Regulation of relationships between heterogeneous farmers and an aquifer accounting for lag effects

Many environmental problems are due to damage caused by pollutants that accumulate with a time lag following their emission. In this study, we focus on nitrates used in agriculture, which can pollute groundwater many years after their initial application. A dynamic optimal control problem with heterogeneous farmers is proposed. The usual structural parameters such as the discount rate, the natural clearing rate and the lagged time interval between the occurrence of soil‐level pollution and the impact on groundwater are taken into account. We also examine pollution as caused by a continuous set of farms characterised by their individual performance index and by their individual marginal contribution to the pollution. The issue is further investigated by taking account of change in the information context, successively related to perfect information and to asymmetric information. As a result, when the delay between the spreading of N‐fertilizer and the impact on the aquifer increases, that is, the longer the lag, the steady‐state pollution stock and the steady‐state shadow price of the stock both increase. Moreover, we show that the optimal regulation may require a decreasing amount of fertilizer over time, even in the case of initial underpollution.     

Corporatisation and Corporate Governance in China's Economic Transition

China has sought to improve enterprise performance not through privatisation as in other transition economies, but through corporatisation as means of improving corporate governance. Actual governance practices of corporatised Chinese firms are however seriously defective, characterized by excessive power of CEOs, insider control and collusion, lack of safeguards for minority shareholders and weak transparency. These shortcomings are attributable to factors such as cultural and political traditions, uncompetitiveness of markets, poor legal enforcement, weak debt and equity markets, but above all to continued state dominance in ownership and control of the corporate sector and listed companies. Corporatisation, nevertheless, has created a regime conducive to implementing measures for improving corporate governance.     

Optimal pricing of payment services

Payments are increasingly being made with payment cards despite the fact that the cost of clearing a card payment usually exceeds the cost of transferring cash. We examine this puzzle through the lens of monetary theory. We consider the design of an optimal card-based payment system when cash is available as an alternative means of payment. We find that a feature akin to the controversial “no-surcharge rule” may be necessary to ensure the viability of the card payment system. This rule states that merchants cannot charge a customer who pays by card more than a customer who pays by cash.     

Monetary policy in a channel system

Channel systems for conducting monetary policy are becoming increasingly popular. Despite its popularity, the consequences of implementing policy with a channel system are not well understood. We develop a general equilibrium framework of a channel system and study the optimal policy. A novel aspect of the channel system is that a central bank can “tighten” or “loosen” its policy without changing its policy rate. This policy instrument has so far been overlooked by a large body of the literature on the optimal design of interest-rate rules.     

Lease finance in industrial markets

Financial leasing is being used increasingly to acquire items of industrial equipment where use is more crucial than ownership. Its advantages over traditional forms of finance are straightforward and to a large degree appear to be based on the utilization of a cost advantage deriving from the fiscal system. In view of this, it might be expected that price would be a dominant marketing variable since the ‘product’ is relatively homogeneous, even though the industry structure is oligopolistic. This has been the case to a certain extent but policies of product differentiation and market segmentation have enabled firms to avoid some of the rigours of price competition.