Forcing Firms to Think About the Future: Economic Incentives and the Fate of Hazardous Waste

What is the cost of off-site hazardous waste disposal? In addition to paying for disposal fees and shipments costs, generators of hazardous waste can potentially be held liable for the cost of cleanup if the waste disposal site contaminates the environment after closure or abandonment and thus falls under the federal or state Superfund legislation. This paper empirically examines the sensitivity of individual hazardous waste generators to these categories of costs, exploiting the variation across states in factors influencing disposal costs, and in the structure of the liability imposed on waste generators under certain circumstances by state laws. We fit nested logit models to predict the waste management method (incineration or landfill disposal) and the state of destination for shipments of halogenated solvent waste used for metal cleaning in manufacturing and reported in the Toxic Release Inventory in 1988–1990. Waste generators respond to transportation costs and to proxies for current disposal costs. Generators also find the concurrent presence of strict and joint-and-several liability a deterrent, but this deterrent effect does not vary with the wealth of the firm or the volume of the waste shipped.     

The structural transformation and aggregate productivity in Portugal

We document the substantial process of structural transformation—the reallocation of labor between agriculture, manufacturing, and services—and aggregate productivity growth undergone by Portugal between 1956 and 1995. We assess the quantitative role of sectoral labor productivity in accounting for these processes. We calibrate a model of the structural transformation to data for the United States and use the model to gain insight into the factors driving the structural transformation and aggregate productivity growth in Portugal. The model implies that Portugal features low and roughly constant relative productivity in agriculture and services (around 22%) and a modest but growing relative productivity in manufacturing (from 44 to 110%). We find that productivity growth in manufacturing accounts for most of the reduction of the aggregate productivity gap with the United States and that a further closing of this gap can only be accomplished via improvements in the relative productivity of services. This paper was written while the authors were affiliated with the Federal Reserve Bank of Richmond. We would like to thank the editor, two anonymous referees, and participants at the Third Conference on Portuguese Economic Development in the European Context organized by the Bank of Portugal for their comments. All errors are our own.     

Specialisation,localisation, and trade value in the wake of cross-border production sharing. The Central Eastern European Countries' case

We focus on five among the sectors in which most of the CEECs’ trade in middle products with EU-15 is concentrated. Over the second half of the 1990s, we observe remarkable changes in both production and trade specialization as well as a significant relocation of industries within CEECs. Using jointly trade and production data we outline co-movements in the adjustment of specialisation patterns. We also show that the redistribution of activities at the regional level reflects the relocation of industries at the global level. Finally, we try to detect the scope of fragmentation of production characterizing each industry and the ways in which CEECs are moving along the “internationally sliced-up value chain”. (JEL: F10, F14, F15)     

Observability and overcoming coordination failure in organizations: An experimental study

Motivated by problems of coordination failure in organizations, we examine how overcoming coordination failure and maintaining coordination depend on the ability of individuals to observe others’ choices. Subjects’ payoffs depend on coordinating at high effort levels in a weak-link game. Treatments vary along two dimensions. First, subjects either start with low financial incentives for coordination, which typically leads to coordination failure, and then are switched to higher incentives or start with high incentives, which usually yield effective coordination, and are switched to low incentives. Second, as the key treatment variable, subjects either observe the effort levels chosen by all individuals in their experimental group (full feedback) or observe only the minimum effort (limited feedback). We find three primary results: (1) When starting from coordination failure the use of full feedback improves subjects’ ability to overcome coordination failure, (2) When starting with good coordination the use of full feedback has no effect on subjects’ ability to avoid slipping into coordination failure, and (3) History-dependence, defined as dependence of current effort levels on past incentives, is strengthened by the use of full feedback. Electronic Supplementary Material Supplementary material is available in the online version of this article at . JEL Classification C92, D23, J31, L23, M52     

International Trade and the Environment: Theoretical and Policy Linkages

I review and extend three approaches to trade and environmental policies: competitive general equilibrium, oligopoly and monopolistic competition. The first two have surprisingly similar implications: deviations from first-best rules are justified only by constraints on policy choice (which motivates what I call a “single dividend” approach to environmental policy), and taxes and emissions standards differ in ways which reflect the Le Chatelier principle. I also show how environmental taxes may lead to a catastrophic relocation of industry in the presence of agglomeration effects, although not necessarily if there is a continuum of industries which differ in pollution intensity. *An earlier version was presented as an invited plenary lecture to the European Association for Environmental and Resource Economics Conference, Oslo, 1999.     

Robust political economy

This paper introduces the idea of “robust political economy.” In the context of political economic systems, “robustness” refers to a political economic arrangement's ability to produce social welfare-enhancing outcomes in the face of deviations from ideal assumptions about individuals' motivations and information. Since standard assumptions about complete and perfect information, instantaneous market adjustment, perfect agent rationality, political actor benevolence, etc., rarely, if ever actually hold, a realistic picture and accurate assessment of the desirability of alternative political economic systems requires an analysis of alternative systems' robustness. The Mises-Hayek critique of socialism forms the foundation for investigations of robustness that relax ideal informational assumptions. The Buchanan-Tullock public choice approach complements this foundation in forming the basis for investigations of robustness that relax ideal motivational assumptions. JEL Code B53, P16, P26     

On the evolutionary edge of altruism: a game-theoretic proof of Hamilton’s rule for a simple case of siblings

We offer a game-theoretic proof of Hamiltons rule for the spread of altruism. For a simple case of siblings, we show that the rule can be derived as the outcome of a one-shot prisoners dilemma game between siblings.JEL Classification: A13, C70, D64Correspondence to: Oded Stark, ZEF, University of Bonn, Walter-Flex-Strasse 3, 53113 Bonn, GermanyWe are indebted to an anonymous referee and to Uwe Cantner for helpful comments and suggestions. Partial financial support from the National Institute on Aging (grant RO1-AG13037) and from the Humboldt Foundation is gratefully acknowledged.