General purpose technologies in theory,application and controversy: a review

Distinguishing characteristics of General Purpose Technologies (GPTs) are identified and definitions discussed. Our definition includes multipurpose and single-purpose technologies, defining them according to their micro-technological characteristics, not their macro-economic effects. Identifying technologies as GPTs requires recognizing their evolutionary nature, and accepting possible uncertainties concerning marginal cases. Many of the existing ‘tests’ of whether particular technologies are GPTs are based on misunderstandings either of what GPT theory predicts or what such tests can establish. The development of formal GPT theories is outlined, showing that only the early theories predicted the inevitability of GPT-induced showdown and surges. More recent GPT theories, designed to model the characteristics of GPTs, do not imply the necessity of specific macro effects. We show that GPTs can rejuvenate the growth process without causing slowdowns or surges. We conclude that existing criticisms of GPT theory can be resolved and that the concept remains useful for economic theory.     

The law and economics of sycophancy

Tullock (in: Rowley (ed) The selected works of Gordon Tullock, Liberty Fund, Indianapolis, pp 399–455, 2005) was skeptical of the presumed economic efficiency of the common law, as adversarialism, apparently inherent to common law procedures, allowed for and was prone to litigiousness. Common law litigations accord to patterns of rent-seeking, as litigants invest ever more resources to assure victory. This paper asks if viable institutional solutions can emerge to resolve the problem Tullock identified. I survey the historical development of the term sycophancy within ancient Greek law as a revealing case study. Though a relatively innocuous pejorative in contemporary parlance, the term’s etymological roots stem from a formative process of ancient legal and institutional change within Athenian Greece. In the wake of specific legal reforms that expanded the scope of governmental authority under Solon (born 638–558 BCE), citizens were given explicit financial incentive to report violators of newly implemented public laws. Thereafter, social stigma surrounding third party legal representation leveraged the term sycophancy in reference to prosecutors motivated by private interests over the public welfare. Forgone social status and eventually formal criminal sanction emerged as offsetting differentials against the incentives of sycophancy.     

Does a Clean Development Mechanism Facilitate International Environmental Agreements?

When politicians negotiate in international climate conventions they may suffer from incomplete information for each other’s preferences for reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of cross border abatement provisions in the likelihood of such failure. For instance, the clean development mechanism was introduced in the context of the Kyoto Protocol to allow countries to make efficiency-enhancing use of cross-country low-cost mitigation opportunities. We use a simple bargaining framework to uncover why this mechanism may reduce the likelihood of reaching an efficient cooperative climate agreement.     

Offset Credits in the EU ETS: A Quantile Estimation of Firm-Level Transaction Costs

International carbon offset certificates were cheaper than European Union Allowances, although they were substitutes within the EU Emissions Trading System (EU ETS). Thus, firms had a strong incentive to use offset certificates. However, a considerable number of firms did not exhaust their offset quota and, by doing so, seemingly forwent profits. While most literature on emissions trading evaluates the efficiency of regulation in a frictionless world, in practice firms incur costs when complying with regulation. In order to assess the relevance of trade-related fixed transaction costs, this study examines the use of international offset credits in the EU ETS. It establishes a model of firm decision under fixed (quantity-invariant) entry costs and estimates the size of such costs rationalizing firm behavior using semi-parametric binary quantile regressions. Comparing binary quantile results with probit estimates shows that high average transaction costs result from a strongly skewed underlying distribution. For most firms, the bulk of transaction costs stems from certificate trading in general, rather than additional participation in offset trading.     

Intertemporal Emission Permits Trading Under Uncertainty and Irreversibility

This paper analyzes the effect of emission permit banking on clean technology investment and abatement under conditions where the stringency of the future cap is uncertain. We examine the problem of heterogeneous firms minimizing the cost of intertemporal emission control in the presence of stochastic future pollution standards and emission permits that are tradable across firms and through time. A firm can invest in clean capital (an improved pollution abatement technology) to reduce its abatement cost. We consider two possibilities: that investment is reversible or irreversible. Uncertainty is captured within a two period model: only the current period cap is known. We show that if banking is positive and marginal abatement costs are sufficiently convex, there will be more abatement and investment in clean technology under uncertainty than there would be under certainty and no banking. These results are at odds with the common belief that uncertainty on future environmental policy is a barrier to investment in clean capital. Moreover, under uncertainty and irreversibility, we find that there are cases where banking enables firms to invest more in clean capital.     

Shaping the Relationship Between Economic Development and Carbon Dioxide Emissions at the Local Level: Evidence from Spatial Econometric Models

The debate over the correlation between economic growth and environmental pollution has attracted a great deal of attention from academic researchers and policy makers in recent years. There has been excessive use of spatial econometric models and too much emphasis on statistical procedures in empirical studies. In this study, we contribute to the existing literature by conducting a more rigorous analysis of the relationship between economic growth and \(\hbox {CO}_{2}\) emissions in Chinese cities using spatial Durbin models. Our results show that \(\hbox {CO}_{2}\) emissions increase monotonically in relation to economic growth at the city level and that the driving effects of economic growth are slightly smaller in central China than in eastern and western China. In addition to economic growth, industry’s share of the economy is a major driver of \(\hbox {CO}_{2}\) emissions, while technological improvement, measured by energy intensity per unit of gross domestic product (GDP), and the effectiveness of environmental governance flatten the shape of the environmental Kuznets curve. We provide evidence of local spillover effects of explanatory variables on \(\hbox {CO}_{2}\) emissions. Economic competition as well as technological diffusion are found to exist in Chinese cities in relation to \(\hbox {CO}_{2}\) emissions. We also find carbon leakage between cities only if the per capita GDP of a given city is less than $493 (in 2010 constant dollars). Results hold when robustness checks are performed. Policy makers should carefully consider regional differences and the inherent spatial interactions between factors when formulating carbon reduction policies.     

Information Exchange and Transnational Environmental Problems

This paper analyzes information exchange in a model of transnational pollution control in which countries use private information in independently determining their domestic environmental policies. We show that countries may not always have an incentive to exchange their private information. However, for a sufficiently high degree of predictability of domestic environmental policy processes, the expected welfare from sharing information is greater than the expected welfare from keeping it private. The minimum degree of policy predictability for which information sharing occurs increases with the level of environmental risk. Intuitively, information exchange can help mitigate the perception of global uncertainty (both political and scientific) that surrounds transnational environmental problems and potentially improve welfare if policymaking processes are sufficiently aligned with evidence-based approaches (predictable).     

Taking Time for the Environment: On Timing and the Role of Delays in Environmental and Resource Economics

Ecosystem transformation and climate change evolve over long time scales. The effects of the economic decisions on the natural environment are also of a long-run character because they relate to investment decisions and capital stocks. At the same time, the economy is short-sighted and subject to different kinds of market failures. The time it takes to notice the changes and adequately address the associated problems affects the dynamics and inertia of the process. We discuss some recent contributions and new research questions that deal with time and timing in environmental and resource economics.     

Non-market Value of Winter Outdoor Recreation in the Swiss Alps: The Case of Val Bedretto

A longstanding interest from environmental economists on winter outdoor recreation has overlooked activities practiced outside the boundaries of winter resorts—e.g. ski mountaineering. This paper implements the Travel Cost Method to estimate consumer surplus per season derived from ski mountaineering and snowshoeing in Val Bedretto—a valley located in the Swiss Alps. In addition, the Contingent Behavior Method is used to estimate the changes in welfare associated with the construction of an alpine center that would provide services aiming to reduce the risk of injury and death associated with winter outdoor recreation. The data is analyzed by means of latent class panel on-site count models. The latent class approach allows us to identify subpopulations that benefit from the alpine center. The results show that 33% of visitors would experience an increase in their consumer surplus per season equivalent to €31 per visitor.     

How are Scope and Adding up Relevant for Benefits Transfer?

In this paper, we explore ways in which the theoretical constructs of scope and adding up can inform and improve the practice of benefit transfer. Specifically, we examine how the stated preference literature on scope and adding up can inform three critical steps in benefits transfer: study site selection, including studies to select for use in a meta-regression; calibrating benefit functions; and assessing transfer validity.