power systems expansion planning with time varying co2 tax abstract this article analyzes the effects of implementing a two stage carbon tax on a ten year power expansion planning model the timing effect of the tax is analyzed by studying the costs capacity investments economic dispatch and co 2 emissions in fixed flat and two stage tax schemes results show that under the absence of political economy constraints the most cost effective solution is to have a low co 2 tax in the first stage and an optimal higher tax in the final stage however early actions can be justified depending on how relevant the policy maker considers the beneficial economic and not economic outcomes of a higher first stage tax consequently focusing on a final period goal may not be the best way of facing the global warming problem if emissions saved early have an important value when preventing the consequences of climate change

cournot oligopoly with information sharing this paper studies the incentives for information sharing among firms in a cournot oligopoly facing a linear uncertain demand and an affine conditional expectation information structure no information sharing is found to be the unique equilibrium in two cases in which the signals with equal precision are assumed indivisible and infinitely divisible however the nonpooling equilibrium converges to the situation where the pooling strategies are adopted as the amount of information increases hence the efficiency is achieved in the competitive equilibrium as the number of the firm become large

are corruption and taxation really harmful to growth firm level evidence exploiting a unique data set containing information about the estimated bribe payments of ugandan firms the authors study the relationship between bribe payments taxes and firm growth in uganda for the period 1995 97 using industry location averages to circumvent the potential problem of endogeneity and to deal with issues of measurement error they find that both the rate of taxation and the rate of bribery are negatively correlated with firm growth for the full data set a one percentage point increase in the bribery rate is associated with three percentage point reduction in firm growth an effect about three times that of taxation moreover after excluding outliers the authors find that bribery has a much greater negative impact on growth and taxation a considerably smaller one this provides some validation of firm level theories of corruption which posit that corruption retards development even more than taxation does

aggregation of information in large cournot markets consider a homogeneous product market where firms have private information about an uncertain demand parameter and compete in quantities we examine the convergence properties of bayesian cournot equilibria as the economy is replicated and conclude that large cournot or almost competitive markets do not aggregate information efficiently except possibly when the production technology exhibits constant returns to scale even in a competitive market there is a welfare loss with respect to the first best outcome due to incomplete information in general nevertheless a competitive market is efficient taking as given the decentralized private information structure of the economy endogenous and costly information acquisition is examined and seen to imply that the market outcome always falls short of the first best level with decreasing returns to scale the results are also shown to be robust to the addition of extra rounds of competition which allows firms to use the information revealed by past prices explicit closed form solutions yielding comparative static results are obtained for models characterized by quadratic payoffs and affine information structures

coalition formation in transmission expansion planning the study of a decentralized coalition formation scheme in a specific power systems transmission expansion scenario is the purpose of this paper the authors define first who are the agents in the expansion game and provide a decentralized coalition scheme based on bilateral shapley values finally they allocate the total costs of expansion amongst the agents based on the coalition history and they compare their method with a centralized scheme

quantifying the effects of uncertain climate and environmental policies on investments and carbon emissions a case study of chile abstract in this article we quantify the effect of uncertainty of climate and environmental policies on transmission and generation investments as well as on co2 emissions in chile we use a two stage stochastic planning model with recourse or corrective investment options to find optimal portfolios of infrastructure both under perfect information and uncertainty under a series of assumptions this model is equivalent to the equilibrium of a much more complicated bi level market model where a transmission planner chooses investments first and generation firms invest afterwards we find that optimal investment strategies present important differences depending on the policy scenario by changing our assumption of how agents will react to this uncertainty we compute bounds on the cost that this uncertainty imposes on the system which we estimate ranges between 3 2 and 5 7 of the minimum expected system cost of 57 6b depending on whether agents will consider or not uncertainty when choosing investments we also find that if agents choose investments using a stochastic planning model uncertain climate policies can result in nearly 18 more co2 emissions than the equilibrium levels observed under perfect information our results highlight the importance of credible and stable long term regulations for investors in the electric power industry if the goal is to achieve climate and environmental targets in the most cost effective manner and to minimize the risk of asset stranding

information acquisition in global games of regime change abstract we study costly information acquisition in global games of regime change that is coordination games where payoffs are discontinuous in the unobserved state and in the agents average action we show that only symmetric equilibria exist and provide sufficient conditions for uniqueness we then characterize the value of information in these games and link it to the underlying parameters of the model we investigate equilibrium efficiency complementarities in information choices and the trade offs between public and private information we show that information acquisition can be inefficient and that strategic complementarities in actions do not always translate into strategic complementarities in information acquisition finally we find that public and private information can be complements these results contrast findings in linear quadratic models where payoffs depend continuously on both the unobserved state and the agents average action

information use and acquisition in price setting oligopolies asymmetric price setting multi product suppliers have access to multiple sources of information about demand conditions where the publicity of each source corresponds to the cross industry correlation of signals received from it a signal s influence on suppliers prices is increasing in its publicity as well as in its precision the emphasis on relatively public information is stronger for smaller suppliers who control narrower product portfolios when information is endogenously acquired suppliers listen to only a subset of information sources this subset is smaller when products are less differentiated and when the industry is less concentrated smaller suppliers focus attention on fewer information sources the inefficiencies arising from information acquisition and use are identified the associated externalities depend upon the extent of product differentiation the concentration of the industry and the degree of decreasing returns to scale

a three level static milp model for generation and transmission expansion planning we present a three level equilibrium model for the expansion of an electric network the lower level model represents the equilibrium of a pool based market the intermediate level represents the nash equilibrium in generation capacity expansion taking into account the outcomes on the spot market and the upper level model represents the anticipation of transmission expansion planning to the investment in generation capacity and the pool based market equilibrium the demand has been considered as exogenous and locational marginal prices are obtained as endogenous variables of the model the three level model is formulated as a mixed integer linear programming milp problem the model is applied to a realistic power system in chile to illustrate the methodology and proper conclusions are reached

learning from prices public communication and welfare we study the effect of releasing public information about productivity or monetary shocks using a micro founded macroeconomic model in which agents learn from the distribution of nominal prices while a public release has the direct beneficial effect of providing new information it also has the indirect adverse effect of reducing the informational efficiency of the price system we show that the negative indirect effect can dominate thus the public information release may increase uncertainty about the monetary shock and reduce welfare we find that the optimal communication policy is always to release either all or none of the information

impact of forecast errors on expansion planning of power systems with a renewables target abstract this paper analyzes the impact of production forecast errors on the expansion planning of a power system and investigates the influence of market design to facilitate the integration of renewable generation for this purpose we propose a programming modeling framework to determine the generation and transmission expansion plan that minimizes system wide investment and operating costs while ensuring a given share of renewable generation in the electricity supply unlike existing ones this framework includes both a day ahead and a balancing market so as to capture the impact of both production forecasts and the associated prediction errors within this framework we consider two paradigmatic market designs that essentially differ in whether the day ahead generation schedule and the subsequent balancing re dispatch are co optimized or not the main features and results of the model set ups are discussed using an illustrative four node example and a more realistic 24 node case study

economic externalities in transmission network expansion planning abstract this paper discusses investing in transmission capacity and its link with investing in generation capacity since opportunity costs in transmission and generation capacity are dependent externalities arise when investment decisions are decentralized externalities are market failures which appear when a decision of a particular agent changes another agent s welfare but not vice versa when generation and transmission investment decisions are made separately generation investment introduces negative externalities to transmission planning a centralized multistage stochastic model is formulated for finding the pareto optimal solution of investments in transmission and generation capacity using the model we show some examples of externalities in transmission planning for the ieee 24 bus test system and the peruvian system finally we found that for the peruvian system simultaneous optimal planning of generation and transmission capacity gave significant savings around 585 million which represents 10 of the total cost

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

does demand for product quality increase worker training abstract we uniquely examine the relationship between firm organized training and the sensitivity of consumer demand to product quality cross section panel fixed effect and instrumental variable estimates confirm that british workplaces provide more intensive training when their product demand is more sensitive to product quality robustness checks including using alternative key variable definitions and a counterfactual analysis examining the importance of competing on price support this confirmation

trade association disclosure rules incentives to share information and welfare in this article i propose a monopolistic competition framework to analyze the effects of different disclosure rules used by trade associations on the incentives to share information and on the welfare of consumers firms and society this framework is appropriate whenever a single firm cannot influence aggregate market magnitudes and serves as a benchmark for the analysis of information pooling agreements abstracting from strategic considerations i report two main results first a policy of nonexclusionary disclosure destroys the incentives to share information while exclusionary disclosure preserves them second information sharing increases expected total surplus with cournot competition but decreases it with bertrand competition in the context of a quadratic normal model with demand uncertainty

transmission expansion planning in electricity markets this paper presents a mixed integer linear programming lp formulation for the long term transmission expansion planning problem in a competitive pool based electricity market to achieve optimal expansion planning while modeling market functioning we define a number of scenarios based on the future demand in the system and we simulate the maximization of the aggregate social welfare investment and operating costs transmission losses and generator offers and demand bids are considered we propose to use a set of metrics to rate the effect of the expansion on the generators demands and the system as a whole the proposed model is applied to the garver six bus system and to the ieee 24 bus reliability test system simulation results can be interpreted in economic terms based on the values of the metrics obtained for different scenarios parameters and topologies

toward fully renewable electric energy systems renewable energy sources are here to stay for a number of important reasons including global warming and the depletion of fossil fuels we explore in this paper how a thermal dominated electric energy system can be transformed into a renewable dominated one this study relies on a stochastic programming model that allows representing the uncertain parameters plaguing such long term planning exercise being the final year of our analysis 2050 we represent the transition from today to 2050 by allowing investment in both production and transmission facilities with the target of achieving a renewable dominated minimum cost system the methodology developed is illustrated using a realistic large scale case study finally policy conclusions are drawn

can cross border transmission expansion lead to fair and stable cooperation northeast asia case analysis abstract in this paper we present a framework for analyzing cross border power interconnection projects based on cooperative game theory compared to existing studies we not only quantify the benefits of interconnections and suggest cost benefit allocation techniques but also analyze the stability of the allocations which is a crucial aspect in regions where coordination and mutual trust between countries have not been built yet we apply our framework to the northeast asia where six countries china russia mongolia south korea north korea and japan are suggested for cross border transmission expansion planning cooperation cost benefits allocation of the interconnections is analyzed according to the marginal contribution of each country to the grand coalition and the minimal dissatisfaction of each coalition that ensures the stability of the solution accordingly game theory concepts the shapley value and the nucleolus are used in our analysis moreover we employ the core concept to further analyze the stability of the allocation solution and present a visualization of the feasible space formed by all stable allocations we found out that the grand coalition i e the scenario where all countries agree on the cooperation is the optimal and stable coalition with 7 1 billion total savings per year we also suggested a scheme of investment allocation and payments between the northeast asian countries in order to ensure that the proposed interconnections are plausible in practice

sequential coordination of transmission expansion planning with strategic generation investments this paper proposes mathematical models for sequential coordination of transmission expansion planning with strategic generation investments the proactive and reactive coordinations are modeled and studied the interaction between transmission company transco and strategic generation companies gencos is modeled using the sequential move game this is while the interaction between the strategic gencos is modeled as a simultaneous move game in the proactive coordination the transco expands its future transmission capacities taking into account the strategic investments by gencos in the reactive coordination strategic gencos move first and expand their future generation capacities and then transco expands the transmission capacity the proactive coordination is modeled as a mixed integer bilevel linear program miblp and the reactive coordination is modeled as a mixed integer linear program milp the miblp has binary variables in both upper and lower levels the moore bard algorithm is parallelized and used to solve the miblp the mathematical models and the parallelized moore bard algorithm are tested on 3 bus and 6 bus example systems and the modified ieee rts96 also the ieee 118 bus test system is studied using a heuristic version of the moore bard algorithm

workers skills product quality and industry equilibrium in this paper we develop a model of a vertically differentiated industry where the production of higher quality goods needs a higher fraction of specialized labour in the first stage firms choose the quality of their products in the second both good prices and skilled workers wages are determined we show that in duopoly though supplying different variants of the product firms tend to cluster either at the bottom or at the top of the quality ladder depending on skilled labour availability this switch in equilibrium qualities creates a discontinuous behaviour for the wage rate of skilled workers when the supply of skilled labour is made endogenous two equilibria are simultaneously possible one with low skill low quality the other with high skill high quality

research note cost uncertainty is bliss the effect of competition on the acquisition of cost information for pricing new products we examine the optimal acquisition of information about a common uncertain cost factor by two competing firms seeking to price a new product we show that existing findings regarding the acquisition of demand information or the acquisition of either cost or demand information related to quantity decisions do not extend to this case for cost information with price competition the information acquisition strategies are strategic substitutes even though the price decisions that are based on the information are strategic complements competition decreases the expected value of cost information moreover when competition is intense and the cost of information low identical firms do not acquire the same amount of cost information even when information is free cost uncertainty acts like a fog that lessens the destructive effect of price competition when products are close substitutes and thus increases expected profits buyers on the other hand are better off when competing firms are informed about cost even though the expected value of cost information strictly decreases with competition the optimal price for industry specific cost information set by an information vendor increases with competition when the firms products are sufficiently substitutable

nash equilibrium in strategic bidding a binary expansion approach this paper presents a mixed integer linear programming solution approach for the equilibrium problem with equilibrium constraints epec problem of finding the nash equilibrium ne in strategic bidding in short term electricity markets a binary expansion be scheme is used to transform the nonlinear nonconvex ne problem into a mixed integer linear problem milp which can be solved by commercially available computational systems the be scheme can be applicable to cournot bertrand or joint price quantity bidding models the approach is illustrated in case studies with configurations derived from the 95 gw brazilian system including unit commitment decisions to the price maker agents

a bilevel approach to transmission expansion planning within a market environment we present a bilevel model for transmission expansion planning within a market environment where producers and consumers trade freely electric energy through a pool the target of the transmission planner modeled through the upper level problem is to minimize network investment cost while facilitating energy trading this upper level problem is constrained by a collection of lower level market clearing problems representing pool trading and whose individual objective functions correspond to social welfare using the duality theory the proposed bilevel model is recast as a mixed integer linear programming problem which is solvable using branch and cut solvers detailed results from an illustrative example and a case study are presented and discussed finally some relevant conclusions are drawn

gathering information before signing a contract after being offered a contract an agent has the possibility to observe the state of nature this enables him to refuse the contract in unfavorable states but burdens him with an observation cost the authors show that the principal offers a contract in which the agent has no incentive to observe the state of nature and they explore its terms later they show that the principal finds it profitable to organize competition between several agents even though he has monopoly power and can push a single agent down to his reservation utility copyright 1992 by american economic association

valuation of flexible transmission investment options under uncertainty significant uncertainty surrounds the future development of electricity systems primarily in terms of size location and type of new renewable generation to be connected in this paper we assess the potential for flexible network technologies such as phase shifting transformers and non network solutions such as energy storage and demand side management to constitute valuable interim measures within a long term planning strategy the benefit of such flexible assets lies not only in the transmission services provided but also in the way they can facilitate and de risk subsequent decisions by deferring commitment to capital intensive projects until more information on generation development becomes available a novel stochastic formulation for transmission expansion planning is presented that includes consideration of investment in these flexible solutions the proposed framework is demonstrated with a case study on the ieee rts where flexible technologies are shown to constitute valuable investment options when facing uncertainties in future renewable generation development

training and worker effort a signalling perspective this paper analyzes the interaction between firms investment in general skills training and workers incentives it shows that when a firm has an informational advantage over its workers its provision of free general skills training can serve as a signal that there will be a long term relationship between the firm and its workers this signal induces the workers to exert more effort in learning firm specific skills which enhances the firm s profits in contrast with most of the existing literature the model implies that firms may provide free general skills training even if there is no labour market friction ce memoire analyse l interaction entre l investissement des entreprises dans l acquisition d habiletes generales de leurs employes et les incitations des travailleurs a fournir un effort on montre que quand une firme a un avantage informationnel sur ses travailleurs le fait de fournir gratuitement de la formation qui permette aux employes d acquerir des habiletes generales peut servir de signal qu il va y avoir une relation a long terme entre la firme et ses travailleurs ce signal incite les travailleurs a investir plus d effort dans l acquisition d habiletes specifiques a la firme ce qui augmente les profits de l entreprise ce modele en porte a faux par rapport au gros de la litterature existante suggere que les entreprises peuvent fournir gratuitement de la formation permettant aux employes d acquerir des habiletes generales meme s il n y a pas de friction dans le marche du travail

why do firms train theory and evidence this paper offers a theory of training whereby workers do not pay for the general training they receive the superior information of the current employer regarding its employees abilities relative to other firms creates ex post monopsony power and encourages this employer to provide and pay for training even if these skills are general the model can lead to multiple equlibria in one equilibrium quits are endogenously high and as a result employers have limited monopsony power and provide little training while in another equilibrium quits are low and training is high using microdata on german apprentices we show that the predictions of our model receive some support from the data

optimal research for cournot oligopolists we extend the classical cournot model to take account of uncertainty in either the cost function or the demand function by undertaking research firms can acquire private asymmetric information to help resolve their uncertainty and make a more informed production decision the model is a two stage game in the first stage research levels are chosen and in the second stage conditional on private research outcomes production decisions are made we find that for a linear continuous information structure there is a unique nash equilibrium to the game in the equilibrium there may be an inefficient amount of aggregate research and there may be incomplete pooling as well the model specializes to the classical case when the cost of research is zero and each firm gains essentially the same information by doing an infinite amount of research or when the cost of research is so high no firm undertakes research

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

pricing network effects the increase in the information that firms can collect or purchase about network effects across consumers motivates two important questions how does a firm s pricing strategy react to detailed information on network effects are the availability and use of such information beneficial or detrimental to consumer surplus we develop a model in which a monopoly sells a network good and price discriminates based on information about consumers influence and consumers susceptibility to influence the monopoly optimally offers consumers price discounts for their influence and charges price premia for their susceptibility the price premia and the price discounts are simple functions of the pattern of network effects we determine under which conditions relative to uniform price consumer surplus increases and we characterize the value of information on network effects for the monopoly

prices as signals of product quality this paper is concerned with the provision of quality in markets in which consumers have only imperfect information the analysis focuses on a market for a product that can be produced at different quality levels all consumers prefer higher to lower quality but they may differ in their willingness to pay for quality producers can produce any quality they like but higher qualities are more costly to produce the information in this market is imperfect in the sense that the exact quality chosen by a firm is known only to the firm itself some information about the quality of a firm s product will however reach its potential customers even if they do not make any special effort to acquire it within the framework suggested here two conclusions are drawn first prices may serve as signals which exactly differentiate the available quality levels that is there exists a fulfilledexpectations equilibrium at which each price signals a unique quality level second the pricesignals are not arbitrary each price signal exceeds the marginal cost of producing the quality it signals such a mark up depends on the nature of the product specific information received by consumers the poorer the information the higher the mark up

the value of ignorance this article provides a new perspective on the information structure of an agent in a standard model of adverse selection before the contracting takes place the agent has the opportunity to gather private information on a relevant parameter that affects final payoffs i allow for the possibility that the agent remains uninformed with some probability the agent s optimal choice of information structure is derived and it is shown that in the case of two states of nature the possibility of remaining ignorant has a positive strategic value for the agent since a poor information structure generates strategic benefits there will be no equilibrium in which the agent is perfectly informed even if additional information is costless at the margin

endogenous private information structures we formally incorporate the option to gather information into a game and thus endogenize the information structure we ask whether models with exogenous information structures are robust with respect to this endogenization any nash equilibrium of the game with information acquisition induces a nash equilibrium in the corresponding game with an exogenous structure we provide sufficient conditions on the structure of the game for which this remains true when nash is replaced by sequential we characterize the sequential nash equilibria of games with exogenous information structures that can arise as a sequential nash equilibrium of games with endogenous information acquisition

information value under demand uncertainty and endogenous market leadership in an oligopoly model with firms choosing to produce in one of two periods we identify the circumstance under which a firm s having early information regarding stochastic demand results in market leadership high demand volatility leads to stackelberg competition with the information advantaged firm leading in the n firm case an equilibrium with multiple leaders and multiple followers emerges endogenously in a duopoly information acquisition game we identify conditions that determine whether neither one or both firms will pay to acquire early information and note that one firm s obtaining early information may generate a positive externality benefitting its competitor both symmetric and asymmetric outcomes are possible and stackelberg market leadership may occur in equilibrium but only when firms have different costs of information our finding that an information advantage may convey leadership which then affects the value of information to the players applies to other settings exhibiting first mover advantage such as certain public good provision games jel c72 d82 l13

competition and the incentive to produce high quality previous literature indicates that when quality is a choice variable firms have an incentive to produce high quality to maintain their reputations with consumers the strategic interaction among firms and competition for market share is not considered this paper finds that when firms compete for market share perfect equilibria in which firms produce high quality goods need not exist competition for customers can eliminate the price premium needed to induce firms to maintain a reputation for high quality production in this case economists and policy analysts should pay greater attention to the interaction among firms and the institutions such as professional associations that structure interfirm relations when considering whether firms have an incentive to produce high quality goods

central bank communication design in a lucas phelps economy abstract in a lucas phelps island economy an island has access to many informative signals about demand conditions each signal incorporates both public and private information the correlation of a signal s realizations across the economy determines its publicity if information sources differ in their publicity then price formation and expectations formation processes separate causing output gaps to open an output stabilizing central bank prefers averagely public information and sometimes limits the clarity of its policy announcements to achieve this the bank s incentive to engage privately in costly information acquisition and transmission is strongest not for the most influential signals but instead for those which drive the largest wedge between prices and expectations signals that are far from averagely public

information acquisition and welfare we study information acquisition in a flexible framework with strategic complementarity or substitutability in actions and a rich set of externalities that are responsible for possible wedges between the equilibrium and the efficient acquisition of information first we relate the in efficiency in the acquisition of information to the in efficiency in the use of information and explain why efficiency in the use is no guarantee of efficiency in the acquisition next we show how the acquisition of private information affects the social value of public information i e the comparative statics of equilibrium welfare with respect to the quality of public information finally we illustrate the implications of the results in a monetary economy with price rigidities and dispersed information about productivity shocks

economic analysis of transmission expansion planning with price responsive demand and quadratic losses by successive lp the growth of demand response programs and renewable generation is changing the economics of transmission planners and regulators require tools to address the implications of possible technology policy and economic developments for the optimal configuration of transmission grids we propose a model for economic evaluation and optimization of inter regional transmission expansion as well as the optimal response of generators investments to locational incentives that accounts for kirchhoff s laws and three important nonlinearities the first is consumer response to energy prices modeled using elastic demand functions the second is resistance losses the third is the product of line susceptance and flows in the linearized dc load flow model we develop a practical method combining successive linear programming with gauss seidel iteration to co optimize ac and dc transmission and generation capacities in a linearized dc network while considering hundreds of hourly realizations of renewable supply and load we test our approach for a european electricity market model including 33 countries the examples indicate that demand response can be a valuable resource that can significantly affect the economics location and amounts of transmission and generation investments further representing losses and kirchhoff s laws is also important in transmission policy analyses

impact of network payment schemes on transmission expansion planning with variable renewable generation abstract a large number of studies have dealt with the transmission expansion planning tep problem however few investigations have focused on analyzing the impacts of network payment schemes on network configuration and the benefits losses distribution among the participants in electricity markets in this paper we propose a multi annual transmission expansion planning model considering four different network payment schemes to finance the construction of new transmission lines seeking to reduce the total system costs wind and solar power generation are included in the model taking into account their variability the proposed models are reformulated as mixed integer linear programming milp problems we use seven performance metrics related with congestion nodal prices and generator benefits among others to evaluate the effect of each payment scheme a realistic case study based on the main power system in chile is analyzed to illustrate the proposed models it is shown that integrating line cost recovering equations into the tep model may result into a more realistic and less congested power network also total system cost is highly related with transmission tariff discrimination in that way tariffs with high location dependence perform better in the case studied the chilean power system

gathering information before the contract is offered the case with two states of nature abstract focusing on a baron myerson model with two states of nature in the first part of the paper we study the contract that a principal would offer to an agent when he does not know whether the agent is informed or not about the state of nature in the second we endogenize the information of acquisition and show that in equilibrium a baron myerson type contract will never be offered

duopoly information equilibrium cournot and bertrand abstract in a duopoly model where firms have private information about an uncertain linear demand it is shown that if the goods are substitutes not to share information is a dominant strategy for each firm in bertrand cournot competition if the goods are complements the result is reversed furthermore the following welfare results are obtained 1 i with substitutes in cournot competition the market outcome is never optimal with respect to information sharing but it may be optimal in bertrand competition if the products are good substitutes with complements the market outcome is always optimal 2 ii bertrand competition is more efficient than cournot competition 3 iii the private value of information to the firms is always positive but the social value of information is positive in cournot and negative in bertrand competition

an analysis of the implications of uncertainty and agency problems on the wealth effects to acquirers of private firms abstract extensive empirical work shows that bidders do not gain from the acquisition of publicly traded targets but experience positive excess returns in the acquisition of privately held firms this study investigates how two important differences between private and public firms namely informational uncertainty and ownership characteristics impact the returns to acquirers a sample of targets that were acquired shortly after filing for an ipo was collected to circumvent the lack of information on private firms in spite of the special characteristics of these targets the listing effect is still prevalent in this sample the results of the analysis are consistent with the hypothesis that acquirers gain in the acquisition of private firms because these targets have a relatively weaker bargaining position due to informational and agency problems and costly access to external capital markets to finance growth opportunities

incentives for information production and disclosure in a duopolistic environment this paper examines the nature of the equilibrium solution to the duopoly problem under various incomplete information structures and the incentives to produce and disclose information attention is focused on the duopolists cost functions the results indicate that disclosure of such information is generally beneficial to the duopolists

cournot competition and the social value of information in a differentiated product cournot model each supplier receives informative signals about demand the cross industry correlations of the signals differ more public signals have higher correlation coefficients in equilibrium information is used inefficiently from the industry s perspective information is over used and too much emphasis is placed on relatively public signals from the consumer s perspective information is under used and too much emphasis is placed on relatively private signals welfare is enhanced by increasing the use of information as desired by consumers but re balancing that use away from public signals as desired by the industry if information is costly and endogenously acquired then suppliers acquire too much new information but they use it too little

endogenous information acquisition in bayesian games with strategic complementarities abstract this paper studies covert or hidden information acquisition in common value bayesian games of strategic complementarities using the supermodular stochastic order to arrange the structures of information increasingly in terms of preferences we provide novel easily interpretable and verifiable though restrictive conditions under which the value of information is increasing and convex and study the implications in terms of the equilibrium configuration increasing marginal returns to information leads to extreme behavior in that agents opt either for the highest or the lowest quality signal so that the final analysis of this complex game simplifies greatly into that of a two action game this result can rationalize the complete information game as an endogenous outcome finally we also establish that higher quality information leads players to select more dispersed actions in the bayesian game

what are the benefits of co optimizing transmission and generation investment eastern interconnection case study transmission planning has traditionally followed a generation first or reactive logic in which network reinforcements are planned to accommodate assumed generation build outs the emergence of renewables has revealed deficiencies in this approach in that it ignores the interdependence of transmission and generation investments for instance grid investments can provide access to higher quality renewables and thus affect plant siting disregarding this complementarity increases costs in theory this can be corrected by proactive transmission planning which anticipates how generation investment responds by co optimizing transmission and generation investments we evaluate the potential usefulness of co optimization by applying a mixed integer linear programming formulation to a 24 bus stakeholder developed representation of the u s eastern interconnection we estimate cost savings from co optimization compared to both reactive planning and an approach that iterates between generation and transmission investment optimization these savings turn out to be comparable in magnitude to the amount of incremental transmission investment we also evaluate three congestion metrics as screens for reducing the number of candidate transmission investments they each improve solution times but the estimated potential benefit metric is much more effective in identifying cost effective lines than the others

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

does risk aversion affect transmission and generation planning a western north america case study abstract we investigate the effects of risk aversion on optimal transmission and generation expansion planning in a competitive and complete market to do so we formulate a stochastic model that minimizes a weighted average of expected transmission and generation costs and their conditional value at risk cvar we show that the solution of this optimization problem is equivalent to the solution of a perfectly competitive risk averse stackelberg equilibrium in which a risk averse transmission planner maximizes welfare after which risk averse generators maximize profits this model is then applied to a 240 bus representation of the western electricity coordinating council in which we examine the impact of risk aversion on levels and spatial patterns of generation and transmission investment although the impact of risk aversion remains small at an aggregate level state level impacts on generation and transmission investment can be significant which emphasizes the importance of explicit consideration of risk aversion in planning models

the impact of product market competition on training provision evidence from canada while standard models of training focus on how input market affects firms training decisions this paper investigates the impact of product market competition on training provision using the longitudinal data from statistics canada s workplace and employee survey we find that increased competition is strongly associated with more training provision this association is unlikely to be driven by unobserved heterogeneity specific measures used and other relevant factors to the extent that training is a significant source of human capital and industry competitiveness our results suggest that increasing training is an important channel through which competition raises productivity

why do temporary help firms provide free general skills training the majority of u s temporary help supply ths firms offer nominally free unrestricted computer skills training a practice inconsistent with the competitive model of training i propose and test a model in which firms offer general training to induce self selection and perform screening of worker ability the model implies and the data confirm that firms providing training attract higher ability workers yet pay them lower wages after training thus beyond providing spot market labor ths firms sell information about worker quality to their clients the rapid growth of ths employment suggests that demand for worker screening is rising

information acquisition and relative efficiency of competitive oligopoly and monopoly markets this paper analyzes the relative efficiency of a competitive equilibrium against cournot oligopoly and monopoly equilibria when firms have diverse private information about the stochastic market demand when firms have information of the same precision the competitive equilibrium yields a larger expected welfare however when information is costly cournot oligopoly and monopoly firms acquire more information and hence may yield a larger expected welfare than the competitive firms under certain conditions the author also finds that competitive firms acquire less than the efficient level of information while cournot oligopoly and monopoly firms may acquire more than the efficient level copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

finding equilibria in the pool based electricity market with strategic wind power producers and network constraints this paper proposes a model to find the equilibria in the short term electricity market with large scale wind power penetration the behavior of each strategic player is modeled through a two stage mathematical problem with equilibrium constraints mpec where the upper level problem maximizes the profit of the strategic player and the lower level problem describes the clearing processes of the day ahead and real time markets while considering the network constraints the joint solution of all the mpecs constitutes an equilibrium problem with equilibrium constraints epec the uncertain wind power production and demand are represented by a set of plausible scenarios by using the duality theory and karush kuhn tucker condition each mpec is transferred into a mixed integer linear programing problem the nash equilibria of the electricity market are obtained by solving the epec using game theory and the diagonalization algorithm case studies are performed to show the effectiveness of the proposed model

monopoly competition and information acquisition abstract an incumbent monopolist is uncertain about its linear demand but can acquire public information at a cost we determine how an entry threat affects the firm s information acquisition if returns to scale are constant and the state contingent demands become more dispersed as output increases then entry reduces information acquisition if however either the incumbent or entrant has increasing returns or if the state contingent demands are nonlinear or fail increasing dispersion then entry can increase information finally entry can hurt consumers although entry always increases output it can decrease information consumers sometimes prefer a better informed monopoly to a duopoly

investment efficiency and product market competition does more competition lead to more information production and greater investment efficiency this question is largely unexplored in the finance literature this article provides both a model and a series of extensive empirical tests the model features a 2 stage bayesian game in differentiated products market competition we find that competition causes firms to acquire less information and investments to become more inefficient relative to a first best case with the same market structure empirically the panel regression analysis provides strong support for the theory and shows that investment is more efficient in concentrated industries

transmission expansion in an oligopoly considering generation investment equilibrium abstract transmission expansion planning tep is a sophisticated decision making problem especially in an oligopolistic electricity market in which a number of strategic price maker producers compete together a transmission system planner who is in charge of making tep decisions requires considering the future generation investment actions however in such an oligopolistic market each producer makes its own strategic generation investment decisions this motivates the transmission system planner to consider the generation investment decision making problem of all producers within its tep model the strategic generation investment problem of each producer can be represented by a complementarity bi level model the joint consideration of all bi level models one per producer characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market this paper proposes a tri level tep decision making model to be solved by the transmission system planner whose objective is to maximize the social welfare of the market minus the expansion costs and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem this model is then recast as a mixed integer linear programming problem and solved numerical results from an illustrative example and a case study based on the ieee 14 bus test system demonstrate the usefulness of the proposed approach

review of grid tie micro generation systems without energy storage towards a new approach to sustainable hybrid energy systems linked to energy efficiency abstract this paper reviews the literature on the subject albeit approaching hybrid micro generation power systems from a systems thinking st and cybernetics standpoint viewing them as dynamically complex adaptive systems cas coupled with and supplying to a set of homes termed a sustainable block in a rural setting here homeostatic regulation hr and control play a vital role in reaching efficient equilibrium towards reconciling power supply and demand response management unlike most of the work reviewed in the literature the focus here is on supervisory control of grid connected micro generation systems without energy storage aiming towards building energy efficiency thriftiness and sustainability in energy consumption building on homeostatic control hc principles first introduced by f c schweppe in 1979 the paper explores the concepts of sustainability and sustainable hybrid energy systems shes applied to micro generation focusing on operational aspects rather than on socio economic environmental or regulatory ones a concrete theoretical model for building a shes is presented for a proposed grid connected renewable microgrid the model seeks to reconcile power supply and demand towards efficient equilibrium homeostasis proposing reward based criteria for controlling renewable electricity supply and consumption in rural communities in chile discussion and recommendations are also offered stating that energy sustainability es is essentially a systems issue and one where es is first and foremost a structural organizational and operational property which is in the very nature of the system itself it is built into it rather than explained by exogenous factors

robust transmission planning under uncertain generation investment and retirement transmission planning is typically faced with a wide range of uncertainty including growth in demand renewable energy generation and fuel price the restructuring of the electric power industry the drive for energy independence and the push for a cleaner environment have led to additional sources of uncertainty in all aspects of power system operations and planning the more decentralized decision making implicates uncertainty in future generation investment and retirement of existing units such uncertainties are among the biggest challenges in transmission planning in power systems however existing approaches in the literature do not fully address this problem in this paper we construct a new robust transmission planning model representing generation investment and retirement uncertainty more realistically to improve the quantification and visualization of uncertainty and the impacts of environmental policies with this model we can manage the impacts of uncertainty in the time the size and the location of candidate generation additions as well as the retirement of units the corresponding algorithm we develop takes advantage of the structural characteristics of the model so as to obtain a computationally efficient solution methodology we present an extensive numerical study on the wecc 240 bus system and illustrate the effectiveness of our approach

competition and product quality in the supermarket industry this article analyzes the effect of competition on a supermarket firm s incentive to provide product quality in the supermarket industry product availability is an important measure of quality using u s consumer price index microdata to track inventory shortfalls i find that stores facing more intense competition have fewer shortfalls competition from walmart the most significant shock to industry market structure in half a century decreased shortfalls among large chains by about a third the risk that customers will switch stores appears to provide competitors with a strong incentive to invest in product quality

free entry does not imply zero profits traditional economic wisdom says that free entry in a market will drive profits down to zero this paper shows that profits may remain bounded away from zero when firms have to make a negligible small investment to learn the demand

beauty contests and iterated expectations in asset markets in a financial market where traders are risk averse and short lived and prices are noisy asset prices today depend on the average expectation today of tomorrow s price thus iterating this relationship the date 1 price equals the date 1 average expectation of the date 2 average expectation of the date 3 price this will not in general equal the date 1 average expectation of the date 3 price we show how this failure of the law of iterated expectations for average belief can help understand the role of higher order beliefs in a fully rational asset pricing model and explain over reaction to noisy public information

optimal information acquisition for heterogenous duopoly firms abstract this paper analyzes a stochastic duopoly market in which heterogenous firms acquire costly information about the stochastic market demand prior to their production decisions the equilibrium amounts of information acquired by each firm are compared the comparative statics analyses show the differential effects of a change in information cost the degree of uncertainty in the market demand and the demand and cost function parameters journal of economic literature classification numbers d82 l13 l15

testing some predictions of human capital theory new training evidence from britain we confront the predictions of various theories with new training data from the british household panel survey we find that employer financed training is associated with significantly higher wages at current and future firms with a larger impact in future firms this is consistent with human capital theory with credit constraints and with the new training literature assuming imperfectly competitive labor markets

strategic bidding under uncertainty a binary expansion approach this work presents a binary expansion be solution approach to the problem of strategic bidding under uncertainty in short term electricity markets the be scheme is used to transform the products of variables in the nonlinear bidding problem into a mixed integer linear programming formulation which can be solved by commercially available computational systems the be scheme is applicable to pure price pure quantity or joint price quantity bidding models it is also possible to represent transmission networks uncertainties scenarios for price quantity plant availability and load financial instruments capacity reinforcement decisions and unit commitment the application of the methodology is illustrated in case studies with configurations derived from the 80 gw brazilian system

strategic factor market intelligence an application of information economics to strategy formulation and competitor intelligence this paper develops a model of information acquisition decisions by firms that are competing in a strategic factor market barney 1986 to purchase a scarce resource whose value is unknown and differs across firms the model builds on the argument that more accurate expectations about the firm specific value of resources is other than luck the only way for firms to obtain the specific resources required for competitive advantage we address the more specific question of what types of information firms should gather to accomplish this goal the model generates a series of testable hypotheses about how a firm s optimal mix of different types of information is affected by a number of factors including the level of uncertainty about the value of the resource being acquired the rarity imitability and nonsubstitutability of that resource the level of inscrutability of firms pre existing stocks of resources and firms information gathering and information processing capacities

economic criteria for planning transmission investment in restructured electricity markets from an economic perspective a common criterion for assessing the merits of a transmission investment is its impacts on social welfare the underlying assumption in using this criterion is that side payments may be used to distribute the social gains among all market players in reality however since the impacts of an electricity transmission project on different players may vary such side payments are rather difficult to implement this paper focuses on different economic criteria that should be considered when planning electricity transmission investments we propose an electricity transmission investment assessment methodology that is capable of evaluating the economic impacts on the various effected stakeholders and account for strategic responses that could enhance or impede the investment s objectives we formulate transmission planning as an optimization problem under alternative conflicting objectives and investigate the policy implications of divergent expansion plans resulting from the planner s level of anticipation of strategic responses we find that optimal transmission expansion plans may be very sensitive to supply and demand parameters we also show that the transmission investments have significant distributional impact creating acute conflicts of interests among market participants we use a 32 bus representation of the main chilean grid to illustrate our results

a tri level model of centralized transmission and decentralized generation expansion planning for an electricity market part ii we study a tri level integrated transmission and generation expansion planning problem in a deregulated power market environment the collection of bi level sub problems in the lower two levels is an equilibrium problem with equilibrium constraints epec that can be approached by either the diagonalization method dm or a complementarity problem cp reformulation this paper is a continuation of its part i in which a hybrid iterative algorithm is proposed to solve the tri level problem by iteratively applying the cp reformulation of the tri level problem to propose solutions and evaluating them in the epec sub problem by dm it focuses on the numerical results obtained by the hybrid algorithm for a 6 bus system a modified ieee 30 bus system and an ieee 118 bus system in the numerical instances the approximate nash equilibrium point for the sub problem can be verified by examining local concavity

a transmission planning framework considering future generation expansions in electricity markets this paper proposes a transmission planning framework in a market environment in which only the generation sector is deregulated the proposed framework is based on modeling generation companies gencos strategic behavior and anticipating their expansion patterns from the viewpoint of a transmission system planner the transmission expansion planning problem in this paper is modeled as a four level optimization problem a solution method based on agent based systems and search based optimization techniques is proposed to determine the optimal transmission expansion plan

finding multiple nash equilibria in pool based markets a stochastic epec approach we present a compact formulation to find all pure nash equilibria in a pool based electricity market with stochastic demands the equilibrium model is formulated as a stochastic equilibrium problem subject to equilibrium constraints epec the problem is based on a stackelberg game where the generating companies gencos optimize their strategic bids anticipating the solution of the independent system operator iso market clearing a finite strategy approach both in prices and quantities is applied to transform the nonlinear and nonconvex set of nash inequalities into a mixed integer linear problem milp a procedure to find all nash equilibria is developed by generating holes that are added as linear constraints to the feasibility region the result of the problem is the set of all pure nash equilibria and the market clearing prices and assigned energies by the iso a case study illustrates the methodology and proper conclusions are reached

optimal market intelligence strategy when management attention is scarce this paper extends the theoretical literature on firms optimal information strategies to the situation when a firm s management attention capacity to process available data is scarce in this case a firm s optimal market intelligence strategy must trade off learning a little about a broad range of markets a broad strategy with gaining a very deep understanding of one or a few markets a focused strategy this trade off is not present when data are scarce an assumption made in most of the existing literature on optimal information search strategies however in data rich environments which are of increasing relevance given technology changes we show a focused market intelligence strategy is always best when managers need to process a substantial amount of data before beginning to gain insights i e there are increasing returns to attention interestingly this focused strategy can also be best with decreasing returns to attention when a managers are sufficiently efficient in processing the available data and b managers have sufficiently strong initial priors on the unknown market parameters we show a broad market intelligence strategy is only optimal when new data points are sufficiently redundant i e when the learning rate is sufficiently decreasing with the allocation of more attention our results also indicate that advances in information technology can account for the pressure on firms to become more focused and that competition increases the likelihood of a focused strategy competition can lead to asymmetric outcomes where firms focus on different markets finally we note that a focused market intelligence strategy and thus an asymmetric allocation of attention does not require a priori differences between firms markets or market specific core capabilities consequently a focused market intelligence strategy can result in market specific core competencies and produce firm differences from equivalent starting conditions

coordination of generation and transmission development through generation transmission charges a game theoretical approach transmission charges aim to recover the cost of transmission network investments and provide efficient locational signals to new generators in this paper we investigate the effect of these charges on the development of new generation capacities in the system generation expansion planning is decided by strategic generation planners sgps trying to maximize their profits while transmission line investments are planned by a central planner and regulatory body aimed at minimizing the overall operation and network investment costs of the system regulatory transmission charges rtcs are calculated according to the marginal responsibility of generation investment on transmission network investment costs an iterative algorithm is proposed to model the interaction taking place between the central planner and sgps the developed methodology is applied to a 2 node illustrative example and the ieee rts96 and effects of rtcs on investment decisions of sgps are analyzed