Berkeley Electronic Press

The Cost of Segregation in Social Networks

Nizar Allouch — Mon, 10 Jun 2013 06:43:49 PDT

This paper investigates the private provision of public goods in segregated societies. While most research agrees that segregation undermines public provision, the findings are mixed for private provision: social interactions, being strong within groups and limited across groups, may either increase or impede voluntary contributions. Moreover, although efficiency concerns generally provide a rationale for government intervention, surprisingly, little light is shed in the literature on the potential effectiveness of such intervention in a segregated society. This paper first develops an index based on social interactions, which, roughly speaking, measures the welfare impact of income redistribution in an arbitrary society. It then shows that the proposed index vanishes when applied to large segregated societies, which suggests an “asymptotic neutrality” of redistributive policies.

The Evolution of Core Stability in Decentralized Matching Markets

Heinrich H. Nax et al. — Mon, 10 Jun 2013 06:32:57 PDT

Decentralized matching markets on the internet allow large numbers of agents to interact anonymously at virtually no cost. Very little information is available to market participants and trade takes place at many different prices simultaneously. We propose a decentralized, completely uncoupled learning process in such environments that leads to stable and efficient outcomes. Agents on each side of the market make bids for potential partners and are matched if their bids are mutually profitable. Matched agents occasionally experiment with higher bids if on the buy-side (or lower bids if on the sell-side), while single agents, in the hope of attracting partners, lower their bids if on the buy-side (or raise their bids if on the sell-side). This simple and intuitive learning process implements core allocations even though agents have no knowledge of other agents' strategies, payoffs, or the structure of the game, and there is no central authority with such knowledge either.

Anonymous Social Influence

Manuel Förster et al. — Mon, 10 Jun 2013 06:32:57 PDT

We study a stochastic model of influence where agents have “yes” or “no” inclinations on some issue, and opinions may change due to mutual influence among the agents. Each agent independently aggregates the opinions of the other agents and possibly herself. We study influence processes modelled by ordered weighted averaging operators, which are anonymous: they only depend on how many agents share an opinion. For instance, this allows to study situations where the influence process is based on majorities, which are not covered by the classical approach of weighted averaging aggregation. We find a necessary and sufficient condition for convergence to consensus and characterize outcomes where the society ends up polarized. Our results can also be used to understand more general situations, where ordered weighted averaging operators are only used to some extent. We provide an analysis of the speed of convergence and the possible outcomes of the process. Furthermore, we apply our results to fuzzy linguistic quantifiers, i.e., expressions like “most” or “at least a few”.

Optimal Truncation in Matching Markets

Peter Coles et al. — Mon, 10 Jun 2013 06:18:14 PDT

Since no stable matching mechanism can induce truth-telling as a dominant strategy for all participants, there is often room in matching markets for strategic misrepresentation (Roth [25]). In this paper we study a natural form of strategic misrepresentation: reporting a truncation of one's true preference list. Roth and Rothblum [28] prove an important but abstract result: in certain symmetric, incomplete information settings, agents on one side of the market (“the women”) optimally submit some truncation of their true preference lists. In this paper we put structure on this truncation, both in symmetric and general settings, when agents must submit preference lists to the Men-Proposing Deferred Acceptance Algorithm. We first characterize each woman's truncation payoffs in an incomplete information setting in terms of the distribution of her achievable mates. The optimal degree of truncation can be substantial: we prove that in a uniform setting, the optimal degree of truncation for an individual woman goes to 100% of her list as the market size grows large, when other women are truthful. In this setting, we demonstrate the existence of an equilibrium where all agents use truncation strategies. Compared to truthful reporting, in any equilibrium in truncation strategies, welfare diverges for men and women: women prefer the truncation equilibrium, while men would prefer that participants truthfully report. In a general environment, we show that the less risk averse a player, the greater the degree of her optimal truncation. Finally, when correlation in preferences increases, players should truncate less. While several recent papers have focused on the limits of strategic manipulation, our results serve as a reminder that without the pre-conditions ensuring truthful reporting, even in settings where agents have little information, the potential for manipulation can be significant.

Bottom-Up Strategic Linking of Carbon Markets: Which Climate Coalitions Would Farsighted Players Form?

Jobst Heitzig — Mon, 10 Jun 2013 06:14:43 PDT

We present typical scenarios and general insights from a novel dynamic model of farsighted climate coalition formation involving market linkage and cap coordination, using a simple analytical model of the underlying cost-benefit structure. In our model, the six major emitters of CO2 can link domestic cap-and-trade systems to form one or several international carbon markets, and can either choose their emissions caps non-cooperatively or form a hierarchy of cap-coordinating coalitions inside each market. Based on individual and collective rationality and an assumed distribution of bargaining power, we derive scenarios of such a climate coalition formation process which show that a first-best state with a coordinated global carbon market might well emerge bottom-up, and underline the importance of coordinating caps immediately when linking carbon markets. Surprisingly, the process tends to involve less uncertainty when agreements can be terminated unanimously or unilaterally, depending on the level of farsightedness.

Information Sharing Networks in Linear Quadratic Games

Sergio Currarini et al. — Mon, 10 Jun 2013 05:57:45 PDT

We study the bilateral exchange of information in the context of linear quadratic games. An information structure is here represented by a non directed network, whose nodes are agents and whose links represent sharing agreements. We first study the equilibrium use of information in any given sharing network, finding that the extent to which a piece of information is "public" affects the equilibrium use of it, in line with previous results in the literature. We then study the incentives to share information ex-ante, highlighting the role of the elasticity of payoffs to the equilibrium volatility of one's own strategy and of one's opponents' strategies. For the case of uncorrelated signals we fully characterize pairwise stable networks for the general linear quadratic game. For the case of correlated signals, we study pair-wise stable networks for three specific linear quadratic games - Cournot oligopoly, Keynes’ beauty contest and Public good provision - in which strategies are substitute, complement and orthogonal, respectively. We show that signals’ correlation favors the transmission of information, but may also prevent all information from being transmitted.

Control Power and Variable Renewables A Glimpse at German Data

Lion Hirth et al. — Mon, 10 Jun 2013 03:57:29 PDT

Control power (regulating power, balancing power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power are often thought to increase the reserve requirement significantly. This paper provides a comprehensive overview of balancing systems in Europe, discusses the role of VRE, and presents empirical market data from Germany. Despite German VRE capacity doubled during the last five years and has surpassed 70% of peak load, contracted control power decreased by 20%, and procurement cost fell by 50%. Today, control power adds only 0.4% to household electricity prices. Nevertheless, we identify several sources of inefficiency in control power markets and imbalance settlement systems and propose a number of policy changes to stimulate the participation of VRE in control provision and to improve the incentives to forecast accurately.

Futures Price Volatility in Commodities Markets: The Role of Short Term vs Long Term Speculation

Matteo Manera et al. — Mon, 10 Jun 2013 03:42:41 PDT

This paper evaluates how different types of speculation affect the volatility of commodities’ futures prices. We adopt four indexes of speculation: Working’s T, the market share of non-commercial traders, the percentage of net long speculators over total open interest in future markets, which proxy for long term speculation, and scalping, which proxies for short term speculation. We consider four energy commodities (light sweet crude oil, heating oil, gasoline and natural gas) and seven non-energy commodities (cocoa, coffee, corn, oats, soybean oil, soybeans and wheat) over the period 1986-2010 analyzed at weekly frequency. Using GARCH models we find that speculation significantly affects volatility of returns: short term speculation has a positive and significant impact on volatility, while long term speculation generally has a negative effect. The robustness exercise shows that: i) scalping is positive and significant also at higher and lower data frequencies; ii) results remain unchanged through different model specifications (GARCH-in-mean, EGARCH, and TARCH); iii) results are robust to different specifications of the mean equation.

Waste Prevention and Social Preferences: The Role of Intrinsic and Extrinsic Motivations

Grazia Cecere et al. — Mon, 10 Jun 2013 03:38:31 PDT

Though reduction is at the top of the waste management hierarchy, EU policies have historically introduced waste management incentives mainly concerning waste recovery and recycling, in addition to actions aimed at reducing disposal in landfills. Only very recently have EU policies started defining targets for waste reduction. Against this backdrop, we aim to examine whether individual behavior towards waste reduction is more strongly driven by extrinsic motivations such as social norms, or intrinsic motivations such as purely altruistic preferences. We exploit a large new survey that covers thousands of individuals for the EU27, to test the role of motivations when people are faced with collective management of the public good. We find that diverse motivations are behind the reduction of food waste: extrinsic motivations nevertheless increase the likelihood of producing more waste. Green consumption / recycling-oriented attitudes and individualistic thinking about waste management relate to ‘waste producers’. This shows that in order to go beyond a recycling-oriented society towards reduction of the source of waste externality – its generation – the nature of social preferences matters. Behavior patterns leading to waste reduction are less socially oriented, less exposed to peer pressure and more reliant upon purely ‘altruistic’ social attitudes. Policy makers should learn from the relevant insights on social behavior we here address if our societies aim to fully integrate the idea of waste reduction alongside recycling in the future.

Clean and Dirty International Technology Diffusion

Valentina Bosetti et al. — Mon, 10 Jun 2013 03:32:51 PDT

This paper investigates the role of Intellectual Property Rights (IPR) protection and Environmental Policies (EPs) on clean (renewable) and dirty (fossil-based) technology diffusion from top-innovators. IPR protection and EPs are extensively debated policy tools, as IPR protection addresses knowledge market failure, while EPs respond to pressing local and global environmental externalities. A model of monopolistic competition inspired by the recent trade literature shows that the profits associated with exporting a blueprint are a function of the quality of the idea and of market and institutional characteristics of the receiving country. We test the empirical implications of our model using patent data in renewable and fossil efficient power technologies for 13 top innovating countries and 40 patenting authorities. We improve on previous contributions by accounting for unobserved heterogeneity and for the endogeneity of policy proxies through a Generalized Method of Moment estimator. We show that knowledge transfer through patent duplication increases with the level of IPR protection, but with slight diminishing marginal returns. The effect is stronger for clean technologies, which are arguably less mature and more sensitive to uncertainty. Commitment to EPs also increases the incentives for patent duplication. The magnitude of the effect is conditional on the nature of the technology and on the specific policy instrument.

Saving Rate Dynamics in the Neoclassical Growth Model – Hyperbolic Discounting and Observational Equivalence

Y. Hossein Farzin et al. — Mon, 10 Jun 2013 03:23:33 PDT

The standard neoclassical growth model with Cobb-Douglas production predicts a monotonically declining saving rate, when reasonably calibrated. Ample empirical evidence, however, shows that the transition path of a country’s saving rate exhibits a rising or non-monotonic pattern. In important cases, hyperbolic discounting, which is empirically strongly supported, implies transitional dynamics of the saving rate that accords well with empirical evidence. This holds true even in a growth model with Cobb-Douglas production technology. We also identify the cases where hyperbolic discounting is observationally equivalent to exponential discounting. In those cases, hyperbolic discounting does not affect the saving rate dynamics. Numerical simulations employing a generalized class of hyperbolic discounting functions that we term regular discounting functions support the results.

Mitigation and Solar Radiation Management in Climate Change Policies

Vasiliki Manousi et al. — Mon, 10 Jun 2013 02:09:46 PDT

We couple a spatially homogeneous energy balance climate model with an economic growth model which incorporates two potential policies against climate change: mitigation, which is the traditional policy, and geoengineering. We analyze the optimal policy mix of geoengineering and mitigation in both a cooperative and a noncooperative framework, in which we study open loop and feedback solutions. Our results suggests that greenhouse gas accumulation is relatively higher when geoengineering policies are undertaken, and that at noncooperative solutions incentives for geoengineering are relative stronger. A disruption of geoengineering efforts at a steady state will cause an upward jump in global temperature.

Robust Multidimensional Welfare Comparisons: One Vector of Weights, One Vote

Stergios Athanassoglou — Wed, 22 May 2013 01:22:35 PDT

Many aspects of social welfare are intrinsically multidimensional. Composite indices at-tempting to reduce this complexity to a unique measure abound in many areas of economics and public policy. Comparisons based on such measures depend, sometimes critically, on how the different dimensions of performance are weighted. Thus, a policy maker may wish to take into account imprecision over composite index weights in a systematic manner. In this paper, such weight imprecision is parameterized via the ε-contamination framework of Bayesian statistics. Subsequently, combining results from polyhedral geometry, social choice, and theoretical computer science, an analytical procedure is presented that yields a provably robust ranking of the relevant alternatives in the presence of weight imprecision. The main idea is to consider a vector of weights as a voter and a continuum of weights as an electorate. The procedure is illustrated on recent versions of the Rule of Law and Human Development indices.

Marginal Intra-industry Trade and Adjustment Costs in Labour Market

Nuno Carlos Leitão et al. — Wed, 22 May 2013 01:18:40 PDT

The objective of this study is to provide some empirical evidences on the existence of labor market adjustments according to smooth adjustment hypothesis (SAH) under the impact of intra-industry trade (IIT) considering the Portuguese case over a time span between 1995 and 2006. The main methodological issue of this study consists in showing that it is preferable to use the GMM-System approach with orthogonal transformation of data. The key outcome consists in highlighting a negative linkage between marginal intra-industry trade and the amplitude of employment changes for this particular market. In addition, we find a negative correlation between changes of employment and changes in domestic consumption. Moreover, the relationship between growth of productivity and market structure is according to smooth adjustment hypothesis.

Energy Intensity Developments in 40 Major Economies: Structural Change or Technology Improvement?

Enrica De Cian et al. — Tue, 21 May 2013 05:42:31 PDT

This study analyzes energy intensity trends and drivers in 40 major economies using the WIOD database, a novel harmonized and consistent dataset of input-output table time series accompanied by environmental satellite data. We use logarithmic mean Divisia index decomposition to (1) study trends in global energy intensity between 1995 and 2007, (2) attribute efficiency changes to either changes in technology or changes in the structure of the economy, and (3) highlight sectoral and regional differences. We first show that heterogeneity within each sector across countries is high. These general trends within the sectors are dominated by large economies, first and foremost the United States. In most cases, heterogeneity is lower within each country across the different sectors. Regarding changes of energy intensity at the country level, improvements between 1995 and 2007 are largely attributable to technological change while structural change is less important in most countries. Notable exceptions are Japan, the United States, Australia, Taiwan, Mexico and Brazil where a change in the industry mix was the main driver behind the observed energy intensity reduction.

Evaluating the Global Role of Woody Biomass as a Mitigation Strategy

Alice Favero et al. — Tue, 21 May 2013 03:17:26 PDT

As policy makers consider stringent targets for greenhouse gas emissions, integrated assessment models are increasingly relying on biomass energy as a critical energy source. However, it is not clear how much woody biomass to expect across time and across the planet. The integrated assessment models simply do not have enough detail about global forests and arable land to make careful forecasts of biomass supply over time. Integrating the complex dynamic demand for bioenergy from the IAMs with the complex dynamic structure of forests and forest supply is a daunting intertemporal task. This study examines the market for woody biomass by combining the integrated assessment model WITCH with the global dynamic forestry model GTM. Three carbon tax schedules are used to simulate different mitigation policies that lead to radiative forcing levels of 3.7, 3.2 and 2.5 W/m2 and a baseline scenario with no mitigation policies. WITCH determines the demand for woody biomass and GTM determines the supply of woody biomass over time. Moving from a mild to stringent mitigation policy would increase the demand of woody biomass from 8.2 to 15.2 billion m3/yr while the international price of wood would increase 4 to 9 times relative to the baseline scenario by 2100. This would shrink the demand for industrial wood products from 80% to 90% with the biomass program. Forest area will expand by 70-95% leading to increased storage of 685-1,279 GtCO2 in forest by 2100. Overall, the biomass program with the CCS technology plays a key contribution to overall GHG emission reductions in all scenarios contributing 20-27% of all mitigation for 2020-2100.

Contagious Cooperation, Temptation, and Ecosystem Collapse

Andries Richter et al. — Tue, 21 May 2013 03:07:33 PDT

Real world observations suggest that social norms of cooperation can be effective in overcoming social dilemmas such as the joint management of a common pool resource – but also that they can be subject to slow erosion and sudden collapse. We show that these patterns of erosion and collapse emerge endogenously in a model of a closed community harvesting a renewable natural resource in which individual agents face the temptation to overexploit the resource, while a cooperative harvesting norm spreads through the community via interpersonal relations. We analyze under what circumstances small changes in key parameters (including the size of the community, and the rate of technological progress) trigger catastrophic transitions from relatively high levels of cooperation to widespread norm violation – causing the social-ecological system to collapse.

Climate Change and Adaptation: The Case of Nigerian Agriculture

Francesco Bosello et al. — Tue, 21 May 2013 02:58:17 PDT

The present research offers an economic assessment of climate change impacts on the four major crop families characterizing Nigerian agriculture, covering more than 80% of agricultural value added. The evaluation is performed shocking land productivity in a computable general equilibrium model tailored to replicate Nigerian economic development until the mid of this century. The detail of land uses in the model has been also increased differentiating land types per agro ecological zones. Uncertainty on future climate is captured, using, as input, yield changes computed by a crop model, covering the whole range of variability produced by an envelope of one RCM and tem GCM runs. Climate change turns to be unambiguously negative for Nigeria in the medium term with production losses, increase in crop prices, higher food dependency on foreign imports and GDP losses in all the simulations after 2025. In a second part of the paper a cost effectiveness analysis of adaptation in Nigeria agriculture is conducted. Adaptation practices considered are a mix of cheaper “soft measures” and more costly “hard” irrigation expansion. The main result is that cost effectiveness of the whole package crucially depends on the possibility to implement adaptation exploiting low cost opportunities. In this case all climate change damages can be offset with a benefit cost ration larger than one in all the climate regimes. Expensive irrigation expansion should however be applied on a much more limited acreage compared with soft measures. If adaptation costs are those of the high end estimates, full adaptation ceases to be cost/effective.This points out the need of a careful planning and implementation of adaptation, irrespectively on the type, looking for measures apt to control its unit cost.

Bepress Announces First Graduating Class of Institutional Repository Manager Certification Course

bepress — Wed, 01 May 2013 15:54:34 PDT

This spring, bepress offered its first ever IR Manager Certification Course, and we’re proud to announce our first graduating class. Hailing from educational organizations from around the world, all twenty participants rated the course “extremely helpful” and indicated that they would recommend it to others.

Jean-Gabriel Bankier, CEO of bepress, was delighted with the response to the company’s first on-site training for repository managers, noting that enrollment exceeded expectations. “We had to have a waiting list. It clearly demonstrates the demand for this kind of training, and no one else is offering anything like it.”

Topics ranged from current trends in scholarly communications to best practices for digital collection development, copyright compliance, faculty engagement, and outreach. In addition, the course included workshops and training sessions where IR administrators worked directly with their Digital Commons Consulting Services representatives. Course participants gained hands-on experience with important tools for managing a repository and implemented immediate improvements to their individual IRs.

Participants praised both the comprehensive scope and the individualized attention the course offered. As Kristine Mudrick, Serials and Electronic Resources Librarian at Saint Joseph’s University commented, “It was really valuable to have one-on-one, real-time dialogue with my consultant.” Jeremy Watson, Digital Services Librarian at Fordham University, remarked, “I am totally inspired and ready to charge ahead with my repository more efficiently and dynamically.”

Based on positive feedback from our first graduating class, bepress will repeat the IR Manager Certification Course in the spring of 2014. For more information, please contact Ann Taylor (ataylor@bepress.com), Director of Outreach and Scholarly Communications, or Eli Windchy (ewindchy@bepress.com), VP, Consulting Services.

To read more about bepress University and upcoming courses, see http://digitalcommons.bepress.com/bepressu/ .

Die Schäden von Preiskartellen: Vom Partial- zum Totalmodell

Thomas Eger et al. — Fri, 26 Apr 2013 01:51:23 PDT

In Wissenschaft und Praxis scheint Einigung darüber zu herrschen, welche Schäden von Preiskartellen ausgehen. Dabei wird ausschließlich partialanalytisch argumentiert. Es wird nur derjenige Sektor betrachtet, in dem das Kartell besteht. Auswirkungen auf andere Sektoren und auf die Beschäftigungsseite werden nicht berücksichtigt. (Siehe dazu umfassend Ashurst 2004 sowie Oxera 2009).

Es wird zum einen behauptet, dass ausschließlich die Nachfrager (Endkonsumenten und Zwischenhändler) Geschädigte sind. Zum anderen wird gezeigt, dass deren Schaden aus der Summe von Gewinn des Kartells und deadweight loss besteht. Beide Aussagen sind in dieser Ausschließlichkeit nicht richtig.

In diesem Aufsatz werden Nachfragewirkungen auf andere Sektoren und Beschäftigungswirkungen mitberücksichtigt. Es wird gezeigt, dass zum einen neben den Nachfragern auch die Faktoreigner einen Schaden durch ein Preiskartell erleiden und dass zum anderen der Schaden für die Nachfrager auch nur aus dem Kartellgewinn bestehen kann oder sogar ganz verschwindet.