Template-Type: ReDIF-Paper 1.0 Number: 2011.01 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-001.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.01 Title: Residential Consumption of Gas and Electricity in the U.S.: The Role of Prices and Income Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: AREC, University of Maryland and CEPE, ETH Zürich Author-Name: Will Gans Author-X-Name-First: Will Author-X-Name-Last: Gans Author-WorkPlace-Name: AREC, University of Maryland Author-Name: Daniel Velez-Lopez Author-X-Name-First: Daniel Author-X-Name-Last: Velez-Lopez Author-WorkPlace-Name: AREC, University of Maryland Abstract: We study residential demand for electricity and gas, working with nationwide household-level data that cover recent years, namely 1997-2007. Our dataset is a mixed panel/multi-year cross-sections of dwellings/households in the 50 largest metropolitan areas in the United States as of 2008. To our knowledge, this is the most comprehensive set of data for examining household residential energy usage at the national level, containing the broadest geographical coverage, and with the longest longitudinal component (up to 6 observations per dwelling). We estimate static and dynamic models of electricity and gas demand. We find strong household response to energy prices, both in the short and long term. From the static models, we get estimates of the own price elasticity of electricity demand in the -0.860 to -0.667 range, while the own price elasticity of gas demand is -0.693 to -0.566. These results are robust to a variety of checks. Contrary to earlier literature (Metcalf and Hassett, 1999; Reiss and White, 2005), we find no evidence of significantly different elasticities across households with electric and gas heat. The price elasticity of electricity demand declines with income, but the magnitude of this effect is small. These results are in sharp contrast to much of the literature on residential energy consumption in the United States, and with the figures used in current government agency practice. Our results suggest that there might be greater potential for policies which affect energy price than may have been previously appreciated. Keywords: Residential Electricity and Gas Demand, Price Elasticity Of Energy Demand, Static Model, Dynamic Panel Data Model, Partial Adjustment Model Classification-JEL: Q4, Q41, Q48, Q54, Q58 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.02 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-002.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.02 Title: Uncertainty in Integrated Assessment Models of Climate Change: Alternative Analytical Approaches Author-Name: Alexander Golub Author-X-Name-First: Alexander Author-X-Name-Last: Golub Author-WorkPlace-Name: Environmental Defense Fund Author-Name: Daiju Narita Author-X-Name-First: Daiju Author-X-Name-Last: Narita Author-WorkPlace-Name: Kiel Institute for the World Economy Abstract: Uncertainty plays a key role in the economics of climate change, and the discussions surrounding its implications for climate policy are far from settled. We give an overview of the literature on uncertainty in integrated assessment models of climate change and identify some future research needs. In the paper, we pay particular attention to three different and complementary approaches that model uncertainty in association with integrated assessment models: the discrete uncertainty modeling, the most common way to incorporate uncertainty in complex climate-economy models: the real options analysis, a simplified way to identify and value flexibility: the continuous-time stochastic dynamic programming, which is computationally most challenging but necessary if persistent stochasticity is considered. Keywords: Uncertainty, Learning, Economics of Climate Change, Integrated Assessment Models, Real Options Classification-JEL: D81, Q54, C61 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.03 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-003.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.03 Title: Energy Abundance, Trade and Industry Location Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: Tilburg University, Netherlands Author-Name: Nicole A. Mathys Author-X-Name-First: Nicole A. Author-X-Name-Last: Mathys Author-WorkPlace-Name: Swiss Federal Office of Energy and University of Neuchâtel, Abstract: We study the effect of countries’ energy abundance on trade and sector activity, conditional on sector’s energy intensity, using an unbalanced panel with 14 high-income countries from Europe, America and Asia, 10 broad sectors, and years 1970-1997. We find that (i) countries with large energy endowments have low energy prices, and are thus energy abundant both on micro and macro level. (ii) Energy abundant countries have a high level of energy embodied in exports relative to imports. (iii) Energy intensive sectors export from and (iv) have higher economic activity in energy abundant countries. (v) The trade and location effects increase with a sector’s exposure to international trade. In short, energy is a major driver for sector location through specialisation. We show that capital and energy are complements in the production function and use various controls in our analysis. The results give insights into delocalisation effects that may take place among rich countries with heterogeneous energy policy. Keywords: Trade and the Environment, Pollution Haven, Factor Endowments, Industry Location Classification-JEL: Q56 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.04 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-004.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.04 Title: Afforestation and Timber Management Compliance Strategies in Climate Policy. A Computable General Equilibrium Analysis Author-Name: Melania Michetti Author-X-Name-First: Melania Michetti Author-X-Name-Last: Michetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Renato Nunes Rosa Author-X-Name-First: Renato Author-X-Name-Last: Nunes Rosa Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: This paper analyzes the role of afforestation-reforestation and timber management activities, and their major and secondary economic effects in stabilizing climate during the first commitment period of the Kyoto Protocol. In particular, with a Computable General Equilibrium framework, the ICES model, it is inferred how forest carbon sequestration fits within the European domestic portfolio of a 2020-20 and 2020-30 climate stabilization policy. Afforestation and land use are accounted for by introducing their effects in the model. This is done by relying on carbon sequestration curves provided by Sohngen (2005), which describe the average annual cost of sequestration for selected world regions. Results show that afforestation and timber management could lead to substantially lower policy costs if included. By allowing afforestation alone it is possible to achieve the 30% emissions reduction target with an additional European effort of only 0.2% compared with the cost of a 20% emissions reduction without afforestation. The introduction of these alternatives for mitigating climate is expected to reduce carbon price by around 30% in 2020 and the already contained leakage effect (around 1%), coming from an independent European commitment, by 0.2%. Keywords: Climate Change, General Equilibrium Modelling, Forestry, Afforestation Classification-JEL: D58, Q23, Q24, Q52, Q54 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.05 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-005.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.05 Title: “The Voracity Effect” and Climate Change: The Impact of Clean Technologies Author-Name: Hassan Benchekroun Author-X-Name-First: Hassan Author-X-Name-Last: Benchekroun Author-WorkPlace-Name: Department of Economics, CIREQ McGill University Author-Name: Amrita Ray Chaudhuri Author-X-Name-First: Amrita Ray Author-X-Name-Last: Chaudhuri Author-WorkPlace-Name: Department of Economics, CentER and TILEC Tilburg University Abstract: We show that a technological breakthrough that reduces CO2 emissions per output can exacerbate the climate change problem: countries may respond by raising their emissions resulting in an increase of the stock of pollution that may reduce welfare. Using parameter values based on empirical evidence we obtain that any 'new technology' that reduces the emissions of CO2 per dollar of GDP by less than 76% from their current level is welfare reducing. Developing clean technologies as well as transferring “cleaner” technologies to developing countries make a global post-Kyoto agreement over the control of emissions all the more urgent. Keywords: Transboundary Pollution, Renewable Resource, Climate Change, Clean Technologies, Differential Games Classification-JEL: Q20, Q54, Q55, Q58, C73 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.06 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-006.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.06 Title: Productivity Spillovers from Foreign MNEs on Domestic Manufacturing Firms: Is Co-location Always a Plus? Author-Name: Sergio Mariotti Author-X-Name-First: Sergio Author-X-Name-Last: Mariotti Author-WorkPlace-Name: DIG - Politecnico di Milano Author-Name: Marco Mutinelli Author-X-Name-First: Marco Author-X-Name-Last: Mutinelli Author-WorkPlace-Name: University of Brescia Author-Name: Marcella Nicolini Author-X-Name-First: Marcella Author-X-Name-Last: Nicolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Lucia Piscitello Author-X-Name-First: Lucia Author-X-Name-Last: Piscitello Author-WorkPlace-Name: DIG - Politecnico di Milano Abstract: The paper analyses productivity spillovers from foreign MNEs on domestic manufacturing firms. Using a database on foreign MNEs in Italy, our results reveal that local firms do benefit from the presence of foreign MNEs, and the effect is higher when local and foreign firms in manufacturing sectors are co-located. However, spillovers benefiting domestic firms are likely to be less influenced by co-location when foreign MNEs are in services sectors as the latter are different from manufacturing industries under a number of aspects that overcome the effect of distance. Indeed, in these sectors, proximity and interaction are often obtained through professional mobility and temporary inter-organizational routines. Keywords: Multinational Firms, Co-Location, Proximity, Spillover Effects, Customer-Supplier Interaction, Vertical Linkages Classification-JEL: D24, F23, O19, R30 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.07 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-007.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.07 Title: The Fight Against Geography: Malaria and Economic Development in Italian Regions 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 Università Bocconi Abstract: Geography has long been considered as a fundamental prerequisite for economic development and growth. In recent years, a growing number of papers have considered the role of physical geography as a determinant of regional growth and development by considering it as a source of “intrinsic advantage”. Malaria is considered to be strictly related to poverty and its geographically-related origin is now widely recognized, i.e. it is endemic only in certain areas of the globe whose environmental and climatic characteristics are ideal for the proliferation of mosquitoes which are the vector for the transmission of the disease. The World Health Organization is currently setting a series of policies aiming to eradicate the disease from Africa, with the specific goals to preserve human lives and possibly to boost economic growth in those areas. Among the several malaria parasites, the worst, Plasmodium falciparum, has infested Italian regions for centuries until the complete eradication occurred in the period 1945-1950. In this paper I provide an empirical assessment of the economic outcomes of malaria eradication in Italian regions. By making use of both macroeconomic and microeconomic data, I found support to the hypothesis that malaria eradication boosts productivity growth and that in the long run it leads to an increase in human capital. In particular, I found that the presence of malaria reduced significantly regional growth over the period 1891-1961, while its eradication increased the years of schooling for both males and females respectively, although my evidence points at a larger support for a very long run impact of eradication actions through an intergenerational spillover effect. Keywords: Geography, Regional Growth, Malaria Classification-JEL: J100, N300, O100, R100 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.08 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-008.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.08 Title: Democracy, Property Rights, Income Equality, and Corruption 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 – Centre for Research in Economics, Management and the Arts and CESifo Abstract: This paper presents theoretical and empirical evidence on the nexus between corruption and democracy. We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property rights system works and there is a low level of income inequality. On the other hand if property rights are not secured and there is strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption. Keywords: Corruption, Democracy, Income inequality, Property rights Classification-JEL: D73, H11, P16 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.09 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-009.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.09 Title: Corruption and Social Interaction: 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 – Centre for Research in Economics, Management and the Arts and CESifo Abstract: We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption. Keywords: Corruption, Social Interaction, China Classification-JEL: K420, D720, D640, O170, J240 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.10 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-010.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.10 Title: Efficiency Improving Fossil Fuel Technologies for Electricity Generation: Data Selection and Trends Author-Name: Elisa Lanzi Author-X-Name-First: Elisa Author-X-Name-Last: Lanzi Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Università Cattolica di Milano Author-Name: Ivan Hašcic Author-X-Name-First: Ivan Author-X-Name-Last: Hašcic Author-WorkPlace-Name: OECD Environment Directorate Abstract: This paper studies innovation dynamics in efficiency improving electricity generation technologies as an important means of mitigating climate change impacts. Relevant patents are identified and used as an indicator of innovation. We find that patenting in efficiency improving technologies has mostly been stable over time, with a recent decreasing trend. We also find that majority of patents are first filed in OECD countries and only then in non-OECD or BRIC countries. Conversely, non-OECD and BRIC countries apply for patents that are mostly marketed domestically. This result shows that there is significant technology transfer in the field of efficiency improving technologies for electricity production. This flow of know-how is likely to contribute to mitigation of greenhouse gases emissions in emerging economies in the long run. Keywords: Climate Change, Technological Innovation, Energy, Patents, Fossil Fuels Classification-JEL: Q32, Q4, Q55 Creation-Date: 201101 Template-Type: ReDIF-Paper 1.0 Number: 2011.11 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-011.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.11 Title: Efficient Random Assignment under a Combination of Ordinal and Cardinal Information on Preferences Author-Name: Stergios Athanassoglou Author-X-Name-First: Stergios Author-X-Name-Last: Athanassoglou Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change Abstract: Consider a collection of m indivisible objects to be allocated to n agents, where m = n. Each agent falls in one of two distinct categories: either he (a) has a complete ordinal ranking over the set of individual objects, or (b) has a set of “plausible” benchmark von Neumann-Morgenstern (vNM) utility functions in whose non-negative span his “true” utility is known to lie. An allocation is undominated if there does not exist a preference-compatible profile of vNM utilities at which it is Pareto dominated by another feasible allocation. Given an undominated allocation, we use the tools of linear duality theory to construct a profile of vNM utilities at which it is ex-ante welfare maximizing. A finite set of preference-compatible vNM utility profiles is exhibited such that every undominated allocation is ex-ante welfare maximizing with respect to at least one of them. Given an arbitrary allocation, we provide an interpretation of the constructed vNM utilities as subgradients of a function which measures worst-case domination. Keywords: Random Assignment, Efficiency, Duality, Linear Programming Classification-JEL: C61, D01, D60 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.12 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-012.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.12 Title: The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices Author-Name: Robin Cross Author-X-Name-First: Robin Author-X-Name-Last: Cross Author-WorkPlace-Name: Oregon State University Author-Name: Andrew J. Plantinga Author-X-Name-First: Andrew J. Author-X-Name-Last: Plantinga Author-WorkPlace-Name: Oregon State University 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, National Bureau of Economic Research, Resources for the Future Abstract: We examine the value of terroir, which refers to the special characteristics of a place that impart unique qualities to the wine produced. We do this by conducting a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes, such as slope, aspect, elevation, and soil types, or designated appellations are more important determinants of price. We find that prices are strongly determined by sub-AVA appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, although the reality of terroir – as proxied for by locational attributes – is not significant Keywords: Wine, Vineyard, Hedonic Price Analysis Classification-JEL: C2, Q11 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.13 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-013.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.13 Title: Contracting for Impure Public Goods: Carbon Offsets and Additionality Author-Name: Charles F. Mason Author-X-Name-First: Charles F. Author-X-Name-Last: Mason Author-WorkPlace-Name: Department of Economics & Finance, University of Wyoming Author-Name: Andrew J. Plantinga Author-X-Name-First: Andrew J. Plantinga Author-X-Name-Last: Plantinga Author-WorkPlace-Name: Department of Agricultural and Resource Economics, Oregon State University Abstract: Governments contracting with private agents for the provision of an impure public good must contend with agents who would potentially supply the good absent any payments. This additionality problem is centrally important in the use of carbon offsets as part of climate change mitigation. Analyzing optimal contracts for forest carbon sequestration, an important offset category, we conduct a national-scale simulation using results from an econometric model of land-use change. The results indicate that for an increase in forest area of 50 million acres, annual government expenditures with optimal contracts are about $4 billion lower compared than under a uniform subsidy. Keywords: Carbon Sequestration, Incentive Contracting, Offsets, Additionality Classification-JEL: Q2, D8, L15 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.14 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-014.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.14 Title: Optimal Emission Policy under the Risk of Irreversible Pollution Author-Name: Alain Ayong Le Kama Author-X-Name-First: Alain Author-X-Name-Last: Ayong Le Kama Author-WorkPlace-Name: EQUIPPE, Université de Lille Author-Name: Aude Pommeret Author-X-Name-First: Aude Author-X-Name-Last: Pommeret Author-WorkPlace-Name: Université de Lausanne and IREGE, Université de Savoie Author-Name: Fabien Prieur Author-X-Name-First: Fabien Author-X-Name-Last: Prieur Author-WorkPlace-Name: INRA-LAMETA, Université Montpellier I Abstract: We consider an optimal consumption and pollution problem that has two important features. Environmental damages due to economic activities may be irreversible and the level at which the degradation becomes irreversible is unknown. Particular attention is paid to the situation where agents are relatively impatient and/or do not care a lot about the environment and/or Nature regenerates at low rate. We show that the optimal policy of the uncertain problem drives the economy in the long run toward a steady state while, when ignoring irreversibility, the economy follows a balanced growth path accompanied by a perpetual decrease in environmental quality and consumption, both asymptotically converging toward zero. Therefore, accounting for the risk of irreversibility induces more conservative decisions regarding consumption and polluting emissions. In general, however, we cannot rule out situations where the economy will optimally follow an irreversible path and consequently, will also be left, in the long run, with an irreversibly degraded environment. Keywords: Optimal Control, Irreversibility Threshold, Uncertainty, Optimal Reversible, Irreversible Policy Classification-JEL: D81, Q54, Q58 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.15 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-015.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.15 Title: How CO2 Capture and Storage Can Mitigate Carbon Leakage 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) Author-Name: Julie Rozenberg Author-X-Name-First: Julie Author-X-Name-Last: Rozenberg Author-WorkPlace-Name: Centre international de recherche sur l’environnement et le développement (CIRED) Author-Name: Olivier Sassi Author-X-Name-First: Olivier Author-X-Name-Last: Sassi Author-WorkPlace-Name: Centre international de recherche sur l’environnement et le développement (CIRED) Author-Name: Adrien Vogt-Schilb Author-X-Name-First: Adrien Author-X-Name-Last: Vogt-Schilb Author-WorkPlace-Name: Centre international de recherche sur l’environnement et le développement (CIRED) Abstract: Most CO2 abatement policies reduce the demand for fossil fuels and therefore their price in international markets. If these policies are not global, this price decrease raises emissions in countries without CO2 abatement policies, generating “carbon leakage”. On the other hand, if the countries which abate CO2 emissions are net fossil fuel importers, they benefit from this price decrease, which reduces the abatement cost. In contrast, CO2 capture and storage (CCS) does not reduce fossil fuel demand, therefore it generates neither this type of leakage nor this negative feedback on abatement costs. We quantify these effects with the global hybrid general equilibrium model Imaclim-R and show that they are quantitatively important. Indeed, for a given unilateral abatement in OECD countries, leakage is more than halved in a scenario with CCS included among the abatement options, compared to a scenario prohibiting CCS. We show that the main reason for this difference in leakage is the above-mentioned international fossil fuel price feedback. This article does not intend to assess the desirability of CCS, which has many other pros and cons. It just identifies a consequence of CCS that should be taken into account, together with many others, when deciding to what extent CCS should be developed. Keywords: CO2 Capture and Storage, Carbon Leakage Classification-JEL: Q5, Q58 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.16 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-016.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.16 Title: Energy and Climate Change in China Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: University of Venice and 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 and Euro-Mediterranean Centre for Climate Change Abstract: The paper examines future energy and emissions scenarios in China, presenting historical data and scenarios generated using the Integrated Assessment Model WITCH. A Business-as-Usual scenario is compared with four scenarios in which Greenhouse Gases emissions are taxed, at different levels. Key insights are provided to evaluate the Chinese pledge to reduce the emissions intensity of Gross Domestic Product by 40/45 percent in 2020 contained in the Copenhagen Accord. Marginal and total abatement costs are discussed using the OECD economies as a term of comparison. Cost estimates for different emissions reduction targets are used to assess the political feasibility of the 50 percent global reduction target set by the G8 and Major Economies Forum in July 2009. Keywords: Climate Change, China, Energy Efficiency, Energy and Development Classification-JEL: Q4 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.17 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-017.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.17 Title: Effective Environmental Protection in the Context of Government Decentralization Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: China has shifted control over resources and decision making to local governments and enterprises as the result of the economic reforms over the past three decades. This devolution of decision-making to local levels and enterprises has placed environmental stewardship in the hands of local officials and polluting enterprises who are more concerned with economic growth and profits than the environment. Therefore, effective environmental protection needs their full cooperation. Against this background, this paper discusses a variety of tactics that China’s central government has been using to incentivize local governments, and a number of market-based instruments, supporting economic policies, environmental performance ratings and disclosure and cooperation with financial institutions to promote long-lasting, improved corporate energy-saving and environmental performance. It concludes that there is a clear need to carefully examine those objective and subjective factors that lead to the lack of local official’s cooperation on the environment, and provides some suggestions for appropriated incentives to get their cooperation. Keywords: Effective Environmental Protection, Incentive Structure, Economic Instruments, Industrial Policy, Financial Institutions, Government Decentralization, China Classification-JEL: Q53, Q56, Q58, Q43, Q48, H23, H75, R51 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.18 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-018.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.18 Title: Pollution Control: When, and How, to be Precautious Author-Name: Stergios Athanassoglou Author-X-Name-First: Stergios Author-X-Name-Last: Athanassoglou Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change 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 Abstract: The precautionary principle (PP) applied to environmental policy stipulates that, in the presence of physical uncertainty, society must take robust preventive action to guard against worst-case outcomes. It follows that the higher the degree of uncertainty, the more aggressive this preventive action should be. This normative maxim is explored in the case of a stylized dynamic model of pollution control under Knightian uncertainty. At time 0 a decision-maker makes a one-time investment in damage-control technology and subsequently decides on a desirable dynamic emissions policy. Adopting the robust control framework of Hansen and Sargent [10], we investigate optimal damage-control and mitigation policies. We show that optimal investment in damage control is always increasing in the degree of uncertainty, thus confirming the conventional PP wisdom. Optimal mitigation decisions, however, need not always comport with the PP and we provide analytical conditions that sway the relationship one way or the other. This result is interesting when contrasted to a model with fixed damage-control technology, in which it can be easily shown that a PP vis-a-vis mitigation unambiguously holds. We conduct a set of numerical experiments to determine the sensitivity of our results to specific functional forms of damage-control cost. We find that when the cost of damage-control technology is low enough, damage-control investment and mitigation may act as substitutes and a PP with respect to the latter can be unambiguously irrational. Keywords: Risk, Ambiguity, Robust Control, Precautionary Principle, Pollution Control Classification-JEL: C61, D80, D81 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.19 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-019.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.19 Title: Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU Author-Name: Jurate Jaraite Author-X-Name-First: Jurate Author-X-Name-Last: Jaraite Author-WorkPlace-Name: CERE, Umeå University Author-Name: Corrado Di Maria Author-X-Name-First: Corrado Author-X-Name-Last: Di Maria Author-WorkPlace-Name: Queen’s University Belfast Abstract: This study uses the EU public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the European Union’s CO2 Emissions Trading Scheme (EU ETS) in its pilot phase. Using Data Envelopment Analysis methods, we measure the environmental efficiency and the productivity growth registered in public power generation across the EU over the 1996-2007 period. In the second stage of our analysis we attempt to explain changes in productivity and efficiency over time using state-of-the-art econometric techniques. Our analysis suggests two conclusions: on the one hand carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier; on the other hand, the overly generous allocation of emission permits had a negative impact on both measures. These results are shown to be robust to changes in controls and specifications. Keywords: Emissions Trading, EU ETS, Environmental Efficiency, Productivity Growth, Data Envelopment Analysis Classification-JEL: O38, Q48, Q58 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.20 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-020.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.20 Title: Environmental Innovations, Local Networks and Internationalization Author-Name: Giulio Cainelli Author-X-Name-First: Giulio Author-X-Name-Last: Cainelli Author-WorkPlace-Name: University of Padova Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara Author-Name: Sandro Montresor Author-X-Name-First: Sandro Author-X-Name-Last: Montresor Author-WorkPlace-Name: University of Bologna Abstract: This paper investigates the drivers of the environmental innovations (EI) introduced by firms in local production systems (LPS). The role of firm network relationships, agglomeration economies and internationalization strategies is analysed for a sample of 555 firms in the Emilia-Romagna region, North-East of Italy. Cooperating with ‘qualified’ local actors – i.e. universities and suppliers – is the most important driver of EI for most firms, along with their training policies and IT innovations. The role of agglomeration economies is less clear and seems to depend on the EI propensity of more locally oriented firms playing in district areas, which might even turn agglomeration into dis-economies. Networking effects and agglomeration economies are instead found to strongly promote the adoption of EI by multinational firms, thus highlighting the importance of local-global interactions. We provide some interesting findings for particular kinds of challenging EI in fields as CO2 abatement and ISO labelling, generally extending the analysis EI driver by joining local and international factors. Keywords: Eco-Innovation, Foreign Ownership, Networking, District, Agglomeration Economics, Local Production Systems Classification-JEL: C21, L60, O13, O30, Q20, Q58, F23 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.21 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-021.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.21 Title: Hazardous Activities and Civil Strict Liability: The Regulator’s Dilemma 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 addresses the conditions for setting up strict civil liability schemes. For that it compares the social efficiency of two main civil liability regimes usually enforced to protect the environment: the strict liability regime and the “capped strict liability scheme”. First, it shows that the regulator faces an effective dilemma when he has to enforce one of these schemes. This because the social cost of a severe harm (and the associated optimum care effort) is determined independently of any liability regime. This independency has economic consequences. First, victims and polluters pit one against another about the liability regime that the government should enforce. Hence, financially constrained polluters prefer the ceiling of responsibilities while victims wish to extend the amount of redress under a “standard” strict liability. Economic criteria for enforcing a regime rather than another one are lacking. Second, the paper shows that implementing civil strict liability rules may be done by setting up care standards as for instance in the nuclear or the maritime sectors and demanding to the injurers to comply with them. We show that this goal can be achieved by resorting to some friendly monitoring corresponding to frequent random controls with low fines rather than few controls that should involve heavy fines. 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: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.22 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-022.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.22 Title: A Trend Deduction Model of Fluctuating Oil Prices Author-Name: Haiyan Xu Author-X-Name-First: Haiyan Author-X-Name-Last: Xu Author-WorkPlace-Name: Institute of International Studies, Fudan University and Center for Energy Economics and Strategy Studies, Fudan University Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: Crude oil prices have been fluctuating over time and by a large range. It is the disorganization of oil price series that makes it difficult to deduce the changing trends of oil prices in the middle- and long-terms and predict their price levels in the short-term. Following a price-state classification and state transition analysis of changing oil prices from January 2004 to April 2010, this paper first verifies that the observed crude oil price series during the soaring period follow a Markov Chain. Next, the paper deduces the changing trends of oil prices by the limit probability of a Markov Chain. We then undertake a probability distribution analysis and find that the oil price series have a log-normality distribution. On this basis, we integrate the two models to deduce the changing trends of oil prices from the short-term to the middle- and long-terms, thus making our deduction academically sound. Our results match the actual changing trends of oil prices, and show the possibility of re-emerging soaring oil prices. Keywords: Oil Price, Log-normality Distribution, Limit Probability of a Markov Chain, Trend Deduction Model, OPEC Classification-JEL: Q41, Q47, C12, C49, F01, O13 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.23 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-023.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.23 Title: Corruption and Environmental Policy: An Alternative Perspective Author-Name: Athanasios Lapatinas Author-X-Name-First: Athanasios Author-X-Name-Last: Lapatinas Author-WorkPlace-Name: University of Ioannina Author-Name: Anastasia Litina Author-X-Name-First: Anastasia Author-X-Name-Last: Litina Author-WorkPlace-Name: University of Ioannina Author-Name: Eftichios S. Sartzetakis Author-X-Name-First: Eftichios S. Author-X-Name-Last: Sartzetakis Author-WorkPlace-Name: University of Macedonia Abstract: We construct an overlapping generations model in which agents live through two periods; childhood and adulthood. Each agent makes choices only as an adult, based on her utility that depends on her own consumption and the human capital and environmental quality endowed to her offspring. Entering adulthood, agents choose randomly between two occupations: citizens and politicians. Citizens are the only producers of a single good and choose the proportion of their income to declare to the tax authorities. Politicians decide upon the allocation of the tax revenue between environmental protection and education activities, taking as given the rates of peculation in each activity. In this context, two self-fulfilling stable equilibria can emerge, one associated with high and another with low corruption. Corrupted politicians induce high levels of tax evasion, reducing total public funds and thus environmental protection activities. This result is in accordance with existing empirical evidence and implies that environmental policies may fail in corrupt countries where they are used as means of supporting rent seeking activities instead of protecting the environment. A higher level political authority could intervene and force the low corruption equilibrium by choosing the appropriate tax rate and, through institutional changes, the rates of peculation. Keywords: Corruption, Environmental Policy Classification-JEL: H2, H26, H3, Q56, Q58 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.24 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-024.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.24 Title: A Tale of Two Countries: Emissions Scenarios for China and India Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euromediterranean Center for Climate Change Abstract: The aim of the paper is to present evidence that China and India are, and will remain, two very different actors in international negotiations to control global warming. We base our conclusions on historical data and on scenarios until 2050. The Business-as-Usual scenario (BaU) is compared to four Emissions Tax scenarios to draw insights on major transformations in energy use and in energy supply and to assess the possible contribution of China and India to a future international climate architecture. We study whether or not the Copenhagen intensity targets require more action than the BaU scenario and we assess whether the emissions reductions induced by the four tax scenarios are compatible with the G8 and MEF pledge to reduce global emissions by 50% in 2050. Keywords: Climate Change, China, India, Energy Efficiency, Energy and Development Classification-JEL: Q32, Q43, Q54, Q43, O53, P52 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.25 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-025.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.25 Title: Abatement Technology and the Environment-Growth Nexus with Education 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 article challenges the conventional result that a tighter environmental tax has no long-run effect on human capital accumulation in the presence of pollution arising from final output production. It demonstrates that the technology used in the abatement sector determines the existence and the direction of the growth-effect. A tighter environmental tax rises (respectively reduces) human capital accumulation in the presence of pollution arising from final production, if the abatement sector is relatively more intensive in human (resp. physical) capital than final sector. That result always holds for finite lifetime but for infinite lifetime it only holds when labor supply is endogenous. The transitional impact of a tighter environmental policy is also investigated. Keywords: Growth, Environment, Overlapping Generations, Human Capital, Abatement Classification-JEL: Q5, Q58 Creation-Date: 201102 Template-Type: ReDIF-Paper 1.0 Number: 2011.26 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-026.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.26 Title: Optimal Exploitation of Groundwater and the Potential for a Tradable Permit System in Irrigated Agriculture Author-Name: Dionysis Latinopoulos Author-X-Name-First: Dionysis Author-X-Name-Last: Latinopoulos Author-WorkPlace-Name: Department of Spatial Planning and Development, Aristotle University of Thessaloniki Author-Name: Eftichios Sartzetakis Author-X-Name-First: Eftichios Author-X-Name-Last: Sartzetakis Author-WorkPlace-Name: Department of Economics, University of Macedonia Abstract: A great challenge facing future agricultural water policy is to explore the potential for transition from the current myopic competitive (common) exploitation of groundwater resources to a long-term efficient and sustainable allocation. A number of economic and/or command and control instruments can be used by the relevant water authority in order to deal with the economic and environmental problems generated by competitive exploitation. However, according to previous experience in both developed and developing countries, tradable permits seem as one of the most effective and efficient instruments, especially under conditions of limited water availability. On this account, the aim of the current study is to explore the feasibility and implementation of a tradable permit system in irrigated agriculture. To this end, two distinct optimization models are applied and compared: (a) an individual farmer’s model (representing the myopic non-cooperative exploitation of groundwater) and (b) a social planner’s model (representing the cooperative and sustainable allocation). The deviation of their results shows the rationale for using a tradable permit system, while the final allocation of the social planner’s model, solved as an optimal control problem that maximizes the social welfare under specific water policy objectives, denotes the equilibrium state of this system. The two models are then applied in a typical rural area of Greece where groundwater is the only source of irrigated agriculture. The derived time paths for water consumption and water availability illustrate the significant environmental benefits from the future implementation of a tradable permit system. Keywords: Tradable Water Permits, Sustainable Water Use, Irrigated Agriculture Classification-JEL: Q15, Q25, Q28 Creation-Date: 201103 Template-Type: ReDIF-Paper 1.0 Number: 2011.27 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-027.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.27 Title: A Century of American Economic Review 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, CESifo, Germany and the National Centre for Econometric Research Author-Name: Marco Piatti Author-X-Name-First: Marco Piatti Author-X-Name-Last: Marco Author-WorkPlace-Name: Piatti Abstract: Using information collected from American Economic Review publications of the last 100 years, we try to provide answers to various questions: Which are the top AER publishing institutions and countries? Which are the top AER papers based on citation success? How frequently is someone able to publish in AER? How equally is citation success distributed? Who are the top AER publishing authors? What is the level of cooperation among the authors? What drives the alphabetical name ordering? What are the individual characteristics of the AER authors, editors, editorial board members, and referees? How frequently do women publish in AER? What is the relationship between academic age, publication performance, and citation success? What are the paper characteristics? What influences the level of technique used in articles? Do connections have an influence on citation success? Who receives awards? Can awards increase the probability of publishing in AER at a later stage? Keywords: American Economic Review, Publishing Economics, Rankings, Cooperation, Authors, Editors, Board Members, Referees, Connections, Awards, Paper Characteristics, Economic History, History of Economic Thought Classification-JEL: A10, A110, B00, B31, B40, I23, N01, J00, Z00 Creation-Date: 201103 Template-Type: ReDIF-Paper 1.0 Number: 2011.28 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-028.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.28 Title: Optimal Mechanisms for Heterogeneous Multi-cell Aquifers Author-Name: Stergios Athanassoglou Author-X-Name-First: Stergios Author-X-Name-Last: Athanassoglou Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change Author-Name: Glenn Sheriff Author-X-Name-First: Glenn Author-X-Name-Last: Sheriff Author-WorkPlace-Name: National Center for Environmental Economics U.S. Environmental Protection Agency Author-Name: Tobias Siegfried Author-X-Name-First: Tobias Author-X-Name-Last: Siegfried Author-WorkPlace-Name: Water Center of the Earth Institute, Columbia University Author-Name: Woonghee Tim Huh Author-X-Name-First: Woonghee Author-X-Name-Last: Tim Huh Author-WorkPlace-Name: Sauder School of Business, University of British Columbia Abstract: Standard economic models of groundwater management impose restrictive assumptions regarding perfect transmissivity (i.e., the aquifer behaves as a bathtub), no external effects of groundwater stocks, observability of individual extraction rates, and/or homogenous agents. In this article, we derive regulatory mechanisms for inducing the socially optimal extraction path in Markov perfect equilibrium for aquifers in which these assumptions do not hold. In spite of the complexity of the underlying system, we identify an interesting case in which a simple linear mechanism achieves the social optimum. To illustrate potential problems that can arise by erroneously imposing simplifying assumptions, we conduct a simulation based on data from the Indian state of Andhra Pradesh. Keywords: Common Property Resource, Differential Games, Groundwater Extraction, Imperfect Monitoring, Markov Perfect Equilibrium Classification-JEL: C6, D0 Creation-Date: 201103 Template-Type: ReDIF-Paper 1.0 Number: 2011.29 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-029.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.29 Title: Inflationary Effect of Oil-Price Shocks in an Imperfect Market: A Partial Transmission Input-output Analysis Author-Name: Libo Wu Author-X-Name-First: Libo Wu Author-X-Name-Last: Wu Author-WorkPlace-Name: Center for Energy Economics and Strategy Studies, Fudan University and Institute of World Economy, Fudan University Author-Name: Jing Li Author-X-Name-First: Jing Author-X-Name-Last: Li Author-WorkPlace-Name: Department of World Economy, School of Economics, Fudan University Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: This paper aims to examine the impacts of oil-price shocks on China’s price levels. To that end, we develop a partial transmission input-output model that captures the uniqueness of the Chinese market. We hypothesize and simulate price control, market factors and technology substitution - the three main factors that restrict the functioning of a price pass-through mechanism during oil-price shocks. Using the models of both China and the U.S., we separate the impact of price control from those of other factors leading to China’s price stickiness under oil-price shocks. The results show a sharp contrast between China and the U.S., with price control in China significantly preventing oil-price shocks from spreading into its domestic inflation, especially in the short term. However, in order to strengthen the economy’s resilience to oil-price shocks, the paper suggests a gradual relaxing of price control in China. Keywords: Oil-price Shocks, Price Transmission, Price Control, Input-output Analysis, Inflation, Industrial Structure, China, the United States Classification-JEL: Q43, Q41, Q48, O13, O53, P22, E31 Creation-Date: 201103 Template-Type: ReDIF-Paper 1.0 Number: 2011.30 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-030.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.30 Title: Environmental Security and its Implications for China’s Foreign Relations Author-Name: Junko Mochizuki Author-X-Name-First: Junko Author-X-Name-Last: Mochizuki Author-WorkPlace-Name: Department of Natural Resources and Environmental Management, University of Hawaii at Manoa Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: China’s emerging standing in the world demands a major rethinking of its diplomatic strategies. Given its population size, geographical scale, economic power and military presence, China is poised to play a larger political role in the twenty-first century, and is thus perceived by the international community to have greater capacities, capabilities and responsibilities. At the same time, environmental stresses caused by China’s energy and resources demands have become increasingly evident in recent years, urging China to cultivate delicate diplomatic relations with its neighbors and strategic partners. Tensions have been seen in areas such as transboundary air pollution, cross-border water resources management and resources exploitation, and more recently in global issues such as climate change. As the Chinese leadership begins to embrace the identity of a responsible developing country, it is becoming apparent that while unabated resources demands and environmental deterioration may pose a great threat to environmental security, a shared sense of urgency could foster enhanced cooperation. For China to move beyond existing and probable diplomatic tensions, a greater attention to domestic and regional environmental security will no doubt be necessary. This article explores such interrelations among domestic, regional and global environmental securities and China’s diplomacy, and suggests possible means by which China could contribute to strengthening global environmental security. Keywords: Acid Rain, Climate Change, Energy, Environmental Security, Transboundary Air Pollution, Water Resource Management, Asia Classification-JEL: Q25, Q34, Q48, Q42, Q53, Q54, Q56, Q58, O13, P28 Creation-Date: 201103 Template-Type: ReDIF-Paper 1.0 Number: 2011.31 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-031.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.31 Title: How to Measure Carbon Equity: Carbon Gini Index Based on Historical Cumulative Emission Per Capita Author-Name: Teng Fei Author-X-Name-First: Teng Author-X-Name-Last: Fei Author-WorkPlace-Name: Institute of Energy, Environment and Economy, Tsinghua University Author-Name: He Jiankun Author-X-Name-First: He Author-X-Name-Last: Jiankun Author-WorkPlace-Name: Institute of Energy, Environment and Economy, Tsinghua University Author-Name: Pan Xunzhang Author-X-Name-First: Pan Author-X-Name-Last: Xunzhang Author-WorkPlace-Name: Institute of Energy, Environment and Economy, Tsinghua University Abstract: This paper uses Lorenz Curve and Gini Index with adjustment to per capita historical cumulative emission and constructs Carbon Gini Index to measure inequality in climate change area. The analysis using Carbon Gini Index shows that 70% of carbon space in the atmosphere has been used for unequal distribution, which is almost the same as that of income in the country with the biggest gap between rich and poor in the world. The carbon equity should be an urgency and priority in the climate agenda. Carbon Gini Index established in this paper can be used to measure inequality in the distribution of carbon space and provide a quantified indicator for measurement of carbon equity among different proposals. Keywords: Climate Change, Carbon Equity, Long-term Mitigation Goal, Cumulative Emission Per Capita, Carbon Gini Index Classification-JEL: Q56, D63 Creation-Date: 201104 Template-Type: ReDIF-Paper 1.0 Number: 2011.32 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-032.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.32 Title: Environmental Regulations, Market Structure and Technological Progress in Renewable Energy Technology — A Panel Data Study on Wind Turbines Author-Name: Dirk Rübbelke Author-X-Name-First: Dirk Author-X-Name-Last: Rübbelke Author-WorkPlace-Name: Basque Centre for Climate Change (BC3) and IKERBASQUE, Basque Foundation for Science Author-Name: Pia Weiss Author-X-Name-First: Pia Author-X-Name-Last: Weiss Author-WorkPlace-Name: Nottingham University Business School Abstract: We study the impact of environmental regulations on the patent activities for wind turbines between 1980 and 2008. We explicitly control for energy market liberalisation and take a potential interaction between liberalisation and policy instruments into account. We find a strong and highly significant effect of environmental tax revenues, which we regard as a proxy for the extent to which energy prices changed in favour of renewable energies, as well as foreign demand for wind turbines on innovation activities. In addition, we find that price-based policy instruments are more effective in fostering innovations in the wind turbine technology when energy markets are fully open to competition. In contrast, non-price-based policy instruments such as grants or low interest rate loans are largely independent from whether or not energy markets are liberalised. Keywords: Environmental Policy, Renewable Energy, Market Structure, Wind Turbines, Innovation, Patents, Technological Change Classification-JEL: Q55, Q58, O34, O38 Creation-Date: 201104 Template-Type: ReDIF-Paper 1.0 Number: 2011.33 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-033.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.33 Title: Market Equilibrium in the Presence of Green Consumers and Responsible Firms: A Comparative Statics Analysis Author-Name: Nicola Doni Author-X-Name-First: Nicola Author-X-Name-Last: Doni Author-WorkPlace-Name: Dipartimento Scienze Economiche, Università di Firenze Author-Name: Giorgio Ricchiuti Author-X-Name-First: Giorgio Author-X-Name-Last: Ricchiuti Author-WorkPlace-Name: Dipartimento Scienze Economiche, Università di Firenze Abstract: This paper analyzes how the interaction between green consumers and responsible firms affects the market equilibrium. The main result is that a higher responsibility by both producers and consumers can have different impacts on the efficiency of the firms’ abatement activity, depending on the nature of the cleaning costs. When the abatement costs are fixed, the efficiency of the clean-up effort is always increasing in their degree of responsibility. On the other hand, when the abatement costs are variable, a higher level of responsibility may reduce social welfare. Finally, the first best allocation is never reached, even in the presence of the highest credible level of responsibility of both consumers and producers. Keywords: Green Consumers, Corporate Social Responsibility, Vertical Differentiation Classification-JEL: D62, L13, L21 Creation-Date: 201104 Template-Type: ReDIF-Paper 1.0 Number: 2011.34 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-034.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.34 Title: Civil Liability, Safety and Nuclear Parks: Is Concentrated Management Better? 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: Ultra-hazardous risky activities as nuclear industry cannot be considered as “normal industries” i.e. industries without abnormal environmental and health risks. Consequently, the industrial organization of these specific sectors is of the utmost importance. This paper aims at studying this question. We focus on the associated costs of prevention and civil liability. We analyze how civil liability rules may contribute to extend or to discourage the expansion of nuclear parks to new operators. The paper compares the consequences of extending the management of nuclear stations to several independent operators. This question can apply to the unification process of the European electricity market in which several public and private nuclear power operators are running. The paper shows that the choice between either a monopolistic scheme (one operator managing several plants) or a decentralized one (one operator by station) depends on the condition of application of the legal civil liability regime and on the strength of the safety control exerted by the Nuclear Regulatory Authorities. It is shown that when the control is high, then the safety costs generated by the monopolistic organization are less than the same costs of a decentralized one. However, conditions on the insurance policy can mitigate this result. Keywords: Strict Liability, Electric Energy, Nuclear Plants Classification-JEL: Q5, Q58, Q53, K23, L13, L52, L94 Creation-Date: 201104 Template-Type: ReDIF-Paper 1.0 Number: 2011.35 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-035.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.35 Title: International Environmental Agreements in the Presence of Adaptation Author-Name: Walid Marrouch Author-X-Name-First: Walid Author-X-Name-Last: Marrouch Author-WorkPlace-Name: Lebanese American University, School of Business, Department of Economics and Finance, CIRANO (Center for Interuniversity Research and Analysis on Organizations) Author-Name: Amrita Ray Chaudhuri Author-X-Name-First: Amrita Ray Author-X-Name-Last: Chaudhuri Author-WorkPlace-Name: Department of Economics, CentER, TILEC, Tilburg University, Department of Economics, The University of Winnipeg Abstract: We show that adaptive measures undertaken by countries in the face of climate change, apart from directly reducing the damage caused by climate change, may also indirectly mitigate greenhouse gas emissions by increasing the stable size of international agreements on emission reductions. Moreover, we show that the more effective the adaptive measure in terms of reducing the marginal damage from emissions, the larger the stable size of the international environmental agreement. In addition, we show that larger coalitions, in the presence of adaptation, may lead to lower global emission levels and higher welfare. Keywords: International Environmental Agreements, Adaptation, Coalition Formation, Climate Change Classification-JEL: Q54, Q59 Creation-Date: 201104 Template-Type: ReDIF-Paper 1.0 Number: 2011.36 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-036.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.36 Title: Smart Meter Devices and The Effect of Feedback on Residential Electricity Consumption: Evidence from a Natural Experiment in Northern Ireland Author-Name: Will Gans Author-X-Name-First: Will Author-X-Name-Last: Gans Author-WorkPlace-Name: AREC, University of Maryland Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: AREC, University of Maryland and Fondazione Eni Enrico Mattei Author-Name: Alberto Longo Author-X-Name-First: Alberto Author-X-Name-Last: ALongo Author-WorkPlace-Name: Gibson Institute for Land Food and Environment, UKCRC Centre of Excellence for Public Health (NI), School of Biological Sciences, Queen‘s University Abstract: Using a unique set of data and exploiting a large-scale natural experiment, we estimate the effect of real-time usage information on residential electricity consumption in Northern Ireland. Starting in April 2002, the utility replaced prepayment meters with “smart” meters that allow the consumer to track usage in real-time. We rely on this event, account for the endogeneity of price and plan with consumption through a plan selection correction term, and find that the provision of information is associated with a decline in electricity consumption of up to 20%. We find that the reduction is robust to different specifications, selection-bias correction methods and subsamples of the original data. At £15-17 per tonne of CO2e (2009£), the smart meter program delivers cost-effective reductions in carbon dioxide emissions. Keywords: Residential Energy, Electricity Demand, Feedback, Smart Meter, Information Classification-JEL: Q40, Q41, D8 Creation-Date: 201105 Template-Type: ReDIF-Paper 1.0 Number: 2011.37 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-037.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.37 Title: Biofuel Economics in a Setting of Multiple Objectives & Unintended Consequences Author-Name: William K. Jaeger Author-X-Name-First: William K. Author-X-Name-Last: Jaeger Author-WorkPlace-Name: Oregon State University Author-Name: Thorsten M. Egelkraut Author-X-Name-First: Thorsten M. Author-X-Name-Last: Egelkraut Author-WorkPlace-Name: Oregon State University Abstract: This paper examines biofuels from an economic perspective and evaluates the merits of promoting biofuel production in the context of the policies’ multiple objectives, life-cycle implications, pecuniary externalities, and other unintended consequences. The policy goals most often cited are to reduce fossil fuel use and to lower greenhouse gas emissions. But the presence of multiple objectives and various indirect effects complicates normative evaluation. To address some of these complicating factors, we look at several combinations of policy alternatives that achieve the same set of incremental gains along the two primary targeted policy dimensions, making it possible to compare the costs and cost-effectiveness of each combination of policies. For example, when this approach is applied to U.S.-produced biofuels, they are found to be 14 to 31 times as costly as alternatives like raising the gas tax or promoting energy efficiency improvements. The analysis also finds the scale of the potential contributions of biofuels to be extremely small in both the U.S. and EU. Mandated U.S. corn ethanol production for 2025 reduces U.S. petroleum input use by 1.75%, and would have negligible net effects on CO2 emissions; and although EU imports of Brazilian ethanol may look better given the high costs of other alternatives, this option is equivalent, at most, to a 1.20% reduction in EU gasoline consumption. Keywords: Biofuel, Biodiesel, Cost-Effectiveness, Indirect Land Use Change Effects, Net Energy, Multiple Objectives, Ethanol, Ghg Classification-JEL: Q42, Q48, Q54 Creation-Date: 201105 Template-Type: ReDIF-Paper 1.0 Number: 2011.38 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-038.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.38 Title: Are Preferences for Environmental Quality Sensitive to Financial Funding Schemes? Evidence from a Marine Restoration Programme in the Black Sea Author-Name: Kyriaki Remoundou Author-X-Name-First: Kyriaki Author-X-Name-Last: Remoundou Author-WorkPlace-Name: Department of International and European Economic Studies, Athens University of Economics and Business Author-Name: Fikret Adaman Author-X-Name-First: Fikret Author-X-Name-Last: Adaman Author-WorkPlace-Name: Bogaziçi University Author-Name: Phoebe Koundouri Author-X-Name-First: Phoebe Author-X-Name-Last: Koundouri Author-WorkPlace-Name: Department of International and European Economic Studies, Athens University of Economics and Business Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: The Mediterranean Science Commission – CIESM, and Department of Agriculture and Natural Resources Economics – TESAF, University of Padova Abstract: This paper uses a non-market valuation study to elicit consumers’ preferences for a marine restoration programme in the Black Sea aiming to reduce the level of public health risk from bathing and improve water quality and the overall level of marine biodiversity. In this context, we administer a stated choice experiment in coastal settlements in Ukraine and Turkey and employ two tax revenue reallocation schemes as payment vehicles. One proposes the financing of the marine restoration programme by the reduction of the public budget for renewable energy and the second by the reduction of the public budget on training for civil servants. We examine the stated preferences and the subsequently derived economic value estimates in the two treatments with the aim to investigate whether the trade-off implied by the funding scheme has implications for the valuation outcome. Results reveal that preferences and marginal rates of substitution between the non-price attributes under consideration differ significantly. In the civil servants’ budget reallocation scheme, the reallocation coefficient is positive, implying that ceteris paribus redistribution of public financial resources from this source is utility-enhancing. The magnitude of the results differs in the two considered countries mirroring their heterogeneity in political and cultural dimensions. Keywords: Non-Market Valuation; Stated Choice Experiment, Payment Vehicle, Tax Revenues Reallocation, Marine Resources, Black Sea, Marine Biodiversity, Developing Countries Classification-JEL: Q22, Q28 Creation-Date: 201105 Template-Type: ReDIF-Paper 1.0 Number: 2011.39 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-039.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.39 Title: A Global Map of Coastal Recreation Values: Results From a Spatially Explicit Based Meta-Analysis Author-Name: Andrea Ghermandi Author-X-Name-First: Andrea Author-X-Name-Last: Ghermandi Author-WorkPlace-Name: Department of Economics, Ca’ Foscari University of Venice Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: Marine Economics Research Programme, The Mediterranean Science Commission – CIESM, Principauté de Monaco, and Department of Agriculture and Natural Resources Economics – TESAF, University of Padova Abstract: The welfare dimension of the recreational services provided by global coastal ecosystems is examined through a meta-analytical regression-based valuation approach. First, we construct a global, state-of-the-art database of stated and revealed preference estimates on coastal recreation, which includes also the grey literature and with the latest entry updated to February 2010. Second, the profile of each of the 253 observations of our dataset, which correspond to individual value estimates, was further enriched with characteristics of the built coastal environment (site accessibility, anthropogenic pressure, level of human development), characteristics of the natural coastal environment (presence of protected area, type of ecosystem, and marine biodiversity richness), geo-climatic factors (temperature and precipitation), as well as sociopolitical characteristics, such as the political stability index. In this context, the proposed meta-analytical valuation exercise explores the spatially explicit dimension of the values building upon Geographic Information System (GIS) tools. GIS are relied upon for the spatial characterization of the valued ecosystems, the determination of the role of spatially explicit variables in the meta analytical value transfer model, as well as for the value transfer exercise. The GIS characterization is observed to be extremely significant in explaining the spatial diversity of the estimates values and underlying explanatory factors. The resulting integrated valuation framework constitutes a worldwide première and it results in the first global map of the recreational value of coastal ecosystems. We argue that the presented global map may play an important role in studying the prioritization for the conservation of coastal areas from a social perspective. Keywords: Built Coastal Environment, Natural Coastal Environment, Ecosystem Service Valuation, Geographic Information Systems, Mapping Ecosystem Values, Marine Biodiversity, Scaling up, Spatial Analysis, Spatial Economic Valuation, Value Transfer Classification-JEL: C53, Q26, Q57, R12 Creation-Date: 201105 Template-Type: ReDIF-Paper 1.0 Number: 2011.40 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-040.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.40 Title: Towards the Optimal Management of the Northeast Arctic Cod Fishery Author-Name: Andries Richter Author-X-Name-First: Andries Author-X-Name-Last: Richter Author-WorkPlace-Name: Wageningen University Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: Marine Economics Research Programme, The Mediterranean Science Commission – CIESM, Principauté de Monaco, and Department of Agriculture and Natural Resources Economics – TESAF, University of Padova Abstract: The objectives pursued by governments managing fisheries may include maximizing profits, minimizing the impact on the marine ecosystem, or securing employment, which all require adjusting the composition of the fishing fleet. We develop a management plan that can be adapted to those objectives and allows the regulator to compare the long-run profits between the various management options. We apply the model to the case of Northeast Arctic cod, and estimate the cost and harvesting functions of various vessel types, the demand function, and a biological model to provide key insights regarding the optimal management of this valuable fish species. Keywords: Built Coastal Environment, Natural Coastal Environment, Ecosystem Service Valuation, Geographic Information Systems, Mapping Ecosystem Values, Marine Biodiversity, Scaling up, Spatial Analysis, Spatial Economic Valuation, Value Transfer Classification-JEL: C53, Q26, Q57, R12 Creation-Date: 201105 Template-Type: ReDIF-Paper 1.0 Number: 2011.41 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-041.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.41 Title: A Measure to Compare Matchings in Marriage Markets Author-Name: Florian M. Biermann Author-X-Name-First: Florian M. Author-X-Name-Last: FBiermann Author-WorkPlace-Name: The Hebrew University of Jerusalem Abstract: In matching markets the number of blocking pairs is often used as a criterion to compare matchings. We argue that this criterion is lacking an economic interpretation: In many circumstances it will neither reflect the expected extent of partner changes, nor will it capture the satisfaction of the players with the matching. As an alternative, we set up two principles which single out a particularly “disruptive” subcollection of blocking pairs. We propose to take the cardinality of that subset as a measure to compare matchings. This cardinality has an economic interpretation: the subset is a justified objection against the given matching according to a bargaining set characterization of the set of stable matchings. We prove multiple properties relevant for a workable measure of comparison. Keywords: Stable Marriage Problem, Matching, Blocking Pair, Instability, Matching Comparison, Decentralized Market, Bargaining Set Classification-JEL: C0 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.42 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-042.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.42 Title: Alliance Formation and Coercion in Networks Author-Name: Timo Hiller Author-X-Name-First: Timo Author-X-Name-Last: THiller Author-WorkPlace-Name: European University Institute Abstract: This paper presents a game-theoretic model of network formation, which allows agents to enter bilateral alliances and to extract payoffs from enemies. Each pair of agents creates a surplus of one, which allies divide in equal parts. If agents are enemies, then the agent with more allies obtains a larger share of the surplus. I show that Nash equilibria are of two types. First, a state of utopia, where all agents are allies. Second, asymmetric equilibria, such that agents can be partitioned into sets of different size, where agents within the same set are allies and agents in different sets are enemies. These results stand in contrast to coalition formation games in the economics of conflict literature, where stable group structures are generally symmetric. The model provides a game-theoretic foundation for structural balance, a long- standing notion in social psychology, which has been fruitfully applied to the study of alliance formation in international relations. Keywords: Network Formation, Economics of Conflict, Contest Success Function, Structural Balance, International Relations Classification-JEL: D86, D74 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.43 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-043.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.43 Title: Strategic Network Interdiction Author-Name: Sunghoon Hong Author-X-Name-First: Sunghoon Author-X-Name-Last: Hong Author-WorkPlace-Name: Vanderbilt University Abstract: We develop a strategic model of network interdiction in a non-cooperative game of flow. An adversary, endowed with a bounded quantity of bads, chooses a flow specifying a plan for carrying bads through a network from a base to a target. Simultaneously, an agency chooses a blockage specifying a plan for blocking the transport of bads through arcs in the network. The bads carried to the target cause a target loss while the blocked arcs cause a network loss. The adversary earns and the agency loses from both target loss and network loss. The adversary incurs the expense of carrying bads. In this model we study Nash equilibria and find a power law relation between the probability and the extent of the target loss. Our model contributes to the literature of game theory by introducing non-cooperative behavior into a Kalai-Zemel (cooperative) game of flow. Our research also advances models and results on network interdiction. Keywords: Network Interdiction, Noncooperative Game of Flow, Nash Equilibrium, Power Law, Kalai-Zemel Game of Flow Classification-JEL: C72, D85, H56 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.44 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-044.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.44 Title: Dynamic Multilateral Markets Author-Name: Arnold Polanski Author-X-Name-First: Arnold Author-X-Name-Last: Polanski Author-WorkPlace-Name: School of Economics, University of East Anglia Author-Name: Emiliya A. Lazarova Author-X-Name-First: Emiliya A. Author-X-Name-Last: Lazarova Author-WorkPlace-Name: University of Birmingham Abstract: We study dynamic multilateral markets, in which players’ payoffs result from coalitional bargaining. In this setting, we establish payoff uniqueness of the stationary equilibria when players exhibit some degree of impatience. We focus on market games with different player types, and derive under mild conditions an explicit formula for each type’s equilibrium payoff as market frictions vanish. The limit payoff of a type depends in an intuitive way on the supply and the demand for this type in the market, adjusted by the type-specific bargaining power. Our framework may be viewed as an alternative to the Walrasian price-setting mechanism. When we apply this methodology to the analysis of labor markets, we can determine endogenously the equilibrium firm size and remuneration scheme. We find that each worker type in a stationary market equilibrium is rewarded her marginal product, i.e. we obtain a strategic underpinning of the neoclassical wage. Interestingly, we can also replicate some standardized facts from the search-theoretical literature such as positive equilibrium unemployment. Keywords: Multilateral Bargaining, Dynamic Markets, Labor Markets Classification-JEL: C71, C72, C78, J30, L20 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.45 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-045.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.45 Title: Myopic or Farsighted? An Experiment on Network Formation Author-Name: Marco Mantovani Author-X-Name-First: Marco Author-X-Name-Last: Mantovani Author-WorkPlace-Name: Università degli Studi di Milano and Université Libre de Bruxelles Author-Name: Georg Kirchsteiger Author-X-Name-First: Georg Author-X-Name-Last: Kirchsteiger Author-WorkPlace-Name: ECARES, Université Libre de Bruxelles, ECORE, CEPR, and CESifo Author-Name: Ana Mauleon Author-X-Name-First: Ana Author-X-Name-Last: Mauleon Author-WorkPlace-Name: FNRS and CEREC, Facultés universitaires Saint-Louis and FNRS and CORE, Université catholique de Louvain Author-Name: Vincent Vannetelbosch Author-X-Name-First: Vincent Author-X-Name-Last: Vannetelbosch Author-WorkPlace-Name: FNRS and CORE, Université catholique de Louvain Abstract: Pairwise stability (Jackson and Wolinsky, 1996) is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these theories. Our results provide support for farsighted stability and strongly reject the idea of myopic behavior. Keywords: Network Formation, Experiment, Myopic and Farsighted Stability Classification-JEL: D85, C91, C92 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.46 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-046.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.46 Title: The Effect of Spillovers and Congestion on the Segregative Properties of Endogenous Jurisdiction Structure Formation Author-Name: Rémy Oddou Author-X-Name-First: Rémy Author-X-Name-Last: Oddou Author-WorkPlace-Name: Aix-Marseille University and IDEP-GREQAM Abstract: This paper analyzes the effect of spillovers and congestion of local public goods on the segregative properties of endogenous formation of jurisdiction. Households living in the same place form a jurisdiction and produce a local public good, that creates positive spillovers in other jurisdictions and suffers from congestion. In every jurisdiction, the production of the local public good is financed through a local tax on household's wealth. Local wealth tax rates are democratically determined in all jurisdictions. Households also consume housing in their jurisdiction. Any household is free to leave its jurisdiction for another one that would increase its utility. A necessary and sufficient condition to have every stable jurisdiction structure segregated by wealth, for a large class of congestion measure and any spillovers coefficient structure, is identified: the public good must be a gross substitute or a gross complement to the private good and the housing. Keywords: Jurisdictions, Segregation, Spillovers, Congestion Classification-JEL: C78, D02, H73, R13 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.47 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-047.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.47 Title: Super-Grids and Concentrated Solar Power: A Scenario Analysis with the WITCH Model Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo per i Cambiamenti Climatici Author-Name: Elena Claire Ricci Author-X-Name-First: Elena Claire Author-X-Name-Last: Ricci Author-WorkPlace-Name: Università degli Studi di Milano and Fondazione Eni Enrico Mattei Abstract: We extend the WITCH model to consider the possibility to produce and trade electricity generated by large scale concentrated solar power plants in highly productive areas that are connected to the demand centres through High Voltage Direct Current (HVDC) cables. We find that it becomes optimal to produce with this source only from 2040 and trade from 2050. In the second half of the century, CSP electricity shares become very significant especially when penetration limits are imposed on nuclear power and on carbon capture and storage operations (CCS). Climate policy costs can be reduced by large percentages, up to 66% with respect to corresponding scenarios without the CSP-powered Super-Grid option and with limits on nuclear power and CCS. We also show that MENA countries have the incentive to form a cartel to sell electricity to Europe at a price higher than the marginal cost. Therefore we advocate the institution of an international agency with the role to regulate a hypothetic Mediterranean electricity market. Keywords: Climate Policy, Integrated Assessment, Renewable Energy, Concentrated Solar Power, Power Grid, Electricity Trade Classification-JEL: Q2, Q43 , Q54 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.48 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-048.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.48 Title: Renewable Energy Subsidies: Second-Best Policy or Fatal Aberration for Mitigation? Author-Name: Matthias Kalkuhl Author-X-Name-First: Matthias Author-X-Name-Last: Kalkuhl Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Ottmar Edenhofer Author-X-Name-First: Ottmar Author-X-Name-Last: Edenhofer Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) and Technical University Berlin Author-Name: Kai Lessmann Author-X-Name-First: Kai Author-X-Name-Last: Lessmann Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Abstract: This paper evaluates the consequences of renewable energy policies on welfare, resource rents and energy costs in a world where carbon pricing is imperfect and the regulator seeks to limit emissions to a (cumulative) target. We use a global general equilibrium model with an intertemporal fossil resource sector. We calculate the optimal second-best renewable energy subsidy and compare the resulting welfare level with an efficient first-best carbon pricing policy. If carbon pricing is permanently missing, mitigation costs increase by a multiple (compared to the optimal carbon pricing policy) for a wide range of parameters describing extraction costs, renewable energy costs, substitution possibilities and normative attitudes. Furthermore, we show that small deviations from the second-best subsidy can lead to strong increases in emissions and consumption losses. This confirms the rising concerns about the occurrence of unintended side effects of climate policy { a new version of the green paradox. We extend our second-best analysis by considering two further types of policy instruments: (1) temporary subsidies that are displaced by carbon pricing in the long run and (2) revenue-neutral instruments like a carbon trust and a feed-in-tariff scheme. Although these instruments cause small welfare losses, they have the potential to ease distributional conflicts as they lead to lower energy prices and higher fossil resource rents than the optimal carbon pricing policy. Keywords: Feed-in-Tariff, Carbon Trust, Carbon Pricing, Supply-Side Dynamics, Green Paradox, Climate Policy Classification-JEL: Q4, Q52, Q54, Q58, D58, H21 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.49 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-049.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.49 Title: Breaking the Impasse in International Climate Negotiations: A New Direction for Currently Flawed Negotiations and a Roadmap for China to 2050 Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Abstract: China’s unilateral pledge to cut its carbon intensity by 40-45 percent by 2020 relative to its 2005 levels raises both the stringency issue, and given that China’s pledge is in the form of carbon intensity, reliability issues concerning China’s statistics on energy and GDP. Moreover, as long as China’s commitments differ in form from those of other major greenhouse gas emitters, China is constantly confronted with both criticism on its carbon intensity commitment being less stringent and the threats of trade measures. In response to these concerns and to put China in a positive position, this paper will map out a realistic roadmap for China’s specific climate commitments towards 2050, with its main distinguishing features including China taking on absolute emission caps around 2030 and the three transitional periods of increasing climate obligations before that. With current international climate negotiations flawed with a focus on commitments on the targeted date of 2020 that does not accommodate well the world’s two largest greenhouse gas emitters, the paper suggests a new direction to break the current impasse in international climate negotiations. Keywords: Carbon Intensity, Post-Copenhagen Climate Change Negotiations, Climate Commitments, China Classification-JEL: Q42, Q43, Q48, Q52, Q53, Q54, Q58 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.50 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-050.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.50 Title: Estimating Ricardian Models With Panel Data Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Centre for Climate Change (CMCC) Author-Name: Robert Mendelsohn Author-X-Name-First: Robert Author-X-Name-Last: Mendelsohn Author-WorkPlace-Name: Yale University Abstract: Many nonmarket valuation models, such as the Ricardian model, have been estimated using cross sectional methods with a single year of data. Although multiple years of data should increase the robustness of such methods, repeated cross sections suggest the results are not stable. We argue that repeated cross sections do not properly specify the model. Panel methods that correctly specify the Ricardian model are stable over time. The results suggest that many cross sectional methods including hedonic studies and travel cost studies could be enhanced using panel data. Keywords: Climate Change, Impacts, Agriculture, Hedonic Models Classification-JEL: Q1, Q12, Q51, Q54 Creation-Date: 201106 Template-Type: ReDIF-Paper 1.0 Number: 2011.51 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-051.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.51 Title: Socioeconomic Factors and Water Quality in California Author-Name: Y. Hossein Farzin Author-X-Name-First: Y. Hossein Author-X-Name-Last: Farzin Author-WorkPlace-Name: Department of Agricultural and Resource Economics, University of California Author-Name: Kelly A. Grogan Author-X-Name-First: Kelly A. Author-X-Name-Last: Grogan Author-WorkPlace-Name: Food and Resource Economics Department, University of Florida Abstract: We investigate the relationships between water quality and socioeconomic factors in California at the county level for the years 1993 to 2006 using 24 water quality indicators coming from seven different types of water bodies. We estimate these relationships using three classes of models: the traditional per capita income-pollution level - Environmental Kuznets Curve (EKC) - specifications, a more inclusive model containing main socioeconomic variables such as agricultural intensity, land use, ethnic composition, population density and educational attainment, and a model that includes the socioeconomic variables while accounting for spatial correlations too. For most water quality indicators, we do not find support for EKC specifications. For pollutants like phosphorus and total suspended solids, the level of agricultural activity is a significant determinant of water quality in California, but for other surface water pollutants commonly considered agricultural pollutants, such as ammonia and nitrate, the level of agricultural activity is not statistically significant. We find that education, ethnic composition, age structure, land use, population density, and water area are all significantly correlated with various indicators of water quality. Keywords: Water Quality Indicators, Socioeconomic Variables, EKC, Agriculture, Industry Classification-JEL: Q53, Q56, Q58, C23 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.52 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-052.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.52 Title: Size Monotonicity and Stability of the Core in Hedonic Games Author-Name: Dinko Dimitrov Author-X-Name-First: Dinko Author-X-Name-Last: Dimitrov Author-WorkPlace-Name: Chair of Economic Theory, Saarland University Author-Name: Shao Chin Sung Author-X-Name-First: Shao Chin Author-X-Name-Last: Sung Author-WorkPlace-Name: Department of Industrial and Systems Engineering, Aoyama Gakuin University Abstract: We show that the core of each strongly size monotonic hedonic game is not empty and is externally stable. This is in sharp contrast to other sufficient conditions for core non-emptiness which do not even guarantee the existence of a stable set in such games. Keywords: Core, Hedonic Games, Monotonicity, Stable Sets Classification-JEL: C71 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.53 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-053.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.53 Title: Migration Restrictions and Criminal Behavior: Evidence from a Natural Experiment Author-Name: Giovanni Mastrobuoni Author-X-Name-First: Giovanni Author-X-Name-Last: Mastrobuoni Author-WorkPlace-Name: Collegio Carlo Alberto Author-Name: Paolo Pinotti Author-X-Name-First: Paolo Author-X-Name-Last: Pinotti Author-WorkPlace-Name: Bank of Italy Abstract: We estimate the causal effect of immigrants' legal status on criminal behavior exploiting exogenous variation in migration restrictions across nationalities driven by the last round of the European Union enlargement. Unique individual-level data on a collective clemency bill enacted in Italy five months before the enlargement allow us to compare the post-release criminal record of inmates from new EU member countries with a control group of pardoned inmates from candidate EU member countries. Difference-in-differences in the probability of re-arrest between the two groups before and after the enlargement show that obtaining legal status lowers the recidivism of economically motivated offenders, but only in areas that provide relatively better labor market opportunities to legal immigrants. We provide a search-theoretic model of criminal behavior that is consistent with these results. Keywords: Immigration, Crime, Legal Status Classification-JEL: F22, K42, C41 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.54 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-054.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.54 Title: On the Economic Determinants of Oil Production. Theoretical Analysis and Empirical Evidence for Small Exporting Countries Author-Name: Alessandro Cologni Author-X-Name-First: Alessandro Author-X-Name-Last: Cologni Author-WorkPlace-Name: Edison Trading, Edison S.p.A Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: Department of Statistics, University of Milan-Bicocca, and Fondazione Eni Enrico Mattei Abstract: In this paper, decisions regarding production in oil exporting countries are studied by means of theoretical analysis and empirical investigation. Under the assumptions of exogenous oil prices and world oil demand, we are able to describe the relationship between oil production levels and changes in the conditions in world oil markets. Intertemporal production decisions by a representative oil producer are modelled by means of a partial equilibrium model. In this theoretical model, oil producers are subject to exogenous shocks in world oil demand and prices. Oil companies can change output levels only by incurring a fixed cost. Results from the simulation of this model show a strong relationship between oil production and changes in world oil consumption. On the contrary, the effects of changes in real oil prices on oil production decisions seem to be much lower. Results from the simulation of the theoretical model are then empirically investigated using time-series econometric techniques. The empirical evidence supports the hypothesis that several oil producing countries are characterized by different responses to changes in world oil demand and in real oil prices. For many countries production rapidly adjusts to changes in consumption whereas responses of oil production to innovations in real oil prices are found to be not statistically significant. In addition, when non-linearities in the relationship between exogenous variables and output levels are allowed for, evidence of asymmetric effects of output levels to shocks in demand levels and oil prices is found. Keywords: Oil Production, Exogenous Shocks, Theoretical Modelling, Time Series Analysis Classification-JEL: C22, D21, D22, Q41 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.55 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-055.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.55 Title: Exogenous Oil Shocks, Fiscal Policy and Sector Reallocations in Oil Producing Countries Author-Name: Alessandro Cologni Author-X-Name-First: Alessandro Author-X-Name-Last: Cologni Author-WorkPlace-Name: Edison Trading, Edison S.p.A Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Abstract: Previous literature has suggested that different mechanisms of transmission of exogenous oil shocks are responsible for the negative effects on the economic performances of oil exporting countries. This paper aims at providing further evidence on the role of sectoral reallocation between private and public sectors in explaining the impact of shocks to oil revenues on the economic growth rates of major oil producing countries (namely the GCC - Gulf Corporation Council - countries). The effects of oil shocks and expansionary fiscal policy on the business cycle of oil producing countries are examined. The possibility to distinguish between various components of public sector spending policy (that is, purchases of consumption goods, investments in productive activities and compensation for public employees) is, in particular, allowed for. A real business cycle (RBC) model is calibrated to fit the data on an “average” oil producing country. Results from the simulation of the theoretical model suggest that the possibility that crowding-out effects of public over private investments can explain a large fraction of the negative effects of shocks to oil revenues on the private sector of the economy. In addition, since the growth in size of the public sector is unable to compensate for the reduction in size of the private sector, an increase in oil revenues has the effect to decrease total output. An expansionary fiscal policy is argued to have significant positive effects on private investments, employment and overall production. On the contrary, a shock to government consumption expenditure impacts negatively the level of public investment. As employment in the public sector increases significantly, public output responds positively to a shock in government consumption expenditure. Finally, an instantaneous negative effect on total investments and on the stock of capital in the economy is predicted. However, driven by the increase of the number of employees in the economy, total output expands. Keywords: Oil Shocks, Dutch Disease, Resource Curse and Real Business Cycle Modelling Classification-JEL: C61, E22, E62, Q48 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.56 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-056.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.56 Title: Informing the Financing of Universal Energy Access: An Assessment of Current Flows Author-Name: Morgan Bazilian Author-X-Name-First: Morgan Author-X-Name-Last: Bazilian Author-WorkPlace-Name: United Nations Industrial Development Organization Author-Name: Patrick Nussbaumer Author-X-Name-First: Patrick Author-X-Name-Last: Nussbaumer Author-WorkPlace-Name: United Nations Industrial Development Organization Author-Name: Giorgio Gualberti Author-X-Name-First: Giorgio Author-X-Name-Last: Gualberti Author-WorkPlace-Name: Technical University of Lisbon Author-Name: Erik Haites Author-X-Name-First: Erik Author-X-Name-Last: Haites Author-WorkPlace-Name: Margaree Consultants Inc. Author-Name: Michael Levi Author-X-Name-First: Michael Author-X-Name-Last: Levi Author-WorkPlace-Name: Council on Foreign Relations Author-Name: Judy Siegel Author-X-Name-First: Judy Author-X-Name-Last: Siegel Author-WorkPlace-Name: Energy and Security Group Author-Name: Daniel M. Kammen Author-X-Name-First: Daniel M. Author-X-Name-Last: Kammen Author-WorkPlace-Name: The World Bank Author-Name: Joergen Fenhann Author-X-Name-First: Joergen Author-X-Name-Last: Fenhann Author-WorkPlace-Name: UNEP Risoe Centre, Technical University of Denmark Abstract: Energy poverty is widely recognized as a major obstacle to economic and social development and poverty alleviation. To help inform the design of appropriate and effective policies to reduce energy poverty, we present a brief analysis of the current macro financial flows in the electricity and gas distribution sectors in developing countries. We build on the methodology used to quantify the flows of investment in the climate change area. This methodology relies on national gross fixed capital formation, overseas development assistance, and foreign direct investment. These high-level and aggregated investment figures provide a sense of scale to policy-makers, but are only a small part of the information required to design financial vehicles. In addition, these figures tend to mask numerous variations between sectors and countries, as well as trends and other temporal fluctuations. Nonetheless, for the poorest countries, one can conclude that the current flows are considerably short (at least five times) of what will be required to provide a basic level of access to clean, modern energy services to the “energy poor”. Keywords: Energy Access, Energy Finance, Financial flows Classification-JEL: Q4 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.57 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-057.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.57 Title: Economic Growth and the Environment with Clean and Dirty Consumption Author-Name: Carlo Orecchia Author-X-Name-First: Carlo Author-X-Name-Last: Orecchia Author-WorkPlace-Name: University of Rome II Tor Vergata Author-Name: Maria Elisabetta Tessitore Author-X-Name-First: Maria Elisabetta Author-X-Name-Last: Tessitore Author-WorkPlace-Name: University of Rome II Tor Vergata Abstract: This paper aims to verify the existence of the Environmental Kuznets Curve (EKC) or inverted U-shaped relationship between economic growth and environmental degradation in the context of endogenous growth. An important feature of this study is that the EKC is examined in the presence of pollution as a by product of consumption activities; also, pollution is a stock variable rather than a flow and tends to accumulate over time. In order to highlight the role of consumption on the environment, consumers do not consider directly pollution in the maximization problem and are assumed to choose between two different consumption types, characterized by a different impact on the environment (i.e. dirty and clean consumption). We find that substitution of dirty consumption with clean consumption alone is not sufficient to reduce environmental pollution. The result depends on the product differentiation and the cost to achieve it. From a social welfare perspective, more environmental awareness is unambiguously desirable when it generates less pollution. However, it could be that more environmental awareness leads to a lower level of social welfare depending on the costs of product differentiation and social marginal damage of pollution. Keywords: Environmental Kuznets Curve, Economic Growth, Pollution, Consumption, Consumption behaviour Classification-JEL: C61, Q56, O44 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.58 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-058.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.58 Title: Households’ WTP for the Reliability of Gas Supply Author-Name: Wan-Jung Chou Author-X-Name-First: Wan-Jung Author-X-Name-Last: Chou Author-WorkPlace-Name: APEC Research Centre for Typhoon and Society Author-Name: Andrea Bigano Author-X-Name-First: Andrea Author-X-Name-Last: Bigano Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo per i Cambiamenti Climatici Author-Name: Alistair Hunt Author-X-Name-First: Alistair Author-X-Name-Last: Hunt Author-WorkPlace-Name: University of Bath Author-Name: Stephane La Branche Author-X-Name-First: Stephane Author-X-Name-Last: La Branche Author-WorkPlace-Name: Institute of political studies Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: BC3 Basque Centre for Climate Change, University of Bath Author-Name: Roberta Pierfederici Author-X-Name-First: Roberta Author-X-Name-Last: Pierfederici Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The security of natural gas supply is an important issue for all EU countries due to the region’s heavy dependence on imported supply sources and in light of energy demand for gas that is continuously increasing. Discussions have emphasised strategies for securing the supply at the macro level, e.g. diversification in supply sources, increase in storage capacity, etc. By contrast, consumers’ demand for the reliability of gas supply is rarely investigated. Hence this study was conducted to examine the economic implications associated with the security of gas supply directly to domestic consumers. Based on the choice experiment approach, household surveys were conducted in France, Italy and the UK. The results confirmed that the degree of the economic impact of a disruption of gas supply to domestic consumers was a function of the duration of a supply disruption and the season in which a supply cut would take place, as well as other preferences of consumers. The willingness to pay to secure per unit of gas consumption, or alternatively the costs of gas unsupplied, was estimated at between €2.65/cubic metre and €41.48/cubic metre across three different European countries. Keywords: Energy Security, Gas Supply, Households, Willingness to Pay, Choice Experiment, EU Classification-JEL: C35, C83, C93, D12, Q41 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.59 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-059.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.59 Title: Intellectual Property Rights and South-North Formation of Global Innovation Networks Author-Name: Maria Comune Author-X-Name-First: Maria Author-X-Name-Last: Comune Author-WorkPlace-Name: University of Siena and Fondazione Eni Enrico Mattei 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 Author-Name: Giovanni Prarolo Author-X-Name-First: Giovanni Author-X-Name-Last: Prarolo Author-WorkPlace-Name: University of Bologna and Fondazione Eni Enrico Mattei Abstract: With the rise of the knowledge economy, delivering sound innovation policies requires a thorough understanding of how knowledge is produced and diffused. This paper takes a step to analyze a new form of globalization, the so-called system of Global Innovation Networks (GINs), to shed light on how the protection of intellectual property rights (IPRs) influences their creation and development. We focus on the role of IPR protection in fostering international innovative activities in emerging economies (South), such as China and India, and more generally, how IPRs affect the development of GINs between newly industrialized countries and OECD countries. Using both survey-based firm-level and country-level global data, we find IPRs to be an important determinant of participation in GINS from a Southern perspective. We find IPR protection at home and its harmonization across county pairs foster South-North formation of GINs. We also find that a stringent regime in the destination country discourages foreign international innovative activities that originate in NICs. Both levels of our analysis confirm the ICT industry, particularly the hardware segment, to rely on IPRs when engaging in the international outsourcing and offshoring of innovation or in patenting activities abroad. Keywords: Gravity Model, Information Communication Technology, Innovation, Intellectual Property Rights, International collaborations, Networks Classification-JEL: D23, F53, O34 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.60 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-060.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.60 Title: Intellectual Property Rights, Migration, and Diaspora 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 Author-Name: Chiara Strozzi Author-X-Name-First: Chiara Author-X-Name-Last: Strozzi Author-WorkPlace-Name: University of Modena and Reggio Emilia Abstract: In this paper we study theoretically and empirically the role of the interaction between skilled migration and intellectual property rights (IPRs) protection in determining innovation in developing countries (South). We show that although emigration from the South may directly result in the well-known concept of brain drain, it also causes a brain gain effect, the extent of which depends on the level of IPRs protection in the sending country. We argue this to come from a diaspora channel through which the knowledge acquired by emigrants abroad can flow back to the South and enhance the skills of the remaining workers there. By increasing the size of the innovation sector and the skill-intensity of emigration, IPRs protection makes it more likely for diaspora gains to dominate, thus facilitating a potential net brain gain. Our main theoretical insights are then tested empirically using a panel dataset of emerging and developing countries. The findings reveal a positive correlation between emigration and innovation in the presence of strong IPRs protection. Keywords: Intellectual property rights, Migration, Technology transfer, Brain gain, Diaspora Classification-JEL: O34, F22, O33, J24, J61 Creation-Date: 201107 Template-Type: ReDIF-Paper 1.0 Number: 2011.61 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-061.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.61 Title: Safe vs. Fair: A Formidable Trade-off in Tackling Climate Change Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Princeton Environmental Institute, Princeton University and Fondazione Eni Enrico Mattei Author-Name: Shoibal Chakravarty Author-X-Name-First: Shoibal Author-X-Name-Last: Chakravarty Author-WorkPlace-Name: Princeton Environmental Institute, Princeton University Author-Name: Robert Socolow Author-X-Name-First: Robert Author-X-Name-Last: Socolow Author-WorkPlace-Name: Princeton Environmental Institute, Princeton University and Department of Mechanical and Aerospace Engineering, Princeton University Abstract: Global warming requires a response characterized by forward-looking management of atmospheric carbon and respect for ethical principles. Both safety and fairness must be pursued, and there are severe trade-offs as these are intertwined by the limited headroom for additional atmospheric CO2 emissions. This paper provides a simple numerical mapping at the aggregated level of developed vs. developing countries in which safety and fairness are formulated in terms of cumulative emissions and cumulative per capita emissions respectively. It becomes evident that safety and fairness cannot be achieved simultaneously for strict definitions of both. The paper further posits potential global trading in future cumulative emissions budgets in a world where financial transactions compensate for physical emissions: the safe vs. fair trade-off is less severe but remains formidable. Finally, we explore very large deployments of engineered carbon sinks and show that roughly 1000 GtCO2 of cumulative negative emissions over the century are required to have a significant effect, a remarkable scale of deployment. We also identify the unexplored issue of how such sinks might be treated in sub-global carbon accounting. Keywords: Climate Policy, Burden Sharing, Negative Emissions Classification-JEL: Q01, Q56 Creation-Date: 201108 Template-Type: ReDIF-Paper 1.0 Number: 2011.62 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-062.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.62 Title: Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks Author-Name: Donatella Baiardi Author-X-Name-First: Donatella Author-X-Name-Last: Baiardi Author-WorkPlace-Name: Department of Economics and Quantitative Methods, University of Pavia Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: Department of Statistics, University of Milano-Bicocca, Italy and Fondazione Eni Enrico Mattei Author-Name: Mario Menegatti Author-X-Name-First: Mario Author-X-Name-Last: Menegatti Author-WorkPlace-Name: Department of Economics, University of Parma Abstract: This paper studies the empirical relationship between consumption and saving under two different sources of uncertainty: financial risk and environmental risk. The analysis is carried out using time series data for six advanced economies in the period 1965-2007. The results support the theoretical conclusions that both financial risk alone and the interaction between financial and environmental risks affect consumption. Moreover, we suggest a solution to some shortcomings which concern the empirical analysis performed with one-argument utility functions. Finally, we provide new estimates of indexes of relative risk aversion and relative prudence, and relative preference of environmental quality. Keywords: Consumption, Precautionary Saving, Financial Risk, Environmental Risk, Prudence, Relative Risk Aversion, Uncertainty Classification-JEL: D81, E21, Q50 Creation-Date: 201108 Template-Type: ReDIF-Paper 1.0 Number: 2011.63 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-063.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.63 Title: Clean or “Dirty” Energy: Evidence on a Renewable Energy Resource Curse Author-Name: Caterina Gennaioli Author-X-Name-First: Caterina Author-X-Name-Last: Gennaioli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The aim of this paper is to provide an assessment of the potential for resource curse in the renewable energy sector. Taking a political economy approach, we analyze the link between public support schemes for renewable energy and the potential scope for rent seeking and corruption. The insights of a model of political influence by interest groups are tested empirically using a panel data of Italian provinces for the period 1990-2007. We find evidence that a curse exists in the case of wind energy, and specifically that: i) criminal association activity increased more in high-wind provinces and especially after the introduction of a more favourable public policy regime and, ii) the expansion of the wind energy sector has been driven by both the wind level and the quality of political institutions, through their effect on criminal association. The analysis points out that in the presence of poor institutions, efficient market-based policies can have an adverse impact. This has important normative implications especially for countries that are characterized by abundant renewable resources and weak institutions, and are thus more susceptible to the private exploitation of public incentives. Keywords: Corruption, Natural Resources Curse, Wind Energy, Political Economy Classification-JEL: D73, O13, P16 Creation-Date: 201108 Template-Type: ReDIF-Paper 1.0 Number: 2011.64 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-064.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.64 Title: Punish and Perish? Author-Name: Angelo Antoci Author-X-Name-First: Angelo Author-X-Name-Last: Antoci Author-WorkPlace-Name: DEIR, University of Sassari Author-Name: Luca Zarri Author-X-Name-First: Luca Author-X-Name-Last: Zarri Author-WorkPlace-Name: Economics Department, University of Verona Abstract: The evolution of large-scale cooperation among genetic strangers is a fundamental unanswered question in the social sciences. Behavioral economics has persuasively shown that so called ‘strong reciprocity’ plays a key role in accounting for the endogenous enforcement of cooperation. Insofar as strongly reciprocal players are willing to costly sanction defectors, cooperation flourishes. However, experimental evidence unambiguously indicates that not only defection and strong reciprocity, but also unconditional cooperation is a quantitatively important behavioral attitude. By referring to a prisoner’s dilemma framework where punishment (‘stick’) and rewarding (‘carrot’) options are available, here we show analytically that the presence of cooperators who don’t punish in the population makes altruistic punishment evolutionarily weak. We show that cooperation breaks down and strong reciprocity is maladaptive if costly punishment means ‘punishing defectors’ and, even more so, if it is coupled with costly rewarding of cooperators. In contrast, punishers don’t perish if cooperators, far from being rewarded, are sanctioned. These results, based on an extended notion of strong reciprocity, challenge evolutionary explanations of cooperation that overlook the ‘dark side’ of altruistic behavior. Keywords: Cooperation, Strong Reciprocity, Altruistic Punishment, Altruistic Rewarding, Heterogeneous Types Classification-JEL: C7, D7, Z1 Creation-Date: 201108 Template-Type: ReDIF-Paper 1.0 Number: 2011.65 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-065.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.65 Title: Autocracies and Development in a Global Economy: A Tale of Two Elites Author-Name: Anders Akerman Author-X-Name-First: Anders Author-X-Name-Last: Akerman Author-WorkPlace-Name: Department of Economics, Stockholm University Author-Name: Anna Larsson Author-X-Name-First: Anna Author-X-Name-Last: Larsson Author-WorkPlace-Name: Department of Economics, Stockholm University 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: Data on the growth performances of countries with similar comparative (dis)advantage and political institutions reveal a striking variation across world regions. While some former autocracies such as the East Asian growth miracles have done remarkably well, others such as the Latin American economies have grown at much lower rates. In this paper, we propose a political economy explanation of these diverging paths of development by addressing the preferences of the country’s political elite. We build a theoretical framework where factors of production owned by the political elites differ across countries. In each country, the incumbent autocrat will cater to the preferences of the elites when setting trade policy and the property rights regime. We show how stronger property rights may lead to capital accumulation and labor reallocation to the manufacturing sector. This, in turn, can lead to a shift in the comparative advantage, a decision to open up to trade and an inflow of more productive foreign capital. Consistent with a set of stylised facts on East Asia and Latin America, we argue that strong property rights are crucial for success upon globalization. Keywords: Autocracy, Growth, Political Elites, Landowners, Capitalists, Growth Miracles, Trade, Comparative Advantage, Capital Mobility, Property Rights Classification-JEL: F10, F20, P14, P16, O10, O24 Creation-Date: 201108 Template-Type: ReDIF-Paper 1.0 Number: 2011.66 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-066.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.66 Title: Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Jeffrey Frankel Author-X-Name-First: Jeffrey Author-X-Name-Last: JFrankel Author-WorkPlace-Name: Kennedy School of Government, Harvard University Abstract: We offer a framework to assign quantitative allocations of emissions of greenhouse gases (GHGs), across countries, one budget period at a time. Under the two-part plan: (i) China, India, and other developing countries accept targets at Business as Usual (BAU) in the coming budget period, the same period in which the US first agrees to cuts below BAU; and (ii) all countries are asked in the future to make further cuts in accordance with a common numerical formula to all. The formula is expressed as the sum of a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. This paper builds on our previous work in many ways. First we update targets to reflect pledges made by governments after the Copenhagen Accord of December 2010 and confirmed at the Cancun meeting of December 2011. Second, the WITCH model, which we use to project economic and environmental effects of any given set of emission targets, has been refined and updated to reflect economic and technological developments. We include the possibility of emissions reduction from bio energy (BE), carbon capture and storage (CCS), and avoided deforestation and forest degradation (REDD+) which is an important component of pledges in several developing countries. Third, we use a Nash criterion for evaluating whether a country’s costs are too high to sustain cooperation. Keywords: Cancun, Climate, Concentrations, Cooperation, Copenhagen, Costs, Developing Countries, Development, Emissions, Equity, Global Climate, Global Warming, Greenhouse Gas, Human Development, International, Kyoto, Sustainable, Treaty, United Nations, WITCH Classification-JEL: Q54 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.67 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-067.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.67 Title: Climate Change and Tourism in Tuscany, Italy. What if heat becomes unbearable? Author-Name: Mattia Cai Author-X-Name-First: Mattia Author-X-Name-Last: Cai Author-WorkPlace-Name: Department Land, Environment, Agriculture and Forestry, University of Padua, and The Mediterranean Science Commission – CIESM, Principauté de Monaco Author-Name: Roberto Ferrise Author-X-Name-First: Roberto Author-X-Name-Last: Ferrise Author-WorkPlace-Name: CNR-IBIMET, National Research Council Institute of Biometeorology, Florence Author-Name: Marco Moriondo Author-X-Name-First: Marco Author-X-Name-Last: Moriondo Author-WorkPlace-Name: CNR-IBIMET, National Research Council Institute of Biometeorology, Florence Author-Name: Paulo A.L.D. Nunes Author-X-Name-First: Paulo A.L.D. Author-X-Name-Last: Nunes Author-WorkPlace-Name: The Mediterranean Science Commission – CIESM, Principauté de Monaco and Department Land, Environment, Agriculture and Forestry, University of Padua Author-Name: Marco Bindi Author-X-Name-First: Marco Author-X-Name-Last: Bindi Author-WorkPlace-Name: Department of Plant, Soil and Environmental Science - University of Florence Abstract: This paper investigates the empirical magnitude of climate conditions on tourist flows in Tuscany, exploring the use of a fine spatial scale analysis. In fact, we explore the use of an 8-year panel dataset of Tuscany’s 254 municipalities, examining how tourist inflows respond to variation in local weather conditions. In particular, as the area enjoys a fairly mild Mediterranean climate, our analysis focused on temperature extremes at key times of the tourist season, i.e., on maximum summer temperature and minimum winter temperature. Separate analyses are conducted for domestic and international tourists, so as to test the differences in the preferences among these distinct groups (or types of demand). Estimation results show the impact of climate change on tourist flows appears to vary significantly among destinations depending on the kind of attractions they offer, and those areas that host the main artistic and historical sights, affecting predominantly the domestic rather than the international tourists. Keywords: Domestic Tourists, International Tourists, Municipalities, Maximum And Minimum Daily Temperature, Dynamic Model, Temperature Demand Elasticity, GMM Classification-JEL: C23, D01, L83 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.68 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-068.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.68 Title: Energy Access Scenarios to 2030 for the Power Sector in Sub-Saharan Africa Author-Name: Morgan Bazilian Author-X-Name-First: Morgan Author-X-Name-Last: Bazilian Author-WorkPlace-Name: United Nations Industrial Development Organization Author-Name: Patrick Nussbaumer Author-X-Name-First: Patrick Author-X-Name-Last: Nussbaumer Author-WorkPlace-Name: United Nations Industrial Development Organization Author-Name: Hans-Holger Rogner Author-X-Name-First: Hans-Holger Author-X-Name-Last: Rogner Author-WorkPlace-Name: International Atomic Energy Agency Author-Name: Abeeku Brew-Hammond Author-X-Name-First: Abeeku Brew-Hammond Author-X-Name-Last: Brew-Hammond Author-WorkPlace-Name: The Energy Center, KNUST Author-Name: Vivien Foster Author-X-Name-First: Vivien Author-X-Name-Last: Foster Author-WorkPlace-Name: The World Bank Author-Name: Shonali Pachauri Author-X-Name-First: Shonali Author-X-Name-Last: Pachauri Author-WorkPlace-Name: International Institute for Applied Systems Analysis Author-Name: Eric Williams Author-X-Name-First: Eric Author-X-Name-Last: Williams Author-WorkPlace-Name: International Atomic Energy Agency Author-Name: Mark Howells Author-X-Name-First: Mark Author-X-Name-Last: Howells Author-WorkPlace-Name: KTH Technical University Author-Name: Philippe Niyongabo Author-X-Name-First: Philippe Author-X-Name-Last: Niyongabo Author-WorkPlace-Name: African Union Commission Author-Name: Lawrence Musaba Author-X-Name-First: Lawrence Author-X-Name-Last: Musaba Author-WorkPlace-Name: Southern African Power Pool Author-Name: Brian Ó Gallachóir Author-X-Name-First: Brian Ó Author-X-Name-Last: Gallachóir Author-WorkPlace-Name: University College Cork Author-Name: Mark Radka Author-X-Name-First: Mark Author-X-Name-Last: Radka Author-WorkPlace-Name: United Nations Environment Programme Author-Name: Daniel M. Kammen Author-X-Name-First: Daniel M. Author-X-Name-Last: Kammen Author-WorkPlace-Name: The World Bank Abstract: In order to reach a goal of universal access to modern energy services in Africa by 2030, consideration of various electricity sector pathways is required to help inform policy-makers and investors, and help guide power system design. To that end, and building on existing tools and analysis, we present several ‘high-level’, transparent, and economy-wide scenarios for the sub-Saharan African power sector to 2030. We construct these simple scenarios against the backdrop of historical trends and various interpretations of universal access. They are designed to provide the international community with an indication of the overall scale of the effort required. We find that most existing projections, using typical long-term forecasting methods for power planning, show roughly a threefold increase in installed generation capacity occurring by 2030, but more than a tenfold increase would likely be required to provide for full access – even at relatively modest levels of electricity consumption. This equates to approximately a 13% average annual growth rate, compared to a historical one (in the last two decades) of 1.7%. Keywords: Energy Access, Power System Planning, Sub-Saharan Africa Classification-JEL: C1, Q41, Q47 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.69 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-069.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.69 Title: Adaptation Can Help Mitigation: An Integrated Approach to Post-2012 Climate Policy 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: 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 Ca’ Foscari of Venice and Fondazione Eni Enrico Mattei Abstract: The latest round of international negotiations in Copenhagen led to a set of commitments on emission reductions which are unlikely to stabilise global warming below or around 2°C. As a consequence, in the absence of additional ambitious policy measures, adaptation will be needed to address climate-related damages. What is the role of adaptation in this setting? How is it optimally allocated across regions and time? To address these questions, this paper analyses the optimal mix of adaptation and mitigation expenditures in a cost-effective setting in which countries cooperate to achieve a long-term stabilisation target (550 CO2-eq). It uses an Integrated Assessment Model (AD-WITCH) that describes the relationships between different adaptation modes (reactive and anticipatory), mitigation, and capacity-building to analyse the optimal portfolio of adaptation measures. Results show the optimal intertemporal distribution of climate policy measures is characterised by early investments in mitigation followed by large adaptation expenditures a few decades later. Hence, the possibility to adapt does not justify postponing mitigation, although it reduces its costs. Mitigation and adaptation are thus shown to be complements rather than substitutes. Keywords: Climate Change Impacts, Mitigation, Adaptation, Integrated Assessment Model Classification-JEL: Q54, Q56, Q43 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.70 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-070.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.70 Title: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency Author-Name: Etienne Farvaque Author-X-Name-First: Etienne Author-X-Name-Last: Farvaque Author-WorkPlace-Name: Equippe -University of Lille 1, Faculté des Sciences Economiques et Sociales Author-Name: Alexander Mihailov Author-X-Name-First: Alexander Author-X-Name-Last: Mihailov Author-WorkPlace-Name: University of Reading and University of Warwick, Department of Economics Author-Name: Alireza Naghavi Author-X-Name-First: Alireza Author-X-Name-Last: Naghavi Author-WorkPlace-Name: University of Bologna, Department of Economics Abstract: This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences in different economic systems. We introduce inequality-averse and inefficiency-averse agents responding to economic incentives and transmitting their ideology as they are affected by evolving outcomes. We analyze their conflict through the interaction between leaders with economic power and followers with ideological determination. The socioeconomic dynamics of our model generate a pendulum-like switch from markets to a centrally-planned economy abolishing private ownership, and back to restoring market incentives. The grand experiment of communism is thus characterized to have led to the discovery of a trade-o¤ between equality and efficiency at the scale of alternative economic systems. Keywords: Capitalism, Communism, Inequality, Inefficiency, Ideological Transmission, Economic Transitions Classification-JEL: C72, D31, D63, D74, D83, P51 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.71 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-071.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.71 Title: Who Should Bear the Cost of China’s Carbon Emissions Embodied in Goods for Exports? Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: China’s capital-intensive, export-oriented, spectacular economic growth since launching its open-door policy and economic reforms in late 1978 not only has created jobs and has lifted millions of the Chinese people out of poverty, but also has given rise to unprecedented environmental pollution and CO2 emissions. While estimates of the embedded CO2 emissions in China’s trade differ, both single country studies for China and global studies show a hefty chunk of China’s CO2 emissions embedded in trade. This portion of CO2 emissions had helped to turn China into the world’s largest carbon emitter, and is further widening its gap with the second largest emitter. This raises the issue of who should be responsible for this portion of emissions and bearing the carbon cost of exports. China certainly wants importers to cover some, if not all, of those costs. While China’s stance is understandable, this paper has argued from a broad and balanced perspective that if this is pushed too far, it will not help to find solutions to this issue. On the contrary it can be to China’s disadvantage for a number of reasons. However, aligning this responsibility with China does not necessarily suggest the sole reliance on domestic actions. In that context, the paper recommends specific actions that need to be taken internationally as well as domestically in order to effectively control the embedded CO2 emissions in China’s trade. Keywords: Emissions Embodied In Trade, Consumption-Based Accounting, Production-Based Accounting, Processing Trade; Carbon Tariffs, Energy Policy Classification-JEL: F18, P28, Q42, Q43, Q48, Q53, Q54, Q56, Q58 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.72 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-072.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.72 Title: Climate Change and Individual Decision Making: An Examination of Knowledge, Risk Perception, Self-interest and Their Interplay Author-Name: Francesca Pongiglione Author-X-Name-First: Francesca Author-X-Name-Last: Pongiglione Author-WorkPlace-Name: , Post-doctoral fellow, Università di Bologna, Visiting fellow, FEEM Abstract: In this essay, three separate yet interconnected components of pro-environmental decision making are considered: (a) knowledge, in the form of basic scientific understanding and procedural knowledge, (b) risk perception, as it relates to an individual’s direct experience of climate change and (c) self-interest, either monetary or status-driven. Drawing on a variety of sources in public policy, psychology, and economics, I examine the role of these concepts in inducing or discouraging pro-environmental behavior. Past researches have often overemphasized the weight of just one of those variables in the decision making. I argue, instead, that none of them alone is capable of bringing about the behavioral change required by the environmental crisis. Evidence shows that increasing the public’s scientific knowledge of climate change cannot unilaterally bring about a strong behavioral change. The same can be noticed even when knowledge is joined by risk-perception: deep psychological mechanisms may steer people towards inaction and apathy, despite their direct experience of the detrimental effects of climate change on their lives. Focusing on self-interest alone is similarly unable to induce pro-environmental behavior, due to a host of psychological factors. Instead, in all of the above cases an important missing ingredient may be found in providing the public with locally contextualized procedural knowledge in order to translate its knowledge and concern into action. The importance of this kind of practical knowledge has solid empirical and theoretical underpinnings, and is often overlooked in the climate-change debate that tends to focus on more high-level issues. Yet, for all its essential simplicity, it may carry important public-policy implications. Keywords: Individual Behavior, Climate-Change, Psychology, Uncertainty Classification-JEL: D03, D80, Q00 Creation-Date: 201109 Template-Type: ReDIF-Paper 1.0 Number: 2011.73 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-073.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.73 Title: Using the Market to Address Climate Change: Insights from Theory and Experience Author-Name: Joseph E. Aldy Author-X-Name-First: Joseph E. Author-X-Name-Last: Aldy Author-WorkPlace-Name: Assistant Professor of Public Policy, Harvard Kennedy School, Nonresident Fellow, Resources for the Future, and Faculty Research Fellow, National Bureau of Economic Research Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: Albert Pratt Professor of Business and Government, Harvard Kennedy School, University Fellow, Resources for the Future, and Research Associate, National Bureau of Economic Research Abstract: Emissions of greenhouse gases linked with global climate change are affected by diverse aspects of economic activity, including individual consumption, business investment, and government spending. An effective climate policy will have to modify the decision calculus for these activities in the direction of more efficient generation and use of energy, lower carbon-intensity of energy, and – more broadly – a more carbon-lean economy. The only approach to doing this on a meaningful scale that would be technically feasible and cost-effective is carbon pricing, that is, market-based climate policies that place a shadow-price on carbon dioxide emissions. We examine alternative designs of three such instruments – carbon taxes, cap-and-trade, and clean energy standards. We note that the U.S. political response to possible market-based approaches to climate policy has been and will continue to be largely a function of issues and structural factors that transcend the scope of environmental and climate policy. Keywords: Global Climate Change, Market-Based Instruments, Carbon Pricing, Carbon Taxes, Cap-And-Trade, Clean Energy Standards Classification-JEL: Q540, Q580, Q400, Q480 Creation-Date: 201110 Template-Type: ReDIF-Paper 1.0 Number: 2011.74 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-074.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.74 Title: Inducing Low-Carbon Investment in the Electric Power Industry through a Price Floor for Emissions Trading Author-Name: Alexander Brauneis Author-X-Name-First: Alexander Author-X-Name-Last: Brauneis Author-WorkPlace-Name: Institute of Financial Management, Alpen-Adria-University Klagenfurt Author-Name: Michael Loretz Author-X-Name-First: Michael Author-X-Name-Last: Loretz Author-WorkPlace-Name: Institute of Banking and Finance, Karl-Franzens-University Graz Author-Name: Roland Mestel Author-X-Name-First: Roland Author-X-Name-Last: Mestel Author-WorkPlace-Name: Institute of Banking and Finance, Karl-Franzens-University Graz Author-Name: Stefan Palan Author-X-Name-First: Stefan Author-X-Name-Last: Palan Author-WorkPlace-Name: Institute of Banking and Finance, Karl-Franzens-University Graz Abstract: Uncertainty about long-term climate policy is a major driving force in the evolution of the carbon market price. Since this price enters the investment decision process of regulated firms, this uncertainty increases the cost of capital for investors and might deter invest-ments into new technologies at the company level. We apply a real options-based approach to assess the impact of climate change policy in the form of a constant or growing price floor on investment decisions of a single firm in a competitive environment. This firm has the opportunity to switch from a high-carbon “dirty” technology to a low-carbon “clean” technology. Using Monte Carlo simulation and dynamic programming techniques for real market data, we determine the optimal CO2 price floor level and growth rate in order to induce investments into the low-carbon technology. We show these findings to be robust to a large variety of input parameter settings. Keywords: Carbon price, price floor, technological change, investment decision, real option approach Classification-JEL: D81, O38, Q55 Creation-Date: 201110 Template-Type: ReDIF-Paper 1.0 Number: 2011.75 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-075.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.75 Title: Unravelling the Worldwide Pollution Haven Effect Author-Name: Jean-Marie Grether Author-X-Name-First: Jean-Marie Author-X-Name-Last: Grether Author-WorkPlace-Name: University of Neuchâtel Author-Name: Nicole A. Mathys Author-X-Name-First: Nicole A. Author-X-Name-Last: Mathys Author-WorkPlace-Name: Swiss Federal Office of Energy, Bern and University of Neuchâtel Author-Name: Jaime de Melo Author-X-Name-First: Jaime de Melo Author-X-Name-Last: de Melo Author-WorkPlace-Name: University of Geneva and CEPR Abstract: This paper tackles the “pollution haven” argument by estimating the pollution content of imports (PCI). The PCI is then decomposed into three components: (i) a “deep” component (i.e. traditional variables unrelated to the environmental debate); (ii) a factor endowment component and (iii) a “pollution haven” component reflecting the impact of differences in environmental policies. The estimation is carried out for 1987 for an extensive data set covering 10 pollutants, 48 countries and 79 ISIC 4-digit sectors. Decompositions based on cross-section econometric estimates suggest a significant pollution haven effect which increases the PCI of the North because of stricter environmental regulations in the North. At the same time, the factor endowment effect lowers the PCI of the North, as the North is relatively well-endowed in capital and pollution-intensive activities are capital intensive. On a global scale, because the bulk of trade is intra-regional with a high North-North share, these effects are small relative to the “deep” determinants of the worldwide PCI. In sum, differences in factor endowments and environmental policies have only marginally affected the PCI of world trade at the end of the eighties. Keywords: Trade and The Environment, Pollution Haven Effect, Factor Endowment Effect Classification-JEL: F18, Q56 Creation-Date: 201110 Template-Type: ReDIF-Paper 1.0 Number: 2011.76 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-076.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.76 Title: Emigration and Wages: The EU Enlargement Experiment Author-Name: Benjamin Elsner Author-X-Name-First: Benjamin Author-X-Name-Last: Elsner Author-WorkPlace-Name: Trinity College Dublin, Department of Economics and IIIS Abstract: This paper studies the impact of a large emigration wave on real wages in the source country. Following EU enlargement in 2004, a large share of the workforce of the Central and Eastern Europe emigrated to Western Europe. Using data from Lithuania for the calibration of a factor demand model I show that emigration had a significant short-run impact on real wages in the source country. In particular, emigration led to a change in the wage distribution between young and old workers. The wages of young workers increased by 6%, whereas the wages of old workers decreased by around 1%. On the contrary, I find no effect on the wage distribution between workers of different education levels. Keywords: Emigration, EU Enlargement, European Integration, Wage Distribution Classification-JEL: F22, J31, O15, R23 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.77 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-077.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.77 Title: Trade in Environmental Goods, with Focus on Climate-Friendly Goods and Technologies Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: East-West Center Abstract: Paragraph 31(iii) of the Doha Ministerial Declaration mandates to the liberalization of 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 the liberalization of trade in climate-friendly goods and technologies in WTO environmental goods negotiations. It begins with discussing what products to liberalize and how. Given that WTO Members are divided by this key issue, the paper explores options to move current negotiations on the liberalization of trade in environmental goods and technologies forward, both within and outside the WTO. Recognizing that there is no one-size-fits-all strategy for tariff liberalization for all countries and for all environmental goods, the paper suggests the need for a high degree of flexibility to accommodate different situations and stakes in the liberalization of trade in environmental goods. Given that there are simply not enough environmental markets or these markets are weak in many developing countries, the paper emphasizes that creating markets for environmental goods in developing countries is far more important than just improving market-access conditions for associated goods, and discusses how to best serve the interests and concerns of developing countries. Keywords: Environmental Goods and Services, Low-Carbon Goods and Technologies, Market Access, Doha Round, WTO, Renewable Energy Technologies Classification-JEL: F18, F13, P28, Q42, Q48, Q56, Q54, Q58, Q48 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.78 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-078.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.78 Title: International Sourcing, Product Complexity and Intellectual Property Rights Author-Name: Alireza Naghavi Author-X-Name-First: Alireza Author-X-Name-Last: Naghavi Author-WorkPlace-Name: Dipartimento di Scienze Economiche, University of Bologna and Fondazione Eni Enrico Mattei Author-Name: Julia Spies Author-X-Name-First: Julia Author-X-Name-Last: Spies Author-WorkPlace-Name: Institute for Applied Economic Research (IAW) and Fondazione Eni Enrico Mattei Author-Name: Farid Toubal Author-X-Name-First: Farid Author-X-Name-Last: Toubal Author-WorkPlace-Name: University of Angers, Paris School of Economics and CEPII Abstract: In this paper, we propose the technological complexity of a product and the level of Intellectual Property Rights (IPRs) protection to be the co-determinants of the mode through which multinational firms purchase their goods. We study the choice between intra-firm trade and outsourcing given heterogeneity at the product- (complexity), firm- (productivity) and country- (IPRs) level. Our findings suggest that the above three dimensions of heterogeneity are crucial for complex goods, where firms face a trade-off between higher marginal costs in the case of trade with an affiliate and higher imitation risks in the case of sourcing from an independent supplier. We test these predictions by combining data from a French firm-level survey on the mode choice for each transaction with a newly developed complexity measure at the product-level. Our fractional logit estimations confirm the proposition that although firms are generally reluctant to source highly complex goods from outside the firm’s boundaries, they do so when a strong IPR regime in the host country guarantees the protection of their technology. Keywords: Sourcing Decision, Product Complexity, Intellectual Property Rights, Fractional Logit Estimation Classification-JEL: F12, F23, O34 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.79 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-079.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.79 Title: Intellectual Property and Biodiversity: When and Where are Property Rights Important? Author-Name: Mare Sarr Author-X-Name-First: Mare Author-X-Name-Last: Sarr Author-WorkPlace-Name: School of Economics, University of Cape Town Author-Name: Tim Swanson Author-X-Name-First: Tim Author-X-Name-Last: Swanson Author-WorkPlace-Name: Department of Economics, Graduate Institute of International and Development Studies Abstract: An important issue in the life sciences industries concerns the nature of the incentive mechanism that should govern the production of innovation within this R&D sector. We look at the specific problem of coordinating the supply of inputs across very different agents - North and South - that must each supply inputs in order to generate innovations from the industry. The current arrangement in this industry provides for a single property right at “end of the pipeline”, i.e. where marketing of the innovation occurs. This property rights scenario raises two problems, one of efficiency and one of equity. The key question asked here pertains to the number and placement of property rights that should be instituted to address this property rights failure. Should one establish new property rights in traditional knowledge alone; property rights in genetic information alone; or in both? We demonstrate that in a world in which traditional knowledge and genetic information are complements in the production of R&D, a resolution of the property rights failure in genetic information also may resolve the allocation failure in traditional knowledge even in the absence of a distinct property right. The reason is that traditional knowledge of the nature of private information is comparable to a trade secret. Traditional knowledge holders may use this informational advantage to improve their benefit by capturing some informational rent. A new property right is important to enable bargaining and coordination to occur across the industry, but a single property right is probably sufficient to enable coordination between the two agents. Keywords: Biodiversity Prospecting, Traditional Knowledge, Genetic Resources, Intellectual Property Rights, Sequential R&D Classification-JEL: Q56, O34, L24 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.80 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-080.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.80 Title: Emissions Pricing to Stabilize Global Climate Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Sergey Paltsev Author-X-Name-First: Sergey Author-X-Name-Last: Paltsev Author-WorkPlace-Name: Massachusetts Institute of Technology (MIT) Author-Name: John Reilly Author-X-Name-First: John Author-X-Name-Last: Reilly Author-WorkPlace-Name: Massachusetts Institute of Technology (MIT) Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: University of Venice Abstract: In the absence of significant greenhouse gas (GHG) mitigation, many analysts project that atmospheric concentrations of species identified for control in the Kyoto protocol could exceed 1000 ppm (carbon-dioxide-equivalent) by 2100 from the current levels of about 435 ppm. This could lead to global average temperature increases of between 2.5 and 6°C by the end of the century. There are risks of even greater warming given that underlying uncertainties in emissions projections and climate response are substantial. Stabilization of GHG concentrations that would have a reasonable chance of meeting temperature targets identified in international negotiations would require significant reductions in GHG emissions below “business-as-usual” levels, and indeed from present emissions levels. Nearly universal participation of countries is required, and the needed investments in efficiency and alternative energy sources would entail significant costs. Resolving how these additional costs might be shared among countries is critical to facilitating a wide participation of large-emitting countries in a climate stabilization policy. The 2°C target is very ambitious given current atmospheric concentrations and inertia in the energy and climate system. The Copenhagen pledges for 2020 still keep the 2°C target within reach, but very aggressive actions would be needed immediately after that. Keywords: Emissions Pricing, Climate Stabilization Classification-JEL: Q54, Q58 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.81 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-081.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.81 Title: A Good Opening: The Key to Make the Most of Unilateral Climate Action Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC) Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC) Abstract: In this paper we argue that when a subgroup of countries cooperate on emission reduction, the optimal response of non-signatory countries reflects the interaction between three potentially opposing factors, the incentive to free-ride on the benefits of cooperation, the incentive to expand the demand of fossil fuels, and the incentive to adopt cleaner technologies introduced by the coalition. Using an Integrated Assessment Model with a game theoretic structure we find that cost-benefit considerations would lead OECD countries to undertake a moderate, but increasing abatement effort (in line with the pledges subscribed in Copenhagen). Even if emission reductions are moderate, OECD countries find it optimal to allocate part of their resources to energy R&D and investments in cleaner technologies. International spillovers of knowledge and technology diffusion then lead to the deployment of these technologies in non-signatory countries as well, reducing their emissions. When the OECD group follows more ambitious targets, such as 2050 emissions that are 50% below 2005 levels, the benefits of technology externalities do not compensate the incentives deriving from the lower fossil fuels prices. This suggests that, when choosing their unilateral climate objective, cooperating countries should take into account the possibility to induce a virtuous behaviour in non-signatory countries. By looking at a two-phase negotiation set-up, we find that free-riding incentives spurred by more ambitious targets can be mitigated by means of credible commitments for developing countries in the second phase, as they would reduce lock-in in carbon intensive technologies. Keywords: Technology Spillovers, Climate Change, Partial Cooperation Classification-JEL: Q54, Q55, C72 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.82 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-082.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.82 Title: The Promise and Problems of Pricing Carbon: Theory and Experience Author-Name: Joseph E. Aldy Author-X-Name-First: Joseph E. Author-X-Name-Last: Aldy Author-WorkPlace-Name: Assistant Professor of Public Policy, Harvard Kennedy School; Nonresident Fellow, Resources for the Future; and Faculty Research Fellow, National Bureau of Economic Research Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: Albert Pratt Professor of Business and Government, Harvard Kennedy School; University Fellow, Resources for the Future; and Research Associate, National Bureau of Economic Research Abstract: Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions. Keywords: : Global Climate Change, Market-Based Instruments, Carbon Pricing, Carbon Taxes, Cap-and-Trade, Emission Reduction Credits, Energy Subsidies, Clean Energy Standards Classification-JEL: Q540, Q580, Q400, Q480 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.83 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-083.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.83 Title: An Evaluation of Overseas Oil Investment Projects under Uncertainty Using a Real Options Based Simulation Model Author-Name: Lei Zhu Author-X-Name-First: Lei Author-X-Name-Last: Zhu Author-WorkPlace-Name: Center for Energy and Environmental Policy Research, Institute of Policy and Management, Chinese Academy of Sciences Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Research Program, East-West Center Author-Name: Ying Fan Author-X-Name-First: Ying Author-X-Name-Last: Fan Author-WorkPlace-Name: Center for Energy and Environmental Policy Research, Institute of Policy and Management, Chinese Academy of Sciences Abstract: This paper applies real options theory to establish an overseas oil investment evaluation model that is based on Monte Carlo simulation and is solved by the Least Squares Monte-Carlo method. To better reflect the reality of overseas oil investment, our model has incorporated not only the uncertainties of oil price and investment cost but also the uncertainties of exchange rate and investment environment. These unique features have enabled our model to be best equipped to evaluate the value of oil overseas investment projects of three oil field sizes (large, medium, small) and under different resource tax systems (royalty tax and production sharing contracts). In our empirical setting, we have selected China as an investor country and Indonesia as an investee country as a case study. Our results show that the investment risks and project values of small sized oil fields are more sensitive to changes in the uncertainty factors than the large and medium sized oil fields. Furthermore, among the uncertainty factors considered in the model, the investment risk of overseas oil investment may be underestimated if no consideration is given of the impacts of exchange rate and investment environment. Finally, as there is an important trade-off between oil resource investee country and overseas oil investor, in medium and small sized oil investment negotiation the oil company should try to increase the cost oil limit in production sharing contract and avoid the term of a windfall profits tax to reduce the investment risk of overseas oil fields. Keywords: Overseas Oil Investment, Project Value, Real Options, Least Squares Monte-Carlo Classification-JEL: Q41, Q43, Q48, G31, O13, O22, C63 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.84 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-084.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.84 Title: Land Conversion Pace under Uncertainty and Irreversibility: too fast or too slow? Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Department of Economics, SLU Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: Department of Economics, 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: Department of Economics, University of Brescia, and Fondazione Eni Enrico Mattei Abstract: In this paper stochastic dynamic programming is used to investigate land conversion decisions taken 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 study the impact of uncertainty on the optimal conversion policy and discuss conversion dynamics under different policy scenarios on the basis of the relative long-run expected rate of deforestation. Interestingly, we show that uncertainty, even if it induces conversion postponement in the short-run, increases the average rate of deforestation and reduces expected time for total conversion in the long run. Finally, we illustrate our findings through some numerical simulations. Keywords: Optimal Stopping, Deforestation, Payments for Environmental Services, Natural Resources Management Classification-JEL: C61, D81, Q24, Q58 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.85 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-085.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.85 Title: Development Accounting with Intermediate Goods Author-Name: Jan Grobovšek Author-X-Name-First: Jan Author-X-Name-Last: Grobovšek Author-WorkPlace-Name: Universitat Autònoma de Barcelona Abstract: Do intermediate goods help explain relative and aggregate productivity differences across countries? Three observations suggest they do: (i) intermediates are relatively expensive in poor countries; (ii) goods industries demand intermediates more intensively than service industries; (iii) goods industries are more prominent intermediate suppliers in poor countries. I build a standard multisector growth model accommodating these features to show that inefficient intermediate production strongly depresses aggregate productivity and increases the price ratio of final goods to services. Applying the model to data for middle and high income countries, I find that poorer countries are only modestly less efficient at producing goods than services, but substantially less efficient at producing intermediate relative to final goods and services. If all countries had the intermediate production efficiency of the US, the aggregate productivity gap between the lowest and highest income countries in the sample is predicted to shrink by roughly two thirds while cross-country differences in the final price ratio would virtually vanish. Keywords: Development Accounting, Productivity, Intermediate Goods Classification-JEL: O10, O41, O47 Creation-Date: 201111 Template-Type: ReDIF-Paper 1.0 Number: 2011.86 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-086.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.86 Title: Applications and Interviews. A Structural Analysis of Two-Sided Simultaneous Search Author-Name: Ronald P. Wolthoff Author-X-Name-First: Ronald P. Author-X-Name-Last: Wolthoff Author-WorkPlace-Name: University of Toronto Abstract: Much of the job search literature assumes bilateral meetings between workers and firms. This ignores the frictions that arise when meetings are actually multilateral. I analyze the magnitude of these frictions by presenting an equilibrium job search model with an endogenous number of contacts. Workers contact firms by applying to vacancies, whereas firms contact applicants by interviewing them. Sending applications and interviewing applicants are costly activities but increase the probability to match. In equilibrium, contract dispersion arises and workers spread their applications over the different contract types. Estimation of the model on the Employment Opportunities Pilot Projects data set provides values for the cost of an application, the cost of an interview, and the value of non-market time. Frictions on the worker and the firm side are estimated to each cause approximately half of the 4.7% output loss compared to a Walrasian world. I show that in the estimated equilibrium welfare is improved if unemployed workers increase their search intensity. Keywords: Directed Search, Recruitment, Stable Matching, Labor Market Frictions, Structural Estimation, Efficiency, Policy Analysis Classification-JEL: J64, J31, D83 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.87 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-087.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.87 Title: 2C or Not 2C? Author-Name: Céline Guivarch Author-X-Name-First: Céline Author-X-Name-Last: Guivarch Author-WorkPlace-Name: Centre International de Recherche sur l’Environnement et le Développement 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 and Ecole Nationale de la Météorologie, Météo-France Abstract: Political attention has increasingly focused on limiting warming to 2°C. However, to date the only mitigation commitments accompanying this target are the so-called Copenhagen pledges, and these pledges appear to be inconsistent with the 2°C objective. Diverging opinions on whether this inconsistency can or should be resolved have been expressed. This paper clarifies the alternative assumptions underlying these diverging view points and explicits their implications. It first gives simple visualizations of the challenge posed by the 2°C target. It then proposes a “decision tree”, linking different beliefs on climate change, the achievability of different policies, and current international policy dynamics to various options to move forward on climate change. Keywords: Feasibility of 2°C Target, Climate Change Negotiations Classification-JEL: Q5, Q58 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.88 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-088.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.88 Title: Finding Maxmin Allocations in Cooperative and Competitive Fair Division Author-Name: Marco Dall'Aglio Author-X-Name-First: Marco Author-X-Name-Last: Dall'Aglio Author-WorkPlace-Name: LUISS University Rome, Italy Author-Name: Camilla Di Luca Author-X-Name-First: Camilla Author-X-Name-Last: Di Luca Author-WorkPlace-Name: "G. D'Annunzio" University Pescara, Italy Abstract: We consider upper and lower bounds for maxmin allocations of a completely divisible good in both competitive and cooperative strategic contexts. We then derive a subgradient algorithm to compute the exact value up to any fixed degree of precision. Keywords: Fair Division, Maxmin Allocation, Kalai Bargaining Solution, Cooperative Game Theory Classification-JEL: D63, C61, C71,C78 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.89 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-089.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.89 Title: Optimal Conservation Policy Under Imperfect Intergenerational Altruism Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Department of Economics, SLU Abstract: In this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest. Keywords: Imperfect Altruism, Real Options, Hyperbolic Discounting, Time Inconsistency, Natural Resources Management Classification-JEL: D81, C70, Q23, Q58 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.90 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-090.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.90 Title: Land-use Change and Solar Energy Production: A Real Option Approach Author-Name: Ardjan Gazheli Author-X-Name-First: Ardjan Author-X-Name-Last: Gazheli Author-WorkPlace-Name: Department of Economics, SLU Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Department of Economics, SLU Abstract: In this paper a real option model is developed to examine the critical factors affecting the decision to lease agricultural land to a company installing a PV power plant. The leasing payment is certain while the net revenues from agriculture are uncertain. We identify the profit values at which the farmer decides to lease his plot vs. continue farming it. By applying the model to the province of Bologna (Italy), we illustrate the possible land-use change scenarios in this area. We conclude by discussing the importance of PV energy production as a source of income for farmers and its implications from a social perspective. Keywords: Land Allocation, Real Options, Renewable Energy, Solar farm, Uncertainty Classification-JEL: C61, D81, Q24, Q42 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.91 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-091.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.91 Title: Oil Price Forecast Evaluation with Flexible Loss Functions Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: Department of Statistics, University of Milan-Bicocca and Fondazione Eni Enrico Mattei Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: Department of Statistics, University of Milan-Bicocca and Fondazione Eni Enrico Mattei Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-WorkPlace-Name: BC3 Basque Centre for Climate Change Author-Name: Elisa Scarpa Author-X-Name-First: Elisa Author-X-Name-Last: Scarpa Author-WorkPlace-Name: Edison Trading Abstract: The empirical literature is very far from any consensus about the appropriate model for oil price forecasting that should be implemented. Relative to the previous literature, this paper is novel in several respects. First of all, we test and systematically evaluate the ability of several alternative econometric specifications proposed in the literature to capture the dynamics of oil prices. Second, we analyse the effects of different data frequencies on the coefficient estimates and forecasts obtained using each selected econometric specification. Third, we compare different models at different data frequencies on a common sample and common data. Fourth, we evaluate the forecasting performance of each selected model using static forecasts, as well as different measures of forecast errors. Finally, we propose a new class of models which combine the relevant aspects of the financial and structural specifications proposed in the literature (“mixed” models). Our empirical findings suggest that, irrespective of the shape of the loss function, the class of financial models is to be preferred to time series models. Both financial and time series models are better than mixed and structural models. Results of the Diebold and Mariano test are not conclusive, for the loss differential seems to be statistically insignificant in the large majority of cases. Although the random walk model is not statistically outperformed by any of the alternative models, the empirical findings seem to suggest that theoretically well-grounded financial models are valid instruments for producing accurate forecasts of the WTI spot price. Keywords: Oil Price, WTI Spot and Futures Prices, Forecasting, Econometric Models Classification-JEL: C52, C53, Q32, Q43 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.92 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-092.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.92 Title: Technological Change, Fuel Efficiency and Carbon Intensity in Electricity Generation: A Cross-Country Empirical Study Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Nick Johnstone Author-X-Name-First: Nick Author-X-Name-Last: Johnstone Author-WorkPlace-Name: OECD Environment Directorate Author-Name: Ivan Hašcic Author-X-Name-First: Ivan Author-X-Name-Last: Hašcic Author-WorkPlace-Name: OECD Environment Directorate Abstract: This paper provides an empirical analysis of the determinants of energy efficiency in fossil fuel electricity generation across 28 OECD countries over the period 1981-2006, with particular attention to the role played by technological development and the availability of energy efficient technologies in the market. This contribution is novel in three respects: first, empirically assess the effects of different determinants of energy efficiency, which include the input mix in electricity generation, the capacity ratio at which power plants are run, as well as the characteristics of the production technology. Second, we focus on the role of technological availability: using patent data for carefully selected innovations in fossil-fuel technologies, we build an indicator which proxies for technological developments in fuel-efficient electricity generation. Third, by formalizing the relationship between fuel efficiency and carbon intensity, we assess the impact of changes in the input mix and in technological availability on CO2 emissions in the electricity sector. Results show that input mix, capacity utilization and new investment in capacity play a significant role in increasing energy efficiency. Increasing the stock of available technologies (or stock of knowledge) is also associated with higher efficiency levels. Given the link between increased efficiency and lower CO2 emissions, we conclude that technological change has a negative and significant effect on carbon intensity, while the changing input mix affects CO2 intensity both through an increase in efficiency as well as by lowering the input-weighted emission factor. Keywords: Fossil Fuel Electricity Generation, Energy Efficiency, Carbon Intensity, Technological Change, Patents Classification-JEL: Q40, O33, O13 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.93 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-093.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.93 Title: Impacts of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibrium Model Author-Name: Qin Bao Author-X-Name-First: Qin Author-X-Name-Last: Bao Author-WorkPlace-Name: Institute of Systems Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences Author-Name: Ling Tang Author-X-Name-First: Ling Author-X-Name-Last: Tang Author-WorkPlace-Name: Institute of Policy and Management, Chinese Academy of Sciences, Graduate University of Chinese Academy of Sciences Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Institute of Policy and Management, Chinese Academy of Sciences, Center for Energy Economics and Strategy Studies; and Research Institute for the Changing Global Environment, Fudan University, Research Program, East-West Center Author-Name: Han Qiao Author-X-Name-First: Han Author-X-Name-Last: Qiao Author-WorkPlace-Name: College of Economics, Qingdao University, Institute of Systems Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences Author-Name: Shouyang Wang Author-X-Name-First: Shouyang Author-X-Name-Last: Wang Author-WorkPlace-Name: Institute of Systems Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences Abstract: Carbon-based border tax adjustments (BTAs) have recently been proposed by some OECD countries to level the carbon playing field and target major emerging economies. This paper applies a multi-sector dynamic computable general equilibrium (CGE) model to estimate the impacts of the BTAs implemented by US and EU on China’s sectoral carbon emissions. The results indicate that BTAs will cut down export prices and transmit the effects to the whole economy, reducing sectoral output-demands from both supply side and demand side. On the supply side, sectors might substitute away from exporting toward domestic market, increasing sectoral supply; while on the demand side, the domestic income may be strikingly cut down due to the decrease in export price, decreasing sectoral demand. Furthermore, such shrinkage of demand may similarly reduce energy prices, which leads to energy substitution effect and somewhat stimulates carbon emissions. Depending on the relative strength of the output-demand effect and energy substitution effect, sectoral carbon emissions and energy demands will vary across sectors, with increasing, decreasing or moving in a different direction. These results suggest that an incentive mechanism to encourage the widespread use of environment-friendly fuels and technologies will be more effective. Keywords: Border Carbon Tax Adjustments, Computable General Equilibrium Model, Carbon Emissions Classification-JEL: D58, F18, Q43, Q48, Q52, Q54, Q56, Q58 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.94 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-094.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.94 Title: Work Values in Western and Eastern Europe 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, research fellows of CREMA – Center for Research in Economics, Management and the Arts, Switzerland and associated with CESifo Abstract: The paper reports on work values in Europe. At the country level we find that job satisfaction is related to lower working hours, higher well-being, and a higher GDP per capita. Moving to the micro level, we turn our attention from job satisfaction to analyse empirically work centrality and work value dimensions (without exploring empirically job satisfaction) related to intrinsic and extrinsic values, power and social elements. The results indicate substantial differences between Eastern and Western Europe. Socio-demographic factors, education, income, religiosity and religious denomination are significant influences. We find additional differences between Eastern and Western Europe regarding work-leisure and work-family centrality that could be driven by institutional conditions. Furthermore, hierarchical cluster analyses report further levels of dissimilarity among European countries. Keywords: Work Values, Job Satisfaction, Work-Leisure Relationship, Work-Family Centrality, Eastern Europe, Western Europe Classification-JEL: P20, D10, J28, J17, J22 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.95 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-095.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.95 Title: The Environment and Directed Technical Change: Comment Author-Name: Jean-Charles Hourcade Author-X-Name-First: Jean-Charles Author-X-Name-Last: Hourcade Author-WorkPlace-Name: CIRED, Centre International de Recherche sur l'Environnement et le Développement Author-Name: Antonin Pottier Author-X-Name-First: Antonin Author-X-Name-Last: Pottier Author-WorkPlace-Name: CIRED, Centre International de Recherche sur l'Environnement et le Développement Author-Name: Etienne Espagne Author-X-Name-First: Etienne Author-X-Name-Last: Espagne Author-WorkPlace-Name: CIRED, Centre International de Recherche sur l'Environnement et le Développement Abstract: This paper discusses the growth model with environmental constraints recently presented in (Acemoglu et al., 2011) which focuses on the redirection of technical change by climate policies with research subsidies and a carbon tax. First, Acemoglu et al.'s model and chosen parameters yield numerical results that do not support the conclusion that ambitious climate policies can be conducted “without sacrificing (much or any) long-run growth”. Second, they select unrealistic key parameters for carbon sinks and elasticity of substitution. We find that more realistic parameters lead to very different results. Third, the model leads to an unrealistic conclusion when used to analyse endogenous growth, suggesting specification problems. Keywords: Technological Change, Endogenous Growth, Climate, Energy Substitutability Classification-JEL: O30,O33,Q43,Q54,Q56 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.96 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-096.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.96 Title: Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany Author-Name: Adamos Adamou Author-X-Name-First: Adamos Author-X-Name-Last: Adamou Author-WorkPlace-Name: University of Cyprus Author-Name: Sofronis Clerides Author-X-Name-First: Sofronis Author-X-Name-Last: SClerides Author-WorkPlace-Name: University of Cyprus and CEPR Author-Name: Theodoros Zachariadis Author-X-Name-First: Theodoros Author-X-Name-Last: Zachariadis Author-WorkPlace-Name: Cyprus University of Technology Abstract: Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. e estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare. Keywords: CO2 emissions, German Automobile Market, Feebates, Carbon Taxation Classification-JEL: Q5, Q53, Q58 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.97 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-097.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.97 Title: Incentives and Stability of International Climate Coalitions: An Integrated Assessment 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: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Abstract: This paper analyses the incentives to participate in and the stability of international climate coalitions. Using the integrated assessment model WITCH, the analysis of coalitions’ profitability and stability is performed under alternative assumptions concerning the pure rate of time preference, the social welfare aggregator and the extent of climate damages. We focus on the profitability, stability, and “potential stability” of a number of coalitions which are “potentially effective” in reducing emissions. We find that only the grand coalition under a specific sets of assumptions finds it optimal to stabilise GHG concentration below 550 ppm CO2-eq. However, the grand coalition is found not to be stable, not even “potentially stable” even through an adequate set of transfers. However, there exist potentially stable coalitions, but of smaller size, which are also potentially environmentally effective. Depending on the assumptions made, they could achieve up to 600 ppm CO2-eq. More ambitious targets lead to the collapse of the coalition. Keywords: Climate Policy, Climate Coalition, Game Theory, Free Riding Classification-JEL: C68, C72, D58, Q54 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.98 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-098.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.98 Title: Combining Climate and Energy Policies: Synergies or Antagonism? Modeling Interactions With Energy Efficiency Instruments Author-Name: Oskar Lecuyer Author-X-Name-First: Oskar Author-X-Name-Last: Lecuyer Author-WorkPlace-Name: EDF R&D - EFESE and CIRED Author-Name: Ruben Bibas Author-X-Name-First: Ruben Author-X-Name-Last: Bibas Author-WorkPlace-Name: CIRED Abstract: In addition to the already present Climate and Energy package, the European Union (EU) plans to include a binding target to reduce energy consumption. We analyze the rationales the EU invokes to justify such an overlapping and develop a minimal common framework to study interactions arising from the combination of instruments reducing emissions, promoting renewable energy (RE) production and reducing energy demand through energy efficiency (EE) investments. We find that although all instruments tend to reduce emissions and a price on carbon tends to give the right incentives for RE and EE too, the combination of more than one instrument leads to significant antagonisms regarding major objectives of the policy package. The model allows to show in a single framework and to quantify the antagonistic effects of the joint promotion of RE and EE. We also show and quantify the effects of this joint promotion on ETS permit price, on wholesale market price and on energy production levels. Keywords: Renewable Energy, Energy Efficiency, Energy Policy, Climate Policy, Policy Interaction Classification-JEL: Q28, Q41, Q48, Q58 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.99 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-099.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.99 Title: Evaluating the Impacts of the EU-ETS on Prices, Investments and Profits of the Italian Electricity Market Author-Name: Francesca Bonenti Author-X-Name-First: Francesca Author-X-Name-Last: Bonenti Author-WorkPlace-Name: Department of Quantitative Methods, University of Brescia Author-Name: Giorgia Oggioni Author-X-Name-First: Giorgia Author-X-Name-Last: Oggioni Author-WorkPlace-Name: Department of Quantitative Methods, University of Brescia, Author-Name: Elisabetta Allevi Author-X-Name-First: Elisabetta Author-X-Name-Last: Allevi Author-WorkPlace-Name: Department of Quantitative Methods, University of Brescia, Author-Name: Giacomo Marangoni Author-X-Name-First: Giacomo Author-X-Name-Last: Marangoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: In this paper we investigate the economic impacts of the European Emission Trading Scheme (EU-ETS) on the Italian electricity market by a power generation expansion model. In particular, we assume that generators make their capacity expansion decisions in a Cournot or in a perfect competition manner. This model is used to measure the effects of the EU-ETS Directives on electricity prices and demand, investments and generators' profits both in an oligopolistic and in a perfectly competitive organization of the power market. We adopt a technological representation of the energy market which is discretized into six geographical zones (North, Center-North, Center-South, South, Sicily, Sardinia) and five virtual poles (Monfalcone, Foggia, Brindisi, Rossano, Priolo) with limited production for a total of eleven zones. We assume that generators operate in different zones connected by interconnections with limited capacity and produce energy by running existing or new plants in which they directly invest. We consider several investment scenarios under the CO2 regulation with and without incentives to renewables. The scenarios also include simulations on future effects of the third EU-ETS phase on the system. Our analysis shows that perfect competition induces generators to invest more than in an oligopolistic framework, but in both market configurations, investments are mainly concentrated in fossil-red plants (CCGT and coal), leaving a small proportion to new wind plants. This happens also in presence of incentives given to renewable technologies. We can thus conclude that investments in a secure and efficient technology like CCGT are preferable compared to those in renewables that cannot be used with continuity. This investment policy affects electricity prices that significantly increase in 2020 compared to their 2009 levels. The raise of electricity prices in 2020 is particularly favorable for generators operating as Cournot players which are able to increase their profits compared to 2009, despite the full auctioning system foreseen for the allocation of CO2 allowance to the power sector in the third EU-ETS phase. The solution of the overall system is found by exploiting the mixed complementarity theoretical framework and solution algorithms. The developed model is implemented as complementarity problems and solved in GAMS using the PATH solver. Keywords: Complementarity Conditions, General Equilibrium Models, EU-ETS, Italian Electricity Market Classification-JEL: Q4, Q48 Creation-Date: 201112 Template-Type: ReDIF-Paper 1.0 Number: 2011.100 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2011-100.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2011.100 Title: Why do Firms Hold Oil Stockpiles? Author-Name: Charles F. Mason Author-X-Name-First: Charles F. Author-X-Name-Last: Mason Author-WorkPlace-Name: H.A. True Chair in Petroleum and Natural Gas Economics, Department of Economics & Finance, University of Wyoming Abstract: Persistent and significant privately-held stockpiles of crude oil have long been an important empirical regularity in the United States. Such stockpiles would not rationally be held in a traditional Hotelling-style model. How then can the existence of these inventories be explained? In the presence of sufficiently stochastic prices, oil extracting firms have an incentive to hold inventories to smooth production over time. An alternative explanation is related to a speculative motive - firms hold stockpiles intending to cash in on periods of particularly high prices. I argue that empirical evidence supports the former but not the latter explanation. Keywords: Petroleum Economics, Stochastic Dynamic Optimization Classification-JEL: Q2, D8, L15 Creation-Date: 201112