Switching to Perennial Energy Crops under Uncertainty and Costly Reversibility

We study a farmer’s decision to convert traditional crop land into growing dedicated energy crops, taking in account sunk conversion costs, uncertainties in traditional and energy crop returns, and learning. The optimal decision rules differ significantly from the expected net present value rule, which ignores learning, and from real option models that allow only one way conversions into energy crops. These models also predict drastically different patterns of land conversions into and out of energy crops over time. Using corn-soybean rotations and switchgrass as examples, we show that the model predictions are sensitive to assumptions about stochastic processes of the returns. Government policies might have unintended consequences: subsidizing conversion costs into switchgrass reduces proportions of land in switchgrass in the long run.real options, irreversibility, sunk costs, land conversion, biofuel, cellulosic biomass, dynamic modeling, stochastic process, biofuel policy, Land Economics/Use, Resource /Energy Economics and Policy, Risk and Uncertainty, Q42, Q24,

Alternative Land Use Policies: Real Options with Costly Reversibility

This paper adopts a real options framework to evaluate the cost-effectiveness of four types of subsidies that aim to encourage a socially desirable land use under return uncertainties and costly reversibility of land use change. We first present a land conversion model to show how the subsidies that are expected net present value (ENPV) equivalent can change a representative farmer’s optimal land conversion rules differently for converting land into an alternative use as well as converting out of it. This is because these subsidies affect the land conversion costs, land return level and uncertainty differently. Then in the context of encouraging energy crop production, we compare the probabilities of inducing the representative farmer to convert land from a current crop to an energy crop across four subsidies for the same, fixed 30-year expected government budget. Results of Monte Carlo simulations show that the insurance subsidy results in the highest probability of land being converted to the energy crop, followed by the constant subsidy. Although the cost-sharing subsidy and the variable subsidy encourage land conversion to the energy crop, they also reduce the incentive to retain land in it. Over time, these two subsidies have little effect on the probability of land converting into energy crops compared to the no-subsidy baseline. Combining the establishment cost-sharing subsidy with other annual subsidies has no added effect over single subsidies in inducing land conversion to the energy crop.Monte Carlo simulations, real options, agricultural subsidies, cost-effectiveness, two-way land conversion, Agricultural and Food Policy, Resource /Energy Economics and Policy, Q24, Q48,

Quantifying the Effect of Mobile Channel Visits on Firm Revenue

The explosive penetration of mobile devices is one of the most prominent trends in e-business. Although the importance of mobile channel has prompted growing literature, little is known about the revenue implications of customer visit toward mobile channel. This study examines (1) the differential effect of mobile visits in affecting firm revenue (i.e. mobile vs. desktop visits), and (2) which type of mobile visits are more effective (i.e., direct vs. search engine and referral traffic; visits for high vs. low involvement products). We collect an unique objective daily data from a leading online travel agency in China. With a vector autoregressive (VAR) method, we find that, compared with desktop channel, mobile channel visits have shorter carryover effect, but larger short-term effect on firm revenues. Further, mobile channel has larger short-term effect on firm revenues for search engine traffic and lower involvement products. Our findings provide important theoretical contributions and notable implications for mobile commerce strategy

Historical analysis of urban public transportation development in modern Tianjin (1902-1949)

Tianjin was the earliest city opening urban public transport lines in China. Urban public transportation had profound impacts on urban construction and on the formation of urban structure in Tianjin from 1902 to 1949. Based on the background of urban development, this paper firstly divides the evolution process of public transportation represented by tramways and buses into three periods from the perspectives of the distribution, quantity and operation status of public transportation lines. It then analyses the strong influence of public transportation on urban roads construction from the view of the increased municipal income, road widening, improvement of pavement quality, and bridges construction and maintenance. Finally, by using qualitative and quantitative analysis and superposing the related statistical data with the historical map, it analyses the relationship among public transportation line density, land value partition and basic urban structure, and certifies they were highly relative. In conclusion, the paper argues that Tianjin urban public transport network was based on trams and supplemented by buses, and not only planning ideas but also advanced municipal technologies from the West like public transportation system were also indispensable supports in the process of urban modernization in Chinese modern treaty ports