Corporate Insurance with Safety Loadings: A Note

In a paper in this journal, Schnabel and Roumi (1989) assert that if uninsured debt is risky, a levered firm takes a casualty insurance with a positive safety loading if, and only if, the amount of debt is sufficiently high. This note shows that, in marked contrast to this assertion, the correct conclusion from their model is that the firm generally takes insurance for low levels of risky debt, and it depends on the magnitude of the loading whether it also takes insurance for high levels of debt.

Environmental Policy, the Porter Hypothesis and the Composition of Capital: Effects of Learning and Technological Progress

In this paper the e.ect of environmental policy on the composition of capital is investigated.By allowing for non-linearities it generalizes Xepapadeas and De Zeeuw (Journal of Environmental Economics and Management, 1999) and determines scenarios in which their results do not carry over.In particular, we show that the way acquisition cost of investment decreases with the age of the capital stock is of crucial importance.Also it is obtained that environmental policy has opposite e.ects on the average age of the capital stock in the case of either deterioration or depreciation.We also focus more explicitly on learning and technological progress.Among others we obtain that in the presence of learning, implementing a stricter environmental policy with the aim to reach a certain target of emissions reduction has a stronger negative e.ect on industry pro.ts, which implies quite the opposite as to what is described by the Porter hypothesis.environmental policy;capital;learning;technological change

Dynamic Investment Behavior Taking into Account Ageing of the Capital Good

In standard capital accumulation models all capital goods are equally productive and produce goods of the same quality.However, due to ageing, in reality it holds most of the time that newer capital goods are more productive. Implications of this feature for the firm's investment policies are investigated in an optimal control problem with distributed parameters.It turns out that investing in capital goods of di¤erent age is done such that the net present value of marginal investment equals zero.Comparing the returns of investment in capital goods of different age, the higher productivity of younger capital goods has to be weighed against the lower costs of depreciation, discounting and acquisition of older capital goods.In the steady state it holds that, in the most reasonable scenario, the firm should invest at the highest rate in new capital goods, and dis-investment can only be optimal when costs of acquisition are large and machines are old.investment;capital goods;ageing

Explicit finite element implementation of a shape memory alloy constitutive model and associated analyses

Shape memory alloys (SMA) represent an important class of smart metallic materials employed in various innovative applications thanks to their unique thermomechanical behavior. Since the 1980s, several SMA constitutive models have been proposed and implemented into both commercial and academic finite element analysis software tools. Such models have demonstrated their reliability and robustness in the design and optimization of a wide variety of SMA-based components. However, most models are implemented using implicit integration schemes, thus limiting their applicability in highly nonlinear analyses. The objective of this work is to present a novel explicit integration scheme for the numerical implementation of the three-dimensional Souza-Auricchio model, a phenomenological model able to reproduce the primary SMA responses (i.e., pseudoelasticity and shape memory effect). The model constitutive equations are formulated by adopting the continuum thermodynamic theory with internal variables, following a plasticity-like approach. An elastic predictor-inelastic corrector scheme is here used to solve the time-discrete non-linear constitutive equations in the explicit framework. The proposed algorithm is investigated through several benchmark boundary-value problems of increasing complexity, considering both pseudoelastic and shape memory response in quasi-static conditions; a comparison with an implicit integration scheme is also performed. Such numerical tests demonstrate the ability of the algorithm to reproduce key material behaviors with effectiveness and robustness. Particularly, the analysis of SMA cables demonstrates the effectiveness of the explicit algorithm to solve complex problems involving widespread nonlinear contact, which prevent the convergence of the implicit scheme. Details such as mass-scaling options are also discussed