On the optimal accumulation of renewable energy generation capacity

As fossil fuels are finite and responsible for environmental problems, renewables have been promoted in recent decades. To study the optimal accumulation of a generation capacity for renewable energy (backstop) and the trade-off between capital investments, backstop capacity investments and consumption, we develop a capital-energy economy with exhaustible fossil fuels. It turns out that optimal economic evolution and, therefore, the steady-state levels of capital, backstop capacity, and consumption depend on the capital endowment and the time preference rate. If the latter is low and the former is high, an intertemporal consumption trade-off renders the accumulation of an excess capacity optimal. In contrast, given a low capital endowment and a high time preference rate, the trade-off is not beneficial, so that capacity investments are nil for all points of time.     

Stability and efficiency from a Neo-Keynesian viewpoint

This paper raises once more the Keynesian challenge of the classical doctrine that an unguided market economy has a natural tendency towards optimal employment of resources. By means of a simple macromodel, we show that if quantity expectations are incorporated into the Walrasian model, then it is no longer generally true that the ‘invisible hand’ leads the economy to Walrasian equilibrium. Instead, it may lead the economy to a kind of Keynesian equilibrium in which the firms' sales expectations constitute a binding constraint on production. Moreover, while Pareto optimum is unstable and hence unattainable in our model, a ‘second-best’ optimum among stable equilibria exists and requires a public sector. Accordingly, a trade-off between efficiency and other policy aims occurs only at tax rates above the positive tax rate in optimum     

Optimal dynamic durability

Consider a firm that adjusts its production and the choice of durability for its products instantaneously. We show that when the marginal cost with the respect to durability is nonincreasing, (a) the optimal durability for both the competitive firm and the monopolist decreases over time and (b) the monopolist will produce a good with lower durability than the competitive firm. We thus lend support for empirical findings and causal observations that found the phenomenon of declining durability over time.     

Capital structure,investment unanimity,and public goods: the case for social responsibility

This paper examines the concepts of optimal capital structure and investment in an economy where government’s role is the provision of a public good. That public good is financed through current tax revenues and the sale of government securities. Absent such complications, traditional finance theory has established the equivalence among (competitive) value maximization, unanimity, and Pareto optimality. In the setting of this paper, however, the market value of government securities is not determined by the value of public good production, and the correspondence between value maximization, Parto optimality, and unanimity will not generally hold without significant restrictions on the tax structure. Otherwise, value maximization is neither an optimal nor unanimously supported objective for the firm.     

NATURAL ADVANTAGE EFFECT, LOCATION AND TRADE PATTERNS IN INCREASING RETURNS TO SCALE INDUSTRIES

In a two sectors, two regions economy I show that the higher the increasing returns to scale of an industry, the more easily it will concentrate in response to natural advantage (giving rise to what I call Natural Advantage Effect). To this end, one sector is assumed to be perfectly competitive and the other is monopolistically competitive, with a region's firms producing at a lower marginal cost than the others in the monopolistic sector (or equivalently producing varieties more intensely demanded by consumers). If capital is mobile between regions in the long run, I analytically characterize the process of industrial location of the imperfectly competitive sector in the region with the natural advantage.     

Open spaces,revenue sharing,and urban structure

Open spaces and revenue sharing are analyzed within an urban-spatial framework. When households do not observe the price of the public good directly and because of the external economy arising from city size, the local government cannot determine the optimal property tax rate from empirical observation of consumer behavior. The relation between the property tax rate and city size is indeterminate. When land is necessary for public good production, there is an optimal amount of revenue sharing. The property tax rate alone, only under exceptional circumstances, can be used to limit city size and the amount of land in housing production.     

On the interpretation of cointegration in the linear–quadratic inventory model

The traditional formulation of the linear–quadratic inventory model with unit roots predicts cointegration between inventories and sales. That formulation implies that marginal production costs and the marginal benefits of inventories are both tending to ∞, and the cointegrating coefficient reflects the optimal trade-off between these competing factors. This paper suggests a reformulation of the problem in which marginal production costs and marginal inventory benefits are both stationary and in which the cointegrating coefficient is the same as the value that characterizes the target inventory level in the cost function.     

Managing the Public Debt: The Optimal Taxation Approach

This paper examines research on public debt management, focusing on debt structure by denomination, indexation features, and maturity. The optimal taxation approach is reviewed and its policy implications are related to the trade-off between minimization of the expected cost of debt servicing and minimization of budgetary risk. Strong arguments are provided for debt instruments which yield low returns when output and hence revenues are lower and public spending higher than expected. This debt design minimizes tax distortions and provides flexibility in conducting fiscal policy. The exact characterization of the debt composition which supports efficient taxation depends on the stochastic structure of the economy. Long-term nominal debt is a hedge against supply shocks affecting revenues and inflation and makes the government budget insensitive to interest-rate risk. However, at high levels of debt, the extent of insurance or flexibility that governments can obtain by issuing long-term nominal debt is limited by the need to maintain the credibility of the anti-inflation stance.     

关于西部地区公共图书馆免费服务及可持续发展的思考

公共图书馆免费开放是国家公益服务方面的重要举措,是一项利国利民的"善政"。但是如何长期、有效地推行这项政策是公共图书馆面临的重要课题。本文通过分析西部地区公共图书馆存在的一些问题,结合实际工作,从制度建设等方面,探讨了建立保障公共图书馆免费开放的长效机制及服务于区域经济发展的有效途径。     

Roles of Public Capital in Pakistan's Economy: Productivity, Investment and Growth Analysis

This study analyzes the role of public capital in Pakistan's economy, tracing the relationship between productivity of public capital and economic growth. We estimate a production function, with public capital as an inputs. The results indicate that the productivity (output elasticity) of aggregate as well as different components of public capital are sufficiently high. We also analyze substitutability and complementarity between public and private capital by estimating investment functions, revealing that public capital has worked as a substitute for private investment. The net effect of public capital on the national economy is analyzed by estimating reduced forms, with the result that public capital has a positive net effect on national product. The growth analysis shows that the contribution of public capital is declining over time.     

A sufficiency result for constrained economies

This paper presents a general sufficiency result for constrained economies. The result shows that, when an equilibrium allocation satisfies the first order necessary conditions for hybrid efficiency (a new type of constrained efficiency), there exists a marginal cost pricing equilibrium in an associated economy. If this equilibrium is Pareto efficient in the associated economy, then the original equilibrium allocation is hybrid efficient. Hence. the necessary conditions are also sufficient.     

Envy-minimizing unemployment benefits

This paper offers an analysis of the optimality of unemployment benefits based on the concept of no-envy. Using a general equilibrium framework with uncertainty, we derive the conditions for a trade-off between the intensity of envy and the expected percentage of envious persons. If the government's sensitivity to the intensity of envy is not too strong (alongside conditions on households' utilities), the optimal benefit is positive and below the full-insurance level. We also show that, for a low enough sensitivity to the intensity of envy, the optimal replacement ratio decreases with unfavorable changes in the distribution of the technological shock.     

Why Lever into a Zero-Profit Industry: Tying, Foreclosure, and Exclusion

This paper considers the incentives of a firm with power in a market for one good to tie in the sale of a complementary good even though the complementary good is produced in a zero profit market. If the zero-profit price of the tied good is greater than the marginal cost (which occurs for example when the technology is characterized by a fixed cost and a constant marginal cost), a firm will fie in order to increase the sales of the complementary good, which at the margin is profitable. We show that such tying will lower the effective prices paid by customers and increase welfare. This incentive exists if the firm with market power is a monopolist or one of several competing oligopolists.     

Strategy-proof allocation of fixed costs

An economy can produce and consume a fixed-cost excludable public good only if its members fully fund the cost of the good. In this paper, we characterize the entire class of mechanisms for the provision of the public good and its cost that are Pareto optimal among the set of strategy-proof, voluntarily-participatory, budget-balancing, non-bossy, and replacement-monotonic mechanisms. We demonstrate that this class of mechanisms is quite small and can be characterized as simple step-price mechanisms.Received: 10 July 2001, Accepted: 5 February 2003, JEL Classification: C72, D71This work was done while Dearden was visiting Center for Economic Research, Tilburg University, The Netherlands. He is thankful for their gracious hospitality. The authors thank the editors and reviewers for their thoughtful comments.     

Local public goods, property values, and local public choice

This paper examines the relationship between the benefits and costs of local public good provision and local property values within the context of the Koopmans-Beckmann-Gale location-assignment model. Property values do not in general measure accurately the marginal net benefits of local public goods; special conditions sufficient for property values to measure or bound the marginal net benefits are stated, however. In addition, it is shown that under certain circumstances, households vote for property-value-enhancing levels of local expenditures. Under these conditions, a political equilibrium produces a Lindahl solution to the local public good problem.     

Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods

We model firms as competing for socially responsible consumers by linking the provision of a public good (environmentally friendly or socially responsible activities) to sales of their private goods. In many cases, too little of the public good is provided, but under certain conditions, competition leads to excessive provision. Further, there is generally a trade-off between more efficient provision of the private and the public good. Our results indicate that the level of private provision of the public good varies inversely with the competitiveness of the private-good market and that the types of public goods provided are biased toward those for which consumers have high participation value.     

Trading equilibrium in a public good economy with smooth preferences and a mixed measure space of consumers

Lindahl and Nash equilibria are often used in the theory of public good. Shitovitz and Spiegel (1998) present an example of 2-person economy with one private good and one pure public good, where the core efficient Lindahl allocation does not Pareto dominate the (inefficient) Nash allocation. In this paper we introduce the new concept of Trading equilibrium for a general public good economy with smooth preferences and a mixed measure space of consumers. We obtain that this economy admits a unique Trading equilibrium. Moreover, the Trading equilibrium induces a core allocation that strictly Pareto dominates the Nash allocation.     

Spatial provision of local public goods with spillover effects

Most of the works dealing with local public goods are aspatial in their treatment since they consider only the case of a pure local public good; such works do not address the problem of where the good is to be supplied. In this paper, an initial attempt to treat the distribution of an impure local public good as a choice function is made within the framework of optimum urban land use. The distance-decay nature of spillover effects inherent in an impure local public good is explicitly considered by adopting a negative exponential function. To highlight the spatial aspect of an impure local public good, a two-supply-site problem with a log-linear utility function is formulated to determine the optimal supply sites. It is shown that if the weight of the utility function on the public service is greater than or equal to that on land, then the local public good is exclusively supplied at the center. Otherwise, separate supply sites can be optimal.     

Multi‐unit pricing

A price takes the form of a cost for either one unit (single‐unit pricing) or multiple units (multi‐unit pricing). I consider a monopolist selling units of a good to a population of homogeneous consumers to explain why one is preferred to the other. A mental cost arises if the division problem a multi‐unit price causes is done. If marginal utility remains high multiple units are desired. Multi‐unit pricing is preferred since it creates a cost if fewer units are purchased. If utility exhibits strong diminishing returns single‐unit pricing is used to avoid the calculation. Copyright © 2008 John Wiley & Sons, Ltd.     

Growth and fluctuations: The role of public dividends and public spending

In this paper, we consider a discrete-time version of the endogenous growth model developed by Barro [Barro, R.J., 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy 98, 103–125], but augmented in order to envisage a public participation in the production of private goods. Public dividends are invested in order to provide a public good; in turn, the public good plays a role of indispensable production externality and, eventually, of growth engine.For what concerns the production of private goods, we find that an optimal policy is always based on a positive participation of the government as shareholder; also, when growth is slow, a public intervention or large substitution effects stabilize the economy.A right mix of short-run services and long-run infrastructures is suggested in slow economies to rule out expectation-driven fluctuations. Infrastructures are mainly recommended in presence of moderate income effects, while services are recommended in presence of strong income effects.