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This paper presents a simulation exercise undertaken with a newly available regional general equilibrium model for the Spanish region of Andalusia. The exercise is intended to assess the structural adjustment processes and impacts on the Andalusian economy directly induced by the dramatic fall in tourism expenditure which occurred in the year 2020, due to the prevention measures implemented because of the COVID-19 pandemic. We also undertake a preliminary evaluation of the impact on some environmental indicators, such as greenhouse gases emissions and air pollutants. The key insight emerging from our analysis is that the COVID crumbling of tourism demand reduces the environmental pressure but also generates very relevant distributional consequences. We believe that these insights are not peculiar to Andalusia but could be extended to many other regions in the world, especially those similar in terms of magnitude of the shock, economic structure, and labor market. We illustrate the latter point by contrasting Andalusia with a set of South-East Asian countries. [ABSTRACT FROM AUTHOR]

Relatively small sectoral productivity shocks could lead to sizable macroeconomic variability. Whereas most contributions in the literature analyze the issue of aggregate sensitivity using simple general equilibrium models, a novel approach is proposed in this paper, based on stochastic simulations with a global computable general equilibrium model. We find that the variability of the GDP, induced by sectoral shocks, is basically determined by the degree of industrial concentration as measured by the Herfindahl index of industrial value added. The degree of centrality in inter-industrial connectivity, measured by the standard deviation of second-order degrees, is mildly significant, but it is also correlated with the industrial concentration index. After controlling for the correlation effect, we find that connectivity turns out to be statistically significant, although less so than granularity. [ABSTRACT FROM AUTHOR]

This paper deals with the construction, decomposition and comparison of water footprint time series in 40 countries and one aggregate macro-region, in the period 1995-2009. The analysis of the different "footpaths" allows us to investigate the possible causes behind the time evolution of water footprints in the various countries. We notice that the physical and economic impact of economic growth on water resources has been significantly lower than what it could have been, for several reasons. First, both production and consumption patterns are shifting away from water-intensive goods. Second, a large part of consumed water is actually not blue water, susceptible to alternative uses. Finally, we do not find strong evidence of gains in the economic productivity of water (dollars per water unit) in many countries, but we do find evidence of indirect efficiency gains, related to a composition of factors in the production processes. [ABSTRACT FROM AUTHOR]

This paper introduces a novel methodology for analyzing bargaining games on network markets, which are markets where transactions occur by means of distribution networks (e.g., gas, electric energy, water, etc.). The overall economic surplus obtained in the market is distributed among all network agents the on the basis of their bargaining power, which in turn depends on a variety of factors: position of each agent (e.g., a country) in the network, reliability in the cooperation scheme (e.g., geo-political stability), existence of market distortions and availability of outside options (e.g., alternative energy sources). The method we propose, which is illustrated here through an application to a fictitious network structure, is based on a two-stage process: first, a network optimization model is used to generate payoff values under different coalitions and network structures; second, cooperative game solutions are identified. Any change in the network structure entails both a variation in the overall welfare level and in the distribution of surplus among agents, as it affects their relative bargaining power. Therefore, expected costs and benefits, at the aggregate as well as at the individual level, can be compared to assess the economic viability of any investment in network infrastructure. A number of model variants and extensions are also considered: changing demand, exogenous instability factors, market distortions, externalities and outside options. [ABSTRACT FROM AUTHOR]

Purpose – This paper aims to present and discuss some quantitative results obtained in assessing the economic impact of variations in tourism flows, induced by climate change, for some Mediterranean countries. Design/methodology/approach – Estimates by a regional climate model are used to build a tourism climate index, which indicates the suitability of climate, in certain locations, for general outdoor activities. As climate change is expected to affect a number of variables like temperature, wind and precipitation, it will have consequences on the degree of attractiveness of touristic destinations. The authors estimate the macroeconomic consequences of changing tourism flows by means of a computable general equilibrium model. Findings – The authors found that more incoming tourists will increase income and welfare, but this phenomenon will also induce a change in the productive structure, with a decline in agriculture and manufacturing, partially compensated by an expansion of service industries. The authors found that, in most countries, the decline in agriculture entails a lower demand for water, counteracting the additional demand for water coming from tourists and bringing about a lower water consumption overall. Research limitations/implications – A great deal of uncertainty affects, in particular: estimates of future climate conditions, especially for variables different from temperature, the relationship between climate and tourist demand, and its interaction with socio-economic variables. This also depends on the reliability of the TCI index as an indicator of climate suitability for tourism, on its application to spatially and temporally aggregated data, on the degree of responsiveness of tourism demand to variations in the TCI. Furthermore, as the authors followed here a single region approach, the authors were not able to consider in the estimates the impact of climate change on the global tourism industry. Nonetheless, the authors believe that a quantitative analysis like the one presented here is not without scope. First, it provides an order of magnitude for the impact of climate change on tourism and the national economy. Second, it allows to assess systemic and second-order effects, which are especially relevant in this context and, moreover, appear to be sufficiently robust to alternative model specifications. In other words, the value added of this study does not lie in the specific figures obtained by numerical computations, but on the broader picture emerging from the overall exercise. Originality/value – To the authors' knowledge, this is the first study in which, by assessing higher tourism attractiveness into a general equilibrium framework, the effect described above is detected and highlighted. [ABSTRACT FROM AUTHOR]

Integrated assessment models offer a crucial support to decisionmakers in climate policy making. For a full understanding and corroboration of model results, analysts ought to identify the exogenous variables that influence the model results the most (key drivers), appraise the relevance of interactions, and the direction of change associated with the simultaneous variation of uncertain variables. We show that such information can be directly extracted from the data set produced by Monte Carlo simulations. Our discussion is guided by the application to the well-known DICE model of William Nordhaus. The proposed methodology allows analysts to draw robust insights into the dependence of future atmospheric temperature, global emissions, and carbon costs and taxes on the model's exogenous variables. [ABSTRACT FROM AUTHOR]

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This paper presents an empirical study of the relationship between residential energy demand and temperature. Unlike previous studies in this field, the data sample has a global coverage and special emphasis is given to the heterogeneous response of different regions and to the contrasting effects on energy demand for cooling and heating purposes. To account for this we distinguish between different regions, seasons, and energy sources. Short- and long-run temperature demand elasticities are estimated. These features make the model results especially valuable in the analysis of climate change impacts as they provide an empirical basis for the study of the impact of climate change on energy demand. To illustrate the potential of the results as a basis for the study of climate change impacts, the estimates are used in a simple exercise that projects changes in energy demand due to temperatures increase in 2085. [ABSTRACT FROM AUTHOR]

Agricultural sectors play a key role in the economics of climate change. Land as an input to agricultural production is one of the most important links between economy and the biosphere, representing a direct projection of human action on the natural environment. Agricultural management practices and cropping patterns exert an enormous effect on biogeochemical cycles, freshwater availability and soil quality. Agriculture also plays an important role in emitting and storing greenhouse gases. To consistently investigate climate policy and future pathways for the economic and natural environment, a realistic representation of agricultural land use is essential. Top-down Computable General Equilibrium (CGE) models have increasingly been used for this purpose. CGE models simulate the simultaneous equilibrium in a set of interdependent markets, and are especially suited to analyze agricultural markets from a global perspective. However, modeling agricultural sectors in CGE models is not a trivial task, mainly because of differences in temporal and geographic aggregation scales. This study surveys some proposed modeling strategies and highlights different tradeoffs involved in the various approaches. Coupling of top-down and bottom-up models is found to be the most applicable for comprehensive analysis of agriculture in prism of climate change. However, linking interdisciplinary data, methods and outputs is still the major obstacle to be solved for wide-scale implementation. [ABSTRACT FROM AUTHOR]

This paper uses two models to examine the direct and indirect costs of sea-level rise for Europe for a range of sea-level rise scenarios for the 2020s and 2080s: (1) the DIVA model to estimate the physical impacts of sea-level rise and the direct economic cost, including adaptation, and (2) the GTAP-EF model to assess the indirect economic implications. Without adaptation, impacts are quite significant with a large land loss and increase in the incidence of coastal flooding. By the end of the century Malta has the largest relative land loss at 12% of its total surface area, followed by Greece at 3.5% land loss. Economic losses are however larger in Poland and Germany ($483 and $391 million, respectively). Coastal protection is very effective in reducing these impacts and optimally undertaken leads to protection levels that are higher than 85% in the majority of European states. While the direct economic impact of sea-level rise is always negative, the final impact on countries' economic performances estimated with the GTAP-EF model may be positive or negative. This is because factor substitution, international trade, and changes in investment patterns interact with possible positive implications. The policy insights are (1) while sea-level rise has negative and huge direct economic effects, overall effects on GDP are quite small (max −0.046% in Poland); (2) the impact of sea-level rise is not confined to the coastal zone and sea-level rise indirectly affects landlocked countries as well (Austria for instance loses −0.003% of its GDP); and (3) adaptation is crucial to keep the negative impacts of sea-level rise at an acceptable level. [ABSTRACT FROM AUTHOR]

Human-generated greenhouse gases depend on the level and emissions intensity of economic activities. Therefore, most climate-change studies are based on the models and scenarios of economic growth. Economic growth itself, however, is likely to be affected by climate-change impacts. These impacts affect the economy in multiple and complex ways: changes in productivity, resource endowments, production and consumption patterns. We use a new dynamic, multi-regional computable general equilibrium (CGE) model of the world economy to answer the following questions: Will climate-change impacts significantly affect growth and wealth distribution in the world? Should forecasts of human-induced greenhouse gas emissions be revised, once the climate-change impacts are taken into account?We found that, even though economic growth and emission paths do not change significantly at the global level, relevant differences exist at the regional and sectoral level. In particular, developing countries appear to suffer the most from the climate-change impacts. [ABSTRACT FROM AUTHOR]

In this article, a model is introduced that has 2 distinguishing features. First, the multidimensional nature of competition in media markets characterized by free access and advertising is acknowledged, through explicit modeling of vertical and horizontal differentiation. Second, the price of advertising depends on the expected audience composition, not simply on its magnitude, and the amount of price discrimination. It is found that market equilibria depend on a number of critical factors: the amount and type of price discrimination in advertising, the correlation between formats and audience composition, the relative profitability of the different market segments, and diseconomies of scale in program quality. For a variety of market structures, the ability to discriminate on the price of advertising encourages a higher level of quality in broadcast media. [ABSTRACT FROM AUTHOR]

While climate change impacts on human life have well defined and different origins, the interactions among the diverse impacts are not yet fully understood. Their final effects, however, especially those involving social-economic responses, are likely to play an important role. This paper is one of the first attempts to disentangle and highlight the role of these interactions. It focuses on the economic assessment of two specific climate change impacts: sea-level rise and changes in tourism flows. By using a Computable General Equilibrium (CGE) model the two impacts categories are first analysed separately and then jointly. Considered separately, in 2050, the forecasted 25 cm. of sea level rise imply a GDP loss ranging from (-) 0.1% in South East Asia to almost no loss in Canada, while redistribution of tourism flows - which in terms of arrivals favours Western Europe, Japan, Korea and Canada and penalises all the other world regions - triggers GDP losses ranging from (-) 0.5% in Small Island States to (-) 0.0004% in Canada. GDP gainers are Australia, New Zealand, Western Europe, Middle East and South Asia. The impact of sea level rise and tourism were simulated jointly and the results compared with those of the two disjoint simulations. From a qualitative point of view, the joint effects are similar to the outcomes of the disjoint exercises; from a quantitative perspective, however, impact interaction does play a significant role. In six cases out of 16 there is a detectable (higher than 2% and peaking to 70%) difference between the sum of the outcomes in the disjoint simulation and the outcomes of the joint simulations. Moreover, the relative contribution of each single impact category has been disentangled from the final result. In the case under scrutiny, demand shocks induced by changes in tourism flows outweigh the supply-side shock induced by the loss of coastal land. [ABSTRACT FROM AUTHOR]

The economy-wide implications of sea level rise in 2050 are estimated using a static computable general equilibrium model. This allows for a better estimate of the welfare effects of sea level rise than the common direct cost estimates; and for an estimate of the impact of sea level rise on greenhouse gas emissions. Overall, general equilibrium effects increase the welfare costs of sea level rise, but not necessarily in every sector or region. In the absence of coastal protection, economies that rely most on agriculture are hit hardest. Although energy is substituted for land, overall energy consumption falls with the shrinking economy, hurting energy exporters. With full coastal protection, GDP increases, particularly in regions with substantial dike building, but utility falls, least in regions that protect their coasts and export energy. Energy prices rise and energy consumption falls. The costs of full protection exceed the costs of losing land. The results also show direct costs – the usual method for estimating welfare changes due to sea level rise – are a bad approximation of the general equilibrium welfare effects; previous estimates of the economic impact of sea level rise are therefore biased. [ABSTRACT FROM AUTHOR]

This paper considers the technical aspects and the consequences, in terms of simulation results and policy assessment, of introducing imperfect competition in a CGE model. The modifications to the standard CGE framework needed to model imperfect competition in some industries are briefly discussed. Next, the paper examines whether, how much and why, those changes may affect the qualitative output a typical simulation experiment. It is argued that technical choices made in designing the model structure may have a significant impact on the model behavior. This is especially evident when the model output of an imperfect competition closure is compared with the one of a standard closure, assuming perfect competition. As an illustration, a simulation of agricultural trade liberalization is analyzed. Results from the same simulation exercise, but produced by alternative model formulations (one standard competitive and three imperfect competition variants) are presented and discussed. It is found that having imperfect competition in a CGE model does matter in terms of simulation results. Furthermore, alternative formulations of imperfect competition typically bring about quite different findings and implications. [ABSTRACT FROM AUTHOR]

In this article, we construct a model to study competing payment networks, where networks offer differentiated products in terms of benefits to consumers and merchants. We study market equilibria for a variety of market structures: duopolistic competition and cartel, symmetric and asymmetric networks, and alternative assumptions about consumer preferences. We find that competition unambiguously increases consumer and merchant welfare. We extend this analysis to competition among payment networks providing different payment instruments and find similar results. [ABSTRACT FROM AUTHOR]

In two-sided networks, two parties interact on a platform, caring about the numbers of subjects on the other side. A typical problem, in this context, is setting prices for network services so as to get “both side on boards”. The standard approach in the literature considers the networks ability to convince both sides to join the network, whereas this paper consider an alternative setting, in which one side determines the price balance. This case is exemplified by the market for meal voucher services in Italy, in which one agency organizes the procurement of services for the public sector, through a competitive auction. A formal model of optimal auction is illustrated and used to assess the current procurement scheme. The model reveals that the current system is inefficient and could be improved through increased flexibility and adaptation to local economic conditions. [ABSTRACT FROM AUTHOR]

The absence of an access fee may hinder the development of capacity in interfaced networks, because the benefits of a larger capacity partly accrue to external consumers. This paper shows, however, that the implied result of under-investment in network capacity may be reversed in a number of circumstances. Different cases are discussed by means of a model, which adopts fairly general assumptions about some key functions. This allows accommodating for a variety of alternative specifications found in the literature. [ABSTRACT FROM AUTHOR]

A dynamic general equilibrium model of the Italian economy is used to assess the impact of carbon taxation (or auctioned carbon permits), where additional revenue is used to cut either existing taxes on labor or on capital income. Simulation results do not support the existence of the so-called “double dividend” when labor taxes are reduced, whereas lower tax rates on capital have mild positive effects on growth and welfare, with progressivity properties on income distribution. These findings hinge on the assumptions of open economy, given world interest rate, and capital mobility. [ABSTRACT FROM AUTHOR]

Markets for transport are often characterised by unequal demand in both directions: every morning during peak hours the trains are crowded while moving towards the direction of large cities, whereas they may be almost empty in the other direction. In this paper we discuss the implications of these imbalances for price setting of transport firms. From the viewpoint of economic theory, two regimes can be distinguished: one where - owing to price discrimination - the flows are equal, and one where unequal flows are the result. Special attention is paid to the case where the transport firm does not apply price discrimination, as is the case with most railway firms in Europe. We find that in the case of substantial joint costs, the introduction of price discrimination not only leads to an increase of profits, but also to positive effects on consumer surplus. This result differs from the standard result in the literature on industrial economics. The standard result purports that with linear demand functions price discrimination has a negative impact on the welfare of the average consumer and that this negative impact dominates the positive effect on profits of the producer. [ABSTRACT FROM AUTHOR]

This paper explores the distributional consequences of alternative emissions trading schemes. It is argued that the distributional impact stems from the difference between two social welfare functions: the function which is implicitly maximised in a competitive market equilibrium and the function which is implicitly adopted when a given equity principle is chosen. An integrated assessment model is used to illustrate these findings, by simulating the introduction of various emissions trading schemes for the Kyoto protocol on the reduction of greenhouse emissions. It is shown that (1) changes produced on an equity index by the imposition of emission constraints (by country) may not be significantly higher than those obtained by the subsequent introduction of a market mechanism, and that (2) the various market regimes which could be adopted have quite different distributional implications. [ABSTRACT FROM AUTHOR]

This paper presents a theoretical and empirical study of the problem of valuation of local public transport services. A contingent valuation exercise, considering two case studies in northern Italy, is illustrated. This serves as a basis for an econometric analysis aimed at highlighting the role of socioeconomic variables in the determination of the willingness to pay, through public funds, for the subsidisation of public transport services. It is argued that social preferences for the provision of a public transport service cannot be directly deducted from observable market behaviour and that the preferred supply level of transport capacity weakly depends on individual consumption levels, whereas the perception of mobility problems (possibly generated by experience) and the characteristics of social networks (especially the family) are likely to be much more important. [ABSTRACT FROM PUBLISHER]

This paper presents a theoretical and empirical study of the problem of valuation of local public transport services. A contingent valuation exercise, considering two case studies in northern Italy, is illustrated. This serves as a basis for an econometric analysis aimed at highlighting the role of socioeconomic variables in the determination of the willingness to pay, through public funds, for the subsidisation of public transport services. It is argued that social preferences for the provision of a public transport service cannot be directly deducted from observable market behaviour and that the preferred supply level of transport capacity weakly depends on individual consumption levels, whereas the perception of mobility problems (possibly generated by experience) and the characteristics of social networks (especially the family) are likely to be much more important. [ABSTRACT FROM AUTHOR]

This paper analyses some of the economic issues involved in the diffusion of modern intermodal technologies and the impact of intermodality on the functions performed by nodes in transportation networks. Two simple economic models are presented: the first considers why an intermodal transport service may be chosen instead of traditional single modal services, while the second addresses the link between standardisation and warehousing. The last section focuses, in a less abstract and more detailed way, on the maritime transport sector. The aim is to find evidence for the effects highlighted by the models. [ABSTRACT FROM PUBLISHER]

Abstract. Network markets arc characterized by composite goods or services that can be obtained from alternative combinations of basic products. Examples are complex, multistage production and consumption systems, transport and communications. Efficiency in these markets depends on the net effect of the complementary and substitution relationships that exist between elementary products, which are determined by network topology and market structure. This paper examines factors that affect equilibria in network markets by considering a number of simple economic models of network markets. First it is shown how network topology influences profits and welfare under different market regimes. In particular, attention is given to price discrimination in monopolistic networks. Next evolution of networks is examined, which may occur via investment in new links by incumbent firms, or via entry of new firms in the network. It is shown that the number of competitors in equilibrium may not coincide with the socially optimal one, which in turn depends on the network structure. In order to show some concrete implications of the theoretical results two examples arc presented, dealing with intermediate factors in an input-output production system, and with the trade-off between network externalities and economies of scale and density in hub-and-spoke transportation networks. [ABSTRACT FROM AUTHOR]

A well-known principle of welfare economics states that an efficient allocation of resources can be achieved in a competitive economy when market prices are in line with social marginal costs. When applied to the transport sector, this implies that the price of the various transport modes should be made equal to the sum of marginal production and external costs, like congestion, accidents, pollution, and road maintenance. It is sometimes argued the internalization of external costs would bring about a change in demand patterns with a shift towards public transport and cleaner modes. But public transport is already favoured by discriminatory fiscal treatment. Whereas public services are normally (heavily) subsidized, private transport is taxed in several ways and, in some countries, quite substantially so. The application of the 'optimal pricing' principle, therefore, critically depends on how the subsidization of public services is interpreted. This paper addresses the issue of optimal pricing of urban transport, using different hypotheses concerning the treatment of public services. After reviewing some traditional arguments in favour of public transport subsidization, a new approach, based on uncertainty and option values, is discussed. The implications of this approach are investigated by means of an applied model, where optimal prices for urban transport services in the city of Bologna are computed under alternative assumptions. [ABSTRACT FROM AUTHOR]

In this paper, an interregional general equilibrium model is presented which combines a linear structure with factor substitution under heterogeneous price sensitivity among industries. The model is an extension of the MRVIO model proposed by Liew and Liew (1984a, b) and is compared with others in the field of interregional computable general equilibrium models. A simple numerical exercise is carried out to assess the impact of alternative hypotheses (about elasticities of substitution) on the model's performance. [ABSTRACT FROM AUTHOR]

Greenhouse gas emissions cause climate change, and agriculture is the most vulnerable sector. Farmers do have some capability to adapt to changing weather and climate, but this capability is contingent on many factors, including geographical and socioeconomic conditions. Assessing the actual adaptation potential in the agricultural sector is therefore an empirical issue, to which this paper contributes by presenting a study examining the impacts of climate change on cereal yields in 55 developing and developed countries, using data from 1991 to 2015. The results indicate that cereal yields are affected in all regions by changes in temperature and precipitation, with significant differences in certain macro-regions in the world. In Southern Asia and Central Africa, farmers fail to adapt to climate change. The findings suggest that the world should focus more on enhancing adaptive capacity to moderate potential damage and on coping with the consequences of climate change. [ABSTRACT FROM AUTHOR]