optimal investments in power generation under centralized and decentralized decision making this work presents a novel model for optimization of investments in new power generation under uncertainty the model can calculate optimal investment strategies under both centralized social welfare and decentralized profit objectives the power market is represented with linear supply and demand curves a stochastic dynamic programming algorithm is used to solve the investment problem where uncertainty in demand is represented as a discrete markov chain the stochastic dynamic model allows us to evaluate investment projects in new base and peak load power generation as real options and determine optimal timing of the investments in a case study we use the model to compare optimal investment strategies under centralized and decentralized decision making a number of interesting results follow by varying the assumptions about market structure and price response on the demand side

a price based approach to generation investment planning in electricity markets a generation planning framework is developed for a competitive energy only electricity market the framework developed combines decentralized merchant investment plans stemming from market signals and technological preferences with centralized resource planning concepts to decide optimal time ordered investment decisions the investment decisions maximize the new entrants net surpluses and minimize the consumer interruption cost accounting for many uncertain variables and technical details the optimal plan given by the main centralized framework represents the system planner s solution derived from the set of decentralized plans an illustrative case study is given in the paper applying the proposed framework to the queensland region of the national electricity market of australia

real option valuation of power transmission investments by stochastic simulation abstract network expansions in power markets usually lead to investment decisions subject to substantial irreversibility and uncertainty hence investors need valuing the flexibility to change decisions as uncertainty unfolds progressively real option analysis is an advanced valuation technique that enables planners to take advantage of market opportunities while preventing or mitigating losses if future conditions evolve unfavorably in the past many approaches for valuing real options have been developed however applying these methods to value transmission projects is often inappropriate as revenue cash flows are path dependent and affected by a myriad of uncertain variables in this work a valuation technique based on stochastic simulation and recursive dynamic programming called least square monte carlo is applied to properly value the deferral option in a transmission investment the effect of option s maturity the initial outlay and the capital cost upon the value of the postponement option is investigated finally sensitivity analysis determines optimal decision regions to execute postpone or reject the investment projects

allocation of fixed transmission cost to wheeling transactions by cooperative game theory this paper describes a methodology to allocate the cost of transmission network facilities to wheeling transactions in decentralized power systems the authors propose that the responsibility placed on transmission facilities involved in each transaction be according to the transmission usage pattern their proposal incorporates the mw mile method and considers economies of scale of transmission network facilities they also incorporate a nucleolus scheme in the cooperative game theory to deal with matters of conflict the applicability of their method is demonstrated in a numerical example

distribution locational marginal pricing for optimal electric vehicle charging management this paper presents an integrated distribution locational marginal pricing dlmp method designed to alleviate congestion induced by electric vehicle ev loads in future power systems in the proposed approach the distribution system operator dso determines distribution locational marginal prices dlmps by solving the social welfare optimization of the electric distribution system which considers ev aggregators as price takers in the local dso market and demand price elasticity nonlinear optimization has been used to solve the social welfare optimization problem in order to obtain the dlmps the efficacy of the proposed approach was demonstrated by using the bus 4 distribution system of the roy billinton test system rbts and danish driving data the case study results show that the integrated dlmp methodology can successfully alleviate the congestion caused by ev loads it is also shown that the socially optimal charging schedule can be implemented through a decentralized mechanism where loads respond autonomously to the posted dlmps by maximizing their individual net surplus

effect of inter temporal factors on the real time pricing of electricity a rigorous theoretical framework for the solution of the price formation and optimal dispatch problems taking into account intertemporal dependence of demand under spot and dynamic tariffs is presented the case in which a common tariff is to be applied to all customers is examined the difference in system response for spot and day ahead dynamic tariffs is illustrated simulation examples of a variety of event types are provided

stability analysis of electricity markets using tsk fuzzy modeling this paper discusses the stability properties of electricity markets and their implications for the deregulated market environment we formulate a takagi sugeno kang tsk fuzzy model for electricity markets to account for their uncertainty and nonlinearity and obtain realistic stability results the paper provides sufficient conditions for the stability and instability of electricity markets all the proposed stability and instability conditions can be tested using linear matrix inequalities simulation results demonstrate the application of the stability and instability tests to electric power market under different market conditions the tests also demonstrate the importance of the including nonlinearities and uncertainty in the electricity market when investigating its stability

congestion management with ex ante pricing for decentralized electricity markets in this paper the authors present a method and a model for managing transmission congestion based on ex ante congestion prices their method is influenced by the yield management approach widely used for airline reservation systems and their model is built based on the relations between transmission congestion prices and electricity commodity prices that exist for an optimal solution they formulate the congestion pricing problem as a master problem and the electricity commodity energy and reserve pricing as subproblems examples are presented to illustrate how a system operator can use this approach to compute ex ante congestion prices and how market operators can determine clearing prices and schedules of forward electric energy and reserve markets

tariffs and load management the french experience the aim of an electric public utility is the optimum control of the electrical energy generating and consumption system consistency is required between the means of control at level of supply and the means of control at level of demand on the demand side marginal cost pricing is an efficient tool to achieve a good management this paper presents the french experience in this field

utility cogenerator game for pricing power sales and wheeling fees the authors have studied an extensive game model of an electricity market where a cogenerator sells excess electricity to an electric utility or to an end user they found that a buy back system the utility purchases cogenerated power is as efficient as a cogenerator customer wheeling system and that these two systems are more desirable than a monopoly system for the regulator the buy back rate should be equal to lp bargaining solution or less than nash bargaining solution the marginal cost of the electric utility they also conducted an analysis of a two period electricity market in which they found that the cogenerator that can supply excess power during peak period obtains the market advantage

mechanisms for incentive regulation theory and experiment this article develops the theoretical properties of a new incentive mechanism for regulating a monopoly seller and reports the results of laboratory experimental tests of its behavioral properties the design of the new mechanism draws upon the results of our earlier experimental research on the behavioral properties of two other mechanisms one by loeb and magat 1979 and a second by finsinger and vogelsang 1981 as with finsinger and vogelsang the new mechanism weakens loeb and magat s requirement that regulators have complete knowledge of market demand the new mechanism however is not subject to the destabilizing profit destroying cycles of nonoptimal behavior observed with finsinger and vogelsang s

controlling electricity consumption by forecasting its response to varying prices in a real time electricity pricing context where consumers are sensitive to varying prices having the ability to anticipate their response to a price change is valuable this paper proposes models for the dynamics of such price response and shows how these dynamics can be used to control electricity consumption using a one way price signal estimation of the price response is based on data measurable at grid level removing the need to install sensors and communication devices between each individual consumer and the price generating entity an application for price responsive heating systems is studied based on real data before conducting a control by price experiment using a mixture of real and synthetic data with the control objective of following a constant consumption reference peak heating consumption is reduced by nearly 5 and 11 of the mean daily heating consumption is shifted

intelligent agents for negotiations in market games 2 application for part i see ibid vol 13 no 5 p 1103 8 1998 in competitive markets human decision makers need assistance to determine potential coalitions that they can be part of note that such coalitions are legal provided market power is not monopolized we present an approach for designing specialized intelligent software agents that perform negotiations on behalf of their human counterparts and then suggest market strategies that the human can adopt our negotiation protocol is derived from cooperative game theory however it differs from the game theory literature in requiring virtually no trustworthy information exchange between the potential coalition partners in the part i we presented the negotiation model in this paper we apply it to power markets

equitable allocation of congestion relief cost to transactions this paper investigates a bid based congestion management scheme for a system that accommodates many bilateral transactions the paper proposes a new allocation method for allocating the cost of congestion relief to transactions that cause the congestion the allocation reflects the actual usage of the congested facilities by the transactions and recovers the cost also proposed in the paper is a consistency test to quantify and test the equity fairness of the method test results illustrate that the method provides better price signals for relieving congestion on lines than the shadow prices the test results also indicate that the method recovers the cost the results on consistency indicate that the proposed method is consistent provided that the transactions causing counterflows on congested lines be compensated

the stability of power system markets market equilibrium conditions can be derived from more general dynamic equations describing the marketplace dynamic equations provide insights into the behavior and stability of markets which are not available from static models for example markets with a single supplier with declining linear costs economies of scale may or may not be stable depending on specific cost characteristics markets with more than one supplier with declining linear costs are always unstable this paper illustrates a situation where the removal of congestion makes a market unstable

internationalization of western venture capitalists into emerging markets risk assessment and information in india this paper provides the first analysis of the internationalization of venture capital firms through an examination of risk assessment and information usage by firms in india personal interviews were conducted with executives in 31 84 of the active venture capital firms the paper extends previous research by comparing perceptions of the behavior of domestic venture capital firms in india foreign primarily u s venture capital firms in india and u s venture capital firms in their domestic markets foreign firms in india place significantly greater emphasis on product market factors and accountants reports than domestic firms in india they place significantly less emphasis on financial contributions of management in assessing risk and own due diligence and information from entrepreneurs than do u s firms in their domestic market they make more use of information from trade publications and relating to production capacity and technology and information from accountants reports than do domestic venture capital firms in india the evidence is consistent with venture capital firms adapting to local market conditions rather than implementing recipes from their domestic markets

application of games with incomplete information for pricing electricity in deregulated power pools the authors present a game theory approach to the problem of pricing electricity in deregulated marketplaces they assume that an independent operator receives bids by pool participants and defines transactions among participants by looking for the minimum price that satisfies the demand in the pool the competition among pool participants is modeled as a noncooperative game with incomplete information they assume that each pool participant knows its own operation costs but does not know his opponents operation costs the game with incomplete information is transformed into a game with complete but imperfect information and solved using the nash equilibrium idea the approach presented in this paper is geared towards providing support for pricing electricity in deregulated pools

market equilibrium under incomplete and imperfect information in bilateral electricity markets in contrast to the centralized pool model bilateral markets present a decision making situation in which information plays a major role along with the physical and operative constraints of the network we propose a model that includes network constraints for competitive bilateral electricity markets based on an evolutionary bipartite complex network in which the nodes and weighted links represent the players and transactions respectively the strong stable equilibrium of the network is applied to detect possible market equilibria obtained through a dynamic game with incomplete and imperfect information in which the players form an evolutionary network while trying to maximize their own utilities the model is conceptually illustrated with a four bus test system and then applied to the ieee30 test system to analyze the impact of the transmission network and information on the equilibria and market performance

on walrasian equilibrium for pool based electricity markets we present a single time period decentralized electricity market clearing model that includes reactive power and demand responsiveness in addition to the more common framework of generation side competition for the real power commodity the approach allows self interested agents namely producers and consumers independently to maximize their individual surpluses subject to prices this is consistent with the very notion of a competitive market as defined in equilibrium theory an auctioneer computes equilibrium prices that achieve power balance at every network node as required by kirchhoff s laws the overall scheme is justified by duality theory for which there is a rich theoretical support and convergence is achieved using a newton price updating algorithm

evaluation of regulatory impacts on dynamic behavior of investments in electricity markets a new hybrid dp game framework a new hybrid framework based on game theory and dynamic programming dp with random demands and prices is proposed for studying the impacts of regulatory interventions on the dynamics of investment in power generation in electricity markets in our approach using markov chains the electric demand and growth of fuel prices have been modeled dp has been used for solving the generation expansion planning gep problem investment strategies of other investors in the market are modeled as constraints the income of the investor is calculated by modeling strategic interactions among market players in the spot energy market the cournot game concept has been applied and the nash equilibrium is calculated for each state and stage of dp simulation results confirm that the proposed framework is an appropriate decision support tool that provides useful information about dynamics of investment

the effect of demand elasticity on security prices for the poolco and multi lateral contract models optimum power flows and security constrained power flows assume that customer demand is a fixed quantity in the new competitive environment it is necessary to assume that demand is elastic and will vary as a function of price a critical element in any competitive model whether it be a poolco or a multi lateral contract model is for a system operator to ensure reliability and feasibility of the power system operating point security pricing for feasibility was first advanced by schweppe et al for the case of line flow constraints for a poolco model using geometry this paper generalizes the approach to include any security constraint for a general competitive model the paper discusses interpretations of security pricing and its possible implementation in energy management systems

generation capacity expansion in energy markets using a two level game theoretic model with a significant number of states in the u s and countries around the world trading electricity in restructured markets a sizeable proportion of capacity expansion in the future will have to take place in market based environments however since a majority of the literature on capacity expansion is focused on regulated market structures there is a critical need for comprehensive capacity expansion models targeting restructured markets in this research we develop a two tier matrix game model and a novel solution algorithm that incorporates risk due to volatilities in profit via cvar intended for use by generators to make multi period multi player generation capacity expansion decisions we demonstrate the applicability of the model using a sample network from power world software and analyze the results

electric power system planning under time of use rates investment decisions under time of use rates and their relationship to utility system planning are examined optimal investment and price under social welfare maximization are derived and compared with the results of static analyses for a multiplant case the optimal pricing and investment policy are characterized by a plant of lower cost in a wide range of cost parameters it is found that the second best price the so called ramsey price is higher than the best price by an amount proportional to the ratio of deficit to revenue of an electric utility

two stage robust generation expansion planning a mixed integer linear programming model this paper presents a new uncertainty handling framework for optimal generation expansion planning gep amalgamating the notions of single stage and two stage robust optimization ro the proposed multiyear robust gep methodology as a tractable mixed integer linear programming optimization problem copes with the inherent planning uncertainties associated with forecasted electricity load demand as well as estimated investment and operation costs through distribution free bounded intervals producing polyhedral uncertainty sets the optimal generation expansion plan obtained from the proposed ro approach is immunized against worst case planning uncertainties considering the adopted degree of conservatism for each uncertainty set therefore the proposed methodology is capable of controlling the robustness of the optimal investment schedule regarding the enforced planning uncertainties simulation results demonstrate the efficacy and efficiency of the proposed ro framework throughout gep studies

real time pricing to assist in load frequency control we study the use of real time prices to assist in the control of frequency and tie line deviations in electric power systems the role of such prices if any would yield the practical limit to the trend in electric power systems of varying prices on ever faster time scales the application of prices in electric power systems to increase the efficient use of resources is an established technique the pricing schemes can be classified by time scales energy adjustment charges vary seasonally or monthly while time of day rates vary two or three times per day the power brokering system of 18 florida utilities operates on an hourly time scale in a spot price market of buyers and sellers of electric power prices adapt to system operation conditions such as changes in system lambda the effect of generation shortages and the effect of line overloads the fastest spot price that has been implemented to date is 30 minutes most implementations involve 1 hour time steps which may be prespecified 24 hours in advance on a five minute time scale is system lambda a shadow price used internally by electric utilities for economic dispatch a key assumption of spot pricing and economic dispatch is that the power system is in quasi steady state i e power system dynamics involving frequency voltage etc are ignored and only kirchoff s laws for network are considered the paper explores pricing at time scales where the quasi steady state assumption is no longer valid

transmission congestion management in competitive electricity markets this paper studies the management of costs associated with transmission constraints i e transmission congestion costs in a competitive electricity market the paper examines two approaches for dealing with these costs the first approach is based on a nodal pricing framework and forms the basis of the so called pool model the paper also provides an analysis of financial instruments proposed to complement nodal pricing and includes illustrative test results on a large scale system the second approach is based on cost allocation procedures proposed for the so called bilateral model the paper explains the basis for this model including a game theoretic evaluation of some of its aspects both the pool and bilateral models have been at the center of the electric utility restructuring debate in california

game theory approach to use of noncommercial power plants under time of use pricing the authors use the game theory approach for evaluating the impact of the introduction of customer owned noncommercial power plants ncp when time of use pricing is used various results from this analysis are derived some of which are that the conflict between ncp customer and the supplier forces the supplier to reduce the price of ncp customers perception of the situation in which they are involved in plays an important role in this conflict the game model analysis presented provides a detailed quantitative information on electricity prices and on the ways of using ncp

a continuous strategy game for power transactions analysis in competitive electricity markets this article presents a game theory application for analyzing power transactions in a deregulated energy marketplace such as poolco where participants especially generating entities maximize their net profits through optimal bidding strategies i e bidding prices and bidding generations in this article the electricity market for power transactions is modeled as a noncooperative game with complete information where the solution is determined in a continuous strategy domain having recourse to the nash equilibrium idea in order to provide more apprehensible analysis we suggest a new hybrid solution approach employing a two dimensional graphical approach as well as an analytical method finally the proposed approach is demonstrated on a sample power system

strategic generation investment under uncertainty via benders decomposition we address the generation investment problem faced by a strategic power producer and consider a detailed description of the uncertain parameters involved namely rival producer investment and market offering and demand growth to identify optimal investment decisions we consider a target year and propose a bilevel model whose upper level problem determines investment and offering decisions to maximize expected profit and whose many lower level problems represent market clearing conditions per demand block and scenario since the producer total expected profit is sufficiently convex with respect to investment decisions a benders decomposition approach is proposed that results in a tractable formulation even if hundred of scenarios are used to describe uncertain parameters extensive numerical simulations based on realistic case studies show the good performance of the proposed decomposition approach

a zonal congestion management approach using real and reactive power rescheduling in a deregulated electricity market it may always not be possible to dispatch all of the contracted power transactions due to congestion of the transmission corridors system operators try to manage congestion which otherwise increases the cost of the electricity and also threatens the system security and stability in this paper a new zonal cluster based congestion management approach has been proposed the zones have been determined based on lines real and reactive power flow sensitivity indexes also called as real and reactive transmission congestion distribution factors the generators in the most sensitive zones with strongest and nonuniform distribution of sensitivity indexes are identified for rescheduling their real power output for congestion management in addition the impact of optimal rescheduling of reactive power output by generators and capacitors in the most sensitive zones has also been studied the proposed new zonal concept has been tested on 39 bus new england system and a 75 bus indian system

start up ventures towards the prediction of initial success abstract there are numerous studies on new product activities that try to measure the relative impact of different factors on success or failure the research on new ventures is less comprehensive and often only a few items are considered this article reports on the early results from a research program that is combining the research on both new products and new ventures to come up with a more comprehensive evaluation of relative success factors the literature was reviewed to determine the most significant factors found in prior work a 68 item questionnaire was developed and used with the chief executives of 24 new technical ventures all associated with the rpi incubator or technology park ten of the 17 factors investigated yielded reliable measurements which were then subjected to siepwise regression analysis to determine the relative impact of each factor on the two success measurements used initial quantified success and initial subjective success it should be recognized that initial success does not necessarily predict ultimate success an area to be investigated in continuing studies the two success measurements were not correlated and the correlations with the independent variables were therefore different initial quantified success showed a strong negative correlation with market attractiveness companies entering smaller or more slowly growing markets were doing better than those in the larger faster growing markets initial quantified success was positively correlated with the level of entrepreneurial characteristics exhibited by the leader s these were the only two variables exhibiting significant relationships with quantified success initial subjective success was negatively correlated with market dynamism rather than market attractiveness negative correlation was also measured with both r d intensity and the organic nature of the firm this latter finding is contrary to much of the new product literature which emphasizes the need for individual independence and initiative such may be the case with new products or ventures within large organizations but in small independent ventures the entrepreneur should provide strong control and guidance a positive correlation was observed with the entrepreneurial characteristics and also with the degree of match between the firm s experience and the new business requirements no significant correlation was observed with 1 product or service uniqueness 2 gross margin or 3 strategic aggressiveness the lack of correlation with these variables is surprising but it may be due to the small size of the sample the research confirmed two items that are understood by most scholars and experienced practitioners the importance of the entrepreneur and the importance of pursuing new ventures that match the technical and market experience of the team the less obvious results are those that suggest that success is favored by strong review and control by the entrepreneur rather than the development of employee initiative and independence also the initial success appears to be coming more readily to firms in more slowly growing or less dynamic markets it will take an expanded sample and a longer time horizon to determine if these initial trends continue to ultimate success

dynamic scheduling of operating reserves in co optimized electricity markets with wind power we propose a probabilistic methodology to estimate a demand curve for operating reserves where the curve represents the amount that a system operator is willing to pay for these services the demand curve is quantified by the cost of unserved energy and the expected loss of load accounting for uncertainty from generator contingencies load forecasting errors and wind power forecasting errors the methodology addresses two key challenges in electricity market design integrating wind power more efficiently and improving scarcity pricing in a case study we apply the proposed operating reserve strategies in a two settlement electricity market with centralized unit commitment and economic dispatch and co optimization of energy and reserves we compare the proposed probabilistic approach to traditional operating reserve rules we use the illinois power system to illustrate the efficiency of the proposed reserve market modeling approach when it is combined with probabilistic wind power forecasting

generator bidding in oligopolistic electricity markets using optimal control fundamentals and application in this paper optimal control is applied to study generator bidding in an oligopolistic electricity market the repeated bidding process in hourly based real time electricity markets is modeled as a dynamic feedback system an optimal control problem is then formulated to explore individual generator s long term multiperiod optimization behavior particularly in our formulation the periodic property of the system demand is considered several lemmas are included for concerning system stability based on the necessary conditions for optimality from the pontryagin maximum principle a sweeping method is proposed and an optimal state feedback control rule is then obtained via backward induction numerical results suggest that the generator who unilaterally applies optimal control for generation decisions will obtain more profits a sensitivity analysis is also performed identifying these market factors that affect the performance of optimal control

a market approach to long term security of supply the problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process although ideally the market itself should be enough to provide adequate investment incentives there are several factors that prevent this result from being achieved and some actual markets have already experienced problems related with a lack of generation capacity a regulatory framework to address this question is presented the procedure is based on an organized market where reliability contracts based on financial call options are auctioned so both their price and their allocation among the different plants are determined through competitive mechanisms this results in a stabilization of the income of the generators and provides a clear incentive for new generation investment with a minimum of regulatory intervention additionally the method represents a market compatible mechanism to hedge demand from the occurrence of high market prices

artificial power markets and unintended consequences administrative pricing rules that try to mimic economic equilibria often fail to capture the complexity of real markets and in that failure can distort incentives as much as or more than cost based pricing in this paper the authors provide three examples of the failure of administrative mechanisms meant to mimic a market two of those examples are very relevant to current debates over industry restructuring in each case the pricing rule fails to maximize social welfare even though in the last two examples production cost is minimized

volatility of power grids under real time pricing the paper proposes a framework for modeling and analysis of the dynamics of supply demand and clearing prices in power systems with real time retail pricing and information asymmetry characterized by passing on the real time wholesale electricity prices to the end consumers real time pricing creates a closed loop feedback system between the physical layer and the market layer of the system in the absence of a carefully designed control law such direct feedback can increase sensitivity and lower the system s robustness to uncertainty in demand and generation it is shown that price volatility can be characterized in terms of the system s maximal relative price elasticity defined as the maximal ratio of the generalized price elasticity of consumers to that of the producers as this ratio increases the system may become more volatile since new demand response technologies increase the price elasticity of demand and since increased penetration of distributed generation can also increase the uncertainty in price based demand response the theoretical findings suggest that the architecture under examination can potentially lead to increased volatility this study highlights the need for assessing architecture systematically and in advance in order to optimally strike the trade offs between volatility robustness and performance metrics such as economic efficiency and environmental efficiency

market based coordination of transmission and generation capacity planning we propose an iso model for coordinating transmission expansion planning with competitive generation capacity planning in electricity markets the purpose of the model is a holistic simulation of generation and transmission capacity expansion in the market environment the solution represents an iterative process for simulating the interactions among gencos transcos and the iso which might be terminated by the iso based on a pre specified stopping criterion the proposed model adopts a joint energy and transmission auction market and a capacity mechanism the joint auction market enables competition to occur among generation and transmission resources the capacity mechanism offers incentives for market participant investments that reflect the locational values of additional capacity transmission capacity expansion decisions are made by merchant transmission lines that recover their capacity investments through transmission marginal pricing and capacity payments transmission network security is reflected in the proposed competitive resource planning model the examples illustrate a coordinated planning of generation and transmission in restructured power systems

the impact of market clearing time and price signal delay on the stability of electric power markets we generalize a model proposed by alvarado of the electric power market by including the effects of control and communication to simulate realistic markets our model issues control signals only at given times and those signals are delayed during transmission these two effects transform alvarado s continuous system into a hybrid system with consequential effects the stability analysis of the new system reveals two important properties first there is an upper limit on the market clearing time and the delay of the price signal beyond which the system becomes unstable second there is a counter intuitive relationship between the market clearing time and price signal delay when the market clearing time is relatively long delaying the price signal can improve the market s stability while reducing the communication delay can destabilize the market this counter intuitive effect shows that the full impact of information technology on power markets can be significant and difficult to anticipate therefore as markets are designed and regulated careful attention should be paid to the effects of information technology on the market s dynamic behavior

management of multiple congested conditions in unbundled operation of a power system this paper studies congestion management based on congestion pricing as may be done by an independent power system operator four main concepts are discussed congestion pricing can lead to the same solution as an optimal power flow pricing need not have cost information available good estimates of nonlinear cost coefficients are necessary and pricing for congestion management is separable from pricing for the purpose of transmission network revenue reconciliation emphasis is on the determination of sufficient information by observation of the behavior of the market to permit optimum pricing without explicit communication among parties and without generators ever being explicitly concerned about the relief of flow congestion results from simulated experiments are presented

transaction analysis in deregulated power systems using game theory the electric power industry is in transition to a deregulated marketplace for power transactions in this environment all power transactions are made based on price rather than cost a regional power pool is noted as the most straightforward path to a deregulated electricity marketplace however many questions remain unanswered regarding the economics of power pool participation in a deregulated energy marketplace participants are interested in maximizing their own profits regardless of the system wide profits it is perceived that competition will reduce the price of electricity for retail customers however the key issue for participants is related with the price definition to remain competitive in this paper the authors use game theory to simulate the decision making process for defining offered prices in a deregulated environment the outcome of this study may be used by power pool coordinators to discourage unfair coalitions a modified ieee 30 bus power system is used as a deregulated power pool to illustrate the main features of the proposed method

real options theory applied to electricity generation projects a review abstract real options ro theory is well known for enhancing the value of projects under uncertainty this is achieved by modelling the flexibility that managers possess to adjust the projects in response to changes in their environments based on this ro theory could be used to tackle current energy and environmental issues by enhancing the value of electricity generation projects egp especially renewable energy projects rep the potential of ro theory to increase the value of egp and rep has been a driver for new research in the topic however existing literature is still scarce diverse and tends to neglect the state of the art of ro theory e g ro in the design of projects ro studies tend to ignore the use of ro in the design of projects as they are difficult to formulate without the help of experts on the projects designs this paper aims to encourage novel research in the application of ro theory to egp and rep for this purpose a critical review of ro theory its state of the art and its applications to egp and rep is presented this review identifies current areas of interest and gaps in knowledge in this research area it is concluded that new and novel ro research should address the state of the art of ro theory and uncertainties that are exclusive for specific types of projects this future research will require the involvement of electrical engineers specialised in the design of egp and rep

the economic efficiency impacts of alternatives for revenue reconciliation about a dozen electric utilities in the us offer rates that possess real time characteristics in these implementations the real time prices are updated at half hourly or hourly intervals and in no case are the prices spatially differentiated the implemented rates are based upon marginal generating costs with markups to account for system transmission and distribution costs or other revenue reconciliation needs this paper analyzes how great is the impact of alternative price markup methods on measures of social welfare and the time pattern of real time prices a case study and sensitivity results are also presented

security constrained resource planning in electricity markets we propose a security based competitive generation resource planning model in electricity markets the objective of the model is to introduce the impact of transmission security in a multi genco generation resource planning the proposed approach is based on effective decomposition and coordination strategies lagrangian relaxation and benders decomposition are applied to decompose the original planning problem into tractable optimization subproblems locational price signal and security signal are defined for the simulation of competition among gencos and the coordination of security between gencos and the regulatory body iso the numerical examples exhibit the effectiveness of the proposed generation planning model in electricity markets

emerging strategies in the venture capital industry abstract this article reports a study of the future direction of the venture capital industry by examining the basic strategies and strategic assumptions of a broad sample of venture capital firms there are three main sets of results first the once homogeneous venture capital industry is rapidly dividing into several different strategic groups members of these groups are increasingly distinguishing themselves from other groups on four basic dimensions followed by member firms 1 financial resources equity capital comes from a greater variety of sources five major sources resulting in fundamentally different demands on the mission of the receiving venture capital firm 2 staff resources the way venture capital firms use staff resources particularly regarding investee management assistance is becoming increasingly varied across different groups some firms provide fewer than 2 days per year while others provide up to 450 man days per year per client 3 venture stages while the overall industry retains a primary interest in stage 1 2 and 3 investment specific firms vary considerably in the distribution of investment emphasis across these three stages 4 use of financial resources firms in the industry are becoming increasingly differentiated in the size of minimum investments they make 100 m to 1000 m and in their role as a direct investor versus a broker for institutional funds practicing venture capitalists should make use of this first set of findings in two ways first they may find it useful to compare their firm s orientation along these four strategic dimensions with those of the firm s that comprised this study second they may seek to use these four strategic dimensions as a basis on which they might examine clarify and or redefine the marketing strategy pursued by their firm a second set of results identified three goals and priorities of venture capital firms that have neither changed over time nor across increasingly different strategic groups annualized after tax return on investments of between 25 and 40 remain the most common objective across all firms a 5 to 6 year investment time horizon and a major emphasis on the quality of the management team in evaluating new deals were universal priorities across diverse venture capital firms a third finding in this study was that venture capital firms profess greater certainty about the future direction of the venture capital industry than the direction of their firm the most notable example of this is a strong sense that industry wide rates of return are headed downward yet few senior partners expect their firm to experience this decline practicing venture capitalists may be interested to peruse these results to see what trends are predicted within the venture capital industry by this subsample of that industry second they should consider the finding that industry wide rates of return are headed downward in light of the first two sets of findings to develop their own opinion about the future performance of different strategic groups within the industry it is important to note that the sample of venture capital firms on which this study was based did not include most of the larger older funds some of these funds would be characterized as industry leaders pace setters and innovators the sample provides a solid representation of the broad middle of the venture capital industry and newer entrants into the industry while larger older funds are under represented their impact on future trends and strategies in the industry is captured to some extent in the set of questions about future direction of the venture capital industry finally the emerging strategic groups in the venture capital industry that were identified by this study may be useful information for investors as well as users of venture capital for investors the opportunity to participate in venture capital activity should become more clearly understood and varied basically this study should help investors differentiate the strategic posture of different venture capital firms and funds on four factors rather than simply industry geographic considerations for users of venture capital the results of this study suggest a possibility for multiple options that are both more accessible and more catered to specific needs users of venture capital should find a clearer basis on which to differentiate venture capital firms in terms of venture stage priorities staff utilization orientations sources and uses of financial resources this should make for more informed shopping among different venture capital sources and provide a basis on which to shop for the most compatible firm

a model of venture capitalist investment activity the paper describes the activities of venture capitalists as an orderly process involving five sequential steps these are 1 deal origination the processes by which deals enter into consideration as investment prospects 2 deal screening a delineation of key policy variables which delimit investment prospects to a manageable few for in depth evaluation 3 deal evaluation the assessment of perceived risk and expected return on the basis of a weighting of several characteristics of the prospective venture and the decision whether or not to invest as determined by the relative levels of perceived risk and expected return 4 deal structuring the negotiation of the price of the deal namely the equity relinquished to the investor and the covenants which limit the risk of the investor 5 post investment activities the assistance to the venture in the areas of recruiting key executives strategic planning locating expansion financing and orchestrating a merger acquisition or public offering 41 venture capitalists provided data on a total of 90 deals which had received serious consideration in their firms the questionnaire measured the mechanism of initial contact between venture capitalist and entrepreneur the venture s industry the stage of financing and product development ratings of the venture on 23 characteristics an assessment of the potential return and perceived risk and the decision vis i vis whether to invest the modal venture represented in the database was a start up in the electronics industry with a production capability in place and seeking 1 million median in outside financing there is a high degree of cross referrals between venture capitalists particularly for the purposes of locating co investors factor analysis reduced the 23 characteristics of the deal to five underlying dimensions namely 1 market attractiveness size growth and access to customers 2 product differentiation uniqueness patents technical edge profit margin 3 managerial capabilities skills in marketing management finance and the references of the entrepreneur 4 environmental threat resistance technology life cycle barriers to competitive entry insensitivity to business cycles and down side risk protection 5 cash out potential future opportunities to realize capital gains by merger acquisition or public offering the results of regression analyses showed expected return to be determined by market attractiveness and product differentiation r2 0 22 perceived risk is determined by managerial capabilities and environmental threat resistance r2 0 33 finally a discriminant analysis correctly predicted in 89 4 of the cases whether or not a venture capitalist was willing to commit funds to the deal on the basis of the expected return and perceived risk the reactions of seven venture capitalists who reviewed the model s specification were used to test its validity

the demand for operating reserves key to price spikes and investment under regulation operating reserve policy and investment policy are completely separate in a market they are tightly linked through expectations currently regulators and engineers intervene in markets to determine how much will be paid when operating reserves are in short supply these prices largely determine the revenue stream that pays the capital costs of new peakers and pays an equal amount toward the capital costs of all other generators in this way operating reserve and price cap policies determine investment in generation and the equilibrium level of installed capacity typically ferc determines a price limit and engineers by setting an operating reserve requirement determine the expected duration of price spikes currently these policies are set without coordination and without analysis of the long run consequences

singapore venture capitalists vcs investment evaluation criteria a reexamination the venture capital vc industry in singapore is of recent origin however funds under management in singapore have grown from s 45 million in 1983 to s 7 86 billion in 1996 these developments together with the recent announcement of government s vision of singapore becoming a hub for venture capital in the region provide an opportunity for an examination of the venture capital industry in singapore the vc industry originated in the western hemisphere in response to the need for risk capital for high technology industries in the light of the differences in investment opportunities around singapore and the nature of industrial developments in south east asia in general the authors anticipated that the investment criteria employed by venture capital firms vcs in singapore would differ the results however reveal that criteria adopted by singapore vcs are not very different from those adopted by vcs in other countries including u s the results also confirm that the entrepreneur s characteristics or the top management s capabilities are seen as being primary indicators of the venture s potential further examination of vcs investment process revealed that the investment criteria adopted by successful vcs were no different from those adopted by less successful vcs this confirms that investment selection is a multi stage process wherein venture assessment is only one of the steps in this process before vcs evaluate a venture they screen investment proposals based on their investment preferences or investment strategies vcs in our sample had definite ideas about where to invest and in what types of firms how do vcs select appropriate investment strategies however has not been adequately dealt in the literature and is a fitting subject for further studies

validation of the venture evaluation model in korea abstract this article examines the validity of the venture evaluation model in korea by directly comparing the relative importance of evaluation criteria on the funding decision with the relative importance of factors influencing venture s empirical performance specifically we first identify the relative importance of evaluation criteria based on whether a deal is accepted or rejected current evaluation model next we derive the relative importance of those criteria revealed in the empirical performance based on the success failure of ventures that overlap with the deals originally used as accepted cases performance based model finally to better understand the differences between the two models we measure the general perceptions of venture capitalists on the importance of those criteria without regard to specific deals normative model to identify potentially important criteria we reviewed the existing related studies on evaluation criteria and we interviewed 10 venture capitalists as a result we selected 31 evaluation items the questionnaire consists of two parts and deals with the following four cases in part a 1 1 case 1 general perceptions concerning the 31 criteria in part b 2 2 case 2 one of the most successful ventures 3 3 case 3 one of the least successful ventures 4 4 case 4 one of the rejected ventures using a five point scale we asked the respondents to rate the 31 criteria based on their general perceptions without referring deals case 1 and on the specific deals they had handled cases 2 3 and 4 to prevent any firm or respondent from affecting the results more than it ought to we distributed the questionnaire to each firm in proportion to the investment amounts we also asked the respondents to fill out only one questionnaire including four cases seventy four venture capitalists including 10 interviewed responded to this questionnaire they have worked as investment directors or managers in the top rated 20 venture capital companies selected according to investment amounts on the basis of the ratings of 31 criteria for the previous four cases we developed three investment models first the current evaluation model reveals which criteria are more important in deciding whether or not to fund the model measures the relative importance of evaluation factors in discriminating between the accept case 2 and case 3 and the reject case 4 decision second the performance based model consists of the relative weights of evaluation factors influencing the two performance categories success case 2 and failure case 3 this model shows the relative importance of evaluation criteria that are reflected in the venture s empirical performance finally we identify the normative model revealing the venture capitalists general perceptions concerning the importance of individual criteria in light of their past field experiences case 1 by comparing the three models we find that the importance of these criteria revealed from venture capitalists perceptions and empirical performances is fairly similar but not sufficiently reflected in the actual deal evaluation in particular the entrepreneur related characteristics are not considered the most important in evaluating venture proposals according to the current evaluation model but they do turn out to be the most important factors in evaluating empirical performance this is in strong contrast to the findings of some existing studies which contend that the entrepreneurrelated criteria ultimately determine the funding decision instead the result confirms the previous assertion that the evaluation of managerial capability is the most challenging task in the venture selection process in the current evaluation model financing ability is considered more important than either superiority of product and technology or production capability contrary to venture capitalists perceptions and empirical performance results therefore it seems necessary to raise the level of specialization of venture capital firms through the acquisition of managerial skills from developed countries and by enhancing the technical background of individual venture capitalists

electricity tariffs under imperfect knowledge of participant benefits the authors consider the problem of establishing tariffs for electrical energy under uncertainty about the value of the energy to the participants a tariff update that achieves welfare maximization asymptotically through successive approximations to the ideal tariff is proposed the successive update of the tariff avoids the need for accurate a priori knowledge of electricity system demand and generation as a function of price the key results are a tariff update algorithm and a proof of local convergence two necessary steps for implementation of practical responsive pricing

long term uncertainty evaluation of pool electricity markets abstract pool electricity markets are cleared under the strong assumption of having a perfectly known future in real life this is anything but true the inability to predict the random parameters of the supply and the demand function introduces risk into the market clearing process therefore the main interest is to minimize such risk by means of a trade off of the mean and the variance of the social cost function this paper considers random variations on the levels and on the slopes of the quadratic supply and demand functions correlation is considered between the corresponding coefficients of the supply and demand curves by means of the mean variance markowitz theory the risk introduced by these random variations is analyzed a comprehensive analysis on the effects that the mean variance markowitz theory has on the nodal spot prices and on the point elasticities of the supply and demand curves is made the non linear optimization model presented in this paper is validated through a three a six and a 21 node system

analysis of generation investment under different market designs in this paper a stochastic dynamic optimization model is used to analyze the effect of different market designs on generation investment and demand the expansion decisions of profit maximizing investors are simulated under four different market designs energy only capacity payment capacity obligation and capacity subscription the results show that the overall social welfare is reduced compared to a centralized social welfare optimization for the first three policies in particular an energy only market with a low price cap leads to insufficient generation investments capacity payments and obligations give additional investment incentives and more generating capacity but also result in a considerable transfer of wealth from consumers to producers due to the capacity payments in contrast the capacity subscription policy increases the social welfare and both producers and consumers benefit this is possible because capacity subscription explicitly utilizes differences in consumers preferences for uninterrupted supply this advantage must be weighed against the cost of implementation which is not included in the model

the role of venture capital in financing small business abstract venture capital is a primary and unique source of funding for small firms because these firms with sales and or assets under 5 million have very limited access to traditional capital markets venture capital is a substitute but not a perfect substitute for trade credit bank credit and other forms of financing for small firms small businesses are not likely to be successful in attracting venture capital unless the firms have the potential to provide extraordinary returns to the venture capitalist this study provides an analysis of a survey of venture capital firms that participate in small business financing the survey participants are venture capital firms that were 1986 members of the national venture capital association nvca the largest venture capital association in the united states the average size of the venture capital firms responding to the survey is 92 million dollars in assets with a range from 600 thousand to 500 million twenty three percent of the respondents have total assets below 20 million and 27 have assets above 100 million the venture capitalists investment assets held in small firms delineate the supply of venture capital to small firms sixty three of the 92 venture capitalists have more than 70 of their assets invested in small firms the venture capitalists were asked how their investment plans might change with changes in the tax law that were projected in the spring of 1986 fifty four percent expected to increase their investments in small firms and 38 did not expect to change these activities venture capitalists are very selective in allocating their resources the average number of annual requests that a venture capitalist receives is 652 and the median number is 500 only 11 5 of the respondents receive more than 1 000 proposals per year

convergence of volatile power markets with price based demand response price based demand response dr program is a mechanism for encouraging electricity consumers to dynamically manage their energy consumptions in response to time varying electricity prices and thereby reduce peak electricity demands and alleviate the pressure to power systems however it brings additional dynamics and new challenges to the real time supply and demand balance specifically if real time price based dr programs are widely deployed in the future price sensitive dr load levels would constantly change in response to dynamic real time prices which will impact the economic dispatch ed schedule and in turn affect electricity market clearing prices this paper adopts two methods for examining the impacts of different dr price elasticity characteristics and dr participation levels on the convergence of volatile power market a closed loop iterative simulation method and a non iterative method based on the contraction mapping theorem in this paper convergence refers to the fact that load and or price values will finally converge to a fixed point after a finite number of iterations between the ed problem and the price sensitive dr load adjustment five price sensitive dr performance function categories are used to simulate different nonlinear price elasticity characteristics of dr loads numerical studies illustrate how the convergence status of power markets will be affected by the nonlinear price elasticity dr curves the dr penetration levels and the capacity limits of generating units

strategic generation investment using a complementarity approach this paper provides a methodology to assist a strategic producer in making informed decisions on generation investment a single target year is considered with demand variations modeled through blocks the strategic behavior of the producer is represented through a bilevel model the upper level considers both investment decisions and strategic production actions and the lower level corresponds to market clearing prices are obtained as dual variables of power balance equations rival uncertainties on offering and investment are characterized through scenarios the resulting model is a large scale mixed integer lp problem solvable using currently available branch and cut techniques results pertaining to an illustrative example and a case study are reported and discussed

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

risk constrained multi stage wind power investment when deciding on wind power investments three major issues arise the production variability and uncertainty of wind facilities the eventual future decline in wind power investment costs and the significant financial risk involved in such investment decisions recognizing the above important issues this paper proposes a risk constrained multi stage stochastic programming model to make optimal investment decisions on wind power facilities along a multi stage horizon the proposed model is illustrated using a clarifying example and a case study

benefit optimization of centralized and decentralized power systems in a multi utility environment the objective is to examine the theoretical bases for benefit optimization in centralized and decentralized electric power systems in a centralized single control power system cost revenue and profit are used as system performance criteria for benefit optimization and the conditions are compared the results show that conventional cost minimization is not necessarily equivalent to benefit optimization based on other criteria in a decentralized multi utility power system benefit optimization and its allocation are investigated at the unconstrained economic optimum economic optimum with constraints and conditions under which the solution is an economic suboptimum the data from the epri regional systems are used to show practical examples of the benefit allocation with wheeling transactions although some rules are better for society than others there still is not one right answer to determine the rules for benefit optimization

combined pool bilateral dispatch part ii curtailment of firm and nonfirm contracts this paper deals with the dispatch of power networks under mixed pool bilateral trading the major questions that are examined are the following 1 to what degree does the relative level of pool versus bilateral trading influence performance in terms of individual power levels costs prices and revenues 2 what is the comparative performance of mixed trading with firm and nonfirm bilateral contracts under various curtailment strategies 3 is the revenue derived from the pool and bilateral trading consistent with the corresponding unbundled costs the above questions are sequentially addressed in separate parts of this three part paper the eventual goal of these results is to help generator and load serving entities choose appropriate relative levels of pool versus bilateral trades while considering risk economic performance and physical constraints in part ii two types of bilateral contracts firm and nonfirm are introduced together with their respective curtailment and noncurtailment bids the optimal power flow problem from part i is now modified to accommodate this new type of operation technical and economical performance measures defined in part i namely generation revenues from bilateral and pool sales pool demand payments plus generation and load expenditures to cover transmission loss and congestion management attributed to bilateral exchanges are also used here together with revenues from contract curtailment and expenditures due to noncurtailment bidding simulation results illustrate the effects of firm and nonfirm contracts and their bidding strategies on the relative levels of pool bilateral trading as well as on economic performance of market participants

transmission analysis by nash game method this paper describes an open access transmission method for maximizing profits in a power system the proposed method is based on the nash bargaining game for power flow analysis in which each transaction and its optimal price are determined to optimize the interests of individual parties transmission losses are considered by the proposed method and test cases and results are discussed to present the merits of the proposed method

venture capitalists decision policies across three countries an institutional theory perspective this paper examines the influence of economic institutions upon venture capitalists vcs decision policies we conducted policy capturing experiments on 119 vcs across three countries representing distinct economic institutions us mature market economy south korea emerging economy and china transitional economy results show that vcs in rules based market economies us rely upon market information to a greater extent than vcs in emerging economies korea and chinese vcs transitional economy weight human capital factors more heavily than either us or korean vcs findings suggest that although professional institutions may dictate which information is included in vc decision policies the extent to which that information is emphasized is determined partly by the economic institution in which the decision maker operates journal of international business studies 2007 38 691 708 doi 10 1057 palgrave jibs 8400291

bidding strategies in oligopolistic dynamic electricity double sided auctions in this paper the problem of developing bidding strategies in oligopolistic dynamic electricity double sided auctions is studied we model electricity double sided auctions as dynamic systems and use nash cournot strategies for the market participants generating firms and load serving entities through simulation studies we compare the efficiency and competitiveness of electricity double sided auctions to those of electricity supplier only auctions using the developed bidding strategies

a theory of electricity tariff design for optimal operation and investment this study addresses the problem of balancing supply and demand side operation and investment activities existing theory is extended to cover electricity industry models with uncertainty in future conditions and intertemporal linking such as storage and investment an optimal pricing structure which takes these into account is presented it would induce participants suppliers and consumers to make profit maximizing investment and operation decisions which are socially optimal the structure contains two terms a short run marginal cost pricing as well as a new incentive term to account for the interaction of participants at different time points a probabilistic forecast of pricing structures at future time is required a justification of the result and three simple illustrative examples are given

congestion driven transmission planning considering the impact of generator expansion this paper presents a multi year transmission expansion planning tep model which considers the transmission congestion and the impact of generation investment cost in the planning horizon the benders decomposition approach is utilized which decomposes tep into a master problem and two subproblems representing security and optimal operation the operation cost due to congestion occ is considered in the proposed model given that the congestion level is a proper criterion for measuring the degree of competitiveness in an electricity market the model evaluates sensitivity of the optimal tep to congestion level planning horizon and financial constraints regulators can utilize the proposed results to provide long term tep to market players and to develop incentive mechanisms to trigger generation investments the proposed approach is applied to a hypothetical system and turkish power system

evaluation of market rules using a multi agent system method the california energy crisis in 2000 2001 showed what could happen to an electricity market if it did not go through a comprehensive and rigorous testing before its implementation due to the complexity of the market structure strategic interaction between the participants and the underlying physics it is difficult to fully evaluate the implications of potential changes to market rules this paper presents a flexible and integrative method to assess market designs through agent based modeling realistic simulation scenarios are constructed for evaluation of the proposed pjm like market power mitigation rules of the california electricity market simulation results show that in the absence of market power mitigation generation company genco agents facilitated by q learning are able to exploit the market flaws and make significantly higher profits relative to the competitive benchmark the incorporation of pjm like local market power mitigation rules is shown to be effective in suppressing the exercise of market power

real option valuation of facts investments based on the least square monte carlo method efficient and well timed investments in electric transmission networks that cope with the large ongoing power market uncertainties are currently an open issue of significant research interest strategic flexibility for seizing opportunities and cutting losses contingent upon an unfavorable unfolding of the long term uncertainties is an attribute of enormous value when assessing irreversible investments in this sense flexible ac transmission systems facts devices appear as an effective manner of adding flexibility to the transmission expansion planning this article proposes an investment valuation approach which properly assesses the option value of deferring transmission lines investments whereas gaining flexibility by investing in facts devices the flexibility provided by facts investments option to abandon and to relocate is assessed through a real option valuation approach based on the novel least square monte carlo method in order to illustrate the practicability of the proposed valuation approach a traditional expansion strategy lines and a flexible investment strategy lines and facts are compared in a real study case the article shows that a proper combination of lines and facts leads to efficient investments by allowing a progressive adaptation of the transmission grid to the changing scenarios

multilevel demand subscription pricing for electric power abstract this paper investigates a general demand subscription pricing policy for electric power service ie a menu of service contracts for assigning different interruption probabilities and prices to different load levels this interruptibility feature is combined with a nonlinear energy price schedule to encourage load flattening we derive a customer value model and a weighted sum objective function for the supplier and consumers for selecting optimal price structures of this type the general form of the optimal price policy is derived and discussed and the implementation methodology is outlined an illustrative example is solved in detail