The standard approach to modelling production under uncertainty has relied on the concept of a stochastic production. In this paper, it is argued that a state-contingent production model is more flexible and realistic. The model is applied to the problem of drought policy

We give a formal treatment of optimal risk sharing contracts in the face of ambiguity. The central idea is that boundedly rational individuals do not have access to a language sufficiently rich to describe all possible states of nature. The ambiguity in a contract arises from contractual clauses...

One of the most striking developments of the late 20th century was the explosion in the volume, speed and complexity of international financial transactions, and the resulting breakdown of effective regulatory control over the global financial system. The speed with which this process has gone...

We specify an oligopoly game, where firms choose quantity in order to maximise profits, that is strategically equivalent to a standard Tullock rent-seeking game. We then show that the Tullock game may be interpreted as an oligopsonistic market for influence.Alternative specifications of the...

The paper consists of a summary of the main sources of uncertainty about climate change, and a discussion of the major implications for economic analysis and the formulation of climate policy. Uncertainty typically implies that the optimal policy is more risk-averse than otherwise, and therefore...

The stabilization of global climate presents one of the most complex problems in public good provision the world has faced. Continuation of ‘business as usual’ policies, leading to warming of more than 2 degrees over the next year, will produce significant damage to agricultural systems and...

The main points of this submission are: 1. The most important distortions of agricultural trade practised by the US are unaffected by the FTA and are, in effect, endorsed by Australia’s signature to the agreement. 2. Considered in isolation, there is little to commend the proposed agreement....

A cost-based approach to asset-pricing equilibrium relationships is developed. A cost function induces a stochastic discount factor (pricing kernel) that is a function of random output, prices, and capital stockt. By eliminating opportunities for arbitrage between financial markets and the...

To mitigate environmental damage from the over allocation of water property rights to irrigation in Australia’s Murray-Darling Basin, the Federal Government has introduced a Buy-Back policy. However, the conjunctive nature of water resources in the Murray- Darling Basin is highly variable....

We develop a model of games with awareness that allows for differential levels of awareness. We show that, for the standard modal logical interpretations of belief and awareness, a player cannot believe there exist propositions of which he is unaware. Nevertheless, we argue that a boundedly...