Comparing Environmental Policy Instruments in the Presence of Imperfect Compliance – A Case Study

In this paper, we aim to include rule making, implementation, monitoring and enforcement costs into the cost comparison of policy instruments. We use a simple partial equilibrium model and apply it to the textile industry. The model includes discrete abatement functions and costly monitoring and enforcement. The case study uses individual firm data to simulate the differences in abatement costs and compliance decisions between firms. We compare combinations of regulatory instruments (emission taxes, emission standards and technology standards) and enforcement instruments (criminal fines, civil fines and transaction offers). We show that the inclusion of information, monitoring and enforcement costs indeed alters the relative cost efficiency of the different instruments.     

On the fundamental thought behind voting rules

The theme is Arrow's requirement in his theorem of 1951 on methods for group choice, that the choice be independent of irrelevant alternatives. The attention is drawn to (1) his own explanation of this requirement in 1972, which is a quite different understanding than has been discussed in the voluminous literature on the theorem, (2) that Arrow, in fact, in 1985 showed an understanding for how irrelevant alternatives might in a meaningful way influence the group choice, (3) that admittedly the border-line between irrelevant and relevant alternatives in Arrow's original statement is arbitrary, and (4) that Arrow, if he had observed the final thought in the origin of the group theory by Borda, which he admittedly did not, might have realized that Borda's method stringently estimates the relevance of each alternative for the result.The author expresses his surprise that a theoretical conclusion based on an arbitrary fundament has been admired so long.     

Crime deterrence role of Romanian churches

We analyse the crime deterrence role of Romanian churches using a data sample of crime in all 42 Romanian counties from 2001 to 2013. We aim to determine whether the public funding of churches can be justified by the role Romanian churches play in deterring illegal behaviour. The decision to build a new church in a certain location can be endogenous; therefore, we use as an instrument the built-up area of counties’ cities in the 1990s. After controlling for the endogeneity of the number of churches, our estimations show that Romanian churches significantly diminish local crime rates. Adventist, Baptist, Catholic and Orthodox churches tend to play an active role in the deterrence of local crime. Hence, Romanian churches not only provide religious services, but also promote religious norms and strengthen the social ties between parishioners, help prevent crime.     

The political economy of pricing and capacity decisions for congestible local public goods in a federal state

This paper studies the political economy of pricing and investment for excludable and congestible public goods in a federal state. Although the model applies to many local congestible public facilities (such as libraries, museums and public swimming facilities), our main motivation is the problem of providing and pricing road infrastructure in federal states. The two-region model we develop allows for spill-overs between regions, it takes into account congestion, and it captures demand heterogeneity both between and within regions. Regional decisions are taken by majority voting; federal decisions are taken by a minimum winning coalition in a legislature of regionally elected representatives. We have the following results. First, when users form the majority in at least one region, decentralized decision making performs certainly better than centralized decision making if spill-overs are not too large. Centralized decisions may yield higher welfare than decentralization only if users have a large majority and the infrastructure in a given region is intensively used by both local and outside users. Second, if non-users form a majority in both regions, centralized decision making and decentralized decision making yield the same socially undesirable outcome, with prices that are much too high. Third, the performance of decentralized supply is strongly enhanced by local self-financing rules; this prevents potential exploitation of users within regions.     

Road Transport Externalities

During the last decade much progress has been made in defining & measuring the external costs of transport. As the cost of tolling equipment falls, the set of realistic policy options to internalise these externalities will continue to grow. This will determine the research and policy agenda. We make three points. Firstly, empirical work is still necessary to better identify marginal external costs, including congestion, accident and environmental costs. Secondly, any assessment of policy options should treat externalities simultaneously. The use of pricing instruments and emissions standards are discussed within this framework. Thirdly, we emphasise the role of government. Designing the optimal road-pricing institutions requires consideration of horizontal and vertical tax competition, while double-dividend arguments are central to the question of securing public support.     

Trip Chaining: Who Wins Who Loses?

This paper studies how trip chaining (combining commuting and shopping or commuting and child care) affects market competition: in particular, pricing and the equilibrium number of firms as well as welfare. We use a monopolistic competition framework, where firms sell differentiated products as well as offering differentiated jobs to households, who are all located at some distance from the firms. The symmetric equilibriums with and without the option of trip chaining are compared. We show analytically that introducing the trip chaining option reduces the profit margin of the firms in the short run, but increases welfare. The welfare gains are, however, smaller than the transport cost savings. In the free-entry long-run equilibrium, the number of firms decreases but welfare is higher. A numerical illustration gives orders of magnitude of the different effects.     

Modes of production in home maintenance: accounting for the choice between formality,off the books and self‐provisioning

Households depend on the existence of a home, and therefore, maintenance plays an important social and economic role. Formal outsourcing is often overestimated here and alternative modes, such as informal outsourcing and do‐it‐yourself (DIY), are overlooked. This paper estimates and accounts for the choice of one mode of production in Flemish households. First, the different modes of production are quantified according to two different methods. Further, an explanation of the choice made is constructed. The complexity of maintenance work has an impact as well as the dimensions of social and cultural capital. Factors such as dexterity, occupational acquaintance with maintenance work, social trust and social contacts play a role. Finally, a model of a sequence of decisions is tested. This ramification mechanism shows that the primary choice is formal commissioning or not, inspired by technical complexity. The second choice between off‐the‐books outsourcing and DIY is influenced by the capital resources of the households.     

The geneva hydrocarbon protocol: Economic insights from a belgian perspective

This paper extends the methodology for the economic analysis of tropospheric ozone regulation reported in Repetto (1987). Firstly, the acid rain objective is explicitly incorporated by assigning an additional benefit to the acidifying precursors of ozone. Secondly, we introduce the transboundary dimension which is of particular importance to Europe. The methodology is applied to the evaluation of the costs and benefits of the Geneva Protocol on hydrocarbons for Belgium.