CO2 Emission from Brickfields in Bangladesh: Can Ethical Responsibility by Doing Reduce Level of Emission?

Recent years’ rapid urbanization and then rural to urban migration have created increasing demands of bricks usages in Bangladesh. However, brick industry has been largely using inefficient, dirty technology and burns woods-coal. It injects huge volume of CO2 in atmosphere. For policy guidance on the issue, this study analyzes the basic issues of CO2 emission from brickfields in terms of marginal damage (MD) analysis. Findings show that the marginal social costs are higher than marginal private (producer of bricks) costs where brickfields are benefiting with the expense of Bangladeshi society as a whole. As time passes by, rises of brick-prices have been causing upward trends of welfare losses where producers’ surpluses are dominating in the total surplus. This economic situation has been causing higher deadweight loss year after year. Addressing the issues, national strategies and policy actions are needed. Reforestation efforts can be achieved in multi-faucets: brick-fields’ charity, government policies on planting trees & policies on motivational efforts inspiring citizens of Bangladesh. Motivational policy can be: i) inspiring celebration individual’s “Birthday, Having 1st child in family and Event of marriage” by planting trees, ii) forcing to utilize green tech in brick kilns and iii) conducting academic research where financial supports are in need. Keywords: brickfields, effluent gases emission, causes social costs & deadweight loss, reforestation, motivational efforts of government policies

Risk allocation with Shapley value in the risk aggregation framework

The topic of risk aggregation arises from the need to incorporate in a single measure the overall exposure to the different risk types. In general, the methodologies adopted for the purposes of risk integration are based on the principle that the overall economic capital is lower than the simple algebraic sum of economic capital measures related to individual risks. This phenomenon, due to the existence of an imperfect correlation between the risks, determines, in line with portfolio theory, a "diversification benefit". The issue of risk allocation subsequently arises when the risk value of the diversified aggregated loss needs to be reassigned to the different risk classes. A similar issue has been solved in the framework of cooperative Game Theory, where the Shapley value provides a player-specific contribution of the total surplus generated by the coalition. The paper proposes a novel application of the Shapley formula in the ICAAP context (Pillar II - economic view). In particular, we show that the Shapley value is the unique solution to the allocation problem of an overall risk value, granting the fundamental requested properties, including the efficiency one. An exemplificative model application is reported, as well as a comparison with a benchmark methodology. The experimental part shows the advantages of the novel approach in terms of precision and reliability of the estimates. Finally, it is important to mention that the presented framework can be applied also in other contexts such as, for instance, in the risk class attribution of the operational risk.

Welfare Effect of Adaptation Policy for Rice Price Variation under Climate Change in Bangladesh

This study was designed to evaluate the welfare effect of the climate adaptation policy for rice price variation in terms of producer surplus, consumer surplus, and net change in social welfare in Bangladesh, using the partial equilibrium model of the adaptation policy. The long-term trend of climate and policy adaptation for climate impact on price variation of the rice in Bangladesh is taken into economic model approach. The base period of this research is 1977-2009 and the extrapolation period is 2010-2030. To execute the designed analysis, the time series data from national and international organization are used. The results for the support price policy show that the total surplus that producers receive is equivalent to USD 1,164 million, substantially higher than the consumer surplus (USD 763 million) during the period 2010–2030. The net change in the social welfare owing to the support price policy is equivalent to –1483 million (USD) during the period 2010–2030. Moreover, analysis of the subsidized price policy shows that the total surplus that consumers receive (USD 1,958 million) is relatively higher than the producer surplus (USD 1,738 million) in the same period. The net change in social welfare owing to the subsidized price policy (–197 million USD) is much higher than that owing to price support –1483 million (USD). Implementing the dual price policy would result in a much higher net change in the society’s welfare (–1185 million USD) compared to that possible through each policy separately. In conclusion, these adaptation and price stabilization policies are recognized to be more useful in mitigating the severe price rise and fall in the future food market, in favour of both producers and consumers. Even though the change in net social welfare is higher, the higher cost of policy budget is imperative to make stable food supply and security.

Mengestimasi Surplus Konsumen Permintaan Daging Sapi Potong: Studi Empiris di Wilayah Perdesaan dan Perkotaan Indonesia

This research aims to analyze the consumer surplus of beef cutlets in Sokaraja and Kembaran Subdistrict in the Banyumas Regency. This research has a novelty where other researchers have never used the residential area (urban and rural). The taken sample is 100 people divided into two, in Sokaraja and Kembaran Subdistrict, in the Banyumas Regency. The used analytical tools are the classic assumption test, multiple regression analysis of dummy variable models, and statistical tests. This research shows that the average number of willingness to pay beef cutlets in Sokaraja and Kembaran is Rp. 136.900 per kilogram. This number is higher in comparison to the paid cutlet, which is Rp. 127.650. The total surplus obtained by the consumer in this research is Rp. 412.494.500. This research implies that the related governmental institution must be focused to either add the production of beef cutlet or do the import of beef cutlet in order to fulfill the demand due to the consumers' willingness to pay is still above the average of the beef cutlet's price itself.

Spoofing the Limit Order Book: A Strategic Agent-Based Analysis

We present an agent-based model of manipulating prices in financial markets through spoofing: submitting spurious orders to mislead traders who learn from the order book. Our model captures a complex market environment for a single security, whose common value is given by a dynamic fundamental time series. Agents trade through a limit-order book, based on their private values and noisy observations of the fundamental. We consider background agents following two types of trading strategies: the non-spoofable zero intelligence (ZI) that ignores the order book and the manipulable heuristic belief learning (HBL) that exploits the order book to predict price outcomes. We conduct empirical game-theoretic analysis upon simulated agent payoffs across parametrically different environments and measure the effect of spoofing on market performance in approximate strategic equilibria. We demonstrate that HBL traders can benefit price discovery and social welfare, but their existence in equilibrium renders a market vulnerable to manipulation: simple spoofing strategies can effectively mislead traders, distort prices and reduce total surplus. Based on this model, we propose to mitigate spoofing from two aspects: (1) mechanism design to disincentivize manipulation; and (2) trading strategy variations to improve the robustness of learning from market information. We evaluate the proposed approaches, taking into account potential strategic responses of agents, and characterize the conditions under which these approaches may deter manipulation and benefit market welfare. Our model provides a way to quantify the effect of spoofing on trading behavior and market efficiency, and thus it can help to evaluate the effectiveness of various market designs and trading strategies in mitigating an important form of market manipulation.

Competition and Entry in Agricultural Markets: Experimental Evidence from Kenya

African agricultural markets are characterized by low farmer revenues and high consumer food prices. Many have worried that this wedge is partially driven by imperfect competition among intermediaries. This paper provides experimental evidence from Kenya on intermediary market structure. Randomized cost shocks and demand subsidies are used to identify a structural model of market competition. Estimates reveal that traders act consistently with joint profit maximization and earn median markups of 39 percent. Exogenously induced firm entry has negligible effects on prices, and low take-up of subsidized entry offers implies large fixed costs. We estimate that traders capture 82 percent of total surplus. (JEL L13, O13, Q11, Q12, Q13)

A critique of Shaikh’s two interpretations of Marx’s ‘transformation problem’

It is argued in this paper that Shaikh has presented two different interpretations of the transformation problem in his works. In his influential 1977 paper, he presented an “iterative” interpretation in which there is a transfer of value between departments in the economy; and in a series of papers in the 1980s and in his recent book, he presented a different interpretation in which there is a transfer of value between firms in Department 3 and capitalist households. An important common feature of these two different interpretations is that total profit is not equal to total surplus-value. The two interpretations present different explanations of this divergence, which are examined in detail in this paper. It is argued that there is no textual evidence whatsoever to support Shaikh’s second interpretation. A few comparisons will also be made to my “macro-monetary” interpretation of Marx theory according to which there is no transformation problem in Marx’s theory and total profit is always equal to total surplus-value.

Analisis Sebaran Jasa Ekosistem Penyediaan Pangan dan Air di Daerah Karst (Studi Kasus Kabupaten Buton Tengah)

The karst area is the dominant ecosystem in the area of Central Buton District where around 80 percent is a stretch of karst. This objectives of the study was to analyze the ability of ecosystems to provide food and water and its distribution spatially in Central Buton District. This research was conducted through a study of ecoregion characteristics, including data on landscape, natural vegetation types and land cover. In addition, population data, water availability, food availability and administrative data in Central Buton District were collected. Data analysis includes the calculation of ecosystem service indexes, spatial distribution of ecosystem service indices and indicative status of the carrying capacity of food and water. The average index of environmental services for food supply in the Karst area of Central Buton District was 2.52 with a low category, while the index of environmental services for water supply was lower at 1.96 with also a low category. Food service ecosystem index with a low category dominates Central Buton District with an area of 50,286.63 hectares (60.08%) and a medium category of 26,695.97 hectares (31.89%). Water supply ecosystem services index is very low to low with an area of 54,849.99 hectares (65.53%) and 24,551.24 hectares (29.33%). The overall carrying capacity of food and water in Central Buton District is still a surplus. The area of food surplus in the region reached 66,977.53 hectares (80.02%) and the total food surplus was 30,453,510,374 kcal. The total area of water surplus in Central Buton District is 81,291 hectares (97.12%) with a total surplus of 367,826,651 m3/year.Keywords: carrying capacity, ecoregion, ecosystem service index, karst area. AbstrakKawasan karst merupakan ekosistem dominan di wilayah Kabupaten Buton Tengah dimana sekitar 80 persen merupakan hamparan karst. Penelitian ini bertujuan untuk menganalisis kemampuan ekosistem menyediakan pangan dan air serta distribusinya secara spasial di Kabupaten Buton Tengah. Penelitian ini dilakukan melalui kajian karakteristik ekoregion, mencakup data bentang lahan, tipe vegetasi alami dan tutupan lahan. Selain itu dilakukan pengumpulan data kependudukan, ketersediaan air, ketersediaan pangan dan data administrasi Kabupaten Buton Tengah. Analisis data meliputi perhitungan indeks jasa ekosistem, sebaran spasial indeks jasa ekosistem dan status indikatif daya dukung pangan dan air. Rerata indeks jasa lingkungan penyediaan pangan Kawasan Karst Kabupaten Buton Tengah adalah 2,52 dengan kategori rendah, sementara itu indeks jasa lingkungan penyediaan air lebih rendah yakni 1,96 dengan kategori juga rendah. Indeks jasa ekosistem penyediaan pangan dengan kategori rendah mendominasi Kabupaten Buton Tengah dengan luas 50.286,63 hektar (60.08 %) dan kategori sedang seluas 26.695,97 hektar (31,89 %). Indeks jasa ekosistem penyediaan air kategori sangat rendah sampai rendah dengan luas masing-masing 54.849,99 hektar (65,53 %) dan 24.551,24 hektar (29,33 %). Status daya dukung pangan dan air Kabupaten Buton Tengah secara keseluruhan masih surplus. Luas daerah surplus pangan di wilayah tersebut mencapai 66.977,53 hektar (80,02 %) dan total surplus pangan sebanyak 30.453.510.374 kkal. Luas daerah surplus air Kabupaten Buton Tengah adalah 81.291 hektar (97,12 %) dengan total surplus sebanyak 367.826.651 m3/tahun..Kata Kunci: daya dukung, ekoregion, indeks jasa ekosistem, kawasan karst, sebaran spasial.

Online Privacy and Information Disclosure by Consumers

I study the welfare and price implications of consumer privacy. A consumer discloses information to a multiproduct seller, which learns about his preferences, sets prices, and makes product recommendations. Although the consumer benefits from accurate recommendations, the seller may use the information to price discriminate. I show that the seller prefers to commit to not use information for pricing in order to encourage information disclosure. However, this commitment hurts the consumer, who could be better off by precommitting to withhold some information. In contrast to single-product models, total surplus may be lower if the seller can base prices on information. (JEL D11, D83, L81, M31)

Regulating Innovation with Uncertain Quality: Information, Risk, and Access in Medical Devices

We study the impact of regulating product entry and quality information requirements on an oligopoly equilibrium and consumer welfare. Product testing can reduce consumer uncertainty, but also increase entry costs and delay entry. Using variation between EU and US medical device regulations, we document patterns consistent with valuable learning from more stringent US requirements. To derive welfare implications, we pair the data with a model of supply, demand, and testing regulation. US policy is indistinguishable from the policy that maximizes total surplus in our estimated model, while the European Union could benefit from more testing. “Post-market surveillance” could further increase surplus. (JEL D43, I18, L13, L51, L64, O31, O38)