nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2017‒07‒30
four papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Attentuation of Free Riding in Environmental Valuation : Evidence from Field Experiment: Contingent Valuation Method By Kitessa, Rahel Jigi
  2. Welfare Effects of R&D Support Policies By Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto
  3. Verification of Statistical Reliability of AHP Overall Rating and Minimization of Wrong Decision-Making By Sungho Cho
  4. Geopolitical Model of Investment Project Implementation By Oleg Malafeyev; Konstantin Farvazov; Olga Zenovich

  1. By: Kitessa, Rahel Jigi (Tilburg University, Center For Economic Research)
    Abstract: Standard economic theory suggests that agents make decision based on the outcomes. Subsequently, environmental valuation using contingent valuation method (CVM) assumes the agent’s valuation of a given environmental good is based on the (expected) results. However, Bulte et al. (2005) found that causes in addition to outcomes matter in valuation. I extended this notion to contribute to design of CVM that attenuate free riding, thus remove the downward bias of method. I used field experiment and tested if designing a scenario that reinforce responsibility in decision making (valuation), attenuates free riding. I do so by eliciting contributions to a reforestation program among farmers in an environmentally valuable area, the Bale eco-Region in Ethiopia, by including or omitting explicit information that one of the main forest related activities the respondents engage in, logging, is among the most important causes of local forest degradation. I find that explicitly stating that logging is one of the main causes of deforestation increases our respondents’ willingness to pay. More interestingly, I find that this “responsibility effect” is sufficiently strong to eliminate free rider behavior. When the information about the cause of deforestation is in place, the respondents’ willingness to pay for the reforestation project is not significantly different if they are informed of other forest protection projects, or not.
    Keywords: valuation of environment; incentive compatible valuation techniques; conservation; field experiment; forestry; public goods
    JEL: C93 D04 H41 O13 Q51 Q23
    Date: 2017
  2. By: Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto
    Abstract: We build a structural model of the R&D subsidy process incorporating externalities, fixed costs of R&D, and financial market imperfections. We estimate the model using project level R&D and subsidy data from Finland. We conduct a counterfactual analysis of an optimal R&D tax credit policy, the first and second best policies, and laissez-faire with no support and compare them to the subsidy policy used in Finland. We find that the optimal R&D tax credit rate is 0.24, which is lower than the observed average R&D subsidy rate (0.36). R&D participation does not vary across regimes. The R&D investments and spillovers generated by the optimal R&D tax credit and subsidy policies are significantly higher than under laissez-faire but smaller than in the first and second best. Neither tax credits nor subsidies improve welfare compared to laissez-faire.
    Keywords: counterfactual; R&D subsidies; welfare
    Date: 2017–07
  3. By: Sungho Cho (KISTEP)
    Abstract: As the size of investment in R & D investment has increased, the awareness of the efficiency of limited government fiscal enforcement has also increased, and a preliminary feasibility study has been conducted as a system to verify the feasibility of projects from the planning stage before large-scale financial investment. The preliminary feasibility study system examines technically, politically and economically feasibility of the R & D project that is planning large-scale government expenditure in three dimensions and derives comprehensive judgment by using the analytical hierarchical process (AHP) . Depending on the aggregate score of the AHP analysis, a single conclusion is presented to the fiscal authority or stakeholder in the form of binary decision making for the implementation or non-execution of the project. Therefore, not only the objectivity and fairness of the survey process and analysis method, but also the reliability of the survey results are the most important foundation and target for the operation of the system. AHP does not involve statistical or probabilistic concepts of aggregate ratings analyzed because it derives alternative conclusions on project implementation alternatives and non-project alternatives based on an aggregate rating of 0.5, meaning theoretically neutral. However, even if a plurality of experts participate in the AHP, the question of whether the opinion can be viewed as reflecting opinions of experts in the relevant field requires a statistical approach. In particular, when there is a conflict between the evaluators, It is necessary to consider aspects that are difficult to make an informed decision. In this paper, we discuss a method for verifying the reliability of the AHP comprehensive rating when choosing a single alternative, and a method for reducing judgment errors from a statistical point of view.
    Keywords: Preliminary Feasibility Survey, Analytic Hierarchy Process, operational definition, confrontation of opinions, type I-error, type II-error, statistical significance test
    JEL: O32
    Date: 2017–05
  4. By: Oleg Malafeyev; Konstantin Farvazov; Olga Zenovich
    Abstract: Two geopolitical actors implement a geopolitical project that involves transportaion and storage of some commodities. They interact with each other through a transport network. The network consists of several interconnected vertices. Some of the vetrices are trading hubs, storage spaces, production hubs and goods buyers. Actors wish to satify the demand of buyers and recieve the highest possible profit subject to compromise solution principle. A numerical example is given.
    Date: 2017–07

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