Hijackers and Hostages in Non-binding Linked-Issues Referenda: Analysis and an Application

Non-binding referenda ('petitions') are an instrument of direct democracy that allows citizens to signal preferences to politicians outside the electoral cycle. This paper analyses a particular form of petitions, so-called linked-issues petitions, which have been described as an 'abuse of direct democracy'. It discusses the use of linked petitions by petition initiators, its take-up by voters in terms of volume and voter motives, and applies the analytical insights to a controversial referendum held in Austria in 2002 that linked issues of transboundary nuclear risk and Eastern enlargement of the European Union.

On Biology and Technology: The Economics of Managing Biotechnologies

This paper considers those sectors of the economy that operate under the same regimes of rewarding private innovators as others, but differ in that they face recurring problems of resistance, as occur in the pharmaceutical and agricultural industries. This recurrence originates in the natural processes of selection and evolution among humanity’s biological competitors. The paper examines the capacity for decentralised patent-based incentive mechanisms to result in socially optimal outcomes in these sectors under scale- and speed-dependent evolution of pathogens. It demonstrates that there is a fundamental incompatibility between the dynamics of the patent system and the dynamics of the resistance problem under both types of evolution. Under scale-dependent evolution, the externalities within a patent-based system indicate that decentralised mechanisms will result in systematic underinvestment in R&D that decreases further with an increasing severity of the resistance problem. Under speed-dependent evolution, a patent-based system will fail to target socially optimal innovation size. The overall conclusion is that patent-based incentive mechanisms are incapable of sustaining society against a background of increasing resistance problems. The paper concludes with appropriate policy implications of these results.Biotechnology, R&D, Patents

Endogenous Information Structures in Conservation Contracting

Landowners are commonly not only better informed about their private cost of conservation than conservation agencies, but also frequently in a position to spend resources on improving their knowledge about contract-relevant parameters before signing a contract on offer. We extend and generalize the literature on conservation contracting by endogenizing the information structure in a setting where the conservation agency is both asymmetrically informed about the efficiency of the landowner and unable to observe whether the landowner collects information after being offered the contract and before signing it. In this setting, we study the optimal contract the conservation agency should offer to the landowner conditional on the cost of information collection. This contract needs to balance moral hazard and adverse selection problems since by encouraging a landowner to collect information, the conservation agency simultaneously increases the landowner's incentive to misreport his 'type'. We term this the 'information rent effect'. Due to its presence, the terms of conservation contracts have to be significantly altered relative to a contract offered based on exogenous information structure or a contract based purely on information collection.

On Backstops and Boomerangs: Environmental R&D under Technological Uncertainty

The literature on environmental R&D frequently studies innovation as a two-stage process, with a single R&D event leading from a conventional polluting technology to a perfectly clean backstop. We allow for uncertainty in innovation in that the new technology may turn out to generate a new pollution problem. R&D may therefore be optimally undertaken more than once. Using and externding recent results from multi-stage optimal control theory, we provide a full characterization of the optimal pollution and R&D policies. The optimal R&D program is strictly sequential and has an endogenous stopping point. Uncertainty drives total R&D effort and its timing.stock pollution, backstop technology, multi-stage optimal control, pollution thresholds, uncertainty

Biodiversity Conservation on Private Lands: Information Problems and Regulatory Choices

This survey paper examines various information insufficiencies in biodiversity conservation and their impact of regulatory choices. We surveyed the literature in the field and identified four major types of informational insufficiencies in making efficient biodiversity conservation decisions: 1) biological uncertainty 2) natural uncertainty 3) individual information, and 4) monitoring problem. The consequences of these four types of information insufficiencies on the choice of regulatory tools are explored. We discuss in this context three types of regulatory tools: land takings, environmental fees/charges, and contracts. The efficiency of each type of regulatory tools is shown dependent on the specific informational constraints that the regulatory faces.Biodiversity conservation, Information, Regulatory tools

The political economy of the environmental criminal justice system: a production function approach

The criminal justice system combines at least three distinct institutions, police, prosecutors, and courts, in order to enforce key regulations. Focusing on criminal environmental law contained in the German Penal Code, this paper empirically studies the determinants of enforcement decisions at the levels of the police, prosecutors, and judges using a production function approach. We focus particularly on the role of economic and political factors and their comparison across institutions. The results of the panel data analysis show evidence for the presence of economic factors determining behavior at all levels. Political factors impact especially on police and court behavio

Learning by Negligence - Torts, Experimentation, and the Value of Information

How should tort law deal with agents that employ novel and imperfectly understood technologies that later turn out to involve harm? There is no agreement among different legal systems whether strict liability or negligence rules should govern these so-called 'development risks'. The law-and- economics literature, however, has predominantly favored strict liability. The present paper shows that the choice depends on the characterization of how society learns about technology risks. When experiential public data is an irreducible input into learning, theory justifies the use of specific negligence rules in order to govern development risks. We reconcile the existence of the negligence doctrine for development risks with the theoretical literature using a simple two-period unilateral care model. There, an optimally designed negligence rule can provide a better balancing of benefits, harm to third parties, costs of care effort, and the value of information from learning than strict liability. If feasible, the optimal negligence rule partitions the population of potential users into two groups. Only the high benefit group engages in the risky activity, subject to due care levels designed to deter the low benefit group

Non-Strategic Punishment when Monitoring is Costly: Experimental Evidence on Differences between Second and Third Party Behavior

This paper studies monitoring and punishment behavior by second and third parties in a cooperation experiment with endogenous information structures: Players are uninformed whether the target player cooperated or defected at the cooperation stage, but can decide to resolve the information imperfection at non-negative cost at the punishment stage. We examine how monitoring and punishment respond to changes in monitoring costs, and exploit the evidence to gain new insights about commonalities and differences between second and third party behavior. We establish three effects of positive monitoring costs relative to the zero-cost baseline and find that each one affects third parties differently than second parties: A «direct punishment cost effect» (the supply of non-strategic punishment decreases), a «blind punishment effect» (players punish without resolving the information imperfection) and a «diffusion effect» (defectors make up a smaller share of the punished and receive weaker punishment). The first effect affects third parties less, the other two more. As a result, third party punishment leads to increasingly weaker incentives for cooperation relative to second party punishment as monitoring costs rise. In addition, the differences between second and third parties suggest the presence of a «pure role effect»: Taking into account elicited beliefs and risk preferences, third parties punish differently from second parties, not just more weakly

Willingness to Pay for Individual Greenhouse Gas Emissions Reductions: Evidence from a Large Field Experiment

In the climate policy debate, a rhetoric has evolved that attributes a high potential to "voluntary climate action". We turn to the population of Germany, the fourth largest cumulative GHG emitter, to obtain an Internet-)representative estimate of the individual willingness to abate one ton of CO2, the equivalent of 10 percent of annual per-capita CO2 emissions. The estimate derives from a large-scale (n=2,440) framed field experiment in which subjects choose between a guaranteed reduction of one ton of EU CO2 emissions and a randomly drawn cash award between €2 and €100. At €6.30, estimated mean WTP is considerably lower than prior hypothetical or non-representative estimates. Median WTP is non-positive. The almost bimodal nature of WTP in the population has important policy implications

The Climate Policy Hold-Up: Green Technologies,Intellectual Property Rights, and the Abatement Incentives of International Agreements

The success of global climate policies over the coming decades depends on the diffusion of 'green' technologies. This requires that international environmental agreements (IEAs) and trade-related intellectual property rights (TRIPs) interact productively.Using a simple and tractable model, we highlight the strategic reduction in abatement commitments on account of a hold-up effect. In anticipation of rent extraction by the innovator signatories might abate less than non-signatories turning the IEA 'brown'. Self-enforcing IEAs have fewer signatories and diffusion can reduce global abatement under TRIPs. Countries hosting patent holders extract rents from TRIPs, but may be better off without them