Recursos de colección

Caltech Authors (160.010 recursos)

Repository of works by Caltech published authors.

Group = Environmental Quality Laboratory

Mostrando recursos 1 - 20 de 53

  1. The Regulation of Surface Freight Transportation: The Welfare Effects Revisited

    Braeutigam, Ronald R.; Noll, Roger G.
    This paper reexamines a much-studied topic, the effects of surface freight regulation. It demonstrates that several studies use invalid methods to estimate the welfare costs of rate regulation, develops a correct procedure, and provides estimates of the welfare effects using data and modal market share relationships estimated by Boyer. The paper also analyzes some implications of the common assumption that the demand for total freight shipments by all modes is perfectly inelastic.

  2. Market power and transferable property rights

    Hahn, Robert W.
    The appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal. When competition is not a foregone conclusion, the question naturally arises as to how a firm might manipulate the market to its own advantage. This paper analyzes the issue of market power in the context of markets for transferable property rights. First, a model is developed that explains how a single firm with market power might exercise its influence. This is followed by an examination of the model in the context of a...

  3. Sample selection and const underestimation bias in pioneer projects

    Quirk, James P.; Terasawa, Katsuaki
    The recent growth of the defense budget has been accompanied by a heightened public awareness of the existence of massive cost overruns in defense procurement. The literature of defense economics has tended to center in on the lack of adequate incentives to keep defense contracting costs under control, given the frequent use of sole source contracts coupled with cost plus a fixed fee or renegotiable fixed price financing arrangements (Cummins 1977; Weitzman 1980; Peck and Scherer 1962; and Terasawa, Quirk, and Womar 1983). But it is not only in defense contracting that cost overruns have occurred. What has received less attention...

  4. Artificial markets and the theory of games

    Montgomery, W. David
    The concept of transaction costs is a common theme in most analyses of the phenomenon of market failure. Few economists would disagree with the abstract proposition that if there exist gains to be made from exchange, then in the absence of transaction costs private bargains will take place and exhaust all potential gain from trade. This proposition serves not only as a characterization of an ideal state of affairs, but as a guide to means by which specific cases of market failure could be remedied. It suggests, in particular, that reduction in transaction costs should be examined as a potential...

  5. Artificial Markets and the Theory of Games

    Montgomery, W. David
    The theory of games has provided notable insights into the nature of bargaining processes. In this article I will apply co-operative game theory to a specific problem of air pollution control, as a device for designing and evaluating a set of institutions intended to eliminate certain transaction costs which appear to prevent profitable bargains from being consummated.

  6. Artificial Markets and the Theory of Games

    Montgomery, W. David
    The theory of games has provided notable insights into the nature of bargaining processes. In this article I will apply co-operative game theory to a specific problem of air pollution control, as a device for designing and evaluating a set of institutions intended to eliminate certain transaction costs which appear to prevent profitable bargains from being consummated.

  7. Separable Externalities in Cost and Production Functions

    Montgomery, W. David
    The characterization of external effects as “separable” has played an important role in the development of the theory of externalities. The separable case is particularly well behaved when procedures for achieving an optimum allocation of resources in the presence of externalities are examined. Davis and Whinston (1962) find that separability assures the existence of a certain kind of equilibrium in bargaining between firms which create externalities, and that equilibrium does not exist without separability. Kneese and Bower (1968) argue that with separability the computation of Pigovian taxes to remedy externalities is particularly simple. Marchand and Russell (1974) demonstrate that certain...

  8. Separability, Externalities, and Competitive Equilibrium

    Montgomery, W. David
    The characterization of external effects as "separable” has played an important role in the development of the theory of externalities. The separable case appears particularly well behaved when procedures for achieving an optimum allocation of resources in the presence of externalities are examined. Three examples can illustrate the range of conclusions which have been reached concerning separable externalities. Davis and Whinston [1962] find that separability assures the existence of a certain kind of equilibrium in bargaining between firms which create externalities, and that equilibrium does not exist without separability. Kneese and Bower [1968] argue that, with separability, the computation of...

  9. Stability of Pure Trade Equilibrium with Externalities

    Montgomery, W. David
    Sufficient conditions for the stability of competitive equilibrium in a pure trade economy with externalities are developed in this paper. Externalities are introduced through the assumption that each individual's utility depends on the consumption of every other individual. A two-level adjustment process is postulated. At fixed prices, individual strategies must be made mutually consistent. Each individual's strategy is stated as a relation which maps prices and the demands of all other individuals into the demand of that individual. The equilibrium of the externality adjustment process is a demand allocation, depending on price, which is feasible and maximizes utility for each...

  10. Competitive Equilibrium with Separable Externalities

    Montgomery, W. David
    The characterization of external effects as "separable" has played an important role in the development of the theory of externalities. The separable case appears particularly well behaved when procedures for achieving an optimum allocation of resources in the presence of externalities are examined. For example, Davis and Whinston (1962) find that separability assures the existence of a certain kind of equilibrium in bargaining between firms which create externalities, and that equilibrium does not exist without sepalability. Kneese and Bower (1968) argue that with separability the computation of Pigovian taxes to remedy externalities is particularly simple. Marchand and Russell (1974) demonstrate...

  11. Has the Averch-Johnson Effect Been Empirically Verified?

    McKay, Derek J.
    Recently three studies have been published which claim to confirm the existence of the Averch-Johnson effect in the electric power industry. Each of these papers uses a distinctly different methodology. This paper examines the general problem of what the nature of the A-J effect might be and what sort of data would be required in order to confirm its presence. The other studies are then critically examined on the basis of this discussion. A modification of the method used in one previous study is then used to test the A-J hypothesis, and no evidence of capital bias is found. The...

  12. Water Rights and Optimal Reservoir Management

    Burness, H. Stuart; Quirk, James P.
    In many areas, notably the arid portion of the western United States, economic development and increased use of both surface and ground water supplies has been accompanied by proliferation of water storage facilities. As these reservoirs are filling, rivers become more completely appropriated and ground water supplies approach depletion more rapidly. While the analysis and management of ground water and surface water supplies should be integrated, we consider surface water independently, thus following the bifurcation in the treatment of ground and surface water under existing water law. In Burness and Quirk (1977), we considered the efficiency aspects of the appropriative...

  13. Markets and Environmental Management with a Storable Pollutant

    Lewis, Tracy R.
    Lee (1977) investigates possibilities where pollutants may be stored for a period of time and later released into the environment when adverse effects are minimal. The treatment and storage of pollutants before their release into the environment is a crucial part of many abatement programs. Surprisingly, emission charges will not induce optimal abatement when storage is possible. This occurs because the firms' response to the dynamic tax is indeterminant. We suggest alternative controls, whereby rights to emit pollutants are sold competitively and demonstrate that markets provide incentives for the optimal generation-storage-emission of pollution by firms. In deriving this result an...

  14. Capital Gains and the Economic Theory of Corporate Finance

    Burness, H. Stuart; Quirk, James P.
    The dependence of one agent’s actions upon those of another constitutes a fundamental departure point for much of received economic theory. Apart from a deterministic setting, the presence of uncertainty implies a dependence on the probable actions of other agents; that is, the ultimate behavior of an individual is to a certain extent a consequence of his beliefs concerning the behavior of other agents. While the difficulty associated with formulating even crude conjectures of this nature is overwhelming, actual informational demands are even greater as from the dependence of agent A’s actions on his beliefs concerning agent B’s actions, it...

  15. Fuel Cost Adjustment Mechanisms and the Regulated Utility Facing Uncertain Fuel Prices

    Isaac, R. Mark
    ncreases in the cost of fossil fuels helped make automatic fuel cost adjustment mechanisms popular institutions for regulating electric utilities. Economic intuition suggests that these clauses could distort incentives for input choice. The purpose of this article is to explore the theoretical basis for such potential distortions in a world of uncertain fuel prices. Two different models of the regulatory environment are considered. For each, it is shown that input choice incentives are altered in the presence of a fuel adjustment mechanism. Finally, some suggested benefits of such clauses to the financial position of the utility are examined.

  16. The Workback Method and the Value of Helium

    Braeutigam, Ronald R.
    It is sometimes the case that the value of a resource at one stage of production must be assessed in the absence of a well defined market at that stage. One tool for valuation is the "workback" method, which imputes a value to a resource at an early processing stage by subtracting from an observed price for the resource at a more refined stage all of the costs incurred between the two stages. The workback method has been used by the courts in attempting to assess the wellhead value of helium extracted from helium-bearing natural gas streams during the Helium...

  17. The Regulation of Surface Freight Transportation: The Welfare Effects Revisited

    Braeutigam, Ronald R.; Noll, Roger G.
    This paper reexamines a topic that has been much studied by economists—estimating the effects on resource allocation of the economic regulation of surface freight transport. It demonstrates that in several studies the methods used to estimate the welfare costs of rate regulation are invalid, develops a correct procedure, and provides estimates of the welfare effects using data and estimates of modal market share relationships from a study by Boyer. The paper also analyzes some implications of an important assumption that is common among studies of the transportation sector. The assumption is that the total quantity of freight shipments by all...

  18. The Regulation of Surface Freight Transportation: The Welfare Effects Revisited

    Braeutigam, Ronald R.; Noll, Roger G.
    This paper reexamines a topic that has been much studied by economists—estimating the effects on resource allocation of the economic regulation of surface freight transport. It demonstrates that in several studies the methods used to estimate the welfare costs of rate regulation are invalid, develops a correct procedure, and provides estimates of the welfare effects using data and estimates of modal market share relationships from a study by Boyer. The paper also analyzes some implications of an important assumption that is common among studies of the transportation sector. The assumption is that the total quantity of freight shipments by all...

  19. Market Power and Transferable Property Rights

    Hahn, Robert W.
    The appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal. When competition is not a foregone conclusion, the question naturally arises as to how a firm might manipulate the market to its own advantage. This paper analyzes the issue of market power in the context of markets for transferable property rights. First, a model is developed which explains how a single firm with market power might exercise its influence. This is followed by an examination of the model in the context of a...

  20. Tradable Air Pollution Permits in the Overall Regulatory System: Problems of Regulatory Interactions

    Hahn, Robert W.; Noll, Roger G.
    Because many environmental problems are associated with the production and use of energy, it is not surprising that the effects of policies in the two areas are often interdependent. This paper explores the interactions between the feasibility of an efficient market for emissions permits for sulfur oxides and the current state of air pollution, public utility and natural gas regulation. It shows how some of the opposition to tradable emissions permits can be traced to proposals to implement the reforms that redistribute wealth and the burden of regulatory uncertainty in ways that have greater economic impact than the potential efficiency...

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