Axiomatic foundation for Lindahl pricing in the NIMBY context

The siting of public facilities, such as prisons, airports or incinerators for hazardous waste typically faces social rejection by local populations (the "NIMBY" syndrome, for Not In My BackYard). These public goods exhibit a private bad aspect which creates an asymmetry: all involved communities benet from their existence, but only one (the host community) bears the local negative externality. We view the siting problem as a cost sharing issue and provide an axiomatic foundation for Lindahl pricing in this context. The set of axioms we introduce are specically designed to overcome the asymmetry of the problem.Public goods; Externalities; NIMBY; Location; Cost sharing

Choosing and Sharing

Implementing a project, like a nationwide nuclear waste disposal, which benefits all involved agents but brings major costs only to the host is often problematic. In practice, revelation issues and redistributional concerns are significant obstacles to achieving stable agreements. We address these issues by proposing the first mechanism to implement the efficient site (the host with the lowest cost) and share the exact cost while retaining total control over realized transfers. Our mechanism is simple and in the vein of the well-known Divide and Choose procedure. The unique Nash equilibrium outcome of our mechanism coincides with truthtelling, is budget-balanced, individually rational and immune to coalitional deviations. More generally, our mechanism can also handle the symmetric case of positive local externalities (e.g., Olympic Games) and even more complex situations where the usefulness of the project---regardless of its location---is not unanimous.Public goods; local externalities; NIMBY; implementation; mechanism design; VCG mechanisms

Choosing and Sharing

Choosing a project for which benefits accrue to all involved agents but brings major costs or additional benefits to only one agent is often problematic. Siting a nationwide nuclear waste disposal or hosting a major sporting event are examples of such a problem: costs or benefits are tied to the identity of the host of the project. Our goals are twofold: to choose the efficient site (the host with the lowest cost or the highest localized surplus) and to share the cost, or surplus, in a predetermined way so as to achieve redistributive goals. We propose a simple mechanism to implement both objectives. The unique subgame-perfect Nash equilibrium of our mechanism coincides with truthtelling, is efficient, budget-balanced and immune to coalitional deviations.

Why Me ? Siting a Locally Unwanted Public Good

The siting of public facilities, such as prisons, airports or incinerators for hazardous wastes faces social rejection by local population. These public goods have a private bad aspect which creates a siting problem: all communities benefit from its existence, but only one (the host) bears its cost. We tackle this inevitable asymmetry from a responsibility and equity viewpoint: the host should not be perceived as a "victim". To realize this objective, we design a method to share the total cost (the disutility of the host plus the construction cost) in a way that bypasses the natural asymmetry of the problem. We also introduce a basic incentives property which has strangely been overlooked in the existing literature: voluntary participation.

Ownership Risk and the Use of Common-Pool Natural Resources

It has long been recognized that the quality of property rights greatly impacts the economic development of a country and the use of its natural resources. Since Long (1975), the conventional wisdom has been that ownership risk induces a firm to overuse the stock of a resource. However, the empirical evidence is mixed. In particular, Bohn and Deacon (2000) finds that weak property rights have an ambiguous effect on present extraction. We provide a theoretical model supporting these mixed observations in a common-pool resource environment. We show that if ownership risk includes a risk of expropriation in which the identities of the excluded firms are unknown ex ante, then the present extraction of all firms may decrease along with a higher risk of expropriation. The elasticity of demand for the resource is key in explaining the effect of ownership risk on present extraction.Common-pool resource, Expropriation, Extraction behavior, Ownership risk, Property rights, Tragedy of the commons.

Induced innovation in a decentralized model of climate change

We propose a model of climate change consistent with four principal stylized facts. First, the benefits and costs of climate change mitigation policies are not evenly distributed across generations. Second, capital accumulation is not determined jointly with emissions policy, but rather as a choice made by self-interested economic agents. Third, most research and development activity in the energy sector is undertaken by private firms. Fourth, significant imperfections exist in the market for technology. The model is calibrated to match global trends in GWP, energy production, and investment in research and development, and is used for the evaluation of policies including research and development subsidies and carbon taxes.Alternative energy sources; climate change; technological change; research and development; induced innovation.

Income shocks and social unrest: theory and evidence

Combining theoretical and empirical work, this paper explores the impact of economic shocks on the incidence of social unrest (i.e., mass demonstrations and violent riots) in autocracies. Our theory predicts negative economic shocks to boost unrest since-in bad times-fighting the regime to reduce the level of resource diversion becomes cheaper. Using a new dataset on political instability in Africa, our empirical analysis confirms this prediction. The instrumental variables estimates-which take into account the potential endogeneity of economic shocks-suggest a significant increase in the level of social unrest as a response to a decline in real per capita GDP.Conflict, social unrest, economic shocks

Splitting an Uncertain (Natural) Capital

Most natural commons are subject to discontinuities and threshold effects, so their gradual depletion may result in a sudden irreversible loss of the associated ecological services. Yet, it is often impossible to locate these thresholds with certainty. We analyze this context using a variant of the divide-the-dollar game, in which the amount to be split among players follows a discrete or multimodal probability distribution. “Cautions equilibria” – where agents collectively behave as if the worst-case scenario were certain – are found to coexist with “dangerous equilibria” – where overall demand for ecological services might lead to their collapse – and “dreadful equilibria” – where agents collectively request so much natural capital that a collapse of ecological services is certain, even if all agents are risk averse. Communication/cooperation among agents, however, which raises the possibility of coordinated group deviations, would eliminate dreadful equilibria and reduce the occurrence of dangerous equilibria, while cautions equilibria are robust to such deviations. A direct corollary is that dangerous equilibria are Pareto-dominated by any cautions equilibrium in which all agents claim less natural capital. These results shed light on the management of common-pool resources, international climate change negotiations, and the implementation of precautionary policies.Common-pool resources, ecological thresholds, divide-the-dollar game, coalition-proof Nash equilibrium

Splitting an Uncertain (Natural) Capital

Most natural commons are subject to discontinuities and threshold effects, so their gradual depletion may result in a sudden irreversible loss of the associated ecological services. Yet, it is often impossible to locate these thresholds with certainty. We analyze this context using a variant of the divide-the-dollar game, in which the amount to be split among players follows a discrete or multimodal probability distribution. ‘Cautious equilibria’ – where agents collectively behave as if the worst-case scenario were certain - are found to coexist with ‘dangerous equilibria’ - where overall demand for ecological services might lead to their collapse - and ‘dreadful equilibria’ - where agents collectively request so much natural capital that a collapse of ecological services is certain, even if all agents are risk averse. Communication/cooperation among agents, however, which raises the possibility of coordinated group deviations, would eliminate dreadful equilibria and reduce the occurrence of dangerous equilibria, while cautious equilibria are robust to such deviations. A direct corollary is that dangerous equilibria are Pareto-dominated by any cautious equilibrium in which all agents claim less natural capital. These results shed light on the management of common-pool resources, international climate change negotiations, and the implementation of precautionary policies.Common-pool resources, Ecological thresholds, Divide-the-dollar game, Coalition-proof Nash equilibrium

2-D Prony-Huang Transform: A New Tool for 2-D Spectral Analysis

This work proposes an extension of the 1-D Hilbert Huang transform for the analysis of images. The proposed method consists in (i) adaptively decomposing an image into oscillating parts called intrinsic mode functions (IMFs) using a mode decomposition procedure, and (ii) providing a local spectral analysis of the obtained IMFs in order to get the local amplitudes, frequencies, and orientations. For the decomposition step, we propose two robust 2-D mode decompositions based on non-smooth convex optimization: a "Genuine 2-D" approach, that constrains the local extrema of the IMFs, and a "Pseudo 2-D" approach, which constrains separately the extrema of lines, columns, and diagonals. The spectral analysis step is based on Prony annihilation property that is applied on small square patches of the IMFs. The resulting 2-D Prony-Huang transform is validated on simulated and real data.Comment: 24 pages, 7 figure