Reducing Carbon Dioxide Emissions in Australia: A Minimum Disruption Approach

Abstract
While at the Toronto Conference in 1988, Australia adopted a target of reducing carbon dioxide emissions by 20 per cent of 1988 levels by the year 2005, however action to reduce emissions has been negligible. Unilateral action is deemed too costly in terms of the negative effects it could have on employment, GDP growth, exports and international competitiveness .
Most Australian studies have evaluated the effect on such variables of employing a specified policy instrument, such as a carbon tax, to reduce emissions. This study instead uses an input-output method developed by Proops, Faber and Wagenhals (1993) to ascertain the minimum set of changes necessary in different sectors of the economy required to achieve the Toronto Target, where constraints on key macroeconomic variables, such as GDP growth and the level of employment, are met. The cost of reducing emissions is defined here in terms of the required structural changes, when factors like GDP growth are held positive .
The results suggest that the necessary changes in various sectors under each of the scenarios are not far removed from the observed rates of change for Australia. The results are also consistent with those obtained for both Germany and the United Kingdom .     

Financing Capacity in the Bottleneck Model

It is well known that, for a congestible facility with constant long-run average cost, the revenue from the unconstrained optimal congestion charge (set so that each individual faces the marginal (social) cost of a use) exactly covers the cost of optimal capacity. In the context of Vickrey′s bottleneck model of morning rush-hour auto congestion, this paper investigates under what circumstances the first-best pricing and investment rules apply when both the time variation of the congestion charge is constrained and users differ in unobservable characteristics so that the same congestion charge must be applied to heterogeneous users.     

Bureaucratic privilege as an issue in Chinese politics

Since December 1978, social policy in China has followed a more openly elitist direction than in any period since 1949. The conservative drift in many policies is unmistakable, but in one respect there is concern — Party opposition to the rapid growth of bureaucratic privilege and abuse of political position. Mao had struck harshly at non-Party intellectuals, urban entrepreneurs, scientists and politically inactive youth. These groups are part of the social base for the new top leadership. A set of demobilizing reforms and purges aimed to route the radical leaders have been ordered by the Deng faction to intimidate their followers, as well as to discredit the mass-campaign style of work in order to replace it with orthodox Party-state structures. Some resistance has followed, but the increasing privatization of the economy created an absolutely larger petty-bourgeoisie which formed a new social layer supporting Deng. Generous back-pay and compensation for those weeded out by the Cultural Revolution gave a material basis for new inequalities. Upper-class communists were once again able to organize privileged, elitist education for their progeny. Finally, economic policy, including the new tolerance of patriotic Hong Kong capitalists, gave a new lease of life to entrepreneurs, some with foreign ties. A coalition of Party bureaucrats, civil servants, academics and businessmen has little time for socialist egalitarianism and Mao's radicalism.     

Asset pricing with unforeseen contingencies

We investigate an economy of heterogeneous agents that cannot specify all exogenous welfare-relevant events and consequently view the impact of unforeseen contingencies as utility shocks. In this setting we characterize an appropriate market equilibrium concept when securities can trade only on demand- and price-contingent events. We establish the existence of an equilibrium for a class of parametric models in which aggregating taste shocks across agents can lead to nonconsumption pricing factors. To fit the stylized facts, (i) non consumption factors must dominate the pricing kernel and contribute to the variation of the wealth-consumption ratio, (ii) markets must be incomplete and the set of claims that are traded endogenously determined, (iii) agents’ preferences with respect to unforeseen contingencies must be non-expected utility, and, (iv) although non-consumption pricing factors can be conditionally uncorrelated with aggregate consumption shocks, they must be correlated with shocks to expected consumption growth.     

A new look at the two-mode problem

This paper considers the second-best policy problem that arises when auto travel is priced below its marginal cost and there is a substitute mass transit mode. We analyze the problem by combining a model of a rail line based on Kraus and Yoshida (J. Urban Econ. 51 (2002) 170) with the highway bottleneck model. The model involves a transit authority which optimizes, in addition to the fare, two dimensions of transit capacity. These are (1) the number of train units serving the route and (2) the capacity of an individual train unit. Under a very weak condition, second-best optimality involves expanding both dimensions of transit capacity. The larger percentage effect is on train capacity.     

Land use in a circular city: Some numerical results

In a previous paper (“Land Use in a Circular City”, Journal of Economic Theory, 1974), I considered efficient land use and travel patterns in a circular city consisting of a homogeneous economic activity and a network of radial and circumferential roads. My analysis assumed that under decentralized optimum conditions, the price of traveling circumferentially through a radian would increase with distance from the city center. Under this and a second pricing assumption, an optimum would involve either restricting inward trip penetration or providing travelers with an inner ring road. This paper provides numerical illustrations of the optimum when trip penetration is restricted. The results suggest that the underlying pricing assumptions are likely not valid.     

Uncovering the power of natural endorsements: a comparison with celebrity-endorsed advertising and product placements

ABSTRACT

Despite the vast literature on celebrity endorsements in advertising, research to date has not assessed whether and how celebrity-brand associations created via traditional endorsements or product placements compare to more natural associations that emerge from real-life celebrity images through social media. This experiment systematically compares the impact of different brand-celebrity associations on consumer perceptions of the celebrity's credibility and their responses to a new brand associated with that celebrity. The results reveal that, unlike more commercial brand associations, natural brand-celebrity associations can yield strong brand effects without eroding the celebrity's credibility. The findings are especially insightful given increasing numbers of natural brand-celebrity associations in social media.     

Necessity entrepreneurship in Latin America: it´s not that simple

ABSTRACT

Entrepreneurship literature takes for granted the motivation dichotomy; however, this simplistic view have been criticised for several studies because it likely does an injustice to entrepreneurs, particularly Latin America (LA) entrepreneurs. This study seeks to contribute to the body of knowledge on entrepreneurs to better explain the process of entrepreneurs being motivated by necessity. We use the Global Entrepreneurship Monitor (GEM) database for LA countries and develop an econometric model based on a set of variables, including contextual variables. First, we identify three types of entrepreneurial motivation: necessity, opportunity and transition. We then demonstrate that the motivation dichotomy does not represent LA entrepreneurship. Second, we find that necessity-driven entrepreneurship does not necessarily indicate the absence of high growth aspirations because some entrepreneurs in this category have such aspirations. Third, we observe that significant differences exist among entrepreneurs based on context, specifically among necessity-driven entrepreneurs. These findings have practical implications for research on entrepreneurship and for regional development.     

Has the CDS market influenced the borrowing cost of European countries during the sovereign crisis?

This paper assesses the potential influence of the growing CDS market on the borrowing cost of sovereign states during the European sovereign crisis. We analyze the sovereign debt market to ascertain the pattern of information transmission between the CDS and corresponding bond markets. Our methodological innovation is the use of a non-linear specification rather than the linear VECM specification customarily employed. Using a panel smooth transition model during the 2008–2010 period, we find that: 1) linearity tests clearly reject the null hypothesis of a linear transmission mechanisms between the bond and the CDS markets; 2) market distress alters the mutual influence and 3) the higher the distress the more the CDS market dominates the information transmission between CDS and bond markets.