We propose a new evolutionary approach to model technological change based on an extension of replicator dynamics with recombination and mutation. It gives rise to interactive innovation-selection dynamics. The model allows studying the combined effects of selection and variety generation on evolutionary-economic change. The developed framework describes a population of boundedly rational entrepreneurs who decide each period on the allocation of investments in different production technologies. They tend to invest in belowaverage cost technologies, just as under replicator dynamics. In addition, they spend a constant fraction of investments, captured by mutation and recombination rates, on alternative technologies and research on recombinant innovation. As opposed to most previous studies, mutation and recombination are here conceptual variables with a concrete behavioral interpretation, namely describing the decision rules (heuristics) of investors. We compare the dynamics of shares of investments in various technologies for three cases: with constant costs of capital, with costs decreasing steadily and exogenously over time, and with costs depending on the level of cumulative investments. For each model version, we examine under which conditions the coexistence of technological options is feasible and optimal in terms of minimising the average cost of investments.(authors' abstract)

The Lincoln Electric Company has been outstandingly successful in the manufacture of welding equipment. The purpose of this thesis is to examine the overall personnel program of the Lincoln Electric Company, and to relate various segments of this program to the high level of individual and organizational productivity which is evident at Lincoln. As a consequence of this study, numerous conclusions were reached. First, many policies in effect at the Lincoln Electric Company tend to make Lincoln's work force quite stable. Since a stable work force composed of highly productive individuals tends to result in a highly productive organization, individual productivity is also examined. It is concluded that the Lincoln worker has more of his needs satisfied through employment than docs the average industrial worker. In order to satisfy those needs which remain capable of motivating the worker, he must proceed in a manner consistent with the organization's goals. This is the most important explanation advanced for the highly productive nature of this company’s work force. In concluding this study, a discussion of the applicability of this system is presented. It is decided that there is nothing unique in the manufacture of welding equipment which would prevent this plan from succeeding in other industries; however, the environment within which this plan was developed is not typical, and has contributed greatly to its success. / Master of Science

We show that, for a utility function U: R to R having reasonable asymptotic elasticity, the optimal investment process H. S is a super-martingale under each equivalent martingale measure Q, such that E[V(dQ/dP)] < "unendlich", where V is conjugate to U. Similar results for the special case of the exponential utility were recently obtained by Delbaen, Grandits, Rheinländer, Samperi, Schweizer, Stricker as well as Kabanov, Stricker. This result gives rise to a rather delicate analysis of the "good definition" of "allowed" trading strategies H for the financial market S. One offspring of these considerations leads to the subsequent - at first glance paradoxical - example. There is a financial market consisting of a deterministic bond and two risky financial assets (S_t^1, S_t^2)_0<=t<=T such that, for an agent whose preferences are modeled by expected exponential utility at time T, it is optimal to constantly hold one unit of asset S^1. However, if we pass to the market consisting only of the bond and the first risky asset S^1, and leaving the information structure unchanged, this trading strategy is not optimal any more: in this smaller market it is optimal to invest the initial endowment into the bond. (author's abstract) / Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"

Using a sample of 21 OECD-countries we measure productivity in top-edge economic research by using data envelopment analysis (DEA). DEA is a tool for evaluating relative efficiency and is widely used when there are multiple inputs and outputs and one lacks a specific functional form of a production function. The publications in 10 economics journals with the highest average impact factor over the time period 1980-1998 are taken as research output. Inputs are measured by R&D expenditures, number of universities with economics departments and (as uncontrolled variable) total population. Under constant returns-to-scale the USA are in dominant position with remarkable distance to other countries. Under variable returns-to-scale the efficiency frontier is created by the USA with most productive scale size (MPSS), and by Ireland and New Zealand, which are technical efficient but scale inefficient. All countries - except the USA - display increasing returns-to-scale, which shows that they have a possibility to improve their efficiency by scaling up their research activities. (author's abstract) / Series: Department of Economics Working Paper Series

Following [10] we continue the study of the problem of expected utility maximization in incomplete markets. Our goal is to find minimal conditions on a model and a utility function for the validity of several key assertions of the theory to hold true. In [10] we proved that a minimal condition on the utility function alone, i.e. a minimal market independent condition, is that the asymptotic elasticity of the utility function is strictly less than 1. In this paper we show that a necessary and sufficient condition on both, the utility function and the model, is that the value function of the dual problem is finite. (authors' abstract) / Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"

Made available in DSpace on 2014-06-12T17:21:58Z (GMT). No. of bitstreams: 2 arquivo6607_1.pdf: 922841 bytes, checksum: 1df7759d9d1f631e49770908e8f3fe42 (MD5) license.txt: 1748 bytes, checksum: 8a4605be74aa9ea9d79846c1fba20a33 (MD5) Previous issue date: 2011 / Conselho Nacional de Desenvolvimento Científico e Tecnológico / O presente estudo tem como objetivo obter uma plataforma para mensurar o valor do ganho social líquido da adoção, pela indústria do bioetanol no primeiro trecho da bacia do rio Pirapama, de mais uma opção para uso econômico da vinhaça, utilizando um modelo econômico-hidrológico integrado já desenvolvido para o mesmo. Essa modelagem maximiza os benefícios dos produtores do bioetanol agregados aos benefícios dos demais consumidores de água do trecho, para diferentes cenários (com e sem produção do biogás), sem impactos ambientais na qualidade das águas. Comparando essas medidas de bem-estar social tem-se uma medida do benefício social líquido da opção do biogás ou o valor econômico social desta alternativa. Além disso, podem ser calculadas as perdas de bem-estar social (deadweight loss) de mudanças no nível de qualidade ambiental nos dois cenários. Estes serão obtidos através da diferença entre os benefícios sociais líquidos máximos diante da mudança nas restrições, admitindo a ocorrência de externalidades ambientais. Estas medidas podem ser usadas para analisar a introdução da opção do biogás tanto sob a ótica dos produtores e consumidores individualmente como da sociedade como um todo. Dessa forma, é possível subsidiar decisões na esfera pública e privada que levem ao desenvolvimento sustentável na região. Os resultados mostraram que, num contexto sem impactos ambientais, os ganhos líquidos obtidos pelos usuários são maiores quando a alternativa da produção biogás é considerada. Além disso, os custos sociais são menores se esta opção estiver disponível. Finalmente, pôde-se observar que prazos viáveis de retorno do investimento num biodigestor são obtidos, para duas das três agroindústrias analisadas, quando se considera os benefícios potenciais da adoção da tecnologia de biodigestão anaeróbia

This article investigates the effects of introducing demography into the New Economic Geography. We generalize the constructed capital approach, which relies on infinite individual planning horizons, by introducing mortality. The resulting overlapping generation framework with heterogeneous individuals allows us to study the effects of aging on agglomeration processes by analytically identifying the level of trade costs that triggers catastrophic agglomeration. Interestingly, this threshold value is rather sensitive to changes in mortality. In particular, the introduction of a positive mortality rate makes the symmetric equilibrium more stable and therefore counteracts agglomeration tendencies. In sharp contrast to other New Economic Geography approaches, this implies that deeper integration is not necessarily associated with higher interregional inequality. / Series: Department of Economics Working Paper Series

We augment a model of endogenous credit cycles by Matsuyama et al.(2016) with human capital to study the impact of human capital on the stability of central economic aggregates. Thus we offer a linkage between human capital formation and credit market instability on a macrolevel combined with an analysis of functional income distribution. Human capital is modelled as pure external effect of production following a learning-by-producing approach. Agents have access to two different investment projects, which differ substantially in their next generations spillover effects. Some generate pecuniary externalities and technological spillovers through human capital formation whereas others fail to do so and are subject to financial frictions. Due to this endogenous credit cycles occur and a pattern of boom and bust cycles can be observed. We explore the impact of human capital on the stability of the system by numerical simulations which indicate that human capital has an ambiguous effect on the evolution of the output. Depending on the strength of the financial friction and the output share of human capital it either amplifies or mitigates output fluctuations. This analysis shows that human capital is an essential factor for economic stability and sustainable growth as a high human capital share tends to make the system's stability robust against shocks. / Series: Department of Economics Working Paper Series

The cost of climate policy depends on the no-policy alternative without which the opportunity cost of climate action cannot be determined. This reference path has to reflect the current failure in the market for carbon emissions: due to a negative externality, private investment decisions do not consider the climate damage they entail; agents overinvest in conventional capital and underinvest in climate capital. Internalization of climate damage lowers the private return to capital; agents reduce investment in favor of mitigation and consumption. Optimal climate mitigation increases welfare of the present and the future. Simulation of the inefficient no-policy scenario in DICE-07 confirms that this point numerically. (author's abstract)

Determining the social cost of carbon emissions (SCC) is a crucial step in the economic analysis of climate change policy as the US government's recent decision to use a range of estimates of the SCC centered at $77/tC (or, equivalently, $21/tCO2) in cost-benefit analyses of proposed emission-control legislation underlines. This note reviews the welfare economics theory fundamental to the estimation of the SCC in both static and intertemporal contexts, examining the effects of assumptions about the typical agent's pure rate of time preference and elasticity of marginal felicity of consumption, production and mitigation technology, and the magnitude of climate-change damage on estimates of the SCC. We high-light three key conclusions: (i) an estimate of the SCC is conditional on a specific policy scenario, the details of which must be made explicit for the estimate to be meaningful; (ii) the social discount rate relevant to intertemporal allocation decisions also depends on the policy scenario; and (iii) the SCC is uniquely defined only for policy scenarios that lead to an efficient growth path because marginal costs and benefits of emission mitigation diverge on inefficient growth paths. We illustrate these analytical conclusions with simulations of a growth model calibrated to the world economy. (authors' abstract)