We consider an industry with firms that produce a final good emitting pollution to different degree as a side effect. Pollution is regulated by a tradable quota system where some quotas may have been allocated at the outset, i.e. before the quota market is opened. We study how volatility in...

Inflation scenarios in forecasts of the Central Bank of Iceland (CBI) appear to converge to the inflation target (2.5%) in 8-9 quarters. We ask whether this is a coincidence or an inherent property of the CBI’s model, QMM. We formulate a sub-model, containing equations for inflation, inflation...

The paper presents the results of an economic experiment in which the effects of fees on allocative efficiency of tradable utilization permits (e.g. pollution permits) are explored. Laboratory subjects (university students) play the roles of firms whose generic product requires a specific input...

The Icelandic Competition Council recently ruled that a cement supplier with 75% market share is not dominant. The ruling was based on countervailing power of local concrete producers. To test the economic arguments for the ruling, we present a simplified bilateral oligopoly model of the...

This paper briefly summarizes recent research on justice, in particular Konow’s (2003) positive theory of justice. This research is then applied to recent events in Iceland: the attempt by Iceland’s largest bank to take over a savings bank. Shortly after the deal was announced the Icelandic...

The Icelandic Competition Council recently ruled that a cement supplier with 75% market share is not dominant. The ruling was based on countervailing power of local concrete producers. To test the economic arguments for the ruling, we present a simplified bilateral oligopoly model of the...

This paper briefly summarizes recent research on justice, in particular Konow’s (2003) positive theory of justice. This research is then applied to recent events in Iceland: the attempt by Iceland’s largest bank to take over a savings bank. Shortly after the deal was announced the Icelandic...

There is concern that prices in a market for Green Certificates (GCs) primarily based on volatile wind power will fluctuate excessively, leading to corresponding volatility of electricity prices. Applying a rational expectations simulation model of competitive storage and speculation of GCs the...

The purpose of this paper is to discuss rules for deciding Total Allowable Catch (TAC) for Icelandic cod. For this purpose, a bioeconomic model describing harvesting and processing of cod, capelin, and shrimp in the Icelandic marine ecosystem is constructed and estimated. The model is used to...

Compensation from rulers of trading centres to merchants whose property rights had been violated was a notable feature of early European international trade. We demonstrate in a repeated-game model that demands for compensation made threats by merchant guilds to impose trade boycotts...