Photo Marc Baudry
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  • Office in Paris Nanterre


  • Research group

      Transitions, Environnement, Énergie, Institutions, Territoires

  • Theme(s)
    • Economie de l'environnement et des ressources naturelles
    • Economie de l'innovation, du changement technologique et de la propriété intellectuelle
    • Econométrie appliquée
    • Microéconomie appliquée

Land allocation and the adoption of innovative practices in agriculture: a real option modelling of the underlying hidden costs

Marc Baudry, Edouard Civel, Camille Tévenart

The agricultural sector is faced with barriers to the adoption and dissemination of innovative practices that cannot be properly captured by the standard financial analysis of their profitability. These barriers can be particularly detrimental to the shift towards practices favorable to environmental protection and mitigation or adaptation to climate change. This article focuses on how different "hidden" costs of adoption can combine, including risk aversion, uncertainty and irreversibility. It emphasizes the particular context of agriculture, in particular the role of land allocation choices which make it possible to modulate the uncertain and potentially irreversible consequences of adoption by a particular type of hedging. It is highlighted from a numerical simulation on the case of Myscanthus in France that "hidden" costs of prima facie low magnitude can strongly curb the adoption and diffusion of an innovative practice.
Mot(s) clé(s)
Technology diffusion; Uncertainty, Irreversibility, Land allocation

The case for a Carbon Border Adjustment: Where do economists stand?

Marc Baudry, Alienor Cameron

On 14 July 2021, the European Commission formally adopted a proposal for a Carbon Border Adjustment Mechanism to mitigate the risk of carbon leakage caused by its increasingly ambitious environmental policies. There is a gap between the ways in which this issue is discussed in political spheres and the evidence provided by economic literature on it. The aim of this paper is to bridge this gap by presenting the context and policy debate surrounding carbon leakage and CBAs in the EU, reviewing the state of the economic literature on this topic, and discussing further research that is necessary to answer remaining policy concerns and unresolved research questions.
Mot(s) clé(s)
climate policy, carbon border adjustment, carbon leakage

Technological Progress and Carbon Price Formation: an Analysis of EU-ETS Plants

Marc Baudry, Anouk Faure

This study investigates the nature of technological progress in six manufacturing industries covered under the EU-ETS, plus the power sector, and its effect on carbon price formation using marginal abatement cost curves. We adopt a technological frontier framework, which we calibrate to input and output data at the plant level from 2013 to 2017, with a directional distance function approach. Our results reveal that most of the time, technological progress resulted in inflating baseline emissions, despite decreasing the carbon intensity of production. In our sample industries, technological progress therefore leads to increase abatement efforts, raising the equilibrium price of carbon.
Mot(s) clé(s)
Directed technological change, frontier analysis, EU-ETS

Emissions Trading with Transaction Costs

Marc Baudry, Anouk Faure, Simon Quemin

We develop an equilibrium model of emissions permit trading in the presence of fixed and proportional trading costs in which the permit price and firms’ participation in and extent of trading are endogenously determined. We analyze the sensitivity of the equilibrium to changes in the trading costs and firms’ allocations, and characterize situations where the trading costs alternatively depress or raise permit prices relative to frictionless market conditions. We calibrate our model to annual transaction and compliance data in Phase II of the EU ETS (2008-2012) which we consolidate at the firm level. We find that trading costs in the order of 10 k€ per annum plus 1€ per permit traded substantially reduce discrepancies between observations and theoretical predictions for firms’ behavior (e.g. autarkic compliance). Our simulations suggest that ignoring trading costs leads to an underestimation of the price impacts of supply-curbing policies, this difference varying with the incidence on firms.
Mot(s) clé(s)
Emissions trading, Transaction costs, Policy design and evaluation, EU ETS

The Fate of Inventions. What can we learn from Bayesian learning in strategic options model of adoption ?

Marc Baudry, Edouard Civel

We develop a game where heterogeneous agents have the option of adopting an invention of uncertain quality or postponing their decision to benefit from others' experience through Bayesian learning. Messages produced on the invention nature are noisy, representing the "teething troubles" of innovation. Our model gives microeconomic foundations to the S-shaped innovation diffusion curves, informational externality inducing strategic delay in agents' behavior. Moreover, noise could nip in the bud the diffusion of inventions: numerical simulations underline a bi-modal distribution of steady states for innovation diffusion, stillborn or fully developed, bringing to light a reputational valley of death for inventions.
Mot(s) clé(s)
Innovation diffusion ; Invention adoption ; Information ; Strategic options ; Bayesian learning.

The Private Value of Plant Variety Protection and the Impact of Exemption Rules

Marc Baudry, Adrien Hervouet

Plant Breeders Rights (PBRs) are sui generis IPRs intended to promote plant variety creation. Two characteristics distinguish PBRs from patents: the research and the farmers’ exemptions. This article attempts to assess the impact of these exemption rules on the private value of PBRs. For this purpose, a microeconometric model of PBRs renewals is developed and estimated. This model extends previous models of patents renewals by allowing the use of PBRs-specific variables. It is argued that simple tests on the coefficients associated to key PBRs-specific variables can provide insights into the impact of the two exemption rules. Implementation to PBRs in France over the period 1973-2011 for six major crops suggests that neither the farmers’ exemption nor the research exemption have a clear cut effect on the private value of PBRs. We conclude that there is no evidence to argue in favor of a reform of PBRs.
Mot(s) clé(s)
IPRs, Inventors’ exemption, Farmers’ exemption, Plant variety creation, Renewals.

Market pull instruments and the development of wind power in Europe: a counterfactual analysis

Marc Baudry, Clément Bonnet

Renewable energy technologies are called to play a crucial role in the reduction of greenhouse gas emissions. Since most of these technologies are immature, public policies provide for two types of support: technology push and market pull. The latter aims at creating demand for new technologies and at stimulating their diffusion. Nevertheless, due to the complex self-sustained dynamics of diffusion it is hard to determine whether newly installed capacities are imputable to the impulse effect of instruments at the beginning of the diffusion process or to the current support. The paper addresses this problem. A micro-founded model of technology diffusion is built to estimate the impact of the yearly average Return-on-Investment (RoI) on the yearly count of commissioned wind farms in six European countries over the last decade. A counter-factual analysis is carried out to assess the impact of policy instruments on the RoI and, indirectly, on diffusion.
Mot(s) clé(s)
Renewable energy; technology diffusion; wind power; market pull; technology push.

Promoting innovation on the seed market and biodiversity: the role of IPRs and commercialisation rules

Marc Baudry, Adrien Hervouet

This article deals with the impact of legislation in the seed sector on incentives for variety creation. Two categories of rules interact. The first category consists in intellectual property rights and is intended to address a problem of sequential innovation and R&D investments by the private sector. The second category concerns commercial rules that are intended to correct a problem of adverse selection on the seed market. We propose a dynamic model of market equilibrium with vertical product differentiation that enables us to take into account the economic consequences of imposing either Plant Breeders’ Rights (PBRs) or patents as IPRs. We simultaneously examine two kinds of commercial legislation: compulsory registration in a catalogue and minimum standards for commercialisation. Analytical results are completed by numerical simulations. The main result is that the combination between minimum standards and PBRs provides higher incentives for sequential innovation and may be preferred by a public regulator to maximise the expected and discounted total surplus when sunk investment costs are low or when they are medium and the probability of R&D success is sufficiently high. This solution differs from the combination of IPRs and commercialisation rules used in both the US and Europe. Otherwise, PBRs have to be replaced by patents, which yields a configuration close to that observed in the US. The catalogue commercialisation rule is seldom preferred to minimum standards, so that the combination of IPRs and commercialisation rules that prevails in Europe is not supported by our model.
Mot(s) clé(s)
Intellectual Property Rights, Plant Breeders’ Rights, Catalogue, Product differentiation, Asymmetric information, Biodiversity.

Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation

Marc Baudry, Masha Maslianskaïa-Pautrel

The article highlights the role of heterogeneity in the formation of hedonic prices. The article distinguishes between continuous and groupwise heterogeneity. The distinction helps understanding two important points. First, the analysis of market equilibrium with groupwise heterogeneity makes explicit the role of participation and incentives compatibility constraints for groups of buyers. The case of continuous heterogeneity may be thought of as a limit case of groupwise heterogeneity when the number of groups goes to infinity and their masses go to zero. The hedonic price curve is then obtained as the solution of a differential equation resulting from a market clearing condition. Second, the article outlines that submarkets emerge from market equilibrium only in the case of groupwise heterogeneity. The existence of submarkets means that the hedonic price function is continuous but the implicit price of characteristics is discontinuous at endogenous threshold values separating submarkets. Major implications for the valuation of environmental quality follow on. Based on numerical simulations, the article gives some insights into the way significant biases and drawbacks in the estimation of the implicit price of environmental quality can arise if the usual two steps procedure is implemented.
Mot(s) clé(s)
Environmental valuation, discrete heterogeneity, hedonicmodeling, vertical differentiation

Valuing patents using renewal data: an inquiry into the feasability of an automated patent scoring method

Marc Baudry, Béatrice Dumont

In this paper, we address the problem of patent valuation. With this aim in view, we focus on the feasibility of a patent rating system. This leads us to develop a structural model of patent renewal decisions based on real options that links patent renewals and patent value and to estimate it on micro level data. Results for a sample of European patents show that unobserved heterogeneity is too high to efficiently discriminate among patents and cast some doubt on the possibility to develop a reliable rating system based only on patent metrics.
Mot(s) clé(s)
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