International environmental agreements with support

We augment the standard cartel formation game from non-cooperative coalition theory, often applied in the context of international environmental agreements, with the possibility that singletons support coalition formation without becoming coalition members themselves. We assume their support takes the form of a monetary transfer to the coalition, in order to induce larger coalitions, higher levels of public good provision and higher payoffs. We show that, under mild conditions on the costs and benefits of contributing to the public good (e.g. abatement of greenhouse gas emissions), there exist equilibria with support. Allowing for support increases payoffs to each of three types of agents: members, supporters and free-riders.     

Externalities,expectations, and pigouvian taxes

This article derives Pigouvian-type corrective measures for reciprocal externalities when non-Nash behavior characterizes the participants. These reciprocal externalities may involve various kinds of environmental pollutants, such as acid rain. A comparison between corrective measures for Nash and non-Nash behavior demonstrates that positive conjectures, regarding the other agent's externality-generating activity, have an expectation-internalizing influence that usually reduces the required corrective measures. Negative conjectures (e.g., free-riding expectations), however, have an expectation-externalizing effect that increases the required corrective measures. The article analyzes both two-person and n-person externalities.     

An Equilibrium Framework for Global Pollution Problems

The paper analyzes global pollution problems from the point of view of the benefit approach to the allocation of public costs. Special attention is paid to the possibility that the optimum abatement vector may have negative elements. An appropriate cost-share equilibrium is defined and characterized, and conditions under which the equilibrium is beneficial to all parties are derived. An implementation mechanism whose Nash equilibrium yields positive abatement levels under appropriate conditions is described.     

A model for within-group coalitionary aggression among males

Perhaps the most common form of cooperation among primates is the formation of coalitions. Competition among males within a group concerns a constant quantity of the limiting resource (fertilizations). Contest competition over fertilizations is known to produce payoffs that are distributed according to the priority-of-access model, and hence show an exponential decline in payoff with rank. We develop a model for rank-changing, within-group coalitions among primate males. For these coalitions to occur, they must be both profitable (i.e. improve fitness) for all coalition members and feasible (i.e. be able to beat the targets). We assume that the value of the coalition is the sum of the payoffs of the partners in their original ranks. We distinguish three basic coalition configurations, depending on the dominance ranks of the coalition partners relative to their target. We predict five basic coalition types. First, all-up, rank-changing coalitions targeting individuals ranking above all coalition partners; these are expected to involve coalition partners ranking just below their target, concern top rank, and be small, just two or three animals. Second, bridging, rank-changing coalitions, where higher-rankers support lower-rankers to rise to a rank below themselves; these are expected to be most common where a high-ranking male in a despotic system can support a low-ranking relative. Third, bridging non-rank-changing coalitions; these are expected to be common whenever high-ranking males have low-ranking close relatives. Fourth, non-rank-changing coalitions by high-rankers against lower-ranking targets; these are expected to serve to counteract or prevent the first type. Fifth, non-rank-changing, leveling coalitions, in which all partners rank below their target and which flatten the payoff distribution; these are expected to be large and mainly involve lower-ranking males. Bridging, rank-changing coalitions are expected in situations where contest is strong, all-up rank-changing coalitions where contest is intermediate, and leveling coalitions where contest is weak. We review the empirical patterns found among primates. The strong predictions of the model are confirmed by observational data on male-male coalitions in primates.

Incentives to diffuse advanced abatement technology under environmental liability law

Polluting firms with advanced abatement technology at their disposal have incentives or disincentives to share this technology with other polluting firms. The ‘direction’ and extent of those incentives depends on the liability rule applicable and the way technical change impacts marginal abatement costs. We establish that incentives for diffusion are socially optimal under strict liability and socially suboptimal under negligence if technical change lowers marginal abatement costs for all levels of abatement. Negligence may, however, induce better diffusion incentives than strict liability if technical change decreases (increases) marginal abatement costs for low (high) levels of abatement.     

Nash Implementation of a Proportional Solution to International Pollution Control Problems

For a very general class of pollution control models involving strictly quasi-concave utility functions over consumption and environmental quality and strictly convex emission abatement cost functions, a proportional cost sharing mechanism is presented inspired by the ratio equilibrium introduced by7. It is shown that the proportional solution yields a cost efficient allocation of abatement efforts and that the resulting utility imputation always lies in the stand alone core of the cost sharing game. In order to decentralize the proportional cost sharing equilibrium, a financial compensation mechanism implementing the proportional solution in complete information Nash equilibrium is presented.     

Environmental policy with upstream pollution abatement technology firms

This paper examines how the existence of an upstream abatement technology sector affects optimal environmental policy. We explore whether the policy should be especially stringent in order to spur a successful export industry based on abatement technology. Furthermore, we investigate if a stringent policy can be used to increase competition in the upstream sector. Our point of departure is a three-stage game between a government in a country with a polluting downstream industry, and a limited number of upstream firms supplying abatement technologies. The government moves first, and may use its environmental policy strategically to influence the behavior of the upstream technology firms. We find that an especially stringent environmental policy towards the polluting downstream sector may be well founded, as it increases competition between the technology suppliers, leading to lower abatement costs. However, to our surprise, an especially stringent environmental policy is not a particularly good industrial policy with respect to developing successful new export sectors based on abatement technology.     

A model for leveling coalitions among primate males: toward a theory of egalitarianism

We present a simple model of within-group leveling coalitions among male primates. The model assumes that the value of the coalition is the sum of the payoffs of its members, that the individuals payoff is monotonically decreasing with its rank and that coalitions do not cause rank changes. It predicts that mainly mid- to low rankers engage in leveling coalitions, and that most coalition partners are of adjacent ranks. These predictions agree reasonably well with observations in nature. The model also makes the novel predictions that leveling coalitions are found where male mating competition has only a moderate contest component, and that male dominance ranks will become poorly differentiated where leveling coalitions are frequent. Both these predictions are consistent with observations on groups of macaques and baboons. The model also may account for leveling coalitions among egalitarian human foragers, without making additional assumptions about special human capabilities.

The social costs of second-best policies: Evidence from agricultural GHG mitigation

This paper investigates the social costs of second-best agricultural greenhouse gas (GHG) mitigation policies. Adjustments along the land use and input intensity margins are represented within a regionalized optimization model of California crop production calibrated to economic and agronomic information. Second-best policies relying on spatially aggregated GHG emission factors lead to small abatement efficiency losses, while policies targeting a single GHG lead to moderate losses. In contrast, policies targeting a single input entail large abatement efficiency losses, which nonetheless can be reduced by combining instruments.     

Reproductive success increases with degree of kinship in cooperative coalitions of female red howler monkeys (Alouatta seniculus)

Evaluation of evolutionary mechanisms proposed to promote cooperative behavior depends on the relative influence of the behavior on the reproductive success of individuals, the reproductive success of the group in which they interact behaviorally, and the degree of gene correlation among cooperators. The genetic relationship within cooperative coalitions of female red howler monkeys was examined for three populations with different densities and growth rates. Patterns of gene correlation change within coalitions is documented using data from the mitochondrial and nuclear genomes, and long-term census monitoring. Differences in fecundity and infant survivorship within and between groups of unrelated (rˉ=0) and related (rˉ≥ 0.25) females are compared. Females that emigrate from their natal groups form coalitions with other migrant females. These coalitions attempt to establish a territory and, once successful in producing offspring, exclude other females from feeding resources. Females in these coalitions had different mtDNA haplotypes and a genetically estimated mean r of 0, supporting demographic data on emigration patterns indicating that these females rarely have the opportunity to form coalitions with kin. Patterns of recruitment and rate of matriline development within social groups supported behavioral data indicating that females actively attempt to promote their own matriline as breeders over that of other females, and that some matrilines are more successful at this than others. Mean r among females was significantly higher in coalitions established as social groups for several generations (rˉ=0.44). In these groups, females all shared the same mtDNA haplotype, and mtDNA haplotype divergence was significantly higher between than within groups. Females in coalitions with kin had significantly higher reproductive success than females in unrelated coalitions in all populations. This difference was not a function of coalition size, number of males, socionomic sex ratio, or primiparity, although anecdotal evidence suggests that allomothering may compensate for inept new mothers in related coalitions more often than in unrelated ones. Differences in territory quality could not be ruled out as a potential causal factor in the saturated populations, but were unlikely in the low-density, growing population. There were substantial differences among long-established coalitions in overall reproductive output in all three populations, and this was significantly correlated with the number of breeding females. Increase in coalition size was a function of both group age and the behavioral tolerance among females. Regardless of the underlying reasons for the patterns observed, reproductive success clearly increases with degree of gene correlation among females within cooperative coalitions, and coalitions that recruit more daughters produce more offspring. The nature of the cooperative relationship among group females directly influences both of these outcomes. This is associated with substantial genetic differentiation among social groups within populations, creating conditions in which genetic tendencies towards cooperative behavior can become tightly associated with group reproductive success. Received: 15 September 1999 / Revised: 27 April 2000 / Accepted: 27 May 2000     

Are there reasons against open-ended research into solar radiation management? A model of intergenerational decision-making under uncertainty

Solar radiation management (SRM) has been proposed as a means of last resort against dangerous climate change. We propose a stylized model of intergenerational decision making on SRM research, greenhouse-gas abatement and SRM deployment, under uncertainties about (a) the extent of future climate damage and (b) effectiveness and potential harmful side-effects of SRM. Open-ended research may reveal either that SRM effectively reduces climate damage, or that it would cause more harm than benefits. We find that SRM research increases the likelihood of deployment (“slippery slope”), and derive conditions that it decreases abatement effort in expectation (“moral hazard”). Neither of these provides a rationale against SRM research, though. The rational decision is to perform SRM research, unless (i) discounting is hyperbolic and (ii) the absolute prudence of expected climate damage is smaller than absolute risk aversion. These results generalize to the case where SRM research also provides information on climate sensitivity.     

Do environmental regulations disproportionately affect small businesses? Evidence from the Pollution Abatement Costs and Expenditures survey

This paper examines whether the impact of environmental regulations differs by the size of the business. We consider the net effect of statutory, enforcement, and compliance asymmetries by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey and from its Annual Survey of Manufactures and Census of Manufactures. We model establishments' pollution abatement operating costs (PAOC) per unit of economic activity as a function of establishment size, industry, state, and year. Our results show that PAOC intensity increases with establishment and firm size.     

Do environmental regulations disproportionately affect small businesses? Evidence from the Pollution Abatement Costs and Expenditures survey

This paper examines whether the impact of environmental regulations differs by the size of the business. We consider the net effect of statutory, enforcement, and compliance asymmetries by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey and from its Annual Survey of Manufactures and Census of Manufactures. We model establishments' pollution abatement operating costs (PAOC) per unit of economic activity as a function of establishment size, industry, state, and year. Our results show that PAOC intensity increases with establishment and firm size.     

Market design in cap and trade programs: Permit validity and compliance timing

Cap and trade programs have considerable heterogeneity in permit validity and compliance timing. For example, permits have different validities across time (e.g., banking, borrowing, and seasons) and space (e.g., zonal restrictions), and compliance timing can be annual, in overlapping cycles, or in multi-year periods. We discuss nine prominent cap and trade programs along these dimensions and construct a general model of permit validity and compliance timing. We derive sufficient conditions under which abatement is invariant to compliance timing, i.e., compliance timing cannot smooth abatement cost shocks. Under these conditions, (i) expected compliance costs are invariant, (ii) the variance of compliance costs increases with the delayed compliance, (iii) equilibrium prices may not be unique, and (iv) the delayed compliance equilibrium may rely on “degenerate” prices not determined by marginal abatement costs. We demonstrate the model's broad applicability by illustrating different types of temporal permit validity.     

The effects on electricity prices in england and wales of notional sulphur dioxide emission standards for power stations

Reducing emissions of sulphur dioxide from the electricity industry in England and Wales would require application of abatement technology and raise electricity prices through increases in marginal supply costs. Capital and operating costs of alternative abatement techniques and their application under possible long-term investment and retirement plans for the industry are discussed. An approximate halving of projected emissions is found to have an effect of the order of 5% on prices under the existing tariff structure. Reductions of up to one-fifth are found to have an effect of under 1% on electricity prices.     

Prices vs quantities with multiple pollutants

We examine the choice of policy instruments (price, quantity or a mix of the two) when two pollutants are regulated and firms' abatement costs are private information. Whether abatement efforts are complements or substitutes is key determining the choice of policies. When pollutants are complements, a mixed policy instrument with a tax on one pollutant and a quota on another is sometimes preferable even if the pollutants are identical in terms of benefits and costs of abatement. Yet, if they are substitutes, the mixed policy is dominated by taxes or quotas.     

Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach

This study employs a parametric input distance function that incorporates both desirable and undesirable outputs to provide a more complete representation of the production technology from which environmentally sensitive productivity and efficiency measures can be generated. This framework also generates pollution abatement cost estimates that are useful for policy making. An input-based Malmquist index of productivity growth that appropriately credits the producer not only for increases in marketable or desirable outputs but also for the production of improved environmental quality through pollution abatement activities is derived from the input distance function. The method was applied to time series data from the Canadian pulp and paper industry. Our shadow price estimates indicate that the marginal cost to producers of pollution control has been rising. The main conclusion of this study is that productivity improvement, from the social viewpoint, has been stronger than conventional measures would suggest.     

Coalitionary mate guarding by male chimpanzees at Ngogo, Kibale National Park, Uganda

Cooperative mate guarding by males is unusual in mammals and birds, largely because fertilizations are non-shareable. Chimpanzees live in fission-fusion communities that have cores of philopatric males who cooperate in inter-group aggression and in defending access to the females in their community. Male contest mating competition is restrained within communities, but single high-ranking males sometimes try to mate guard estrous females. Data from an unusually large chimpanzee commmunity at Ngogo, Kibale National Park, Uganda, that contains more males than any previously studied community show new variation in chimpanzee mate-guarding behavior. Contrary to expectation given the large number of males, mate guarding was as common as, or more common than, at other sites, and males other than the alpha male guarded more often. More strikingly, pairs or trios of top-ranking males sometimes engaged in cooperative aggression to prevent estrous females from mating with other males, but tolerated each other's mating activities. Both single males and coalitions mostly guarded periovulatory females. Mate-guarding coalitions were previously unknown in chimpanzees. Coalitions occurred in large mating parties, seemingly because these often contained too many males for single males to maintain exclusive access to estrous females. Coalition members gained higher shares of copulations than they could have expected from solo mate guarding, and suffered lower per capita costs of guarding (as inferred from aggression rates). Two males who most often participated in coalitions formed two-male coalitions at about the point where the number of males present made it unlikely that either could get 50% or more of total copulations on his own, and formed trios when this value dropped below 33%. Kin selection could be a factor in cooperation among male chimpanzees, but coalition members were not necessarily close relatives and the apparent structure of payoffs fit that of mutualism. Furthermore, reliance of male chimpanzees on support from allies to maintain high rank could have led to trading of mating exclusivity for support against mating competitors. Received: 28 May 1997 / Accepted after revision: 16 May 1998     

Efficient air pollution abatement for regions in China

This paper computes the efficient air pollution abatement ratios of 30 regions in China during the period 1996–2002. Three air emissions (SO₂, soot and dust) are considered. Data envelopment analysis (DEA) with a single output (real GDP) and five inputs (labour, real capital stock, SO₂, dust and soot emissions) is used to compute the target emissions of each region for each year. The efficient abatement ratios of each region in each year are then obtained by dividing the target emission by the actual emission of an air pollutant. Our major findings are: 1. The eastern area is the most efficient region with respect to SO₂, soot and dust emissions in every year during the research period. 2. The eastern, central and western areas have the lowest, medium and highest 1996–2002 average target abatement ratios of SO₂ (22.09%, 42.23% and 57.58%), soot (26.19%, 56.34% and 66.37%) and dust (15.20%, 29.09% and 40.59%), respectively. 3. These results are consistent with the Environmental Kuznets Curve (EKC) theory, whereby a more developed area will use environmental goods more efficiently than a less developed area. 4. Compared to dust emission, the average target abatement ratios for SO₂ and soot emissions (as direct outcomes of burning coal) are relatively much higher for all three areas.     

Robust technology policy against emission leakage: The case of upstream subsidies

Asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage, which hampers countries’ welfare. In order to limit leakage, governments consider supporting domestic trade-exposed firms by subsidizing their investments in abatement technology. The suppliers of such technologies tend to be less than perfectly competitive, particularly when both emissions regulations and advanced technologies are new. In this context of twin market failures, we consider the relative effects and desirability of subsidies for abatement technology. We find a more robust recommendation for upstream subsidies than for downstream subsidies. Downstream subsidies tend to increase global abatement technology prices, reduce pollution abatement abroad and increase emission leakage. On the contrary, upstream subsidies reduce abatement technology prices, and hence also emissions leakage.