Directed Technological Change and Resource Use
Recently, the classical analysis of the long term management of natural resource has been renewed by its reconsideration in the light of the so-called “new” theories of endogenous growth. In this literature, the technical progress is modelled as a “general” process, that is non dedicated to the improvement of the productivities of specific production factors. The objective of the research project is to examine the consequences of dedicated R&D policies over the use patterns of natural resources, either renewable or non renewable, which raise new issues in the sustainability debate. By dedicated technical progress we mean R&D efforts to improve the productivities of specific factors, especially natural resources, or alternatively to reduce pollution impacts resulting from the use of specific resources (fossil fuels for example). Introducing dedicated technical progress allows for an analysis of the R&D policy issues related to the patterns of use of the natural resources or of specific cumulative pollution issues in a dynamical and general equilibrium context. It allows also for a reconsideration of the classical models of intertemporal resource substitution patterns (in the Herfindhal spirit) by endogenously determining the dynamics of the production costs and the differential rents of different kinds of resources, either exhaustible or renewable. The research project is hence a combination of a theoretical reflection about R&D policies and environmental issues with a sustainability analysis of the growth of economies depending upon the use of frequently exhaustible and polluting natural resources.
We construct and estimate a structural principal/agent model of contract renegotiation in the French urban transport sector in a context where operators are privately informed on their innate costs (adverse selection) and can exert cost-reducing managerial effort (moral hazard). This model captures two important features of the industry. First, only two types of contracts are used in practice by local public authorities to regulate the service: cost-plus and fixed-price contracts with positive subsidies. Second, these subsidies increase over time. Such increasing subsidies are consistent with the theoretical hypothesis that principals cannot commit not to renegotiate and contracts are renegotiation-proof. We compare this situation to the hypothetical case with full commitment. The distribution of innate costs of operators is shifted upwards under this hypothetical scenario. The welfare gains of commitment are significant and accrue mostly to operators. Estimates of the weights that local governments give to the operator’s profit in their objective functions and of the social value of the cost-reducing managerial effort are obtained as by-products.
We implement the graphical representation of simple portfolio choice problems as developed in Choi et al. (2007) in the computer-based CentERpanel, a representative sample of the Dutch population, generating a rich dataset to study behavior under uncertainty at the level of the individual subject. We observe that the consistency in the individual decisions is overall high while there is a significant amount of heterogeneity with respect to the measures of the extent of GARP violations such as Afriat’s CCEI. To understand such heterogeneity, we correlate the experimental measures of GARP violations with observed socio-demographic information. The estimation results show clear evidence that many socio-demographic variables (such as gender, age, education, and income) relate significantly to the variations in the consistency measures.
The goal of axiomatic approaches to game theory is to understand the foundations of different solution concepts or modes of behavior by characterizing them in terms of a number of --- hopefully intuitively appealing --- properties or axioms. Recent papers on this topic, in which I cooperated with colleagues from Tilburg University, provide axiomatizations of cautious behavior, minimal curb sets, and compensation schemes for museum passes.
Global vs. Local Markets