Strategic Immigration Policies and Welfare in Heterogeneous Countries

In this paper we consider a model with two industrialised countries and immigrants that come from “the rest of the world”. The countries are distinguished on the basis of three parameters: population size, bias towards immigrants, and production complementarity between native population and immigrants. We consider a non-cooperative game where each country makes a strategic choice of its immigration quotas. We first show that our game admits a unique pure strategy Nash equilibrium and then study the welfare implications of countries’ choices. It turns out that a county with a higher degree of production complementarity and a higher level of tolerance towards immigrants would allow a larger immigration quota and achieve a higher welfare level. Our results call for coordinated and harmonised immigration policies that may improve the welfare of both countries.Immigration quotas, Heterogeneity, Production complementarity, Welfare, Policy Harmonisation

Languages Disenfranchisement in the European Union

We introduce the notion of language disenfranchisement which arises if the number of EU working languages is reduced. We use the data on language proficiency in EU and show that, in spite of the widespread knowledge of English, the retention of French and German as working languages in essential to avoid a too large degree of disenfranchisement of citizens. The picture, however, becomes somewhat different if we consider the population under age of 40. We also argue that even though French is the second leading language within the EU, the situation is likely to be reversed after the enlargement.Languages, Disenfranchisement, European Union

Social Conformity and Bounded Rationality in Arbitrary Games with Incomplete Information: Some First Results

In has been frequently observed, in both economics and psychology, that individuals tend to conform to the choices of other individuals with whom thy identify. Can such conformity be consistent with self-interested behaviour? To address this question we use the framework of games with incomplete information. For a given game we first put a lower bound on e so that there exists a Nash e-equilibrium in pure strategies consistent with conformity. We also introduce a new concept of conformity that allows players to conform and yet perform different actions. This is achieved by the endogenous assignment of roles to players and by allowing actions to be conditional on roles. We conclude by relating our research to some experimental literature.Social Conformity, Bounded Rationality, Arbitrary Games

R&D in Cleaner Technology and International Trade

We consider a dynamic three-stage game played by two regulator-firm hierarchies to capture the scale and technological effects of opening markets to international trade. Each firm produces one good sold on the market. Firms can invest in R&D in order to lower their fixed emission/output ratio and are regulated with costly public funds. We take the context of sufficiently high market sizes and investment cost parameters. Opening markets to international trade yields more investment in R&D, more production and a lower emission ratio. When the market size is low enough and the investment cost parameter is high enough, pollution in common market is higher than in autarky. International trade reduces the social welfare.R&D, Cleaner technology, Common market, Social welfare

Merger Performance under Uncertain Efficiency Gains

In view of the uncertainty over the ability of merging firms to achieve efficiency gains, we model the post-merger situation as a Cournot oligopoly wherein the outsiders face uncertainty about the merged entity’s final cost. At the Bayesian equilibrium, a bilateral merger is profitable provided that non-merged firms sufficiently believe that the merger will generate large enough efficiency gains, even if ex post none actually materialize. The effects of the merger on market performance are shown to follow similar threshold rules. The findings are broadly consistent with stylized facts, and provide a rationalization for an efficiency consideration in merger policy.Horizontal merger, Bayesian Cournot equilibrium, Efficiency gains, Market performance

Fondazione Eni Enrico Mattei

This paper develops and tests a dynamic optimization model of fishermen’s investment behavior in a limited-entry fishery. Because exit from limited-entry fisheries may be irreversible, the fisherman has an incentive to maintain the right to fish (whether by actually fishing or by purchasing an annual license) even when the fishery is not profitable, in the hope that conditions may improve. This incentive provides at least a partial explanation for excess capacity in fishing fleets, one of the most pressing fisheries management issues in limited-entry (and other) fisheries around the world. To assess the ability of simple financial models to explain observed investment behavior, we develop a two-factor (price and catch) real options model of the decision problem faced by an active fisherman who has the option to exit a fishery irrevocably. The immediate reason for adopting a two-factor model is the hope of achieving greater predictive power, since obviously both price and catch are important to fishermen’s decisions. Another advantage to this approach is that it provides a mechanism by which investment behavior can be linked in a real options framework to exogenous factors that affect price and catch separately. For example, international market forces are likely to affect price while having a negligible effect on a local fish stock, while local fish stock dynamics may affect catch directly but have little influence on prices (assuming the demand for a particular fish is relatively elastic). In a comparison of model predictions about fishermen’s exit decisions to 5059 observed decisions in the California salmon fishery in the 1990s, 65% of the model’s predictions are correct, suggesting this approach may be useful in the analysis of fishing fleet dynamics.Real option investment, Numerical methods, Fisheries

Mind in Africa, Body in Europe: The Struggle for Maintaining and Transforming Cultural Identity - A Note from the Experience of Eritrean Immigrants in Stockholm

This paper describes how individuals and groups who had crossed ‘physical, national boundaries’, and who live in a different social context make sense of their lives make sense of their lives by re-constructing their identities - of the sense of who they are, and who they want to be, which is an ongoing process. This is done by narrating the experiences of African men and women who live in Sweden and who struggle to both maintain their cultural identity and at the same time change aspects in their culture due to the context in which they find themselves. Maintaining cultural identity and transforming aspects of that identity therefore constitute the main thrust of the paper. Some of the ways through which immigrants claim to maintain their identity are practices and routines that they repeatedly and consistently perform as if these were uniform both in the host country and in the country of origin. But it is exactly within this premise that ‘maintaining’ an identity is defined in this paper. However, the routines, or practices may have different meanings or significance to different actors, different audience, and especially for the main beneficiaries, in a particular context. In this paper, I will narrate how ‘maintaining’ cultural identity is understood and practiced by Blin (Eritrean) immigrants in Stockholm, Sweden, when they solemnly perform a cultural rite called blessing (gewra) in weddings. The paper is based on a participant observation of weddings from 1992 to 2001 in Stockholm, Sweden, when the Blin speaking people perform the blessing rite, enjoy doing it, show to the audience how they maintain ‘who they are’, and perhaps symbolically confirm their unity with the Blin community. The main actors are the elderly and the bridegroom, both sine qua non if the rite is to get its legitimacy. Thus, the blessing rite is an example of being Eritrean in Sweden for its performers. The concept of identity and identity construction has become an important concept to deal with such demands for ‘maintaining’ and 'transforming' identities. Even though maintaining identity is encouraged in the Swedish social policy, transformation of that identity comes through demands that are widely accepted as modern values, such as egalitarianism, gender equality and individualism – leading to issues of diversity at different levels. If one strictly defines the meaning of the blessing rite, one can find that the meaning sometimes may not be consonant with the so-called modern values but that the people then provide symbolic significance to the rite.Blessing rite, Blin community, Culture maintenance, Identity construction, Immigrant

Transport Energy Security. The Unseen Risk?

The decline in significance given to energy security in recent years can be associated with increasing trust in the self-balancing security of a global-trading economy. After the events of the first years of the 21st century, that framework now looks more problematic, at least for oil supplies. The underlying level of risk that characterised the oil market of the late 20th century has changed, exacerbated by the increasing inelasticity of demand for oil-based products in the transport sector of the world’s economies, which in its turn reflects the strategic dominance of transport within economies. The prudent course for the international community is to reduce the underlying causes of possible geopolitical constraints by making them more manageable through normal channels. One such constraint that is within every nation’s capability (and self-interest) to reduce is the upward drift in the price inelasticity of domestic oil consumption. This could involve increasing the ability to divert oil used within the domestic economy to transport. Yet for many industrial economies, this option has largely been exhausted and a more radical approach of opening up new energy vectors to supply the transport sector may be needed. Taking preventative action after a security event is generally more straightforward than taking precautionary action to ensure that it never happens. The latter course may only be successful through a coincidence with other interests. The current environment agenda is such a coincident interest with transport fuel security.Transport energy security, Risk

Stable Matchings for a Generalised Marriage Problem

We show that a simple generalisation of the Deferred Acceptance Procedure with men proposing due to Gale and Shapley (1962) yields outcomes for a generalised marriage problem, which are necessarily stable. We also show that any outcome of this procedure is Weakly Pareto Optimal for Men, i.e. there is no other outcome which all men prefer to an outcome of this procedure. In a final concluding section of this paper, we consider the problem of choosing a set of multi-party contracts, where each coalition of agents has a non-empty finite set of feasible contracts to choose from. We call such problems, generalised contract choice problems. The model we propose is a generalisation of the model due to Shapley and Scarf (1974) called the housing market. We are able to show with the help of a three agent example, that there exists a generalised contract choice problem, which does not admit any stable outcome.Stable outcomes, Matchings, pay-offs, Generalised marriage problem, Contract choice problem

Valuation of Ecosystem Services Provided by Biodiversity Conservation: An Integrated Hydrological and Economic Model to Value the Enhanced Nitrogen Retention in Renaturated Streams

The importance of ecosystem functions for humankind is well known. But only few attempts have been undertaken to estimate the economic value of these ecosystem services. In particular, indirect methods are rarely used, even though they are most suitable for the task. This discrepancy is because quantitative knowledge of changes in ecosystem functions is scarce. This paper presents a user-friendly procedure to quantify the increased N-retention in a renaturated river using easily available data. In a case study of the renaturated River Jossa (Germany) the benefits of increased nitrogen retention caused by beaver reintroduction are determined by using the replacement cost method. The quantification of chemical processes is discussed in detail, as well as the problems of defining an adequate reference scenario for the substitute costs. Results show that economic benefits from the evaluated ecosystem service (€12,000/annum) equal 12% of the total costs of the corresponding conservation scheme.Biodiversity conservation programmes, Cost-benefit-analysis, Replacement cost method, Ecosystem services, Nutrient retention