Using relative profit incentives to prevent collusion

This paper describes a new economic method for preventing oligopoly collusion. The method eliminates incentives for collusion by making managerial compensation depend on relative profits rather than absolute profits. This alteration of managerial incentives sets up a zero-sum game among the firms in an industry, yielding the result that firms no longer have incentive to collude, either actually or tacitly, with regard to prices or outputs. The method also ameliorates the imperfectly competitive outcomes which can result from even noncooperative oligopoly interactions.     

Crude substitution: The cyclical dynamics of oil prices and the skill premium

At the business cycle frequency, energy prices and the skill premium display a strong, negative correlation. This fact is robust to different de-trending procedures. Identifying exogenous shocks to oil prices using the Hoover-Perez [1994. Post hoc ergo propter once more: an evaluation of ‘Does monetary policy matter?’ in the spirit of James Tobin. Journal of Monetary Econonmics 34, 47-73] dates, shows that the skill premium falls in response to such a shock. The estimation of the parameters of an aggregate technology that uses, among other inputs, energy and heterogeneous skills, demonstrates that capital-skill and capital-energy complementarity are responsible for this correlation. As energy prices rise, the use of capital decreases and the demand for unskilled labor—relative to skilled labor—increases, lowering the skill premium.     

Abatement investments and green goodwill

This paper develops and estimates a dynamic model that links profits to green goodwill. Assuming that abatement investments generate green goodwill, and using data from the Swedish pulp industry, we are able to test the effects of green goodwill on firm level output price and profits. The results suggests that Swedish pulp plant output prices and profits may be positively related to changes in green goodwill. Furthermore, no evidence is found to support the existence of adjustment costs due to abatement investments.     

A MICROECONOMIC MODEL OF CORPORATE SOCIAL RESPONSIBILITY

This paper explores the economic mechanisms behind corporate social responsibility (CSR) in a microeconomic model of the firm. The study's motivation is to shed light on the potential causes of the observed phenomena of voluntary over‐compliance among firms. We investigate how assumptions about costs and benefits affect CSR behavior through a stock of goodwill capital. In optimum, the firm must balance marginal costs and benefits of investing in CSR. We characterize the equilibrium and examine comparative statics and dynamics from a parameterized model. Finally, we link some of the model's results to the empirical literature on CSR.     

Time substitution for environmental performance: The case of Swedish manufacturing

We extend recent advances in time substitution modeling to a directional distance function framework, in order to examine the environmental performance of firms in Sweden’s pulp and paper industry for the years 2002–2008. Our data allow us to estimate the optimal reallocation of environmental investments, expenditures and energy use to simultaneously maximize production output and minimize emissions in the years immediately before and after the implementation of the European Union Emissions Trading Scheme. We find some evidence of overall productivity decline when considering both emissions and output objectives, due primarily to technological decline, and that cumulative dynamic inefficiency outweighs static inefficiency. A comparison of optimal investment with observed investment indicates that firms could have improved their performance by reallocating environmental investments to early periods and production-oriented investment to later periods.     

Print news coverage of the 2010 Iowa egg recall: Addressing bad eggs and poor oversight

This paper examines the print news coverage of the 2010 Iowa egg recall, the largest in the United States, in order to determine how the news media conveyed messages regarding the recall and its causes, as well as what consumers might do in response to the recall. The news media has long been both a primary source of consumer information relating to food safety and a notable contributor to the policy agenda. A content analysis of 160 articles from four national US newspapers, the largest regional paper in Iowa, and the Associated Press revealed that the recall was framed both as a failure of government oversight and as an instance of poor production practices by the farmers in question. Proposed responses to the recall similarly fell into two distinct categories: changing consumer purchasing and food preparation habits in order to minimize the immediate risk of infection, and supporting legislative and regulatory food safety reforms that would minimize the risk of future outbreaks. Particular media focus was given to both the US Food Safety Modernization Act and the FDA Egg Rule. Relatively little media attention was given to industrial agriculture as a causal frame or the purchasing of “alternative” eggs as a potential response. Overall, coverage conveyed the policy relevance of the recall but failed both to fully contextualize the outbreak within the history of previous outbreaks and food safety concerns and to convey the relationship of the outbreak to the current system of industrial agriculture.     

The impact of tourism in the Caribbean: A methodological study

Hills, Theo L. and Lundgren, Jan, “The Impact of Tourism in the Caribbean—A Methodological Study,” Annals of Tourism Research, Vol.IV, No.5, May/September 1977, pp. 248–267. The paper examines some economic, cultural and ecological problems arising from the impact of tourism in the Caribbean. Special attention is given to the nature and mechanism of the international tourist system and to the possibility of predicting saturation of tourist destinations by means of an irritation index. Types of data reflecting “space” as a resource are related to many types of tourist data, including a “seasonality index”.