier periods and some are novel. Notable facts are that: the compensation distribution is highly skewed; each year, a sizeable fraction of chief executives lose money; the use of security grants has increased over time; the income accruing to CEOs from the sale of stock increased; regardless of the measure we adopt, compensation responds strongly to innovations in shareholder wealth; measured as dollar changes in compensation, incentives have strengthened over time, measured as percentage changes in wealth, they have not changed in any appreciable way. Keywords: CEO, Pay–Performance Sensitivity, Stock, Options Classification-JEL: G34, J33, M52 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.90 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-090.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.90 Title: Job Instability and Family Planning: Insights from the Italian Puzzle Author-Name: Fabio Sabatini Author-X-Name-First: Fabio Author-X-Name-Last: Sabatini Author-WorkPlace-Name: University of Trento, Euricse and University of Siena Abstract: This paper carries out an investigation into the socio-economic determinants of couples’ childbearing decisions in Italy. Since having children is in most cases a “couple matter”, the analysis accounts for the characteristics of both the possible parents. Our results do not support established theoretical predictions according to which the increase in the opportunity cost of motherhood connected to higher female labour participation is responsible for the fall in fertility. On the contrary, the instability of the women’s work status (i.e. their being occasional, precarious, and low-paid workers) reveals to be a significant dissuasive deterrent discouraging the decision to have children. Couples with unemployed women are less likely to plan childbearing as well. Other relevant explanatory variables are current family size and the strength of family ties. Keywords: Fertility, Family Planning, Parenthood, Childbearing, Participation, Job Instability, Labour Precariousness, Social Capital, Italy Classification-JEL: C25, J13, Z1 Creation-Date: 201006 Template-Type: ReDIF-Paper 1.0 Number: 2010.91 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-091.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.91 Title: Copenhagen and Beyond: Reflections on China’s Stance and Responses Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Research Program East-West Center Abstract: China had been singled out by Western politicians and media for dragging its feet on international climate negotiations at Copenhagen, the accusations previously always targeted on the U.S. To put such a criticism into perspective, this paper provides some reflections on China’s stance and reactions at Copenhagen. While China’s reactions are generally well rooted because of realities at home, some reactions could have been handled more effectively for a better image of China. The paper also addresses the reliability of China’s statistics on energy and GDP, the issue crucial to the reliability of China’s carbon intensity commitments. The paper discusses flaws in current international climate negotiations and closes with my suggestion that international climate negotiations need to focus on 2030 as the targeted date. Keywords: Copenhagen Climate Negotiations, Emissions Reductions, Carbon Intensity Target, Binding Emissions Caps, Statistics on Energy and GDP, Coal and Energy Consumption, China, USA Classification-JEL: Q41, Q43, Q48, Q52, Q54, Q58, O53 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.92 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-092.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.92 Title: Assessing China’s Energy Conservation and Carbon Intensity: How Will the Future Differ from the Past? Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Research Program East-West Center Abstract: As an important step towards building a “harmonious society” through “scientific development”, China has incorporated for the first time in its five-year economic plan an energy input indicator as a constraint. While it achieved a quadrupling of its GDP while cutting its energy intensity by about three quarters between 1980 and 2000, China has had limited success in achieving its own 20% energy-saving goal set for 2010 to date. Despite this great challenge at home, just prior to the Copenhagen climate summit, China pledged to cut its carbon intensity by 40-45% by 2020 relative its 2005 levels to help to reach an international climate change agreement at Copenhagen or beyond. This raises the issue of whether such a pledge is ambitious or just represents business as usual. To put China’s climate pledge into perspective, this paper examines whether this proposed carbon intensity goal for 2020 is as challenging as the energy-saving goals set in the current 11th five-year economic blueprint, to what extent it drives China’s emissions below its projected baseline levels, and whether China will fulfill its part of a coordinated global commitment to stabilize the concentration of greenhouse gas emissions in the atmosphere at the desirable level. Given that China’s pledge is in the form of carbon intensity, the paper shows that GDP figures are even more crucial to the impacts on the energy or carbon intensity than are energy consumption and emissions data by examining the revisions of China’s GDP figures and energy consumption in recent years. Moreover, the paper emphasizes that China’s proposed carbon intensity target not only needs to be seen as ambitious, but more importantly it needs to be credible. Given that China has shifted control over resources and decision making to local governments as the result of the economic reforms during the past three decades, the paper argues the need to carefully examine those objective and subjective factors that lead to the lack of local official’s cooperation on the environment, and concludes that their cooperation, and strict implementation and coordination of the policies and measures enacted are of paramount importance to meeting China’s existing energy-saving goal in 2010, its proposed carbon intensity target in 2020 and whatever climate commitments beyond 2020 that China may take. Keywords: Energy Saving, Renewable Energy, Carbon Intensity, Post-Copenhagen Climate Negotiations, Climate Commitments, China Classification-JEL: Q42, Q43, Q48, Q52, Q53, Q54, Q58 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.93 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-093.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.93 Title: The Environment and Directed Technical Change Author-Name: Daron Acemoglu Author-X-Name-First: Daron Author-X-Name-Last: Acemoglu Author-WorkPlace-Name: Massachusetts Institute of Technology and Canadian Institute for Advanced Research Author-Name: Philippe Aghion Author-X-Name-First: Philippe Author-X-Name-Last: Aghion Author-WorkPlace-Name: Harvard University, Stockholm School of Economics and Canadian Institute for Advanced Research Author-Name: Leonardo Bursztyn Author-X-Name-First: Leonardo Author-X-Name-Last: Bursztyn Author-WorkPlace-Name: Harvard University Author-Name: David Hemous Author-X-Name-First: David Author-X-Name-Last: Hemous Author-WorkPlace-Name: Harvard University Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints. A unique final good is produced by combining inputs from two sectors. One of these sectors uses "dirty" machines and thus creates environmental degradation. Research can be directed to improving the technology of machines in either sector. We characterize dynamic tax policies that achieve sustainable growth or maximize intertemporal welfare. We show that: (i) in the case where the inputs are sufficiently substitutable, sustainable long-run growth can be achieved with temporary taxation of dirty innovation and production; (ii) optimal policy involves both “carbon taxes” and research subsidies, so that excessive use of carbon taxes is avoided; (iii) delay in intervention is costly: the sooner and the stronger is the policy response, the shorter is the slow growth transition phase; (iv) the use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values and with sufficient substitutability between inputs, it is optimal to redirect technical change towards clean technologies immediately and optimal environmental regulation need not reduce long-run growth. Keywords: Environment, Exhaustible Resources, Directed Technological Change, Innovation Classification-JEL: Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.94 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-094.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.94 Title: On the Green Side of Trade Competitiveness? Environmental Policies and Innovation in the EU Author-Name: Valeria Costantini Author-X-Name-First: Valeria Author-X-Name-Last: Costantini Author-WorkPlace-Name: University of Roma Tre Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara, and CERIS-CNR Abstract: This paper aims to explore how the competitiveness of the EU economy, here captured by export dynamics over the medium run (1996-2007), has been affected by environmental regulation both on the public and private sector side. The strong and weak versions of the Porter hypothesis are tested by specifying the export dynamics of five aggregated manufacturing sectors classified by their technological or environmental content using a dynamic panel data estimator applied to a theoretically-based gravity model. When testing the strong version on export performances of manufacturing sectors, the overall effect of environmental policies does not conflict with export competitiveness. When testing the weak version using export flows of environmental goods, environmental policies, as well as innovation activities, all foster competitive advantages of green exports. Public policies and private innovation patterns trigger higher efficiency in the production process, thus turning the perception of environmental protection actions as a production cost into a net benefit. These results constitute useful advice for policy makers involved in the new wave of environmental tax reforms and green recovery packages currently debated at European Union level. Keywords: Environmental Policies, Porter Hypothesis, Technological Innovation, Export Performances, Gravity Model, European Union Classification-JEL: F14, O14, Q43, Q56 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.95 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-095.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.95 Title: The Impact of Mergers on the Degree of Competition in the Banking Industry Author-Name: Vittoria Cerasi Author-X-Name-First: Vittoria Author-X-Name-Last: Cerasi Author-WorkPlace-Name: Bicocca University Author-Name: Barbara Chizzolini Author-X-Name-First: Barbara Author-X-Name-Last: Chizzolini Author-WorkPlace-Name: Bocconi University Author-Name: Marc Ivaldi Author-X-Name-First: Marc Author-X-Name-Last: Ivaldi Author-WorkPlace-Name: Toulouse School of Economics and EHESS, Toulouse University Abstract: This paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We propose a measure of the degree of competiveness in each local market that is function also of market structure indicators. We then use the econometric model to evaluate the impact of horizontal mergers among incumbent banks on competition and discuss when, depending on the pre-merger structure of the market and geographic distribution of branches, the merger is anti-competitive. The paper has implications for competition policy as it suggests an applied tool to evaluate the potential anti-competitive impact of mergers. Keywords: Banking Industry, Competition and Market Structure, Merger Policy Classification-JEL: G21, L13, L59 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.96 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-096.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.96 Title: The Optimal Climate Policy Portfolio when Knowledge Spills Across Sectors Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change Author-Name: Lea Nicita Author-X-Name-First: Lea Author-X-Name-Last: Nicita Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy sector, we show that the combination between environmental and knowledge externalities provides a strong rationale for implementing a portfolio of policies for both emissions reduction and the internalisation of knowledge externalities. Moreover, we show that implementing technology policy as a substitute for stabilisation policy is likely to increase global emissions. Keywords: Technical Change, Climate Change, Development, Innovation, Spillovers Classification-JEL: C72, H23, Q25, Q28, O31, O41, Q54 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.97 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-097.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.97 Title: Three Key Elements of Post-2012 International Climate Policy Architecture Author-Name: Sheila M. Olmstead Author-X-Name-First: Sheila M. Author-X-Name-Last: Olmstead Author-WorkPlace-Name: chool of Forestry and Environmental Studies, Yale University, Resources for the Future Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: John F. Kennedy School of Government, Harvard University, Resources for the Future, National Bureau of Economic Research Abstract: We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change. Keywords: Global Climate Change, Global Warming, Policy Architecture, Kyoto Protocol Classification-JEL: Q54, Q58, Q48, Q39 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.98 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-098.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.98 Title: Interactions between State and Federal Climate Change Policies Author-Name: Lawrence H. Goulder Author-X-Name-First: Lawrence H. Author-X-Name-Last: Goulder Author-WorkPlace-Name: Stanford University National Bureau of Economic Research Resources for the Future Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: John F. Kennedy School of Government, Harvard University, Resources for the Future National Bureau of Economic Research Abstract: Federal action addressing climate change is likely to emerge either through new legislation or via the U.S. EPA’s authority under the Clean Air Act. The prospect of federal action raises important questions regarding the interconnections between federal efforts and state-level climate policy developments. In the presence of federal policies, to what extent will state efforts be cost-effective? How does the co-existence of state- and federal-level policies affect the ability of state efforts to achieve emissions reductions? This paper addresses these questions. We find that state-level policy in the presence of a federal policy can be beneficial or problematic, depending on the nature of the overlap between the two systems, the relative stringency of the efforts, and the types of policy instruments engaged. When the federal policy sets limits on aggregate emissions quantities, or allows manufacturers or facilities to average performance across states, the emission reductions accomplished by a subset of U.S. states may reduce pressure on the constraints posed by the federal policy, thereby freeing facilities or manufacturers to increase emissions in other states. This leads to serious “emissions leakage” and a loss of cost-effectiveness at the national level. In contrast, when the federal policy sets prices for emissions or does not allow manufactures to average performance across states, these difficulties are usually avoided. Even in circumstances involving problematic interactions, there may be other attractions of state-level climate policy. We evaluate a number of arguments that have been made to support state-level climate policy in the presence of federal policies, even when problematic interactions arise. Keywords: Global Climate Change, Federalism, Cap-And-Trade, Carbon Tax, Regulation Classification-JEL: H110, H770, K320, L510, Q480, Q540 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.99 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-099.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.99 Title: Innovation and Institutional Ownership Author-Name: Philippe Aghion Author-X-Name-First: Philippe Author-X-Name-Last: Aghion Author-WorkPlace-Name: Harvard University and CEPR Author-Name: John Van Reenen Author-X-Name-First: John Author-X-Name-Last: Van Reenen Author-WorkPlace-Name: London School of Economics (LSE), Centre for Economic Performance, NBER and CEPR Author-Name: Luigi Zingales Author-X-Name-First: Luigi Author-X-Name-Last: Zingales Author-WorkPlace-Name: University of Chicago, NBER and CEPR Abstract: We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional owners increase managerial incentives to innovate by reducing the career risk of risky projects. The data supports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitution effect between institutional ownership and product market competition (and managerial entrenchment generally), the career-concern model allows for complementarity. Empirically, we reject substitution effects. Second, CEOs are less likely to be fired in the face of profit downturns when institutional ownership is higher. Finally, using instrumental variables, policy changes and disaggregating by type of owner we find that the effect of institutions on innovation does not appear to be due to endogenous selection. Keywords: Career Concerns, Innovation, Institutional Ownership, Productivity and R&D Classification-JEL: G20, G32, O31, O32, O33 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.100 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-100.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.100 Title: The Solaria Syndrome: Social Capital in a Growing Hyper-technological Economy Author-Name: Angelo Antoci Author-X-Name-First: Angelo Author-X-Name-Last: Antoci Author-WorkPlace-Name: Università di Sassari Author-Name: Fabio Sabatini Author-X-Name-First: Fabio Author-X-Name-Last: Sabatini Author-WorkPlace-Name: Università di Siena Author-Name: Mauro Sodini Author-X-Name-First: Mauro Author-X-Name-Last: Sodini Author-WorkPlace-Name: Università di Pisa Abstract: We develop a dynamic model to analyze the sources and the evolution of social participation and social capital in a growing economy characterized by exogenous technical progress. Starting from the assumption that the well-being of agents basically depends on material and relational goods, we show that the best-case scenarios hold when technology and social capital both support just one of the two productions at the expenses of the other. However, trajectories are possible where technology and social interaction balance one another in fostering the growth of both the social and the private sector of the economy. Along such tracks, technology may play a crucial role in supporting a “socially sustainable” economic growth. Keywords: Technology, Economic Growth, Relational Goods, Social Participation, Social Capital Classification-JEL: O33, J22, O41, Z13 Creation-Date: 201007 Template-Type: ReDIF-Paper 1.0 Number: 2010.101 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-101.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.101 Title: On the Optimal Taxation of Common-Pool Resources Author-Name: Georgios Kossioris Author-X-Name-First: Georgios Author-X-Name-Last: Kossioris Author-WorkPlace-Name: Department of Mathematics, University of Crete Author-Name: Michael Plexousakis Author-X-Name-First: Michael Author-X-Name-Last: Plexousakis Author-WorkPlace-Name: Department of Applied Mathematics, University of Crete Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Athens University of Economics and Business and Beijer Fellow Author-Name: Aart de Zeeuw Author-X-Name-First: Aart Author-X-Name-Last: de Zeeuw Author-WorkPlace-Name: TSC, Tilburg University and Beijer Fellow Abstract: Recent research developments in common-pool resource models emphasize the importance of links with ecological systems and the presence of non-linearities, thresholds and multiple steady states. In a recent paper Kossioris et al. (2008) develop a methodology for deriving feedback Nash equilibria for non-linear differential games and apply this methodology to a common-pool resource model of a lake where pollution corresponds to benefits and at the same time affects the ecosystem services. This paper studies the structure of optimal state- dependent taxes that steer the combined economic-ecological system towards the trajectory of optimal management, and provides an algorithm for calculating such taxes. Keywords: Differential Games, non-linear Feedback Nash Equilibria, Ecosystems, Optimal State-dependent Tax Classification-JEL: Q25, C73, C61 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.102 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-102.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.102 Title: Liberalizing Climate-Friendly Goods and Technologies in the WTO: Product Coverage, Modalities, Challenges and the Way Forward Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: enior Fellow Research Program East-West Center Abstract: The Doha Round Agenda (paragraph 31(3)) mandates to liberalize environmental goods and services. This mandate offers a good opportunity to put climate-friendly goods and services on a fast track to liberalization. Agreement on this paragraph should represent one immediate contribution that the WTO can make to fight against climate change. This paper presents the key issues surrounding liberalized trade in climate-friendly goods and technologies in WTO environmental goods negotiations. It begins with what products to liberalize and how. Clearly, WTO environmental goods negotiations to date show that WTO member countries are divided by this key issue. Focusing on the issue, the paper explores options available to liberalize trade in climate-friendly goods and technologies, both within and outside the WTO, and along with these discussions, discusses how to serve the best interests of developing countries. Keywords: Environmental Goods and Services, Low-Carbon Goods and Technologies, Doha Round, WTO Classification-JEL: F18, F13, Q56, Q54, Q58, Q48 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.103 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-103.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.103 Title: Risky Activities and Strict Liability Rules: Delegating Safety Author-Name: Gérard Mondello Author-X-Name-First: Gérard Author-X-Name-Last: Mondello Author-WorkPlace-Name: University of Nice Sophia Antipolis, CREDECO, GREDEG, UMR 6727, CNRS Abstract: This paper studies the delegation of activities that pose serious risks to health and the environment in an economy regulated by strict liability schemes. Strict liability induces judgment-proof possibilities. Two civil liability regimes are then compared: a strict liability scheme and a capped strict liability one. The argument is led under a twofold asymmetric information assumption between the principal and the agent: the efficiency level in effort for safety and the agent’s level of wealth. The paper shows that standard strict liability under information asymmetries deters the efficient agent to compete and favors adverse selection. Then, under conditions, a capped strict liability regime is a better regime than a standard strict liability one because it induces the efficient agent to supply the level of safety effort equivalent to the first best solution. The counterpart is the perception of an informational rent by the efficient agent. At the optimum, this rent is minimized by the efficient contract supplied by the principal. Keywords: Environment, Strict Liability, Ex-Ante Regulation, Ex-Post Liability, Judgment-Proof, Environment Law, CERCLA, Environmental Liability Classification-JEL: K0, K32, Q01, Q58 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.104 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-104.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.104 Title: Are Academics Messy? Testing the Broken Windows Theory with a Field Experiment in the Work Environment Author-Name: João Ramos Author-X-Name-First: João Author-X-Name-Last: Ramos Author-WorkPlace-Name: School of Economics and Finance, Queensland University of Technology Author-Name: Benno Torgler Author-X-Name-First: Benno Author-X-Name-Last: Torgler Author-WorkPlace-Name: School of Economics and Finance, Queensland University of Technology, CREMA – Center for Research in Economics, Management and the Arts, Switzerland, NCER – National Centre for Econometric Research, and CESifo Abstract: We study the broken windows theory with a field experiment in a shared area of a workplace in academia (department common room). We explore academics’ and postgraduate students’ behaviour under an order condition (clean environment) and a disorder condition (messy environment). We find strong support that signs of disorderly behaviour triggers littering. In the disorder treatment 59% of the subjects litter compared to 18% in the order condition. The results remain robust when controlling compared to previous studies for a large set of factors in a multivariate analysis. When academic staff members and postgraduate students observe that others violated the social norm of keeping the common room clean the probability of littering increases ceteris paribus by around 40 percent. Keywords: Broken Windows Theory, Field Experiment, Littering Classification-JEL: Z130, C930, K420 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.105 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-105.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.105 Title: The Economic Impact of the Green Certificate Market through the Macro Multiplier Approach Author-Name: Maurizio Ciaschini Author-X-Name-First: Maurizio Author-X-Name-Last: Ciaschini Author-WorkPlace-Name: University of Macerata Author-Name: Francesca Severini Author-X-Name-First: Francesca Author-X-Name-Last: Severini Author-WorkPlace-Name: University of Macerata Abstract: In the last decade, as many other European countries, the Italian Government adopted several reforms in order to increase the use of Renewable Energy Sources (RES). The liberalization of the electricity market that represents one of these reforms aims to reach environmental benefits from the substitution of fossil fuel with renewable sources. The Italian Green Certificate market was introduced in 2002 in order to accomplish this objective and represents a mechanism where a quota of renewable electricity is imposed to suppliers in proportion to their sales. The electricity industries are obliged to meet this condition by producing the quantity of renewable electricity by means of a change in their production process, otherwise they must buy a number of certificates corresponding to the quota. This mechanism changes the importance of the electricity industry first in promoting climate protection, then in terms of the impact on the economy as a whole. A policy aimed to develop the market of green certificates may lead to environmental improvement by switching the energy production process to renewable resources. But above all an increase in demand for green certificates, resulting from a reform on the quota of renewable electricity, can generate positive change in all components of the industrial production. For this purpose, the paper aims to quantify the economic impact of a reform on Green Certificate market for the Italian system by means of the Macro Multiplier (MM) approach. The analysis is performed through the Hybrid Input-Output (I-O) model that allows expressing the energy ows in physical terms (GWh) while all other ows are expressed in monetary terms (€). Moreover, through the singular value decomposition of the inverse matrix of the model, which reveals the set of key structures of the exogenous change of final demand, we identify the appropriate key structure able to obtain both the expected positive total output change and the increase of electricity production from RES. Keywords: Environmental Policy, Hybrid I-O model, Macro Multiplier Classification-JEL: C67, E23, Q43, Q48 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.106 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-106.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.106 Title: Improving the Energy-Efficiency of Buildings: The Impact of Environmental Policy on Technological Innovation Author-Name: Joëlle Noailly Author-X-Name-First: Joëlle Author-X-Name-Last: Noailly Author-WorkPlace-Name: CPB Netherlands Bureau for Economic Policy Analysis The Hague Abstract: This paper investigates the impact of alternative environmental policy instruments on technological innovations aiming to improve energy-efficiency in buildings. The empirical analysis focuses on three main types of policy instruments, namely regulatory energy standards in buildings codes, energy taxes as captured by energy prices and specific governmental energy R&D expenditures. Technological innovation is measured using patent counts for specific technologies related to energy-efficiency in buildings (e.g. insulation, high-efficiency boilers, energy-saving lightings). The estimates for seven European countries over the 1989-2004 period imply that a strengthening of 10% of the minimum insulation standards for walls would increase the likelihood to file additional patents by about 3%. In contrast, energy prices have no significant effect on the likelihood to patent. Governmental energy R&D support has a small positive significant effect on patenting activities. Keywords: Innovation, Technological Change, Patents, Energy-Efficiency, Buildings, Environmental Policy Classification-JEL: O31, O34, Q55 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.107 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-107.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.107 Title: The Impact of Unilateral Climate Policy with Endogenous Plant Location and Market Size Asymmetry Author-Name: Francesca Sanna-Randaccio Author-X-Name-First: Francesca Author-X-Name-Last: Sanna-Randaccio Author-WorkPlace-Name: Sapienza Università di Roma Author-Name: Roberta Sestini Author-X-Name-First: Roberta Author-X-Name-Last: Sestini Author-WorkPlace-Name: Sapienza Università di Roma Abstract: This paper analyses the impact of unilateral climate policy on firms’ international location strategies in emission-intensive sectors, when countries differ in terms of market size. The cases of partial and total relocation via foreign direct investment are separately considered. A simple international duopoly model highlights the differences between short-term and long-term effects. In the short-term no change in location is a likely outcome in very capital-intensive sectors, and when there is a strategy shift this takes the form of partial instead of total relocation. In the long-run total relocation becomes a feasible outcome. However we found that, when tighter mitigation measures are introduced by the larger country and unit transport cost is high, with a pronounced market asymmetry the probability of firms not relocating abroad is high even in the long-term. The welfare implications of unilateral environmental measures are assessed considering global industrial pollution and accounting for shifts in location strategy. Keywords: Foreign Direct Investment, Carbon Leakage, Climate Policy, Relocation, Transport Costs, Welfare Classification-JEL: F12, F23, Q58 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.108 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-108.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.108 Title: Enviromental Performance and Regional Innovation Spillovers Author-Name: Valeria Costantini Author-X-Name-First: Valeria Author-X-Name-Last: Costantini Author-WorkPlace-Name: University of Roma III Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara, University of Bologna and CERIS-CNR Author-Name: Anna Montini Author-X-Name-First: Anna Author-X-Name-Last: Montini Author-WorkPlace-Name: University of Bologna Abstract: The achievement of positive environmental performance at national level could strongly depend on differences in local capabilities of both institutions and the private business sector. Environmental regulation alone is a weak instrument if the institutional and business environment cannot transform regulation strengths into opportunities. In this paper, we use the new environmental accounting matrix for polluting emissions now available for the 20 Italian Regions that covers 24 sectors and combines a shift-share approach with spatial econometric modelling. We provide evidence of the role played by internal innovation, innovation spillovers and regional policies in shaping the geographical distribution of environmental performance achievements. Keywords: Environmental Performance, Technological Innovation, Regional Spillovers, Polluting Emissions, Italian Regions Classification-JEL: Q53, Q55, Q56, R15 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.109 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-109.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.109 Title: Social Responsibility as a Driver for Local Sustainable Development Author-Name: Elena Costantino Author-X-Name-First: Elena Author-X-Name-Last: Costantino Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Maria Paola Marchello Author-X-Name-First: Maria Paola Author-X-Name-Last: Marchello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Cecilia Mezzano Author-X-Name-First: Cecilia Author-X-Name-Last: Mezzano Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The increased interconnection among local and global players induced by globalization, as well as the need for a complete application of the “subsidiarity principle”, calls for a re-thinking of the “corporate social responsibility” concept. This new concept broadens the perspective of the single company interacting with its own stakeholders in relation to specific social and environmental impacts, to a network of organizations, with different aims and natures, collaborating on relevant sustainability issues. In this paper, the authors will provide a definition of “Territorial Social Responsibility”, sustaining the multi-stakeholder approach as a driver toward local sustainable development. Firstly, theoretical approaches to sustainable development at the territorial level will be examined, identifying the most innovative ideas about governance, network relation and development theories. The idea of development focuses not only on the economic aspects, but on the structural and institutional factors. The existence of cooperative territorial networks is essential to fulfil the creation of tangible and intangible assets at the local level. At the same time, the effectiveness of the decision-making and rules’ system can stimulate and empower territorial networks to tackle sustainable development. An analytical framework, scheme-shaped, will be set in order to identify the main aspects, indicators and practices characterizing the territorial social responsibility concept. It will represent a first attempt to create a feasible instrument aimed at understanding how cooperative social responsible actors, operating in the same territory, could direct the path toward sustainable development. Keywords: Local Sustainable Development, Territorial Social Responsibility, Participation, Local Governance, Accountability, Sustainability Reporting, Multi-Stakeholder Approach, Networks Classification-JEL: M14, O10 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.110 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-110.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.110 Title: Path Dependence, Institutions and the Density of Economic Activities: Evidence from Italian Cities Author-Name: Marco Percoco Author-X-Name-First: Marco Author-X-Name-Last: Percoco Author-WorkPlace-Name: Department of Institutional Analysis and Public Management and CERTeT Bocconi University Abstract: In recent years a growing body of literature has begun to consider the possible presence of path dependence in the development processes of countries. This phenomenon has always been recognized in regional and urban studies because the path of development almost naturally follows a history-dependent spatial diffusion influenced by both physical geography and the quality of institutions. In this paper, I consider the case of firm concentration in Italy and its impact on local development. A large and growing literature has argued in favour of persisting effects of past institutions on current outcomes. Hence, in order to identify the impact of firm density on income, I use instruments from the history of a set of Italian cities: namely the presence of a university and status as a free-city state in the Early Middle Ages. I first show that those two variables had an important effect on the process of urban development between 1300 and 1861, together with favourable geographic conditions. Then, when I use these instruments to predict firm density, I find that the elasticity of income to firm density is close to 0.1. This result is interpreted as providing evidence of the historical roots of agglomeration economies in Italy. Keywords: Path dependence, Urban development, Geography, Institutions, Firm density Classification-JEL: O18, R12 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.111 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-111.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.111 Title: Biodiversity Valuation in Developing Countries: A Focus on Small Island Developing States (SIDS) Author-Name: Sonja S. Teelucksingh Author-X-Name-First: Sonja S. Author-X-Name-Last: Teelucksingh Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of the West Indies Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Ca’ Foscari University of Venice Abstract: The Millennium Development Goals explicitly recognise “sustainable development” as a target. A step towards this is a greater understanding of the significant role of biodiversity in rural communities of developing countries who depend most on the ecosystem goods and services and who as a result may suffer most from its continued degradation. Understanding the input of biodiversity in developing countries to the provision of the ecosystem goods and services (EGS) that are essential to their human well-being is seen as a significant first step in sustainable development, and environmental valuation is a necessary tool for achieving this objective. However, valuing biodiversity in a developing country context can be an intricate affair. While economic valuation literature yields a range of tried and tested methodological techniques for measuring biodiversity, the question remains as to whether these generalised techniques are capable of revealing the complexities of local environmental use in developing countries. A heterogeneous group, “developing countries” can be characterised by a range of factors existing in different intensities that can (1) impact the ways in which local communities interact with their environmental resources (2) impact the efficacy of the methodological and data collection process (3) impact the values obtained from the application of valuation techniques and (4) impact the implementation, success and sustainability of policy and management prescriptions. This paper attempts to address these issues by discussing the main characteristics of developing countries that can impact the biodiversity valuation process and, with specific reference to Small Island Developing States (SIDS), discussing how knowledge of these characteristics can assist the valuation process to better reveal the complex interaction between biodiversity and human welfare in a developing country context. Keywords: Biodiversity, Developing Countries, Small Island Developing States Classification-JEL: Q01, Q57 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.112 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-112.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.112 Title: In What Format and under What Timeframe Would China Take on Climate Commitments? A Roadmap to 2050 Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Senior Fellow Research Program East-West Center Abstract: In what format and under what timeframe China would take on climate commitments is of significant relevance to China because it is facing great pressure both inside and outside international climate negotiations to exhibit greater ambition and is being confronted with the threats of trade measures. It is of significant global relevance as well because when China’s emissions peak is crucial to determine when global emissions would peak and because what China is going to do in what format has significant implications for the level and ambition of commitments from other countries. In response to these concerns and to put China in a positive position, this paper maps out the roadmap for China’s specific climate commitments towards 2050. Taking many factors into consideration, the paper argues that China needs to take on absolute emissions caps around 2030. While this date is later than the time frame that the U.S. and other industrialized countries would like to see, it would probably still be too soon from China’s perspective. However, it is hard to imagine how China could apply the brakes so sharply as to switch from rapid emissions growth to immediate emissions cuts, without passing through several intermediate phases. To that end, the paper envisions that China needs the following three transitional periods of increasing climate obligations before taking on absolute emissions caps that will lead to the global convergence of per capita emissions by 2050: First, further credible energy-conservation commitments starting 2013 and aimed at cutting China’s carbon intensity by 45-50% by 2020; second, voluntary “no lose” emission targets starting 2018; and third, binding carbon intensity targets as its international commitment starting 2023. Overall, this proposal is a balanced reflection of respecting China’s rights to grow and recognizing China’s growing responsibility for increasing greenhouse gas emissions as China is approaching the world’s largest economy. Keywords: Carbon Intensity Target, Binding Emissions Caps, Post-Copenhagen Climate Negotiations, Energy Saving; Renewable Energy, Clean Development Mechanism, China, USA, India Classification-JEL: Q42, Q48, Q52, Q54, Q58 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.113 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-113.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.113 Title: A Numerical Analysis of Optimal Extraction and Trade of Oil under Climate Policy Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center for Climate Change Author-Name: Fabio Sferra Author-X-Name-First: Fabio Author-X-Name-Last: Sferra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: We introduce endogenous investments for increasing conventional and non-conventional oil extraction capacity in the integrated assessment model WITCH. The international price of oil emerges as the Nash equilibrium of a non-cooperative game. When carbon emissions are not constrained, oil is used throughout the century, with unconventional oil taking over conventional oil from mid-century onward. When carbon emissions are constrained, oil consumption drops dramatically and the oil price is lower than in the BaU. Unconventional oil is not extracted. Regional imbalances in the distribution of stabilisation costs are magnified and the oil-exporting countries bear, on average, costs three times larger than in previous estimates. Keywords: Climate Policy, Integrated Assessment, Oil Production, Oil Revenues, Oil Trade Classification-JEL: E17, F17, Q32, Q43, Q54 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.114 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-114.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.114 Title: Financial Innovation and Financial Fragility Author-Name: Nicola Gennaioli Author-X-Name-First: Nicola Author-X-Name-Last: Gennaioli Author-WorkPlace-Name: UPF and CREI Author-Name: Andrei Shleifer Author-X-Name-First: Andrei Author-X-Name-Last: Shleifer Author-WorkPlace-Name: Harvard University Author-Name: Robert Vishny Author-X-Name-First: Robert Author-X-Name-Last: Vishny Author-WorkPlace-Name: University of Chicago Abstract: We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive. Financial innovation can make both investors and intermediaries worse off. The model mimics several facts from recent historical experiences, and points to new avenues for financial reform. Keywords: Financial Innovation, Financial Fragility, Securities, Risks Classification-JEL: G, G11, G15, G2 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.115 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-115.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.115 Title: Internal Migration Across Italian regions: Macroeconomic Determinants and Accommodating Potential for a Dualistic Economy Author-Name: Romano Piras Author-X-Name-First: Romano Author-X-Name-Last: Piras Author-WorkPlace-Name: University of Cagliari Abstract: We provide econometric evidence that relative per capita GDP and relative unemployment rates are the main determinants of migration flows across Italian regions from 1970 to 2002. The empirical analysis is based on an accurate study of the dynamic properties of the series. In fact, we deal with the issues of non-stationarity and cointegration and estimate an error correction model in which both the short- and long-run dynamics are modelled at once. The regional unemployment rate is robustly inversely related with net regional migration rate, while per capita GDP is strongly positively linked with it. As far as the accommodating potential of internal migration to regional unbalances, we have detected very little room for such a role. Indeed, the degree of labour mobility across Italian regions cannot be active as an effective equilibrating mechanism. Keywords: Italy, Labour Migration, Internal Migration, Income Differences, Panel Cointegration Classification-JEL: C23, J61, R23 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.116 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-116.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.116 Title: Overlapping Coalitions, Bargaining and Networks Author-Name: Messan Agbaglah Author-X-Name-First: Messan Author-X-Name-Last: Agbaglah Author-WorkPlace-Name: Département de Sciences Economiques and CIREQ, Université de Montréal Author-Name: Lars Ehlers Author-X-Name-First: Lars Author-X-Name-Last: LEhlers Author-WorkPlace-Name: Département de Sciences Economiques and CIREQ, Université de Montréal Abstract: This paper extends the theory of endogenous coalition formation, with complete information and transferable utility, to the overlapping case. We propose a cover function bargaining game which allows the formation of overlapping coalitions at equilibrium. We show the existence of subgame perfect equilibrium and provide an algorithm to compute this equilibrium in the symmetric case. As an application, we establish an interesting link with the formation of networks. Keywords: Overlapping Coalitions, Cover Function, Bargaining, Symmetric Game, Network Classification-JEL: C71, C72, C78, D62, D85 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.117 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-117.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.117 Title: Spying in Multi-market Oligopolies Author-Name: Pascal Billand Author-X-Name-First: Pascal Author-X-Name-Last: Billand Author-WorkPlace-Name: CREUSET, Jean Monnet University Author-Name: Christophe Bravard Author-X-Name-First: Christophe Author-X-Name-Last: Bravard Author-WorkPlace-Name: CREUSET, Jean Monnet University Author-Name: Subhadip Chakrabarti Author-X-Name-First: Subhadip Author-X-Name-Last: Chakrabarti Author-WorkPlace-Name: School of Management and Economics, Queen’s University Belfast Author-Name: Sudipta Sarangi Author-X-Name-First: Sudipta Author-X-Name-Last: Sarangi Author-WorkPlace-Name: DIW Berlin and Department of Economics, Louisiana State University Abstract: We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some situations firms may refrain from spying even if it is costless. Moreover, even though spying leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare. Keywords: Oligopoly, Multimarket, Networks Classification-JEL: C70, L13, L20 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.118 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-118.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.118 Title: Marketing via Friends: Strategic Diffusion of Information in Social Networks with Homophily Author-Name: Roman Chuhay Author-X-Name-First: Roman Author-X-Name-Last: Chuhay Author-WorkPlace-Name: University of Alicante Abstract: The paper studies the impact of homophily on the optimal strategies of a monopolist, whose marketing campaign of new product relies on a word of mouth communication. Homophily is a tendency of people to interact more with those who are similar to them. In the model there are two types of consumers embedded into a social network, which differ in friendship preferences and desirable design of product. Consumers can learn about the product directly from an advertisement or from their neighbors. The monopolist chooses the product design and price to influence a pattern of communication among consumers. We find a number of results: (i) for low levels of homophily the product attractive to both types of consumers is preferred to specialized products; (ii) the price elasticity is increasing in homophily; (iii) an increase in the homophily benefits both the monopolist and consumers; and (iv) the product attractive to both types may be optimal even if the monopolist obtains profits only from sales to one type of consumers. Keywords: Networks, Word of Mouth, Viral Marketing, Homophily, Diffusion, Social Networks, Random Graphs, Monopoly, Pricing Strategy, Product Design, Marketing, Advertisement Classification-JEL: D21, D42, D60, D83, L11, L12 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.119 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-119.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.119 Title: Core-stable Rings in Second Price Auctions with Common Values Author-Name: Françoise Forges Author-X-Name-First: Françoise Author-X-Name-Last: Forges Author-WorkPlace-Name: Université Paris-Dauphine Author-Name: Ram Orzach Author-X-Name-First: Ram Author-X-Name-Last: Orzach Author-WorkPlace-Name: Oakland University Abstract: In a common value auction in which the information partitions of the bidders are connected, all rings are core-stable. More precisely, the ex ante expected utilities of rings, at the (noncooperative) sophisticated equilibrium proposed by Einy, Haimanko, Orzach and Sela (Journal of Mathematical Economics, 2002), describe a cooperative game, in characteristic function form, in spite of the underlying strategic externalities. A ring is core-stable if the core of this characteristic function is not empty. Furthermore, every ring can implement its sophisticated equilibrium strategy by means of an incentive compatible mechanism. Keywords: Auctions, Bayesian Game, Collusion, Core, Partition Form Game, Characteristic Function Classification-JEL: C71, C72, D44 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.120 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-120.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.120 Title: The Repeated Prisoner’s Dilemma in a Network Author-Name: Markus Kinateder Author-X-Name-First: Markus Author-X-Name-Last: Kinateder Author-WorkPlace-Name: Universidad de Navarra Abstract: Imperfect private monitoring in an infinitely repeated discounted Prisoner’s Dilemma played on a communication network is studied. Players observe their direct neighbors’ behavior only, but communicate strategically the repeated game’s history throughout the network. The delay in receiving this information requires the players to be more patient to sustain the same level of cooperation as in a complete network, although a Folk Theorem obtains when the players are patient enough. All equilibria under exogenously imposed truth-telling extend to strategic communication, and additional ones arise due to richer communication. There are equilibria in which a player lies. The flow of information is related with network centrality measures. Keywords: Repeated Game, Prisoner’s Dilemma, Imperfect Private Monitoring, Network, Strategic Communication, Centrality Classification-JEL: C72, C73, D85 Creation-Date: 201009 Template-Type: ReDIF-Paper 1.0 Number: 2010.121 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-121.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.121 Title: Harmful Signaling in Matching Markets Author-Name: Alexey Kushnir Author-X-Name-First: Alexey Author-X-Name-Last: Kushnir Author-WorkPlace-Name: Pennsylvania State University Abstract: Some labor markets have recently developed formal signalling mechanisms, e.g. the signalling for interviews in the job market for new Ph.D. economists. We evaluate the effect of such mechanisms on two-sided matching markets by considering a game of incomplete information between firms and workers. Workers have almost aligned preferences over firms: each worker has “typical” commonly known preferences with probability close to one and “atypical” idiosyncratic preferences with the complementary probability close to zero. Firms have some commonly known preferences over workers. We show that the introduction of a signalling mechanism is harmful for this environment. Though signals transmit previously unavailable information, they also facilitate information asymmetry that leads to coordination failures. As a result, the introduction of a signalling mechanism lessens the expected number of matches when signals are informative. Keywords: Signaling, Cheaptalk, Matching Classification-JEL: C72, C78, D80, J44 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.122 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-122.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.122 Title: Status-Seeking in Hedonic Games with Heterogeneous Players Author-Name: Emiliya Lazarova Author-X-Name-First: Emiliya Author-X-Name-Last: Lazarova Author-WorkPlace-Name: Queen's University Belfast Author-Name: Dinko Dimitrov Author-X-Name-First: Dinko Dimitrov Author-X-Name-Last: Dinko Dimitrov Author-WorkPlace-Name: Saarland University Abstract: We study hedonic games with heterogeneous player types that reflect her nationality, ethnic background, or skill type. Agents' preferences are dictated by status-seeking where status can be either local or global. The two dimensions of status define the two components of a generalized constant elasticity of substitution utility function. In this setting, we characterize the core as a function of the utility's parameter values and show that in all cases the corresponding cores are non-empty. We further discuss the core stable outcomes in terms of their segregating versus integrating properties. Keywords: Coalitions, Core, Stability, Status-seeking Classification-JEL: C78, J41, D71 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.123 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-123.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.123 Title: The Paradox of New Members in the EU Council of Ministers: A Non-cooperative Bargaining Analysis Author-Name: Maria Montero Author-X-Name-First: Maria Author-X-Name-Last: Montero Author-WorkPlace-Name: University of Nottingham, School of Economics Abstract: Power indices suggest that adding new members to a voting body may increase the power of an existing member, even if the number of votes of all existing members and the decision rule remain constant. This phenomenon is known as the paradox of new members. This paper uses the leading model of majoritarian bargaining and shows that the paradox is predicted in equilibrium for past EU enlargements. Furthermore, a majority of members would have been in favor of the 1981 enlargement even if members were bargaining over a fixed budget. Keywords: Majoritarian Bargaining, Weighted Voting, Power Measures, EU Enlargement, Paradox of New Members Classification-JEL: C71, C72, C78 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.124 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-124.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.124 Title: Stochastic Stability in the Best Shot Game Author-Name: Leonardo Boncinelli Author-X-Name-First: Leonardo Author-X-Name-Last: Boncinelli Author-WorkPlace-Name: Università degli Studi di Siena Author-Name: Paolo Pin Author-X-Name-First: Paolo Pin Author-X-Name-Last: Paolo Pin Author-WorkPlace-Name: Università degli Studi di Siena Abstract: The best shot game applied to networks is a discrete model of many processes of contribution to local public goods. It has generally a wide multiplicity of equilibria that we refine through stochastic stability. In this paper we show that, depending on how we define perturbations, i.e. the possible mistakes that agents can make, we can obtain very different sets of stochastically stable equilibria. In particular and non-trivially, if we assume that the only possible source of error is that of an agent contributing that stops doing so, then the only stochastically stable equilibria are those in which the maximal number of players contributes. Keywords: Networks, Best Shot Game, Stochastic Stability Classification-JEL: C72, C73, D85, H41 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.125 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2010-125.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.125 Title: Group Bargaining and Conflict Author-Name: Nicolas Quérou Author-X-Name-First: Nicolas Author-X-Name-Last: Quérou Author-WorkPlace-Name: Queen's University Belfast Abstract: We consider a situation where groups negotiate over the allocation of a surplus (which is used to fund group specific goods). Each group is composed of agents who have differing valuations for public goods. Members choose a representative to take decisions on their behalf. Specifically, representatives can decide to enter either a (cooperative) negotiation protocol or a conflict to appropriate the surplus. In the cooperative negotiations, disagreement corresponds to a pro rata allocation (as a function of the size of the groups). We analyse the conditions (on the internal composition of the groups) under which conflict will be preferred to negotiated agreements (and vice versa), and we derive welfare implications. Finally, we provide results of comparative statics that highlight the influence of changes in the internal composition of groups and in their relative size on the profitability of negotiated agreements. Keywords: Bargaining, Conflict, Agency Problem Classification-JEL: C78, D74, J52 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.126 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-126.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.126 Title: Diffusion of Innovations on Community Based Small Worlds: the Role of Correlation between Social Spheres Author-Name: Emily Tanimura Author-X-Name-First: Emily Author-X-Name-Last: Tanimura Author-WorkPlace-Name: Université Paris 1 Panthéon-la Sorbonne-CNRS Abstract: Which types of networks favor the diffusion of innovations in the sense that an innovation whose intrinsic benefits are greater than those of an established choice will be able to replace the latter when it is initially used only by a small fraction of a large population? For deterministic and regular networks there are characterizations, based on a coordination game model of the diffusion of innovations. Here we study this question for a class of irregular random networks, Small world networks, which are of interest as more realistic models of social networks. We consider a random graph model based on a community structure, in which the choice of a parameter allows us to obtain as special cases several well known models, in particular Watts' Small world. We show that there are different types of Small World graphs some which favor diffusion, others that do not. Our study suggests that the kinds of ties that exist between different communities of an individual play an important role. We interpret Watts' Small World as one with high correlation between social spheres of individuals and favorable to diffusion. In other Small Worlds where the communities of individuals are uncorrelated diffusion succeeds only for very large payoff benefits in favor of the innovation. Keywords: Diffiusion of innovations, Small World Networks, Contagion Threshold, Community Structure, Social Networks Classification-JEL: D85 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.127 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-127.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.127 Title: The Survival of the Conformist: Social Pressure and Renewable Resource Management Author-Name: Alessandro Tavoni Author-X-Name-First: Alessandro Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Advanced School of Economics at the University of Venice Author-Name: Maja Schlüter Author-X-Name-First: Maja Author-X-Name-Last: Schlüter Author-WorkPlace-Name: Leibniz-Institute of Freshwater Ecology and Inland Fisheries Author-Name: Simon Levin Author-X-Name-First: Simon Author-X-Name-Last: Levin Author-WorkPlace-Name: Department of Ecology and Evolutionary Biology at Princeton University Abstract: This paper examines the role of pro-social behavior as a mechanism for the establishment and maintenance of cooperation in resource use under variable social and environmental conditions. By coupling resource stock dynamics with social dynamics concerning compliance to a social norm prescribing non-excessive resource extraction in a common pool resource (CPR), we show that when reputational considerations matter and a sufficient level of social stigma affects the violators of a norm, sustainable outcomes are achieved. We find large parameter regions where norm-observing and norm-violating types coexist, and analyze to what extent such coexistence depends on the environment. Keywords: Cooperation, Social Norm, Ostracism, Common Pool Resource, Evolutionary Game Theory, Replicator Equation, Agent-based Simulation, Coupled Socio-resource Dynamics Classification-JEL: C73, Q20, D70 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.128 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-128.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.128 Title: Information, Stability and Dynamics in Networks under Institutional Constraints Author-Name: Norma Olaizola Author-X-Name-First: Norma Author-X-Name-Last: Olaizola Author-WorkPlace-Name: Universidad del País Vasco Author-Name: Federico Valenciano Author-X-Name-First: Federico Author-X-Name-Last: Valenciano Author-WorkPlace-Name: Universidad del País Vasco Abstract: In this paper we study the effects of institutional constraints on stability, efficiency and network formation. More precisely, an exogenous "societal cover" consisting of a collection of possibly overlapping subsets that covers the whole set of players and such that no set in this collection is contained in another specifies the social organization in different groups or "societies". It is assumed that a player may initiate links only with players that belong to at least one society that s/he also belongs to, thus restricting the feasible strategies and networks. In this way only the players in the possibly empty "societal core", i.e., those that belong to all societies, may initiate links with all individuals. In this setting the part of the current network within each connected component of the cover is assumed to be common knowledge to all players in that component. Based on this two-ingredient model, network and societal cover, we examine the impact of societal constraints on stable/efficient architectures and on dynamics. Keywords: Network, Non-cooperative Game, Dynamics Classification-JEL: C72 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.129 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-129.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.129 Title: Crime and Education in a Model of Information Transmission Author-Name: Darwin Cortés Author-X-Name-First: Darwin Author-X-Name-Last: Cortés Author-WorkPlace-Name: Universidad del Rosario Author-Name: Guido Friebel Author-X-Name-First: Guido Author-X-Name-Last: Friebel Author-WorkPlace-Name: Goethe-Universität Author-Name: Darío Maldonado Author-X-Name-First: Darío Author-X-Name-Last: Maldonado Author-WorkPlace-Name: Universidad del Rosario Abstract: We model the decisions of young individuals to stay in school or drop-out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumor and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. We first show that a society with fully rational students is less vulnerable to crime than an otherwise identical society with boundedly rational students. We also investigate the spillovers from the actions of talented students to less talented students and show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. This is always the case when the heterogeneity of students with respect to talent is sufficiently small. Keywords: Human Capital, The Economics of Rumors, Social Interactions, Urban Economics Classification-JEL: D82, D83, I28 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.130 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-130.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.130 Title: Static and Dynamic Efficiency of Irreversible Health Care Investments under Alternative Payment Rules Author-Name: Rosella Levaggi Author-X-Name-First: Rosella Author-X-Name-Last: Levaggi Author-WorkPlace-Name: University of Brescia Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: University of Padova and FEEM Author-Name: Paolo Pertile Author-X-Name-First: Paolo Author-X-Name-Last: Pertile Author-WorkPlace-Name: University of Verona Abstract: The paper studies the incentive for providers to invest in new health care technologies under alternative payment systems, when the patients' benefits are uncertain. If the reimbursement by the purchaser includes both a variable (per patient) and a lump-sum component, efficiency can be ensured both in the timing of adoption (dynamic) and the intensity of use of the technology (static). If the second instrument is unavailable, a trade-off may emerge between static and dynamic efficiency. In this context, we also discuss how the regulator could use the control of the level of uncertainty faced by the provider as an instrument to mitigate the trade-off between static and dynamic efficiency. Finally, the model is calibrated to study a specific technology. Keywords: Health Care, Investments Classification-JEL: I18, D92 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.131 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-131.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.131 Title: The Problem of the Commons: Still Unsettled after 100 Years Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: John F. Kennedy School of Government, Harvard University, Resources for the Future and National Bureau of Economic Research Abstract: The problem of the commons is more important to our lives and thus more central to economics than a century ago when Katharine Coman led off the first issue of the American Economic Review. As the U.S. and other economies have grown, the carrying-capacity of the planet - in regard to natural resources and environmental quality — has become a greater concern, particularly for common-property and open-access resources. The focus of this article is on some important, unsettled problems of the commons. Within the realm of natural resources, there are special challenges associated with renewable resources, which are frequently characterized by open access. An important example is the degradation of open-access fisheries. Critical commons problems are also associated with environmental quality. A key contribution of economics has been the development of market-based approaches to environmental protection. These instruments are key to addressing the ultimate commons problem of the twenty-first century - global climate change. Keywords: Common-Property Resource, Open-Access Resource, Fisheries, Global Climate Change Classification-JEL: Q220, Q280, Q500, Q540, Q580 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.132 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-132.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.132 Title: On the Road to a Unified Market for Energy Efficiency: The Contribution of White Certificates Schemes Author-Name: Louis-Gaëtan Giraudet Author-X-Name-First: Louis-Gaëtan Author-X-Name-Last: Giraudet Author-WorkPlace-Name: ENPC/CIRED Author-Name: Dominique Finon Author-X-Name-First: Dominique Author-X-Name-Last: Finon Author-WorkPlace-Name: CNRS/CIRED Abstract: White certificates schemes mandate competing energy companies to promote energy efficiency with flexibility mechanisms, including the trading of energy savings. So far, stylized facts are lacking and outcomes are mainly country-specific. By comparing results of British, Italian and French experiences, we attempt to identify the core determinants of their performances. We show that (i) white certificates schemes are depicted in theoretical works as mandatory subsidies on energy efficiency goods recovered by an end-use energy tax, whereby white certificates exchanges are not a central feature; (ii) at current stages, existing schemes are cost-effective and economically efficient, with large discrepancies though; (iii) the hybrid subsidy-tax mechanism seems valid but conditional to cost pass through permissions; otherwise, obliged energy companies merely promote information on the “downstream” side (i.e. at the consumer level); (iv) although white certificates exchange between different types of actors involved can be important as in Italy, trade among obliged companies is negligible; instead, flexibility sustains vertical relationships between obliged parties and “upstream” partners (i.e. installers, energy service companies). In this respect, we support the view that white certificates schemes are a policy instrument of multi-functional nature (subsidisation, information, technology diffusion), whose static and dynamic efficiency depends upon the consistency between a proper definition of long-term energy savings, the appropriate cost-recovery permission and a fine coordination with other instruments. We finally propose a four stages deployment pattern, along which fragmented markets for energy efficient technologies get closer to create a unified market delivering energy efficiency as a homogeneous good. Keywords: White Certificates Schemes, Static Efficiency, Dynamic Efficiency, Vertical Organisation, Policy Coordination Classification-JEL: Q4 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.133 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-133.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.133 Title: The Impact of Protest Responses in Choice Experiments Author-Name: Melina Barrio Author-X-Name-First: Melina Author-X-Name-Last: Barrio Author-WorkPlace-Name: Universidade de Santiago de Compostela Author-Name: Maria Loureiro Author-X-Name-First: Maria Author-X-Name-Last: Loureiro Author-WorkPlace-Name: Universidade de Santiago de Compostela Abstract: Not much attention has been given to protest responses in choice experiments (CE). Using follow-up statements, we are able to identify protest responses and compute welfare estimates with and without the inclusion of such protest responses. We conclude that protest responses are fairly common in CE, and their analysis affects the statistical performance of the empirical models. In particular, when the sample is corrected by protests, our results come from utility consistent models. Thus, future choice experiments should consider the role of protest responses as contingent valuation studies have done. Keywords: Protest Responses, Choice Experiments Classification-JEL: Q01, Q10, Q50 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.134 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-134.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.1343 Title: Optimal Patentability Requirements with Fragmented Property Rights Author-Name: Vincenzo Denicolò Author-X-Name-First: Vincenzo Author-X-Name-Last: Denicolò Author-WorkPlace-Name: Università di Bologna Author-Name: Christine Halmenschlager Author-X-Name-First: Christine Author-X-Name-Last: Halmenschlager Author-WorkPlace-Name: University Paris II Abstract: We study the effect of the fragmentation of intellectual property rights on optimal patent design. The major finding is that when several complementary innovative components must be assembled to operate a new technology, the patentability requirements should be stronger than in the case of stand-alone innovation. This reduces the fragmentation of intellectual property, which is socially costly. However, to preserve the incentives to innovate, if a patent is granted the strength of protection should be generally higher than in the stand-alone case. Keywords: Intellectual Property Rights, Fragmentation, Patent Requirements Classification-JEL: O3, O34 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.135 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-135.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.135 Title: Local Communities in front of Big External Investors: An Opportunity or a Risk? 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 Author-Name: Elisa Ticci Author-X-Name-First: Elisa Author-X-Name-Last: Ticci Author-WorkPlace-Name: European University Institute Abstract: In the current age of trade and financial openness, local economies in developing countries are becoming increasingly exposed to external investments. The objective of the proposed two-sector model with environmental externalities is to provide an insight into the interaction between external investors and local communities with a focus upon the different strategies and income sources available to each category. In this context, analysis suggests that environmental regulations and incentives offered in order to attract external capital investment (whether foreign or national) may have an un-uniform impact on the two typologies of actors. Keywords: Foreign Direct Investments, Environmental Negative Externalities, Structural Changes, Poverty Alleviation Classification-JEL: F21, F43, D62, O11, O13, O15, O41, Q20 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.136 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-136.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.136 Title: Beyond Copenhagen: A Realistic Climate Policy in a Fragmented World Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: University of Venice, Fondazione Eni Enrico Mattei Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center for Climate Change Abstract: We propose a realistic approach to climate policy based on the Copenhagen Agreement to reduce Greenhouse Gases (GHGs) emissions. We assess by how much the non-binding, although official, commitments to reduce emissions made in Copenhagen will affect the level of world GHGs emissions in 2020. Our estimates are based on official communications to the UNFCCC, on historic data and on the Business-as-Usual scenario of the WITCH model. We are not interested in estimating the gap between the expected level of emissions and what would be needed to achieve the 2°C target. Nor do we attempt to calculate the 2100 temperature level implied by the Copenhagen pledges. We believe these two exercises are subject to high uncertainty and would not improve the current state of negotiations. Rather, we take stock of the present politically achievable level of commitment and suggest an effective way to push forward the climate policy agenda. The focus is on what can be done rather than on what should be done. To this end, we estimate the potential of the financial provisions of the Copenhagen Agreement to sponsor mitigation effort in Non-Annex I countries. Using scenarios produced with the WITCH model, we show that lower commitment on domestic abatement measures can be compensated by devoting roughly 50% of the Copenhagen financial provisions in 2020 to mitigation in Non-Annex I countries. The policy implications of our results will be discussed. Keywords: Kyoto Protocol, International Climate Agreements, Climate Policy, Clean Development Mechanism Classification-JEL: F5, Q01, Q54, Q58 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.137 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-137.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.137 Title: Climate Change Adaptation, Development, and International Financial Support: Lessons from EU Pre-Accession and Solidarity Funds Author-Name: Valentin Przyluski Author-X-Name-First: Valentin Author-X-Name-Last: Przyluski Author-WorkPlace-Name: Centre International de Recherche sur l’Environnement et le Développement (CIRED) Author-Name: Stéphane Hallegatte Author-X-Name-First: Stéphane Author-X-Name-Last: Hallegatte Author-WorkPlace-Name: Centre International de Recherche sur l’Environnement et le Développement (CIRED) and Ecole Nationale de la Meteorologie, Meteo-France Abstract: Funding adaptation requires adequate governance and there are different ways to organise and channel the funds to where it is most efficient and most necessary. This paper investigates this issue and studies the practical implementation of a development under conditionality, namely adaptation-development, and its requirement in terms of financing architecture. To contribute to this research, it looks at similar problems that have been met in the past, namely the European funding programs for Eastern Europe countries that were candidates to adhesion, and European internal structural and cohesion funds. These funding examples provide a pertinent analogy for the adaptation problem, and most issues in adaptation finance have also been met in these funds (difficulty to define and measure additionality and incremental cost, concept fuzziness, need for leverage and mainstreaming, ownership and sovereignty issues). Publicly available documents from the European Commission and the European Court of Auditors are reviewed, providing interesting insights into possible implementation of adaptation finance. These insights can be summarized into seven main lessons: (1) “black-spot” programs are less flexible but more efficient than “concept-based” programs; (2) a multi-scale and multi-step approach can minimize sovereignty and ownership issue, and facilitate capacity building; (3) private funding leverage is a myth, and funding based on the “additional cost” is highly inefficient; (4) non substitutability among objectives and regions is necessary; (5) sub-national eligibility criteria are a viable solution; (6) institutional capacity matter: low-capacity countries should focus on capacity building and “black-spot” strategies; higher-capacity countries can follow a concept-based approach; and (7) the EU should use its own experience to promote its views of adaptation funds. Keywords: Economic Development, Climate Change Adaptation, Foreign Aid, European Union, Pre-acccession and Solidarity Funds Classification-JEL: E61, F35, O19, O2, Q54, Q56 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.138 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-138.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.138 Title: Valuation of Linkages between Climate Change, Biodiversity and Productivity of European Agro-Ecosystems Author-Name: Ruslana Rachel Palatnik Author-X-Name-First: Ruslana Rachel Author-X-Name-Last: RPalatnik Author-WorkPlace-Name: FEEM, Department of Economics, the Max Stern Academic College of Emek Yezreel Israel, NRERC- Natural Resource and Environmental Research Center, University of Haifa Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: FEEM and Center for Environmental Economics and Management, Department of Economics, Ca’ Foscari University of Venice Abstract: It is clear that climate change involves changes in temperature and precipitation and therefore directly affects land productivity. However, this is not the only channel for climatic change to affect agro-systems. Biodiversity is subject to climatic fluctuations and in turn may alter land productivity too. Firstly, biodiversity is an input into agro-ecosystems. Secondly, biodiversity supports the functioning of these systems (e.g. the balancing of the nutrient cycle). Thirdly, agro-systems also host important wildlife species which, though not always, play a functional role in land productivity, nonetheless constitute important sources of landscape amenities. The present paper illustrates a unique attempt to economically assess this additional effect climate change may imply on agriculture. We first empirically evaluate changes in land productivity due to climatic change effect on temperature, precipitations and biodiversity. Then we estimate the economic cost of biodiversity impact on agro-systems. Our key finding is that climate-change-induced biodiversity impact on European agro-systems measured in terms of GDP change in year 2050 is sufficiently large to deepen the direct climate-change effect in some regions and to reverse it in others. Different economies show different resilience profiles to deal with this effect. Keywords: Climate Change, Biodiversity, Agro-Ecosystems Classification-JEL: D58, Q54, Q57 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.139 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-139.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.139 Title: Does the Cause of Death Matter? The Effect of Dread, Controllability, Exposure and Latency on the Vsl Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: University of Maryland, College Park, FEEM and Queen’s University Belfast Author-Name: Milan Šcasný Author-X-Name-First: Milan Šcasný Author-X-Name-Last: Šcasný Author-WorkPlace-Name: Charles University Prague Abstract: The Value of a Statistical Life is a key input into the calculation of the benefits of environmental policies that save lives. To date, the VSL used in environmental policy analyses has not been adjusted for age or the cause of death. Air pollution regulations, however, are linked to reductions in the risk of dying for cancer, heart disease, and respiratory illnesses, raising the question whether a single VSL should be applied for all of these causes of death. We conducted a conjoint choice experiment survey in Milan, Italy, to investigate this question. We find that the VSL increases with dread, exposure, the respondents’ assessments of the baseline risks, and experience with the specific risks being studied. The VSL is higher when the risk reduction is delivered by a public program, and increases with the effectiveness rating assigned by the respondent to public programs that address specific causes of death. The effectiveness of private risk-reducing behaviors is also positively associated with the VSL, but the effect is only half as large as that of public program effectiveness. The coefficients on dummies for the cause of death per se—namely, whether it’s cancer, a road traffic accident or a respiratory illness—are strongly statistically significant. All else the same, the fact that the cause of the death is “cancer” results in a VSL that is almost one million euro above the amount predicted by dread, exposure, beliefs, etc. The VSL in the road safety context is about one million euro less than what is predicted by dread, exposure, beliefs, etc. These effects are large, but the majority of the variation in the VSL is accounted for by the public program feature, the effectiveness of public programs at reducing the indicated risk, and dread. The effects of exposure and experience are smaller. These results raise the question whether using VSL figures based on private risk reduction, which is usually recommended to avoid double-counting, severely understates how much a society might be willing to pay for public safety. Keywords: VSL, Conjoint Choice Experiments, Mortality Risk Reductions, Cost-benefit Analysis, Forced Choice Questions Classification-JEL: I18, J17, K32, Q51 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.140 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-140.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.140 Title: Sovereign Wealth Funds: Form and Function in the 21st Century Author-Name: Gordon L. Clark Author-X-Name-First: Gordon L. Author-X-Name-Last: Clark Author-WorkPlace-Name: Centre for Employment, Work and Finance, Oxford University Centre for the Environment and Faculty of Business and Economics, Monash University Author-Name: Ashby H. B. Monk Author-X-Name-First: Ashby H. B. Author-X-Name-Last: Monk Author-WorkPlace-Name: Centre for Employment, Work and Finance, Oxford University Centre for the Environment Abstract: As representatives of nation-states in global financial markets, sovereign wealth funds (SWFs) share a common form and many functions. Arguably their form and functions owe as much to a shared (global) moment of institutional formation as they owe their form and functions to the hegemony of Anglo-American finance over the late 20th and early 21st centuries. We distinguish between the immediate future for SWFs in the aftermath of the global financial crisis, and two possible long-term scenarios; one of which sees SWFs becoming financial goliaths dominating global markets, while the other sees SWFs morphing into nation-state development institutions that intermediate between financial markets and the long-term commitments of the nation-state sponsors. If the former scenario dominates, global financial integration will accelerate with attendant costs and benefits. If the latter scenario dominates, SWFs are likely to differentiate and evolve, returning, perhaps, to their national traditions and their respective places in a world of contested power and influence. Here, we clarify the assumptions underpinning the conception and formation of sovereign wealth funds over the past twenty years or so in the face of the ‘new’ realities of global finance. Keywords: Sovereign Wealth Funds, Crisis, Market Performance, Long-term Investment Classification-JEL: D02, F36, G15 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.141 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-141.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.141 Title: The European Emission Trading Scheme and Renewable Energy Policies: Credible Targets for Incredible Results? Author-Name: Simone Borghesi Author-X-Name-First: Simone Author-X-Name-Last: Borghesi Author-WorkPlace-Name: University of Siena Abstract: This paper discusses the merits and limits of the recent European energy policy aimed at reducing carbon emissions, devoting particular attention to the European Trading System of carbon permits and to the measures that the European Union has adopted to promote renewable energy sources. From the comparison of past goals and present results, it is argued that more credible targets for carbon emission reductions and renewable shares would probably help the transition towards an alternative energy system and the necessary reduction of greenhouse gases. Keywords: Pollution, Sustainable Development, Climate Change, Fossil Fuels, Energy Policy, European Union, European Trading System (ETS), Cap-And-Trade, Renewable Energy Sources, Credibility Classification-JEL: L11, Q28, Q38, Q42, Q43, Q48 Creation-Date: 201010 Template-Type: ReDIF-Paper 1.0 Number: 2010.142 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-142.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.142 Title: REDD in the Carbon Market: A General Equilibrium Analysis Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Milan, Euromediterranean Center for Climate Change Author-Name: Fabio Eboli Author-X-Name-First: Fabio Author-X-Name-Last: Eboli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Venice, Euromediterranean Center for Climate Change Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Venice, Euromediterranean Center for Climate Change Author-Name: Renato Rosa Author-X-Name-First: Renato Author-X-Name-Last: Rosa Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, University of Venice, Euromediterranean Center for Climate Change Abstract: Deforestation is a major source of CO2 emissions, accounting for around 17% of total annual anthropogenic carbon release. While the cost estimates of reducing deforestation rates vary considerably depending on model assumptions, it is widely accepted that emissions reductions from avoided deforestation consist of a relatively low cost mitigation option. Halting deforestation is therefore not only a major ecological challenge, but also a great opportunity to cost effectively reduce climate change negative impacts. In this paper we analyze the impact of introducing avoided deforestation credits into the European carbon market using a multiregional Computable General Equilibrium model – the ICES model (Inter-temporal Computable Equilibrium System). Taking into account political concerns over a possible “flooding” of REDD credits, various limits to the number of REDD allowances entering the carbon market are considered. Finally, unlike previous studies, we account for both direct and indirect effects occurring on land and timber markets resulting from lower deforestation rates. We conclude that avoided deforestation notably reduces climate change policy costs - by approximately 80% with unlimited availability of REDD credits - and may drastically reduce carbon prices. Policy makers may, however, effectively control for these imposing limits to avoided deforestation credits use. Moreover, avoided deforestation has the additional positive effect of reducing carbon leakage of a unilateral European climate change policy. This is good news for the EU, but not necessarily for REDD regions. Indeed we show that REDD revenues are not sufficient to compensate REDD regions for a less leakage-affected and more competitive EU in international markets. In fact, REDD regions would prefer to free ride on the EU unilateral mitigation policy. Keywords: Forestry, Avoided Deforestation, Climate Change, Emission Trading, General Equilibrium Modelling Classification-JEL: D58, Q23, Q54 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.143 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-143.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.143 Title: Repeated Cheap-Talk Games of Common Interest between a Decision-Maker and an Expert of Unknown Statistical Bias Author-Name: Irene Valsecchi Author-X-Name-First: Irene Author-X-Name-Last: Valsecchi Author-WorkPlace-Name: University of Milano-Bicocca Abstract: Two agents are engaged in a joint activity that yields a common perperiod payoff at two rounds of play. The expert announces the probability that the current state of the world is low, instead of high, at each stage. Having received the report of the expert, the decision-maker takes action at every period according to his posterior beliefs. At the end of each round of play, the true current state is verifiable. The distinctive assumption of the paper is that the decision-maker makes a subjective appraisal of the expert’s reliability: he considers the expert’s true forecasts as the outcomes of an experiment of unknown statistical bias. The paper shows that the expert will have instrumental reputational concerns, related to the future estimate of the systematic error associated to his predictions. In contrast with previous work, reputational concerns are shown to enhance the credibility of the initial messages, and to increase both the agents’ expected payoff at the first round of play in equilibrium. The equilibrium messages will be noisy, but noisiness will be less costly than it would be in single-stage games. Keywords: Opinion, Expert, Strategic Communication Classification-JEL: D81, D84 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.144 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-144.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.144 Title: The Public Management of Risk: Separating Ex Ante and Ex Post Monitors Author-Name: Yolande Hiriart Author-X-Name-First: Yolande Author-X-Name-Last: Hiriart Author-WorkPlace-Name: Toulouse School of Economics (IDEI-LERNA) Author-Name: David Martimort Author-X-Name-First: David Author-X-Name-Last: Martimort Author-WorkPlace-Name: Toulouse School of Economics (EHESS, IDEI-GREMAQ) Author-Name: Jerome Pouyet Author-X-Name-First: Jerome Author-X-Name-Last: JPouyet Author-WorkPlace-Name: Paris School of Economics Abstract: When a firm undertakes risky activities, the conflict between social and private incentives to implement safety care requires public intervention which can take the form of both monetary incentives but also ex ante or ex post monitoring, i.e., before or after an accident occurs. We delineate the optimal scope of monitoring depending on whether public monitors are benevolent or corruptible. We show that separating the ex ante and the ex post monitors increases the likelihood of ex post investigation, helps prevent capture and improves welfare. Keywords: Risk Regulation, Monitoring, Capture, Integration, Separation Classification-JEL: L51, D82 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.145 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-145.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.145 Title: Immigration, Offshoring and American Jobs Author-Name: Gianmarco I.P. Ottaviano Author-X-Name-First: Gianmarco I.P. Author-X-Name-Last: Ottaviano Author-WorkPlace-Name: Università Bocconi, CEPR, FEEM and LdA Author-Name: Giovanni Peri Author-X-Name-First: Giovanni Author-X-Name-Last: Peri Author-WorkPlace-Name: University of California, Davis, NBER and LdA Author-Name: Greg C. Wright Author-X-Name-First: Greg C. Author-X-Name-Last: Wright Author-WorkPlace-Name: University of California, Davis Abstract: How many "American jobs" have U.S.-born workers lost due to immigration and offshoring? Or, alternatively, is it possible that immigration and offshoring, by promoting cost-savings and enhanced efficiency in firms, have spurred the creation of jobs for U.S. natives? We consider a multi-sector version of the Grossman and Rossi-Hansberg (2008) model with a continuum of tasks in each sector and we augment it to include immigrants with heterogeneous productivity in tasks. We use this model to jointly analyze the impact of a reduction in the costs of offshoring and of the costs of immigrating to the U.S. The model predicts that while cheaper offshoring reduces the share of natives among less skilled workers, cheaper immigration does not, but rather reduces the share of offshored jobs instead. Moreover, since both phenomena have a positive "cost-savings" effect they may leave unaffected, or even increase, total native employment of less skilled workers. Our model also predicts that offshoring will push natives toward jobs that are more intensive in communication-interactive skills and away from those that are manual and routine intensive. We test the predictions of the model on data for 58 U.S. manufacturing industries over the period 2000-2007 and find evidence in favor of a positive productivity effect such that immigration has a positive net effect on native employment while offshoring has no effect on it. We also find some evidence that offshoring has pushed natives toward more communication-intensive tasks while it has pushed immigrants away from them. Keywords: Employment, Production tasks, Immigrants, Offshoring Classification-JEL: F22, F23, J24, J61 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.146 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-146.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.146 Title: Polluters and Abaters Author-Name: Alain-Désiré Nimubona Author-X-Name-First: Alain-Désiré Author-X-Name-Last: Nimubona Author-WorkPlace-Name: Department of Economics, University of Waterloo, and CIRANO Author-Name: Bernard Sinclair-Desgagné Author-X-Name-First: Bernard Author-X-Name-Last: Sinclair-Desgagné Author-WorkPlace-Name: HEC Montréal, CIRANO and École polytechnique Abstract: To comply with laws, regulations and social demands, polluting firms increasingly purchase the needed means from specialized suppliers. This paper analyzes this relatively recent phenomenon. We show how environmental regulation, the size of the output market, the elasticity of demand for abatement goods and services, and the fact that in-house and outsourced abatement expenses are substitutes or complements can influence a polluter’s make-or-buy decision. Specific features of abatement outsourcing are highlighted, qualifications and refinements of the theory of vertical integration are then proposed, and some consequences for environmental policy are briefly discussed. Keywords: Eco-industry, Make-or-buy Decision, Outsourcing, Vertical Integration Classification-JEL: L23, L24, Q52 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.147 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-147.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.147 Title: Governing a Common-Pool Resource in a Directed Network Author-Name: Lionel Richefort Author-X-Name-First: Lionel Author-X-Name-Last: Richefort Author-WorkPlace-Name: Nantes-Atlantic Economics and Management Laboratory (LEMNA), University of Nantes – IEMN Author-Name: Patrick Point Author-X-Name-First: Patrick Author-X-Name-Last: Point Author-WorkPlace-Name: Research Group on Theoretical and Applied Economics (GREThA),University of Bordeaux 4 – CNRS Abstract: A local public-good game played on directed networks is analyzed. The model is motivated by one-way flows of hydrological influence between cities of a river basin that may shape the level of their contribution to the conservation of wetlands. It is shown that in many (but not all) directed networks, there exists an equilibrium, sometimes socially desirable, in which some stakeholders exert maximal effort and the others free ride. It is also shown that more directed links are not always better. Finally, the model is applied to the conservation of wetlands in the Gironde estuary (France). Keywords: Common-pool Resource, Digraph, Cycle, Independent Set, Empirical Example Classification-JEL: C72, D85, H41 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.148 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-148.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.148 Title: Extrapolation in Games of Coordination and Dominance Solvable Games Author-Name: Friederike Mengel Author-X-Name-First: Friederike Author-X-Name-Last: Mengel Author-WorkPlace-Name: Maastricht University Author-Name: Emanuela Sciubba Author-X-Name-First: Emanuela Author-X-Name-Last: Sciubba Author-WorkPlace-Name: Birkbeck College London Abstract: We study extrapolation between games in a laboratory experiment. Participants in our experiment first play either the dominance solvable guessing game or a Coordination version of the guessing game for five rounds. Afterwards they play a 3x3 normal form game for ten rounds with random matching which is either a game solvable through iterated elimination of dominated strategies (IEDS), a pure Coordination game or a Coordination game with pareto ranked equilibria. We find strong evidence that participants do extrapolate between games. Playing a strategically different game hurts compared to the control treatment where no guessing game is played before and in fact impedes convergence to Nash equilibrium in both the 3x3 IEDS and the Coordination games. Playing a strategically similar game before leads to faster convergence to Nash equilibrium in the second game. In the Coordination games some participants try to use the first game as a Coordination device. Our design and results allow us to conclude that participants do not only learn about the population and/or successful actions, but that they are also able to learn structural properties of the games. Keywords: Game Theory, Learning, Extrapolation Classification-JEL: C72, C91 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.149 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-149.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.149 Title: Carbon Abatement Leaders and Laggards Non Parametric Analyses of Policy Oriented Kuznets Curves Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara (DEIT) and National Research Council (CERIS Milan) Author-Name: Antonio Musolesi Author-X-Name-First: Antonio Author-X-Name-Last: Musolesi Author-WorkPlace-Name: INRAE Dijon, France and LSE department of Geography and the Environment Abstract: We study the eventual structural differences of climate change leading ‘actors’ such as Northern EU countries, and ‘lagging actors’ - southern EU countries and the ‘Umbrella group’ - with regard to long run (1960-2001) carbon-income relationships. Parametric and semi parametric panel models show that the groups of countries that were in the Kyoto arena less in favour of stringent climate policy, have yet to experience a turning point, though they at least show relative delinking in their monotonic carbon-income relationship. Northern EU instead robustly shows bell shapes across models, which seem to depend on time related (policy) events. Time related effects are more relevant than income effects in explaining the occurrence of robust Kuznets curves. The reaction of northern EU to exogenous policy events such as the 1992 climate change convention that gave earth to the Kyoto era, and even the second oil shock that preceded it in the 80’s are among the causes of the observed structural differences. Keywords: Carbon Kuznets Curves, Kyoto, Long Run Dynamics, Policy Events, Heterogeneous Panels, Cross-Section Correlation, Semi Parametric Models, Common Time Trends Classification-JEL: C14, C22, C23, Q53 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.150 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-150.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.150 Title: Drought and Civil War in Sub-Saharan Africa Author-Name: Mathieu Couttenier Author-X-Name-First: Mathieu Author-X-Name-Last: Couttenier Author-WorkPlace-Name: University of Paris 1 Panthéon-Sorbonne, CES and Sciences-Po Author-Name: Raphael Soubeyran Author-X-Name-First: Raphael Author-X-Name-Last: Soubeyran Author-WorkPlace-Name: INRA-LAMETA and IDEP Montpellier Abstract: In this paper, we show that drought has a positive effect on the incidence of civil war over the 1945-2005 period in Sub-Saharan Africa. We use the Palmer Drought Severity Index which is a richer measurement of drought than the measures used in the literature (rainfall and temperature) as it measures the accumulation of water in the soil in taking into account the temperature and the geological characteristics of the soil. We show that the risk of civil war increases by more than 42% from a “normal” climate to an “extremely drought” climate. Surprisingly, only 2.5% of this effect is channeled through economic growth. Keywords: Climate Change, Drought, Civil War Classification-JEL: Q5, Q58 Creation-Date: 201011 Template-Type: ReDIF-Paper 1.0 Number: 2010.151 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-151.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.151 Title: Does Emigration Benefit the Stayers? The EU Enlargement as a Natural Experiment. Evidence from Lithuania Author-Name: Benjamin Elsner Author-X-Name-First: Benjamin Author-X-Name-Last: Elsner Author-WorkPlace-Name: Trinity College Dublin, Department of Economics and the Institute for International Integration Studies Abstract: The eastern enlargement of the European Union in 2004 triggered a large flow of migrant workers from the new member states to the UK and Ireland. This paper analyzes the impact of this migration wave on the real wages in the source countries. I consider the case of Lithuania, which had the highest share of emigrants relative to its workforce among all ten new member states. Using data from the Lithuanian Household Budget Survey and the Irish Census, I find that emigration had a significant positive effect on the wages of men who stayed in the country, but no such effect is visible for women. A percentage point increase in the emigration rate increases the real wage of men on average by 1%. Several robustness checks confirm this result. Keywords: Emigration, Labor Mobility, EU Enlargement Classification-JEL: F22, J61, R23 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.152 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-152.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.152 Title: The Effect of Tracking Students by Ability into Different Schools: A Natural Experiment Author-Name: Nina Guyon Author-X-Name-First: Nina Author-X-Name-Last: Guyon Author-WorkPlace-Name: Paris School of Economics (PSE) Author-Name: Eric Maurin Author-X-Name-First: Eric Author-X-Name-Last: Maurin Author-WorkPlace-Name: Paris School of Economics (PSE) Author-Name: Sandra McNally Author-X-Name-First: Sandra Author-X-Name-Last: McNally Author-WorkPlace-Name: Centre for Economic Performance, London School of Economics Abstract: The tracking of pupils by ability into elite and non-elite schools represents a controversial policy in many countries. There is no consensus on how large the elite track should be and little agreement on the effects of any further increase in its size. This paper presents a natural experiment where the increase in the size of the elite track was followed by a significant improvement in average educational outcomes. This experiment provides a rare opportunity to isolate the overall effect of allowing entry to the elite track for a group that was previously only at the margin of being admitted. Keywords: Education, Tracking, Selection Classification-JEL: I2 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.153 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-153.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.153 Title: Entry on Export Markets and Firm-Level Performance Growth: Intra-Industrial Convergence or Divergence? Author-Name: Florian Mayneris Author-X-Name-First: Florian Author-X-Name-Last: Mayneris Author-WorkPlace-Name: CORE Abstract: This paper investigates theoretically and empirically the endogenous investment decision of firms conditioning on export decision. It shows that theoretically, whatever the form of preferences, firms that start exporting invest more and grow more than the others. However, it is shown that when preferences are CES, within each category of firms (domestic and switchers), initial productivity and investment are strategic complements, inducing intra-industrial divergence. On the contrary, when preferences are quadratic, initial productivity and investment are strategic substitutes: less productive firms invest more and grow more than the others, inducing intra-industrial convergence. Empirical results on French data support the predictions of the quadratic preferences model. Keywords: Export Decision, Investment, Firm Heterogeneity Classification-JEL: D21, D24, F12 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.154 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-154.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.154 Title: Is the Value of Bioprospecting Contracts Too Low? Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: Basque Center for Climate Change and University of Bath Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of Venice Abstract: In order to regulate the proliferated bioprospecting and protect the biological diversity in the source countries, the Convention on Biological Diversity (CBD) established a legal framework for the reciprocal transfer of biological materials between the interested parties in bioprospecting activities, subject to the Prior Informed Content (PIC) principles and a set of mutually agreed items on equitable sharing of benefits (CBD 1992, Bhat 1999; Ten Kate and Laird 1999; Dedeurwaerdere 2005). Although interesting and valuable to the cause of conservation, there is a feeling that the ‘price’ being paid under these arrangements is too low. Somehow ecologists argue that, surely, these materials have a greater value than the few million dollars being paid to national conservation organizations for the protection of the areas where the material are located. In this paper we seek to understand better how a biodiversity resource’ use value in production is determined, and how the real value is obscured by the fact that the resource is largely open access. We attempt to analyse how special arrangements, set op top of a basic framework in which the resource open access is limited in what it can achieve and in the ‘price’ that will emerge from any transaction between the buyers of the rights and the sellers of the rights. Keywords: Access and Benefit Sharing, Convention for Biological Diversity, Bioprospecting Contract, Genetic Resource, Open Access and Welfare Analysis Classification-JEL: D21, D23, D61, L14, Q57 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.155 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-155.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.155 Title: Robust Control and Hot Spots in Dynamic Spatially Interconnected Systems Author-Name: William Brock Author-X-Name-First: William Author-X-Name-Last: Brock Author-WorkPlace-Name: University of Wisconsin and Beijer Fellow Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Athens University of Economics and Beijer Fellow Abstract: This paper develops linear quadratic robust control theory for a class of spatially invariant distributed control systems that appear in areas of economics such as New Economic Geography, management of ecological systems, optimal harvesting of spatially mobile species, and the like. Since this class of problems has an infinite dimensional state and control space it would appear analytically intractable. We show that by Fourier transforming the problem, the solution decomposes into a countable number of finite state space robust control problems each of which can be solved by standard methods. We use this convenient property to characterize “hot spots” which are points in the transformed space that correspond to “breakdown” points in conventional finite dimensional robust control, or where instabilities appear or where the value function loses concavity. We apply our methods to a spatial extension of a well known optimal fishing model. Keywords: Distributed Parameter Systems, Robust Control, Spatial Invariance, Hot Spot, Agglomeration Classification-JEL: C61, C65, Q22 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.156 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-156.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.156 Title: Carbon Capture; Transport and Storage in Europe: A Problematic Energy Bridge to Nowhere? Author-Name: Johannes Herold Author-X-Name-First: Johannes Author-X-Name-Last: Herold Author-WorkPlace-Name: Technische Universität Berlin Author-Name: Sophia Rüster Author-X-Name-First: Sophia Author-X-Name-Last: Rüster Author-WorkPlace-Name: Technische Universität Dresden Author-Name: Christian Von Hirschhausen Author-X-Name-First: Christian Author-X-Name-Last: Von Hirschhausen Author-WorkPlace-Name: Technische Universität Dresden Abstract: This paper is a follow up of the SECURE-project, financed by the European Commission to study “Security of Energy Considering its Uncertainties, Risks and Economic Implications”. It addresses the perspectives of, and the obstacles to a CCTS-roll out, as stipulated in some of the scenarios. Our main hypothesis is that given the substantial technical and institutional uncertainties, the lack of a clear political commitment, and the available alternatives of low-carbon technologies, CCTS is unlikely to play an important role in the future energy mix; it is even less likely to be an “energy bridge” into a low-carbon energy future Keywords: Carbon Capture, Transport, Storage Classification-JEL: L71, Q3, Q4 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.157 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-157.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.157 Title: REDD and International Organizations Author-Name: Valentina Giannini Author-X-Name-First: Valentina Author-X-Name-Last: Giannini Author-WorkPlace-Name: Institute for Environmental Studies (IVM), Ca’ Foscari University and Fondazione Eni Enrico Mattei Abstract: Climate change mitigation can be achieved, according to many, by means of Reducing emissions from deforestation and forest degradation in the Tropics (REDD). Within the climate change policy debate we thus find discussions on how to reduce GHG emissions by designing appropriate REDD programmes and projects. In this paper I try to capture this debate by looking at the role of five major international organizations, which were chosen to represent the different aspects related to REDD. In order for REDD to be successful, not only GHG reduction, but also multiple benefits should be achieved: indigenous and local peoples’ involvement, livelihood improvement, fair and equitable labour, biodiversity conservation, and sustainable forest management, to name some of the most relevant. The selected international organizations are: UN-REDD, The GEF, The CBD, ITTO, and ILO. The role of these is assessed, to understand not only what has been defined and achieved, but also what possible way forward the organizations are envisioning, and what issues remain to be addressed. Keywords: Reducing Emissions from Deforestation and Forest Degradation, REDD, Climate Change, Climate Policy Debate, Mitigation, Multiple Benefits, UN-REDD, The GEF, The CBD, ITTO, ILO Classification-JEL: O13, O20, Q23, Q28, Q54, Q56, Q57 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.158 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-158.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.158 Title: Assessing China’s Carbon Intensity Pledge for 2020: Stringency and Credibility Issues and their Implications Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: Just prior to the Copenhagen climate summit, China pledged to cut its carbon intensity by 40-45% by 2020 relative to its 2005 levels to help to reach an international climate change agreement at Copenhagen or beyond. This raises the issue of whether such a pledge is ambitious or just represents business as usual. To put China’s climate pledge into perspective, this paper examines whether this proposed carbon intensity goal for 2020 is as challenging as the energy-saving goals set in the current 11th five-year economic blueprint, to what extent it drives China’s emissions below its projected baseline levels, and whether China will fulfill its part of a coordinated global commitment to stabilize the concentration of greenhouse gas emissions in the atmosphere at the desirable level. Given that China’s pledge is in the form of carbon intensity, the paper shows that GDP figures are even more crucial to the impacts on the energy or carbon intensity than are energy consumption and emissions data by examining the revisions of China’s GDP figures and energy consumption in recent years. Moreover, the paper emphasizes that China’s proposed carbon intensity target not only needs to be seen as ambitious, but more importantly it needs to be credible. Finally, it is concluded with a suggestion that international climate change negotiations need to focus on 2030 as the targeted date to cap the greenhouse gas emissions of the world’s two largest emitters in a legally binding global agreement. Keywords: Carbon Intensity, Post-Copenhagen Climate Change Negotiations, Climate Commitments, China Classification-JEL: Q42, Q43, Q48, Q52, Q53, Q54, Q58 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.159 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-159.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.159 Title: Adapting and Mitigating to Climate Change: Balancing the Choice under Uncertainty Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: University of Milan and Fondazione Eni Enrico Mattei Author-Name: Chen Chen Author-X-Name-First: Chen Author-X-Name-Last: Chen Author-WorkPlace-Name: Defap Graduate School in Public Economics and Fondazione Eni Enrico Mattei Abstract: Nowadays, as stressed by important strategic documents like for instance the 2009 EU White Paper on Adaptation or the recent 2009 “Copenhagen Accord”, it is amply recognized that both mitigation and adaptation strategies are necessary to combat climate change. This paper enriches the rapidly expanding literature trying to devise normative indications on the optimal combination of the two introducing the role of catastrophic and spatial uncertainty related to climate change damages. Applying a modified version of the Nordhaus’ Regional Dynamic Integrated Model of Climate and the Economy it is shown that in both cases uncertainty works in the direction to make mitigation a more attractive strategy than adaptation. When catastrophic uncertainty is concerned mitigation becomes relatively more important as, by curbing emissions, it helps to reduce temperature increase and hence the probability of the occurrence of the event. Adaptation on the contrary has no impact on this. It is also shown that optimal mitigation responses are much less sensitive than adaptation responses to spatial uncertainty. Mitigation responds to global damages, while adaptation to local damages. The first, being aggregated, change less than the second in the presence of spatial uncertainty as higher expected losses in some regions are compensated by lower expected losses in other. Accordingly, mitigation changes less than adaptation. Thus if it cannot be really claimed that spatial uncertainty increases the weight of mitigation respect to that of adaptation, however its presence makes mitigation a “safer” or more robust strategy to a policy decision maker than adaptation. Keywords: Climate Change, Mitigation, Adaptation, Uncertainty, Integrated Assessment Model Classification-JEL: C61, D58, Q54 Creation-Date: 201012 Template-Type: ReDIF-Paper 1.0 Number: 2010.160 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2010-160.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2010.160 Title: An Equilibrium Model of Habitat Conservation under Uncertainty and Irreversibility Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Swedish University of Agricultural Sciences Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: University of Padova, Fondazione Eni Enrico Mattei and Centro Studi Levi-Cases Author-Name: Sergio Vergalli Author-X-Name-First: Sergio Author-X-Name-Last: Vergalli Author-WorkPlace-Name: University of Brescia and Fondazione Eni Enrico Mattei Abstract: In this paper stochastic dynamic programming is used to investigate habitat conservation by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We analytically determine the impact of uncertainty and optimal policy conversion dynamics and discuss different policy scenarios on the basis of the relative long-run expected rate of deforestation. Finally, some numerical simulations are provided to illustrate our findings. Keywords: Optimal Stopping, Deforestation, Payments For Environmental Services, Natural Resources Management Classification-JEL: C61, D81, Q24, Q58 Creation-Date: 201012