Jan Horst Keppler

Prices, technology development and the rebound effect

Energy efficiency is the critical parameter for policies that aim at reducing energy consumption while maintaining or even boosting economic growth. The two main options to influence energy efficiency are changes in relative prices, i.e., raising the price of energy through economic instruments, or to introduce new technologies which increase the productivity of each unit of energy. This paper is based on the notion that in an equilibrium economy the marginal economic productivity is identical for all factors, i.e., energy, labour, knowledge and capital. From this premise two main conclusions can be drawn. First, any change in price or technology will have an impact on the whole economy by creating feedbacks through the substitution of factors of production and goods, as well as increased wealth. Second, the two policy approaches, changing relative prices and technology development, are not opposite to each other. They are the two faces of the same reality and should be developed and promoted simultaneously and consistently.

The Econometrics of Energy Systems

Twenty years of liberalization have transformed the energy sector. The old energy world of long-term contracts and personal contacts has changed beyond recognition into a set of highly competitive markets with instantaneous decision-making much like the financial sector. Decentralized decision-making by multiple actors creates the necessary environment for applying econometric techniques. More importantly, the complexity and volatility of these new markets create strong demand for quantitative analysis and, in particular, econometric techniques. Written jointly by energy economists and econometricians, this book offers an introduction to the state of the art in econometric modelling applied to the most pertinent issues in todays energy markets.

Financing incentives for the protection of biodiversity

The conservation or sustainable use of biological diversity presents special challenges for policy-makers because of its complex nature and the difficulties associated with identifying the underlying causes that lead to biodiversity loss. As such, it is often necessary that a range of incentive measures are utilised to ensure both the private and the public benefits of its conservation or sustainable use are realised. Incentive measures available for this purpose include economic incentives (such as taxes, charges, tradable use rights, and subsidies), regulatory measures (such as development or access restrictions), and the provision of relevant information and sufficient institutional capacity. While many of the direct use values of biodiversity are privately appropriable given a clear assignment of property rights and the existence of markets, other financing methods are often necessary for the realisation of other values, such as indirect use values, non-use values and option values. This paper expands the analysis in the Handbook of Incentive Measures for Biodiversity: Design and Implementation (OECD, 1999) developed under the responsibility of the OECD Expert Group on Economic Aspects of Biodiversity to discuss some of the methods available for financing incentive measures for the conservation and sustainable use of biodiversity. Where appropriate, case studies of experiences in OECD countries are drawn upon to provide practical examples of the financing and implementation of incentive measures.

Causality and Cointegration between Energy Consumption and Economic Growth in Developing Countries

Estimating the relation between energy demand (or of any of its components such as electricity) and economic growth (GDP) is one of the classic applications of econometrics in the energy sector (see Bohi and Zimmerman, 1984; Dahl, 1994; or Table 4.2 for surveys). It is also an issue of high relevance for development and energy policies. Consider, for instance, that a government would like to introduce measures to control energy demand (say, an energy tax) to improve its environmental performance and to reduce its dependence on foreign imports. If energy consumption precedes or causes economic growth, such policies would hamper further economic development.

Monopolistic competition theory : origins, results, and implications

In the 1920s, when the world economy began to show signs of crisis, a number of leading economists questioned the ability of a free-market economy to ensure automatic stability. Economists such as Piero Sraffa, Joan Robinson and Edward Chamberlin turned instead to monopolistic competition theory in order to find explanations for the crisis as well as rationales for potential remedies such as cartelization and heightened state intervention. During the 1930s, monopolistic competition theory displaced orthodox theory and became the generally accepted foundation of microeconomic reasoning. Economist Jan Keppler traces the development of monopolistic competition theory within the context of the political, economic and historical development of its time. He argues that the emergence of the theory was linked to politically motivated criticisms of liberal capitalism. Whether in the form of corporatist critiques in Germany and Italy or social reform movements in Great Britain and New Deal America, it provided economic arguments for market intervention and income redistribution. Following a stormy debate brought on by the attacks from the Chicago School economists George Stigler and Milton Friedman, monopolistic competitions theory was abandoned in favour of perfect competition theory, which lacked the realism of monopolistic competition theory, yet was compatible with the new demands of mathematical tractability. Yet recently, Keppler points out, the theory has gained new credibility as an explanation for the workings of the economy.

Special section: Towards hybrid market regimes in the power sector

The context and the policy objective guiding the liberalisation of the electricity industry have changed significantly over recent decades. Policy priorities in favour of decarbonisation and maintaining security of supply have taken centre stage on the policy agenda in many countries. The emergence of new decentralised and variable technologies and the change toward fixed cost technologies have profound implications for market dynamics.

Climate Change, Security of Supply and Competitiveness: Does Europe Have the Means to Implement its Ambitious Energy Vision?

Energy questions have always played an important part in shaping the identity of modern Europe. Right from the start, the first common institution of the original six countries of the European Union was the European Coal and Steel Community (ECSC) in 1951. It was followed in 1957 by the European Economic Community (the EEC) and the European Atomic Energy Community (EAEC or EURATOM). The founders of modern Europe were aware of the strategic character of energy security. The European Union would be an energy union or it would be nothing. Recently, the French presidency of the European Union that began on 1 July 2008 chose energy as a priority topic beside climate, immigration, defence, the reform of the common agricultural policy (CAP), the Union for the Mediterranean and Social Europe. Its key task in the energy area is in passing the vastly ambitious second legislative package on energy and climate that proposes to shape European energy policy up to 2020 and beyond.

Piero Sraffa and Attilio da Empoli : Competing Solutions for the Crisis of the Theory of the Firm in the Early 20th Century

In the first third of the 20th century, economic theory develops the key features of the modern theory of the firm, which determine also the essential elements of the theories of value and competition. Italian economists fully participate in a discussion at times confusing that takes place on the backdrop of Marshall’s over-ambitious and ultimately unsustainable attempt to integrate increasing returns to scale into a framework of static competition. In this context, Piero Sraffa and Attilio da Empoli, offer clear-cut albeit opposed alternatives to emerge from the ambivalences of the Marshallian heritage. Of similar age and ambition, both were driven by a thirst for logical purity which only extreme solutions were able to satisfy. Apart from a brief foray into monopolistic competition theory, Piero Sraffa developed a long-run vision of perfect competition under constant returns to scale with complete malleability of factors, which allows the establishment of static equilibrium. Searching for conformity with immediate experience, Attilio da Empoli concentrates instead on the shortest of short-runs, in which the momentary fixity of factors creates transitory equilibria, which continuously point towards ‘ultra-marginal’ phenomena. This article aims to bring out the defining characteristics of their work in the context of the broader contribution of Italian theorists.