nep-cmp New Economics Papers
on Computational Economics
Issue of 2011‒05‒24
29 papers chosen by
Stan Miles
Thompson Rivers University

  1. Using Economic Theory to Guide Numerical Analysis: Solving for Equilibria in Models of Asymmetric First-Price Auctions By Timothy P. Hubbard; Rene Kirkegaard; Harry J. Paarsch
  2. Application of Weather Derivatives in Multi-Period Risk Management By Vedenov, Dmitry V.; Sanchez, Leonardo
  3. Taking Perturbation to the Accuracy Frontier: A Hybrid of Local and Global Solutions By Maliar, Lilia; Maliar, Serguei; Villemot, Sébastien
  4. Project scheduling with resource capacities and requests varying with time By Hartmann, Sönke
  5. A cross entropy multiagent learning algorithm for solving vehicle routing problems with time windows By Tai-Yu Ma
  6. The Environment, Trade and Innovation with Heterogeneous Firms: A Numerical Analysis By Cui, Jingbo; Ji, Yongjie
  7. An Agent-Based Model of Exurban Land Development By Chen, Yong; Irwin, Elena G.; Jayaprakash, Ciriyam
  8. Economic Value of Information: Wheat Protein Measurement By Miao, Ruiqing; Hennessy, David A.
  9. Comparison of several demand systems By Meyer, Stefan; Yu, Xiaohua; Abler, David
  10. A vehicle routing model with split delivery and stop nodes By Leonardo Berbotto; Sergio García; Francisco J. Nogales
  11. How Market Power Changes in Monopoly: Using Lauâs Hessian Identities By Yamaura, Koichi; Featherstone, Allen
  12. Anomalous price impact and the critical nature of liquidity in financial markets By Bence Toth; Yves Lemperiere; Cyril Deremble; Joachim de Lataillade; Julien Kockelkoren; Jean-Philippe Bouchaud
  13. First in Class? The Performance of Latent Class Model By Chen, Min; Lupi, Frank
  14. A Lagrangian discretization multiagent approach for large-scale multimodal dynamic assignment By Tai-Yu Ma; Jean-Patrick Lebacque
  15. Spatial Pricing Patterns of Cellulosic Biomass under Oligopsony â A Multi-agent Simulation Model By Kumarappan, Subbu
  16. The international Economic Crisis and the Colombian Economy By Ricardo Argüello C
  17. Poverty Impacts of Agricultural Policy Adjustments in an Opening Economy: the Case of Colombia By Ricardo Argüello C; Daniel Valderrama G.; Sandra Acero W.
  18. Impact of Climate Change on Poverty in Laos By Kyophilavong, Phouphet; Takamatsu, Shinya
  19. Assessing the Impact of Climate Change on China's Grain Sector and International Trade By Hansen, Jim; Tuan, Francis; Somwaru, Agapi
  20. ANALYZING TRADE IMPLICATIONS OF U.S. BIOFUELS POLICIES IN A GENERAL EQUILIBRIUM FRAMEWORK By Birur, Dileep K.; Beach, Robert H.
  21. Global Land Use Changes and Consequent CO2 Emissions due to US Cellulosic Biofuel Program: A Preliminary Analysis By Taheripour, Farzad; Tyner, Wallace E.
  22. Are there Carbon Savings from US Biofuel Policies? Accounting for Leakage in Land and Fuel Markets By Bento, Antonio M.; Klotz, Richard; Landry, Joel R.
  23. Managing Future Oil Revenues in Uganda for Agricultural Development and Poverty Reduction: A CGE Analysis of Challenges and Options By Manfred Wiebelt; Karl Pauw; John Mary Matovu; Evarist Twimukye; Todd Benson
  24. Advanced Biofuel Production in Louisiana Sugar Mills: an Application of Real Options Analysis By Darby, Paul; Mark, Tyler B.; Detre, Joshua D.; Salassi, Michael
  25. Assessing the Effects of Climate Change on Farm Production and Profitability: Dynamic Simulation Approach By Cai, Ruohong; Bergstrom, John C.; Mullen, Jeffrey D.; Wetzstein, Michael E.
  26. The Integration of Palestinian-Israeli Labour Markets: A CGE Approach By Flaig, Dorothee; Siddig, Khalid; Grethe, Harald; Luckmann, Jonas; McDonald, Scott
  27. Construction of a fuel demand function portraying interfuel substitution, a system dynamics approach By Ibrahim Abada; Vincent Briat; Olivier Massol
  28. Hiring older employees: Do incentives of early retirement channels matter? By Ilmakunnas, Pekka; Ilmakunnas, Seija
  29. The FDA Food Safety and Modernization Act and the Exemption for Small Firms By Pouliot, Sebastien

  1. By: Timothy P. Hubbard; Rene Kirkegaard; Harry J. Paarsch
    Abstract: In models of first-price auctions, when bidders are ex ante heterogenous, deriving explicit equilibrium bid functions is typically impossible, so numerical methods (such as polynomial approximations) are often employed to find approximate solutions. Recent theoretical research concerning asymmetric auctions has determined conditions under which equilibrium bid functions must cross. When equilibrium bid functions are approximated by low-order polynomials, however, such polynomials may not be flexible enough to satisfy the qualitative predictions of the theory. Plotting the relative expected pay-offs of bidders is a quick, informative way to decide whether the approximate solutions are consistent with theory.
    Keywords: first-price auctions; asymmetric auctions; numerical methods
    JEL: C20 D44 L1
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:cca:wpaper:207&r=cmp
  2. By: Vedenov, Dmitry V.; Sanchez, Leonardo
    Abstract: This work is a first attempt to analyze the effect of weather derivative availability on the risk management strategies in a multi-period setting, when crop activities take place twice a year. Rice production in Ecuador is used as a case study. Numerical solutions show farmers improve their well-being by reducing their risk exposure.
    Keywords: Weather Derivatives, Risk Management, Multi-Period., Agribusiness, Agricultural Finance, Risk and Uncertainty, Q13, Q14,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103740&r=cmp
  3. By: Maliar, Lilia; Maliar, Serguei; Villemot, Sébastien
    Abstract: Perturbation methods produce solutions of lower accuracy than global Euler equation-based methods. In the present paper, we implement a hybrid method that solves for some policy functions locally (using standard perturbation) and solves for the other policy functions globally (using closed-form expressions and a numerical solver). Our hybrid method extends the current speed-accuracy frontier: for a multi-country RBC model used for comparing numerical methods in a special 2011 issue of the JEDC, we attain higher accuracy of solutions than any other method participating in the comparison analysis. Our solutions are computed with the help of Dynare, and the programs are publicly available.
    Keywords: Dynare; Perturbation; Hybrid; Accuracy; Numerical methods; Approximation
    JEL: C63 C68 C88 F41
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:cpm:dynare:006&r=cmp
  4. By: Hartmann, Sönke
    Abstract: This paper discusses an extension of the classical resource-constrained project scheduling problem (RCPSP) in which the resource availability as well as the resource request of the activities may change from period to period. While the applicability of this extension should be obvious, we provide a case study in order to emphasize the need for the extension. A realworld medical research project is presented which has a structure that is typical for many other medical and pharmacological research projects that consist of experiments. Subsequently, we provide a mathematical model and analyze some properties of the extended problem setting. We also discuss how priority rule based heuristics for the RCPSP can be applied to the extended problem. In addition to the priority rules themeselves, we outline a framework for randomized priority rule methods. In order to provide a basis for experiments, we propose an adaptation of standard RCPSP test instances to the extended version of the problem. Finally we report the computational results of the priority rule methods. --
    Keywords: Project Management and Scheduling,Temporal Constraints,Resource Constraints,Priority Rules,Computational Results,Case Study
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:zbw:hsbawp:012011&r=cmp
  5. By: Tai-Yu Ma (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: The vehicle routing problem with time windows (VRPTW) has been the subject of intensive study because of its importance in real applications. In this paper, we propose a cross entropy multiagent learning algorithm, which considers an optimum solution as a rare event to be learned. The routing policy is node-distributed, controlled by a set of parameterized probability distribution functions. Based on the performance of experienced tours of vehicle agents, these parameters are updated iteratively by minimizing Kullback-Leibler cross entropy in order to generate better solutions in next iterations. When applying the proposed algorithm on Solomon's 100-customer problem set, it shows outperforming results in comparison with the classical CE approach. Moreover, this method needs only very small number of parameter settings. Its implementation is also relatively simple and flexible to solve other vehicle routing problems under various dynamic scenarios.
    Keywords: Vehicle routing problem, heuristic, cross entropy
    Date: 2011–04–30
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00592118&r=cmp
  6. By: Cui, Jingbo; Ji, Yongjie
    Abstract: We employ a two-sector heterogeneous firms model in the presence of endogenous innovation and environmental constraints. We perform simple numerical simulations concerning the implication of a stringent environmental policy and trade cost differences between dirty and clean inputs. Our objective is to highlight the effects of these policy proposals on the process innovation, trade pattern, and productivity dynamics.
    Keywords: Cap and Trade, Heterogeneous Firms, Process Innovation, Trade Pattern, Environmental Economics and Policy, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies, F18, Q55, Q56, C63,
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103478&r=cmp
  7. By: Chen, Yong; Irwin, Elena G.; Jayaprakash, Ciriyam
    Abstract: In contrast to urban areas that are aptly characterized by a large population base and scarce land supply, exurban regions have limited households and plentiful land. This basic difference has far reaching implications for spatial equilibrium in exurban land markets. Rather than bidding their maximum willingness-to-pay and reaching a spatial equilibrium in which households are indifferent to location, as is the central condition of urban economic models, we argue that exurban households will be able to retain some amount of surplus in moving to an exurban location and therefore will choose the location that maximizes this locational surplus. In this paper, we first review the handful of structural spatial models of exurban land development that have been developed. We then develop a structural spatial model of exurban land development that captures these hypothesized features of exurban land markets using an auction model to represent household bidding and adapting the Capooza and Helsley (1990) model to represent landownersâ optimal timing of development. A key innovation of our approach is that, in the absence of full capitalization of land or location differences into land prices, households have preferences for some locations over others and thus it is possible to order household location choices in time and space. This greatly facilitates modeling of land use dynamics by enabling us to model location and land use decisions sequentially in time rather than assuming that all development is instantaneous for given levels of population and income in the region. In addition, the spatial agent-based simulation method that is used to implement the model permits an explicit examination of the implications of exurban land market conditions for the evolution of urban development pattern. Specifically, we ask whether these exurban market conditions explain the emergence and persistence of so-called leapfrog development that is characteristic of exurban regions.
    Keywords: Land Economics/Use,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103641&r=cmp
  8. By: Miao, Ruiqing; Hennessy, David A.
    Abstract: In this paper we study U.S. wheat farmersâ willingness to pay for near infrared (NIR) sensor that can segregates wheat grains according to their protein concentration. We first develop a microeconomic optimization model of wheat farmersâ segregating and commingling decisions. Then we use U.S. wheat prices and stocks to estimate a wheat protein stock demand system. This allows us to establish the effects of changes in the protein profile of wheat stocks on protein premiums. The paperâs simulation section combines the results from the microeconomic optimization model and from the econometric estimations to simulate wheat farmersâ WTP for the sorting technology. Preliminary findings from the simulation show that a typical hard red winter (hard red spring) wheat farmerâs WTP for the sorting technology is 5.6 (4.8) cents per bushel.
    Keywords: information, economic value, wheat, protein, market structure, Crop Production/Industries, Production Economics, Q12, Q16, D81,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103974&r=cmp
  9. By: Meyer, Stefan; Yu, Xiaohua; Abler, David
    Abstract: Using Monte-Carlo simulation, , we compare the most popular demand systems including the LES, AIDS, BTL, QES, QUAIDS and AIDADS, and find that different models actually have different advantages in estimating different elasticities. Specifically, QES, AIDS and AIDADS models are the best in income, own-price and cross-price elasticities, respectively. Overall, AIDADS model has the best performance. The results indicate that the rank three models are not necessary always better than the rank two models.
    Keywords: Comparison, Demand Systems, Monte Carlo, AIDS, Consumer/Household Economics, Demand and Price Analysis, Research Methods/ Statistical Methods,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103736&r=cmp
  10. By: Leonardo Berbotto; Sergio García; Francisco J. Nogales
    Abstract: In this work, a new variant of the Capacitated Vehicle Routing Problem (CVRP) is presented where the vehicles cannot perform any route leg longer than a given length L (although the routes can be longer). Thus, once a route leg length is close to L, the vehicle must go to a stop node to end the leg or return to the depot. We introduce this condition in a variation of the CVRP, the Split Delivery Vehicle Routing Problem, where multiple visits to a customer by different vehicles are allowed. We present two formulations for this problem which we call Split Delivery Vehicle Routing Problem with Stop Nodes: a vehicle flow formulation and a commodity flow formulation. Because of the complexity of this problem, a heuristic approach is developed. We compare its performance with and without the stop nodes
    Keywords: Split delivery vehicle routing problem, Stop node, Granular neighborhood, Tabu search
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:cte:wsrepe:ws110906&r=cmp
  11. By: Yamaura, Koichi; Featherstone, Allen
    Abstract: This research examines market power using Lauâs Hessian Identity relationships based on the empirical properties of duality theory. We compare the performance of the proposed dual approach using Lauâs Hessian Identity relationships with the simple traditional dual approach.
    Keywords: Lauâs Hessian Identity, Monte Carlo simulation, Market Power, Monopoly, Marketing,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103932&r=cmp
  12. By: Bence Toth; Yves Lemperiere; Cyril Deremble; Joachim de Lataillade; Julien Kockelkoren; Jean-Philippe Bouchaud
    Abstract: We propose a dynamical theory of market liquidity that predicts that the average supply/demand profile is V-shaped and {\it vanishes} around the current price. This result is generic, and only relies on mild assumptions about the order flow and on the fact that prices are (to a first approximation) diffusive. This naturally accounts for two striking stylized facts: first, large metaorders have to be fragmented in order to be digested by the liquidity funnel, leading to long-memory in the sign of the order flow. Second, the anomalously small local liquidity induces a breakdown of linear response and a diverging impact of small orders, explaining the "square-root" impact law, for which we provide additional empirical support. Finally, we test our arguments quantitatively using a numerical model of order flow based on the same minimal ingredients.
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:arx:papers:1105.1694&r=cmp
  13. By: Chen, Min; Lupi, Frank
    Abstract: Researchers have been using the latent class model (LCM) to value recreational activities for years. Then the reliability of this model becomes an issue. We conduct Monte Carlo simulations to test if the latent class model is able to recover the truth. The simulation results show that LCM does a better job on recovering population average values than recovering underlying population segments.
    Keywords: Monte Carlo Simulations, Latent Class Model, Environmental Economics and Policy,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103449&r=cmp
  14. By: Tai-Yu Ma (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat); Jean-Patrick Lebacque (GRETTIA-Génie des Réseaux de Transport Terrestres et Informatique Avancée - INRETS)
    Abstract: This paper develops a Lagrangian discretization multiagent model for large-scale multimodal simulation and assignment. For road traffic flow modeling, we describe the dynamics of vehicle packets based on a macroscopic model on the basis of a Lagrangian discretization. The metro/tram/train systems are modeled on constant speed on scheduled timetable/frequency over lines of operations. Congestion is modeled as waiting time at stations plus induced discomfort when the capacity of vehicle is achieved. For the bus system, it is modeled similar to cars with different speed settings, either competing for road capacity resources with other vehicles or moving on separated bus lines on the road network. For solving the large-scale multimodal dynamic traffic assignment problem, an effective-path-based cross entropy is proposed to approximate the dynamic user equilibrium. Some numerical simulations have been conducted to demonstrate its ability to describe traffic dynamics on road network.
    Keywords: multimodal transportation systems; Lagrangian discretization; traffic assignment; multiagent systems
    Date: 2011–04–30
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00592273&r=cmp
  15. By: Kumarappan, Subbu
    Keywords: Agribusiness, Industrial Organization, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103623&r=cmp
  16. By: Ricardo Argüello C
    Abstract: The purpose of this research is to provide an approximation to the likely effects of the crisis on the Colombian economy and to the effectiveness of policy response. For this, the most relevant transmission channels and policy measures are simulated in the setting of a static computable general equilibrium model (CGE). The results obtained are interesting in their own right and are in line with what could be expected given the information available on the behavior of the Colombian economy. Furthermore, they call into question the effectiveness of governmental intervention as judged by its intended countercyclical effects.
    Date: 2011–05–01
    URL: http://d.repec.org/n?u=RePEc:col:000092:008574&r=cmp
  17. By: Ricardo Argüello C; Daniel Valderrama G.; Sandra Acero W.
    Abstract: We aim to contribute to the assessment of poverty impacts on the rural sector arising from agricultural policy adjustments in Colombia. For this we use an agriculture specialized static CGE model, jointly (sequentially) with a microsimulation model that allows for effective job relocation. Results indicate that the sectoral impact of the program implemented tends to be small and has considerable variability across crops. They also show that the highest impacts come from the irrigation and land improvements component of the program. Lastly, although it reduces poverty, poverty impacts are small and tend to concentrate in rural households toward the middle of the income distribution ladder.
    Date: 2011–05–01
    URL: http://d.repec.org/n?u=RePEc:col:000092:008575&r=cmp
  18. By: Kyophilavong, Phouphet; Takamatsu, Shinya
    Abstract: The climate change is global problems. It is predicted to have more severe impact on developing country which most of population are poor. The main impact of climate change on poverty is changing crop productivity and commodity prices. However, there are few studies on the relationship between climate change and poverty. Therefore, this study will use Laos which has a high share of agriculture sector on GDP and high poverty rates as a case study to assess the impact the climate change on national wide-economy and climate change using CGE model. The preliminary result shows that climate change has serious impact of Lao economy in term of declining GDP. On the other hand, the micro-simulation indicates that the impact on poverty was negligible. This is because the households in Laos are autarky and not affected by the changes of prices and wages due to climate change.
    Keywords: Environmental Economics and Policy, Food Security and Poverty,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103999&r=cmp
  19. By: Hansen, Jim; Tuan, Francis; Somwaru, Agapi
    Abstract: This study analyzes the potential impact of climate change on China's corn, wheat, and rice, domestic agricultural markets, and the international markets out to the year 2050. The study provides a brief background and reviews research literature of climate change effects on China's crop yields. The paper presents the potential impact of climate change on China's yields and attempts to quantify the domestic and global market impacts. The analysis has four scenarios, which assumes two future levels of greenhouse gas emissions with the effects of CO2 fertilization and no CO2 fertilization. A 27-country commodity partial equilibrium simulation mathematical programming model (PEATSim) is used for this analysis. Results indicate under CO2 fertilization, which increases yields, China's grain imports may decrease leading to a decrease in international prices. Under no CO2 fertilization, yields decrease, China's grain imports may increase leading to increased international prices.
    Keywords: China, trade, climate change, GHG, CO2 fertilization, rice, wheat, corn, dynamic partial equilibrium simulation mathematical model., Environmental Economics and Policy, International Relations/Trade,
    Date: 2011–05–01
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103768&r=cmp
  20. By: Birur, Dileep K.; Beach, Robert H.
    Abstract: As the biofuels are emerging as promising alternative transportation fuels across the world, they also offer huge potential for international trade in biofuels. A number of trade barriers such as import tariffs and domestic support have limited the scope for trade in biofuels. The purpose of this study is to analyze the implications of U.S. biofuel mandates, subsidies and import tariffs on global trade and welfare. We utilize the GTAP-BIO model, which was developed as a customized version of the Global Trade Analysis Project (GTAP) model capable of analyzing domestic and trade policy issues associated with biofuels (Birur, 2010). We supplement this model with updated and detailed sectoral level information on feedstock crops, different types of first and second generation biofuels and their byproducts. This highly refined data base facilitates the model for simulating changes in cropping patterns at individual crop level, land use changes, commodity prices, etc. We analyze the following policy scenarios in this study: (a) implementation of volume requirements consistent with the U.S RFS2 volumes for the year 2022 relative to a starting point of the base year 2004, (b) reduction in the ethanol specific import tariff from 54 ¢/gallon to 45 ¢/gallon, so that there will be âparityâ between the U.S. and exporting countryâs ethanol price, (c) Complete removal of the U.S. ethanol blendersâ credit and import tariff on ethanol, (d) combined implementation of (a) and (c) policy scenarios. This paper offers insights regarding the prospective policy options that can affect potential trade in biofuels amongst the major producing countries, such as the extent to which a removal of U.S. import tariff on ethanol affects pasture and forest land conversion in Brazil.
    Keywords: Biofuels, Computable General Equilibrium, land use change, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103996&r=cmp
  21. By: Taheripour, Farzad; Tyner, Wallace E.
    Abstract: The economic and land use consequences of US biofuel programs and their contributions to GHG emissions have been the focal point of many debates and research studies in recent years. However, most of these studies focused on the land use emissions due to the first generation of biofuels such as corn ethanol, sugarcane ethanol, and biodiesel (e.g. [1, 2] [3, 4]). A quick literature review indicates that only a few attempts have been made to estimate these emissions for the second generation of biofuels which convert cellulosic materials into liquid fuels. Gurgel et al. [5] have used a highly aggregated computational model (CGE) to evaluate land use consequences of producing biofuels from biomass feedstock. This model does not distinguish between the first and second generation of biofuels, aggregates all agricultural products in one sector thereby over simplifying the competition for land among its alternative uses, and relies on an old data set which represents the world economy in 1999. These authors predict that producing energy from biomass requires a considerable amount of land, about 0.5 hectares per 1000 gallons of ethanol. More recently, the United States Environmental Protection Agency (EPA) has released its emissions assessments for alternative biofuels including ethanol produced from corn stover and a dedicated crop (switchgrass) [6]. To provide these assessments EPA has mainly relied on the FASOM and FARPRI partial equilibrium models to evaluate domestic and international land use impacts of the US cellulosic biofuel targets. The simulation results obtained from these models show that producing ethanol from corn stover has insignificant land use impacts. However, producing ethanol from switchgrass will cause major land use changes in the US and other countries across the world. The EPA results show that producing 7.9 billion gallons of ethanol from switchgrass will increase global cropland areas by about 3 million hectares of which 1.7 million hectares will occur in the US. In addition, according to the EPA estimates, producing ethanol from switchgrass will curb acreages of US soybeans, wheat, hay, and other crops by 3.36 million hectares as well. On the other hand several research studies have concluded that dedicated energy crops can be grown on marginal lands (including idled cropland and cropland pasture) and that considerable amounts of these lands are available across the world to use without imposing a major impact on cropland and no consequences for food security [7-9],. These papers simply assume that these marginal lands have no opportunity costs. The economic and land use impacts of producing biofuels from dedicated crops could be more complicated than corn ethanol. Production of dedicated crops for significant volumes of biofuels could alter relative prices of crops and their profitability leading farmers to produce them on their existing active croplands or convert their idled or marginal croplands to produce these crops. This could cause major implications for livestock producers who use marginal lands (such as cropland pasture) in their production process. This will alter demand for feedstocks leading to major changes in markets of agricultural commodities, animal feed items such as DDGS (a by-product corn ethanol) and oilseed meals (co-products of biodiesel), and livestock products. The impacts of producing cellulosic biofuels from dedicated energy crops go beyond agricultural sectors and affect many economic activities at local, regional, national, and global scales. This paper discusses these impacts and explains interactions among the first and second generations of biofuels and their joint implications for other economic activities and markets. Then it provides a preliminary analysis of the economic and land use changes induced by cellulosic feedstocks for biofuel production. It develops an economy-wide computational general equilibrium (CGE) model based on the modeling framework developed at the Center for Global Trade Analysis (GTAP) to assess the economic and land use consequences of producing biofuels from cellulosic materials including corn stover and a dedicated energy crop. In particular, it extends the model developed in Tyner et al. [4]. The paper extends this model and its database in several directions. The new model works based on the latest version of GTAP databases (version 7). Following Taheripour et al. [10] the first generation of biofuels are introduced into the database. Then new industries and commodities are introduced into the database to support production and consumption of an advanced cellulosic biofuel (named Bio-Gasoline). In particular, a new crop industry is introduced to produce a dedicated energy crop (miscanthus) and a new industry is defined to supply agricultural residues (corn stover). The production technologies and cost structures of new industries are taken from the literature. The land use and land cover component of the data base is also updated according to the work done by Avetisyan et al. [11]. To introduce cellulosic biofuels we assumed several regions including US, some EU members, Brazil, and China produce tiny volumes of cellulosic biofuels from miscanthus in the base year in order to be able to shock the model for larger volumes of production. Then the GTAP modeling framework is revised to handle production, consumption, and trade of new industries and commodities at a global scale. To accomplish this task all production, supply, and demand functions included in the model are revised and necessary changes are made in market clearing conditions as well. In addition, the land use module of the model is altered to handle competition for land (including marginal lands) among the new dedicated crop and traditional land use industries such as forestry, livestock, and crops. Econometric analyses on land cover changes are used to update the economic parameters of the land use module as well. Furthermore the model is augment with a procedure which links productivity of marginal lands with their rent. This component will play an essential role in assessing the economic impacts of advanced biofuels. The CGE model is used to assess the economic and land use impacts of alternative biofuel scenarios including in the US Renewable Fuel Standard Program (RFS2). The numerical results obtained from these simulations show that producing bio-gasoline from corn stover has no significant land use impacts and generates economic gains. On the other hand, the numerical results indicate that the economic land use impacts of producing bio-gasoline from miscanthus vary across alternative assumptions. For example, producing bio-gasoline from miscanthus increases global cropland areas by about 0.2 hectares per 1000 gallons of ethanol equivalent in the presence of yield improvement on cropland pasture. This experiment indicates that about 40% of this land requirement will occur in the US, and forest has a small share (about 4%) in this land conversion. This figure is significantly higher than the additional land requirement of corn ethanol (about 0.13hectares per 1000 gallon ethanol). The results obtained from this experiment shows that production and consumption of each gallon of Bio-Gasoline (converted to ethanol equivalent) produced from miscanthus generates 891 grams CO2 emissions. This figure is 7% percent less than the corresponding figure for corn ethanol. In this case the livestock industry will not suffer from bio-gasoline production. However, when farmers do not improve yield on cropland pasture more land with higher share from forest is needed. Finally, based on the numerical results the paper offers a set of policies to support production of the second generation of biofuels which reduce welfare costs of the RFS policies. References 1. Searchinger, T., et al., Use of U.S. croplands for biofuels increases greenhouse gases through emissions from land use change. Science, 2008. 319(5867): p. 1238-1240. 2. Taheripour, F., T. Hertel, and W.E. Tyner, Biofuels and Their By-Products: Global Economic and Environmental Implications. Biomass and Bioenergy, 2010. 34: p. 278-89. 3. Hertel, T., W. Tyner, and D. Birur, The Global Impacts of Multinational Biofuels Mandates. Energy Journal, 2010. 31(1): p. 75-100. 4. Tyner, W., et al., Land Use Changes and Consequent CO2 Emissions due to US Corn Ethanol Production: A Comprehensive Analysis, A Report to Argonne National Laboratory. 2010, Department of Agricultural Economics, Purdue University. 5. Gurgel, A., J.M. Reilly, and S. Paltsev, Potential Land Use Implications of a Global Biofuels Industry. Journal of Agricultural and Food Industrial Organization, 2007. 5: p. Article 9. 6. Environmental Protection Agency, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. 2010: Washington, D.C. 7. Tyner, W.E., F. Taheripour, and Y. Han., Preliminary Analysis of Land Use Impacts of Cellulosic Biofuels, Argonne National Laboratory and the California Energy Commission, Editor. 2009. 8. Campbell, J.E., et al., The Global Potential of Bioenergy on Abandoned Agricultural Lands. Environmental Science and Technology, 2008. 42(15): p. 5791-5794. 9. Cai, X., X. Zhand, and D. Wang, Land Availability for Biofuel Production. Environmental Science and Technology, 2011. 45(1): p. 334-39. 10. Taheripour, F., et al., Introducing Liquid Biofuels into the GTAP Database, in GTAP Research Memorandum No 11, GTAP, Editor. 2007, Purdue University: West Lafayette, IN. 11. Avetisyan, M., U. Baldos, and T. Hertel, Development of the GTAP Version 7 land Use Data Base, in GTAP Research Memorandum No. 19. 2010, Purdue University: West Lafayette.
    Keywords: biofuels, cellullosic feedstocks, land use change, Resource /Energy Economics and Policy,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103559&r=cmp
  22. By: Bento, Antonio M.; Klotz, Richard; Landry, Joel R.
    Abstract: This paper applies the insights of the carbon leakage literature to study the emissions consequences of biofuel policies. We develop a simple analytic framework to decompose the intended emissions impacts of biofuel policy from four sources of carbon leakage: domestic fuel markets, domestic land markets, world land markets and world crude oil markets. A numerical simulation model illustrates the magnitude of each source of leakage for combinations of two current US biofuel policies: the Volumetric Ethanol Excise Tax Credit (VEETC) and the Renewable Fuel Standard (RFS). In the presence of both land and fuel market leakage, current US biofuel policies are unlikely to reduce greenhouse gases. Four of the five policy scenarios we consider lead to increases in greenhouse gas emissions. That is, total leakage was greater than 100%. The single scenario that generates emissions savings, the removal of the VEETC in conjunction with a binding RFS, only does so because negative leakage in the domestic fuel market offset the remaining positive sources of leakage.
    Keywords: Multi-market, carbon leakage, biofuels, greenhouse gases, Agricultural and Food Policy, Land Economics/Use, Resource /Energy Economics and Policy, Q42, Q54, Q58,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:104008&r=cmp
  23. By: Manfred Wiebelt; Karl Pauw; John Mary Matovu; Evarist Twimukye; Todd Benson
    Abstract: With the recent discovery of crude oil reserves along the Albertine Rift, Uganda is set to establish itself as an oil producer in the coming decade. Total oil reserves are believed to be 2 billion barrels, with recoverable reserves estimated at 0.8-1.2 billion barrels. At peak production, likely to be reached by 2017, oil output will range from 120,000-210,000 barrels per day, with a production period spanning up to 30 years. Depending on the exact production levels, the extraction period, the future oil price, and revenue sharing agreements with oil producers, the Ugandan government is set to earn revenue equal to 10-15 percent of GDP at peak production. The discovery of crude oil therefore has the potential to provide significant stimulus to the Ugandan economy and address its development objectives. However, this is subject to careful management of oil revenues to avoid the potential pitfall of a sudden influx of foreign exchange. Dominating the concerns is the potential appreciation in the real exchange rate and subsequent loss of competitiveness in the non-resource tradable goods sectors such as agriculture or manufacturing (‘Dutch Disease’). These sectors are often major employers in developing countries and the engines of growth. Several mitigation measures can be employed by government to counter Dutch Disease, including measures that directly counter the real exchange rate appreciation or measures that offer direct support to traditional export sectors in the form of subsidies. With the aid of a recursive-dynamic computable general equilibrium model this study evaluates the economic implications of the future oil boom in Uganda. We also consider various options open to the Ugandan government for saving, spending, or investing forecasted oil revenues with aim of promoting economic development and reducing poverty, but also countering possible Dutch Disease effects. We find that generally urban sectors and households will be better able to capture rents generated by the oil revenues leading to growing rural-urban and regional inequality. Yet, despite these potential risks, Uganda’s oil economy presents an unparalleled opportunity for the agricultural sector and for poverty reduction in particular. On the one hand, domestic demand for food, such as cereals, root crops, pulses and matooke (cooking banana), but especially higher valued products, such as horticulture and livestock products, will increase as incomes rise. Moreover, higher urban income and urban consumer preferences will lead to increasing demand for processed foods and foods with greater domestic value-added, such as meat, fish, etc. Provided Uganda’s tradable food sectors can remain competitive, this provides an opportunity for both farming and the food processing manufacturing sector. On the other hand, there is the immediate danger to lose market shares in agricultural export markets, which might be extremely hard to regain after the oil boom. As shown in this paper, the outcomes for agriculture, rural-urban income differentials and poverty reduction depend very much on whether government revenues for public investment in the agricultural sector will increase and help alleviate chronic under-investment in public goods that is constraining agricultural growth in Uganda
    Keywords: Uganda, crude oil, Dutch Disease, agricultural competitiveness, general equilibrium modeling
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:kie:kieliw:1696&r=cmp
  24. By: Darby, Paul; Mark, Tyler B.; Detre, Joshua D.; Salassi, Michael
    Abstract: In order to more fully study the risks and uncertainty involved in cellulosic ethanol production, we examine a simulated plant in South Louisiana using Real Options Analysis
    Keywords: real options, risk, uncertainty, cellulosic ethanol, energy cane, sorghum, bagasse, simulation, Agribusiness, Agricultural Finance, Production Economics, Resource /Energy Economics and Policy, Risk and Uncertainty, q42, q14, q16, d81, g31,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103747&r=cmp
  25. By: Cai, Ruohong; Bergstrom, John C.; Mullen, Jeffrey D.; Wetzstein, Michael E.
    Abstract: In this paper, a dynamic optimization model was developed to simulate how farm-level realized price and profitability respond to yield change which was induced by climate change. Producers' acreage response was included in the dynamic model considering crop rotation effect. In the crop rotation model, a modified Bellman equation was used to dynamically optimize the net present value of farm profit for a five-year interval. This simulation process was repeated through the year 2050. Then yield, price, and acreage response were compiled to generate realized profit. Results generally indicated that reduction in crop yields due to climate change results in reduced farm profitability for most of the states studied. Predicted climate change is more likely to pose a problem for agricultural production and profitability in the southern U.S. states as compared to the northern U.S. states. Our results also suggest that acreage response alone is not sufficient to ameliorate the potential negative effects of global climate change on agricultural production and profitability. The results of this research are expected to provide a foundation for future related research to aid producers' crop rotation decisions in an unstable price environment.
    Keywords: Dynamic simulation model, Acreage response, Crop rotation, Expected price, Realized price, Agricultural Finance, Crop Production/Industries, Environmental Economics and Policy, Farm Management, Land Economics/Use, Production Economics, Productivity Analysis, Risk and Uncertainty,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103420&r=cmp
  26. By: Flaig, Dorothee; Siddig, Khalid; Grethe, Harald; Luckmann, Jonas; McDonald, Scott
    Abstract: A high number of Palestinian workers used to work in Israel for decades. They are mostly employed in low-skilled jobs in Israeli sectors which are highly dependent on foreign labour, namely agriculture and construction. With the beginning of the second Intifada in 2000 border restrictions increased severely due to security concerns, limiting employment possibilities for Palestinians and leaving Palestine with severe unemployment and loss of income. Israeli employers have substituted Palestinian workers with an increasing number of foreign workers, mostly coming from Asia. Growing unemployment among Israeli unskilled workers caused Israel to impose quotas on the employment of foreigners. The purpose of this paper is to estimate the benefits of lifting movement and access restrictions between Israel and the West Bank for both economies. The macro-economic effects of the Israeli labour policy are important to determine the absorptive capacity of the Israeli labour market. Therefore, we use an extended version of the single country CGE model âSTAGEâ (McDonald, 2009), adapted to a Social Accounting Matrix (SAM) of Israel for the year 2004 (Siddig et al., forthcoming), to simulate the effects of different Israeli labour policy regimes.
    Keywords: labor market, CGE, Labor and Human Capital,
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103861&r=cmp
  27. By: Ibrahim Abada; Vincent Briat; Olivier Massol
    Abstract: Most of the recent numerical market equilibrium models of natural gas markets use imperfect competition assumptions. These models are typically embedded with an oversimplified representation of the demand side, usually a single-variable affine function, that does not capture any dynamic adjustment to past prices. To remedy this, we report an effort to construct an enhanced functional specification using the system dynamics-based model of Moxnes (1987, 1990). Thanks to a vintage representation of capital stock, this putty-clay model captures the effect of both past and current energy prices on fuel consumption. Using a re-calibrated version of this model, we first confirm the pertinence of this modeling framework to represent interfuel substitutions at different fuel prices in the industrial sector. Building on these findings, a dynamic functional specification of the demand function for natural gas is then proposed and calibrated.
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:drm:wpaper:2011-13&r=cmp
  28. By: Ilmakunnas, Pekka; Ilmakunnas, Seija
    Abstract: We examine the impact of a Finnish reform in the 1990s that restricted the use of particular early retirement channels, unemployment pension and individual early retirement, and simultaneously changed the rules of firm size related experience rating in disability pensions. Our emphasis is on how the reforms affected the incentives of the firms to hire older employees. In a simple model we illustrate how forward-looking behaviour of firms affects the value of a new hire. Simulations with the model illustrate that although the reform in the unemployment pension in principle affected particular age groups, 53-54 year olds in the case of unemployment pension and 55-57 year olds in the case of individual early retirement, the impacts on hiring may have been felt also in other, younger, age groups. On the other hand, the effects of both reforms are likely to have varied by firm size. In a differences-indifferences-in-differences analysis with firm-level data we show that the impact of the reforms has been to increase the probability of hiring especially in the age group 51-52 and especially in the largest firms.
    Keywords: early retirement; hiring; pension reform
    JEL: J14 J63 J26
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:30885&r=cmp
  29. By: Pouliot, Sebastien
    Abstract: The FDA Food Safety Modernization Act of 2010 is new legislation that mandates, among other things, new food safety standards. The act includes a clause that exempts small firms from new regulatory requirements. This paper investigates the effects of a small firm exemption from more stringent food safety standards. The model compares food safety, total output and the number of market participants for different food safety regulation with and without an exemption for small firms. The numerical examples show that a more stringent food safety regulation increases food safety, increases the price of food, decreases the total output and decreases the number of firms. A new food safety standard with an exemption for small firms increases the average food safety but not as much as with a new standard alone. An exemption for small firms causes the total number of firms to increase.
    Keywords: Food safety, heterogeneous firms, regulation, regulatory exemption, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, D21, M31, Q10, Q18,
    Date: 2011–05–03
    URL: http://d.repec.org/n?u=RePEc:ags:aaea11:103885&r=cmp

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