Pigouvian Taxes in General Equilibrium with a Fixed Tax Redistribution Rule

This paper establishes existence of a first-best emission tax in a general equilibrium model with pollution, when the redistribution rule of the tax income is chosen fixed and independently of the Pigouvian tax rate. It is known that under standard convexity assumptions each Pareto efficient allocation can be implemented by simultaneously choosing a Pigouvian tax rate and an appropriate lump sum redistribution of income. In real politics, however, tax redistribution schemes are often restricted to a small feasible set. Nonetheless we show that for any given lump sum redistribution rule, being continuous in overall tax income, an emission tax rate exists that leads to a Pareto efficient equilibrium.     

Endorsers in Advertising: The Case of Negative Celebrity Information

Abstract

The use of celebrity endorsers is a popular executional device, but it is not without risk. The authors report three studies examining how negative information about a celebrity can affect the brand the celebrity endorses. Using an associative network model of memory as a theoretical framework, they considered four moderating variables: the size of the association set for the brand, the size of the association set for the celebrity, the timing of the negative celebrity information, and the strength of the associative link between the brand and the celebrity. In the first two studies, they used a fictitious but realistic celebrity endorser and in the third they used an actual celebrity. Negative information about a celebrity resulted in a decline in attitude toward the endorsed brand only for the fictitious celebrity. That general relationship was moderated in varying degrees by association set size, timing of the negative information, and the strength of the link between brand and celebrity.     

Introduction: methodologies of bounded rationality

The modelling of bounded rationality is currently pursued by approaches that exhibit a wide diversity of methodologies. This special issue collects five contributions that discuss different methodological aspects of these approaches. In our introduction, we map the variety of methodological positions with respect to three questions. First, what kinds of evidence do the respective approaches consider relevant for modelling bounded rationality? Second, what kind of modelling desiderata do the respective approaches focus on? And third, how do the respective approaches justify the normative validity of bounded rationality? To broaden the picture, we not only discusss the five contributions of this issue, but also include relevant positions from the extant literature.     

Nachhaltige Bioenergie nachhaltig nutzen!

Due to far developed technologies and high shares on the energy provision with renewable energies, bioenergy is often considered as a promising option for a sustainable energy system. But in the last years also critical voices could be heard, for instance with regard to particulate emissions or the production of biofuels. Against this background, various bioenergy-technologies for covering heating demand are analysed and compared with a fossil-supply system. Nine sustainability indicators are derived for each technology and exemplary settlement types of the residential sector. The article shows that the influence of demand side is crucial for the performance of bioenergy.     

Structural policies and growth: Time series evidence from a natural experiment

Documenting the long term impact of structural policies on economic performance has generated tremendous interest in the development literature. In contrast, contemporary effects of structural policies are difficult to establish. Structural policies seldom change sufficiently in the short run, and accepted instruments to control for endogeneity in cross sections are inappropriate for time series analysis. In this paper we utilize an eleven year panel of 26 transition countries to identify short term effects of structural policies that are large and significant. A ten percent change in the quality of structural policies (or the Rule of Law) towards OECD standards is shown to raise annual growth by about 2.5%. To control for endogeneity, we develop an instrument using the hierarchy of institutions hypothesis and find that it holds a robust explanatory power. We also document that early reformers reap the greatest benefits, but that it is never too late to begin structural policy reforms.     

RECONSIDERING THE INVESTMENT–PROFIT NEXUS IN FINANCE‐LED ECONOMIES: AN ARDL‐BASED APPROACH

A Post‐Keynesian growth model is developed, in which financial variables are explicitly taken into account. Variants of an investment function are estimated econometrically, applying the ARDL (auto‐regressive distributed lag)‐based approach proposed by Pesaran et al. (Journal of Applied Econometrics, 16 (3), pp. 289–326). The econometric results are discussed with respect to a remarkable phenomenon that can be observed for some important OECD countries since the early 1980s: accumulation has generally been declining while profit shares and rates have shown a tendency to rise. We concentrate on one potential explanation of this phenomenon, which is particularly relevant for the USA and relies on a high propensity to consume out of capital income.     

Investment Incentives Under Emission Trading: An Experimental Study

This paper presents the results of an experimental investigation on incentives to adopt advanced abatement technology under emissions trading. Our experimental design mimics an industry with small asymmetric polluting firms regulated by different schemes of tradable permits. We consider three allocation/auction policies: auctioning off (costly) permits through an ascending clock auction, grandfathering permits with re-allocation through a single-unit double auction, and grandfathering with re-allocation through an ascending clock auction. Our results confirm both dynamic and static theoretical equivalence of auctioning and grandfathering. We nevertheless find that although the market institution used to reallocate permits does not impact the dynamic efficiency from investment, it affects the static efficiency from permit trading.     

Incentives to adopt new technologies under different pollution-control policies

The paper investigates the incentives for polluting firms to adopt new technologies under pollution-control policies such as effluent taxes and auctioned permits. We pay explicit attention to the output market. Firms can choose among two types of technologies, a conventional one with high marginal abatement costs and a new one with low margainl abatement costs but higher fixed costs. We find that taxes almost always induce complete adoption or no adoption at all. Permits, in contrast, allow for partial adoption. Moreover, ex post, permits can always induce first best, whereas taxes cannot if partial adoption is socially optimal.