ANDREAS LÖSCHEL, Centre for European Economic Research (ZEW)
Email: andreas.loeschel@cec.eu.int
BODO STURM, Centre for European Economic Research (ZEW), Center for European Economic Research (ZEW)
Email: sturm@zew.de
EVA BENZ, Centre for European Economic Research (ZEW)
Email: eva.benz@web.de

The Climate action and renewable energy package proposed by the European Commission in the beginning of 2008 suggests auctioning as basic principle for allocation for the upcoming third trading phase of the EU Emissions Trading Scheme that runs from 2013 to 2020. Overall, it is estimated that at least two third of the total quantity of allowances will be auctioned in 2013, to be increased to 100 % by 2020. In this paper, we emphasize the importance of a properly chosen auction design as the significantly higher auction share, compared to the past and current trading phase, is expected to yield a thin secondary market for CO2 allowances. We elaborate main criteria that a viable auction design is supposed to fulfil and propose a specific auction design for the third trading phase. The auction we recommend is a simultaneous dynamic uniform double auction.

CARTER G. BISHOP, Suffolk University Law School
Email: cbishop@suffolk.edu

Until the release of Revenue Ruling 88-76, only two states adopted limited liability company legislation, Wyoming in 1977 and Florida in 1982. In 1975, Alaska rejected adoption of the first limited liability company legislation based on concerns regarding the tax classification of a limited liability company. When those concerns were resolved in Revenue Ruling 88-76, all fifty states and the District of Columbia adopted legislation by 1996, only eight years later. However, Revenue Ruling 88-76 did not resolve whether a single member limited liability company should be classified as a sole proprietorship or a corporation. That matter was not resolved until 1997 with the release of the check-the-box regulations. Again, within a few years all states had amended their limited liability company legislation to permit a single member limited liability company. Further still, while Delaware adopted series limited liability company legislation in 1996, the check-the-box regulations did not address the classification of a series within a limited liability company. Since 1996 only six other states have followed suit. The 2008 release of Private Letter Ruling 200803004 classifying a series in the same manner as any other business entity under the check-the-box regulations signals a potential amendment of those regulations to embrace the series. If so, once again, all remaining states might be expected to provide for a series. These enormous events raise important transparency questions regarding where disregarded entities exist for state law purposes. Stated another way, what is the state of member status liability in these forms. As this Article explores, the tax classification and state statutory amendments have given rise to a proliferation of these forms while failing to address fundamental state law liability concerns that separate owners from the obligations in these forms.

CLAUDIA HERMELING, Centre for European Economic Research (ZEW)
Email: hermeling@zew.de
GEORG BUHLER, Centre for European Economic Research (ZEW)
Email: buehler@zew.de
MARTIN ACHTNICHT, Centre for European Economic Research (ZEW)
Email: achtnicht@zew.de

In this paper we analyze the impact of service station availability on the demand for alternative-fuel vehicles and the consumers' willingness to pay for an enlarged fueling infrastructure. We examine a stated preferences choice experiment conducted as a CAPI survey with about 600 interviews of potential car buyers in Germany and estimate the coefficients of a discrete choice model. We simulate different scenarios and analyze how individual choice probabilities for alternative fuel-types are changing with a modified fueling infrastructure. In our scenarios hybrids, LPG/CNG and hydrogen will be real alternatives to the existing conventional technologies. However, biofuels and electric power trains are well behind even in a situation where their infrastructure is equally developed. Moreover, on the basis of our model we compute what increases in fixed or variable costs consumers of different income groups are willing to accept for an increasing station density.

DAVID NISSEN, Columbia University - Center for Energy, Marine Transportation and Public Policy
Email: dn2022@columbia.edu

This paper derives the efficient tax-subsidy policy in an energy-economy-environment growth model with carbon emission externalities, and a carbon capture and sequestration (CCS) sector with learning by doing (LBD) externalities. First we derive the socially optimum pricing, quantities, cashflows, and valuation. Then we derive the government tax-subsidy policies for carbon emissions and CCS that support socially efficient economic behavior with a competitive CCS industry. The Social Accounting Matrix for supporting institutional structure is derived. We analyze the qualitative dynamics of the time paths of emissions and CCS and of pricing for atmospheric carbon, sequestration capacity, and LBD.

JONATHAN C. BORCK, Analysis Group, Inc., Boston, Massachusetts
Email: jborck@analysisgroup.com
CARY COGLIANESE, University of Pennsylvania Law School
Email: cary_coglianese@law.upenn.edu
JENNIFER NASH, Product Stewardship Institute, Harvard University - John F. Kennedy School of Government
Email: jennifer@productstewardship.us

Over the past decade, the U.S. Environmental Protection Agency (EPA) and states have developed environmental leadership programs (ELPs), a type of voluntary environmental program designed to recognize facilities with strong environmental performance records and encourage facilities to perform better. Proponents argue that ELPs overcome some of the limitations of traditional environmental regulation by encouraging managers to address the full gambit of environmental problems posed by their facilities, reducing the costs of environmental regulation, easing adversarialism, and fostering positive culture change. Although ELPs have been in place for at least five years at the federal level and in seventeen states, these programs have been subject to little empirical evaluation. In this paper, we chart a course for assessing whether ELPs achieve their goals. Drawing on archival research and interviews with government officials who manage these programs, we provide the first comprehensive analysis of the characteristics of these programs, describing program goals, activities, communication strategies, and data collection practices. We find that EPA and many states have established ELPs to improve the environment and to achieve various social goals such as improving relationships between business and government. When it comes to collecting data that could be used to assess these programs' successes, however, government efforts fall short. Even when agencies collect reliable data, these data usually cannot be aggregated sensibly and are insufficient to draw inferences about the true impact of these programs. They also cannot help answer the question of whether ELPs are actually prompting pollution reductions or improving regulatory relationships. These general data weaknesses are significant, even surprising, given the aspirations for ELPs to facilitate policy learning and advocates' claims that these programs are delivering important environmental benefits.

JONATHAN C. BORCK, Analysis Group, Inc., Boston, Massachusetts
Email: jborck@analysisgroup.com
CARY COGLIANESE, University of Pennsylvania Law School
Email: cary_coglianese@law.upenn.edu
JENNIFER NASH, Product Stewardship Institute, Harvard University - John F. Kennedy School of Government
Email: jennifer@productstewardship.us

In the past decade, EPA and over 20 states have created voluntary environmental leadership programs designed to recognize and reward businesses that take steps that go beyond compliance with the strictures of environmental law. Environmental leadership programs seek not only to spur direct improvements to environment quality but also to advance broader social goals that may lead indirectly to environmental improvements, such as improving business-government relationships and changing business culture. Measuring progress toward leadership programs' social goals is a particularly challenging but essential task if researchers and decision makers are to understand the full impacts of these programs. In this paper, Jonathan C. Borck, Cary Coglianese, and Jennifer Nash present strategies for overcoming the three core challenges in evaluating the social effects of leadership programs and any voluntary environmental initiative: (1) defining appropriate measures of social goals, (2) inferring whether programs achieve those goals, and (3) linking social effects to environmental outcomes. Only through careful attention to these three empirical issues will it be possible to rule out alternative explanations and determine whether environmental leadership programs are truly generating their intended positive social effects as well as improvements to the environment.

OREN PEREZ, Bar-Ilan University - Faculty of Law
Email: perezo@mail.biu.ac.il

The article develops a general critique of the economic approach to environmental regulation, drawing on the insights of systems theory. It highlights, first, the problematic of subjugating the regulatory system to a single purpose - which in the context of environmental economics is interpreted as the utilitarian maximization of collective welfare. Second, it questions the teleological pretense of the regulatory project as it is configured in the economic literature. It highlights in this context the problem of trans-systemic incompatibilities, which impede the incorporation of economic ideas into the systems of law and politics. Environmental economics in both its normative and socio-political strands, fails to provide a convincing response to this dilemma. The article discusses two examples of the reconstruction of economic ideas within the legal and political domains, drawing on the EU and US regulatory experience. This twofold critique of the economic approach can be extended, it is argued, to every regulatory project with far-reaching teleological ambitions. The article applies this critique to some alternative regulatory visions, such as self-regulation, reflexive law and responsive regulation, noting in this context the limitations of systems theory itself. It concludes with a discussion of the role of intuition in regulatory decision-making.

HENRIK LINDHJEM, Econ Pöyry
Email: henrik.lindhjem@poyry.com
STALE NAVRUD, affiliation not provided to SSRN
Email: stale.navrud@umb.no

The aggregate welfare measure for a change in the provision of a public good derived from a contingent valuation (CV) survey will be much higher if the same elicited mean willingness to pay (WTP) is added up over individuals rather than households. A trivial fact, however, once respondents are part of multi-person households it becomes almost impossible to elicit an uncontaminated WTP measure that with some degree of confidence can be aggregated over one or the other response unit. The literature is mostly silent about which response unit to use in WTP questions and in some CV studies it is even unclear which type has actually been applied. We test for differences between individual and household WTP in a novel, web-administered, split-sample CV survey asking WTP for preserving biodiversity in old-growth coniferous forests in Norway. Two samples are asked both types of questions, but in reverse order, followed by a question with an item battery trying to reveal why WTP may differ. We find in a between-sample test that the WTP respondents state on behalf of their households is not significantly different from their individual WTP. However, within the same sample, household WTP is significantly higher than individual WTP; in particular if respondents are asked to state individual before household WTP. Our results suggest that using individual WTP as the response unit would overestimate aggregate WTP, and thus bias welfare estimates in benefit-cost analyses. Thus, the choice of response format needs to be explicitly and carefully addressed in CV questionnaire design in order to avoid the risk of unprofitable projects passing the benefit-cost test.

LIRONG LIU, Sam Houston State University - Department of Economics and International Business
Email: lxl004@shsu.edu

In this paper I model the optimal monitoring and enforcement strategy when inspection capacity is fixed by budget or manpower constraints. I adopt a leverage enforcement structure that classifies firms into two groups with different enforcement intensities. Optimal monitoring and enforcement requires effective allocation of the fixed number of inspections to the two groups. In each period, a fixed number of firms are selected from each group for inspection, and those with the highest emissions are placed in the targeted group in which the inspection probability is higher. This transition structure induces rank-order tournaments among inspected firms. Once selected for inspection, the emissions of each firm are subject to a standard above which the firm pays a fixed penalty. I find that a regulator facing inspection capacity constraints should leverage the limited inspections by allocating more inspections to the targeted group. In addition, I show that targeting enforcement is generally superior to static enforcement. This is in accordance with findings in the literature. These results are consistent over different ranges of regulatory parameters.

FELIX MUNOZ-GARCIA, Washington State University - School of Economic Sciences
Email: fmunoz@wsu.edu
ANA ESPINOLA-ARREDONDO, Washington State University - School of Economic Sciences
Email: anaespinola@wsu.edu

This paper examines countries' free-riding in international environmental agreements (IEA) when, first, the treaty is non-enforceable, and second, countries do not have complete information about other countries' noncompliance cost. We analyze a signaling model whereby the country leading the negotiations of the international agreement can reveal its own noncompliance cost through the commitment level it signs in the IEA. Our results show that countries' probability to join the IEA is increasing in the free-riding benefits they can obtain from other countries' compliance, and decreasing in their own noncompliance costs. This paper shows that, when free-riding incentives are strong enough, there is no equilibrium in which all types of countries join the IEA. Despite not joining the IEA, countries invest in clean technologies. Finally, we relate our results with some common observations in international negotiations.

DR. RAJAGOPAL, Graduate School of Administration and Management (EGADE), Monterrey Institute of Technology and Higher Education (ITESM) - Mexico City Campus
Email: rajagopal@itesm.mx

Shopping malls contribute to business more significantly than traditional markets which were viewed as simple convergence of supply and demand. Shopping malls attract buyers and sellers, and induce customers providing enough time to make choices as well as a recreational means of shopping. However, competition between malls, congestion of markets and traditional shopping centers has led mall developers and management to consider alternative methods to build excitement with customers. This study examines the impact of growing congestion of shopping mall in urban areas on shopping conveniences and shopping behavior. Based on the survey of urban shoppers, the study analyzes the cognitive attributes of the shoppers towards attractiveness of shopping malls and intensity of shopping. The results of the study reveal that ambiance of shopping malls, assortment of stores, sales promotions and comparative economic gains in the mall attract higher customer traffic to the malls.

SUJIT KUMAR ROY, Goenka College of Commerce and Business Administration
Email: sujitkroy@lycos.com

The role of accounting in mitigating environmental problems has been widely discussed and debated in the various national and international forums. Yet, there is no universally agreed definition of environmental accounting. However, the pale green model of environmental accounting as a direct offshoot of the concept of sustainable development, enunciated by the World Commission on Environment and Development, allows traditional accounting to spread its net much wider in order to incorporate data in terms of both financial as well as physical quantities. This evolving model of accounting also contemplates other means such as narrative accounts, so as to capture more and more environmental effects. Practical articulation of this model is evidenced in the most recent developments, involving third generation environmental reporting frameworks by the Global Reporting Initiative (GRI), ISO 14000 series of environmental management standards, Social Accountability (SA) 8000 standards, etc. This paper, while demonstrating that environmental accounting creates a process to hold the corporations to account for its environmental obligations, delves on its structure and the emerging issues within this broad-based system.