Optimal Regulation of Private Production Contracts with Environmental Externalities

We address the problem of optimal regulation of an industry where the production of a polluting output is contracted with independent agents. The provision of inputs is divided between the principal and the agent such that the production externality results from their joint actions. The main result shows that in the three-tier hierarchy (regulator-firm-agent) involving a double-sided moral hazard, the equivalence across regulatory schemes generally obtains. The only task for the regulator is to determine the optimal total fiscal revenue in each state of nature because any sharing of the regulatory burden between the firm and the agent generates the same solution. The equivalence principle is upset only when the effects of regulation on the endogenous organizational choices are explicitly taken into account.JEL Classification: D82, H23, Q50We thank Bob Chambers, Emma Hutchinson, David Martimort and Katleen Segerson as well as the participants of the 2nd World Congress of Environmental and Resource Economists, Monterey, 2002; the 2nd Annual Workshop on the Economics of Contracts in Agriculture, Annapolis, 2002; and the 1st CIRANO-IDEI-LEERNA conference on Regulation, Liability and the Management of Major Industrial Environmental Risks in Toulouse, 2003 for their comments on previous versions of the paper. Support from the French Ministry of Ecology and Sustainable Development is gratefully acknowledged.     

PUBLIC SERVICE PERSPECTIVES ON REFORMS OF ELECTRICITY DISTRIBUTION AND SUPPLY: A MODULAR ANALYSIS

ABSTRACT ** : This article analyzes organizational change in electricity distribution and retail businesses and its impact on public service issues. Organizational change has resulted from the European electricity directives, especially the EU Electricity directive 2003/54/EC , which has imposed major transformations on these activities, requiring legal unbundling of electricity distribution networks by 1 July 2007. Organizational change has also resulted from an adaptation of companies to the newly competitive environment. This has led to a diversity of organizational choices across Europe. We analyze this diversity by using a modular approach, which decomposes reforms in electricity distribution and retail into logical ‘blocks’. We then examine how European countries have dealt with two policy and regulatory issues related to customer protection in that new environment: the regulation of quality of distribution, which is a task of regulators, and energy affordability policies for vulnerable customers, which are a central aspect of public service policies in the electricity sector.     

Tourism travel under climate change mitigation constraints

The paper first describes an inventory for 2005 giving the tourism related CO₂ emission caused by global tourism, and presents a 30-year projection and a 45-year simulation. The study found that tourists cause 4.4% of global CO₂ emissions. Also these emissions are projected to grow at an average rate of 3.2% per year up to 2035. This increase is problematic as globally a reduction of emissions by 3–6% is required to avoid ‘dangerous’ climate change. Using contemporary scenario techniques it appeared difficult to find a future tourist travel system consistent with CO₂ emission reductions of up to 70% by 2050 with respect to 2005. Based on the model underlying the 30-year projection, 70 scenarios are presented in a ‘landscape’ graph exploring the effect of opportunities to reduce the emissions, but this attempt did not reach the large reductions envisaged. We therefore explored automated scenario generation as a way to define backcasting scenarios that both reach the emission reduction target and retain the highest possible economic value for the sector. The main contributions made by this study are (1) in comparing the value of different ways to approach a (desired) future and (2) giving insight into the kind of structural changes required within tourism and tourism transport in case very strong emission reductions are required. Finally the model showed signs of ‘complex’ behaviour.     

The impact of development of customer online banking skills on customer adviser skills

The object of this article is the development of customer banking skills as a result of using online banking and its impact on the competence of customer advisers in face‐to‐face customer contacts. The main results show that online banking enables customers to develop a range of banking skills.     

The care‐of‐self ethic with continual reference to Socrates: towards ethical self‐management

‘Have you ever taken sufficient care of yourselves?’ By asking the elite Athenian youth this question, Socrates implies that the liberation of self and the capacity to govern are inseparable. Drawing on the lectures given by Michel Foucault at the Collège de France in 1984 – only recently made available to the public – we show the consequences of the return to this ancient care‐of‐self ethic in the organizational context. After reviewing the contributions made to business ethics by these two philosophers, we propose four phases necessary to the emergence and constitution of a moral subject in organizations: self‐awakening, self‐evaluation, self‐transformation and self‐presentation. We then suggest various managerial practices and behaviour inspired by this philosophical parrhesia embodied by the Greek philosopher wherein the manager should have a personal relationship with his or her own activity. Finally, we discuss implications of our study in the field of business ethics and propose an agenda for future research.     

Heterogeneous information exposure and technology adoption: the case of tissue culture bananas in Kenya

Classical innovation adoption models implicitly assume homogenous information flow across farmers, which is often not realistic. As a result, selection bias in adoption parameters may occur. We focus on tissue culture (TC) banana technology that was introduced in Kenya more than 10 years ago. Up till now, adoption rates have remained relatively low. We employ the average treatment effects approach to account for selection bias and extend it by explicitly differentiating between awareness exposure (having heard of a technology) and knowledge exposure (understanding the attributes of a technology). Using a sample of Kenyan banana farmers, we find that estimated adoption parameters differ little when comparing the classical adoption model with one that corrects for heterogeneous awareness exposure. However, parameters differ considerably when accounting for heterogeneous knowledge exposure. This is plausible: while many farmers have heard about TC technology, its successful use requires notable changes in cultivation practices, and proper understanding is not yet very widespread. These results are also important for other technologies that are knowledge‐intensive and require considerable adjustments in traditional practices.     

The gradual transition to a team-based environment: the success story of a medium-sized manufacturing facility

This article will review the case in which a medium-sized manufacturing facility in upstate New York underwent the transition to a team-based environment. As with any change, this transition involved a decision process, a design process, and an implementation process. The transition took place gradually over a period of several years, allowing each stage to be studied in some detail. The degree to which these approaches are applicable to an organization will depend in part on how similar that organization is to the study facility; therefore, this article will begin with a background discussion of the nature of that facility.     

Continuous Versus Discrete Time in Dynamic Common Pool Resource Game Experiments

Environmental and Resource Economics - We study the impact of discrete versus continuous time on the behavior of agents in the context of a dynamic common pool resource game. To this purpose, we...     

Microstructure and asset pricing: An insight on African frontier stock markets

This article investigates the impact of microstructure factors on asset pricing in some African stock markets. We use data on stocks listed on the Johannesburg Stock Exchange, the “Bourse Régionale des Valeurs Mobilières,” and the Nigeria Stock Exchange, and we consider international portfolio management from 2000 to 2014. Generalized least square and fixed effect are estimation methods used to highlight the effect of microstructure variables on expected return. At the same time, panel smooth transition regression (PSTR) modeling is considered to identify the thresholds in this effect. The results show that liquidity and to a lesser extent the number of trading days are the most common significant microstructure variables for all the studied markets. However, other variables’ effects on the return are specific to the considered stock markets. Furthermore, the PSTR estimator reveals that the impact of indicated factors on asset pricing is not linear because it produces a double threshold between return and microstructure.     

Long-run dynamics between trade liberalization and income inequality in the European Union: a second generation approach

Empirica - The surprisingly limited literature investigating whether there exists a long-run association between trade liberalization and income inequality finds strong evidence for it. We point...