Alistair Ulph

A Model of the Crude Oil Market in Which Market Conduct Varies

This paper describes a model which first identifies (in an estimatable manner) parameters which describe the conduct each decision maker in an oligopoly expects from its rivals, and then allows them to vary in a systematic fashion across rivals and over time. The model is applied to ten producing countries in the crude oil market (1966I to 1981III ). A fully dynamic demand system is estimated, together with equations describing price choice and variations in conduct, and the null hypothesis of constant conduct is rejected against the more general alternative proposed here. Copyright 1987 by Royal Economic Society.

Can adaptation and mitigation be complements

It is often claimed that mitigation of greenhouse gases and adaptation to climate change are complementary strategies. If this means that it will usually be optimal to use both mitigation and adaptation to deal with climate change; and that a perceived increase in the damages caused by climate change should require an increase in both mitigation and adaptation, then simple economic analysis would support such an interpretation. However, complementarity has a more technical meaning in economics, which implies if the costs of mitigation fell, then the optimal response would be to increase the level of both mitigation and adaptation. We develop a range of economic models to explore the relationship between mitigation and adaptation; and show that in general adaptation and mitigation will be substitutes. We also find that it is possible for complementarity to occur in the special case where adaptation costs depend on the amount of mitigation.

Oligopoly, Competition and Welfare - Some Recent Developments

IN THIS essay, we wish to highlight three particular areas in the enormous literature on oligopoly where, we believe, recent work has proved particularly productive and illuminating. One recent development of interest has been the application of game theory to the well known interdependence of expectations problem. While interesting in its own right, it has also had a major impact in clarifying thinking about rational strategic choice, and the role of information in affecting outcomes. Our view is that the information structure of the oligopoly problem plays a crucial role in conditioning the nature of its solution, and this is the first topic that we propose to discuss. These developments in theory have occurred in tandem with and, indeed, have stimulated empirical work. One important empirical problem is that of identifying the exercise of monopoly power in practice, and recent work has focussed on the problem of inferring conduct from observed price-output configurations. This obviously has a high order of policy importance, and it constitutes the second topic in our discussion...

Bargaining Structures and Delay in Innovation

It is sometimes argued that fears about the employment consequences of introducing new technology may lead unions to wish to delay innovations, and this may reduce incentives for a firm to carry out R&D. The authors explore these issues in a model of two countries that compete over both market share and R&D, and they restrict attention to cases where unions would wish to delay innovation. They show that allowing unions to bargain over the timing of innovation need not reduce the possibility of a firm successfully competing for R&D. However, simulations suggest that, for a particular model, allowing unions to delay innovation does not help a firm compete over R&D. Copyright 1988 by The editors of the Scandinavian Journal of Economics.

Climate change and common sense : essays in honour of Tom Schelling

There is widespread agreement that climate change is a serious problem. If we fail to regulate greenhouse gases that contribute to global warming, or use alternative strategies for addressing the problem, the damages could be significant, and perhaps catastrophic. After several international meetings in which nation-states have tried unsuccessfully to address the climate change problem, there is a sense of frustration and urgency: frustration at the slow pace at which countries are moving toward an international agreement to reduce greenhouse gas emissions; urgency because of the growing evidence that climate change is a serious problem that should be addressed globally and quickly. This book takes a close look at the fundamental political and economic processes driving climate change policy. It identifies institutional arrangements and policies that are needed to design more effective climate change policy. It also examines ethical and distributional arguments that are critical in understanding and framing the climate debate. The book is built around a conference honouring Tom Schelling that took place at the Sustainable Consumption Institute at The University of Manchester. Each chapter represents a significant contribution to the literature on the political economy of climate change. Contributors to this volume - David Anthoff, University of California, Berkeley Geir B. Asheim, University of Oslo Scott Barrett, Columbia University Linda R. Cohen, University of California, Irvine Partha Dasgupta, University of Cambridge David J. Frame, University of Oxford Amihai Glazer, University of California, Irvine Robert W. Hahn, University of Manchester and University of Oxford Geoffrey Heal, Columbia University Cameron J. Hepburn, University of Oxford Michael Hoel, University of Oslo Charles D. Kolstad, University of California, Santa Barbara Howard Kunreuther, University of Pennsylvania Robert Mendelsohn, Yale University Ian Parry, Resources for the Future Thomas Schelling, University of Maryland Richard S.J. Tol, Economic and Social Research Institute Alistair Ulph, University of Manchester Roberton C. Williams III, University of Maryland Anastasios Xepapadeas, Athens University of Economics and Business

Advertising Subsidy and International Oligopolistic Competition

This paper examines the strategic role of advertising subsidies in a third-country trade model in which two firms located in different countries export their products to a third country (Brander and Spencer (1985)). We first develop a basic model of advertising in oligopolistic industries in which firms decide how much to invest in either predatory or cooperative advertising and then engage in product market competition either as Cournot competitors or Bertrand competitors. We show that firms invest in only one form of advertising; which form they invest in depends on the relative effectiveness of the two types of advertising, the degree of product differentiation and the form of product market competition. We then study strategic industrial policy and show that an advertising subsidy is the optimal strategic policy irrespective of the form of product market competition and the form of advertising in which firms invest.

Thinking Through the Climate Change Challenge

In October 2010, a group of leading thinkers on environmental policy met at the Sustainable Consumption Institute at the University of Manchester for a conference in honour of Nobel Laureate Tom Schelling. This column presents a 10-point guideline for climate change policy co-authored by 26 attendees that focuses on designing policies that are credible, easily monitored, and easily enforced.

The Impact of Environmental Recall and Carbon Taxation on the Carbon Footprint of Supermarket Shopping

This study uses an incentive-compatible experimental online supermarket to assess whether prior environmentally-friendly behaviour outside the store, and whether carbon taxes motivate sustainable consumption. Previous research suggests that past decisions may influence current decisions, for example because consumers compensate morally desirable and undesirable acts (e.g. high-carbon food baskets may follow past environmentally-friendly behaviours) over time; while carbon taxes have been promoted as effective tools to reduce the carbon footprint of food baskets, despite limited empirical evidence. After controlling for past consumption, results show that being required to recall past environmentally-friendly behaviour before shopping led consumers to purchase more sustainable food baskets. Carbon taxation also strongly reduces the carbon footprint of food baskets, showing no interaction with the recall of past behaviours.

Stackelberg leadership under symmetric and asymmetric information

Abstract This Paper considers the types of pre-committments that a first moving incumbent may make when information is symmetric, and when it is asymmetric. The model contains as a special case the familiar model of Stackelberg leadership, but also shows the circumstances under which more complex strategies are optimal for the incumbent.