The opportunity cost of duality

A dual representation of a technology, e.g., a cost function, may not contain all of the technological information, but it will contain all of the information about input vectors that would be chosen by a cost-minimizing firm. At least this much is clear for deterministic technologies. The main question addressed in this paper is whether the same can be said about stochastic technologies and their dual representations. Despite some pessimism expressed in the stochastic frontier literature on this question, we argue that there is no extra cost imposed in the stochastic case. Thus, the conclusion of this paper is: Just dual it!     

Technological change and timing reductions in greenhouse gas emissions

In 2007 Nicholas Stern’s Review (in Science 317:201–202, 2007) estimated that global GDP would shrink by 5–20% due to climate change which brought forth calls to reduce emissions by 30–70% in the next 20 years. Stern’s results were contested by Weitzman (in J Econ Lit XLV(3):703–724, 2007) who argued for more modest reductions in the near term, and Nordhaus (in Science 317:201–202, 2007) who questioned the low discount rate and coefficient of relative risk aversion employed in the Stern Review, which caused him to argue that ‘the central question about global-warming policy—how much how, how fast, and how costly—remain open.’ We present a simulation model developed by Färe et al. (in Time substitution with application to data envelopment analysis, 2009) on intertemporal resource allocation that allows us to shine some light on these questions. The empirical specification here constrains the amount of undesirable output a country can produce over a given period by choosing the magnitude and timing of those reductions. We examine the production technology of 28 OECD countries over 1992–2006, in which countries produce real GDP and CO₂ using capital and labor and simulate the magnitude and timing necessary to be in compliance with the Kyoto Protocol. This tells us ‘how fast’ and ‘how much’. Comparison of observed GDP and simulated GDP with the emissions constraints tells us ‘how costly’. We find these costs to be relatively low if countries are allowed reallocate production decision across time, and that emissions should be cut gradually at the beginning of the period, with larger cuts starting in 2000.     

Seeking External Evidence to Assess Benefit Transfers for Environmental Policy

The cost and time required to produce original benefit estimates makes benefit transfers a highly valuable component of the process of assessing the benefits and costs of environmental improvements. Because of the great variety of benefit estimates, conducted at different times with different data sources and different techniques, there is concerted effort to understand the validity of transfers. The research in this paper approaches the validity issue of benefit transfers by asking whether there is indirect evidence of the benefits. The premise of the paper is that policies that give significant benefits should induce expected and unexpected behavioral changes. We look for evidence of potential indirect evidence by by estimating the effect of differences air pollutants on activities such as outdoor recreation and work, as found in the American Time Use Survey.     

Integrated bio-economic models as tools to support land-use decision making: a review of potential and limitations

Bio-economic modelling has become a useful tool for anticipating the outcomes of policies and technologies before their implementation. Advances in mathematical programming have made it possible to build more comprehensive models. In an overview of recent studies about bio-economic models applied to land-use problems in agriculture and forestry, we evaluated how aspects such as uncertainty, multiple objective functions, system dynamics and time have been incorporated into models. We found that single objective models were more frequently applied at the farm level, while multiple objective modelling has been applied to meet concerns at the landscape level. Among the objectives, social aspects are seldom represented in all models, when being compared to economic and environmental aspects. The integration of uncertainty is occasionally a topic, while stochastic approaches are more frequently applied than non-stochastic robust methods. Most multiple-objective models do not integrate uncertainty or sequential decision making. Static approaches continue to be more recurrent than truly dynamic models. Even though integrating multiple aspects may enhance our understanding of a system; it involves a tradeoff between complexity and robustness of the results obtained. Land-use models have to address this balance between complexity and robustness in order to evolve towards robust multiple-objective spatial optimization as a prerequisite to achieve sustainability goals.     

Early adoption,experience, and farm performance of GM corn seeds

The current article explores the characteristics that distinguish early from late adopters of GM corn and measures the productivity impacts of early adoption, for a sample of farmers in Minnesota and Wisconsin. The results of the adoption analysis confirm that size, education as well as specialization are positively correlated with early adoption. In addition, these results also show that farms that are mostly worked by family labor but hire some off‐farm labor are more likely to adopt GM seeds earlier in the diffusion process. The productivity analysis demonstrates the superiority of stacked varieties. At the same time, we find no evidence of a direct impact of experience on yields. Given the previously documented impact of early adoption on the use of stacked varieties, we conclude that experience plays a role through the adoption of these new technologies but does not play a role in allowing the producer to use the technology more efficiently, once it has been adopted.     

German stagnation versus Swedish progression: gender wage gaps in comparison, 1960–2006

This article provides a comparative analysis of the development of the gender wage gap in West Germany and Sweden during the period 1960–2006. Despite the economic similarities including broad social safety nets, the gap has developed differently since 1960. This analysis accounts for micro- and macroeconomic factors and politics and concludes that norms and traditions penetrate institutional settings and ensnare Germany in a cultural trap with regard to gender equality. While Sweden has moved to a two-earner model, German society expects mothers to stay at home. The micro analysis shows that family concerns (e.g. marriage and motherhood) decrease female income in Germany to a far greater extent than do such factors in Sweden, which can be explained in part by deeply held social attitudes.