This paper characterizes the short- and long-run Cournot equilibrium with heterogeneous firms and stochastic technological change. In our model, firms have different technologies with heterogeneous fixed and variable costs and various degrees of markups. In a framework with homogeneous firms,...

Energy-intensive industries play a critical role in achieving carbon reduction goals. This paper proposes a quantitative evaluation model for Marginal Abatement Costs (MACs) and carbon reduction potential, enabling scientific assessment of abatement costs and capabilities. Building on this...

To evaluate the marginal welfare effects of taxation and of public spending, we must account for both distortionary and distributional effects. The distributional consequences of taxation, in terms of welfare, cannot be fully captured in in the measures currently used in the literature, such as...

This paper aims to estimate the optimal environmental policy in the elektricity generation sector for each of the EU countries maximizing total welfare. The study uses a recently proposed theoretical corporate finance model and empirically estimate each of its components using the current state...

As a relevant indicator for quantifying the value of carbon emissions, the marginal abatement cost (MAC) of carbon emissions has received increasing attention from academics and policymakers. This study uses a quadratic directional output distance function to analyse the technical efficiency,...

We study the determinants of inventory accumulation in a structural VAR framework with news shocks. Specifically, we investigate how news shocks affect two key determinants of inventory movements, namely rates of return and marginal costs. We establish that inventories react strongly and...

We develop and test a theory of firm size and scope centered on standardization: the extent to which a firm's products are similar. Heterogeneous firms choose the number, quality and standardization of their products. Standardizing makes expanding scope less costly, which then increases the...

In a perfect market economy, the cost of raising another euro of tax revenue equals one. However, once distortionary taxes on goods and factors are introduced, the marginal cost of public funds, MCPF, typically deviates from one. Often it exceeds one, but one can also find cases where it falls...

This paper assesses the impact of the North American Free Trade Agreement on Mexican manufacturing plants' output prices and markups. We distinguish between Mexican goods that are exported and those sold domestically, and decompose their prices separately into markups and marginal costs. We then...

Standard consumption models assume a notional consumption flow that does not distinguish between nondurable and durable consumption. Such notional-consumption models generate notional marginal propensities to consume (MPC). By contrast, empirical work and policy discussions often highlight...

By allowing exporters to produce under asymmetric increasing marginal costs, we investigate the impact of tariff discrimination when considering exporters' endogenous choice of competition mode. Discriminatory tariffs lead to Cournot competition, whereas uniform tariffs lead to diverse modes of...

Consumers often face monetary and non-monetary costs when purchasing goods. Experience goods, for example, require consumers to invest time and money to acquire and use a product, and time requirements may not be fully known prior to making a purchase. Unlike monetary costs, non-monetary costs...

Previous analyses of the cost of redistribution by a unitary governmenthave focussed on the welfare losses of distorted labor supply choices. On theother hand, the analysis of redistribution b,y local qovernments in a federalsystem has emphasized the effect of the migration of taxpayers and...

The directional distance function (DDF) framework has been widely used to estimate the marginal abatement cost (MAC) of CO2 emissions to support decision-making in environmental sustainability and climate change issues. In the use of DDF, an important task is mapping evaluated entities towards a...

The cement industry which is characterised by the highest carbon intensity per unit of revenue among all major industries needs to rapidly reduce their CO2 equivalent (CO2e) emissions to reach carbon neutrality. To do so economically optimal strategies for emission reductions need to be...

The energy-intensive pulp and paper industry is a major contributor to carbon dioxide emissions. The potential to reduce energy consumption and carbon dioxide emissions is generally assessed using energy conservation supply curves and marginal abatement cost curves; however, both of these...

We examine the superiority of the uniform versus discriminatory tariffs in global welfare by taking into account the asymmetric increasing marginal costs between exporters and endogenous delegation problem. First, depending on the degree of product differentiation under Bertrand competition,...

I propose a simple theory of strategic network formation that accounts for many empirical patterns. Three elements forge the theory: i) local linking benefits, ii) convex linking costs, and iii) swap-proofness, a new refinement of pairwise stability. If players agree about who is a more...

This paper uses a rich panel data set of Indian manufacturing firms to analyze the effects of foreign direct investment (FDI) on various outcomes of domestic firms. We apply recent methodological advances in the estimation of production functions together with detailed product-level information...

An examination of data on labor input and the quantity of output reveals that most U.S. industries have marginal costs far below their prices. The corilusion rests on the empirical finding that cyclical variations in labor input are small compared to variations in output. In booms, firms produce...

Estimating market power is often complicated by the lack of reliable measures of marginal cost. Instead, policy-makers often rely on other summary statistics of the market, thought to be correlated with price cost margins---such as concentration ratios or the HHI. In many industries, these...

We develop a theory linking “misallocation,” i.e., dispersion in marginal products of capital (MPK), to macroeconomic risk. Dispersion in MPK depends on (i) heterogeneity in firm-level risk premia and (ii) the price of risk, and thus is countercyclical. We document strong empirical support...