Diffusion of environment-saving technological change— a petroleum refining case study

This paper attempts a theoretical model (Section I) of a dynamic relationship, brought about by environment-saving technological changes over time, between output and water pollution. The improvement in environmental quality is studied in terms of adoption of relatively environment-saving processes in petroleum refining industry. This is done (Section II) by empirically fitting the Gompertz function or the growth rates of diffusion of the processes by the use of multiple regression equations. Social desirability of substituting the relative environment-saving process is examined in terms of social benefit-cost analysis (Section III). Thereafter, (Section IV) an attempt is made to find social policy variables which could be used in order to accelerate diffusion of environment-saving processes. The analysis concludes that both “carrot” (incentives, say, in the form of accelerated depreciation allowances for purchase of environment-saving process equipment) as well as “stick” (in the form of stricter enforcement of water pollution control laws) are necessary for inducing adoption of the desired technological changes over time.     

Two-stage adoption of different types of pollution prevention (P2) activities

Pollution prevention (P2) remains the key pollution reduction strategy in the US despite its limited success in improving environmental performance. To aid the targeting of policies to promote the types of P2 that achieve environmental goals, this study investigates the intricate nature of P2 adoption by (1) distinguishing among three types of P2: procedural changes, input and material changes and equipment and product changes, (2) disentangling the adoption decision into a binary and a count decision, and (3) analyzing benefit- and cost-related factors. Using a sample of facilities of S&P 500 firms, I employ NB hurdle models to analyze how facilities respond to these factors in making P2 adoption decisions. I find that facilities that have lower cost of adoption due to past P2 experience have higher likelihood of adoption and higher rates of adoption of all types of P2. However, those exposed to greater threat of enforcement action find limited scope for P2 in achieving environmental compliance objectives. Some regulatory threat variables even have a negative effect. Facilities also adopt P2 to enjoy market-related benefits: final good producers are more likely to adopt P2 that appeal to consumers (input and material changes), while intermediate good producers are more likely to adopt P2 that is valued by its supply chain (procedural changes). Community characteristics and other knowledge sources are not always positively associated with the likelihood of adoption nor with the rate of adoption.     

Price setting behaviour in Latvia: Econometric evidence from CPI micro data

This paper discovers the driving forces behind Latvian firms' decisions to adjust prices by using various panel logit models, which explain the probability of observing price change by a broad set of exogenous variables. The results show that the consumer price formation in Latvia is a combination of both state-dependent and time-dependent behaviours. On the one hand, frequency of price changes depends on inflation, demand conditions, and the size of last price changes. On the other hand, we observe some elements of time-dependent price setting like price truncation and strong seasonal pattern. We also find several important differences in the price setting behaviour in cases of price increases and decreases. The fact that frequency of price changes in Latvia depends on inflation as well as demand and supply conditions allows for faster price adjustment process in the event of high distortions in the economy.     

Duration analysis of adoption of drip irrigation technology in southeastern Spain

In this paper, the process of adopting drip irrigation technology is investigated in one of the more water-scarce irrigation communities in Spain during the period 1975-2005. Why some farmers are faster to adopt this technology is investigated using duration analysis, which allows the timing of an event to be explored in a dynamic framework. The relative influence of a range of farmer, farm, economic, technology and institutional determinants is explored using discrete time models. The empirical results highlight the importance of educational factors, technological trialability, credit availability and institutional factors such as water availability and price, information networks and policy factors, as well as systematic effects that influence the adoption decision over the lifetime of the producer and over the survey period.     

Economies of scale and scope in petroleum refining

Despite evidence that aggregate consumption of complex carbohydrates has risen over the last decade, food consumption surveys suggest that fewer households are consuming less bread, pasta rice, potatoes and corn. This paper estimates systems of complex carbohydrae demand using cross-sectional data from 1977–78 and 1987–88 in order to explain this paradox. Changes in demand that are not explained by changes in prices or income are explained by variations in taste. Because tastes cannot be directly observed, the paper uses a multiple indicator and multiple cause (MIMIC) model to construct a suitable proxy variable. In the MIMIC approach, the ‘indicators’ are residuals from a household demand function that includes prices and incomes as explanatory variables, while household and demograhic proxies are ‘cause’ variables. The objectives in applying the MIMIC model are to determine the effect of consumer tastes on complex carbohydrate demand and, comparing cross-sectional survey data from two different periods, test the hypothesis that these tastes change over time. The data consist of US complex carbohydrate prices and expenditures, taken from the USDA Household Food Consumption Surveys in 1977–78 and 1987–88. The results show that structural changes in demand, or those that are not explained by changes in price, income, or the cause variables, led to an increase in complex carbohydrate demand of 5% from 1977–78 to 1987–88. However, changes in demand explained by the cause variables cause demand to fall by 9%.     

A variable threshold band approach to measuring market linkages

Uncertain and changing economic conditions can have substantial effects on price relationships in spatially separated, linked markets. Although numerous studies have analysed price relationships to characterize market linkage structures, most assume that the relationships and associated linkages are time invariant. This study extends the literature by modelling and estimating time-dependent market linkages that are conditional on changes in exogenous factors. The methodology is used to investigate price relationships in North Carolina (NC) corn and soya bean markets. Empirical results indicate that generalized market-linkage models provide a better representation of price relationships over time, improving the understanding of price discovery dynamics and marketing strategies.     

Where have all the flowers gone? Forecasting green trends in the automobile industry with a choice-based conjoint adoption model

With rising gas prices, global warming, and green thinking, all-electric vehicles are currently considered the automobile technology of the future. However, besides their advantages electric drive trains also exhibit several disadvantages. Moreover, history shows several failed attempts to establish electric vehicles. Thus, a reliable forecasting model is needed that predicts if the current trend is sustainable. We develop and empirically test a choice-based conjoint adoption model that uses individual-level preferences as a basis for prediction. Predictions are mapped to the time of the next planned purchase in order to establish the adoption process. The model extends existing research in several ways. First, no prior information, e.g., historical market data or a functional form of the adoption process, has to be integrated. Second, the model allows dynamic modifications of product specifications or competition at different points in time. Third, a no-choice option can be integrated so that a technology switch is not forced by the model itself and switching costs can be considered. The empirical results reveal different critical factors for the adoption of all-electric vehicles, such as purchase price, range, timing of the market entry, or environmental evolution, which could lead to a solid base of consumers preferring this option.     

Food Prices and Market Structure in Sweden

This paper examines retail grocery price levels across a large panel of stores in Sweden. We explain price variation across stores by market structure variables to capture differences in competition intensity and a number of store– and region–specific factors. Most of the explained variation in prices can be attributed to store–specific factors such as size and chain affiliation. Overall, the relation between market structure variables and food prices is weak, and effects are small in percentage terms. Nevertheless, higher local concentration of stores, higher regional wholesaler concentration and a lower market share of large stores are all correlated with higher prices.
JEL classification : D 43; L 13; L 81     

The Amenity Value of English Nature: A Hedonic Price Approach

Using a hedonic property price approach, we estimate the amenity value associated with proximity to habitats, designated areas, domestic gardens and other natural amenities in England. There is a long tradition of studies looking at the effect of environmental amenities and disamenities on property prices. But, to our knowledge, this is the first nationwide study of the value of proximity to a large number of natural amenities in England. We analysed 1 million housing transactions over 1996–2008 and considered a large number of environmental characteristics. Results reveal that the effects of many of these environmental variables are highly statistically significant, and are quite large in economic magnitude. Gardens, green space and areas of water within the census ward all attract a considerable positive price premium. There is also a strong positive effect from freshwater and flood plain locations, broadleaved woodland, coniferous woodland and enclosed farmland. Increasing distance to natural amenities such as rivers, National Parks and National Trust sites is unambiguously associated with a fall in house prices. Our preferred regression specifications control for unobserved labour market and other geographical factors using Travel to Work Area fixed effects, and the estimates are fairly insensitive to changes in specification and sample. This provides some reassurance that the hedonic price results provide a useful representation of the values attached to proximity to environmental amenities in England. Overall, we conclude that the housing market in England reveals substantial amenity value attached to a number of habitats, designations, private gardens and local environmental amenities.     

The socially responsible choice in a duopolistic market: A dynamic model of “ethical product” differentiation

The increasing attention of profit maximizing corporations to corporate social responsibility (CSR) is a new stylized fact of the contemporary economic environment. In our theoretical analysis we model CSR adoption as the optimal response of a profit maximizing firm to the competition of a not for profit corporate pioneer in the presence of a continuum of consumers with heterogeneous preferences towards the social and environmental features of the final good. CSR adoption implies a trade-off since, on the one side, it raises production costs but, on the other side, it leads to accumulation of “ethical capital”. We investigate conditions under which the profit maximizing firm switches from price to price and CSR competition by comparing monopoly and duopoly equilibria and their consequences on aggregate social responsibility and consumer welfare. Our findings provide a theoretical background for competition between profit maximizing incumbents and not for profit entrants in markets such as fair trade, organic food, ethical banking and ethical finance.