On the Sequential Choice of Tradable Permit Allocations

This paper investigates the sequential announcement of domestic emissions caps by regulators in a federal or international-based tradable pollution permit market for a transboundary pollutant. A leader-follower framework is used to analyse the consequences of regulators sequentially announcing domestic allocation caps. We find the sequential choice of domestic allocation caps is sub-optimal and depends on the follower's reaction to the leader's choice. Furthermore, the marginal damage and the degree to which allocations are substitutes or complements affects whether the leader changes from being a net permit buyer (seller) of permits to a seller (buyer).Initial allocation, international tradable permit market, leader-follower

Controlling externalities in the presence of rent seeking

Contests are a common method to describe the distribution of many different types of rents. Yet in many of these situations the utilisation of the prize plays an important role in determining agents payoffs and incentives. In this paper, we investigate the incentives to expend effort for a prize that produces consumption externalities and consider alternative regulatory policies. We find relatively more global consumption externalities will increase (decrease) rent seeking when con- sumption externalities are negative (positive). We show how introducing Pigouvian taxation (possibly with revenue transfer) and Coasean bargaining alters equilib- rium effort and payoffs. Pigouvian taxation tends to reduce both effort and payoffs whereas this is not always the case for Coasean bargaining. In the presence of suf- ficiently large consumption externalities, establishing Pigouvian taxation coupled with some element of lump-sum transfer may reduce costly rent seeking effort and improve the welfare of some agents compared to other approaches.externalities, contest, natural resources

Computation methods for the eigenvalue analysis of large structures by component synthesis

Imperial Users onl

Optimal monitoring of credit-based emissions trading under asymmetric information

Project-based emissions trading schemes, like the Clean Development Mechanism, are particularly prone to problems of asymmetric information between project parties and the regulator. In this paper, we extend the general framework on incomplete enforcement of policy instruments to reflect the particularities of credit-based mechanisms. The main focus of the analysis is to determine the regulator’s optimal spot-check frequency given plausible assumptions of incomplete enforcement under asymmetric information on reduction costs and heterogeneous verifiability of projects. We find that, depending on the actual abatement cost and penalty schemes, optimal monitoring for credit-based systems is often discontinuous and significantly differs from the one to be applied for cap-and-trade schemes or environmental taxes. We conclude that, in a real-world context, project admission should ultimately be based on the criterion of verifiability.Environmental regulation, Project-based emissions trading systems, Audits and compliance.

The effects of rent seeking over tradable pollution permits

The establishment of a tradable permit market requires the regulator to select a level of aggregate emissions and then distribute the associated permits (rent) to specific groups. In most circumstances, these decisions are often politically contentious and frequently influenced by rent seeking behaviour. In this paper, we use a contest model to analyse the effects of rent seeking effort when permits are freely distributed (grandfathered). Rent seeking behaviour can influence both the share of permits which an individual firm receives and also the total supply of permits. This latter impact depends on the responsiveness of the regulator to aggregate rent seeking effort. Using a three-stage game, we show that rent seeking can influence both the distribution of rents and the ex post value of these rents, whilst welfare usually decreases in the responsiveness of the regulator.tradable permit market, rent seeking, initial allocation

An assessment of blockchain consensus protocols for the Internet of Things

In a few short years the Internet of Things has become an intrinsic part of everyday life, with connected devices included in products created for homes, cars and even medical equipment. But its rapid growth has created several security problems, with respect to the transmission and storage of vast amounts of customers data, across an insecure heterogeneous collection of networks. The Internet of Things is therefore creating a unique set of risk and problems that will affect most households. From breaches in confidentiality, which could allow users to be snooped on, through to failures in integrity, which could lead to consumer data being compromised; devices are presenting many security challenges to which consumers are ill equipped to protect themselves from. Moreover, when this is coupled with the heterogeneous nature of the industry, and the interoperable and scalability problems it becomes apparent that the Internet of Things has created an increased attack surface from which security vulnerabilities may be easily exploited. However, it has been conjectured that blockchain may provide a solution to the Internet of Things security and scalability problems. Because of blockchain’s immutability, integrity and scalability, it is possible that its architecture could be used for the storage and transfer of Internet of Things data. Within this paper a cross section of blockchain consensus protocols have been assessed against a requirement framework, to establish each consensus protocols strengths and weaknesses with respect to their potential implementation in an Internet of Things blockchain environment

Lexical innovation: cromulently embiggening a language

In this article I look at the main ways of making new English words, and at the different types of neologisms this produces; consider various categories of people who coin them, including famous authors and television scriptwriters as well as anonymous nonnative speakers of English as a lingua franca, and highlight the similarities and differences in the ways they tend to coin words; consider to what extent the formation of new words by way of established processes or rules or schemas should be thought of as morphological productivity rather than individual creativity; and finally look at the processes by which neologisms can, potentially, be diffused

Deliberate development of asset frontiers in innovative manufacturing businesses

Manufacturing companies need to be innovative to ensure long term success. This requires organisations to reconcile the conflicting temporal demands of a dynamic business environment and the more gradual development of infrastructure, systems and people. This challenge is explored by examining the relationship between a firm’s innovation propensity and the profile of its portfolio of manufacturing resources. The Theory of Performance Frontiers is used to characterise the capability profile arising from a firm’s suite of assets and resources. The theory contends that the distance between a firm’s operating frontier (OF) and its asset frontier (AF) is related to the manufacturing unit’s ability to be agile and flexible. A new measure is developed and validated that represents the gap between the frontiers – the OF-AF Gap. The organisation’s innovation propensity is shown to have a negative impact on firm performance unless it is accompanied by a correspondingly large OF-AF gap. It is therefore important that the gap is actively managed by addressing its three constituent elements. Firstly, organisational learning should be planned along the technological trajectory of the business ahead of current needs. Secondly, product development resources should be balanced between exploitative and explorative projects, with exploration grounded in the fertile areas created by prior knowledge-acquisition activities. Thirdly, justification for investment in physical assets should not be limited to project-related benefits, but should incorporate the capability-building value new equipment brings to the organisation. The acquisition of equipment that has capability beyond immediate project-specific requirements then becomes more justifiable in a financial environment where return-on-investment is king. The research concludes by developing a simple tool that allows an organisation’s OF-AF gap to be enumerated on a normalised scale. This unlocks the potential for firms to benchmark themselves against industry norms and to numerically incorporate the capability-building value of asset investments in financial justifications

Life’s a breach! Ensuring ‘permanence’ in forest carbon sinks under incomplete contract enforcement

As carbon sinks, forests play a critical role in helping to mitigate the growing threat from anthropogenic climate change. Forest carbon offsets transacted between GHG emitters in industrialised countries and sellers in developing countries have emerged as a useful climate policy tool. A model is developed that investigates the role of incentives in forestry carbon sequestration contracts. It considers the optimal design of contracts to ensure landowner participation and hence, permanence in forest carbon sinks in a context of uncertain opportunity costs and incomplete contract enforcement. The optimal contract is driven by the quality of the institutional framework in which the contract is executed, in particular, as it relates to contract enforcement. Stronger institutional frameworks tend to distort the seller’s effort upwards away from the full enforcement outcome. This also leads to greater amounts of carbon sequestered and higher conditional payments made to the seller. Further, where institutions are strong, there is a case for indexing the payment to the carbon market price if permanence is to be ensured. That is, as the carbon price increases, the payment could be raised and vice versa.forest carbon offsets, permanence, contract design, incomplete enforcement