Offset carbon emissions or pay a price premium for avoiding them? A cross-country analysis of motives for climate protection activities

This article contributes to the economic literature on pure and impure public goods by considering two alternatives for contributing to the public good climate protection: offsetting carbon emissions from conventional consumption or paying higher prices for climate-friendly products. We empirically examine a wide range of motives and their impact on individuals’ choice in favour of these two alternatives relying on data from representative international surveys. Our results indicate that environmental awareness, warm glow motives and the desire to set a good example have the most robust effects on both climate protection activities in Germany and the United States. However, some motives differ considerably between both alternatives and the two countries. A green identity enhances the willingness to pay a price premium for climate-friendly goods or services in Germany, while social norms seem to be of much higher relevance in the United States. Our results further suggest that the choice of climate protection activities, especially of carbon offsetting, entails a high degree of uncertainty.     

A Dynamic Tiebout Theory of Voluntary vs. Involuntary Provision of Public Goods

This paper considers a dynamic model of Tiebout-like migration between communities that utilize distinct allocation procedures for public goods. At issue is whether voluntary or compulsory procedures are more likely to prevail over time. We model infinitely lived individuals who make repeated, sequential location decisions over one of two communities. Each community uses a distinct mechanism for allocating public goods. The first is one in which contributions are given voluntarily by the citizenry of the community. The second is a compulsory scheme by which individuals are taxed proportionately to wealth with the tax determined by a majority vote. Opportunities to accumulate wealth exist via accumulation of public capital.
The Markov Perfect equilibria of the dynamic game are studied. Our main result shows that when accumulated wealth converges to a steady state, individuals' locational choices eventually "select" the involuntary provision mechanism. This holds despite the fact that unanimous location in the voluntary provision community may in many cases remain as a Nash equilibrium of the static game each period. We also describe conditions under which voluntary provision survives. These conditions require that accumulation of capital fails to decrease wealth dispersion over time. The results are shown to be consistent with findings relating inequality to school choice.     

Limits to Substitution Between Ecosystem Services and Manufactured Goods and Implications for Social Discounting

This paper examines implications of limits to substitution for estimating substitutability between ecosystem services and manufactured goods and for social discounting. Based on a model that accounts for a subsistence requirement in the consumption of ecosystem services, we provide empirical evidence on substitution elasticities. We find an initial mean elasticity of substitution of two, which declines over time towards complementarity. We subsequently extend the theory of dual discounting by introducing a subsistence requirement. The relative price of ecosystem services is non-constant and grows without bound as the consumption of ecosystem services declines towards the subsistence level. An application suggests that the initial discount rate for ecosystem services is more than a percentage-point lower as compared to manufactured goods. This difference increases by a further half percentage-point over a 300-year time horizon. The results underscore the importance of considering limited substitutability in long-term public project appraisal.     

Home bias, distribution services and determinants of real exchange rates

This paper examines empirically how exogenous changes in the terms of trade affect the real exchange rate through the relative price of traded goods with Canada–US data. The relative price of traded goods is constructed using prices at the dock and retail prices. The first measure emphasizes the importance of home bias in consumption of traded goods. The second measure highlights the importance of distribution services required for consumption of traded goods. It is found that terms of trade shocks affect the relative price of traded goods using both measures. A possible interpretation of empirical findings is that home bias and distribution services are important for understanding the relative price of traded goods.     

A generalized impure public good and linear characteristics model of green consumption

This paper provides a general framework for understanding consumer behavior related to goods and services that may be considered environmentally friendly, ethically produced, fairly traded, or some combination thereof. We generalize the impure public good model and derive its comparative static properties. The model accounts for any number of impure public (green) goods and joint production of any number of both private and public characteristics. The generalization provides a bridge between the impure public good model and the well-known linear characteristics model, both of which are special cases of the model developed here. The results show how demand for green goods and characteristics such as environmental quality depends on wealth, exogenously given levels of public goods, and the technologies of joint production. The effects of changes in technology depend critically on whether jointly produced characteristics are complements or substitutes in consumption. Several of the results are rather counterintuitive and differ in meaningful ways from existing models of impure public goods and linear characteristics. The results also illuminate several reasons for greater caution about whether it is reasonable to assume that green goods and services are necessarily beneficial for the provision of public goods.     

Risk Aversion and International Markets: Does Asset Trade Smooth Real Income?*

In a two-country model, complete asset markets do not guarantee that individuals will choose to eliminate all (diverifiable) risk in aggregate consumption. the presence of nontraded goods forces individuals to choose between reducing uncertainty in aggregate consumption and in the composition between traded and nontraded goods. This choice depends on a comparison of the standard coefficient of relative risk aversion with a second type of risk aversion that becomes relevant when nontraded goods are present, one that captures aversion to risk in composition. Regardless of the decision made, asset trade always reduces the risk premium.     

消费者自愿在线反馈行为的效用分析——基于马斯洛人类动机理论的考察

自愿的在线反馈行为是网络消费中的普遍现象，其背后隐藏着一个重要的经济学问题，即公共品的私人自愿供给。为了更深入地研究消费者自愿进行在线反馈的动因，并相应探讨私人自愿提供公共品的原因，本文以马斯洛人类动机理论为基础，建立了自愿在线反馈行为的效用模型，并利用网络问卷数据对模型进行验证。研究结果表明，自愿在线反馈行为是消费者在效用和成本之间理性选择的结果，公共品的私人自愿供给方式具有理性基础。本文拓展了传统效用函数的内涵，深化了对公共品私人自愿供给和马斯洛动机理论的认识，也为网络消费平台的信用体系建设提供了新思路。     

广义虚拟经济价值创造机制、居民消费决策及价格行为

探讨了广义虚拟经济的价值创造机制。将广义虚拟经济产品纳入消费者的消费集和效用函数,建立广义虚拟经济产品消费决策模型,并对其消费行为进行分析;对广义虚拟经济产品的价格决定机制进行分析。在此基础之上对广义虚拟经济产品消费决策和价格行为进行实证研究,实证发现广义虚拟经济产品已成为我国居民的正常消费品和奢侈品。数据同时显示随着国民收入水平的提高,艺术品市场价格存在上涨的趋势。     

Determinants of pro-environmental consumption: The role of reference groups and routine behavior

This paper investigates the determinants of pro-environmental consumption, focusing on the role of reference groups and routine behavior. We study the factors that explain whether or not people have installed residential solar energy equipment or have subscribed to green-electricity programs, and the factors that influence the intensity of buying organic food. In addition to demographic characteristics and environmental attitudes, we consider the following categories of determinants: economic and cognitive factors (income, estimated price premium, level of information on environmentally-friendly goods); consumption patterns of reference persons; own consumption patterns in the past. Using a unique data set from a survey conducted in the region of Hanover, Germany, we find the following: (1) Economic and cognitive factors are significant covariates of all three kinds of pro-environmental consumption. Their influence is greatest in the case of green electricity. (2) Consumption patterns of reference persons are significant covariates of all three kinds of pro-environmental consumption. Their influence is greatest in the case of organic food. (3) The intensity of buying organic food is greater the longer people have been consumers of these goods.     

公司治理状况对自愿披露水平的影响

本文构建了关于中国上市公司自愿信息披露水平与公司治理各因素间关系的多元回归数学模型。由方程拟合结果,可推断公司治理各要素对我国上市公司自愿披露水平的影响程度,从而揭示出公司治理对自愿信息披露水平的内生约束机制。     

Overcompliance and Voluntary Agreements

Voluntary agreements with industry offer many examplesof overcompliance with respect to environmentalstandards. Such phenomena seem to be irrational butappear less surprising considering firms' strategiesare aimed to internalise environmental quality. Wemodel the choice of the environmental quality ofproducts in a one-shot game between a monopolist andconsumers, to show the existence of inefficientequilibria where quality is low because of moralhazard. The firm can, however, change its' equilibriumstrategy in a repeated but finite game, in order tobuild an environmental reputation if we suppose thatconsumers' information is not only imperfect withregard to quality, but also incomplete with respect toany environmental constraint that may affect thebehaviour of firms (like the threat either of astricter regulation or of potential entry). In atwo-period model, we show the existence of a perfectBayesian equilibrium in mixed strategies where thefirm can revert to the production of green products inorder to influence consumers' beliefs and acquire anenvironmentally friendly reputation. Due to thepeculiarity of environmental information (greenproducts are credence goods), we claim that anexplicit agreement is also necessary in order toestablish monitoring and controlling procedures toverify the performance of firms. These procedures canexplain per se the diffusion of voluntary agreementsthat are nevertheless self-enforcing because of thereputation effect.     

Simultaneous Supplies of Dirty Energy and Capacity Constrained Clean Energy: Is There a Green Paradox?

We propose a representation of individual preferences with a subsistence requirement in consumption, and examine its implications for substitutability and sustainability. Specifically, we generalize the standard constant-elasticity-of-substitution (CES) utility specification for manufactured goods and environmental services, by adding a subsistence requirement for environmental services. We find that the Hicksian elasticity of substitution strictly monotonically increases with the consumption of environmental services above the subsistence requirement, and approaches the standard CES value as consumption becomes very large. Whether the two goods are market substitutes depends on the level of income. We further show that the subsistence requirement may jeopardize the existence of an intertemporally optimal and sustainable consumption path. Our results have important implications for growth, development and environmental policy.     

Determinants of the premium in forward contracts

Whilst the benefits of forward contracting for goods and services have been extensively researched in terms of mitigating market power effects in spot markets, we analyse how the risk in spot price formation induces a counteracting premium in the contract prices. We consider and test a wide-ranging set of propositions, involving fundamental, behavioural, dynamic, market conduct and shock components, on a long data set from the most liquid of European electricity forward markets, the EEX. We show that part of what is conventionally regarded as the market price of risk in electricity is actually that of its underlying fuel commodity, gas; that market power has a double effect on prices, insofar as it increases spot prices and induces a forward premium; that oil price sentiment spills over and that the premium reacts to scarcity and the higher moments of spot price uncertainty. We observe that considerations of the scale and determinants of the forward premium are at least as important as the market power effects in spot market price formation when evaluating the efficiency of wholesale power trading.     

Local Manufacturing Hurt by Depreciations in a Theoretical Model Reflecting the Australian Experience

The model is motivated by data showing that the Australian production of local manufactures is hurt by depreciations and invigorated by appreciations. The paper briefly presents such evidence and then proceeds to a theoretical analysis. The model aims to capture short‐to‐medium run exchange rate effects in an economy with goods and services aggregated into four commodities: (i) imports; (ii) local manufactures; (iii) services; and (iv) rural goods (agricultural, pastoral, forestry, fishing and mining products). With the exception of rural goods, each commodity comprises consumer goods as well as inputs into the other sectors. Rural goods enter consumption only indirectly after processing by the manufacturing sector. Exports are exclusively rural goods. The model has a Keynesian flavour in that the production of local manufactures and services is not constrained by the availability of resources and of labour. Variable inputs per unit of output are assumed to be constant. There are also fixed inputs. Variable inputs are imports in the case of the import sector; rural goods and imports in the case of the local manufacturing sector; and labour in the case of the services sector. The prices of imports, local manufactures and services are set by constant mark‐up factors on variable costs. This assumption is based on a picture of imperfect competition with constant elasticity of demand at the firm level. The extreme capital intensity of rural goods production is taken into account by modelling total production of rural goods as an exogenous parameter. The price of rural goods is determined in the export market. It falls with increasing exports. The economy is not assumed to be small in its export market. The domestic consumption demand schedule is modelled as predetermined in the sense that in the time span under consideration the relationship between quantities consumed and nominal prices is not affected by the exchange rate. The nominal wage rate is assumed to be predetermined in the same sense. No specific functional form is imposed on the consumption demand schedule: the analysis is based on general assumptions, mainly non‐inferiority and gross substitutability. In view of gross substitutability, there is a competitive relationship between imports and local manufactures. Adepreciation raises the price of imports and ceteris paribus such an increase raises the consumption of manufactures. However, the analysis shows that this enhancing influence of a depreciation on manufacturing is weaker than other causal channels that work in the opposite direction. An increase in the price of imports (and exportables) raises variable costs and thereby the price of local manufactures. This leads to a decrease in the output of local manufactures. In the course of the analysis, it is first shown that a uniquely determined equilibrium exists for every exchange rate above a lower bound. Then the effects of a change in the exchange rate are investigated. In most cases the results are unambiguous. In particular this is true for the output and the price of local manufactures. Other conclusions are that a depreciation increases exports and the amount of services provided. In some cases unequivocal results can be obtained only with the help of further assumptions. This concerns the domestic price of rural goods, the balance of trade in domestic prices and import penetration.     

Is There a Win–Win Situation in Household Energy Policy?

To achieve environmental goals, most governments aim to reduce consumption of the most polluting energy goods by taxation. Often, the authorities not only aim to change the consumption of the regulated good by the taxation, but also to change the consumption of close substitutes (hereafter referred to as win–win effects). The size of the win–win effects depend not only on how close substitutes the goods are, but also on the price sensitivity of the taxed good and on the budget effects of the regulation. We use a conditional demand model to decompose the cross-price effect to discuss which criteria that must be fulfilled in order for substantial win–win effects to occur, using Norwegian stationary energy consumption as an empirical example.     

Consumption aspirations in dirty and clean goods and economic growth

This paper builds a two-sector, two-factor environmental model in which agents optimally choose the clean and dirty goods in order to display their social status. In contrast to the conventional notion, we show that greater social aspirations in consumption regardless of either clean or dirty goods have an ambiguous impact on growth, depending on whether the production of conspicuous goods is relatively labor- or capital-intensive, whether the production of conspicuous goods generates more or fewer emissions, and whether labor supply is or is not responsive to social status seeking. By connecting two conflicting aspects of consumer preference involving social aspirations and environmental concerns, our analysis offers a novel explanation for the environmental Kuznets curve and a theoretical support for the empirical possibility of a negative employment-growth relationship and the so-called Green New Deal. Our welfare analysis shows that social comparisons in consumption may increase, rather than decrease, social welfare. The Pigovian tax may only be socially sub-optimal in the two-sector economy because it is unable to completely correct the distortion caused by consumption externalities.     

Voluntary Provision of Public Goods and Technology

This paper highlights issues in the theory of voluntary provision of public goods, building on the investigation by Peacock in connection with the contributions by Coase and Buchanan. Our goal is twofold. We first draw attention to the early literature investigating the provision of public goods and to the successive theoretical analysis. We then focus on the impact of technology on supply and demand. Examples of different types of public goods are provided, with special attention to the cultural sector, to investigate whether and how technology affects the efficiency and the effectiveness of the related public goods provision. The implementation and exploitation of technological advancements are investigated in view of the role of different actors (public, private) at different levels of government.     

The impact of public goods and services and public R&D on the non-observed economy size,wages inequality and growth

We develop a general equilibrium endogenous growth model in which final goods can be produced either in the Non-Observed Economy (NOE) or in the Official Economy (OE). In particular, by solving transitional dynamics numerically towards the unique and stable steady state, we show that, by affecting the technological-knowledge bias in favour of the OE, productive public goods and services and public policies promoting R&D explain the simultaneous rise in the OE size, the wage premium in favour of OE workers and the economic growth rate. These results are mainly in line with empirical evidence for developed countries, since the 1990s.     

Welfare change and the elimination of the shortage economy in Russia: some representative-household results1

The welfare consequences of eliminating the shortage economy for the representative Russian household are quantitatively assessed. Before price liberalization, households either bought goods and services at state prices and paid searching and queuing costs, or they bought on parallel markets at higher monetary prices. An equation is derived that permits empirical evaluation of the extent to which welfare gains from eliminating searching and queuing costs offset welfare losses from falling real consumption. Available data suggest that when regime change was initiated in Russia in 1992, welfare gains from eliminating shortage were substantial and may have completely offset welfare losses from falling real consumption.     

In search of marginal environmental valuations — ecosystem services in Finnish forest accounting

There is currently substantial interest in valuing various services provided by different ecosystems. Concurrently economists have ascribed substantial effort on expanding traditional forest accounting systems by environmental services. This paper contributes to curtailing the existing gap between green accounting theory and applications for valuing forest ecosystem services. The multitude of links between forest ecosystem services and economy are characterized by the theoretical model for forest-economy interactions. By utilizing recently updated data we also incorporate empirical value estimates of these services comparable to other goods into Finnish forest accounting system. Finally, we discuss some problems encountered and clarify the interpretation of some value estimates incorporated to national forest account.