Remote operation in environmentally sensitive areas: development of early warning indicators

Exploration and production of oil and gas in certain sensitive areas such as the Barents Sea and Lofoten is controversial and further expansion depends on the ability to avoid harmful spills. One way of improving the ability to avoid such spills is to use early warning indicators. The objective of the work presented in this paper is to describe and compare strengths and weaknesses of different approaches for the development of early warning indicators. The approaches that have been compared are: safety performance-based methods; risk-based methods; incident-based methods; and resilience-based methods. There are pros and cons with all methods. All methods are very favorable with respect to some characteristics and at the same time very unfavorable to some other characteristics. They are also different in terms of scope and depth of analysis. This suggests that we should be flexible with respect to the choice of methods, and preferably use more than one method. Thus, the main conclusion is that it is favorable to have the possibility to use several different methods for the establishment of early warning indicators.     

Strategic partitioning of emission allowances under the EU Emission Trading Scheme

The EU Emission Trading Scheme (ETS) is breaking new ground in the experience with emission trading regimes across multiple jurisdictions. Since the EU ETS covers only some industries, it implies a hybrid emission control scheme where EU member states must apply complementary domestic emissions regulation for the non-trading sectors of their economies in order to comply with their national emission reduction targets. The EU ETS thus opens up for strategic partitioning of national emissions budgets by the member states between trading and non-trading sectors. In this paper we examine the potential effects of such strategic behavior on compliance cost and emissions prices. We show that concerns on efficiency losses from strategic partitioning are misplaced. In turn, our analysis implicitly indicates significant political economy forces behind EU climate policy, as both cost-effective and strategically motivated partitioning of national emission budgets are far off from the actual break-down between trading and non-trading sectors.     

Genetic testing: affected parties and decision making

The network of issues around information obtained from genetic testing is wide and complex. While risk assessment, awareness and discussion are often public driven, and in many instances, including that of nuclear power, are allied with democratic principles, the case of gene technology and genetic testing appears to be different. The opportunity for risk assessment by gene testing is rejected by many, and this rejection is supported by the claim of the right not to know. This article discusses the background to this development, and argues that decisions that consider issues related to genetic testing should be taken with the participation of affected parties.     

Perspectives of Risk Sharing

In this paper we present an overview of the standard risk sharing model of insurance. We discuss and characterize a competitive equilibrium, Pareto optimality, and representative agent pricing, including its implications for insurance premiums. We only touch upon the existence problem of a competitive equilibrium, primarily by presenting several examples. Risk tolerance and aggregation is the subject of one section. Risk adjustment of the probability measure is one topic, as well as the insurance version of the capital asset pricing model. The competitive paradigm may be a little demanding in practice, so we alternatively present a game theoretic view of risk sharing, where solutions end up in the core. Properly interpreted, this may give rise to a range of prices of each risk, often visualized in practice by an ask price and a bid price. The nice aspect of this is that these price ranges can be explained by "first principles", not relying on transaction costs or other frictions. We also include a short discussion of moral hazard in risk sharing between an insurer and a prospective insurance buyer. We end the paper by indicating the implications of our results for a pure stock market. In particular we find it advantageous to discuss the concepts of incomplete markets in this general setting, where it is possible to use results for closed, convex subspaces of an L 2 -space to discuss optimal risk allocation problems in incomplete financial markets.     

On the St. Petersburg Paradox

The classical St. Petersburg Paradox is discussed in terms of doubling strategies. It is claimed that what was originally thought of as a ''paradox'' can hardly be considered as very surprising today, but viewed in terms of doubling strategies, we get some results that look paradoxical, at least to the practically oriented investor.     

The Nash bargaining solution vs. equilibrium in a reinsurance syndicate

We compare the Nash bargaining solution in a reinsurance syndicate to the competitive equilibrium allocation, focusing on uncertainty and risk aversion. Restricting attention to proportional reinsurance treaties, we find that, although these solution concepts are very different, one may just appear as a first order Taylor series approximation of the other, in certain cases. This may be good news for the Nash solution, or for the equilibrium allocation, all depending upon one's point of view.

Our model also allows us to readily identify some properties of the equilibrium allocation not be shared by the bargaining solution, and vice versa, related to both risk aversions and correlations.     

Stochastic market sharing, partial communication and collusion

This paper analyzes the role of communication between firms in an infinitely repeated Bertrand game in which firms receive private signals of a common value i.i.d. demand shock. It is shown that firms can use stochastic, inter-temporal market sharing as a substitute for communication in low demand states. Partial communication in high demand states is sufficient to achieve the most collusive, full communication outcome and strictly dominates partial communication in low demand states. Communication in high demand states allows firms to coordinate their pricing, choose the most efficient uninformed price and avoid price wars. I demonstrate that under some conditions consumers are better off with communication among colluding firms.     

Trends in ICT standards: The relationship between European standardisation bodies and standards consortia

Theoretical analyses have dealt with the relationship between standardisation activities in formal standardisation bodies and in standards consortia. However, the empirical evidence is rather weak. Besides various case studies, there is no broad and quantitative approach for examining the relationship between formal and informal standardisation processes. This paper quantifies the standardisation activities in information and communication technology (ICT) of formal and informal standardisation bodies by utilising the database PERINORM containing formal standards and by analysing two CEN/ISSS surveys of standardisation consortia in 2000 and 2004. The two major insights gained are that the technical content of activities of formal and informal standardisation bodies is complementary rather than substitutive, which means most technical issues are addressed by both formal standardisation bodies and standardisation consortia. In addition, there has been a consolidation of consortia activities through a significant reduction in the number of consortia. However, this reduction has not changed the distribution of consortia activities by technical fields and complementary relations with the activities of formal standardisation bodies. Based on these new insights, some challenges emerge both for future theoretical analysis of decisions on standardisation types and for ICT policy regarding the interaction between standardisation and technical regulation and the role of standards in public procurement.     

Spatial dependencies and spatial drift in public transport seasonal ticket revenue data

When firms' customers are located in spatially dispersed areas, it can be difficult to manage service quality on a geographically small scale because the relative importance of service quality might vary spatially. Moreover, standard approaches discussed so far in the marketing science literature usually neglect spatial effects, such as spatial dependencies (spatial autocorrelation for example) and spatial drift (spatial non-stationarity). We propose a comprehensive approach based on spatial econometric methods that covers both issues. Based on the real company data on seasonal ticket revenue of a local public transport service company, we show that addressing such spatial effects of service data can improve management's ability to implement programs aimed at enhancing seasonal ticket revenue. In particular, the article shows how a spatial revenue response function might be specified.