Energy sources in the modern world are mostly based on fossil fuels like oil, natural gas, and coal. They all share two main characteristics of the utmost importance for their economic analysis. First, they are depletable resources. The amount of reserves for these resources may be small or large, but definitely not large enough to […]
“We asked for workers. We got people instead.” Max Frisch In a past article, I reviewed the recent literature on the effects of immigration on the labor market. To sum up, it finds no significant negative effects on employment or wages of native workers while it boosts the local economy. From here, one may be […]
I consider an offer for a gym membership and decide to accept it after being overconfident that I will use it regularly, but in the end I will not. In other words, I overvalue the offered contract. The opposite is also possible, for instance, I may undervalue car insurance because I underestimate the likelihood of […]
Standard supply and demand analysis shows that competitive markets will deliver a given commodity up to the point where costs (as perceived by producers) equal benefits (as perceiver by consumers). When both producers and consumers internalize all costs and benefits, the result is efficient in the sense that the market does not dilapidate resources. An […]
“‘Is there no way,’ said I, ‘of escaping Charybdis, and at the same time keeping Scylla off when she is trying to harm my men?’” -Homer, The Odyssey Conventional cost-benefit studies are based on marginal analysis. A decision to undertake a project should be made if, with respect to the actual situation, it provides more […]
A Spanish folk saying goes “ mujer que sabe latín no tiene marido ni tiene buen fin ,” which may be translated as “a women who knows Latin can expect neither a husband nor a good ending”. The saying implies how difficult is has been traditionally for an educated woman to be accepted as a […]
The European Association of Environmental and Resource Economics has awarded its 2015 Erik Kempe Award to Ralf Martin, Mirabelle Muûls, Laure B. de Preux, and Ulrich J. Wagner for their research “Industry Compensation Under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme,” published recently in the American Economic Review. I summarize their […]
In Economics, there is a number of what may be called equivalence theorems. They indicate how two seemingly different economic mechanisms are equivalent in most or all of their consequences. Typically the equivalence may be established under certain conditions that are considered general enough for the theorem to be relevant. Perhaps the oldest and one […]
Here is an example of the “discursive dilemma” or “doctrinal paradox”: Say that a jury of three members must decide by majority rule whether a candidate should be accepted in a group. The rules specify that the candidate must meet two requirements, A and B, to be accepted. The first member of the jury believes […]
It is widely accepted that low carbon technologies will contribute to reduce greenhouse gas emissions, mostly those coming from carbon dioxide, and thus slow down the global warming. That’s why most of the largest economies in the world have committed to reduce their gas emissions by supporting an unprecedented transition from the current fossil-fuel based […]