Scientific progress and irreversibility: an economic interpretation of the ‘Precautionary Principle’

Gollier, Christian; Jullien, Bruno; Treich, Nicolas

doi:10.1016/s0047-2727(99)00052-3

Cited by 284 publications

(173 citation statements)

References 21 publications

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“…Garcia et al (2003) develop a systems dynamics model of the decomposition of R&D efforts into explorative and exploitative activities and identify four relevant factors: resource availability, exogenous competition, aging of knowledge bases, and adaptive capacity to the environment. Gollier et al (2000) formalize the rationality of adhering to a precautionary principle (i.e. keeping options open).…”

Section: Inspiration From Existing Economic and Evolutionary Modelsmentioning

confidence: 99%

Optimal diversity: Increasing returns versus recombinant innovation

Bergh

2008

Journal of Economic Behavior & Organization

133

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Choices regarding diversity play an important role in economics and innovation management, but often remain implicit. Once made explicit, the objectives of efficiency and diversity are usually posed as in conflict, as efficiency relates positively and diversity negatively to various increasing returns to scale in markets. Such a perspective, however, neglects the benefits of diversity in terms of realizing system improvements through recombinant innovation or spillovers. The latter implies a contribution of diversity to long-term efficiency. Dominant economic approaches that address diversity, such as option value and real options theories, regard benefits of diversity as exogenous. This paper proposes a simple model of variable, endogenous diversity to analyze the optimal balance between increasing returns to scale and recombinant innovation. It is discussed under which conditions one of four solutions is optimal: complete specialization regardless of which option, complete specialization in one specific option, symmetric diversity (perfect balance), and asymmetric diversity. The results give rise to a number of policy insights.

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Section: Inspiration From Existing Economic and Evolutionary Modelsmentioning

confidence: 99%

Optimal diversity: Increasing returns versus recombinant innovation

Bergh

2008

Journal of Economic Behavior & Organization

133

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“…Moreover, it may depend on the prior beliefs of the decision maker. This idea is reinforced by more recent results by Gollier et al (2000). In a two-period setting close to Ulph and Ulph's, they show that the irreversibility effect is guaranteed for all risks if the utility function belongs to a restrictive class.…”

Section: Introductionmentioning

confidence: 66%

“…A first thread follows Epstein (1980) and concentrates on determining the direction of the learning effect for all possible random vectors γ over a finite sample set and for all comparable information structures. As Ulph and Ulph (1997) noted, this restricts the conclusion to limited classes of problems, for example those later identified by Gollier et al (2000). An other thread looks for specific problems where the irreversibility effect is verified when Epstein conditions do not apply.…”

Section: Value Of Information As a Key To The Irreversibility Literaturementioning

confidence: 99%

“…In an analytical framework with a linear dynamic, Gollier et al (2000) showed that logarithmic utility implies that the structure of information has no effect on the initial decision. They wondered whether this was the explanation for the little or nonexistent learning effect found in earlier results by Nordhaus (1994), Manne and Richels (1992) and others 17 .…”

Section: How Policy Affects the Value Of Information On The Climatementioning

confidence: 99%

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Precautionary Effect and Variations of the Value of Information

Gilotte

Lara

2005

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Precautionary Effect and Variations of the Value of Information SummaryFor a sequential, two-period decision problem with uncertainty and under broad conditions (non-finite sample set, endogenous risk, active learning and stochastic dynamics), a general sufficient condition is provided to compare the optimal initial decisions with or without information arrival in the second period. More generally the condition enables the comparison of optimal decisions related to different information structures. It also ties together and clarifies many conditions for the so-called irreversibility effect that are scattered in the environmental economics literature. A numerical illustration with an integrated assessment model of climate-change economics is provided.

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“…Given the characteristics of the precautionary principle, the formal analysis within this paradigm is based on two main streams. The first stream is the theory of expected utility (Von Neumann and Morgenstern, 1944) and the effect of irreversibility and learning, initiated by ARROW and FISHER (1974) and HENRY (1974) and developed by GOLLIER et al (2000) and GOLLIER and TREICH (2003). The decision-maker maximises expected utility based on the estimated costs and benefits of different options and alternatives, in a context that involves irreversibility.…”

Section: Economic Models For the Interpretation Of The Precautionary mentioning

confidence: 99%

O princípio da precaução e a gestão dos riscos ambientais: contribuições e limitações dos modelos econômicos

Gonçalves¹

2013

Ambient. soc.

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Neste artigo apresentam-se os modelos mais relevantes que têm sido desenvolvidos para a interpretação econômica do princípio da precaução e a sua aplicação, com vista a conhecer as suas contribuições para o debate sobre a precaução e discutir a sua relevância prática para a decisão pública. Analisam-se igualmente suas virtualidades e principais limitações. Identificam-se também algumas ações que visam ultrapassar as limitações existentes. O conceito de precaução tem presentemente grande relevância na regulação ambiental em muitos países. É, no entanto, ainda vaga a legislação a respeito da aplicação do princípio da precaução na tomada de decisão relativa à gestão dos riscos ambientais. Por isso, tem sido largamente referida a necessidade de dispor de quadros reguladores para a implementação operacional deste princípio que clarifiquem conceitos e procedimentos adequados à natureza dos riscos ambientais.

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Scientific progress and irreversibility: an economic interpretation of the ‘Precautionary Principle’

Cited by 284 publications

References 21 publications

Optimal diversity: Increasing returns versus recombinant innovation

Optimal diversity: Increasing returns versus recombinant innovation

Precautionary Effect and Variations of the Value of Information

O princípio da precaução e a gestão dos riscos ambientais: contribuições e limitações dos modelos econômicos

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