Economic models of land allocation may lead to expectations for farmer response that “surprisingly" do not materialize, if market prices fail to reflect the value of farmers' product. “Shadow prices" rather than market prices explain resource allocation better for farmers who attach significant non-market values to their own crops. I extend the theoretical model in Arslan and Taylor (2008) to e...

Article history: Received 22 December 2007 Received in revised form 15 November 2008 Accepted 15 November 2008 Available online 29 December 2008 We present a model of optimal flow pollution control considering explicitly the dynamics of the corresponding assimilative capacity. We focus first on the degradation of this assimilative capacity triggered by pollution excesses and determine the inter...

In this paper we seek to enhance decision making of investments under multiple uncertainties. We assess optimal commitment strategies for future reference of pulp and paper mills given stochastically correlated processes of one input and two output prices. The price processes are consistent with shadow price trajectories of a large scale global energy model. For the detailed engineering model, ...

This paper has a twofold objective. First, we develop a new method to assess the monetary value for individuals of external effects. The method makes use of an ordinal index of life satisfaction as scored by individual respondents who are subjected in varying intensity to the external effect. Our second objective is to assess, with this method, to what extent noise nuisance effects around Amste...

Exchange of risks is considered here as a transferable-utility cooperative game. When the concerned agents are risk averse, there is a core imputation given by means of shadow prices on state-dependent claims. Like in finance, a risk can hardly be evaluated merely by its inherent statistical properties (in isolation from other risks). Rather, evaluation depends on the pooled risk and the convol...

Most systems of health care financing in EU member states currently include elements of income redistribution. The paper analyzes the effects of shifting this kind of redistribution to the tax system and argues that this reform could create two types of efficiency gains. On the expenditure side, it would facilitate the adoption of more incentive-compatible insurance contracts, for example throu...

The UK Government recently reviewed its methodology to value greenhouse gas emissions in policy appraisal. The Review implemented a move away from the previous approach, which used estimates of marginal social damage costs (‘the social cost of carbon’) to value changes in emissions, to one in which valuation is based on the marginal abatement costs that will need to be incurred to meet specific...

This paper deals with two elements of Thomas Kuhn (1962) ideas regarding paradigm: Depletion and resiliency. The possibility of paradigm depletion taking resilience into account, given the hierarchy among scientists, is modeled as a Stackelberg differential game between editors [leaders] and authors [followers]. A number of results emerge from the model: i) Paradigm depletion can be optimal; ii...

Empirical tests of the relationship between international competitiveness and the severity of environmental regulations are hampered by the lack of pollution abatement cost data for nonU.S. countries. The theory of the firm suggests that environmental stringency can be measured by the difference between a polluting input’s shadow price and its market price. We make a first attempt at quantifyin...

We consider a non-consuming agent interested in the maximization of the long-run growth rate of a wealth process investing either in a money market and in one risky asset following a geometric Brownian motion or in futures following an arithmetic Brownian motion. The agent faces proportional transaction costs, and similarly as in [17] where the case of stock trading is considered, we show how t...