Evaluation of cumulative externality: environmental economics, oligopoly and the private provision of public goods

This paper evaluates environmental externality when the structure of the externality is cumulative. The evaluation exercise is based on the assumption that the agents in question form conjectural variations. A number of environments are encompassed within this classification and have received due attention in the literature. Each of these heterogeneous environments, however, possesses considerable analytical homogeneity and permit subscription to a general model treatment. These environments include environmental externality, oligopoly and the analysis of the private provision of public goods. We highlight the general analytical approach by focusing on this latter context, in which debate centers around four issues: the existence of free-riding, the extent to which contributions are matched equally across individuals, the nature of conjectures consistent with equilibrium, and the allocative inefficiency of alternative regimes. This paper resolves each of these issues, with the following conclusions: A consistent-conjectures equilibrium exists in the private provision of public goods. It is the monopolistic-conjectures equilibrium. Agents act identically, contributing positive amounts of the public good in an efficient allocation of resources. There is complete matching of contributions among agents, no free-riding, and the allocation is independent of the number of members within the community. Thus the Olson conjecture—that inefficiency is exacerbated by community size—has no foundation in a consistent-conjectures, cumulative-externality, context (212 words).

Essays on Industrial Organization and Environmental Economics

This dissertation studies environmental regulation issues in the hog production industry as well as forces behind the reorganization of the industry during the past two decades. Federal and State-level environmental regulations imposed on U.S. hog production during the year 2003 are examined in Chapter 1. Based on the number of regulations passed by the Federal government and states, the 2003 regulatory index is constructed. The regulatory stringency index suggests that state-level regulations vary across states and have increased over the years. In addition, state-level regulations are more stringent than federal regulations. Chapter 2 develops an empirically implementable theoretical model which allows us to investigate the long-run effects of environmental regulations on the U.S. hog industry. Hog feeding operations (HFOs) are divided into large feeding operations (LHFOs) and small feeding operations (SHFOs). The impact of the presence of a large number of LHFOs on the entry and exit of CHFOs is also examined. Results of this study suggest that: Increased state-level regulation stringency significantly lowers the output of SHFOs; increased state-level regulation stringency significantly lowers the output of LHFOs; increased state-level regulation stringency significantly lowers the number of SHFOs; SHFO output rises significantly in states that have a greater number of LHFOs; LHFO output rises significantly in states that have a greater number of LHFOs; the number of SHFOs significantly increases in states that have a greater numbers of LHFOs; regulation increases the average SHFO size; and regulation decreases the average LHFO size. Chapter 3 examines the importance of input availability, market attractiveness, agglomeration economies and environmental regulations on the reorganization of U.S. hog production for a panel of 22 U.S. hog producing states which include, Northern states, Southern states and Midwest states for the period 1994-2006. Results from this study suggest that: Hog production in a state is positively affected by hog production in a nearby state, confirming the presence of agglomeration economies; Environmental regulations and high corn price have negative effects on state-level U.S. hog production; High hog prices, and favorable labor cost, and land values attract hog production; and transportation cost has no effect on hog production. Advisors: Azzeddine Azzam and Karina Schoengold

Essays in Environmental Economics

This dissertation comprises four essays on the topic of environmental economics and industrial organization. In the first essay, we develop a two-country world differential game model with a polluting firm in each country to investigate the equilibrium of the game between firms when they decide to trade or not and to see under which conditions social welfare coincides with the market equilibrium. In the second essay, we built a model where firms strategically choose whether to participate in an auction/lottery to attain pollution permits, or instead invest in green R&D, to show that, somewhat counterintuitively, a desirable side effect of the auction is in fact that of fostering environmental R&D in an admissible range of the model parameters. The third essay investigates a second-best trade agreement between two countries when pollution spillovers are asymmetric to examine the strategic behavior of governments in using pollution taxes and tariffs under trade liberalization. The fouth essay studies the profitability of exogenous output constraint in a differential game model with price dynamics under the feedback strategies.

Sustainable Management of the Great Artesian Basin: An Analysis Based on Law and Environmental Economics

Current policy issues surrounding management of the Great Artesian Basin - historical development of existing legislation and institutions - hydrological and historical background information - development of concerns over unsustainable use of resources and possible adverse environmental impacts - recent developments associated with the general reforms to water law and policy initiated by the Council of Australian Governments (COAG) - comparison of issues surrounding the Murray-Darling Basin and the Great Artesian Basin.

Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience

It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.

Tracing CO2 emissions in global value chains

This paper integrates two lines of research into a unified conceptual framework: trade in global value chains and embodied emissions. This allows both value added and emissions to be systematically traced at the country, sector, and bilateral levels through various production network routes. By combining value-added and emissions accounting in a consistent way, the potential environmental cost (amount of emissions per unit of value added) along global value chains can be estimated. Using this unified accounting method, we trace CO2 emissions in the global production and trade network among 41 economies in 35 sectors from 1995 to 2009, basing our calculations on the World Input–Output Database, and show how they help us to better understand the impact of cross-country production sharing on the environment.

Environmental and ecological economics in the 21st century: an age adjusted citation analysis of the influential articles, journals, authors and institutions

We investigate the influence of articles, authors, journals and institutions in the field of environmental and ecological economics. We depart from studies that investigated the literature until 2001 and include a time period that has witnessed an enormous increase of importance in the field. We adjust for the age effect given the huge impact of the year of an article's publication on its influence and we show that this adjustment does make a substantial difference — especially for disaggregated units of analysis with diverse age characteristics such as articles or authors. We analyse 6597 studies on environmental and ecological economics published between 2000 and 2009. We provide rankings of the influential articles, authors, journals and institutions and find that Ecological Economics, Energy Economics and the Journal of Environmental Economics and Management have the most influential articles, they publish very influential authors and their articles are cited most. The University of Maryland, Resources for the Future, the University of East Anglia and the World Bank appear to be the most influential institutions in the field of environmental and ecological economics.

Environmental and ecological economics in the 21st century: an age adjusted citation analysis of the most influential articles, journals, authors and institutions

We investigate the influence of articles, authors, journals and institutions in the field of environmental and ecological economics. We depart from studies that investigated the literature until 2001 and include a time period that has witnessed an enormous increase of importance in the field. We adjust for the age effect given the huge impact of the year of an article's publication on its influence and we show that this adjustment does make a substantial difference — especially for disaggregated units of analysis with diverse age characteristics such as articles or authors. We analyse 6597 studies on environmental and ecological economics published between 2000 and 2009. We provide rankings of the influential articles, authors, journals and institutions and find that Ecological Economics, Energy Economics and the Journal of Environmental Economics and Management have the most influential articles, they publish very influential authors and their articles are cited most. The University of Maryland, Resources for the Future, the University of East Anglia and the World Bank appear to be the most influential institutions in the field of environmental and ecological economics.

Assessment on the effect of pollution abatement on environmental efficiency with Markov chain Monte Carlo simulation

Both environmental economists and policy makers have shown a great deal of interest in the effect of pollution abatement on environmental efficiency. In line with the modern resources available, however, no contribution is brought to the environmental economics field with the Markov chain Monte Carlo (MCMC) application, which enables simulation from a distribution of a Markov chain and simulating from the chain until it approaches equilibrium. The probability density functions gained prominence with the advantages over classical statistical methods in its simultaneous inference and incorporation of any prior information on all model parameters. This paper concentrated on this point with the application of MCMC to the database of China, the largest developing country with rapid economic growth and serious environmental pollution in recent years. The variables cover the economic output and pollution abatement cost from the year 1992 to 2003. We test the causal direction between pollution abatement cost and environmental efficiency with MCMC simulation. We found that the pollution abatement cost causes an increase in environmental efficiency through the algorithm application, which makes it conceivable that the environmental policy makers should make more substantial measures to reduce pollution in the near future.