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Stephen Walter Salant

Stephen Walter Salant
University of Michigan---Ann Arbor · Economics

phD

About

129
Publications
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5,215
Citations
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May 2009 - present
January 1986 - present

Publications

Publications (129)
Article
Full-text available
Throughout his career, Ngo Van Long made substantial contributions to applied economic theory. With nearly 200 articles and 8 books to his credit, his contributions span the fields of international trade, industrial organization, public finance, natural resources, and environmental economics. This paper contributes to the significant literature whi...
Article
Full-text available
Governments often impose price floors to protect sellers against low prices in markets characterized by uncertainty. Hard floors arise in grain and currency markets whenever the government acquisitions at the support price are unconstrained. Soft floors arise whenever such acquisitions are subject to a binding constraint. An important special case...
Article
Full-text available
The theoretical literature following Hotelling (J Polit Econ 39:137–175, 1931) assumed that all nonrenewable resource needs are satisfied by one type of resource (e.g. “oil”), extractible at different per-unit costs. This formulation implicitly assumes that all users are the same distance from each resource pool, that all users can switch costlessl...
Article
We show that oil production from existing wells in Texas does not respond to oil prices, while drilling activity and costs respond strongly. To explain these facts, we reformulate Hotelling’s classic model of exhaustible resource extraction as a drilling problem: firms choose when to drill, but production from existing wells is constrained by reser...
Article
This paper clarifies issues debated by A. C. Pigou and Frank Knight about correcting inefficient use of congestible resources, focusing for concreteness on their original example of road congestion. Instead of government-imposed Pigouvian access fees, Knight favoured access fees set by private toll-setters. We consider the case of n≥2 congestible r...
Article
Keeping temperature change below 2° C will require leaving large reserves of fossil fuels unextracted. We assess alternative policies to achieve this goal in a world divided into two regions, one regulated with emissions pricing and one unregulated, supplied by multiple resource pools with different extraction costs and a carbon-free backstop whose...
Article
Full-text available
We study a widely used ordering process (“Early Bird Discounts”) whereby a profit-maximizing manufacturer permits his dealers to place advance orders at a discount before they set retail prices. We show that such discounts may be used to shift just enough channel profits to dealers to enable them to cover their fixed costs and stay in business. If...
Article
Professor of Economics (Emeritus), University of Michigan; Research Professor, University of Maryland; Visiting Scholar, Resources for the Future (RFF). I would like to thank Dallas Burtraw, Harrison Fell, Karsten Neuhoff, Richard Sandor, and Luca Taschini for valuable discussions leading up to this preliminary draft. The revisions suggested by Til...
Article
When importing durables and nondurables, consumers often cannot discern quality prior to purchase. If they cannot also identify the individual producer, exporters have diminished incentives to produce high quality goods. To raise the quality of traded experience goods, previous international literature has proposed consolidation of export firms and...
Article
Over the past 65 years, forest tenure in China has oscillated unpredictably between private and village property regimes. This policy-induced uncertainty has distorted the harvesting decisions of individuals granted rights to grow trees and has lowered the value of China's forest output. We provide an analytical framework for assessing these effect...
Article
Virtually every analysis of cap-and-trade programs assumes that firms must surrender permits as they pollute. However, no program, existing or proposed, requires such continual compliance. Some (e.g. the Acid Rain Program limiting SO2 emissions) require compliance once a year; others (e.g. the Regional Greenhouse Gas Initiative limiting CO2 emissio...
Chapter
Full-text available
Carbon leakage occurs when attempts to reduce greenhouse gas emissions drive markets to respond in ways that allow emissions to expand elsewhere. Much attention has been paid to carbon leakage across space, particularly the emissions response of trading partners with weaker climate policies. However, carbon leakage can also occur over time, as the...
Article
The purpose of this chapter is to provide an elementary introduction to the non-renewable resource model with multiple demand curves. The theoretical literature following Hotelling (1931) assumed that all energy needs are satisfied by one type of resource (e.g. ‘oil’), extractible at different per-unit costs. This formulation implicitly assumes tha...
Article
We show that oil production from existing wells in Texas does not respond to price incentives. Drilling activity and costs, however, do respond strongly to prices. To explain these facts, we reformulate Hotelling's (1931) classic model of exhaustible resource extraction as a drilling problem: firms choose when to drill, but production from existing...
Article
Full-text available
We review the literature on bankable emissions permits that has developed over the last two decades. Most articles analyze either theoretical or simulation models. The theoretical literature considers the problem of minimizing the discounted sum of social costs and the possibility of decentralizing the solution through competitive permit markets. I...
Article
Prior to 1985, virtually all analyses of forestry economics took the price of timber as given. Since Mitra and Wan (1985), however, the literature has sought to solve social planning problems where the price of timber, as reflected in the path of the marginal utility of consumption, is endogenous. The purpose here is to focus directly on the equili...
Article
Full-text available
When every individual's effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimental...
Article
We study a widely used ordering process (“Early Bird Discounts”) whereby a profit-maximizing manufacturer permits his dealers to place advance orders at a discount before they set retail prices. We show that such discounts may be used to shift just enough channel profits to dealers to enable them to cover their fixed costs and stay in business. If...
Article
Price collars have frequently been advocated to restrict the price of emissions permits. Consequently, collars were incorporated in the three bills languishing in Congress as well as in California?'s AB-32; Europeans are now considering price collars for EU ETS. In advocating collars, most analysts have assumed (1) collars will be implemented by go...
Article
The forestry literature has sought to describe competitive equilibria by fi rst solving social planning problems. This "indirect" approach may cease to be useful in determining market equilibrium if the government intervenes. The equilibrium price path of timber is characterized directly here under the assumption that once a site is cleared, the si...
Article
Previous analyses assumed that ?firms must surrender permits as they pollute. If so, then the price of permits may remain constant over measurable intervals if the government injects additional permits at a ceiling price or may even collapse if more permits are injected through an auction (Hasegawa and Salant 2012). However, no cap-and-trade progra...
Article
We consider a health authority seeking to allocate annual budgets optimally over time to minimize the discounted social cost of infection(s) evolving in a finite set of groups. This optimization problem is challenging since the standard SIS epidemiological model describing the spread of the disease contains a nonconvexity. Neither optimal control n...
Article
Efforts to limit cumulative emissions over the next century may be partially thwarted by the responses of fossil fuel suppliers. Current price-cost margins for major reserves are ample, leaving scope for significant price reductions if climate policies reduce demand for fossil fuels through conservation or substitution to clean alternatives. Most m...
Article
In developing countries, consumers can buy many goods either in formal markets or in informal markets and decide where to purchase based on the product's price and anticipated quality. We assume consumers cannot assess quality prior to purchase and cannot, at reasonable cost, identify who produced the good they are considering. Many products (meats...
Article
Full-text available
Individuals extracting common-pool resources in the field sometimes form output-sharing groups to avoid costs of crowding. In theory, if the right number of groups forms, Nash equilibrium aggregate effort should fall to the socially optimal level. Whether individuals manage to form the efficient number of groups and to invest within the chosen grou...
Article
Many researchers and commentators underestimate the length and importance of the time lags between initial research investment and ultimate impacts on the development and adoption of technological innovations. In both econometric studies of productivity and ex post and ex ante benefit-cost evaluations of research investments, researchers typically...
Article
Full-text available
Stabilizing greenhouse gas concentrations requires limiting cumulative emissions over the next century. Yet efforts to do so may be offset by emissions leakage, not only between countries but over time. Current price-cost margins for some of the world's largest reserves are considerable, so there is ample scope for price reductions if clean substit...
Article
Many researchers and commentators underestimate the length and importance of the time lags between initial research investment and ultimate impacts on the development and adoption of technological innovations. In both econometric studies of productivity and ex post and ex ante benefit-cost evaluations of research investments, researchers typically...
Article
The common-property problem results in excessive mining, hunting, and extraction of oil and water. The same phenomenon is also responsible for excessive investment in R&D and excessive outlays in rent-seeking contests. We propose a “Partnership Solution” to eliminate or at least mitigate these excesses. Each of N players joins a partnership in the...
Article
Throughout the developing world, many water distribution systems are unreliable. As a result, it becomes necessary for each household to store its own water as a hedge against this uncertainty. Since arrivals of water are not synchronized across households, serious distributional inefficiencies arise. We develop a model describing the optimal inter...
Article
Additional gold can be made available either by mining at high cost (approximately $250 per ounce in 1997 dollars) or by mobilizing government stocks at zero cost. Governments own massive above-ground stocks but loan out only a small percentage of these stocks. Making all government gold available for private uses immediately through some combinati...
Article
Common intuition and experimental psychology suggest that the ability to self-regulate, willpower, is a depletable resource. We investigate the behavior of an agent who optimally consumes a cake (or paycheck or workload) over time and who recognizes that restraining his consumption too much would exhaust his willpower and leave him unable to manage...
Article
Can choice of mutualistic partners and the degree of their utilization determine (1) mutualistic partner coexistence, (2) relative abundance of mutualistic partners, and (3) environment-dependent changes in relative abundance? We investigate these questions in the context of the plant-mycorrhizal fungal mutualism by building a biological market mod...
Article
Full-text available
The common-property problem results in excessive mining, hunting, and extrac- tion of oil and water. The same phenomenon is also responsible for excessive investment in R&D and excessive outlays in rent-seeking contests. We propose a "Partnership Solution" to eliminate or at least mitigate these excesses. Each of N players joins a partnership in th...
Article
Full-text available
The common property problem, first analyzed in the context of overfishing (Gor- don, 1954), is ubiquitous: independent tax authorities will overtax the same base (Berkowitz and Li, 2000), and independent researchers will exert excessive eort to make the same breakthrough (Wright, 1983). We propose a "Partnership Solution" to this common prop- erty...
Article
The subjective value given to time, also known as the psychological interest rate, or the subjective price of time, is a core concept of the microeconomic choices. Individual decisions using a unique and constant subjective interest rate will refer to an exponential discounting function. However, many empirical and behavioural studies underline the...
Article
Many resources extracted under the rule of capture are not utilized immediately but are stored instead for later use: oil is stockpiled; fish are frozen; groundwater is bottled; rivers are dammed; land, deforested as the way to establish title, remains uncultivated. We examine the positive and normative effects of such storage. Privatization of com...
Article
Beginning in the early 1990s, stricter government regulation to protect public health and the environment led to radical changes in waste technology and management in the United States. More stringent regulation induced wholly new technologies, including the lining of landfills, the control of their gas emissions, and changes in the economic scale...
Article
Analyses of trade quotas typically assume that the quota restricts the flow of some nondurable good. Many real-world quotas, however, restrict the stock of durable imports. We consider the cases where (1) anyone is free to export against such quotas and where (2) only those allocated portions of the total quota are free to export against such quota...
Article
Full-text available
Following the IPCC's report (2005), which recommended the development and the use of carbon capture and sequestration (CCS) technologies in order to achieve the environmental goals, dened by the Kyoto Protocol, the issue addressed in this paper concerns the optimal strategy regarding the long-term use of CCS technologies. The aim of this paper is t...
Article
this paper are entirely those of the author(s) and not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.Working papers describe research in progress by the author(s) and are published to elicit comments and to further debate Summary Although much interesting work has been done by economists...
Article
Full-text available
Following the IPCC's report (2005), which recommended the development and the use of carbon capture and sequestration (CCS) technologies in order to achieve the environmental goals, dened by the Kyoto Protocol, the issue addressed in this paper concerns the optimal strategy regarding the long-term use of CCS technologies. The aim of this paper is t...
Article
Full-text available
: Gold has both private uses (depletion uses and service uses) and government uses. It can be obtained from mines with high extraction costs (about $300 per ounce) or from aboveground stocks with no extraction costs. Governments still store massive stocks of gold. Making government gold available for private uses through some combination of sales a...
Article
Full-text available
Analyses of common property extraction under free access follow two distinct paths, traditional and game-theoretic, giving rise to two standard methodologies. One methodology avoids game-theoretic analysis by assuming that aggregate extraction in each period induces full rent dissipation. The second methodology solves for the Markov-perfect equilib...
Article
Full-text available
Oligopoly models where prior actions by firms affect subsequent marginal costs have been useful in illuminating policy debates in areas such as antitrust regulation, environmental protection, and international competition. The authors discuss properties of such models when a Cournot equilibrium occurs at the second stage. Aggregate production costs...
Article
This paper identifies an overlooked implication of models of research joint ventures initiated by d'Aspremont and Jacquemin (1988). Even though the aggregate R&D cost of identical firms in a research joint venture would be lowest if they invested equally to reduce subsequent production costs, nonetheless members may often enlarge their overall join...
Article
Full-text available
We examine the problem of the intertemporal allocation of the solid waste of cities within the United States to spatially distributed landfills and incinerators, taking into account that capacity at existing and potential landfills is scarce. Amendments to the Solid Waste Disposal Act have been proposed to restrict waste flows between states by mea...
Article
Full-text available
This paper examines a characteristic of common property problems unmodeled in the published literature: extracted common reserves are often stored privately rather than sold immediately. We examine the positive and normative effects of such storage. Privatization of common reserves through storage may eliminate inefficiencies altogether but the pre...
Article
Gold has both private uses (depletion uses and service uses) and government uses. It can be obtained from mines with high extraction costs (about $300 per ounce) or from above ground stocks with no extraction costs. Governments still store massive stocks of gold. Making government gold available for private uses through some combination of sales an...
Article
Full-text available
This paper generalizes Hotellings (1931) theory of nonrenewable resources to situations where resource pools and their users are distributed spatially. Extraction and transport costs are assumed to be linear in the rate of extraction, but utilization of each deposit may require a setup cost. While Herndahls (1967) analysis of the socially optimal u...
Article
Full-text available
This paper examines a characteristic of common property problems unmodeled in the published literature: extracted common reserves are often stored privately rather than sold immediately. We examine the positive and normative effects of such storage, Privatization of common reserves through storage may eliminate inefficiency altogether but the prema...
Article
This paper generalizes Hotelling?s (1931) theory of nonrenewable resources to situations where resource pools and their users are distributed spatially. Extraction and transport costs are assumed to be linear in the rate of extraction, but utilization of each deposit may require a setup cost. While Herfindahl?s (1967) analysis of the socially optim...
Article
Gold has both private uses (depletion uses and service uses) and government uses. It can be obtained from mines with high extraction costs (about $300 per ounce) or from above ground stocks with no extraction costs. Governments still store massive stocks of gold. Making government gold available for private uses through some combination of sales an...
Article
We examine the intertemporal allocation of the solid waste of cities within the United States to spatially distributed landfills and incinerators, taking into account that capacity at existing and potential landfills is scarce. Amendments have been proposed to restrict waste flows between states by means of quotas and surcharges. We assess the aggr...
Article
Full-text available
While reviewing "Game Theory and the Law" by Baird, Gertner and Picker, the essay provides a self-contained, nontechnical introduction to modern noncooperative game theory.
Article
Full-text available
While the theory of natural selection posits that those behaviors maximizing reproductive success (“fitness”) tend to survive, behavioral ecologists more frequently explain observed behaviors as maximizing some “currency” on which fitness depends. In the case of optimal foraging theory, for example, the currency is the long-term rate of energy inta...
Article
We consider a monopolist selling durable goods to consumers with unit demands but different preferences for quality. The seller can offer items of different quality at the same time to induce buyers to self-select, as in Mussa-Rosen (1978), but is not artificially constrained to offer only one such menu. Instead the seller can offer without precomm...
Article
Full-text available
The authors examine the choice of quotas by legal volume-restricting organizations: cartels, commodity agreements, agricultural marketing boards, and prorationing boards. Unlike their illegal counterparts, legal cartels have published regulations and broader enforcement capabilities. However, differences in costs and size among cartel members still...
Article
As developing countries become major consumers of the global supply of commercial energy, it is essential to understand the determinants of future energy prices. At the same time, many developing countries are relying on exports of their own natural resources - tropical hardwoods, oil, tin, gold, and other minerals - to generate badly needed foreig...
Article
The endogenous merger model of Kamien and Zang (QJE, 1990) is generalized to price competition with perfect complements and used to show that some socially desirable mergers will fail to occur. We also clarify the link between this merger model and the ‘exogenous merger’ literature.
Article
This paper identifies an overlooked implication of models of research joint ventures initiated by d'Aspremont and Jacquemin (1988). Even though the aggregate R&D cost of identical firms in a research joint venture would be lowest if they invested equally to reduce subsequent production costs, nonetheless members may often enlarge their overall join...
Article
Full-text available
This paper provides sufficient conditions for the existence of a unique Cournot equilibrium. Previous uniqueness results have depended on an assumption of non-degeneracy of equilibrium. As we illustrate, this assumption often fails in multi-stage games with proper Cournot subgames. Since our uniqueness results do not depend on this assumption, they...
Article
Full-text available
By using a broker, the owner of a house can speed up his search for buyers but must pay a percentage of the sale price as a commission. Nonstationarities inherent in the housing market may make it optimal to market a house "by-owner" at the outset and to retain a broker only if the house remains on the market later in the selling season. This artic...
Article
Full-text available
In past experiments, committees voting under majority rule have often failed to choose the Condorcet alternative (the core). Since this failure of theory might be due to flaws in experimental design, we developed a voting procedure in which the unique element in the core is also the unique outcome when a Nash equilibrium in undominated strategies f...
Article
Full-text available
The authors analyze a dynamic game between consumers and the sole seller of a durable good. Unlike previous analyses, they assume that there exists a finite collection of buyers rather than a continuum. None of the main conclusions of the literature on durable-goods monopoly survives this change in assumption. Coase's conjecture that a durable-good...
Chapter
Celebrating the 150th anniversary of Cournot's work, which Mark Blaug has characterized as 'a book that for sheer originality and boldness of conception has no equal in the history of economics thought', this volume focuses on the properties and uses of Cournot's model of competition among the few. While there are many issues that Cournot explored...
Article
Full-text available
The traditional model for assessing the effects of treble damage pena lties on price fixing is reexamined and shown to yield surprising res ults. Unless the probability of detection is extremely sensitive to the price charged, increasing the damage multiple will affect neither market efficiency nor expected distribution, and will raise the mark et...

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Assume as the newspapers assert that Jeffrey Epstein killed himself by kneeling into a noose rather than jumping from the upper bunk. This is known as  »soft hanging » Among self-inflicted hanging deaths, is this method common? Are data collected on bone breakage of individuals who use this method to kill themselves? Including bone breakage among those who hang themselves with the force of a considerable drop is irrelevant if it is known in his case that no such force was applied.

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