Template-Type: ReDIF-Paper 1.0 Number: 2013.01 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-001.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.01 Title: Bargaining and Delay in Trading Networks Author-Name: Mikel Bedayo Author-X-Name-First: Mikel Author-X-Name-Last: Bedayo Author-WorkPlace-Name: CORE, University of Louvain, Belgium Author-Name: Ana Mauleon Author-X-Name-First: Ana Author-X-Name-Last: Mauleon Author-WorkPlace-Name: CORE, University of Louvain and CEREC, University of Saint-Louis, Belgium Author-Name: Vincent Vannetelbosch Author-X-Name-First: Vincent Author-X-Name-Last: Vannetelbosch Author-WorkPlace-Name: CORE, University of Louvain and CEREC, University of Saint-Louis, Belgium Abstract: We study a model in which heterogeneous agents first form a trading network where link formation is costless. Then, a seller and a buyer are randomly selected among the agents to bargain through a chain of intermediaries. We determine both the trading path and the allocation of the surplus among the seller, the buyer and the intermediaries at equilibrium. We show that a trading network is pairwise stable if and only if it is a core periphery network where the core consists of all weak (or impatient) agents who are linked to each other and the periphery consists of all strong (or patient) agents who have a single link towards a weak agent. Once agents do not know the impatience of the other agents, each bilateral bargaining session may involve delay, but not perpetual disagreement, in equilibrium. When an agent chooses another agent on a path from the buyer to the seller to negotiate bilaterally a partial agreement, her choice now depends both on the type of this other agent and on how much time the succeeding agents on the path will need to reach their partial agreements. We provide sufficient conditions such that core periphery networks are pairwise stable in presence of private information. Keywords: Bargaining, Trading networks, Private information Classification-JEL: C70, D60, J50 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.02 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-002.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.02 Title: Paths to Stability in Two-sided Matching with Uncertainty Author-Name: Emiliya Lazarova Author-X-Name-First: Emiliya Author-X-Name-Last: Lazarova Author-WorkPlace-Name: Department of Economics, University of Birmingham, United Kingdom Author-Name: Dinko Dimitrov Author-X-Name-First: Dinko Author-X-Name-Last: Dimitrov Author-WorkPlace-Name: Chair of Economic Theory, Saarland University, Germany Abstract: We consider one-to-one matching problems under two modalities of uncertainty that differ in the way types are assigned to agents. Individuals have preferences over the possible types of the agents from the opposite market side and initially know the “name” but not the ”type” of the other players. Learning occurs via matching and using Bayes’ rule. We introduce the notion of a stable and consistent outcome, and show how the interaction between blocking and learning behavior shapes the existence of paths to stability in each of the uncertainty environments. Existence of stable and consistent outcomes then follows as a side result. Keywords: Consistent Outcomes, One-to-One Uncertainty, Many-to-One Uncertainty, Paths to Stability, Two-Sided Matching Classification-JEL: C62, C78, D71, D83 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.03 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-003.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.03 Title: Flexible Waste Management under Uncertainty Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Department of Economics, Swedish University of Agricultural Sciences Author-Name: Natalia Montinari Author-X-Name-First: Natalia Montinari Author-X-Name-Last: Montinari Author-WorkPlace-Name: Strategic Interaction Group, Max Planck Institute of Economics Abstract: In this paper, we use stochastic dynamic programming to model the choice of a municipality which has to design an optimal waste management program under uncertainty about the price of recyclables in the secondary market. The municipality can, by undertaking an irreversible investment, adopt a flexible program which integrates the existing landfill strategy with recycling, keeping the option to switch back to landfilling, if profitable. We determine the optimal share of waste to be recycled and the optimal timing for the investment in such a flexible program. We find that adopting a flexible program rather than a non-flexible one, the municipality: i) invests in recycling capacity under circumstances where it would not do so otherwise; ii) invests earlier, and iii) benefits from a higher expected net present value. Keywords: Real Options, Flexibility, Municipal Waste, Recycling Classification-JEL: C61, Q53 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.04 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-004.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.04 Title: Games on Networks: Direct Complements and Indirect Substitutes Author-Name: Sergio Currarini Author-X-Name-First: Sergio Author-X-Name-Last: Currarini Author-WorkPlace-Name: Università Ca' Foscari di Venezia and FEEM, Italy Author-Name: Elena Fumagalli Author-X-Name-First: Elena Author-X-Name-Last: Fumagalli Author-WorkPlace-Name: Université de Lausanne, CH Author-Name: Fabrizio Panebianco Author-X-Name-First: Fabrizio Author-X-Name-Last: Panebianco Author-WorkPlace-Name: Università degli Studi di Milano – Bicocca, Italy Abstract: Many types of economic and social activities involve significant behavioral complementarities (peer effects) with neighbors in the social network. The same activities often exert externalities that cumulate in "stocks" affecting agents' welfare and incentives. For instance, smoking is subject to peer effects, and the stock of passive smoke increases the marginal risks of bad health, decreasing the incentives to smoke. In the linear quadratic framework studied by Ballester et al. (2006), we consider contexts where agents' incentives decrease with the "stock" to which neighbors are exposed (agents may, for instance, care about their friends' health). In such contexts, the patterns of strategic interaction differ from the network of social relations, as agents display strategic substitution with distance-two neighbors. We show that behavior is predicted by a weighted Bonacich centrality index, with weights accounting for distance-two relations. We find that both maximal behavior and key-players tend to move to the periphery of the network, and we discuss the effect of close-knit communities and segregated groups on aggregate behavior. We finally discuss the implications for peer effects identification and for the emergence of potential biases in the estimation of social effects. Keywords: Networks, Peer Effects, Key-player, Centrality, Substitutes, Altruism Classification-JEL: D01, D85 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.05 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-005.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.05 Title: Social Incentives Matter: Evidence from an Online Real Effort Experiment Author-Name: Mirco Tonin Author-X-Name-First: Mirco Author-X-Name-Last: Tonin Author-WorkPlace-Name: University of Southampton, CEU, and IZA Author-Name: Michael Vlassopoulos Author-X-Name-First: Michael Author-X-Name-Last: Vlassopoulos Author-WorkPlace-Name: University of Southampton Abstract: Contributing to a social cause can be an important driver for workers in the public and non- profit sector as well as in firms that engage in Corporate Social Responsibility activities. This paper compares the effectiveness of social incentives - that take the form of a donation received by a charity of the subject's choice - to financial incentives using an online real effort experiment. We find that social incentives lead to a 20% rise in productivity, regardless of their form (lump sum or related to performance) or strength. When subjects can choose the mix of incentives half sacrifice some of their private compensation to increase social compensation, with women more likely than men. Furthermore, social incentives do not attract less productive subjects, nor subjects that respond more to exogenously imposed social incentives. Our calculations suggest that in the context of our experiment a dollar spent on social incentives is equivalent to increasing private compensation by at least half a dollar. Keywords: Private Incentives, Social Incentives, Sorting, Prosocial Behavior, Real Effort Experiment, Corporate Social Responsibility, Gender Classification-JEL: D64, J24, J32, L3, M14, M52 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.06 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-006.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.06 Title: Corruption and the Curse: The Dictator’s Choice 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: We develop a dynamic discrete choice model of a self-interested and unchecked ruler making decisions regarding the exploitation of a resource-rich country. This dictator makes the recursive choice between either investing domestically to live off the productivity of the country while facing the risk of being ousted, or looting the country’s riches by liquefying the resources and departing. We demonstrate that important parameters determining this choice include the level of resources, liquidity and indebtedness. We find that the dictator’s choice regarding the timing of departure is significantly related to external lending, investment and debt. We then argue that this looting phenomenon provides an explanation for the generation of corrupt economies in resource-rich countries. An empirical analysis of available corruption indices suggests that instability-led looting provides a more fundamental explanation of perceived corruption than do various social and cultural indicators or the economic theory of internal political competition. Keywords: Corruption, Dictatorship, Lending and Indebtedness, Looting, Natural Resource Curse Classification-JEL: O11, O13, O16 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.07 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-007.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.07 Title: Technology Agreements with Heterogeneous Countries Author-Name: Michael Hoel Author-X-Name-First: Michael Author-X-Name-Last: Hoel Author-WorkPlace-Name: University of Oslo Author-Name: Aart de Zeeuw Author-X-Name-First: Aart Author-X-Name-Last: de Zeeuw Author-WorkPlace-Name: Tilburg University Abstract: For sufficiently low abatement costs many countries might undertake significant emission reductions even without any international agreement on emission reductions. We consider a situation where a coalition of countries does not cooperate on emission reductions but cooperates on the development of new, climate friendly technologies that reduce the costs of abatement. The equilibrium size of such a coalition, as well as equilibrium emissions, depends on the distribution across countries of their willingness to pay for emission reductions. Increased willingness to pay for emissions reductions for any group of countries will reduce (or leave unchanged) the equilibrium coalition size. However, the effect of such an increase in aggregate willingness to pay on equilibrium emissions is ambiguous. Keywords: Technology Agreement, Coalition Stability, Climate, International Agreement Classification-JEL: F42, O32, Q2, C72 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.08 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-008.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.08 Title: Long-term Transport Energy Demand and Climate Policy: Alternative Visions on Transport Decarbonization in Energy Economy Models Author-Name: Robert Pietzcker Author-X-Name-First: Robert Author-X-Name-Last: Pietzcker Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Thomas Longden, Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change Author-Name: Thomas Longden Author-X-Name-First: Thomas Author-X-Name-Last: Longden Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change Author-Name: Wenying Chen Author-X-Name-First: Wenying Author-X-Name-Last: Chen Author-WorkPlace-Name: 3E (Energy, Environment and Economy) Research Institute, Tsinghua University Author-Name: Sha Fu Author-X-Name-First: Sha Author-X-Name-Last: Fu Author-WorkPlace-Name: National Center for Climate Change Strategy and International Cooperation (NCSC) Author-Name: Elmar Kriegler Author-X-Name-First: Elmar Author-X-Name-Last: Kriegler Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Page Kyle Author-X-Name-First: Page Author-X-Name-Last: Kyle Author-WorkPlace-Name: Joint Global Change Research Institute, Paci?c Northwest National Laboratory Author-Name: Gunnar Luderer Author-X-Name-First: Gunnar Author-X-Name-Last: Luderer Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Abstract: Transportation accounts for a substantial share of CO2 emissions, and decarbonizing transport will be necessary to limit global warming to below 2°C. Due to persistent reliance on fossil fuels, it is posited that transport is more difficult to decarbonize than other sectors. We test this hypothesis by comparing long-term transport energy demand and emission projections for China, USA and the World from five large-scale energy-economy models with respect to three climate policies. We systematically analyze mitigation levers along the chain of causality from mobility to emissions, and discuss structural differences between mitigation in transport and non-transport sectors. We can confirm the hypothesis that transport is difficult to decarbonize with purely monetary signals when looking at the period before 2070. In the long run, however, the three global models achieve deep transport emission reductions by >90% through the use of advanced vehicle technologies and carbon-free primary energy; especially biomass with CCS plays a crucial role. Compared to the global models, the two partial-equilibrium models are relatively inflexible in their reaction to climate policies. Across all models, transportation mitigation lags behind non-transport mitigation by 10-30 years. The extent to which earlier mitigation is possible strongly depends on implemented technologies and model structure. Keywords: Transportation Scenarios, Carbon Emission Mitigation, Integrated Assessment, Energy-Economy Modeling, Advanced Light Duty Vehicles, Demand Reduction Classification-JEL: Q54, R41, R48 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.09 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-009.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.09 Title: Short and Long-term Effects of Environmental Tax Reform Author-Name: Walid Oueslati Author-X-Name-First: Walid Author-X-Name-Last: Oueslati Author-WorkPlace-Name: Centre for Rural Economy, Newcastle University Abstract: This paper examines the macroeconomic effects of an environmental tax reform in a growing economy. A model of endogenous growth based on human capital accumulation is used to numerically simulate the growth effects of different environmental tax reforms and compute their impact on welfare in the short and the long-term. Our results suggest that the magnitude of these effects depends on the type of tax reform. Thus, only environmental tax reform that aims to use the revenue from environmental tax to reduce wage tax and increase the proportion of public spending within GDP, enhances both growth and welfare in the long-term. However, the short-term effect remains negative. Keywords: Tax reform, Endogenous Growth, Human Capital, Environmental Externality, Transitional Dynamics, Welfare cost Classification-JEL: E62, I21, H22, Q28, O41, D62 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.10 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-010.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.10 Title: Can Climate Policy Enhance Sustainability? Author-Name: Lorenza Campagnolo Author-X-Name-First: Lorenza Author-X-Name-Last: Campagnolo Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Advanced School of Economics Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Ca’ Foscari University of Venice Author-Name: Marinella Davide Author-X-Name-First: Marinella Author-X-Name-Last: Davide Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change Author-Name: Fabio Eboli Author-X-Name-First: Fabio Author-X-Name-Last: Eboli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change Author-Name: Elisa Lanzi Author-X-Name-First: Elisa Author-X-Name-Last: Lanzi Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Advanced School of Economics Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change Abstract: Implementing an effective climate policy is one of the main challenges for our future. Even though ambitious mitigation targets are necessarily costly, curbing GHG emissions can prevent future irreversible impacts of climate change on human kind and the environment. Climate policy is therefore crucial for present and future generations. Nonetheless, one may wonder whether the economic and social dimensions of future global development could be harmed by climate policy. This paper addresses this question by examining some recent developments in international climate policy and considering different levels of cooperation that may arise in light of the outcomes of the Conference of the Parties recently held in Doha. Then it explores whether the implementation of various climate policy scenarios would help enhancing sustainability or rather whether there is a trade-off between climate policy and economic development and/or social cohesion. This is done by using a new comprehensive indicator, the FEEM Sustainability Index (FEEM SI), which aggregates several economic, social, and environmental indicators. The FEEM SI index is built into a recursive-dynamic Computable General Equilibrium (CGE) model of the world economy, thus offering the possibility of projecting all indicators into the future, and therefore delivering a perspective assessment of sustainability under different future climate policy scenarios. We find that the environmental component of sustainability improves at the regional and world level thanks to the GHG emission reductions achieved through climate policy. However, the economic and social components are affected negatively yet marginally. Hence, overall sustainability increases in all scenarios. If the USA, Canada, Japan and Russia would not contribute to mitigating future GHG emissions, as envisioned in one of our scenarios, sustainability in these countries would decrease and the overall effectiveness of climate policy in enhancing global sustainability would be offset. Keywords: Climate policy, Computable General Equilibrium (CGE) Models, Sustainability, Indicators Classification-JEL: Q54, Q56, C68 Creation-Date: 201301 Template-Type: ReDIF-Paper 1.0 Number: 2013.11 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-011.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.11 Title: Robust Control of a Spatially Distributed Commercial Fishery Author-Name: William A. Brock Author-X-Name-First: William A. Author-X-Name-Last: Brock Author-WorkPlace-Name: Department of Economics, University of Wisconsin, and Department of Economics, University of Missouri Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Department of International and European Economic Studies, Athens University of Economics and Business Author-Name: Athanasios. N. Yannacopoulos Author-X-Name-First: Athanasios. N. Author-X-Name-Last: Yannacopoulos Author-WorkPlace-Name: Department of Statistics, Athens University of Economics and Business Abstract: We consider a robust control model for a spatially distributed commercial fishery under uncertainty, and in particular a tracking problem, i.e. the problem of robust stabilization of a chosen deterministic benchmark state in the presence of model uncertainty. The problem is expressed in the form of a stochastic linear quadratic robust optimal control problem, which is solved analytically. We focus on the emergence of breakdown from the robust stabilization policy, called hot spots, and comment upon their significance concerning the spatiotemporal behaviour of the system. Keywords: Spatiotemporal Dynamics, Model Uncertainty, Robust Control, Fishery Classification-JEL: D81, R12, Q22, C6 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.12 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-012.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.12 Title: Towards a New Eastern Mediterranean Energy Corridor? Natural Gas Developments Between Market Opportunities and Geopolitical Risks Author-Name: Simone Tagliapietra Author-X-Name-First: Simone Author-X-Name-Last: Tagliapietra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The Eastern Mediterranean region is rapidly changing. The turbolent political transition in Egypt after the Arab Spring, the civil war in Syria, the emergence of Turkey as leading regional power, the tensions between Israel and Gaza and the never-ending dispute between Turkey and the Republic of Cyprus are -all together- reshuffling the regional geopolitical equilibrium. At the same time natural gas findings are flourishing in the offshore of Egypt, Israel, and Cyprus, reshaping the regional energy map and rapidly making the Eastern Mediterranean a world-class natural gas province. These geopolitical and energy pressures are rapidly converging, generating a number of new challenges and opportunities for each player in the region. The aim of this paper is to provide a comprehensive overview on these new regional developments and to propose a critical discussion of the market opportunities and geopolitical risks related to the potential emergence of a new Eastern Mediterranean Energy Corridor. Keywords: Eastern Mediterranean, Natural Gas, Energy Geopolitics, Turkey, Israel, Egypt, Cyprus, Lebanon, European Union, Security of Gas Supply, Energy security Classification-JEL: Q40, Q42, Q48 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.13 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-013.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.13 Title: Trade of Woody Biomass for Electricity Generation under Climate Mitigation Policy Author-Name: Alice Favero Author-X-Name-First: Alice Author-X-Name-Last: Favero Author-WorkPlace-Name: Yale University, FEEM and CMCC Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Yale University, FEEM and CMCC Abstract: Bio-energy has the potential to be a key mitigation option if combined with carbon capture and sequestration (BECCS) because it generates electricity and absorbs emissions at the same time. However, biomass is not distributed evenly across the globe, and regions with a potentially high demand might be constrained by limited domestic supply. Therefore, climate mitigation policies might create the incentive to trade biomass internationally. This paper uses scenarios generated by the integrated assessment model WITCH to study trade of woody biomass from multiple perspectives: the volume of biomass traded, its value, the impact on other power generation technologies and on marginal abatement costs. The policy scenarios consist of three representative carbon tax policies (4.8 W/m2, 3.8 W/m2 and 3.2 W/m2 radiative forcing in 2100) and a cap-and-trade scheme (3.8 W/m2 in 2100). Results show that the incentive to trade biomass is high: at least 50% of biomass consumed globally is from the international market. Regions trade 13-69 EJ/yr of woody biomass in 2050 and 55-81 EJ/yr in 2100. In 2100 the value of biomass traded is equal to US$ 0.7-7.2 Trillion. Trade of woody biomass sensibly reduces marginal abatement costs. In the tax scenarios, abatement increases by 120-323 Gt CO2 over the century. In the cap-and-trade scenario biomass trade reduces the price of emission allowances by 34% in 2100 and cumulative discounted policy costs by 14%. Keywords: BECCS, Woody Biomass Trade, IAM, Negative Emissions, Carbon Market Classification-JEL: Q23, Q56, F18 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.14 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-014.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.14 Title: A Methodology to Propose the X-Factor in the Regulated English and Welsh Water and Sewerage Companies Author-Name: Alexandros Maziotis Author-X-Name-First: Alexandros Author-X-Name-Last: Maziotis Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Meditarranean Centre on Climate Change Author-Name: David S. Saal Author-X-Name-First: David S. Author-X-Name-Last: Saal Author-WorkPlace-Name: Aston University Author-Name: Emmanuel Thanassoulis Author-X-Name-First: Emmanuel Author-X-Name-Last: Thanassoulis Author-WorkPlace-Name: Aston University Abstract: The purpose of this paper is to develop a methodology which can be used to set X-factor under price cap schemes, when the number of observations is limited. We firstly apply a panel index approach across Water and Sewerage companies (WaSCs) over time to decompose unit-specific index number based productivity growth as a function of the productivity growth achieved by benchmark firms, and the catch-up to the benchmark firm achieved by less productive firms. We then calculate the potential productivity catch-up of laggard firms and an estimate of how the top performing company improved its productivity over time (technical change). Both estimates are used to propose X-factor for the industry over a particular period. The results indicated that significant gains in productivity occurred after 2000, when Ofwat set tighter price cap reviews in order to pass previous productivity benefits to consumers. However, average WaSC still needs to improve its productivity towards the benchmark firm (reduce their costs in real terms) by 2.69%, while the most productive firm needs to continue to improve its productivity by 0.95% over a period of five years. This technique is of great interest to researchers who are interested in developing comparative performance measurement under regulation and setting appropriate regulated prices when sample sizes are extremely limited. Keywords: X-factor, Productivity Decomposition, Panel Index Numbers, Regulation, Water and Sewerage Industry Classification-JEL: Q5 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.15 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-015.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.15 Title: Profit, Productivity, Price and Quality Performance Changes in the English and Welsh Water and Sewerage Companies Author-Name: Alexandros Maziotis Author-X-Name-First: Alexandros Author-X-Name-Last: Maziotis Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Meditarranean Centre on Climate Change Author-Name: David S. Saal Author-X-Name-First: David S. Author-X-Name-Last: Saal Author-WorkPlace-Name: Aston University Author-Name: Emmanuel Thanassoulis Author-X-Name-First: Emmanuel Author-X-Name-Last: Thanassoulis Author-WorkPlace-Name: Aston University Abstract: The purpose of this paper is the evaluation of various profit drivers such as price changes, productivity changes and quality levels on the financial performance of the Water and Sewerage Companies (WaSCs) over time in the case when the number of observations is limited. We thereby follow Maziotis, Saal and Thanassoulis (2012) approach and extend it by measuring the impact of exogenous factors such as drinking water and sewerage treatment quality on profitability, productivity and price performance measures. The results suggest that while quality improvements have significantly contributed to the productivity performance of the WaSCs, they have also contributed negatively to their price performance. Overall, after 2000 steady reductions in average price performance, gains in productivity and stable economic profitability were apparent. This trend indicates Ofwat’s policy on passing productivity benefits to consumers, and sustaining stable profitability than it was in earlier regulatory periods. This technique is of great interest for both regulators and regulated companies to better identify the sources of profit variation and aid them in evaluating both the effectiveness of a regulatory price cap scheme and the performance of the regulated companies, when the sample size is extremely limited. Keywords: Profit Decomposition, Productivity, Price Performance, Quality Change, Panel Index Numbers, Regulation, Water and Sewerage Industry Classification-JEL: Q5 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.16 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-016.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.16 Title: Constructing the FEEM Sustainability Index: A Choquet-integral Application Author-Name: Caterina Cruciani Author-X-Name-First: Caterina Author-X-Name-Last: Cruciani Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Ca’ Foscari University Author-Name: Silvio Giove Author-X-Name-First: Silvio Author-X-Name-Last: Giove Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Ca’ Foscari University Author-Name: Mehmet Pinar Author-X-Name-First: Mehmet Author-X-Name-Last: Pinar Author-WorkPlace-Name: Edge Hill University Author-Name: Matteo Sostero Author-X-Name-First: Matteo Author-X-Name-Last: Sostero Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Ca’ Foscari University Abstract: This paper presents an application of a multi-attribute aggregation methodology to the construction of a sustainability index. Sustainability is a multi-faceted issue, in which synergies or conflicts may arise among the different components, thus making it a complex concept to which multi attribute methods can be employed. This paper addresses the development of the FEEM Sustainability Index (FEEM SI), a composite index including 19 different indicators grouped in the three classical pillars of sustainability ? economic, social and environmental. We present the relevance of multi-attribute aggregation methodologies when dealing with such complex concepts and provide an aggregation methodology used for this case study, the Choquet-integral aggregation. First, we normalize each sustainability indicator with the use of a benchmarking procedure with a smooth target of sustainability. Furthermore, an ad-hoc questionnaire implemented to assess the importance of each sustainability indicator and their interaction with other indicators through expert elicitation. After normalizing each sustainability indicator and computing consensus importance of each sustainability indicator and their interactions for the Choquet-integral aggregation procedure, the overall sustainability index, the FEEM SI is calculated. This paper also conducts robustness analysis and discusses the main implications of the aggregation methodology used. Keywords: Sustainability Indices, Composite Indicators, Choquet Integral, Multiattribute Value Theory Classification-JEL: C43, C44, Q01, Q56 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.17 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-017.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.17 Title: Carbon-based Border Tax Adjustments and China’s International Trade: Analysis based on a Dynamic Computable General Equilibrium Model Author-Name: Ling Tang Author-X-Name-First: Ling Author-X-Name-Last: Tang Author-WorkPlace-Name: School of Economics and Management, Beijing University of Chemical Technology, China 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, China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Department of Public Economics, School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, China 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, China Abstract: With large shares in global trade and carbon emissions, China’s international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by the USA and EU on China’s international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China’s international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China’s exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China’s total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China’s power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs. Keywords: Border Carbon Tax Adjustments, International Trade, Dynamic Computable General Equilibrium Model, Price Determination Power, Technological Change Classification-JEL: D58, F18, Q43, Q48, Q52, Q54, Q56, Q58 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.18 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-018.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.18 Title: The Power of Biomass: Experts Disclose the Potential for Success of Bioenergy Technologies Author-Name: Giulia Fiorese Author-X-Name-First: Giulia Author-X-Name-Last: Fiorese Author-WorkPlace-Name: FEEM and European Commission, Joint Research Centre, Institute for Environment and Sustainability Author-Name: Michela Catenacci Author-X-Name-First: Michela Author-X-Name-Last: Catenacci Author-WorkPlace-Name: FEEM Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: FEEM and CMCC - Centro Euro-Mediterraneo per i Cambiamenti Climatici Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: FEEM and CMCC - Centro Euro-Mediterraneo per i Cambiamenti Climatici Abstract: This paper focuses on technologies which use thermo-chemical or biochemical processes to convert biomass into electricity. We present the results from an expert elicitation exercise involving sixteen leading experts coming from different EU Member States. Aim of the elicitation was to assess the potential cost reduction of RD&D (Research, Development and Demonstration) efforts and to identify barriers to the diffusion of these technologies. The research sheds light on the future potential of bioenergy technologies both in OECD (Organisation for Economic Co-operation and Development) and non-OECD countries. The results we present are an important input both for the integrated assessment modeling community and for policy makers who draft public RD&D strategies Keywords: Expert Elicitation, Research, Development and Demonstration, Bioenergy Classification-JEL: Q42, Q55 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.19 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-019.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.19 Title: Uranium and Nuclear Power: The Role of Exploration Information in Framing Public Policy 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: As addressing climate change becomes a high priority it seems likely that there will be a surge in interest in deploying nuclear power. Other fuel bases are too dirty (coal), too expensive (oil, natural gas) or too speculative (solar, wind) to completely supply the energy needs of the global economy. To the extent that the global society does in fact choose to expand nuclear power there will be a need for additional production. That increase in demand for nuclear power will inevitably lead to an increase in demand for uranium. While some of the increased demand for uranium will be satisfied by expanding production from existing deposits, there will undoubtedly be pressure to find and develop new deposits, perhaps quite rapidly. Looking forward, it is important that policies be put in place that encourage an optimal allocation of future resources towards exploration. In particular, I argue there is a valid concern that privately optimal levels of industrial activity will fail to fully capture all potential social gains; these sub-optimal exploration levels are linked to a departure between the private and social values of exploration information. Keywords: Uranium, Nuclear Power, Exploration Classification-JEL: Q48, L72, D83 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.20 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-020.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.20 Title: The Impact of Immigration on Portuguese Intra-Industry Trade Author-Name: Nuno Carlos Leitão Author-X-Name-First: Nuno Carlos Author-X-Name-Last: Leitão Author-WorkPlace-Name: Polytechnic Institute of Santarém and CEFGAGE, University of Èvora, Portugal Abstract: This paper investigates the relationship between intra-industry trade (IIT) and immigration flows using a gravity model for the period 2000-2010 between Portugal and European Union’s Member States (EU-27). The present study uses the methodology of Kandogan (2003) for separating IIT into its components horizontal (HIIT) and vertical intra-industry trade (VIIT). Using a panel data approach, our study find that immigration has a positive influence on Portuguese intra-industry trade. These results indicate that the immigration can reduce transaction costs between home and host country. We also consider in econometric model, the economic dimension which appears to exercise a positive effect on IIT. Our results confirm the hypothesis that there is a negative effect of transportation costs on trade. Keywords: Gravity Model, Horizontal and Vertical Intra-industry Trade Immigration and Panel Data Classification-JEL: C20, C30, F12, L10 Creation-Date: 201302 Template-Type: ReDIF-Paper 1.0 Number: 2013.21 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-021.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.21 Title: Climate Policies: a Burden or a Gain? Author-Name: Thierry Bréchet Author-X-Name-First: Thierry Author-X-Name-Last: Bréchet Author-WorkPlace-Name: CORE and Louvain School of Management (LSM), Université catholique de Louvain, Belgium Author-Name: Henry Tulkens Author-X-Name-First: Henry Author-X-Name-Last: Tulkens Author-WorkPlace-Name: CORE, Université catholique de Louvain, Belgium Abstract: That climate policies are costly is evident and therefore often creates major fears. But the alternative (no action) also has a cost. Mitigation costs and damages incurred depend on what the climate policies are; moreover, they are substitutes. This brings climate policies naturally in the realm of benefit-cost analysis. In this paper we illustrate the “direct” cost components of various policies, and then confront them with the benefits generated, that is, the damage cost avoided. However, the sheer benefit-cost criterion is not a sufficient incentive to induce cooperation among countries, a necessary condition for an effective global climate policy. Thus, we also explore how to use this criterion in the context of international climate cooperation. Keywords: Climate Policy, Integrated Assessment, Cost-Benefit Analysis, Climate Cooperation Classification-JEL: Q54, H87, D61, D9, F42, Q2 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.22 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-022.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.22 Title: Biofuels and Food Prices: Searching for the Causal Link Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: University of Milan-Bicocca and FEEM Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and IEFE-Bocconi Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: University of Milan-Bicocca and FEEM Abstract: We analyze the relationship between the prices of ethanol, agricultural commodities and livestock in Nebraska, the U.S. second largest ethanol producer. The paper focuses on long-run relations and Granger causality linkages between ethanol and the other commodities.The analysis takes possible structural breaks into account and uses a set of techniques that allow to draw inferences about the existence of long-run relations and of short-run in-sample Granger causality and out-of-sample predictive ability. Even after taking breaks into account, evidence that the price of ethanol drives the price dynamics of the other commodities is extremely weak. It is concluded that, on the basis of a formal, comprehensive and rigorous causality analysis we do not find evidence in favour of the Food versus Fuel debate. Keywords: Ethanol, Field Crops, Granger Causality, Forecasting, Structural Breaks Classification-JEL: C22, C53, Q13, Q42, Q47 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.23 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-023.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.23 Title: Food versus Fuel: Causality and Predictability in Distribution Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: University of Milan-Bicocca and FEEM Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and IEFE-Bocconi Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: University of Milan-Bicocca and FEEM Abstract: This paper examines the relationship between biofuels and commodity food prices in the U.S. from a new perspective. While a large body of literature has tried to explain the linkages between sample means and volatilities associated with ethanol and agricultural price returns, little is known about their whole distributions. We focus on predictability in distribution by asking whether ethanol returns can be used to forecast different parts of field crops returns distribution, or vice versa. Density forecasts are constructed using Conditional Autoregressive Expectile models estimated with Asymmetric Least Squares. Forecast evaluation relies on quantile-weighed scoring rules, which identify regions of the distribution of interest to the analyst. Results show that both the centre and the left tail of the ethanol returns distribution can be predicted by using field crops returns. On the contrary, there is no evidence that ethanol can be used to forecast any region of the field crops distribution. Keywords: Biofuels, Ethanol, Field Crops, Density Forecasting, Granger Causality, Quantiles Classification-JEL: C22, C53, Q13, Q42, Q47 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.24 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-024.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.24 Title: Looking for Free-riding: Energy Efficiency Incentives and Italian Homeowners Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: Department of Agricultural and Resource Economics, University of Maryland, USA, Fondazione Eni Enrico Mattei, Italy and faculty affiliate at CEPE, ETH Zurich Author-Name: Andrea Bigano Author-X-Name-First: Andrea Author-X-Name-Last: Bigano Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre for Climate Change, Italy Author-Name: Marco Boeri Author-X-Name-First: Marco Author-X-Name-Last: Boeri Author-WorkPlace-Name: Queen’s University, Northern Ireland Abstract: We examine the effect of energy efficiency incentives on household energy-efficiency home improvements. Starting in February 2007, Italian homeowners have been able to avail themselves of tax credits on the purchase and installation costs of certain types of energy efficiency renovations. We examine two such renovations—door/windows replacements and heating system replacements—using multi-year cross-section data from the Italian Consumer Expenditure Survey and focusing on a narrow period around the introduction of the tax credits. Our regressions control for dwelling and household characteristics and economy-wide factors likely to influence the replacement rates. The effects of the policy are different for the two types of renovations. With window replacements, the policy is generally associated with a 30% or stronger increase in the renovation rates and number of renovations. In the simplest econometric models, the effect is not statistically significant, but the results get stronger when we allow for heterogeneous effects across the country. With heating system replacements, simpler models suggest that the tax credits policy had no effect whatsoever or that free riding was rampant, i.e., people are now accepting subsidies for replacements that they would have done anyway. Further examination suggests a strong degree of heterogeneity in the effects across warmer and colder parts of the country, and effects in the colder areas that are even more pronounced than those for windows replacements. These results should, however, be interpreted with caution due to the low rate of renovations and the imprecisely estimated effects. Keywords: Energy Efficiency Policy, Household Behavior, Italy, Energy Consumption Survey Classification-JEL: Q41, D12, H3 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.25 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-025.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.25 Title: Energy Poverty Alleviation and Climate Change Mitigation: is There a Trade off? Author-Name: Shoibal Chakravarty Author-X-Name-First: Shoibal Author-X-Name-Last: Chakravarty Author-WorkPlace-Name: Princeton University Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Euro-Mediterranean Center for Climate Change (CMCC) and Fondazione Eni Enrico Mattei (FEEM) Abstract: Energy poverty alleviation has become an important political issue in the most recent years. Several initiatives and policies have been proposed to deal with poor access to modern sources of energy in many developing countries. Given the large number of people lacking basic energy services, an important question is whether providing universal access to modern energy could significantly increase CO2 emissions. This paper provides one of the few formal assessments of this problem by means of a simple but robust model of current and future energy consumption. The model allows mapping energy consumption globally for different classes of energy use, quantifying current and future imbalances in the distribution of energy consumption. Our results indicate that an energy poverty eradication policy to be met by 2030 would increase global final energy consumption by about 7% (or 19EJ). This is the same quantity of energy which would be added between now and 2030 by individuals with energy consumption above current European standards. The additional energy infrastructure needed to eradicate energy poverty would produce 16-131 GtCO2 over the 21st century and contribute at most 0.1C of additional warming. Keywords: Energy Poverty, Climate Change, Household Energy Consumption Classification-JEL: Q43, Q54 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.26 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-026.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.26 Title: East Africa: The Next Game-Changer for the Global Gas Markets? Author-Name: Manfred Hafner Author-X-Name-First: Manfred Author-X-Name-Last: Hafner Author-WorkPlace-Name: Johns Hopkins University School of Advanced International Studies (SAIS), Bologna Center, Sciences Po Paris School of International Affairs (PSIA), Skolkovo Moscow School of Management, IEFE, Bocconi University, Fondazione Eni Enrico Mattei, Euro-Mediterranean Center for Climate Change, and International Energy Consultants (IEC) Author-Name: Simone Tagliapietra Author-X-Name-First: Simone Author-X-Name-Last: STagliapietra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The geographical distribution of African natural gas resources is going through a period of profound change as new gas discoveries in East Africa emerge to reshape the continent's energy landscape. This region is rapidly establishing itself as a world-class natural gas province and two countries have already emerged as key-players of this new African natural gas renaissance: Mozambique and Tanzania. This paper provides a comprehensive analysis of the gas developments in the region, which could well become the next game-changer of the global gas market. Keywords: Natural Gas, East Africa, Energy Geopolitics, Hydrocarbons, Exploration and Production Classification-JEL: Q4, Q48 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.27 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-027.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.27 Title: A Study on Industrial Green Transformation in China Author-Name: Li Ping Author-X-Name-First: Li Author-X-Name-Last: Ping Author-WorkPlace-Name: Institute of Quantitative and Technological Economics, Chinese Academy of Social Sciences Author-Name: Yang Danhui Author-X-Name-First: Yang Author-X-Name-Last: Danhui Author-WorkPlace-Name: Institute of Quantitative and Technological Economics, Chinese Academy of Social Sciences Author-Name: Li Pengfei Author-X-Name-First: Li Author-X-Name-Last: Pengfei Author-WorkPlace-Name: Institute of Quantitative and Technological Economics, Chinese Academy of Social Sciences Author-Name: Ye Zhenyu Author-X-Name-First: Ye Author-X-Name-Last: Zhenyu Author-WorkPlace-Name: Institute of Quantitative and Technological Economics, Chinese Academy of Social Sciences Author-Name: Deng Zhou Author-X-Name-First: Deng Author-X-Name-Last: Zhou Author-WorkPlace-Name: Institute of Quantitative and Technological Economics, Chinese Academy of Social Sciences Abstract: China’s speedy industrialization has undertaken mostly a crude path with extensive energy consumption and severe environmental damage. In face of the challenge of global warming and resource restrictions, it calls for urgent green transformation for the sustainable development of China’s industry. With huge potentials and more general benefits than costs, the industrial green transformation in China will have more positive effects and accelerate the whole process of the development of China’s green economy. From this perspective, China needs to adopt a comprehensive and open mechanism for green transformation with more strict environmental regulations, effective energy conservation and emissions reduction, green technology R&D and application, as well as international cooperation in the related fields with market-oriented reform, government strategies and regulations, proactive response from the industry sector, self-initiative of enterprises and active public participation. Keywords: Industry, Green Transformation, Technology Roadmap, Cost and Benefit Classification-JEL: Q5, Q55 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.28 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-028.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.28 Title: Macroeconomic Impacts of the EU 30% GHG Mitigation Target Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: University of Milan, Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Italy Author-Name: Lorenza Campagnolo Author-X-Name-First: Lorenza Author-X-Name-Last: Campagnolo Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Ca’ Foscari University of Venice, Italy Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Ca’ Foscari University of Venice, Italy Author-Name: Fabio Eboli Author-X-Name-First: Fabio Author-X-Name-Last: Eboli Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Italy Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Italy Author-Name: Elisa Portale Author-X-Name-First: Elisa Author-X-Name-Last: Portale Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Italy Abstract: The reduction of GHG emissions is one of the most important policy objectives worldwide. Nonetheless, concrete and effective measures to reduce them are hardly implemented. One of the main reasons for this deadlock is the fear that unilateral actions will reduce a country’s competitiveness, and will benefit those countries where no GHG mitigation measures are implemented. This kind of argument is also often used to explain why some governments and many business leaders are not in favour of the EU 30% GHG mitigation target that has been proposed to replace the previous 20% GHG emission reduction objective approved by the EU within the well-known 20-20-20 climate and energy package. By developing and applying a recursive, dynamic, very detailed CGE model with energy generation from both fossil fuel and renewable sources, we address this issue by estimating the cost for different EU countries and industries of the EU climate and energy package under a set of alternative international scenarios on global GHG mitigation efforts. Results show that, thanks to the EU economic recession, achieving a 20% GHG emission reduction entails a moderate cost for the European Union - about 0.5% of EU GDP – even in the case of EU unilateral action. This cost could be reduced to almost zero if not only the European Union, but also the other major world economies, comply with the “low pledge” Copenhagen Accord. A 30% GHG emission reduction target would certainly be more costly: the total loss in the European Union would be 1.26% of EU GDP in the case of EU unilateral action, whereas the total cost would be 0.55% of EU GDP if all major economies reduce their own GHG emissions according to the “low pledge” Copenhagen Accord. Both border tax adjustments and free allocation of carbon permits are shown to be successful in reducing some adverse competitiveness effects of the EU GHG mitigation policy into energy intensive sectors, but at the expenses of the other economic sectors. Keywords: EU Climate Package, UNFCCC Conference of Parties, Kyoto Protocol, Computable General Equilibrium Analysis Classification-JEL: C68, Q43, Q48, Q54 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.29 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-029.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.29 Title: An Exploration of the Link Between Development, Economic Growth, and Natural Risk Author-Name: Stéphane Hallegatte Author-X-Name-First: Stéphane Author-X-Name-Last: Hallegatte Author-WorkPlace-Name: The World Bank, USA Abstract: This paper investigates the link between development, economic growth, and the economic losses from natural disasters in a normative analytical framework, with an illustration on hurricane flood risks in New Orleans. It concludes that, where capital accumulates through increased density of capital at risk in a given area, it is optimal for (i) the probability of disaster occurrence to decrease with income; (ii) the capital at risk – and thus the economic losses in case of disaster – to increase faster than economic growth; (iii) the average annual losses to grow faster than income at low levels of development and slower than income at high levels of development. In that case, increasing risk-taking reinforces economic growth, and improving protections transfer risks from frequent low-intensity events to rarer high-impact events. These findings are robust to a broad range of modeling choices and parameter values, and to the inclusion of risk aversion. Risk-taking is both a driver and a consequence of economic development, and should not be indiscriminately suppressed. The observation of a trend in disaster losses should not be confused with the presence of excessive risk taking. In a descriptive framework, suboptimal decision-making (the introduction of prospect theory's decision weights, biases in risk perception and myopic expectations) may amplify these trends and lead to excessive or insufficient risk taking. In all instances, the world is very likely to experience fewer but more costly disasters in the future. Keywords: Development, Economic Growth, Risk, Natural Disaster, Economic Losses Classification-JEL: O10, O44, Q01, Q54 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.30 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-030.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.30 Title: Cost-Reducing R&D in the Presence of an Appropriation Alternative: An Application to the Natural Resource Curse Author-Name: Klarizze Anne Martin Puzon Author-X-Name-First: Klarizze Anne Martin Author-X-Name-Last: Puzon Author-WorkPlace-Name: LAMETA-Université Montpellier I, France Abstract: This study proposes a new mechanism for the resource curse: crowding-out of innovation due to the existence of an option to engage in conflict. Using a game theoretical framework, it is argued that an increase in the amount of natural resources (in the informal sector here conflict for a common-pool rent materializes) reduces the incentives of entrepreneurial groups to engage in cost-reducing R&D (in the non-resource sector where production occurs). Compared to most models of the resource curse, the impact of resource abundance on income and welfare was interestingly observed to be non-monotonic. An increase in the amount of resources in the common pool induces intensified conflict among groups and less R&D investment. Depending on the relative strengths of the income and diversion effects, three scenarios were exhibited. First, there is a 1.) Pure Blessing. This happens when both the extent of technological spillovers and the initial level of resource are low. Starting from scarcity, the increase in natural resource generates an overall jump in the groups' income levels. Even if an increase in resources decreases innovation in the formal sector, both income and welfare still go up. Meanwhile, for intermediate initial values of the natural resource, there is a 2.) Pseudo-curse. A resource boom induces an immediate income effect. However, this income gain is dominated by the indirect diversion effect due to lower output and higher price (because of less cost-reducing R&D). Consequently, while income increases, the welfare of the economy decreases. The range of resource levels where this occurs is greater when spillovers are high. Finally, a 3.) Double Curse occurs for extremely high initial levels of natural resources. Both aggregate income of the economy and welfare suffer. Keywords: Innovation, Appropriation, Natural Resources Classification-JEL: O13, Q33, P48 Creation-Date: 201303 Template-Type: ReDIF-Paper 1.0 Number: 2013.31 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-031.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.31 Title: Geoengineering and Abatement: A “flat” Relationship under Uncertainty Author-Name: Johannes Emmerling Author-X-Name-First: Johannes Author-X-Name-Last: Emmerling Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro-Euro Mediterraneo per i Cambiamenti Climatici (CMCC), Italy Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro-Euro Mediterraneo per i Cambiamenti Climatici (CMCC), Italy Abstract: The potential of geoengineering as an alternative or complementary option to mitigation and adaptation has received increased interest in recent years. The scientific assessment of geoengineering is driven to a large extent by assumptions about its effectiveness, costs, and impacts, all of which are highly uncertain. This has led to a polarizing debate. This paper evaluates the role of Solar Radiation Management (SRM) on the optimal abatement path, focusing on the uncertainty about the effectiveness of SRM and the interaction with uncertain climate change response. Using standard economic models of dynamic decision theory under uncertainty, we show that abatement is decreasing in the probability of success of SRM, but that this relation is concave and thus that significant abatement reductions are optimal only if SRM is very likely to be effective. The results are confirmed even when considering positive correlation structures between the effectiveness of geoengineering and the magnitude of climate change. Using a stochastic version of an Integrated Assessment Model, the results are found to be robust for a wide range of parameters specification. Keywords: Geoengineering, Mitigation, Climate Policy, Uncertainty Classification-JEL: Q54, C63, D81 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.32 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-032.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.32 Title: Heterogeneous Beliefs, Regret, and Uncertainty: The Role of Speculation in Energy Price Dynamics Author-Name: Marc Joëts Author-X-Name-First: Marc Author-X-Name-Last: Joëts Author-WorkPlace-Name: Ipag Business School and EconomiX-CNRS, University of Paris Ouest, France Abstract: This paper proposes to investigate the impact of financialization on energy markets (oil, gas, coal and electricity European forward prices) during both normal times and extreme fluctuation periods through an original behavioral and emotional approach. To this aim, we propose a new theoretical and empirical framework based on a heterogeneous agents model in which fundamentalists and chartists co-exist and are subject to regret and uncertainty. We find significant evidence that energy markets are composed by heterogeneous traders which behave differently depending on the intensity of the price fluctuations and uncertainty context. In particular, energy prices are mainly governed by fundamental and chartist neutral agents during normal times whereas they face to irrational chartist averse investors during extreme fluctuations periods. In this context, the recent energy prices surge can be viewed as the consequence of irrational exhuberance. Our new theoretical model outperforms the random walk in out-of-sample predictive ability. Keywords: Energy Forward Prices, Financialization, Heterogeneous Agents, Uncertainty Aversion, Regret Classification-JEL: Q43, G15, G02, D81 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.33 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-033.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.33 Title: Business Groups as Hierarchies of Firms: Determinants of Vertical Integration and Performance Author-Name: Carlo Altomonte Author-X-Name-First: Carlo Author-X-Name-Last: Altomonte Author-WorkPlace-Name: Bocconi University and FEEM Author-Name: Armando Rungi Author-X-Name-First: Armando Author-X-Name-Last: Rungi Author-WorkPlace-Name: Bocconi University and FEEM Abstract: We explore the nature of Business Groups, that is network-like forms of hierarchical organization between legally autonomous firms spanning both within and across national borders. Exploiting a unique dataset of 270,474 headquarters controlling more than 1,500,000 (domestic and foreign) affiliates in all countries worldwide, we find that business groups account for a significant part of value-added generation in both developed and developing countries, with a prevalence in the latter. In order to characterize their boundaries, we distinguish between an affiliate vs. a group-level index of vertical integration, as well as an entropy-like metric able to summarize the hierarchical complexity of a group and its trade-off between exploitation of knowledge as an input across the hierarchy and the associated communication costs. We relate these metrics to host country institutional characteristics, as well as to the performance of affiliates across business groups. Conditional on institutional quality, a negative correlation exists between vertical integration and organizational complexity in defining the boundaries of business groups. We also find a robust (albeit non-linear) positive relationship between a group's organizational complexity and productivity which dominates the already known correlation between vertical integration and productivity. Results are in line with the theoretical framework of knowledge-based hierarchies developed by the literature, in which intangible assets are a complementary input in the production processes. Keywords: Production Chains, Hierarchies, Business Groups, Financial Development, Property Rights, Vertical Integration, Corporate Ownership, Organization of Production, Productivity Classification-JEL: F23, L22, L23, L25, D24, G34 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.34 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-034.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.34 Title: Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data Author-Name: Joëlle Noailly Author-X-Name-First: Joëlle Author-X-Name-Last: Noailly Author-WorkPlace-Name: CIES, Graduate Institute of International and Development Studies, Switzerland Author-Name: Roger Smeets Author-X-Name-First: Roger Author-X-Name-Last: Smeets Author-WorkPlace-Name: Rutgers Business School, USA Abstract: This paper investigates the determinants of directed technical change at the firm level in the electricity generation sector. We use firm-level data on patents filed in renewable (REN) and fossil fuel (FF) technologies by 5,261 European firms over the period 1978-2006. We investigate how energy prices, market size and knowledge stocks affect firms' incentives to innovate in one technology relative to another and how these factors may thereby induce a shift from FF to REN technology in the electricity generation sector. We separately study small specialized firms, which innovate in only one type of technology during our sample period, and large mixed firms, which innovate in both technologies. We also separate the extensive margin innovation decision (i.e. whether to conduct innovation) from the intensive margin decision (i.e. how much to innovate). Overall, we find that all three factors – energy prices, market sizes and past knowledge stocks - matter to redirect innovation towards REN and away from FF technologies. Yet, we find that these factors have a larger impact on closing the technology gap through the entry (and exit) of small specialized firms, rather than through large mixed firms' innovation. An implication of our results is that firm dynamics are of direct policy interest to induce the replacement of FF by REN technologies in the electricity generation sector. Keywords: Directed Technical Change, Renewable Energy, Fossil Fuel Energy, Patents, Innovation, Firm Dynamics Classification-JEL: Q4 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.35 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-035.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.35 Title: Climate Change and Adaptation: The Case of Nigerian Agriculture Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Centro Euro-Mediterraneo sui Cambiamenti Climatici, Fondazione Eni Enrico Mattei and University of Milan, Italy Author-Name: Lorenza Campagnolo Author-X-Name-First: Lorenza Author-X-Name-Last: Campagnolo Author-WorkPlace-Name: Centro Euro-Mediterraneo sui Cambiamenti Climatici, Fondazione Eni Enrico Mattei and University of Venice, Italy Author-Name: Fabio Eboli Author-X-Name-First: Fabio Author-X-Name-Last: Eboli Author-WorkPlace-Name: Centro Euro-Mediterraneo sui Cambiamenti Climatici, Fondazione Eni Enrico Mattei and University of Venice, Italy Abstract: The present research offers an economic assessment of climate change impacts on the four major crop families characterizing Nigerian agriculture, covering more than 80% of agricultural value added. The evaluation is performed shocking land productivity in a computable general equilibrium model tailored to replicate Nigerian economic development until the mid of this century. The detail of land uses in the model has been also increased differentiating land types per agro ecological zones. Uncertainty on future climate is captured, using, as input, yield changes computed by a crop model, covering the whole range of variability produced by an envelope of one RCM and tem GCM runs. Climate change turns to be unambiguously negative for Nigeria in the medium term with production losses, increase in crop prices, higher food dependency on foreign imports and GDP losses in all the simulations after 2025. In a second part of the paper a cost effectiveness analysis of adaptation in Nigeria agriculture is conducted. Adaptation practices considered are a mix of cheaper “soft measures” and more costly “hard” irrigation expansion. The main result is that cost effectiveness of the whole package crucially depends on the possibility to implement adaptation exploiting low cost opportunities. In this case all climate change damages can be offset with a benefit cost ration larger than one in all the climate regimes. Expensive irrigation expansion should however be applied on a much more limited acreage compared with soft measures. If adaptation costs are those of the high end estimates, full adaptation ceases to be cost/effective.This points out the need of a careful planning and implementation of adaptation, irrespectively on the type, looking for measures apt to control its unit cost. Keywords: Climate Change, Impact, Adaptation, Agriculture, CGE Modelling Classification-JEL: C68, Q51, Q54, Q15 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.36 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-036.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.36 Title: Contagious Cooperation, Temptation, and Ecosystem Collapse Author-Name: Andries Richter Author-X-Name-First: Andries Author-X-Name-Last:Richter Author-WorkPlace-Name: Centre for Ecological and Evolutionary Synthesis (CEES), University of Oslo, Norway, and Department of Mathematical Statistical Methods, Wageningen University, the Netherlands Author-Name: Daan van Soest Author-X-Name-First: Daan van Author-X-Name-Last: Soest Author-WorkPlace-Name: Department of Spatial Economics and IVM, VU University Amsterdam, Department of Economics, Tilburg University, the Netherlands Author-Name: Johan Grasman Author-X-Name-First: Johan Author-X-Name-Last: Grasman Author-WorkPlace-Name: Department of Mathematical and Statistical Methods, Wageningen University, the Netherlands Abstract: Real world observations suggest that social norms of cooperation can be effective in overcoming social dilemmas such as the joint management of a common pool resource – but also that they can be subject to slow erosion and sudden collapse. We show that these patterns of erosion and collapse emerge endogenously in a model of a closed community harvesting a renewable natural resource in which individual agents face the temptation to overexploit the resource, while a cooperative harvesting norm spreads through the community via interpersonal relations. We analyze under what circumstances small changes in key parameters (including the size of the community, and the rate of technological progress) trigger catastrophic transitions from relatively high levels of cooperation to widespread norm violation – causing the social-ecological system to collapse. Keywords: Social Norms, Common Pool Resource, Co-Evolution, Resilience, Alternative Stable States Classification-JEL: C73, D62, D64, Q20 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.37 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-037.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.37 Title: Evaluating the Global Role of Woody Biomass as a Mitigation Strategy Author-Name: Alice Favero Author-X-Name-First: Alice Favero Author-X-Name-Last: Favero Author-WorkPlace-Name: Yale University, FEEM and CMCC Author-Name: Robert Mendelsohn Author-X-Name-First: Robert Author-X-Name-Last: Mendelsohn Author-WorkPlace-Name: Yale University Abstract: As policy makers consider stringent targets for greenhouse gas emissions, integrated assessment models are increasingly relying on biomass energy as a critical energy source. However, it is not clear how much woody biomass to expect across time and across the planet. The integrated assessment models simply do not have enough detail about global forests and arable land to make careful forecasts of biomass supply over time. Integrating the complex dynamic demand for bioenergy from the IAMs with the complex dynamic structure of forests and forest supply is a daunting intertemporal task. This study examines the market for woody biomass by combining the integrated assessment model WITCH with the global dynamic forestry model GTM. Three carbon tax schedules are used to simulate different mitigation policies that lead to radiative forcing levels of 3.7, 3.2 and 2.5 W/m2 and a baseline scenario with no mitigation policies. WITCH determines the demand for woody biomass and GTM determines the supply of woody biomass over time. Moving from a mild to stringent mitigation policy would increase the demand of woody biomass from 8.2 to 15.2 billion m3/yr while the international price of wood would increase 4 to 9 times relative to the baseline scenario by 2100. This would shrink the demand for industrial wood products from 80% to 90% with the biomass program. Forest area will expand by 70-95% leading to increased storage of 685-1,279 GtCO2 in forest by 2100. Overall, the biomass program with the CCS technology plays a key contribution to overall GHG emission reductions in all scenarios contributing 20-27% of all mitigation for 2020-2100. Keywords: Bio-energy, Carbon Sequestration, Forestry, Integrated Assessment Model Classification-JEL: Q23, Q42, Q54 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.38 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-038.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.38 Title: Energy Intensity Developments in 40 Major Economies: Structural Change or Technology Improvement? 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 CMCC Author-Name: Michael Schymura Author-X-Name-First: Michael Author-X-Name-Last: Schymura Author-WorkPlace-Name: Centre for European Economic Research (ZEW) Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and CMCC Author-Name: Sebastian Voigt Author-X-Name-First: Sebastian Author-X-Name-Last: Voigt Author-WorkPlace-Name: Centre for European Economic Research (ZEW) Abstract: This study analyzes energy intensity trends and drivers in 40 major economies using the WIOD database, a novel harmonized and consistent dataset of input-output table time series accompanied by environmental satellite data. We use logarithmic mean Divisia index decomposition to (1) study trends in global energy intensity between 1995 and 2007, (2) attribute efficiency changes to either changes in technology or changes in the structure of the economy, and (3) highlight sectoral and regional differences. We first show that heterogeneity within each sector across countries is high. These general trends within the sectors are dominated by large economies, first and foremost the United States. In most cases, heterogeneity is lower within each country across the different sectors. Regarding changes of energy intensity at the country level, improvements between 1995 and 2007 are largely attributable to technological change while structural change is less important in most countries. Notable exceptions are Japan, the United States, Australia, Taiwan, Mexico and Brazil where a change in the industry mix was the main driver behind the observed energy intensity reduction. Keywords: Energy Intensity, Logarithmic Mean Divisia Index Decomposition, WIOD Database Classification-JEL: Q43, C43 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.39 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-039.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.39 Title: Marginal Intra-industry Trade and Adjustment Costs in Labour Market Author-Name: Nuno Carlos Leitão Author-X-Name-First: Nuno Carlos Author-X-Name-Last: Leitão Author-WorkPlace-Name: ESGTS, Polytechnic Institute of Santarém, CEFAGE, Évora University Author-Name: Bogdan Dima Author-X-Name-First: Bogdan Author-X-Name-Last: Dima Author-WorkPlace-Name: West University of Timisoara, Faculty of Economics and Business Administration, Finance Department Author-Name: Dima (Cristea) Stefana Author-X-Name-First: Dima (Cristea) Author-X-Name-Last: Stefana Author-WorkPlace-Name: Vasile Goldis Western University of Arad Abstract: The objective of this study is to provide some empirical evidences on the existence of labor market adjustments according to smooth adjustment hypothesis (SAH) under the impact of intra-industry trade (IIT) considering the Portuguese case over a time span between 1995 and 2006. The main methodological issue of this study consists in showing that it is preferable to use the GMM-System approach with orthogonal transformation of data. The key outcome consists in highlighting a negative linkage between marginal intra-industry trade and the amplitude of employment changes for this particular market. In addition, we find a negative correlation between changes of employment and changes in domestic consumption. Moreover, the relationship between growth of productivity and market structure is according to smooth adjustment hypothesis. Keywords: Intra-Industry Trade, Adjustment Costs, Portugal, Labour Market Classification-JEL: F12, C33 Creation-Date: 201304 Template-Type: ReDIF-Paper 1.0 Number: 2013.40 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-040.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.40 Title: Robust Multidimensional Welfare Comparisons: One Vector of Weights, One Vote Author-Name: Stergios Athanassoglou Author-X-Name-First: Stergios Author-X-Name-Last:Athanassoglou Author-WorkPlace-Name: European Commission Joint Research Center, Econometrics and Applied Statistics Unit Abstract: Many aspects of social welfare are intrinsically multidimensional. Composite indices at-tempting to reduce this complexity to a unique measure abound in many areas of economics and public policy. Comparisons based on such measures depend, sometimes critically, on how the different dimensions of performance are weighted. Thus, a policy maker may wish to take into account imprecision over composite index weights in a systematic manner. In this paper, such weight imprecision is parameterized via the e-contamination framework of Bayesian statistics. Subsequently, combining results from polyhedral geometry, social choice, and theoretical computer science, an analytical procedure is presented that yields a provably robust ranking of the relevant alternatives in the presence of weight imprecision. The main idea is to consider a vector of weights as a voter and a continuum of weights as an electorate. The procedure is illustrated on recent versions of the Rule of Law and Human Development indices. Keywords: Multidimensional Welfare, Composite Index, e-Contamination, Polyhedral Geometry, Social Choice, Approximation Algorithms Classification-JEL: C02, C61, D04, D71, I31 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.41 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-041.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.41 Title: Mitigation and Solar Radiation Management in Climate Change Policies Author-Name: Vasiliki Manousi Author-X-Name-First: Vasiliki Author-X-Name-Last: Manousi Author-WorkPlace-Name: Department of International and European Economic Studies, Athens University of Economics and Business Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Department of International and European Economic Studies, Athens University of Economics and Business Abstract: We couple a spatially homogeneous energy balance climate model with an economic growth model which incorporates two potential policies against climate change: mitigation, which is the traditional policy, and geoengineering. We analyze the optimal policy mix of geoengineering and mitigation in both a cooperative and a noncooperative framework, in which we study open loop and feedback solutions. Our results suggests that greenhouse gas accumulation is relatively higher when geoengineering policies are undertaken, and that at noncooperative solutions incentives for geoengineering are relative stronger. A disruption of geoengineering efforts at a steady state will cause an upward jump in global temperature. Keywords: Climate Change, Mitigation, Geoengineering, Cooperation, Differential Game, Open Loop - Feedback Nash Equilibrium Classification-JEL: Q53, Q54 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.42 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-042.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.42 Title: Saving Rate Dynamics in the Neoclassical Growth Model – Hyperbolic Discounting and Observational Equivalence 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, UC Davis, U.S.A, Oxford Centre for the Analysis of Resource Rich Economies (OxCarre), Department of Economics, University of Oxford, UK Author-Name: Ronald Wendner Author-X-Name-First: Ronald Author-X-Name-Last: Wendner Author-WorkPlace-Name: Department of Economics, University of Graz, Austria Abstract: The standard neoclassical growth model with Cobb-Douglas production predicts a monotonically declining saving rate, when reasonably calibrated. Ample empirical evidence, however, shows that the transition path of a country’s saving rate exhibits a rising or non-monotonic pattern. In important cases, hyperbolic discounting, which is empirically strongly supported, implies transitional dynamics of the saving rate that accords well with empirical evidence. This holds true even in a growth model with Cobb-Douglas production technology. We also identify the cases where hyperbolic discounting is observationally equivalent to exponential discounting. In those cases, hyperbolic discounting does not affect the saving rate dynamics. Numerical simulations employing a generalized class of hyperbolic discounting functions that we term regular discounting functions support the results. Keywords: Saving Rate, Non-Monotonic Transition Path, Hyperbolic Discounting, Regular Discounting, Commitment, Short Planning Horizon, Neoclassical Growth Model Classification-JEL: D91, E21, O40 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.43 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-043.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.43 Title: Clean and Dirty International Technology Diffusion Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Department of Economics, Bocconi University, Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change Abstract: This paper investigates the role of Intellectual Property Rights (IPR) protection and Environmental Policies (EPs) on clean (renewable) and dirty (fossil-based) technology diffusion from top-innovators. IPR protection and EPs are extensively debated policy tools, as IPR protection addresses knowledge market failure, while EPs respond to pressing local and global environmental externalities. A model of monopolistic competition inspired by the recent trade literature shows that the profits associated with exporting a blueprint are a function of the quality of the idea and of market and institutional characteristics of the receiving country. We test the empirical implications of our model using patent data in renewable and fossil efficient power technologies for 13 top innovating countries and 40 patenting authorities. We improve on previous contributions by accounting for unobserved heterogeneity and for the endogeneity of policy proxies through a Generalized Method of Moment estimator. We show that knowledge transfer through patent duplication increases with the level of IPR protection, but with slight diminishing marginal returns. The effect is stronger for clean technologies, which are arguably less mature and more sensitive to uncertainty. Commitment to EPs also increases the incentives for patent duplication. The magnitude of the effect is conditional on the nature of the technology and on the specific policy instrument. Keywords: Technology Diffusion and Transfer, Innovation, Patents, Energy Technologies, Environmental Policy, Intellectual Property Rights Classification-JEL: O33, O34, Q55 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.44 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-044.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.44 Title: Waste Prevention and Social Preferences: The Role of Intrinsic and Extrinsic Motivations Author-Name: Grazia Cecere Author-X-Name-First: Grazia Author-X-Name-Last: Cecere Author-WorkPlace-Name: Institut Mines Télécom, Télécom Ecole de Management, Université Paris Sud France. France Author-Name: Susanna Mancinelli Author-X-Name-First: Susanna Author-X-Name-Last: Mancinelli Author-WorkPlace-Name: University of Ferrara Italy Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara, SEEDS & CERIS CNR, Italy Abstract: Though reduction is at the top of the waste management hierarchy, EU policies have historically introduced waste management incentives mainly concerning waste recovery and recycling, in addition to actions aimed at reducing disposal in landfills. Only very recently have EU policies started defining targets for waste reduction. Against this backdrop, we aim to examine whether individual behavior towards waste reduction is more strongly driven by extrinsic motivations such as social norms, or intrinsic motivations such as purely altruistic preferences. We exploit a large new survey that covers thousands of individuals for the EU27, to test the role of motivations when people are faced with collective management of the public good. We find that diverse motivations are behind the reduction of food waste: extrinsic motivations nevertheless increase the likelihood of producing more waste. Green consumption / recycling-oriented attitudes and individualistic thinking about waste management relate to ‘waste producers’. This shows that in order to go beyond a recycling-oriented society towards reduction of the source of waste externality – its generation – the nature of social preferences matters. Behavior patterns leading to waste reduction are less socially oriented, less exposed to peer pressure and more reliant upon purely ‘altruistic’ social attitudes. Policy makers should learn from the relevant insights on social behavior we here address if our societies aim to fully integrate the idea of waste reduction alongside recycling in the future. Keywords: Intrinsic Motivations, Extrinsic Motivations, Social Norms, Recycling, Waste Reduction, Green Preferences Classification-JEL: Q53, R11, K42 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.45 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-045.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.45 Title: Futures Price Volatility in Commodities Markets: The Role of Short Term vs Long Term Speculation Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: University of Milan-Bicocca, Milan, and Fondazione Eni Enrico Mattei, Milan Author-Name: Marcella Nicolini Author-X-Name-First: Marcella Author-X-Name-Last: Nicolini Author-WorkPlace-Name: University of Pavia, Pavia, and Fondazione Eni Enrico Mattei, Milan Abstract: This paper evaluates how different types of speculation affect the volatility of commodities’ futures prices. We adopt four indexes of speculation: Working’s T, the market share of non-commercial traders, the percentage of net long speculators over total open interest in future markets, which proxy for long term speculation, and scalping, which proxies for short term speculation. We consider four energy commodities (light sweet crude oil, heating oil, gasoline and natural gas) and seven non-energy commodities (cocoa, coffee, corn, oats, soybean oil, soybeans and wheat) over the period 1986-2010 analyzed at weekly frequency. Using GARCH models we find that speculation significantly affects volatility of returns: short term speculation has a positive and significant impact on volatility, while long term speculation generally has a negative effect. The robustness exercise shows that: i) scalping is positive and significant also at higher and lower data frequencies; ii) results remain unchanged through different model specifications (GARCH-in-mean, EGARCH, and TARCH); iii) results are robust to different specifications of the mean equation. Keywords: Commodities Futures Markets, Speculation, Scalping, Working’s T, Data Frequency, GARCH Models Classification-JEL: C32, G13, Q11, Q43 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.46 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-046.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.46 Title: Control Power and Variable Renewables A Glimpse at German Data Author-Name: Lion Hirth Author-X-Name-First: Lion Author-X-Name-Last: Hirth Author-WorkPlace-Name: Vattenfall GmbH, Potsdam-Institute for Climate Impact Research Author-Name: Inka Ziegenhagen Author-X-Name-First: Inka Author-X-Name-Last: Ziegenhagen Author-WorkPlace-Name: Vattenfall GmbH, University of Leipzig Abstract: Control power (regulating power, balancing power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power are often thought to increase the reserve requirement significantly. This paper provides a comprehensive overview of balancing systems in Europe, discusses the role of VRE, and presents empirical market data from Germany. Despite German VRE capacity doubled during the last five years and has surpassed 70% of peak load, contracted control power decreased by 20%, and procurement cost fell by 50%. Today, control power adds only 0.4% to household electricity prices. Nevertheless, we identify several sources of inefficiency in control power markets and imbalance settlement systems and propose a number of policy changes to stimulate the participation of VRE in control provision and to improve the incentives to forecast accurately. Keywords: Balancing power; Control Power; Variable renewables; Wind power; Solar power; Market design Classification-JEL: Q42, Q48, L94, D62 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.47 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-047.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.47 Title: Information Sharing Networks in Linear Quadratic Games Author-Name: Sergio Currarini Author-X-Name-First: Sergio Author-X-Name-Last: Currarini Author-WorkPlace-Name: University of Leicester, Universita' di Venezia, Euro-Mediterranean Center on Climate Change, CIP Division and FEEM Author-Name: Francesco Feri Author-X-Name-First: Francesco Author-X-Name-Last: Feri Author-WorkPlace-Name: Royal Holloway, University of London Abstract: We study the bilateral exchange of information in the context of linear quadratic games. An information structure is here represented by a non directed network, whose nodes are agents and whose links represent sharing agreements. We first study the equilibrium use of information in any given sharing network, finding that the extent to which a piece of information is "public" affects the equilibrium use of it, in line with previous results in the literature. We then study the incentives to share information ex-ante, highlighting the role of the elasticity of payoffs to the equilibrium volatility of one's own strategy and of one's opponents' strategies. For the case of uncorrelated signals we fully characterize pairwise stable networks for the general linear quadratic game. For the case of correlated signals, we study pair-wise stable networks for three specific linear quadratic games - Cournot oligopoly, Keynes’ beauty contest and Public good provision - in which strategies are substitute, complement and orthogonal, respectively. We show that signals’ correlation favors the transmission of information, but may also prevent all information from being transmitted. Keywords: Information Sharing, Networks, Bayesian Equilibrium, Beauty Contest, Oligopoly Classification-JEL: D43, D82, D85, L13 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.48 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-048.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.48 Title: Bottom-Up Strategic Linking of Carbon Markets: Which Climate Coalitions Would Farsighted Players Form? Author-Name: Jobst Heitzig Author-X-Name-First: Jobst Author-X-Name-Last: Heitzig Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research, Transdisciplinary Concepts and Methods Abstract: We present typical scenarios and general insights from a novel dynamic model of farsighted climate coalition formation involving market linkage and cap coordination, using a simple analytical model of the underlying cost-benefit structure. In our model, the six major emitters of CO2 can link domestic cap-and-trade systems to form one or several international carbon markets, and can either choose their emissions caps non-cooperatively or form a hierarchy of cap-coordinating coalitions inside each market. Based on individual and collective rationality and an assumed distribution of bargaining power, we derive scenarios of such a climate coalition formation process which show that a first-best state with a coordinated global carbon market might well emerge bottom-up, and underline the importance of coordinating caps immediately when linking carbon markets. Surprisingly, the process tends to involve less uncertainty when agreements can be terminated unanimously or unilaterally, depending on the level of farsightedness. Keywords: Climate Policy, International Environmental Agreements, Cap and Trade, Coalition Formation, Farsightedness Classification-JEL: D85, Q5 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.49 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-049.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.49 Title: Optimal Truncation in Matching Markets Author-Name: Peter Coles Author-X-Name-First: Peter Author-X-Name-Last: Coles Author-WorkPlace-Name: Harvard Business School Author-Name: Ran Shorrer Author-X-Name-First: Ran Author-X-Name-Last: Shorrer Author-WorkPlace-Name: Harvard University and Harvard Business School Abstract: Since no stable matching mechanism can induce truth-telling as a dominant strategy for all participants, there is often room in matching markets for strategic misrepresentation (Roth [25]). In this paper we study a natural form of strategic misrepresentation: reporting a truncation of one's true preference list. Roth and Rothblum [28] prove an important but abstract result: in certain symmetric, incomplete information settings, agents on one side of the market (“the women”) optimally submit some truncation of their true preference lists. In this paper we put structure on this truncation, both in symmetric and general settings, when agents must submit preference lists to the Men-Proposing Deferred Acceptance Algorithm. We first characterize each woman's truncation payoffs in an incomplete information setting in terms of the distribution of her achievable mates. The optimal degree of truncation can be substantial: we prove that in a uniform setting, the optimal degree of truncation for an individual woman goes to 100% of her list as the market size grows large, when other women are truthful. In this setting, we demonstrate the existence of an equilibrium where all agents use truncation strategies. Compared to truthful reporting, in any equilibrium in truncation strategies, welfare diverges for men and women: women prefer the truncation equilibrium, while men would prefer that participants truthfully report. In a general environment, we show that the less risk averse a player, the greater the degree of her optimal truncation. Finally, when correlation in preferences increases, players should truncate less. While several recent papers have focused on the limits of strategic manipulation, our results serve as a reminder that without the pre-conditions ensuring truthful reporting, even in settings where agents have little information, the potential for manipulation can be significant. Keywords: Matching Markets, Truncation Classification-JEL: C78, C62, D47, D61 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.50 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-050.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.50 Title: The Evolution of Core Stability in Decentralized Matching Markets Author-Name: Heinrich H. Nax Author-X-Name-First: Heinrich H. Author-X-Name-Last: Nax Author-WorkPlace-Name: Paris School of Economics Author-Name: Bary S. R. Pradelski Author-X-Name-First: Bary S. R. Author-X-Name-Last: Pradelski Author-WorkPlace-Name: University of Oxford, Oxford-Man Institute Author-Name: H. Peyton Young Author-X-Name-First: H. Peyton Author-X-Name-Last: Young Author-WorkPlace-Name: University of Oxford Abstract: Decentralized matching markets on the internet allow large numbers of agents to interact anonymously at virtually no cost. Very little information is available to market participants and trade takes place at many different prices simultaneously. We propose a decentralized, completely uncoupled learning process in such environments that leads to stable and efficient outcomes. Agents on each side of the market make bids for potential partners and are matched if their bids are mutually profitable. Matched agents occasionally experiment with higher bids if on the buy-side (or lower bids if on the sell-side), while single agents, in the hope of attracting partners, lower their bids if on the buy-side (or raise their bids if on the sell-side). This simple and intuitive learning process implements core allocations even though agents have no knowledge of other agents' strategies, payoffs, or the structure of the game, and there is no central authority with such knowledge either. Keywords: Assignment Games, Cooperative Games, Core, Evolutionary Game Theory, Learning, Matching Markets Classification-JEL: C71, C73, C78, D83 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.51 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-051.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.51 Title: Anonymous Social Influence Author-Name: Manuel Förster Author-X-Name-First: Manuel Author-X-Name-Last: Förster Author-WorkPlace-Name: Université Paris 1 Panthéon-Sorbonne, France, Université catholique de Louvain – CORE, Belgium Author-Name: Michel Grabisch Author-X-Name-First: Michel Author-X-Name-Last: Grabisch Author-WorkPlace-Name: Paris School of Economics – Université Paris 1 Panthéon-Sorbonne, France Author-Name: Agnieszka Rusinowsk Author-X-Name-First: Agnieszka Author-X-Name-Last: Rusinowsk Author-WorkPlace-Name: Paris School of Economics – CNRS Centre d’Économie de la Sorbonne, France Abstract: We study a stochastic model of influence where agents have “yes” or “no” inclinations on some issue, and opinions may change due to mutual influence among the agents. Each agent independently aggregates the opinions of the other agents and possibly herself. We study influence processes modelled by ordered weighted averaging operators, which are anonymous: they only depend on how many agents share an opinion. For instance, this allows to study situations where the influence process is based on majorities, which are not covered by the classical approach of weighted averaging aggregation. We find a necessary and sufficient condition for convergence to consensus and characterize outcomes where the society ends up polarized. Our results can also be used to understand more general situations, where ordered weighted averaging operators are only used to some extent. We provide an analysis of the speed of convergence and the possible outcomes of the process. Furthermore, we apply our results to fuzzy linguistic quantifiers, i.e., expressions like “most” or “at least a few”. Keywords: Influence, Anonymity, Ordered Weighted Averaging Operator, Convergence, Consensus, Speed Of Convergence, Fuzzy Linguistic Quantifier Classification-JEL: C7, D7, D85 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.52 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-052.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.52 Title: The Cost of Segregation in Social Networks Author-Name: Nizar Allouch Author-X-Name-First: Nizar Author-X-Name-Last: Allouch Author-WorkPlace-Name: , Queen Mary, University of London, School of Economics and Finance, UK Abstract: This paper investigates the private provision of public goods in segregated societies. While most research agrees that segregation undermines public provision, the findings are mixed for private provision: social interactions, being strong within groups and limited across groups, may either increase or impede voluntary contributions. Moreover, although efficiency concerns generally provide a rationale for government intervention, surprisingly, little light is shed in the literature on the potential effectiveness of such intervention in a segregated society. This paper first develops an index based on social interactions, which, roughly speaking, measures the welfare impact of income redistribution in an arbitrary society. It then shows that the proposed index vanishes when applied to large segregated societies, which suggests an “asymptotic neutrality” of redistributive policies. Keywords: Public Goods, Segregated Society, Private Provision, Networks, Bonacich Transfer Index Classification-JEL: C72, D31, H41 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.53 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-053.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.53 Title: Investments in Quality, Collective Reputation and Information Acquisition Author-Name: Fulvio Fontini Author-X-Name-First: Fulvio Author-X-Name-Last: Fontini Author-WorkPlace-Name: Department of Economics and Management, University of Padua, Italy Author-Name: Katrin Millock Author-X-Name-First: Katrin Author-X-Name-Last: Millock Author-WorkPlace-Name: Paris School of Economics, CNRS, Centre d’Economie de la Sorbonne Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: Department of Economics and Management, University of Padua, Italy Abstract: In many cases consumers cannot observe firms’ investment in quality or safety, but have only beliefs on the average quality of the industry. In addition, the outcome of the collective investment game of the firms may be stochastic since firms cannot control perfectly the technology or external factors that may affect production. In such situations, when only consumers’ subjective perceptions of the industry level of quality matter, the regulator may make information available to firms or subsidize their information acquisition. Under what conditions is it desirable to make information available? We show how firms’ overall level of investment in quality depends upon the parameters of the quality accumulation process, the cost of investment and the number of firms in the industry. We also show the potentially negative effects on the total level of quality from providing information on consumers’ actual valuation. Keywords: Collective Reputation, Option Value, Quality Classification-JEL: C73, D92, L15, Q52 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.54 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-054.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.54 Title: Asymmetry Reversals and the Business Cycle Author-Name: Roberta Distante Author-X-Name-First: Roberta Author-X-Name-Last: Distante Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Ivan Petrella Author-X-Name-First: Ivan Author-X-Name-Last: Petrella Author-WorkPlace-Name: Department of Economics, Mathematics and Statistics, Birkbeck, University of London Author-Name: Emiliano Santoro Author-X-Name-First: Emiliano Author-X-Name-Last: Santoro Author-WorkPlace-Name: Department of Economics and Finance, Catholic University of Milan and Department of Economics, University of Copenhagen Abstract: The cross-sectional dynamics of the U.S. business cycle is examined through the lens of quantile regression models. Conditioning the quantiles of firm-level growth to different measures of technological change highlights a deep connection between counter-cyclical skewness and the transmission of aggregate disturbances. Asymmetry reversals emerge as the dominant source of cyclical variation in the probability density, generating a powerful amplification of aggregate shocks to firm technology. Designing and validating heterogeneous firm business cycle models should necessarily account for this empirical finding. Keywords: Corporate Growth, Conditional Quantiles, Business Cycles, Asymmetry Reversals Classification-JEL: C21, E32 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.55 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-055.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.55 Title: Environmental Catastrophes under Time-Inconsistent Preferences Author-Name: Thomas Michielsen Author-X-Name-First: Thomas Author-X-Name-Last: Michielsen Author-WorkPlace-Name: Tilburg University Abstract: I analyze optimal natural resource use in an intergenerational model with the risk of a catastrophe. Each generation maximizes a weighted sum of discounted utility (positive) and the probability that a catastrophe will occur at any point in the future (negative). The model generates time- inconsistency as generations disagree on the relative weights on utility and catastrophe prevention. As a consequence, future generations emit too much from the current generation’s perspective and a dynamic game ensues. I consider a sequence of models. When the environmental problem is related to a scarce exhaustible resource, early generations have an in-incentive to reduce emissions in Markov equilibrium in order to enhance the ecosystem’s resilience to future emissions. When the pollutant is expected to become obsolete in the near future, early generations may however in- crease their emissions if this reduces future emissions. When polluting inputs are abundant and expected to remain essential, the catastrophe becomes a self-fulfilling prophecy and the degree of concern for catastrophe prevention has limited or even no effect on equilibrium behaviour. Keywords: Catastrophic Events, Decision Theory, Uncertainty, Time Consistency Classification-JEL: C73, D83, Q54 Creation-Date: 201305 Template-Type: ReDIF-Paper 1.0 Number: 2013.56 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-056.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.56 Title: Lessons from 15 Years of Experience with the Dutch Tax Allowance for Energy Investments for Firms Author-Name: Arjan Ruijs Author-X-Name-First: Arjan Author-X-Name-Last: Ruijs Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency Author-Name: Herman Vollebergh Author-X-Name-First: Herman Author-X-Name-Last: Vollebergh Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency, CentER and Tilburg Sustainability Centre, Tilburg University Abstract: Since 1997 the Netherlands has a tax allowance scheme introduced to promote investments in energy saving technologies and sustainable energy production. This Energy Investment Tax Allowance (EIA in Dutch) reduces up-front investment costs for firms investing in the newest energy saving and sustainable energy technologies. The basic design of the EIA has remained the same over the past 15 years. Firms investing in technologies listed in the annually updated ‘Energy List’ may deduct some of the investment costs from their taxable profits. The EIA may also reduce search costs by investors to find particular technologies because of the Energy List which is used to consider eligibility for the subsidy. This Energy List contains generic technologies that meet a certain energy-saving standard or a selection of novel, but proven, technologies with a higher energy-saving potential than conventional technologies. Over the past 15 years, the use of the EIA has been affected by a number of changes, mainly due to exogenous factors, such as interactions with other policy instruments, rising oil and gas prices, and the economic crisis since 2007. Despite this turbulence and changes in government focus, the EIA is still part of the Dutch energy policy mix. Our evaluation of the EIA contains four lessons. First, the use of tax revenues to subsidise investment in energy-efficient technologies and renewable energy is not very different from using on-budget subsidies if budgetary rules require sufficient accountability of such tax expenditures. At the beginning of the scheme, a lack of accountability of tax expenditures contributed to budgetary turbulence. A number of budget overruns in later periods were not related to budget accountability issues, but to changes outside the EIA. Second, incentive compatibility problems of the EIA are of concern but seem to be manageable. The main weakness of the tax allowance is the difficulty to prevent free-riders from receiving subsidies, even though subsidy effectiveness has improved considerably over the years. Third, the use of a dynamic technology list makes the regulation flexible, allowing policy to refocus and apply tighter standards if necessary. The list also reduces the information asymmetry between supply and demand of new technologies and helps suppliers of energy-saving or sustainable energy technologies to overcome the well-known ‘valley of death’. Finally, the design of a subsidy scheme should pay sufficient attention to the likely interaction with other policy instruments, in particular other subsidy schemes aimed at complementary objectives. The turbulence with the EIA over the 2001–2007 period was mainly caused by fluctuations in the application of other instruments. Keywords: Energy Efficiency, Renewable Energy, Investment, Tax, Tax Preference, Policy Evaluation Classification-JEL: H23, H25, H32, O33, Q48 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.57 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-057.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.57 Title: Decentralization, Social Capital and Regional Convergence Author-Name: Luciano Mauro Author-X-Name-First: Luciano Author-X-Name-Last: Mauro Author-WorkPlace-Name: Università di Trieste, Italy, Dipartimento di Scienze Economiche Aziendali, Statistiche e Matematiche Author-Name: Francesco Pigliaru Author-X-Name-First: Francesco Author-X-Name-Last: Pigliaru Author-WorkPlace-Name: Università di Cagliari and CRENoS, Italy Dipartimento di Scienze Economiche e Aziendali Abstract: By studying the interaction between social capital and decentralization, we show that political decentralization can be a source of divergence across heterogeneous regions. In particular, we claim that since the local endowments of social capital display their effect on the economy mainly through the functioning of local institutions, decentralization enhances (hampers) growth wherever social capital is high (low). We define our hypothesis within a growth model with public capital, and use the North-South divide in Italy to assess the quantitative plausibility of our model. A calibration exercise shows that it accounts for the major swings in the Italian regional divide since 1861. Keywords: Social Capital, Convergence, Economic Growth Classification-JEL: O4, N9, R5 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.58 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-058.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.58 Title: Robust Institutions for Sustainable Water Markets: A Survey of the Literature and the Way Forward Author-Name: Alexandros Maziotis Author-X-Name-First: Alexandros Author-X-Name-Last: Maziotis Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change, CIP Division, Isola of San Giorgio Maggiore, Venice, Italy Author-Name: Elisa Calliari Author-X-Name-First: Elisa Author-X-Name-Last: Calliari Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center For Climate Change, CIP Division, Isola of San Giorgio Maggiore, Venice, Italy Author-Name: Jaroslav Mysiak Author-X-Name-First: Jaroslav Author-X-Name-Last: Mysiak Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center For Climate Change, CIP Division, Isola of San Giorgio Maggiore, Venice, Italy Abstract: This paper discusses a framework for analyzing robust institutions for water markets drawn on the new institutional economics school of thoughts which is based on Williamson, North, Coase and Ostrom theories on transaction cost economics, property rights and collective actions. Based on these theories, we review the evolution and development of water reforms and markets in countries such as Australia, USA (California and Colorado), Chile and in Spain. Based on the lessons learned from the Spanish and international experience on water markets, a list of robust recommendations for the improvement of water markets in Spain is proposed. These include among others, not only the definition of secure water rights, through the registration of rights or recognition of environment as a legitimate user, but also the monitoring of water trading activities, including the collection of information for prices and quantities or cost-benefit analysis for quantifying benefits and externalities. Finally, based on Sharma’s approach (2012) a new robust water governance model for Spain is proposed in which the highest priority is given to the role of legal and political institutions and second priority to environmental, economic and social needs. We hope that the framework presented in this paper will function as a tool for researchers and policy makers in Spain and other European countries to understand how water markets can be further developed to be economically and environmentally efficient, and socially accepted. Keywords: New Institutional Economics, Robust Design Principles, Water Governance, Institutions, Water Markets Classification-JEL: B52, D23, Q25 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.59 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-059.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.59 Title: The Influence of Economic Growth, Population, and Fossil Fuel Scarcity on Energy Investments Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change, Italy Author-Name: Fabio Sferra Author-X-Name-First: Fabio Author-X-Name-Last: Sferra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change, Italy Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last:Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change, Italy Abstract: This paper examines the dynamics of energy investments and clean energy Research and Development (R&D) using a scenario-based modeling approach. Starting from the global scenarios proposed in the RoSE model ensemble experiment, we analyze the dynamics of investments under different assumptions regarding economic and population growth as well as availability of fossil fuel resources, in the absence of a climate policy. Our analysis indicates that economic growth and the speed of income convergence across countries matters for improvements in energy efficiency, both via dedicated R&D investments but mostly through capital-energy substitution. In contrast, fossil fuel prices, by changing the relative competitiveness of energy sources, create an economic opportunity for radical innovation in the energy sector. Indeed, our results suggest that fossil fuel availability is the key driver of investments in low carbon energy innovation. However, this innovation, by itself, is not sufficient to induce emission reductions compatible with climate stabilization objectives. Keywords: Technological change and innovation, Energy investments, R&D Investments, Fossil fuel availability, Fossil fuel prices, Energy Intensity, Carbon Intensity Classification-JEL: O13, Q43, Q54, Q55 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.60 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-060.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.60 Title: Endogenous Participation in a Partial Climate Agreement with Open Entry: A Numerical Assessment Author-Name: Fabio Sferra Author-X-Name-First: Fabio Author-X-Name-Last: Sferra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change, Italy Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: avoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change, Italy Abstract: Our purpose is to analyse the effectiveness and efficiency of a Partial Climate Agreement with open entry under a non-cooperative Nash-Equilibrium framework. We evaluate a partial agreement policy in which non-signatory countries can decide to join or to leave a coalition of the willing at any point in time. By means of a simple analytical model and of a numerical integrated assessment model, we assess different coalition structures, and different minimum admission requirements. Our results indicate that a Partial Climate Agreement with open entry can be effective, achieving climate stabilization between 2C and 3C depending on the composition of the coalition of the willing. The policy turns out to be also rather efficient, with only minor losses with respect to a full cooperation agreement. Finally, we quantify the optimal admission requirement in about 40-50% of cumulative abatement. Keywords: International Environmental Agreements, Non-Binding Targets, Voluntary Climate Change Actions, Optimal Mitigation Strategies, Fair Burden Sharing in Climate Negotiations, Carbon Leakage Classification-JEL: C72 , F18, Q54 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.61 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-061.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.61 Title: The Political Economy of Oil and the Crisis of the Arab State System Author-Name: Daniel Atzori Author-X-Name-First: Daniel Author-X-Name-Last: Atzori Author-WorkPlace-Name: FEEM and Agenzia Giornalistica Italia (AGI) Abstract: This paper argues that the so-called Arab spring is part of a tectonic shift which signals the frailty of the Arab state system as such. Countries benefitting from oil and gas rents have been more resilient, because of their potential to create systems of incentives and disincentives in order to prevent disruptive social change. Islamism, whose emergence is connected with rentier state dynamics is, at the same time, an opportunity and a threat for the survival of the Arab state and, in general, of the Arab states system. In this context, national oil companies can increasingly be conceptualized not merely as instruments of the state, but as bulwarks of nation-state legitimacy in a period of chaos. Keywords: Oil, Energy, Political Economy, MENA, Globalization, Arab Spring Classification-JEL: F6, N5, O1, P1, Q3, Q4 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.62 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-062.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.62 Title: A Fear Index to Predict Oil Futures Returns Author-Name: Julien Chevallier Author-X-Name-First: Julien Author-X-Name-Last: Chevallier Author-WorkPlace-Name: Université Paris 8 (LED) Author-Name: Benoît Sévi Author-X-Name-First: Benoît Author-X-Name-Last: Sévi Author-WorkPlace-Name: Aix-Marseille Université (Aix-Marseille School of Economics), CNRS & EHESS Abstract: This paper evaluates the predictability of WTI light sweet crude oil futures by using the variance risk premium, i.e. the difference between model-free measures of implied and realized volatilities. Additional regressors known for their ability to explain crude oil futures prices are also considered, capturing macroeconomic, financial and oil-specific influences. The results indicate that the explanatory power of the (negative) variance risk premium on oil excess returns is particularly strong (up to 25% for the adjusted Rsquared across our regressions). It complements other financial (e.g. default spread) and oil-specific (e.g. US oil stocks) factors highlighted in previous literature. Keywords: Oil Futures, Variance Risk Premium, Forecasting Classification-JEL: C32, G17, Q47 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.63 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-063.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.63 Title: Bargaining and Power Author-Name: Dominik Karos Author-X-Name-First: Dominik Author-X-Name-Last: Karos Author-WorkPlace-Name: Department of Economics and Statistics, Saarland University Abstract: Given a simple game, a power configuration specifies the power of each player in each winning coalition. We introduce a new power configuration which takes into account bargaining among players in coalitions. We show that under very weak conditions on a bargaining solution there is a power configuration which is stable with respect to renegotiations. We further show that given this power configuration there is a coalition which is both internally and Nash stable. We consider two different bargaining solutions on apex games and show under which conditions there are core stable coalitions. Finally, we investigate how infeasible coalition might affect the outcome and apply our model to the German parliament. Keywords: Coalition Formation, Power, Bargaining Classification-JEL: C71, D71 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.64 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-064.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.64 Title: Estimating the Value of Travel Time to Recreational Sites Using Revealed Preferences Author-Name: Carlo Fezzi Author-X-Name-First: Carlo Author-X-Name-Last: Fezzi Author-WorkPlace-Name: CSERGE, School of Environmental Sciences, University of East Anglia Author-Name: Ian J. Bateman Author-X-Name-First: Ian J. Author-X-Name-Last: Bateman Author-WorkPlace-Name: CSERGE, School of Environmental Sciences, University of East Anglia Abstract: The opportunity Value of Travel Time (VTT) is one of the most important parts of the total cost of day-long recreational activities and arguably the most difficult to estimate. While numerous studies have criticized the use of salaries to proxy the relevant shadow values, a consensus on an alternative measure still has to emerge. This paper uses a revealed preference approach to estimate the VTT for recreational trips by modeling individuals' preferences for toll roads and deriving their willingness-to-pay to reduce travel time. Our case-study sites are three beaches located in the Italian Riviera Romagnola, whose road network is a mix of toll and free access roads. By carrying-out face-to-face interviews, we reconstruct respondents' routes, indentify their time-cost trade-offs and ultimately estimate their VTT. Results show considerable heterogeneity in values with the VTT for day-long recreational visits being significantly higher than the one of longer holidays. Keywords: Value of Time, Value of Travel Time Savings, Recreation Demand Models, Revealed Preferences, Willingness to Pay Space Classification-JEL: Q50 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.65 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-065.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.65 Title: Long-run Investment under Uncertain Demand Author-Name: Luca Di Corato Author-X-Name-First: Luca Di Corato Author-X-Name-Last: Corato Author-WorkPlace-Name: Department of Economics, Swedish University of Agricultural Sciences, Sweden 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, Italy 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, Italy Abstract: In the literature investigating the impact of uncertainty on short-run and long-run investment, most authors have used a log linear profit function. This functional form has been generally considered a reasonable approximation for more general ones and has the advantage of providing closed form solutions for both short-run investment rule and long-run rate of capital accumulation. In this paper, we consider a firm facing a linear demand function with additive shocks and present a technique for the analytical approximation of the long-run average rate of capital accumulation for the case of an inverted U-shape profit function. We then compare the long-run rates of capital accumulation calculated under both assumptions within a plausible range of parameter values. We notice significant differences and conclude that the choice of a log linear functional form has a non-trivial impact on the magnitude of the long run rate of capital accumulation. Keywords: Investment, Demand Uncertainty, Irreversibility Classification-JEL: C61, D92, E22 Creation-Date: 201306 Template-Type: ReDIF-Paper 1.0 Number: 2013.66 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-066.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.66 Title: Tax Competition, Investment Irreversibility and the Provision of Public Goods Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: Department of Economics, University of Padua, Fondazione Eni Enrico Mattei and Centro Studi Levi-Cases Author-Name: Paolo Panteghini Author-X-Name-First: Paolo Author-X-Name-Last: Panteghini Author-WorkPlace-Name: Department of Economics and Management, University of Brescia, CESifo and AccounTax Lab 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: This article studies the effects of tax competition on the provision of public goods under business risk and partial irreversibility of investment. As will be shown, the provision of public goods changes over time and also depends on the business cycle. In particular, under source-based taxation, public goods can be optimally provided during a downturn, in the short term. The converse is true during a recovery, when they are underprovided. In the long term however, tax competition does not affect capital accumulation and therefore, the provision of public goods. Keywords: Irreversibility, Risk, Short- and Long-Term Effects, Tax Competition Classification-JEL: H25, H32 Creation-Date: 201307 Template-Type: ReDIF-Paper 1.0 Number: 2013.67 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-067.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.67 Title: Can Property Values Capture Changes in Environmental Health Risks? Evidence from a Stated Preference Study in Italy and the UK Author-Name: Dennis Guignet Author-X-Name-First: Dennis Author-X-Name-Last: Guignet Author-WorkPlace-Name: National Center for Environmental Economics US Environmental Protection Agency Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: Department of Agricultural and Resource Economics University of Maryland, and Fondazione Eni Enrico Mattei, Venice Abstract: Hedonic property value models are often used to place a value on localized amenities and disamenities. In practice, however, results may be affected by (i) omitted variable bias and (ii) whether homebuyers and sellers are aware of, and respond to, the assumed environmental measure. In this paper we undertake an alternative stated preference (SP) approach that eliminates the potential for unobserved confounders and where the measure of environmental quality is explicitly presented to respondents. We examine how homeowners in the United Kingdom and Italy value mortality risk reductions by asking them to choose among hypothetical variants of their home that differ in terms of mortality risks from air pollution and price. To our knowledge this is the first stated preference study examining respondents’ willingness to pay for properties using a quantitative and clearly specified measure of health risks. We find that Italian homeowners hold a value of a statistical life (VSL) of about €6.4 million, but UK homeowners tend to hold a much lower VSL (€2.1 million). This may be due to the fact that respondents in the UK do not perceive air pollution where they live to be as threatening, and actually live in cities with relatively low air pollution levels. Exploiting part of our experimental design, we find that Italian homeowners value a reduction in the risk of dying from cancer more than from other causes, but UK respondents do not hold such a premium. We also find that those who face higher baseline risks, due to higher air pollution levels where they live, hold a higher VSL, especially in the UK. In both countries, the VSL is twice as large among individuals who perceive air pollution where they live as relatively high. Keywords: Home Values, Air Pollution, Stated Preference, Vsl, Value of Statistical Life, Value of a Prevented Fatality, Health Risks, Cancer Premium Classification-JEL: Creation-Date: 201307 Template-Type: ReDIF-Paper 1.0 Number: 2013.68 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-068.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.68 Title: Adjustment Costs and Long Run Spatial Agglomerations Author-Name: William Brock Author-X-Name-First: William Author-X-Name-Last: Brock Author-WorkPlace-Name: University of Wisconsin, Department of Economics, University of Missouri, Columbia Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Athens University of Economics and Business Department of International and European Economic Studies Author-Name: Athanasios Yannacopoulos Author-X-Name-First: Athanasios Author-X-Name-Last: Yannacopoulos Author-WorkPlace-Name: Athens University of Economics and Business, Department of Statistics Abstract: We introduce knowledge spillovers as an externality in the production function of competitive firms operating in a finite spatial domain under adjustment costs. Spillovers are spatial as productive knowledge flows more easily among firms located nearby. When knowledge spillovers are not internalized by firms spatial agglomerations may emerge endogenously in a competitive equilibrium, however, they do not emerge at the steady state of the social optimum. Keywords: Investment Theory, Adjustment Costs, Spatial Agglomerations Classification-JEL: D21, R3, C61 Creation-Date: 201307 Template-Type: ReDIF-Paper 1.0 Number: 2013.69 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-069.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.69 Title: Multiproduct Multinationals and the Quality of Innovation Author-Name: Sasan Bakhtiari Author-X-Name-First: Sasan Author-X-Name-Last: Bakhtiari Author-WorkPlace-Name: Australian National University Author-Name: Antonio Minniti Author-X-Name-First: Antonio Author-X-Name-Last: Minniti Author-WorkPlace-Name: University of Bologna Author-Name: Alireza Naghavi Author-X-Name-First: Alireza Author-X-Name-Last: Naghavi Author-WorkPlace-Name: University of Bologna Abstract: This research sheds light on the role of multinational production on the type of innovation performed by firms. We construct matched firm-patent data to measure the scope of innovation, that is the extent to which the output of R&D can be spread across different product lines. We focus on two features of multinational production: (i) core knowledge is geographically more difficult to transfer abroad to foreign production sites, (ii) learning spillovers can occur from international operations. The results reveal that the second effect is more likely to dominate when a firm is active in more product lines. We argue that a more diversified portfolio of products increases a firm’s span of learning from international operations, thereby enhancing its ability to engage in more fundamental research. In contrast, firms with fewer product lines that geographically separate production from innovation focus on more specialized types of R&D. Keywords: Multinational Production, Fundamental Innovation, Specialized Innovation, Multiproduct Firms, Product Scope, Knowledge Spillovers Classification-JEL: F12, F23, O31, O32 Creation-Date: 201307 Template-Type: ReDIF-Paper 1.0 Number: 2013.70 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-070.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.70 Title: Trade Liberalisation and Global-scale Forest Transition Author-Name: Rafael González-Val Author-X-Name-First: Rafael Author-X-Name-Last: González-Val Author-WorkPlace-Name: Universidad de Zaragoza & Institut d'Economia de Barcelona (IEB), Departamento de Análisis Económico Author-Name: Fernando Pueyo Author-X-Name-First: Fernando Author-X-Name-Last: Pueyo Author-WorkPlace-Name: Universidad de Zaragoza, Departamento de Análisis Económico Abstract: In this paper, we develop a theoretical model that provides an additional explanation for the forest transition based on a trade liberalisation scenario. Furthermore, in contrast with most explanations, in which the forest transition can only take place at a local level at the expense of other areas, ours is capable of supporting such phenomenon at a worldwide level. We introduce a renewable natural resource (wood), used as an input by manufacturing firms, in a framework with economic geography foundations: transport costs affect the distribution of firms between countries. In a general equilibrium, the results reproduce the forest transition at a global scale: a decrease in transport costs (in particular, that of the natural resource) has a negative effect on the worldwide stock of the natural resource in the short-term; however, this effect is offset during the transition as a consequence of industrial reallocation between countries and eventually disappears in the long-run. Keywords: Forest Transition, Natural Resources, Industrial Location, Trade Liberalisation Classification-JEL: F18, Q20, Q23, R12 Creation-Date: 201307 Template-Type: ReDIF-Paper 1.0 Number: 2013.71 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-071.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.71 Title: Smart-Grids and Climate Change. Consumer adoption of smart energy behaviour: a system dynamics approach to evaluate the mitigation potential Author-Name: Elena Claire Ricci Author-X-Name-First: Elena Claire Author-X-Name-Last: Ricci Author-WorkPlace-Name: Università degli Studi di Milano, Centro Euro-Mediterraneo sui Cambiamenti Climatici and Fondazione Eni Enrico Mattei Abstract: adoption of “Smart Energy Behaviour”. Within this term we include different levels of: i) shift in electricity consumption towards less costly-less polluting and congestioning hours; ii) the reduction of mainly wasteful electricity consumption, that maintains similar levels of comfort; iii) the enrolment in demand response programs; iv) electricity generation via residential micro-photovoltaic (PV) systems. These behavioural changes are triggered by the installation of advanced metering systems and a tariff policy that prices electricity according to time-of-use. The context analysed is that of Italy, where the largest diffusion of smart meters has taken place. We perform a set of 2500 simulations of our model with stochastic parameters to take into account the uncertainty in their estimation, to find that on average consumer involvement may induce on aggregate a shift in residential electricity consumption of 13.0% by 2020 and of 29.6% by 2030; and reduction in residential electricity consumption (just by reducing wasteful consumption) of 2.5% by 2020 and 9.2% by 2030. These consumption changes may have strong impacts on the system operating costs (in the order of 380 M€/y by 2020, 1203 M€/y by 2030), on the CO2 emissions (in the order of 1.56 MtonCO2/y by 2020, 5.01 Mton CO2/y by 2030), confirming the value of consumer participation. Keywords: Smart-Grids, Demand Response, Demand Management, System Dynamics, Consumer Choices, Climate Policy Classification-JEL: C61, Q42, Q54 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.72 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-072.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.72 Title: Taxing Carbon under Market Incompleteness Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Università Commerciale “L. Bocconi”, IGIER and FEEM Author-Name: Marco Maffezzoli Author-X-Name-First: Marco Author-X-Name-Last:Maffezzoli Author-WorkPlace-Name: Università Commerciale “L. Bocconi” and IGIER Abstract: This paper is the first attempt, to the best of our knowledge, to study the impact of a carbon tax by means of a heterogeneous agents model. The objectives of the paper are two: i) To assess how the results of a representative agent model compare to those coming from a model accounting for heterogeneity across agents when evaluating aggregate economic and environmental impacts of a carbon tax; ii) To assess the distributional implications of a carbon tax (and equivalent cap) and how they can be mitigated through different recycling schemes or allocations. Keywords: Carbon Tax, Double Dividend, Heterogeneous Agents Model Classification-JEL: Q58, Q54, E2 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.73 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-073.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.73 Title: Nautical Tourism, Carrying Capacity and Environmental Externality in the Lagoon of Marano and Grado Author-Name: Francesco Silvestri Author-X-Name-First: Francesco Author-X-Name-Last: Silvestri Author-WorkPlace-Name: eco&eco Economia ed Ecologia Ltd. Bologna and Dept. of Economics and Marketing, University of Ferrara Author-Name: Stefano Ghinoi Author-X-Name-First: Stefano Author-X-Name-Last: Ghinoi Author-WorkPlace-Name: Dept of Statistics, Alma Mater Studiorum Bologna Author-Name: Vincenzo Barone Author-X-Name-First: Vincenzo Author-X-Name-Last: Barone Author-WorkPlace-Name: eco&eco Economia ed Ecologia Ltd. Bologna Abstract: Tourism and environmental preservation are often conflicting activities, mainly in areas such as coastal lagoons, where seaside mass-tourism comes into contact with a very sensitive ecological system. In this paper we deal with a classical problem of both environmental and tourism economics, the internalization of environmental costs of tourism, focusing on the nautical fruition of the Lagoon of Marano and Grado (North-Eastern Italy, Friuli Venezia Giulia Region). Using different instruments, both theoretical (Carrying Capacity framework, Polluter-Payer principle, Coase compensation) and empirical (Cluster analysis, Log-log regression, Forecasting model, cost and benefit calculation through actual market values), we get the result that a standard Coasian equilibrium (unit external cost equal to unit private benefit) doesn’t hold, and a higher coverage of the local berths endowment (i. e. a higher vessels transit in the Lagoon) is more effective for nature conservation than a tempered fruition. Another interesting result is that the best available solution to internalize environmental externality is a mixed one, comprehensive of a command and control rule (a speed-limit prescription), and a compensation scheme. Keywords: Tourism Carrying Capacity, Nature conservation, Externalities, Empirical studies Classification-JEL: Q01, Q26, Q57 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.74 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-074.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.74 Title: The Role of Standards in Eco-innovation: Lessons for Policymakers Author-Name: Herman R.J. Vollebergh Author-X-Name-First: Herman R.J. Vollebergh Author-X-Name-Last: Vollebergh Author-WorkPlace-Name: CentER and Tilburg Sustainability Centre, Tilburg University, PBL Netherlands Environmental Assessment Agency, CESifo Author-Name: Edwin van der Werf Author-X-Name-First: Edwin Author-X-Name-Last: van der Werf Author-WorkPlace-Name: Wageningen University, CESifo Abstract: This paper aims to help policy makers identify how standards can contribute to the effective and cost-efficient development and deployment of eco-innovations (innovations that result in a reduction of environmental impact). To that end we discuss what standards are, how the process of standardization works, and how standards are related to induced innovation and diffusion in different type of markets, e.g. markets for add-on technologies versus markets for integrated resource- or emission-saving technologies. This broad perspective enables us to identify interesting economic dimensions of standards, such as their contribution to positive network externalities, and the extent to which they are substitutes or complements to environmental policy instruments. Finally we discuss how governments might contribute to eco-innovation by selecting, stimulating or creating (inter)national standards. Keywords: Standards, Technological Change, Eco-innovation, Environmental Policy Instruments Classification-JEL: Q38, Q55, Q58 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.75 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-075.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.75 Title: Ambiguous Beliefs on Damages and Civil Liability Theories 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 7321,CNRS Abstract: This paper analyzes the meaning of comparing the economic performance of strict liability and negligence rule in a unilateral standard accident model under Knightian uncertainty. It focuses on the cost expectation of major harm on which the injurers form beliefs. It shows first that, when the Court agrees with the regulator, whatever the liability regime, the first best level of care is never reached but under both regimes the tortfeasors define the same level of care. Second, when, judge and regulator disagree, it is impossible to discriminate among liability standards because the issue depends on the injurer’s optimism degree. Keywords: Strict Liability, Negligence Rule, Ambiguity Theory, Uncertainty, Accident Model Classification-JEL: K0, K32,Q01, Q58 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.76 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-076.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.76 Title: Green Investment Strategies and Export Performance: A Firm-level Investigation Author-Name: Roberto Antonietti Author-X-Name-First: Roberto Author-X-Name-Last: Antonietti Author-WorkPlace-Name: Department of Economics and Management “Marco Fanno”, University of Padova, Italy Author-Name: Alberto Marzucchi Author-X-Name-First: Alberto Author-X-Name-Last: Marzucchi Author-WorkPlace-Name: Department of International Economics, Institutions and Development (DISEIS), Catholic University of Milan, Italy and INGENIO (CSIC-UPV), Spain Abstract: In this paper we empirically investigate the relationship between investments in environmentally-oriented equipment and firms’ export performance. Drawing on Porter hypothesis and firm heterogeneity theory, we adopt a structural model where first we estimate the impact of green investment strategies on the level of productive efficiency (TFP), and second we assess whether induced productivity influences the extensive and intensive margin of exports. Relying on a rich firm-level dataset on Italian manufacturing, our results show that firms with higher productivity, induced among other factors by green investment involving environmental protection and reduction in the use of raw materials, have increased commitment to, and profits from, exports, especially towards countries adopting a more stringent environmental regulatory framework. Our evidence provides a ‘green investment-based’ explanation for the link between TFP-heterogeneity and trade. Keywords: Exports, Firm Heterogeneity, Green Investment Strategy, Total Factor Productivity Classification-JEL: Q55, Q56, F14, F18 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.77 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-077.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.77 Title: Cheap Talk with Correlated Signals Author-Name: A.K.S. Chand Author-X-Name-First: A.K.S. Author-X-Name-Last: Chand Author-WorkPlace-Name: University of Venice, Italy Author-Name: Sergio Currarini Author-X-Name-First: Sergio Author-X-Name-Last: Currarini Author-WorkPlace-Name: University of Leicester, University of Venice and CMCC, Italy Author-Name: Giovanni Ursino Author-X-Name-First: Giovanni Author-X-Name-Last: Ursino Author-WorkPlace-Name: Catholic University of Milan, Italy Abstract: We consider a game of information transmission, with one informed decision maker gathering information from one or more informed senders. Private information is (conditionally) correlated across players, and communication is cheap talk. For the one sender case, we show that correlation unambiguously tightens the existence conditions for a truth-telling equilibrium. We then generalize the model to an arbitrary number of senders, and we find that, in this case, the effect of correlation on the incentives to report information truthfully is non monotone, and correlation may discipline senders' equilibrium behavior, making it easier to sustain truth-telling. Keywords: Cheap Talk, Multiple Senders, Correlation Classification-JEL: C72, D82, D83 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.78 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-078.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.78 Title: An Overview of Urban Vulnerability to Natural Disasters and Climate Change in Central America & the Caribbean Region Author-Name: Ebru A. Gencer Author-X-Name-First: Ebru A. Author-X-Name-Last: Gencer Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Italy Abstract: Central America and the Caribbean is one of the most hazard-prone regions in the world. In addition, the region is heavily affected by poverty, unemployment, critical management of natural resources, and urban conglomeration in capital cities, especially in the Small Island Developing States, increasing vulnerability and risk to natural disasters and climate change. This paper examines characteristics of urban vulnerability to natural disasters and climate change in the Central America and the Caribbean Region. It argues that even though the region is not vast in size, the diversity within creates different characteristics of vulnerability to natural disasters and thus requires an extensive variety of disaster risk reduction approaches and adaptation techniques. Keywords: Urban Vulnerability, Disaster Risk, Central America, the Caribbean Classification-JEL: Q5, Q54 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.79 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-079.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.79 Title: Understanding the Consumption Behaviors on Electric Vehicles in China - A Stated Preference Analysis Author-Name: Libo Wu Author-X-Name-First: Libo Author-X-Name-Last: Wu Author-WorkPlace-Name: School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, Fudan-Tyndall Center, China Author-Name: Changhe Li Author-X-Name-First: Changhe Author-X-Name-Last: Li Author-WorkPlace-Name: School of Economics, Fudan University, China Author-Name: Haoqi Qian Author-X-Name-First: Haoqi Author-X-Name-Last: Qian Author-WorkPlace-Name: School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, China Abstract: This paper examines how the different characteristics of both electric vehicles themselves and the consumers would influence the consumption behavior on electric vehicles. Data collection is based on the questionnaire design using the orthogonal experimental method and large-scale stated preference survey covering more than 2000 households in 10 central districts of Shanghai. Three types of electric vehicles, i.e. fast charging, battery swapping and slowing charging are investigated according to a set of factors, such as acquisition costs, operation and maintenance costs, charging time and convenience, mileage, preferential policies and so on. We analyze the data with the nested-logit model. Our results suggest that the mode of battery swapping with slowing charging enjoys a relatively higher proportion in Shanghai, though there is no absolutely dominating type. By group classification analysis, the male, the young, the well-educated and the well-paid groups share relatively low proportion of selecting electric vehicles. Furthermore, consumers pay more attention to daily variable usage cost and charging time instead of acquisition costs. All these suggest the necessity for the government to adjust the current supporting policy in order to cultivate the electric vehicle market effectively. Keywords: Electric Vehicle, Nested-Logit Model, Stated Preference Experiment, Willingness to Pay Classification-JEL: Q41, Q42, Q48, Q54, Q55, Q58, C65, C83 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.80 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-080.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.80 Title: The Transmission of Sustainable Harvesting Norms When Agents Are Conditionally Cooperative Author-Name: Andries Richter Author-X-Name-First: Andries Author-X-Name-Last: Richter Author-WorkPlace-Name: Centre for Ecological and Evolutionary Synthesis (CEES), Department of Biosciences, University of Oslo, Norway Author-Name: Johan Grasman Author-X-Name-First: Johan Author-X-Name-Last: Grasman Author-WorkPlace-Name: and Statistical Methods, Wageningen University, the Netherlands Abstract: Experimental and observational studies have highlighted the importance of agents being conditionally cooperative when facing a social dilemma. We formalize this mechanism in a theoretical model that portrays a small community having joint access to a common pool resource. The diffusion of norms of cooperation takes place via interpersonal relations, while individual agents face the temptation of higher profits by overexploiting the resource. Agents remain conditionally cooperative, unless other individuals are misbehaving already. We can observe a bubble of conditional cooperators slowly building up followed by a sudden burst, which means that a transition from a cooperative social norm to non-cooperation occurs. Interestingly, in some parameter regions alternative stable states and limit cycles arise. The latter implies that the same community goes through such a transition repeatedly over long time spans – history thus repeats itself in the form of the creation and erosion of social capital. Keywords: Common Pool Resource, Conditional Cooperators, Social-Ecological Complexity, Social Capital, Social Norms Classification-JEL: C73, D70, D64, Q20 Creation-Date: 201309 Template-Type: ReDIF-Paper 1.0 Number: 2013.81 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-081.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.81 Title: Climate Variability, Child Labour and Schooling: Evidence on the Intensive and Extensive Margin Author-Name: Jonathan Colmer Author-X-Name-First: Jonathan Author-X-Name-Last: Colmer Author-WorkPlace-Name: London School of Economics Abstract: How does future income uncertainty affect child labour and human capital accumulation? Using a unique panel dataset, we examine the effect of changes in climate variability on the allocation of time among child labour activities (the intensive margin) as well as participation in education and labour activities (the extensive margin). We find robust evidence that increased climate variability increases the number of hours spent on farming activities while reducing the number of hours spent on domestic chores, indicating a substitution of time across child labour activities. In addition, we find no evidence of climate variability on enrolment decisions or educational outcomes, suggesting that households may spread the burden of labour across children to minimize its impact on formal education. Keywords: Climate Variability, Child Labour, Schooling Classification-JEL: D13, O12, J13, J22, Q54 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.82 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-082.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.82 Title: Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: AREC, University of Maryand, USA College Park, Fondazione Eni Enrico Mattei (FEEM), Italy and Centre for Energy Policy and Economics (CEPE) at ETH-Zürich, Switzerland Author-Name: Will Gans Author-X-Name-First: Will Author-X-Name-Last: Gans Author-WorkPlace-Name: Consultant with NERA, USA Author-Name: Charles Towe Author-X-Name-First: Charles Author-X-Name-Last: Towe Author-WorkPlace-Name: AREC, University of Maryand, College Park, USA Abstract: We use a unique dataset that combines the responses from an original survey of households, information about the structural characteristics of their homes, utility-provided longitudinal electricity usage records, plus utility program participation information, to study the uptake of energy efficiency incentives and their effect on residential electricity consumption. Attention is restricted to homes where heating and cooling are provided exclusively by heat pumps, which are common in our study area—four counties in Maryland—and were covered by federal, state and utility incentives during our study period (2007-2012). We deploy a difference-in-difference study design. We find that replacing an existing heat pump with a new one does reduce electricity usage: the average treatment effect is an 8% reduction. However, the effect differs dramatically across households based upon whether they receive an incentive towards the purchase of a new heat pump. Among those that receive the purchase incentive, the effect is small or nil, and indeed, the larger the incentive, the smaller the reduction in electricity usage. Those that do not receive incentives reduce usage by about 16%. Our results appear to be driven by the numerous free riders in our sample and by persons who—inferred from their responses to survey questions—might be exploiting the subsidy to purchase a larger system and increase usage, with no emissions reductions benefits to society. Keywords: Energy Efficiency, Household Behavior, Energy Efficiency Incentives, Electricity Usage, Rebound Effect, Free Rider Classification-JEL: Q41, D12, H3 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.83 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-083.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.83 Title: A Simple Formula for the Social Cost of Carbon Author-Name: Inge van den Bijgaart Author-X-Name-First: Inge Author-X-Name-Last: van den Bijgaart Author-WorkPlace-Name: Department of Economics, CentER, TSC, Tilburg University, The Netherlands Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: Department of Economics, CentER, TSC, Tilburg University, The Netherlands Author-Name: Luuk Korsten Author-X-Name-First: Luuk Author-X-Name-Last: Korsten Author-WorkPlace-Name: Tilburg University, The Netherlands Author-Name: Matti Liski Author-X-Name-First: Matti Author-X-Name-Last: Liski Author-WorkPlace-Name: School of Economics, Aalto University, Finland Abstract: The social cost of carbon (SCC), commonly referred to as the carbon price, is the monetized damage from emitting one unit of CO2 to the atmosphere. The SCC is typically obtained from large-scale computational Integrated Assessment Models (IAMs) that consolidate interdisciplinary climate research inputs to obtain a carbon price estimate relevant for policy-making. However, the climate economy interactions of IAMs remain inaccessible to scientists in general. Here we develop a simple closed-form formula that captures the key physical and economic determinants of the SCC in the IAMs. For a mainstream IAM, it explains over 99 percent of the within-model variation originating from structural uncertainties; in an inter-model comparison, the structural variation captured by the formula matches closely a SCC distribution of previous SCC estimates. The precise replication of the SCC estimates is strikingly free of details such as those on future policy and technology options, or even carbon concentration levels; the size of the current economy and the emissions-temperature-damage response are the dominant SCC determinants in the IAMs. The structural interpretation given allows decision-makers to disentangle the subjective and structural determinants of the carbon price. Structural uncertainties alone lead to a strongly right-skewed density with median 15 €/tCO2, mean 31 €/tCO2, and more than 5 percent probability for higher than 100 €/tCO2 for year 2015. Keywords: Climate Change, Carbon Price, Integrated Assessment Models, Uncertainty Classification-JEL: Q50, Q51, Q52 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.84 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-084.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.84 Title: An Integrated Assessment of Super & Smart Grids Author-Name: Elena Claire Ricci Author-X-Name-First: Elena Claire Author-X-Name-Last: Ricci Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Italy Abstract: We assess the optimality of investments in power grid innovation, under both technological options of Super and Smart Grids, using the WITCH model in the version that includes Super-Grids. Super Grids allow producing and trading of electricity generated by large scale concentrated solar power (CSP) plants in highly productive areas that are connected to the %demand centres through High Voltage Direct Current (HVDC) cables. We extend the model to include also Smart-Grids that allow: i) to increase the share of renewable power manageable by the power network, ii) to reduce the costs of customer relationships via Smart Meters; iii) residential consumer to generate electricity via micro-photovoltaic plants, and iv) residential consumer to generate virtual electricity via consumption management. We find that it becomes optimal to invest in grid innovation, in order to start gaining the management benefits and taking advantage of consumer generating opportunities (of electricity and “nega-watts”), starting in 2010 and to exploit the increased possible penetration of renewable energy sources from 2035. Long-distance CSP generation becomes optimal only from 2040, and trade from 2050; but it reaches very high shares in the second half of the century, especially when penetration limits are imposed on nuclear power and on carbon capture and storage operations (CCS). On the whole, climate policy costs can be reduced by large percentages, up to 48%, 34%, 24% for the USA, Western Europe, Eastern Europe, respectively, with respect to corresponding scenarios without the grid innovation via Super and Smart Grid option and with limits on nuclear power, CCS, and CSP import. The analysis is then extended to compare these options considering, at least qualitatively, the differentiated impacts on the environment, technology, organization, society, local and national economies and geopolitics. Keywords: Smart-Grids, Climate Policy, Integrated Assessment, Renewable Energy, Residential Power Generation, Demand Side Management Concentrated Solar Power, Super-Grids, Electricity Trade Classification-JEL: C61, Q42, Q54 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.85 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-085.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.85 Title: The Future Costs of Nuclear Power Using Multiple Expert Elicitations: Effects of RD&D and Elicitation Design Author-Name: Laura Diaz Anadon Author-X-Name-First: Laura Author-X-Name-Last: Diaz Anadon Author-WorkPlace-Name: Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University, USA Author-Name: Gregory Nemet Author-X-Name-First: Gregory Nemet Author-X-Name-Last: Nemet Author-WorkPlace-Name: Nelson Institute Center for Sustainability and the Global Environment (SAGE), University of Wisconsin, and La Follette School of Public Affairs, University of Wisconsin, USA Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC, Italy Abstract: Characterizing the anticipated performance of energy technologies to inform policy decisions increasingly relies on expert elicitation. Knowledge about how elicitation design factors impact the probabilistic estimates emerging from these studies is however scarce. We focus on nuclear power, a large-scale low-carbon power option, for which future cost estimates are important to designing energy policies and climate change mitigation efforts. We use data from three elicitations in the USA and in Europe and assess the role of government Research, Development, and Demonstration (RD&D) investments on expected nuclear costs in 2030. We show that controlling for expert, technology, and design characteristics increases experts’ implied public RD&D elasticity of expected costs by 25%. Public sector and industry experts’ costs expectations are 14% and 32% higher, respectively than academics. US experts are more optimistic than their EU counterparts, with median expected costs 22% lower. On average, a doubling of public RD&D is expected to result in an 8% cost reduction, but uncertainty is large. The difference between the 90th and 10th percentile estimates is on average 58% of the experts’ median estimates. Public RD&D investments do not affect uncertainty ranges, but US experts’ are less confident about costs than Europeans. Keywords: Nuclear Power, Uncertainty, Returns to RD&D, Expert Elicitations, Meta-Analysis Classification-JEL: O3, Q5, Q55 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.86 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-086.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.86 Title: The Optimal Energy Mix in Power Generation and the Contribution from Natural Gas in Reducing Carbon Emissions to 2030 and Beyond Author-Name: Carlo Carraro Author-X-Name-First: Carlo Author-X-Name-Last: Carraro Author-WorkPlace-Name: University of Venice, FEEM and CMCC, Italy Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: FEEM and CMCC, Italy Author-Name: Thomas Longden Author-X-Name-First: Thomas Author-X-Name-Last: Longden Author-WorkPlace-Name: FEEM and CMCC, Italy Author-Name: Giacomo Marangoni Author-X-Name-First: Giacomo Author-X-Name-Last: Marangoni Author-WorkPlace-Name: FEEM and CMCC, Italy Abstract: This paper analyses a set of new scenarios for energy markets in Europe to evaluate the consistency of economic incentives and climate objectives. It focuses in particular on the role of natural gas across a range of climate policy scenarios (including the Copenhagen Pledges and the EU Roadmap) to identify whether current trends and policies are leading to an economically efficient and, at the same time, climate friendly, energy mix. Economic costs and environmental objectives are balanced to identify the welfare-maximising development path, the related investment strategies in the energy sector, and the resulting optimal energy mix. Policy measures to support this balanced economic development are identified. A specific sensitivity analysis upon the role of the 2020 renewable targets and increased energy efficiency improvements is also carried out. We conclude that a suitable and sustained carbon price needs to be implemented to move energy markets in Europe closer to the optimal energy mix. We also highlight that an appropriate carbon pricing is sufficient to achieve both the emission target and the renewable target, without incurring in high economic costs if climate policy is not too ambitious and/or it is internationally coordinated. Finally, our results show that natural gas is the key transitional fuel within the cost-effective achievement of a range of climate policy targets. Keywords: : EU Climate Policy, Energy Markets, Gas Share, Carbon Pricing, Renewables Target Classification-JEL: O33, O41, Q43, Q48, Q54 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.87 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-087.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.87 Title: External Influence as an Indicator of Scholarly Importance Author-Name: Ho Fai Chan Author-X-Name-First: Ho Fai Author-X-Name-Last: Chan Author-WorkPlace-Name: Queensland Behavioural Economics Group (QuBE), School of Economics and Finance, Queensland University of Technology Author-Name: Bruno S. Frey Author-X-Name-First: Bruno S. Author-X-Name-Last: Frey Author-WorkPlace-Name: Warwick Business School, University of Warwick and Department of Economics, Zeppelin University and CREMA Author-Name: Jana Gallus Author-X-Name-First: Jana Author-X-Name-Last: Gallus Author-WorkPlace-Name: Department of Economics, University of Zurich Author-Name: Markus Schaffner Author-X-Name-First: Markus Author-X-Name-Last: Schaffner Author-WorkPlace-Name: Queensland Behavioural Economics Group (QuBE), 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: Queensland Behavioural Economics Group (QuBE), School of Economics and Finance, Queensland University of Technology, and EBS Business School, ISBS, EBS Universität für Wirtschaft and CREMA Author-Name: Stephen Whyte Author-X-Name-First: Stephen Author-X-Name-Last: Whyte Author-WorkPlace-Name: Queensland Behavioural Economics Group (QuBE), School of Economics and Finance, Queensland University of Technology Abstract: The external influence of scholarly activity has to date been measured primarily in terms of publications and citations, metrics that also dominate the promotion and grant processes. Yet the array of scholarly activities visible to the outside world are far more extensive and recently developed technologies allow broader and more accurate measurement of their influence on the wider societal discourse. Accordingly we analyze the relation between the internal and external influences of 723 top economics scholars using the number of pages indexed by Google and Bing as a measure of their external influence. Although the correlation between internal and external influence is low overall, it is highest among recipients of major key awards such as the Nobel Prize or John Bates Clark medal, and particularly strong for those ranked among the top 100 researchers. Keywords: Academia, Scholarly Importance, Role of Economics, Social Importance of Economists, External and Internal Influence, Academic Performance, Awards Classification-JEL: A11, A13, Z18, Z19 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.88 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-088.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.88 Title: Innovation Complementarity and Environmental Productivity Effects: Reality or Delusion? Evidence from the EU Author-Name: Marianna Gilli Author-X-Name-First: Marianna Author-X-Name-Last: Gilli Author-WorkPlace-Name: University of Ferrara, Italy Author-Name: Susanna Mancinelli Author-X-Name-First: Susanna Author-X-Name-Last: Mancinelli Author-WorkPlace-Name: University of Ferrara, Italy Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara & Ceris Cnr Milan, Italy Abstract: Innovation is a key element behind the achievement of desired environmental and economic performances. Regarding CO2, mitigation strategies would require cuts in emissions of around 80-90% with respect to 1990. We investigate whether complementarity, namely integration, between the adoption of environmental innovation measures and other technological and organizational innovations is a factor that has supported reduction in CO2 emissions per value added, that is environmental productivity. We merge new EU CIS and WIOD meso level data to assess the innovation effects on sector CO2 performances at a wide EU level. We find that jointly adopting different innovations is not a significant factor to increase environmental productivity, neither for the entire economy nor for manufacturing or narrower ETS sectors. The only case where a complementarity arises is for Northern EU manufacturing sectors that integrate eco innovations with product and process innovations to support environmental productivity. We believe that the lack of integrated innovation adoption behind environmental productivity performance is a signal of the current weaknesses economies face in tackling climate change and green economy challenges. Incremental rather than more radical strategies have predominated so far; this is probably insufficient when we look at long-term economic and environmental goals. Keywords: Complementarity, Innovation, Climate Change, Sector Performance Classification-JEL: Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.89 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-089.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.89 Title: Marginal Abatement Cost Curves and the Optimal Timing of Mitigation Measures Author-Name: Adrien Vogt-Schilb Author-X-Name-First: Adrien Author-X-Name-Last: Vogt-Schilb Author-WorkPlace-Name: CIRED, France Author-Name: Stéphane Hallegatte Author-X-Name-First: Stéphane Author-X-Name-Last: Hallegatte Author-WorkPlace-Name: The World Bank, Sustainable Development Network, USA Abstract: Decision makers facing abatement targets need to decide which abatement measures to implement, and in which order. Measure-explicit marginal abatement cost curves depict the cost and abating potential of available mitigation options. Using a simple intertemporal optimization model, we demonstrate why this information is not su_cient to design emission reduction strategies. Because the measures required to achieve ambitious emission reductions cannot be implemented overnight, the optimal strategy to reach a short-term target depends on longer-term targets. For instance, the best strategy to achieve European's -20% by 2020 target may be to implement some expensive, high-potential, and long-to-implement options required to meet the -75% by 2050 target. Using just the cheapest abatement options to reach the 2020 target can create a carbonintensive lock-in and make the 2050 target too expensive to reach. Designing mitigation policies requires information on the speed at which various measures to curb greenhouse gas emissions can be implemented, in addition to the information on the costs and potential of such measures provided by marginal abatement cost curves. Keywords: Climate Change Mitigation, Dynamic Efficiency; Inertia, Sectoral Policies Classification-JEL: L98, Q48, Q54, Q58 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.90 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-090.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.90 Title: The Optimal Share of Variable Renewables. How the Variability of Wind and Solar Power Affects their Welfare-optimal Deployment Author-Name: Lion Hirth Author-X-Name-First: Lion Author-X-Name-Last: Hirth Author-WorkPlace-Name: Potsdam-Institute for Climate Impact Research, Vattenfall GmbH Abstract: This paper estimates the welfare-optimal market share of wind and solar power, explicitly taking into account their output variability. We present a theoretical valuation framework that consistently accounts for output variability over time, forecast errors, and the location of generators in the power grid, and evaluate the impact of these three factors on the marginal value of electricity from renewables. Then we estimate the optimal share of wind and solar power in Northwestern Europe from a calibrated numerical power market model. The optimal long-term share of wind power of total electricity consumption is estimated to be 20% at cost levels of 50 €/MWh, about three times the current market share of wind; but this estimate is subject to significant parameter uncertainty. Variability significantly impacts results: if winds were constant, the optimal share would be 60%. In addition, the effect of technological change, price shocks, and policies on the optimal share is assessed. We present and explain several surprising findings, including a negative impact of CO2 prices on optimal wind deployment. Keywords: Wind Power, Solar Power, Variable Renewables, Cost-Benefit Analysis, Numerical Optimization, Competitiveness Classification-JEL: C61, C63, Q42, Q48, D41 Creation-Date: 201310 Template-Type: ReDIF-Paper 1.0 Number: 2013.91 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-091.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.91 Title: Nonlinearity, Heterogeneity and Unobserved Effects in the CO2-income Relation for Advanced Countries Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara, Department of Economics & Management Author-Name: Antonio Musolesi Author-X-Name-First: Antonio Musolesi Author-X-Name-Last: Antonio Musolesi Author-WorkPlace-Name: University Grenoble Alpes & INRA France Abstract: We study long run carbon emissions-income relationships for advanced countries grouped in policy relevant groups: North America and Oceania, South Europe, North Europe. By relying on recent advances on Generalized Additive Mixed Models (GAMMs) and adopting interaction models, we handle simultaneously three main econometric issues, named here as functional form bias, heterogeneity bias and omitted time related factors bias, which have been proved to be relevant but have been addressed separately in previous papers. The model incorporates nonlinear effects, eventually heterogeneous across countries, for both income and time. We also handle serial correlation by using autoregressive moving average (ARMA) processes. We find that country-specific time-related factors weight more than income in driving the northern EU Environmental Kuznets. Overall, the countries differ more on their carbon-time relation than on the carbon-income relation which is in almost all cases monotonic positive. Once serial correlation and (heterogeneous) time effects have been accounted for, only three Scandinavian countries - Denmark, Finland and Sweden - present some threshold effect on the CO2-development relation Keywords: Environmental Kuznets Curve, Semiparametric Models, Generalized Additive Mixed Models, Interaction Models Classification-JEL: C14, C23, Q53 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.92 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-092.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.92 Title: Energy and Environmental Issues and Policy in China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: University Distinguished Professor and Chairman, School of Economics, Fudan University, Shanghai, China Abstract: China’s rampant environmental pollution problems and rising greenhouse gas emissions and the resulting climate change are undermining its long-term economic growth. China, from its own perspective cannot afford to and, from an international perspective, is not meant to continue on the conventional path of encouraging economic growth at the expense of the environment. Instead, concerns about a range of environmental stresses from burning fossil fuels, energy security as a result of steeply rising oil imports and international pressure on it to exhibit greater ambition in fighting global climate change have sparked China’s determination to improve energy efficiency and cut pollutants, and to increase the use of clean energy in order to help its transition to a low-carbon economy. This chapter focuses on China’s efforts towards energy conservation, nuclear power and the use of renewable energy. The chapter examines a number of market-based instruments, economic and industrial policies and measures targeted for energy saving, pollution cutting, energy greening. To actually achieve the desired outcomes, however, requires strict implementation and coordination of these policies and measures. The chapter discusses a variety of implementation/compliance/reliability issues. The chapter ends with some concluding remarks and recommendations. Keywords: Energy Saving, Renewable Energy, Power Generation, Nuclear Power, CCS, Market-Based Instruments, Economic and Industrial Policies, Carbon Intensity, Resource Taxes; Implementation, Compliance and Reliability, Financial Institutions Classification-JEL: Q42, Q43, Q48, Q52, Q54, Q55, Q56, Q58, R13, R15 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.93 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-093.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.93 Title: The Clean Energy R&D Strategy for 2°C Author-Name: Giacomo Marangoni Author-X-Name-First: Giacomo Author-X-Name-Last: Marangoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Italy Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Italy Abstract: This paper uses an integrated assessment model to quantify the climate R&D investment strategy for a variety of scenarios fully consistent with 2°C. We estimate the total climate R&D investment needs in approximately 1 USD Trillion cumulatively in the period 2010-2030, and 1.6 USD Trillions in the period 2030-2050. Most of the R&D would be carried out in industrialized countries initially, but would be evenly split after 2030. We also assess a ‘climate R&D deal’ in which countries cooperate on innovation in the short term, and find that an R&D agreement slightly underperforms a climate policy based on the extension of the Copenhagen pledges till 2030. Both policies are inferior to full cooperation on mitigation starting in 2020. A global agreement on clean energy innovation beyond 2030 without sufficiently stringent GHG emissions reduction policies is found to be incompatible with 2°C. Keywords: Clean Energy R&D, Endogenous Technical Change, Climate Policy, 2 Degrees, Durban Action Platform Classification-JEL: Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.94 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-094.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.94 Title: The Impact of Climate Change on Agriculture: Nonlinear Effects and Aggregation Bias in Ricardian Models of Farm Land Values Author-Name: Carlo Fezzi Author-X-Name-First: Carlo Author-X-Name-Last: Fezzi Author-WorkPlace-Name: Department of Economics, University of California and CSERGE (School of Environmental Sciences), University of East Anglia Author-Name: Ian Bateman Author-X-Name-First: Ian Author-X-Name-Last: Bateman Author-WorkPlace-Name: CSERGE (School of Environmental Sciences), University of East Anglia Abstract: Ricardian (hedonic) analyses of the impact of climate change on farmland values typically assume additively separable effects of temperature and precipitation. Model estimation is implemented on data aggregated across counties or large regions. We investigate the potential bias induced by such approaches by using a large panel of farm-level data. Consistent with the literature on plant physiology, we observe significant non-linear interaction effects, with more abundant precipitation acting as a mitigating factor for increased heat stress. This interaction disappears when the same data is aggregated in the conventional manner, leading to predictions of climate change impacts which are significantly distorted. Keywords: Climate Change, Agriculture, Ricardian Analysis, Aggregation Bias, Semi-Parametric Models Classification-JEL: Q54, C23, C14 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.95 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-095.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.95 Title: A Comparison Between Shale Gas in China and Unconventional Fuel Development in the United States: Health, Water and Environmental Risks Author-Name: Paolo D. Farah Author-X-Name-First: Paolo D. Author-X-Name-Last: Farah Author-WorkPlace-Name: Edge Hill University, Department of Law & Criminology, UK, gLAWcal, Global Law Initiatives for Sustainable Development, UK Author-Name: Riccardo Tremolada Author-X-Name-First: Riccardo Author-X-Name-Last: Tremolada Author-WorkPlace-Name: Università degli Studi del Piemonte Orientale, Dipartimento di Studi per l’Impresa e il Territorio, Italy, EU Commission Marie Curie Fellow (2013), Chinese Research Academy on Environmental Sciences (CRAES), China, J.D. and LL.M. Università degli Studi di Milano, School of Law, Italy Abstract: China is appraised to have the world's largest exploitable reserves of shale gas, although several legal, regulatory, environmental and investment-related issues will likely restrain its scope. China's capacity to successfully face these hurdles and produce commercial shale gas will have a crucial impact on the regional gas market and on China’s energy mix, as Beijing strives to decrease reliance on imported oil and coal, while attempting to meet growing energy demand and maintain a certain level of resource autonomy. The development of the unconventional natural gas extractive industry will also endow China with further negotiating power to obtain more advantageous prices from Russia and future liquefied natural gas (LNG) suppliers. This paper, adopting a comparative perspective, underlines the trends learned from unconventional fuel development in the United States, emphasizing their potential application to the Chinese context in light of recently signed production-sharing contracts between qualified foreign investors and China. The wide range of regulatory and enforcement problems in this matter are accrued by an extremely limited liberalization of gas prices, lack of technological development, and political hurdles curbing the opening of resource extraction to private investors. These issues are exacerbated by concerns related to the risk of water pollution deriving from mismanaged drilling and fracturing, absence of adequate regulation framework and industry standards, entailing consequences on social stability and environmental degradation. Keywords: Shale Gas, Unconventional Fuel, China, U.S.A., Health, Water, Environmental Risks Classification-JEL: A12, A13, D40, D62, D81, F10, F13, F18, H23, K32, K33, Q4, Q40, Q41, Q42, Q43, Q48, F1, F13, F40, L95, Q3, Q30, Q32, Q33, Q25 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.96 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-096.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.96 Title: Energy Efficiency and Industrial Output: The Case of the Iron and Steel Industry Author-Name: Florens Flues Author-X-Name-First: Florens Author-X-Name-Last: Flues Author-WorkPlace-Name: OECD, France, formerly Zentrum für Europäische Wirtschaftsforschung (ZEW), Germany 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, Spain Author-Name: Stefan Vögele Author-X-Name-First: Stefan Author-X-Name-Last: Vögele Author-WorkPlace-Name: Institute for Energy and Climate Research - Systems Analysis and Technology Evaluation, Forschungszentrum Jülich (IEK-STE), Germany Abstract: The iron and steel industry is one of the most carbon emitting and energy consuming sectors in Europe. At the same time this sector is of high economic importance for the European Union. Therefore, while public environmental and energy policies target this sector, there is political concern that it suffers too much from these policy measures. Various actors fear a policy-induced decline in steel production, and possibly an international reallocation of production plants. This study analyzes the role that input prices and public policies may play in attaining an environmentally more sustainable steel production and how this - in turn - affect total steel output. As we find out for examples of major European steel producing countries, a kind of rebound effect of energy-efficiency improvements in steel production on total steel output may arise. Keywords: Energy Efficiency, Iron And Steel Industry, Environmental Protection, Rebound Effect Classification-JEL: L51, L61, Q43, Q50 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.97 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-097.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.97 Title: Leadership and International Climate Cooperation Author-Name: Gregor Schwerhoff Author-X-Name-First: Gregor Author-X-Name-Last: Schwerhoff Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research, Germany Abstract: Which kind of reaction can a nation or group of nations expect when leading by example in climate policy? This literature survey describes possible positive reaction mechanisms from different fields of economics, some of which have scarcely been linked to climate economics previously. One effect may be behavioral, a reaction motivated by fairness, reciprocity or norms. Second, other nations may interpret the leader's action as a signal on his preference or the value of the objective and adjust their own policy based on the new information. Third, the leader may provide a service to other nations, which decreases their costs and risks. The followers could benefit by learning successful policies, adopting technologies and obtaining information on the cost of environmental policy. In addition to these economic mechanisms, a leading group of nations might initiate a political process of successive enlargements. Keywords: Climate Change, Leadership, Public Good Provision Classification-JEL: H41, O33, Q54 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.98 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-098.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.98 Title: Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information Author-Name: Francisco Alvarez Author-X-Name-First: Francisco Author-X-Name-Last: Alvarez Author-WorkPlace-Name: Department of Fundamentos del Análisis Económico II, Universidad Complutense de Madrid, Spain Author-Name: Francisco J. André Author-X-Name-First: Francisco J. Author-X-Name-Last: André Author-WorkPlace-Name: Department of Fundamentos del Análisis Económico II, Universidad Complutense de Madrid, Spain Abstract: We compare auctioning and grandfathering as allocation mechanisms of emission permits when there is a secondary market with market power and the firms have private information. Based on real-life cases such as the EU ETS, we consider a multi-unit, multi-bid uniform auction, modelled as a Bayesian game of incomplete information. At the auction each firm anticipates his role in the secondary market, which affects the firms’ valuation of the permits (that are not common across firms) as well as their bidding strategies and it precludes the auction from generating a cost-effective allocation of permits, as it would occur in simpler auction models. Auctioning tends to be more cost-effective than grandfathering when the firms’ costs are asymmetric enough, especially if the follower has lower abatement costs than the leader and uncertainty about the marginal costs is large enough. If market power spills over the auction, the latter is always less cost-effective than grandfathering. One central policy implication is that the specific design of the auction turns out to be crucial for cost-effectiveness. The chances of the auction to outperform grandfathering require that the former is capable of diluting the market power that is present in the secondary market. Keywords: Cap-and-Trade Systems, Auctions, Grandfathering, Market Power, Bayesian Games of Incomplete Information Classification-JEL: D44, Q58, L13 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.99 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-099.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.99 Title: Looking Forward from the Past: Assessing the Potential Flood Hazard and Damage in Polesine Region by Revisiting the 1950 Flood Event Author-Name: Mattia Amadio Author-X-Name-First: Mattia Author-X-Name-Last: Amadio Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici, Italy Author-Name: Jaroslav Mysiak Author-X-Name-First: Jaroslav Author-X-Name-Last: Mysiak Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici, Italy and Agenzia Regionale Prevenzione e Ambiente dell’Emilia-Romagna, Italy Author-Name: Silvano Pecora Author-X-Name-First: Silvano Author-X-Name-Last: Pecora Author-WorkPlace-Name: Agenzia Regionale Prevenzione e Ambiente dell’Emilia-Romagna, Italy Author-Name: Alberto Agnetti Author-X-Name-First: Alberto Author-X-Name-Last: Agnetti Author-WorkPlace-Name: Agenzia Regionale Prevenzione e Ambiente dell’Emilia-Romagna, Italy Abstract: River floods are a common natural hazard in Europe, causing high mortality and immense economic damage (EM-DAT 2009). Human-induced climate change will alter intensity and frequency of extreme weather events, hence flood risk (IPCC 2012). While large-scale assessments of flood risk dominate (Genovese, et al. 2007), the knowledge of the effects at smaller scales is poor or incomplete, with few localized studies. The approach of this study starts from the definition of the risk paradigm and the elaboration of local climatic scenarios to track a methodology aimed at elaborating and combining the three elements concurring to the determination of risk: hydrological hazard, value exposure and vulnerability. First, hydrological hazard scenarios are provided by hydrological and hydrodynamic models, included in a flood forecasting system capable to define “what-if” scenario in a flexible way. These results are then integrated with land-use data (exposure) and depth-damage functions (vulnerability) in a GIS environment, to assess the final risk value (potential flood damage) and visualize it in form of risk maps. In this paper, results from a pilot study in the Polesine area (Po river basin) are presented, where four simulated levee breach scenarios are compared. This technique is of great interest to decision makers who are interested in gaining knowledge about possible direct losses from river flooding events. It can also be an important tool to guide decision making and planning processes, to help them understand how to reduce risk to river flood events. As future perspective, the employed methodology can also be extended at the basin scale through integration with the existent flood warning system to gain a real-time estimate of floods direct costs. Keywords: Flood Risk/Damage Assessment, Hydrological-Hydrodynamic Modelling, Climate Scenarios, Historical Flood Reassessment, Po River Basin District, Polesine Region (Rovigo Province) Classification-JEL: Q25, Q54 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.100 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-100.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.100 Title: A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS Author-Name: Carlo Orecchia Author-X-Name-First: Carlo Author-X-Name-Last: Orecchia Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), and Euro-Mediterranean Center on Climate Change (CMCC), Italy Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), and Euro-Mediterranean Center on Climate Change (CMCC), Italy Abstract: Although CO2 emissions stand for most of greenhouse gas (GHG) emissions, the contribution of mitigation efforts based on non-CO2 emissions is still a field that needs to be explored more thoroughly. Extending abatement opportunities to non-CO2 could reduce overall mitigation costs but it could also exert a negative pressure on agricultural output. This paper offers insights about the first effect while provides a preliminary discussion for the second. We investigate the role of non-CO2 GHGs in climate change mitigation in Europe using a computable general equilibrium (CGE) model. We develop a specific modelling framework extending the model with non-CO2 GHGs as an additional mitigation alternative. These modifications allow us to analyse the implications for the European Union (EU) of including non-CO2 GHG emissions in its cap and trade system. We distinguish two targets on all GHG emissions for 2020, a reduction by 20% and 30% with respect to 1990 levels. Within each reduction cap, we consider two mitigation opportunities by means of a carbon tax levied on: 1) CO2 emissions only, and 2) All GHGs emissions (both CO2 and non-CO2 GHG). Results show that a multi-gas mitigation policy would slightly decrease policy costs compared to the CO2 only alternative. Keywords: CGE, Greenhouse gas emissions, Cap-and-trade system, Agriculture, Non-CO2 emissions, European Union, Effort Sharing Decision Classification-JEL: Q5, Q58 Creation-Date: 201311 Template-Type: ReDIF-Paper 1.0 Number: 2013.101 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-101.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.101 Title: Urban Watershed Services For Improved Ecosystem Management and Risk Reduction, Assessment Methods and Policy Instruments: State of the Art Author-Name: Yaella Depietri Author-X-Name-First: Yaella Author-X-Name-Last: Depietri Author-WorkPlace-Name: United Nations University, Institute for Environment and Human Security (UNU-EHS), Institut de Ciència i Tecnologia Ambientals (ICTA), Universitat Autonoma de Barcelona (UAB) Author-Name: Lorenzo Guadagno Author-X-Name-First: Lorenzo Author-X-Name-Last: Guadagno Author-WorkPlace-Name: International Organization for Migration (IOM) Author-Name: Margaretha Breil Author-X-Name-First: Margaretha Author-X-Name-Last: Breil Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Euro-Mediterranean Center on Climate Change (CMCC) Abstract: Under scenarios of increasing unplanned urban expansion, environmental degradation and hazard exposure, the vulnerability of urban populations, especially of their poorer segments, needs to be tackled through integrated economic, social and environmental solutions. Basing our analysis on the concept of ecosystem services, we suggest that urban areas would benefit from a shift in perspective towards a more regional approach, which recognizes them as one of many interconnected elements that interact at the watershed level. By integrating an ecosystem approach into the management of water-related services, urban management policies can take a first step towards fostering an improvement of the health of upstream and downstream areas of the watershed, activating environmentally sound practices which aim at guaranteeing the sustainable and cost effective supply of services. These strategies can for instance be supported by using payment schemes for ecosystem services or similar strategies, allowing for the redistribution of resources among communities in the watershed. From our analysis it results that, through the recognition of the primary role played by watershed ecosystems, cities can benefit from an enlarged set of policies, which can help strengthen the supply of essential environmental services, while reducing the vulnerability of its population and contributing to the maintenance of healthy ecosystems. Keywords: Urban Watersheds, Ecosystem Services, Water Supply And Sanitation, Disaster Risk Reduction, Valuation Classification-JEL: I14, Q01, Q25, Q54, Q57 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.102 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-102.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.102 Title: Energy Prices and the Real Exchange Rate of Commodity-Exporting Countries Author-Name: Magali Dauvin Author-X-Name-First: Magali Author-X-Name-Last: Dauvin Author-WorkPlace-Name: EconomiX-CNRS, University Paris West Nanterre-la Défense, France Abstract: This paper investigates the relationship between energy prices and the real effective exchange rate of commodity-exporting countries. We consider two sets of countries: 10 energy-exporting and 23 non-fuel commodity-exporting countries over the period 1980-2011. Estimating a panel cointegrating relationship between the real exchange rate and its fundamentals, we provide evidence for the existence of "energy currencies". Relying on the estimation of panel smooth transition regression (PSTR) models, we show that there exists a certain threshold beyond which the real effective exchange rate of both energy and commodity exporters reacts to oil prices, through the terms-of-trade. More specifically, when oil price variations are low, the real effective exchange rates are not determined by terms-of-trade but by other usual fundamentals Nevertheless, when the oil market is highly volatile, currencies follow an "oil currency" regime, terms-of-trade becoming an important driver of the real exchange rate. Keywords: Energy Prices, Terms-of-Trade, Exchange Rate, Commodity-Exporting Countries, Panel Cointegration, Nonlinear Model, PSTR Classification-JEL: C33, F31, O13, Q43 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.103 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-103.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.103 Title: The Effect of Within-Sector, Upstream and Downstream Energy Taxes on Innovation and Productivity Author-Name: Chiara Franco Author-X-Name-First: Chiara Author-X-Name-Last: Franco Author-WorkPlace-Name: Catholic University Author-Name: Giovanni Marin Author-X-Name-First: Giovanni Author-X-Name-Last: Marin Author-WorkPlace-Name: Ceris-CNR, Institute for Economic Research on Firms and Growth, National Research Council of Italy Abstract: The aim of the paper is to investigate the effect of environmental stringency on innovation and productivity using a cross-country panel made up of 7 European countries for 13 manufacturing sectors over the years 2001-2007. This research topic goes under the heading of Porter Hypothesis (PH) of which different versions have been tested. We take into consideration both the strong and the weak versions while adding some peculiarities to the analysis. Firstly, we assess the role played by a specific environmental regulation, that is energy taxes, that have rarely been empirically tested as factors that can favour PH hypothesis to be verified. Secondly, we do not consider, within the same framework, only the effect of energy taxes in the same sector (within-sector), but also the role played by energy taxes in upstream and downstream sectors in terms of input-output relationship. Thirdly, we test these relationships also “indirectly” by verifying whether innovation can be one of the channels through which higher sectoral productivity can be reached. The main findings suggest that downstream stringency is the most relevant driver for innovation and that most of the effect of regulation on productivity is direct, while the part of the effect mediated by induced innovation is not statistically significant. Keywords: Energy Taxes, Porter Hypothesis, Upstream, Downstream Classification-JEL: L6, O13, Q55 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.104 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-104.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.104 Title: Climate Change, Sea Level Rise, and Coastal Disasters. A Review of Modeling Practices Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: University of Milan, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (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 Euro-Mediterranean Center on Climate Change (CMCC) Abstract: The climate change impacts on sea level rise and coastal disasters, and the possible adaptation responses have been studied using very different approaches, such as very detailed site-specific engineering studies and global macroeconomic assessments of costal zones vulnerability. This paper reviews the methodologies and the modeling practices used by the sea level rise literature. It points at the strengths and weaknesses of each approach, motivating differences in results and in policy implications. Based on the studies surveyed, this paper also identifies potential directions for future research. Keywords: Climate Change Impacts, Adaptation, Sea Level Rise Classification-JEL: Q5, Q54 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.105 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-105.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.105 Title: Economic Cycles and Their Synchronization: A Survey of Spectral Properties Author-Name: L. Sella Author-X-Name-First: L. Sella Author-X-Name-Last: Sella Author-WorkPlace-Name: Department of Economics “S. Cognetti de Martiis", University of Turin, Italy, CNR-Ceris, Moncalieri, Italy Author-Name: G. Vivaldo Author-X-Name-First: G. Author-X-Name-Last: Vivaldo Author-WorkPlace-Name: Istituto Nazionale di Fisica Nucleare (INFN), Turin, Italy Author-Name: A. Groth Author-X-Name-First: A. Groth Author-X-Name-Last: Groth Author-WorkPlace-Name: Environmental Research & Teaching Institute and Geosciences Department, Ecole Normale Supérieure, France Author-Name: M. Ghil Author-X-Name-First: M. Author-X-Name-Last: Ghil Author-WorkPlace-Name: Environmental Research & Teaching Institute and Geosciences Department, Ecole Normale Supérieure, France, Department of Atmospheric & Oceanic Sciences and Institute of Geophysics & Planetary Physics, University of California, USA Abstract: The present work applies several advanced spectral methods to the analysis of macroeconomic fluctuations in three countries of the European Union: Italy, The Netherlands, and the United Kingdom. We focus here in particular on singular-spectrum analysis (SSA), which provides valuable spatial and frequency information of multivariate data and that goes far beyond a pure analysis in the time domain. The spectral methods discussed here are well established in the geosciences and life sciences, but not yet widespread in quantitative economics. In particular, they enable one to identify and describe nonlinear trends and dominant cycles | including seasonal and interannual components that characterize the deterministic behavior of each time series. These tools have already proven their robustness in the application on short and noisy data, and we demonstrate their usefulness in the analysis of the macroeconomic indicators of these three countries. We explore several fundamental indicators of the countries' real aggregate economy in a univariate, as well as a multivariate setting. Starting with individual single-channel analysis, we are able to identify similar spectral components among the analyzed indicators. Next, we consider combinations of indicators and countries, in order to take different effects of comovements into account. Since business cycles are cross-national phenomena, which show common characteristics across countries, our aim is to uncover hidden global behavior across the European economies. Results are compared with previous findings on the U.S. indicators (Groth et al., 2012). Finally, the analysis is extended to include several indicators from the U.S. economy, in order to examine its influence on the European market. Keywords: Advanced Spectral Methods, European Business Cycle, Frequency Domain, Time Domain Classification-JEL: C15, C60, E32 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.106 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-106.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.106 Title: The Dawn of Italian Industry in Argentina: Pirelli in Buenos Aires (1898-1910) Author-Name: Veronica Ronchi Author-X-Name-First: Veronica Author-X-Name-Last: Ronchi Author-WorkPlace-Name: University of Milan and Fondazione Eni Enrico Mattei, Italy Abstract: With a great vocation for internationalization, Pirelli begins expanding in Argentina in the final years of the nineteenth century. The first step is the establishment of a commercial chain followed by the construction of a factory started in 1910. Essential for the growth of the enterprise is the strong bond to Italian culture that characterizes Alberto Pirelli's proposals for the Argentine soil, from the international exhibition in Buenos Aires in 1910 to the launch of Pirelli within the Compañía Italo-Argentina de Electricidad, together with other major Italian companies, the following year. The rise of Pirelli will continue, without interruptions, up to the present day. Keywords: Italian Industry, Pirelli, Argentina Classification-JEL: N66, N8 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.107 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-107.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.107 Title: Accounting for Different Uncertainties: Implications for Climate Investments? Author-Name: Svenja Hector Author-X-Name-First: Svenja Author-X-Name-Last: Hector Author-WorkPlace-Name: ETH Zurich Department of Management, Technology and Economics Abstract: The paper clarifies the link between changes in risk aversion and the effect on the consumption discount rate. In a general framework that can cope with various forms of uncertainty, it is shown that the response of the consumption discount rate to a change in risk aversion depends on some fundamental properties of the considered uncertainties. The application of this general result to specific forms of uncertainty extends existing results to more general forms of risk and yields a new result on preference uncertainty. Keywords: Discount Rate, Risk Aversion, Kreps-Porteus-Selden, Risk-Sensitive Preferences, Uncertain Preferences, Climate Change Classification-JEL: H43, D81, Q54 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.108 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-108.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.108 Title: The Global Emission Game: On the Impact of Strategic Interactions Between Countries on the Existence and the Properties of Nash Equilibria Author-Name: Mélanie Heugues Author-X-Name-First: Mélanie Author-X-Name-Last: Heugues Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Italy Abstract: In a context of laissez-faire, the propositions established in this paper shed light on the evolution of the problem of greenhouse gas (GHG) accumulation in the atmosphere for each type of strategic behaviour resulting from countries’ interconnection on global markets. In a framework of strong economic interdependencies, they show the potential consequences of the free trade arrangements on the environment and question the idea that free trade liberalisation should necessarily lead to an increase in countries’ welfare. This paper provides an exhaustive typology of countries’ strategic behaviours and a strong static comparative analysis with regard to the exogenous parameters of the model. Whereas some assumptions tend to be less relevant from an environmental point of view; others that are very relevant have not yet been considered in the literature. Using lattice theoretic notions, this paper generalizes the existing results of the literature and determines new equilibria not yet exploited. It thus extends the current framework of the traditional public economic theory dealing with public goods. Keywords: Non-Cooperative Game Theory, Climate Change, Global Emission Game, Nash Equilibria, Strategic Substitutes and Complements Classification-JEL: C72, H41, Q54 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.109 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-109.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.109 Title: Solar Grid Parity Dynamics in Italy: A Real Option Approach Author-Name: Tommaso Biondi Author-X-Name-First: Tommaso Author-X-Name-Last: Biondi Author-WorkPlace-Name: Sinloc, Sistema Iniziative Locali S.p.A Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: Department of Economics and Management, University of Padova, Fondazione Eni Enrico Mattei and Centro Studi Levi- Cases Abstract: Over the past three years Italy has witnessed a rapid growth in the photovoltaic energy market, followed by an equally sudden decline when the government decided to reduce the incentives. This sharp change in the trend of the market calls into question the achievement of Grid Parity and the possibility that the market is able to develop independently. Starting from the standard Grid Parity Model, widely used for the photovoltaic (PV) market, we internalize the uncertainty surrounding both the energy price and PV module costs, to forecast the dynamics of the Italian PV market. We show that these sources of uncertainty can delay the Grid Parity timing of several years compared to current forecasts, well describing the current market situation. Keywords: Photovoltaic Market, Grid Parity Classification-JEL: O3, O31, O32 Creation-Date: 201312 Template-Type: ReDIF-Paper 1.0 Number: 2013.110 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2013-110.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2013.110 Title: Non-CO2 Greenhouse Gas Mitigation Modeling with Marginal Abatement Cost Curves: Technical Change, Emission Scenarios and Policy Costs Author-Name: Samuel Carrara Author-X-Name-First: Samuel Author-X-Name-Last: Carrara Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Italy Author-Name: Giacomo Marangoni Author-X-Name-First: Giacomo Author-X-Name-Last: Marangoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Italy Abstract: The abatement of non-CO2 greenhouse gases (OGHG) has proved to be of paramount importance for reaching global mitigation targets. The modeling of their abatement is normally carried out referring to marginal abatement cost (MAC) curves, which by now represent a standard approach for such an analysis. As no evolution scenarios are available to describe future mitigation opportunities for OGHGs, exogenous technical progress factors (TP) are normally imposed, producing progressive MAC dilatation over time. The main aim of this work is to perform a sensitivity analysis evaluating climate and economic effects of imposing various TPs under different policy scenarios: the analysis shows that TP variation has a considerable impact on the climatic and economic results. Keywords: Non-CO2 Greenhouse Gases, Marginal Abatement Cost Curve, Technical Change Classification-JEL: Q54, Q55 Creation-Date: 201312