nep-ene New Economics Papers
on Energy Economics
Issue of 2014‒11‒01
43 papers chosen by
Roger Fouquet
London School of Economics

  1. The State of Play in Poland's Unconventional Shale and Oil Development By J. Wesley Burnett; Randall W. Jackson; Robert Blobaum
  2. Doubling the Share of Renewable Energy in the Global Energy Mix By Gabriela Elizondo Azuela; Irina Bushueva
  3. Economic Impacts of Inter-Island Energy in Hawaii By Makena Coffman; Paul Bernstein
  4. Reaping the Carbon Rent: Abatement and Overallocation Profits in the European Cement industry, Insights from an LMDI Decomposition Analysis By Frédéric Branger; Philippe Quirion
  5. Optimal Timing of CCS Policies under Decreasing Returns to Scale By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  6. Renewable and non-renewable intermittent energy sources: friends and foes? By Edmond Baranes; Julien Jacqmin; Jean-Christophe Poudou
  7. EU Biofuel Policies in Practice – A Carbon Map for the Brazilian Cerrado By Mareike Lange
  8. Spatial dynamics of electricity usage in India By Ghani, Ejaz; Goswami, Arti Grover; Kerr, William R.
  9. Energy Security in Asia: Prospects for Regional Cooperation By Lucas, Nigel
  10. Going to the Source: Using an Upstream Point of Regulation for Energy in a National Chinese Emissions Trading System By Suzi Kerr; Vicki Duscha
  11. Small Might Be Beautiful, but Bigger Performs Better: Scale Economies in "Green" Refurbishments of Apartment Housing By Claus Michelsen; Sebastian Rosenschon; Christian Schulz
  12. Trade-off Relationship between Energy Intensity-thus energy demand-and Income Level: Empirical Evidence and Policy Implications for ASEAN and East Asia Countries By Han PHOUMIN; Fukunari KIMURA
  13. Optimal Carbon Sequestration Policies in Leaky Reservoirs By Jean-Marie Alain; Michel Moreaux; Mabel Tidball
  14. Regime Switching Model of US Crude Oil and Stock Market Prices: 1859 to 2013 By Mehmet Balcilar; Rangan Gupta; Stephen M. Miller
  15. Inducing Private Finance for Renewable Energy Projects: Evidence from Micro-Data By Miguel Cárdenas Rodríguez; Ivan Haščič; Nick Johnstone; Jérôme Silva; Antoine Ferey
  16. Price and Market Behavior in Phase II of the EU ETS By Beat Hintermann; Sonja Peterson; Wilfried Rickels
  17. The Effect of Subsidized Entry on Capacity Auctions and the Long-Run Resource Adequacy of Electricity Markets By Brown, David
  18. EU ETS, Free Allocations and Activity Level Thresholds. The devil lies in the details By Frédéric Branger; Jean-Pierre Ponssard; Oliver Sartor; Misato Sato
  19. A Spatial Approach to Energy Economics By M. Scott Taylor; Juan Moreno Cruz
  20. Transition to Clean Technology By Douglas Hanley; Daron Acemoglu; Ufuk Akcigit; William Kerr
  21. Performance of renewable energy auctions : experience in Brazil, China and India By Elizondo Azuela, Gabriela; Barroso, Luiz; Khanna, Ashish; Wang, Xiaodong; Wu, Yun; Cunha, Gabriel
  22. EU ETS, free allocations and activity level thresholds, the devil lies in the details By Frédéric Branger,; Jean-Pierre Ponssard; Oliver Sartor; Misato Sato
  23. Date stamping historical oil price bubbles: 1876 - 2014 By Itamar Caspi; Nico Katzke; Rangan Gupta
  24. Cities and Green Growth: The Case of the Chicago Tri-State Metropolitan Area By OECD
  25. Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality? By Weitzman, Martin L.
  26. Explaining the convenience yield in the WTI crude oil market using realized volatility and jumps By Benoît Sévi
  27. Clean substitutes and the effectiveness of Carbon Footprint Labels vs. Pigovian Subsidies: Evidence from a Field Experiment By Bruno Lanz; Jules-Daniel Wurlod; Luca Panzone; Timothy Swanson
  28. A Comparison of Stochastic Models of Natural Gas Consumption By Serli Kiremitciyan; Ahmet Goncu; Tolga Umut Kuzubas
  29. Spielräume für uni- und multilateralen Klimaschutz By Wolfgang Buchholz; Wolfgang Peters; Aneta Ufert
  30. Green subsidies and the WTO By Charnovitz, Steve
  31. Le contrôleur de gestion au service de l’environnement naturel By Angèle RENAUD
  32. Liberalizing the Gas Industry: Take-or-Pay Contracts, Retail Competition and Wholesale Trade By Michele Polo; Carlo Scarpa
  33. Ancillary Benefits of GHG Abatement Policies in Developing Countries: A literature Survey By Timothy Swanson; Chiara Ravetti; Mu Quan; Xuxuan Xie; Zhang Shiqiu
  34. Unbalanced Fractional Cointegration and the No-Arbitrage Condition on Commodity Markets By Gilles De Truchis; Florent Dubois
  35. Voting with their feet ? access to infrastructure and migration in Nepal By Shilpi, Forhad; Sangraula, Prem; Li, Yue
  36. Income Inequality and Technological Adoption By Marcelo Santos; Tiago Neves Sequeira; Alexandra Ferreira Lopes
  37. Maîtriser la demande d'énergie, une option consensuelle face à ses obstacles By Minh Ha-Duong; Dominique Finon
  38. Dynamic Mechanism Design for a Global Commons By Rodrigo Harrison; Roger Lagunoff
  39. Green Luxury Goods? The Economics of Eco-Labels in the Japanese Housing Market By Fuerst, Franz; Shimizu, Chihiro
  41. On the Relationship Between Exploration and Extraction Creation Date: 1983 By R.W. Fraser
  42. Market power and regulation (press release) By Committee, Nobel Prize
  43. Price Formation of Exhaustible Resources: An Experimental Investigation of the Hotelling Rule By Mathias Erlei; Christoph Neumann

  1. By: J. Wesley Burnett (Division of Resource Management, West Virginia University); Randall W. Jackson (Regional Research Institute, West Virginia University); Robert Blobaum (Eberly College of Arts and Sciences, West Virginia University)
    Abstract: Following the huge gas and oil rush in the US, the world’s gas and oil companies have been eyeing reserves in other countries including Poland, which is believed to be sitting on one of the largest reserves in the European Union. The Poles, seeking to diversify their energy sources and meet EU emissions standards, which are driving up electricity costs, met the news with tremendous fanfare. Following initial geological assessments, major international oil and gas companies soon made announcements to begin drilling operations in Poland. However, one of the major challenges of shale gas development is that is often requires voluminous speculative activity before the gas is successfully extracted. In the U.S. this was not such a problem because of several adventuresome energy firms willing to take on risk, but in Poland (and Europe in general) such firms are rare, and in former communist countries these firms are rarer still. This lack of critical infrastructure coupled with bureaucratic red tape in the permitting process has led to slow growth in exploration activities in Poland. Will Poland be able to successfully develop these resources? This manuscript explores the current state of play in Poland’s unconventional gas and oil development.
    Keywords: shale gas development, energy policy, unconventional energy resources, Europe
    JEL: Q40 Q41 Q48
    Date: 2013–06
  2. By: Gabriela Elizondo Azuela; Irina Bushueva
    Keywords: Environment - Climate Change Mitigation and Green House Gases Energy - Energy Demand Energy - Energy Production and Transportation Environment - Environment and Energy Efficiency Energy - Energy and Environment
    Date: 2014–09
  3. By: Makena Coffman (Department of Urban & Regional Planning; UHERO, University of Hawaii at Manoa); Paul Bernstein (Operations Reserach)
    Abstract: This study assesses the economic and greenhouse gas emissions impacts of a proposed 400MW wind farm in Hawaii. Due to its island setting, this project is a hybrid between an onshore and offshore wind development. The turbines are planned for the island(s) of Lanai and, potentially, Molokai. The project includes building an undersea cable to bring the power to the population center of Oahu. It is motivated by 1) Hawaii’s high electricity rates, which are nearly three times the national average, and 2) its Renewable Portfolio Standard mandating that 40% of electricity sales be met through renewable sources by the year 2030. We use an economy-wide computable general equilibrium model of Hawaii’s economy coupled with a detailed dynamic optimization model for the electric sector. We find that the 400MW wind project competes with imported biofuel as a least-cost means of meeting the RPS mandate. As such, the wind project serves as a “hedge” against potentially rising and volatile fuel prices, including biofuel. Though its net positive macroeconomic impacts are small, the estimated reduction by 9 million metric tons of CO2 emissions makes the project a cost-effective approach to GHG reduction. Moreover, variability in imported fuel costs are found to be a much more dominant factor in determining cost-effectiveness than potential cost overruns in the wind project’s construction.
    Keywords: Wind Energy; Hawaii; Renewable Portfolio Standard; Computable General Equilibrium
    Date: 2013–09
  4. By: Frédéric Branger (CIRED et AgroParisTech ENGREF); Philippe Quirion (CNRS et CIRED)
    Abstract: We analyse variations of carbon emissions in the European cement industry from 1990 to 2011, at the European level(EU 27), and at the national level for six major producers (Germany, France, Spain, United Kingdom, Italy and Poland). We apply a Log-Mean Divisia Index (LMDI) method, crossing data from three databases: the Getting the Numbers Right (GNR) database developed by the Cement Sustainability Initiative, the European Union Transaction Log (EUTL), and the Eurostat International Trade database. Our decomposition method allows disentangling seven channels of emissions change: activity, clinker trade, clinker share, alternative fuels, thermal and electric energy efficiency, and electricity decarbonisation. We find that, apart from a slow trend of emissions reductions coming from technological improvements(first from a decrease in the clinker share, then from an increase in alternative fuels), most of the emissions changes can be attributed to the activity effect. Using counterfactual scenarios, we estimate that the introduction of the EU ETS brought small but positive technological abatement (2.0% ± 1.1% between 2005 and 2011). Moreover, we find that the European cement industry have gained 3.5 billion euros of “overallocation profits”, mostly due to the slowdown of production. Based on these findings, we advocate for output-based allocations, based on a stringent hybrid clinker and cement benchmarking.
    Keywords: Cement Industry, LMDI, EU ETS, Abatement, Overallocation, Windfall Profits, Overallocation Profits, Carbon Emissions, Energy Efficiency.
    JEL: Q58 Q54
    Date: 2014–09
  5. By: Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
    Abstract: Carbon capture and sequestration (CCS) can help to mitigate the climate change transition. Usually, in models where the atmospheric carbon stock is constrained by an institutional stabilization cap and under constant average CCS cost, the use of CCS must be delayed up to the time at which the constraint begins to be e@ective. In this paper, we show that, when abatement activity are submitted to decreasing returns to scale, abatement must start earlier, before the climate constraint becomes to bind, but they must also be stopped strictly before the climate constraints ceases to be active. Depending on the solar energy costs, either there is a return toward dirty energy or either a progressive rise of solar energy at the expense of abatement activities.
    Keywords: Energy resources; carbon stabilization cap; carbon capture and storage; decreasing returns to scale
    JEL: Q32 Q42 Q54 Q58
    Date: 2014–05
  6. By: Edmond Baranes; Julien Jacqmin; Jean-Christophe Poudou
    Abstract: This paper studies the links between renewable and non-renewable intermittent energy sources in the production of electricity. More precisely, we argue that the relationship between the natural gas price and capacity investments in solar and wind power energy is far from univocal. We find that this relationship is not linear but is better represented by a bell-shaped curve. Hence, for relativelly low gas price, the two modes of production are substitutable. After a price threshhold is reached, the two are complementary. A theoretical model explains this as the trade-off resulting from two forces: the input price differential of these two modes of production and the risks related to the unpredictable nature of the intermittence of renewable energies. Using U.S. state level data from 1998 to 2012, we find that this relationship is robust to various empirical specifications.
    Date: 2014–10
  7. By: Mareike Lange
    Abstract: It is still difficult for biofuel producers to prove the contribution of their biofuels to reducing carbon emissions because the production of biofuel feedstocks can cause land use change (LUC), which in turn causes carbon emissions. A carbon map can serve as a basis to prove such contribution. I show how to calculate a carbon map according to the sustainability requirements for biofuel production adopted by the European Commission (EU-RED) for the Brazilian Cerrado. Based on the carbon map and the carbon balance of the production process I derive maps showing the possible emission savings that would be generated by biofuels based on soy and sugarcane if an area were to be converted to produce feedstock for this biofuel options. I evaluate these maps according to the criterion contained in the EU-RED of 35% minimum emission savings for each biofuel option compared to its fossil alternative. In addition, to avoid indirect LUC effects of the EU-RED that might offset any contribution of biofuels to reducing carbon emissions. I argue that all agricultural production should be subject to a carbon assessment. In this effort, the calculated carbon maps can be the basis for a climate friendly land use planning that is binding for all agricultural production in the Cerrado
    Keywords: biofuels, carbon emissions, Renewable Energy directive, carbon map, land use change, Brazil
    JEL: Q42 Q58 Q56 Q16
    Date: 2014–10
  8. By: Ghani, Ejaz; Goswami, Arti Grover; Kerr, William R.
    Abstract: India's manufacturing sector has undergone many spatial adjustments since 1989, including, for example, the organized sector's migration to rural locations, the powerful rise of informal manufacturing within cities, and the development of intermediate cities for manufacturing. This paper investigates the impact of these spatial adjustments for electricity usage in India’s manufacturing sector. Striking spatial differences in energy usage exist, and whether spatial adjustments exacerbate or alleviate energy consumption strains is important for issues ranging from reducing India's power blackouts to stemming rising pollution levels. Using detailed surveys for the organized and unorganized sectors, the analysis finds that electricity usage per unit of output in urban plants declined steadily during 1989-2010. In the rural areas, by contrast, electricity consumption per unit of output for organized sector plants peaked in 2000 and thereafter declined. Decomposing the observed trends in aggregate electricity usage from 2000 onwards, the paper finds that most reductions in electricity usage per unit of output came from reductions in existing sites of activity (defined through state-industry-urban/rural cells). The second biggest factor leading to reduced usage was lower usage in fast-growing sectors. By contrast, spatial movements of manufacturing activity across India did not significantly change usage levels and may have even increased them. This appears to have been in part because of the split nature of the mobility, with organized and unorganized sectors migrating in opposite directions.
    Keywords: Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Environment and Energy Efficiency,Energy and Environment,Energy Demand
    Date: 2014–10–01
  9. By: Lucas, Nigel
    Abstract: Three case studies illustrate some of the secondary consequences of the search for energy security and its relationship to regional trade and cooperation: the role of the People’s Republic of China, the emerging market in biofuels in Southeast Asia, and diverse feed-in tariffs for renewable energy. The three main ways regional cooperation can strengthen national policies on energy security are (i) sharing information and knowledge to create a sound evidence base for policies, (ii) agreeing on common policies, and (iii) developing subregional markets in electricity and gas. The priorities of the knowledge base should be energy efficiency and renewable energy; in many cases it will be advantageous to work further toward harmonized policies. In the long term, the biggest impact of regional cooperation on national energy security will be creating regional networks; developing subregional markets will likely be the most effective approach. An Asian infrastructure cell at the Asian Development Bank could identify technically feasible projects of Asian interest and determine country support; serve as the secretariat for an Asian infrastructure fund; further monitor the development of subregional markets in electricity and gas; and encourage a harmonized approach through facilitating information exchanges, dialogues, and regional agreements.
    Keywords: energy security; regional cooperation; energy sustainability; renewable energy; Asia and the Pacific
    JEL: F10 F15 Q40 Q43 Q48
    Date: 2014–09–01
  10. By: Suzi Kerr (Motu Economic and Public Policy Research); Vicki Duscha (Fraunhofer Institute for Systems and Innovation Research)
    Abstract: There are many choices within the design of an emissions trading system. In this paper we focus on one specific aspect – the point of regulation for the energy sector. This choice affects transaction costs; comprehensiveness, and hence the amount of emissions covered and the extent to which the potential cost-effectiveness gains are realised; and credibility of the system. We discuss how an “upstream” energy sector emissions trading system works and present arguments for going upstream (in particular, simplicity of administration) while also discussing arguments for other points of regulation in light of the Chinese circumstances. We present experiences with the New Zealand system, the only system that is entirely upstream for energy, showing ways to address issues that may arise with an upstream system. Ultimately the success of emissions trading depends on markets that operate in a relatively free and competitive way. Simply copying others’ systems to the context of a largely controlled economy such as the Chinese one is likely to be ineffective; each system must be uniquely tailored to local circumstances, possibly in China more than ever before.
    Keywords: Emissions trading scheme, point of regulation, upstream, energy sector, China, New Zealand
    JEL: Q54 Q56 Q58 Q48 H23
    Date: 2014–09
  11. By: Claus Michelsen; Sebastian Rosenschon; Christian Schulz
    Abstract: The energy efficiency of the residential housing stock plays a key role in strategies to mitigate climate change and global warming. In this context, it is frequently argued that private investment and the quality of thermal upgrades is too low in the light of the challenges faced and the potential energy cost savings. While many authors address the potential barriers for investors to increase energy efficiency, studies on the capabilities different investors have to reduce energy requirements of their property are scarce. This study investigates potential advantages of housing company's size, i.e. economies of scale, economies of scope and institutional learning in thermal upgrades of residential housing. Based on unique data on energy consumption in 102,307 apartment houses in Germany, we present new evidence for advantages and disadvantages of housing company's size in "green" retrofitting projects. Our estimations show, that large housing companies outperform private landlords by far in high effort refurbishment projects. In contrast, private landlords appear to have advantages in low effort, incremental refurbishment activities. The results offer new options for policy makers to refine the support schemes towards a low carbon housing stock.
    Keywords: "green" real estate, energy efficiency, refurbishment, economies of scale, economies of scope
    JEL: R31 R32 Q48
    Date: 2014
  12. By: Han PHOUMIN (Economic Research Institute for ASEAN and East Asia (ERIA)); Fukunari KIMURA (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: This study has been motivated by the recent shift of energy demand’s gravity to Asia due to decades of robust and stable economic growth in the region. Said economic growth has correspondingly led to increases in per capita income in emerging economies in ASEAN and East Asia. Past empirical studies showed that energy intensity –thus energy demand-- tends to grow at an early stage of development. However, curbing the energy intensity remains central to green growth policy. Thus, this study formulates the hypothesis on whether energy intensity – thereby energy demand -- starts to fall as a country becomes richer. Based on this hypothesis, this study aims to investigate: (i) the non-monotonic relationship between energy demand and income levels in selected ASEAN and East Asia countries; (ii) the short- and long-run association of energy demand with price and income level; and (iii) the country performance in curbing the energy intensity. The study employs panel data model, pool-OLS, and historical time series data of individual countries with Vector Error Correction Model (ECM) for the analysis of the above objectives. The findings have suggested three major implications. One, it found that energy intensity --thus energy demand -- has a trade-off relationship with income level which contributes to the theory of energy demand. Two, energy demand has a trade-off relationship with income level, albeit the fact that each country has a different threshold level, implying that whatever the level of per capita income a particular country has, that country can curb energy intensity if it has the right policies in place. And three, countries with persistently increasing energy intensity will need to look into their energy efficiency policies more aggressively to ensure that structural changes in the economy do keep the energy efficiency policy to its core.
    Keywords: energy demand, energy intensity, income, price, energy efficiency, trade-off or threshold, ASEAN and East Asia
    JEL: C30 Q40 Q49
    Date: 2014
  13. By: Jean-Marie Alain (INRIA and UMR LIRMM); Michel Moreaux (Toulouse School of Economics, IDEI and LERNA); Mabel Tidball (INRA and UMR LAMETA)
    Abstract: We study in this report a model of optimal Carbon Capture and Storage in which the reservoir of sequestered carbon is leaky, and pollution eventually is released into the atmosphere. We formulate the social planner problem as an optimal control program and we describe the optimal consumption paths as a function of the initial conditions, the physical constants and the economic parameters. In particular, we show that the presence of leaks may lead to situations which do not occur otherwise, including that of non-monotonous price paths for the energy.
    Keywords: carbon sequestration and storage, optimal control.
    JEL: Q32 C61
    Date: 2014–09
  14. By: Mehmet Balcilar (Eastern Mediterranean University); Rangan Gupta (University of Pretoria); Stephen M. Miller (University of Nevada, Las Vegas and University of Connecticut)
    Abstract: This paper examines the relationship between US crude oil and stock market prices, using a Markov-Switching vector error-correction model and a monthly data set from 1859 to 2013. The sample covers the entire modern era of the petroleum industry, which typically begins with the first drilled oil well in Titusville, Pennsylvania in 1858. We estimate a two regime model that divides the sample into high- and low-volatility regimes based on the variance-covariance matrix of the oil and stock prices. We find that the high-volatility regime more frequently exists prior to the Great Depression and after the 1973 oil price shock caused by the Organization of Petroleum Exporting Countries. The low-volatility regime occurs more frequently when the oil markets fell largely under the control of the major international oil companies from the end of the Great Depression to the first oil price shock in 1973. Using the National Bureau of Economic research business cycle dates, we also find that the high-volatility regime more likely occurs when the economy experiences a recession.
    Keywords: Markov switching, vector error correction, oil and stock prices
    JEL: C32 E37
    Date: 2014–09
  15. By: Miguel Cárdenas Rodríguez; Ivan Haščič; Nick Johnstone; Jérôme Silva; Antoine Ferey
    Abstract: This paper analyses the effects of government policies on flows of private finance for investment in renewable energy (inducement effect). It also examines whether direct provision of public finance for a project increases the volume of private finance raised (“crowding in” effect). A unique dataset of financial transactions for renewable energy projects with worldwide coverage is constructed using the Bloomberg New Energy Finance database. The analysis covers 87 countries, six renewable energy sectors (wind, solar, biomass, small hydropower, marine and geothermal) and the 2000-2011 time-span. Main findings are that, in contrast to quota-based schemes, price-based support schemes are positively correlated with investors’ ability to raise private finance. The paper suggests that, rather than the type of instrument (price vs. quota), it is the specific design of such schemes that is key to providing a predictable signal and an effective incentive to attract private investors. It is also found that public finance supports precisely those projects that have had difficulty raising private finance (co-financed projects), where neither quota-based measures nor price-based support schemes have a significant effect on private finance flows. This raises the concern that in the absence of well-designed policies which incentivise private finance investment, governments wishing to secure project completion have no other choice than to support projects directly through the use of public finance. Ce document porte sur l’analyse des effets des politiques publiques sur les flux financiers privés affectés à l'investissement dans les énergies renouvelables (effet d'induction). Il examine également si l’apport direct de fonds publics à un projet renforce la probabilité d'obtention de financements privés (effet d'attraction). Cette analyse est fondée sur une base de données sans équivalent sur les financements d'actifs (c'est-à-dire sur les opérations d'investissement réalisées dans des projets d'énergie renouvelable) construite à partir de la base de données Bloomberg sur le financement des énergies nouvelles (BNEF, Bloomberg New Energy Finance), couvrant tous les pays. Les principaux résultats indiquent que contrairement aux systèmes fondés sur des quotas, les dispositifs de soutien fondés sur les prix sont corrélés positivement avec la capacité des investisseurs à obtenir des financements privés. Notre analyse suggère que, davantage que le type de dispositif utilisé (instrument fondé sur les prix ou système de quotas), c'est la conception spécifique de ces dispositifs qui est déterminante pour donner des signaux prévisibles et des incitations efficaces attirant les investisseurs privés. L’analyse conclue également que les financements publics sont précisément affectés aux projets qui ont eu des difficultés à attirer des fonds privés (projets cofinancés), très probablement parce qu'ils ne sont pas économiquement viables en l'absence d'un tel soutien. Cela laisse à penser qu'en l'absence de politiques publiques judicieusement conçues, permettant d'attirer des investissements financiers privés, les gouvernements souhaitant garantir l'achèvement d'un projet n'aient pas d'autre choix que de soutenir directement ledit projet à travers des financements publics.
    Keywords: renewable energy, technology deployment, investment, finance, policy instrument choice, choix des instruments d'action, innovation induite, financement d'actifs, investissement, énergie renouvelable
    JEL: G3 H23 L94 O3 Q42 Q48 Q54 Q55 Q58
    Date: 2014–10–16
  16. By: Beat Hintermann; Sonja Peterson; Wilfried Rickels
    Abstract: Since 2005, the EU ETS has provided a market-based price signal for European carbon emissions, accompanied by increasing economic research related to this policy instrument. In this paper, we carry out a review of the empirical literature examining allowance price formation. A consensus has emerged that allowance prices are significantly related to fuel prices and to variables affecting the expected amount of necessary abatement, such as economic activity or changes in the cap. However, the relationship is not robust, probably because the relevant abatement technologies change with the economic conditions they operate in. There is evidence that models explicitly accounting for uncertainty about future demand and supply of abatement are better at explaining allowance price variation during certain periods. Yet, our understanding of the level of the allowance price remains poor. We cannot say with any degree of confidence whether the price is “right,” in the sense that it reflects marginal abatement costs, or whether there is a price wedge caused by transaction costs, price manipulation, or other sources of inefficiency. Nevertheless, the market has matured compared to Phase I, and the banking provision has induced it to incorporate future scarcity of allowances and to smooth the effect of transient shocks as intended
    Keywords: EU Emission trading, allowance Prices, market efficiency
    JEL: Q56 Q58
    Date: 2014–09
  17. By: Brown, David (University of Alberta, Department of Economics)
    Abstract: Motivated by recent government interventions in the form of mandated subsidies for new generation capacity, I examine the impact of subsidized entry of electricity generation capacity on the performance of centralized capacity auctions. Subsidized entry suppresses capacity prices and induces an inefficient allocation of capacity. It also alters the equilibrium generation portfolio determined by the capacity auction. In the short-run, altering the generation portfolio through subsidized entry may lead to lower expected electricity prices in subsequent market interactions. These effects reduce total industry profit, but may increase consumer surplus. Consequently, the effect of subsidized entry on short-run expected welfare is ambiguous. However, subsidized entry also has adverse long-run impacts. The suppressed capacity and electricity prices reduce the incentives of unsubsidized firms to invest in generation capacity. Further, subsidized entry may induce welfare-reducing boom and bust investment cycles and/or may be self-reinforcing. Regulatory policies such as PJM’s Minimum Offer Pricing Rule (MOPR) attempt to eliminate subsidized entry. Under plausible conditions, the long-run resource adequacy issues associated with insufficient capacity investment dominate the potential short-run benefits of subsidized entry such that the MOPR is welfare-enhancing.
    Keywords: electricity market design; subsidized entry; resource adequacy; regulatory policy; multi-unit auctions
    JEL: D44 L13 L50 L94
    Date: 2014–09–01
  18. By: Frédéric Branger (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech, AgroParisTech - AgroParisTech); Jean-Pierre Ponssard (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Oliver Sartor (IDDRI - Institut du Développement Durable et des Relations Internationales - Institut d'Études Politiques [IEP] - Paris); Misato Sato (London School of Economics - [-])
    Abstract: This paper investigates incentives for firms to increase output above the activity level thresholds (ALTs) in order to obtain more free allowances in the EU Emissions Trading Scheme. While ALTs were introduced in order to reduce excess free allocation to low-activity installations, for installations operating below the threshold, the financial gain from increasing output to reach the threshold may outweigh the costs. Using installation level data for 246 clinker plants, we estimate the effect of ALTs on output decisions. The ALTs induced 5.8Mt of excess clinker production in 2012 (4% of total EU output), which corresponds to 5.2Mt of excess CO2 emissions (over 5% of total sector emissions). As intended, ALTs do reduce overallocation (by 6.6million allowances) relative to a scenario without ALTs, but an alternative output based allocation would further reduce overallocation by 39.5million allowances (29% of total cement sector free allocation). Firms responded disproportionately to ALTs in countries with low demand, especially in Spain and Greece. The excess clinker output lead to increased EU clinker and cement exports, production shifting between plants and also an increase in clinker content of cement thus reducing the carbon efficiency of cement production.
    Keywords: Activity level thresholds, EU ETS, carbon trading, free allowance allocations, cement
    Date: 2014–10–08
  19. By: M. Scott Taylor (University of Calgary); Juan Moreno Cruz
    Date: 2014–09–29
  20. By: Douglas Hanley; Daron Acemoglu; Ufuk Akcigit; William Kerr
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation-in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several steps to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model`s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy heavily relies on research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policy structures. For example, just relying on carbon taxes or delaying intervention both have significant welfare costs--though their implications for medium run temperature increases are quite different.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy
    JEL: O30 O31 O33 C65
    Date: 2014–01
  21. By: Elizondo Azuela, Gabriela; Barroso, Luiz; Khanna, Ashish; Wang, Xiaodong; Wu, Yun; Cunha, Gabriel
    Abstract: This paper considers the design and performance of auction mechanisms used to deploy renewable energy in three emerging economies: Brazil, China, and India. The analysis focuses on the countries'experience in various dimensions, including price reductions, bidding dynamics, coordination with transmission planning, risk allocation strategies, and the issue of domestic content. Several countries have turned to public competitive bidding as a mechanism for developing the renewable generation sector in recent years, with the number of countries implementing some sort of auction procedure rising from nine in 2009 to 36 by the end of 2011 and about 43 in 2013. In general, the use of auctions makes sense when the contracting authority expects a large volume of potentially suitable bids, so that the gains from competition can offset the costs of implementation. A study of the successes and failures of the particular auction design schemes described in this paper can be instrumental in informing future policy making.
    Keywords: Energy Production and Transportation,Markets and Market Access,Climate Change Mitigation and Green House Gases,Debt Markets,Emerging Markets
    Date: 2014–10–01
  22. By: Frédéric Branger,; Jean-Pierre Ponssard; Oliver Sartor; Misato Sato
    Abstract: This paper investigates incentives for firms to increase output above the activity level thresholds (ALTs) in order to obtain more free allowances in the EU Emissions Trading Scheme. While ALTs were introduced in order to reduce excess free allocation to low-activity installations, for installations operating below the threshold, the financial gain from increasing output to reach the threshold may outweigh the costs. Using installation level data for 246 clinker plants, we estimate the effect of ALTs on output decisions. The ALTs induced 5.8Mt of excess clinker production in 2012 (4% of total EU output), which corresponds to 5.2Mt of excess CO2 emissions (over 5% of total sector emissions). As intended, ALTs do reduce overallocation (by 6.6million allowances) relative to a scenario without ALTs, but an alternative output based allocation would further reduce overallocation by 39.5million allowances (29% of total cement sector free allocation). Firms responded disproportionately to ALTs in countries with low demand, especially in Spain and Greece. The excess clinker output lead to increased EU clinker and cement exports, production shifting between plants and also an increase in clinker content of cement thus reducing the carbon efficiency of cement production.
    Date: 2014–10
  23. By: Itamar Caspi (Research Department, Bank of Israel); Nico Katzke (Department of Economics, University of Stellenbosch); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This paper sets out to date-stamp periods of historic oil price explosivity (or bubbles) using the Generalized sup ADF (GSADF) test procedure suggested by Phillips et al. (2013). The date-stamping strategy used in this paper is effective at identifying periodically collapsing bubbles; a feature found lacking with previous bubble detecting methods. We set out to identify bubbles in the real price and the nominal price-supply ratio of oil for the period 1876 - 2014. The recursive identification algorithms used in this study identifies several periods of significant explosivity, and as such provides future researchers with a reference for studying the macroeconomic impact of historical periods of significant oil price build-ups.
    Keywords: Oil-prices, Date-Stamping Strategy, Periodically Collapsing Bubbles, Explosivity, Flexible Window, GSADF Test, Commodity Price Bubbles
    JEL: C15 C22
    Date: 2014
  24. By: OECD
    Abstract: This working paper assesses opportunities and policies for green growth in the Chicago Tri-State Metropolitan Area. It first examines the Chicago metro-region's economic and environmental performance and potential constraints to regional growth, and identifies emerging regional specialisations in green products and services. This is followed by a review of sector-specific policies that can contribute to green jobs, green firms and urban attractiveness, with particular attention to energy-efficient buildings, the wind energy industry, public transportation, and the water and waste sectors. Finally, the working paper considers the role of workforce, innovation and governance policies, focusing on skill shortages and skill mismatches in the regional labour market, ways to make the most of the region's innovation assets, and opportunities for regional institutional co-ordination.
    Keywords: sustainable development, innovation, transport, renewable energy, climate change, energy efficiency, green technologies, green growth, green economy, urban sustainability, cities, multi-level governance, metro-region, Chicago, Indiana, Illinois, green cities, Milwaukee, urban development, regional clusters, attractiveness, Wisconsin
    JEL: O18 O44 Q01 Q55 Q58 R11 R58
    Date: 2013–05–03
  25. By: Weitzman, Martin L.
    Abstract: It is difficult to resolve the global warming free-rider externality problem by negotiating n different quantity targets. By contrast, negotiating a single internationally binding minimum carbon price (the proceeds from which are domestically retained) counters self-interest by incentivizing agents to internalize the externality. The model of this article indicates an exact sense in which each agent’s extra cost from a higher emissions price is counterbalanced by that agent’s extra benefit from inducing all other agents to simultaneously lower their emissions in response to the higher price. Some implications are discussed. While the study is centered on a formal model, the tone of the policy discussion resembles more an exploratory think piece.
    Date: 2014
  26. By: Benoît Sévi
    Abstract: In this paper, we first provide empirical evidence of the existence of intraday jumps in the crude oil price series. We then show that these jumps, in conjunction with realized volatility measures, are important in modeling the convenience yield over the 2001-2010 period. Our empirical results indicate that lagged jumpmean only explains around 16% of the weekly convenience yield. Our best specification, including variation in inventories, eight-week realized variance and the 250-day jumpmean is able to explain around 61% of the weekly convenience yield. Importantly, our results are not driven by the simultaneous determination of the various variables at work as we only use lagged variables in all regressions.
    Keywords: convenience yield, realized volatility, jump, inventory.
    JEL: C15 C32 C53 G1 Q4
    Date: 2014–09–30
  27. By: Bruno Lanz; Jules-Daniel Wurlod (Centre for International Environmental Studies, The Graduate Institute); Luca Panzone; Timothy Swanson
    Abstract: We study how substitutability between clean and dirty alternatives affects the effectiveness of environmental regulation in a field experiment that controls for the choice set of respondents. We consider four product categories with clean and dirty alternatives: (i) cola products in plastic bottles vs. in aluminum cans; (ii) skimmed vs. whole milk; (iii) chicken meat vs. beef meat; and (iv) margarine vs. butter. We employ two neutrally framed treatments to quantify the willingness to substitute between clean and dirty alternatives in each product market, namely a change in relative prices and the removal of the dirty alternative, leaving respondents the option of buying one of the remaining clean alternatives or nothing. We then compare the impact of a carbon footprint label and a Pigovian subsidy to the clean alternatives. While both instruments increase the market share of the clean products, their impact is higher when clean and dirty alternatives are close substitutes. We also find evidence that motivation crowding is present and increases with substitutability. Our results highlight the importance of product markets in the design of consumer-orientated policies.
    Keywords: Field experiments; Environmental policy; Market-based instruments; Information provision; Clean substitutes; Motivation crowding; Carbon footprint.
    JEL: C25 C91 D12 D64 L15 L50 Q58
    Date: 2014–10–01
  28. By: Serli Kiremitciyan; Ahmet Goncu; Tolga Umut Kuzubas
    Date: 2014–10
  29. By: Wolfgang Buchholz (Department of Economics, University of Regensburg); Wolfgang Peters (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Aneta Ufert (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))
    Abstract: The failure of previous climate policy leads us back to the public good characteristic of climate protection. The first aim of this paper is to identify by a simple graphical representation of 2x2 games, the ranges of constellations between country-specific environmental benefits and abatement costs which entail the four relevant games: prisoners’ dilemma, chicken game, stag hunt game and harmony game. Moreover, we examine how fairness preferences and especially reciprocity change these ranges. In contrast to the hypothesis that fairness motivations will foster cooperation we show that reciprocity reduces the scope for unilateral climate protection. In a third step, we consider reciprocal subsidies of abatement efforts, which definitely increase the scope for successful climate protection without requiring contractual mitigation obligations.
    Date: 2014–09
  30. By: Charnovitz, Steve
    Abstract: This paper provides a detailed explanation how the law of the World Trade Organization regulates environmental subsidies with a focus on renewable energy subsidies. The paper begins by discussing the economic justifications for such subsidies and the criticisms of them and then gives examples of categories of subsidies. The paper provides an overview of the relevant World Trade Organization rules and case law, including the recent Canada-Renewable Energy case. The paper also makes specific recommendations for how World Trade Organization law can be improved and discusses the literature on reform proposals. The study finds that because of a lack of clarity in World Trade Organizaion rules, for some clean energy subsidies, a government will not know in advance whether the subsidy is World Trade Organization-legal.
    Keywords: Environmental Economics&Policies,Economic Theory&Research,Taxation&Subsidies,Emerging Markets,Trade Law
    Date: 2014–10–01
  31. By: Angèle RENAUD (IAE DIJON - Université de Bourgogne (CREGO))
    Abstract: (VF) Cet article s’interroge sur les rôles du contrôleur de gestion dans le domaine environnemental.Pour ce faire, une étude de cas longitudinale est menée sur une entreprise française avantgardiste en matière de contrôle de gestion environnemental (CGE). Les résultats révèlent 4 rôles du contrôleur de gestion (vérificateur de CO2, business partner, traducteur euro-carbone, acteur du changement) et ses caractéristiques dans ce nouveau domaine (image, pouvoir d’influence et territoire). Plusieurs enseignements d’ordre théorique, managérial et méthodologique sont tirés du cas. (VA) This paper explores the role of the management controller in environmental management control (EMC) by means of a longitudinal case study of a French company with a pioneering approach to EMC. The results show that the management controller has four key roles (carbon auditor, business partner, euro-carbon translator, and agent of change) and illustrate the characteristics of the controller in this new domain (image, power of influence, and territory). Several theoretical, managerial, and methodological lessons may be learned from this case study.
    Keywords: Contrôleur de gestion;Contrôle de gestion environnemental (CGE);Bilan carbone;Budget carbone ; Management Controller;Environmental Management Control (EMC);Environmental Management Controller;Carbon Footprint;Carbon Budget
    JEL: M41 M14
    Date: 2014–04
  32. By: Michele Polo; Carlo Scarpa
    Abstract: This paper examines retail competition in a liberalized gas market. Vertically integrated firms run both wholesale activities (buying gas from the producers under take-or-pay obligations) and retail activities (selling gas to final customers). The market is decentralized and the firms decide which customers to serve, competing then in prices. We show that TOP clauses limit the incentives to face-to-face competition and determine segmentation and monopoly pricing even when entry of new competitors occurs. The development of wholesale trade, instead, may induce generalized entry and retail competition. This equilibrium outcome is obtained if a compulsory wholesale market is introduced, even when firms are vertically integrated, or under vertical separation of wholesale and retail activites when firms can use only linear bilateral contracts.
    Keywords: Entry, Segmentation, capacity constraints, wholesale markets.
    JEL: L11 L13 L95
  33. By: Timothy Swanson (Centre for International Environmental Studies, IHEID, The Graduate Institute of International and Development Studies, Geneva); Chiara Ravetti; Mu Quan; Xuxuan Xie; Zhang Shiqiu
    Abstract: In this subtask we survey the literature that estimates the ancillary benefits of greenhouse gas (GHG) abatement in developing countries, and the extent to which its findings can be transferred across countries. Specifically, we focus upon the health benefits from emission reduction in developing nations. In order to evaluate the spillovers and indirect benefits that a country could reap from GHG mitigation policies, it is crucial to account for the differences that exist among nations in the valuation of such benefits. In fact, the monetary loss attached to an illness and the value of a human life may vary across cultures, economies and over time, depending on income, demographics, socio-economic and political characteristics of a country. There is a rich literature on valuation techniques that spans much of the developed world, whereas there has been far less analysis of developing countries. The goal of this research is to examine the still relatively scarce literature on the developing world and its specific findings. Particular attention will be dedicated to case studies of China.
    Date: 2014–08–08
  34. By: Gilles De Truchis (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Florent Dubois (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))
    Abstract: Technical abstract: A necessary condition for two time series to be nontrivially cointegrated is the equality of their respective integration orders. Nonetheless, in some cases, the apparent unbalance of integration orders of the observables can be misleading and the cointegration theory applies all the same. This situation refers to unbalanced cointegration in the sense that balanced long run relationship can be recovered by an appropriate filtering of one of the time series. In this paper, we suggest a local Whittle estimator of bivariate unbalanced fractional cointegration systems. Focusing on a degenerating band around the origin, it estimates jointly the unbalance parameter, the long run coefficient and the integration orders of the regressor and the cointegrating errors. Its consistency is demonstrated for the stationary regions of the parameter space and a finite sample analysis is conducted by means of Monte Carlo experiments. An application to the no-arbitrage condition between crude oil spot and futures prices is proposed to illustrate the empirical relevance of the developed estimator. Non-technical abstract: The no-arbitrage condition between spot and future prices implies an analogous condition on their underlying volatilities. Interestingly, the long memory behavior of the volatility series also involves a long-run relationship that allows to test for the no-arbitrage condition by means of cointegration techniques. Unfortunately, the persistent nature of the volatility can vary with the future maturity, thereby leading to unbalanced integration orders between spot and future volatility series. Nonetheless, if a balanced long-run relationship can be recovered by an appropriate filtering of one of the time series, the cointegration theory applies all the same and unbalanced cointegration operates between the raw series. In this paper, we introduce a new estimator of unbalanced fractional cointegration systems that allows to test for the no-arbitrage condition between the crude oil spot and futures volatilities.
    Keywords: unbalanced cointegration; fractional cointegration; no-arbitrage condition; local Whittle likelihood; commodity markets
    Date: 2014–09
  35. By: Shilpi, Forhad; Sangraula, Prem; Li, Yue
    Abstract: Using bilateral migration flow data from the 2010 population census of Nepal, this paper provides evidence on the importance of public infrastructure and services in determining migration flows. The empirical specification, based on a generalized nested logit model, corrects for the non-random selection of migrants. The results show that migrants prefer areas that are nearer to paved roads and have better access to electricity. Apart from electricity's impact on income and through income on migration, the econometric results indicate that migrants attach substantial amenity value to access to electricity. These findings have important implications for the placement of basic infrastructure projects and the way benefits from these projects are evaluated.
    Keywords: Transport Economics Policy&Planning,Population Policies,Economic Theory&Research,Anthropology,Public Sector Economics
    Date: 2014–09–01
  36. By: Marcelo Santos (Departamento de Gestão e Economia and CEFAGE-UBI); Tiago Neves Sequeira (Departamento de Gestão e Economia and CEFAGE-UBI); Alexandra Ferreira Lopes
    Abstract: We relate technological adoption (of different technologies) with income inequality. We discovered that some technologies such as aviation, cell phones, electric production, internet, telephone, and TV are skill-complementary in raising inequality. We constructed standardized indexes of skill-complementary technological adoption for modern Information and Communication Technologies (ICT), older ICT, production and transport technologies. We found strong evidence that older ICT and transport technologies (and less frequently modern ICT) tend to increase inequality. Additionally, we discovered that results are much stronger in rich countries than in poor ones. Our results are quite robust to a series of changes in specifications, estimators, samples, and measurement of technology adoption. These results may bring insights to the design of incentive-schemes for technology adoption.
    Keywords: Income inequality; Technological adoption.
    JEL: I32 O10 O33 O50
    Date: 2014
  37. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech); Dominique Finon (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: Le CIRED a organisé un colloque le jeudi 20 mars 2014 à l'auditorium du CNRS. Cet événement a été produit dans le cadre du projet de recherche européen R&Dialogue, en association avec le laboratoire PACTE (U. Grenoble-CNRS) et avec le soutien de l'INSHS et de l'INSIS du CNRS. Ce document constitue les actes de cette journée. Son sommaire reprend le déroulé des exposés. Il est organisé en cinq parties correspondant aux sessions : * A. " L'efficacité des consommations dans le bâtiment : entre innovations financières, inerties des systèmes et organisation des filières. " Session présidée par Isabelle Vincent (Ademe). * B. " Transports entre mobilité subie et mobilité choisie : des prix de l'immobilier et de l'énergie aux politiques d'infrastructure. " Session présidée par Jean Laterrasse (LMVT, ENPC). * C. " Le territoire, nouvel acteur de la maîtrise de l'énergie et de la transition. " Session présidée par Dominique Finon (Cired). * D. " La vulnérabilité énergétique face au coût de la transition énergétique. " Session présidée par Stéphane Mialot (Médiateur national de l'Énergie). *E. " Transition énergétique, quels nouveaux atouts économiques pour sortir de la crise du régime de croissance. " Table ronde présidée par Géraud Guibert (La Fabrique écologique). Cette journée achève un cycle de trois journées de dialogue CNRS sur la transition énergétique.
    Date: 2014–07
  38. By: Rodrigo Harrison (Instituto de Economia. Pontificia Universidad Católica de Chile.); Roger Lagunoff (Department of Economics, Georgetown University)
    Abstract: We model dynamic mechanisms for a global commons. Countries benefit from both consumption and aggregate conservation of an open access resource. A country's relative value of consumption-to-conservation is privately observed and evolves stochastically. An optimal quota maximizes world welfare subject to being implementable by Perfect Bayesian equilibria. With complete information, the optimal quota is first best; it allocates more of the resource each period to countries with high consumption value. Under incomplete information, the optimal quota is fully compressed - initially identical countries always receive the same quota even as environmental costs and resource needs differ later on.
    Keywords: Dynamic mechanism design, global commons, climate change, optimal quota, full compression, fish wars, Perfect Bayesian equilibria, international agency.
    JEL: C73 D82 F53 Q54 Q58
    Date: 2013–09–15
  39. By: Fuerst, Franz; Shimizu, Chihiro
    Abstract: This paper aims to extend the existing evidence on the investment value of green buildings to international markets, specifically the residential market in Japan. Using a unique transaction database of condominiums in the Tokyo metropolitan area and a hedonic analytical framework, we find that green buildings command a small but significant premium on both the asking and transaction prices. This finding is consistent with results from other countries. As far as we are aware, this is also the first study of green buildings’ economic value based on a hedonic model incorporating buyer characteristics. However, further analysis reveals that this premium is primarily driven by wealthy households that exhibit a higher willingness-to-pay for eco-labelled condominiums, both as a total amount and as a fraction of the total sales price. We therefore conclude that eco-labels are perceived as a luxury good in the Japanese housing market rather than a way to save money on lower utility bills.
    Keywords: Green building, green label, hedonic approach, offer price, bid price, market price function, omitted variable bias
    JEL: M14 D92
    Date: 2014–09
  40. By: Tom Duncanson (Millikin University, USA)
    Abstract: With one exception, the major coal companies in the U.S. have ignored growing demands for corporate social responsibility. Coal in the U.S. is a profoundly problematic industry with a history of labor violence, worker safety disasters, fatal health impacts on both those who produce and consume the product, the ruin of landscapes, myriad impacts on water and land resources, and commodity price volatility for those who would invest in it. Only the most sanguine coal backers see it as a key energy for the future; while people might fantasize automobiles without gasoline, practical thinkers have, for a generation, successfully pursued substitutes for coal. For many observers, to open a coal mine today is as absurd as founding a buggy factory. This paper is a case study of the attempt by Sunrise Coal of Terre Haute, Indiana to open a massive new underground coal mine spanning Champaign County and Vermilion County, Illinois, and the crucial step in the process of acquiring treated and untreated water, plus sewer services, from the Village of Homer, Illinois. In this controversy members of the Homer community first raised questions, then concerns, and finally arguments, about the coal mine; but at each step in the public deliberations Sunrise remained aloof from making answers, reassurances, and rebuttals. Sunrise negotiated legal obligations but did not acknowledge social responsibilities; in this negotiation process community voices became little more than background noises. Profoundly, the coal company chose not to explain its silence, and to cloak its position in as much secrecy as possible with “non-disclosure agreements” with the land owners who leased their mineral rights to Sunrise and disciplining their champion, the Mayor of Homer, when he went off script. Sunrise gave its critics’ complaints no credit, but it is likely it did not build enough trust to actually open and operate the mine.
    Date: 2013–09
  41. By: R.W. Fraser
  42. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: Jean Tirole is one of the most influential economists of our time. He has made important theoretical research contributions in a number of areas, but most of all he has clarified how to understand and regulate industries with a few powerful firms.
    Keywords: Market power;
    JEL: D40
    Date: 2014–10–13
  43. By: Mathias Erlei; Christoph Neumann (Abteilung für Volkswirtschaftslehre, Technische Universität Clausthal (Department of Economics, Technical University Clausthal))
    Abstract: In 1931 Harold Hotelling published his seminal contribution to the economic theory of exhaustible resources. His major insight states that the prices of exhaustible resources - more specifically the scarcity rent - will rise at the rate of interest, and consumption will decline over time. The equilibrium implies social optimality. However, empirical analysis shows that market prices of exhaustible resources rarely follow the predicted pattern. Yet our experimental investigation provides support for the position that the Hotelling rule is relevant for the long term development of resource prices.
    Keywords: Exhaustible resource, Hotelling rule, Intertemporal Allocation Problem, Continuous Double Auction, Experiment
    Date: 2014

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