ENERGY INTENSITY IMPROVEMENTS IN STEEL MINIMILLS

Over the past 20 years, U.S. steel manufacturing has experienced an episode of creative destruction. Iron-ore based plants closed, and new electric arc furnace (EAF) plants–the "minimills"–opened. The steel industry is an energy intensive segment of manufacturing, and the changeover causes major change in energy use. The analysis here links a plant-level database from the Bureau of the Census with publicly available sources and obtains measures of the best practice energy use in minimills. The analysis examines how technical efficiency, vintage, and capacity utilization affect plant-level electricity use per ton of steel. This measure of electricity use gives a plant's "energy intensity." Plants in the sample keep operating even during deep recessions, suggesting that energy, e.g., BTU, taxes may fall short of the fullest potential for reducing energy use. During recession, plants actually may continue to operate at lower output rates and higher energy intensities rather than close down. Substantial potential exists for energy improvements of as much as 1 billion kWh per year. New facilities exhibit energy intensity improvement of 6.2 kWh/ton per year. This finding is consistent with engineering estimates. Realizing this potential among all plants would require policies that assist capital turnover.     

THE ECONOMIC EVALUATION OF A JOINT SUPPLY CHAIN INNOVATION

In this paper we discuss the economic evaluation of a supply chain innovation. We look at a situation in which a single manufacturer and a single distributor consider relocating assets and reengineering processes, in order to reduce total assets and total costs in the supply chain. The selling price between the manufacturer and distributor needs to be adjusted to reflect the new costs and asset levels. We investigate the price adjustment needed to maintain the ROA (Return on Assets) of both companies and to yield a nonnegative NPV (Net Present Value) for both companies. We identify conditions under which ROA and NPV yield the same results, such as the absence of implementation costs. We also demonstrate that the minimum price required by the manufacturer may lie above the maximum price acceptable for the distributor. Then the price range is empty and companies will not be able to find a price adjustment that results in a nonnegative NPV and nondecreasing ROAs for both companies.     

Sharing the Cost of a Public Good without Subsidies

We study the construction of a social ordering function for the case of a public good financed by contributions from the population. We extend the analysis of Maniquet and Sprumont (2004) to the case when cost shares cannot be negative, i.e., agents cannot receive subsidies from others. We adapt the Maniquet–Sprumont defense of public good welfare egalitarianism to this context. Weakening their Free Lunch Aversion axiom and adding a continuity requirement allows us to characterize the public good welfare maximin social ordering function.     

Insider Trading, News Releases, and Ownership Concentration

This paper investigates the market's reaction to U.K. insider transactions and analyzes whether the reaction depends on the firm's ownership. We present three major findings. First, differences in regulation between the U.K. and United States, in particular the speedier reporting of trades in the U.K., may explain the observed larger abnormal returns in the U.K. Second, ownership by directors and outside shareholders has an impact on the abnormal returns. Third, it is important to adjust for news released before directors' trades. In particular, trades preceded by news on mergers and acquisitions and CEO replacements contain significantly less information.     

Irving Fisher and Price‐Level Targeting in Austria: Was Silver the Answer?

The question of price level versus inflation targeting remains controversial. Disagreement concerns not so much the desirability of price stability but rather the means of achieving it. Irving Fisher argued for a commodity dollar standard where the purchasing power of money was fixed by indexing it to a basket of commodities. We show that movements in the price of silver closely track the movements in overall prices during the classical gold standard era. The one‐to‐one relationship between paper and silver bonds suggests that a simple “silver rule” could have sufficed to fix the purchasing power of money.     

Help the Low Skilled or Let the Hardworking Thrive? A Study of Fairness in Optimal Income Taxation

In a model where agents have unequal wages and heterogeneous preferences, we study the optimal redistribution via an income tax, when the social objective is based on a combination of efficiency and fairness principles, and when incentive issues are taken into account. We show how some fairness principles entail specific features for the optimal taxes, such as progressivity or tax exemption for incomes below the minimum wage.