Scott E. Atkinson

Terrorism in a Bargaining Framework

A LTHOUGH hostage seizures are a small percentage of terrorist incidents, they represent some of the most spectacular and influential events.2 The takeover of the American embassy in Tehran on November 14, 1979, the seizure of eleven dPEC oil ministers on December 21, 1975, and the capture and killing of nine Israeli athletes on September 5, 1972, are incidents not easily forgotten. From 1968 through 1982, of the approximately 8,000 reported terrorist events, 540 (7 percent) were transna-

Revenue Sharing as an Incentive in an Agency Problem: An example from the National Football League

We consider a professional sports leagues use of a well-defined incentive mechanism, revenue sharing, to encourage the desired behavior of teams in the league. The incentive mechanism works by internalizing externalities that arise across agents (the team owners). We find revenue sharing to be a potentially powerful incentive scheme because in this setting it encourages an optimal distribution of resources among agents. Its effectiveness is mitigated, however, by agents who enjoy private, nonmonetary benefits that are not shared. Using data from the National Football League, we examine how well the propositions explain observed behavior in this relationship.

The relative efficiency of public and private firms in a regulated environment: The case of U.S. electric utilities

Abstract The relative efficiency of privately-owned and publicly-owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation. The estimation results indicate that the two types of firms are equally cost inefficient in the United States. The average effect of inefficiency is to increase the cost of production by 2.4 percent. Holding output constant, inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel.

Market Failure in Incentive-Based Regulation: The Case of Emissions Trading*

Abstract Among the existing evaluations of the US EPAs emissions trading program, a consensus has emerged. While the program has resulted in significant cost savings, it has not even approximately achieved a cost-effective allocation of the control responsibility. The cost savings have been smaller and the trades fewer than might have been expected at the outset of the program. In this article we explore one hypothesis which purports to explain the divergence between the cost-minimizing and the observed pattern of trades for nonuniformly mixed pollutants. The “trading process hypothesis” attributes some significant proportion of this divergence to the nature of the process by which emission reduction credits are traded under the bubble policy. An examination of actual bubble trades reveals that the actual trading process is sequential and bilateral and, hence, differs considerably from the implicit process modeled in the existing empirical studies. Simulations of this more realistic trading process suggest that the resulting equilibria deviate considerably from cost-effective allocations of the control responsibility.

A cost-effectiveness analysis of alternative air quality control strategies

Abstract A number of linear programming models purport to minimize the costs of emission control to achieve ambient air quality standards. Many of the simulations incorporate the simplifying assumption that improvements in ambient air quality are proportional to reductions in regional emissions. This approach minimizes the cost of mass emission reduction, but not the cost to achieve a prescribed ambient air quality. The costs of this emissions least-cost strategy are compared to an ambient least-cost strategy which does achieve prescribed ambient air quality at minimum cost. The cost saving achieved by this strategy relative to the emissions least-cost strategy is as much as 50670. In addition, both are compared to a strategy typical of those currently used by the states, which is found to be as much as ten times as expensive as the ambient least-cost strategy.

Parametric Estimation of Technical and Allocative Inefficiency with Panel Data

The error-components approach to estimating allocative inefficiency imposes restrictive assumptions on the distributions of the errors and functional form. The parametric approach does not require special assumptions about the error distribution or technology but typically assumes technical efficiency or restrictive functional forms. The parametric approach also allows for systematic firm responses to shadow prices. The authors generalize the parametric approach to a panel data setting and show that input and firm-specific allocative inefficiency, as well as firm-specific technical inefficiency, can be identified and estimated using a flexible functional form. This is demonstrated empirically with an application to U.S. airlines. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

A Test of Relative and Absolute Price Efficiency in Regulated Utilities

A model for testing all types of relative price inefficiency expands the Averch-Johnson effect and makes it possible to test for absolute price efficiency, which exists if the value of the marginal product for each factor is equated to factor price and implies both cost minimization and production of the optimal quantity of output. Duality theory is used to derive the empirical model using 1973 data for electric utilities. The results indicate that relative and absolute price efficiency were generally not achieved by electric utilities in that year. 36 references, 1 table.

Interfuel Substitution in Steam Electric Power Generation

A translog normalized restricted profit function is used to study the characteristics of the production function for electric energy. The results indicate that fuel choice in existing steam electric plants responds to changes in fuel prices. The production function is also tested for separability of fuels from capital and labor, homotheticity, returns to scale, and embodied technical change.

The empirical properties of two classes of designs for transferable discharge permit markets

Abstract Previous work by Atkinson and Lewis ( J. Environ. Econ. Manag. 1 , 237–250 (1974)) and Anderson et al. (“An Analysis of Alternative Policies for Attaining and Maintaining a Short-Term NO 2 Standard,” MATHTECH, Inc., Princeton, N.J., 1979) has indicated the tremendous cost advantages to be achieved by moving from a policy based on emission standards to one based on marketable emission permits. As Tietenberg ( Land Econ. 56 , 391–416 (1980)) points out, however, neither of the major permit designs treated in the literature are optimal from all points of view. This has triggered a search for alternative permit designs, which, while they may not minimize compliance costs, have sufficient other virtues as to make them attractive on other grounds. The purpose of this paper is to examine, within the context of an empirical mathematical programming model, the air quality, emission, and cost consequences of two classes of the permit designs which can be implemented in the absence of information on control costs. This case study involves particulate control in St. Louis.

Comparing Mean Efficiency and Productivity Scores from Small Samples: A Bootstrap Methodology

This paper provides a bootstrap methodology for constructing confidence intervals for means of DEA and econometrically estimated efficiency scores, Malmquist productivity indices, and other similar measures in small samples. The procedure is nonparametric since no distributional assumptions are required. An empirical example is provided.