short run price and income elasticity of gasoline demand evidence from lebanon abstract we empirically estimate the demand for gasoline in the presence of multiple shifts caused by structural breaks using monthly data from lebanon covering the period 2000 m1 2010 m12 consistent with most studies in the literature our study reports that gasoline is price and income inelastic in the short run however when a single and multiple breaks are introduced the consumers responsiveness to gasoline price and income increase since both price and income elasticity are sensitive to structural changes a policy that pleads for a flat excise tax may not be optimal with respect to either the cyclical pattern of government revenues or the internalization of international environment standards

estimating the bias in technical change a nonparametric approach in this note we propose a nonparametric methodology to estimate the bias in technical change we apply the model to estimate the direction of technical progress for a sample of 81 countries covering the period 1970 2014 our results confirm previous findings that during the 1980s technical change in industrialized countries has become increasingly capital using moreover we find that patterns in the bias of technical change have converged among different country groups after the productive decade 1995 2004

price signaling and the strategic benefits of price rigidities we analyze trade between a perfectly informed price setting party seller and an imperfectly informed price taker buyer differently from most of the literature we focus on the case in which under full information it would be inefficient to trade goods of sufficiently poor quality we show that the unique equilibrium surviving d1 is characterized by market breakdown although trade would be mutually beneficial in some state of nature this occurs independently of the precision of the information available to the buyer the model thus implies that signaling through prices may exacerbate the effect of adverse selection rather than mitigate it under d1 the seller would always benefit from committing to prices that do not reveal her information we develop this intuition by analyzing the strategic advantages of price rigidities we show that price rigidities help restore trade and could even enhance effectiveness of prices as signals of quality

revisiting the lemons market this article extends the standard competitive adverse selection model by allowing for qualitatively different information structures of agents on the informed side of the market using the stylized framework of the market for used cars we examine the welfare properties of equilibria under the assumption that a fraction of the sellers remains uninformed about a parameter that is relevant for their own transaction whether market performance increases or decreases in the number of uninformed sellers is shown to depend on 1 the potential gains from trade in the market and 2 the average quality of the sellers information structure

the relationship between regional natural gas markets and crude oil markets from a multi scale nonlinear granger causality perspective this study first decomposes the daily returns of regional gas and crude oil at different time scales using the ensemble empirical mode decomposition eemd method it then investigates the causality relationship between each pair of components at the different time scales by employing the linear and nonlinear granger causality tests for the original returns series this study finds that unidirectional linear granger causality exists from crude oil markets to north american and european gas markets however for nonlinear characteristics the crude oil and regional gas markets exhibit bidirectional nonlinear granger causality on the medium term time scale a bidirectional nonlinear spillover effect is found between the markets the long term trends for the markets suggest a significant linear relationship however no nonlinear spillover effect is found between the crude oil and regional gas markets

information and the market for lemons this paper revisits akerlofs 1970 classic adverse selection market and asks the following question do greater information asymmetries reduce the gains from trade perhaps surprisingly the answer is no better information on the selling side worsens the buyers curse thus lowering demand but may shift supply as well whether trade increases or decreases depends on the relative sizes of these effects a characteization is given on the other hand improving the buyers information i e making private information public unambiguously improves trade so long as market demand is downward sloping

dynamic adverse selection and the supply size in this paper we examine the problem of dynamic adverse selection in a stylized market where the quality of goods is a seller s private information while the realized distribution of qualities is public information we obtain that full trade occurs in every dynamic competitive equilibrium moreover we show that if prices can be conditioned on the supply size then a dynamic competitive equilibrium always exists while it fails to exist if prices cannot be conditioned on the supply size and the frequency of exchanges is high enough we conclude that the possibility to condition prices on the supply size allows us to reach efficiency in the limit for exchanges becoming more and more frequent while otherwise the welfare loss due to delays of exchanges remains bounded away from zero

quality undersupply and oversupply abstract i analyze a market in which a price taking buyer buys a variable quality good from a population of sellers contrasting the case where quality is a seller s private information to that where it is public information average quality traded under private information can be either higher quality oversupply or lower quality undersupply than under public information depending on sellers preferences we are likely to see quality undersupply if i sellers preferences exhibit substitutability between the variable quality good and the numeraire good and or ii sellers view the numeraire good as a luxury good relative to the variable quality good reverse arguments hold for quality oversupply

the impact of the north american shale gas revolution on regional natural gas markets evidence from the regime switching model this paper investigates the impact of the north american shale gas revolution on price movement regimes in the north american and european gas markets using the markov regime switching model it then measures price spreads between oil and gas from 1998 to 2015 to identify the impact of the revolution on the relationship between oil and regional gas prices the results show that the typical movement regime of henry hub prices changes from slightly upward to sharply downward in addition the clear seasonal effect of henry hub prices has disappeared after the shale gas revolution the typical movement of national balancing point nbp prices has changed gradually from a sharply upward regime to the alternative regimes between sharply downward and slightly upward tending to follow oil prices this indicates that the shale gas revolution has had little impact on nbp price movement meanwhile henry hub prices have decoupled from wti prices while nbp and brent prices have continued to exhibit a long term equilibrium level around which they have swung in the short time frame since the shale gas revolution pertinent energy policy makers and energy market participants should pay attention to these changes and adjust their trade production and investment strategies accordingly

what drives volatility in natural gas prices abstract we examine the primary drivers of u s natural gas price volatility to do so we apply a structural heterogeneous autoregressive var shvar model accommodating structural breaks in both the coefficient and volatility to monthly time series data on natural gas supply demand and price between january 1978 and july 2018 we detect several structural changes in coefficients and shock volatility in the natural gas market our findings indicate that the response of natural gas prices differs significantly depending on the regime and type of shock in the natural gas market while demand shocks specific to the natural gas market are the primary drivers of natural gas price volatility structural supply shocks also play a significant role in explaining movements in natural gas prices our results suggest that failure to consider structural breaks in the coefficient and volatility may result in biased estimates and distorted impulse responses of the impact of shocks on natural gas price volatility

oil indexation market fundamentals and natural gas prices an investigation of the asian premium in natural gas trade abstract a heated debate has arisen over whether the asian premium i e higher prices in asia than elsewhere in natural gas trade is due to price discrimination or different market fundamentals determining the origin of this premium can help to guide the gas industries and policy makers in asia especially when the traditional oil indexed price mechanism fades away using a new systemic time series approach this paper explores the extent to which oil prices and market fundamentals contribute to variations in gas prices in japan the united states and germany we find clear cross country differences and time varying patterns gas prices are much less affected by supply and demand factors than oil prices in japan and germany whereas these factors are more important than oil prices in the us market which has a pricing hub through rolling windows and subsample analysis we discover that oil prices were important in japan and germany but the level of importance has declined significantly in recent years though the contribution of fundamentals does not change much the results show that asian gas prices are determined more by oil prices than by the market fundamentals thus the asian premium is more likely due to this oil indexed pricing mechanism rather than market fundamentals this suggests that developing asia s benchmark prices through trading hubs with a better reflection of regional specific fundamentals can lead to a more efficient allocation of gas resources

shale gas policy in the united kingdom an argumentative discourse analysis shale gas has become an energy policy priority in the united kingdom in light of profitable extraction activities in the united states since 2012 the coalition government has created key economic drivers to encourage shale exploration whilst growing activism in affected site communities has stirred significant media and academic commentary this study examines the growing national debate as a matter of discourse adopting an argumentative discourse analytic approach to assess data collected from stakeholder interviews n 21 and key policy actor statements quoted in broadsheet newspapers we explore three dominant storylines emerging in relation to shale gas policy 1 cleanliness and dirt concerns the relative framing of the environmental benefits and harms of shale gas 2 energy transitions pathways and diversions concerns geographic metaphors of transitions to carbon intensive and low carbon energy systems and 3 geographies of environmental justice concerns divisions of economic benefit distribution environmental impact and procedural fairness we find that central government policy rhetoric emphasises economic development regulatory oversight and distribution of benefits to site communities whilst minimising discussion of the implications of shale gas for anthropogenic climate change the role of these discourses in influencing shale gas policy is discussed

shale gas analysis of its role in the global energy market shale gas revolution that took place in the united states at the beginning of the 21st century has still been shaping our global fossil fuel market in 2012 the u s has surpassed russia in natural gas production for the first time since 1982 at the same year annual average u s henry hub natural gas spot price decreased to 2 75 per million btu which was 8 69 per million btu in 2005 in 2013 proved shale gas reserves of the world is estimated at nearly 2 7 trillion cubic metres tcm and unproved resources at staggering 203 9 tcm as a result there is a global rush to develop most of this resource as possible however shale gas is no miracle fuel it has been suggested that its effects on the environment could be worse than conventional natural gas fugitive methane emissions groundwater pollution and increased seismicity are amongst the most important potential environmental side effects there is also concern about the accuracy of resource potential estimations due to lack of data and specifically designed shale gas reservoir models nonetheless the analysis in this study clearly showed that without developing global shale gas resources we have to consume 66 of our proved natural gas reserves to supply the demand till 2040 this would make most of the world natural gas importers and rules of economy dictate that limited supply and increasing demand would skyrocket natural gas prices therefore shale gas resource development is not an option but a must for the continuance of our global energy market and economy

public information quality with monopolistic sellers abstract we show that in markets with asymmetric information even if there is full agreement on the choice of optimal information quality entrusting the choice of unverifiable public information quality to traders who benefit from such information leads to inefficiencies however delegation of information quality choice to an independent agent who is precluded from sharing in trading profits results in efficient implementation this result provides a game theoretic rationale for current institutional arrangements where a private organization that is independent of market traders the financial accounting standards board determines the standards for public disclosures journal of economic literature classification numbers d41 d42 d82

turbulent times uncovering the origins of us natural gas price fluctuations since deregulation abstract in this paper we investigate supply and demand shocks in the u s natural gas market focusing on how the effects of these shocks have changed over time using a sign identified structural vector autoregression svar model that allows for both time varying parameters and stochastic volatility we find that supply and demand shocks are the main drivers of natural gas price fluctuations during 1993 2015 with speculative activities playing a minor role during a portion of the sample period we also find that after the recent shale boom the supply and demand of natural gas in the us have become somewhat more elastic an examination of several volatile episodes during the sample period suggest that though natural gas price fluctuations are predominately determined by fundamental factors supply and demand shocks have significantly evolved over time

overconfidence in the markets for lemons we extend akerlof s 1970 market for lemons by assuming that some buyers are overconfident buyers in our model receive a noisy signal about the quality of the good that is at display for sale overconfident buyers do not update according to bayes rule but take the noisy signal at face value the main finding is that the presence of overconfident buyers can stabilize the market outcome by preventing total adverse selection this stabilization however comes at a cost rational buyers are crowded out of the market

how do oil price shocks affect the output volatility of the u s energy mining industry the roles of structural oil price shocks abstract this paper focuses on how explicit structural shocks that characterize the endogenous character of international oil price change affect the output volatility of the u s crude oil and natural gas mining industries to this end we employ a modified structural vector autoregressive model svar to decompose real oil price changes into four components u s supply shocks non u s supply shocks aggregate demand shocks and oil specific demand shocks mainly driven by precautionary demand the results indicate that output volatility of the u s crude oil and natural gas mining industry has significantly negative responses to u s supply shocks aggregate demand shocks and oil specific demand shocks while lacks significant response to non u s supply shocks variance decomposition and historical decomposition confirm that u s supply shocks occupy most explaining variations in output volatility among the four structural oil shocks moreover the oil specific demand shocks explain more variation than that of aggregate demand shocks for the crude oil mining industry but the opposite is true for the natural gas mining industry

the path of technological progress for china s low carbon development evidence from three urban agglomerations abstract it is widely believed that technological progress is the key driving force for low carbon development based on a panel data of 50 cities during the period 2005 2014 in china s three urban agglomerations beijing tianjin hebei yangtze river delta and pearl river delta this paper presents a comprehensive analysis on the path of technological progress for the low carbon development specifically it firstly estimates the factor biased technological progress by using a translog production function model and then dynamic panel data models are used to investigate the impacts of three sources of technological progress including rd finally we introduce an index to measure the appropriate technical structure and analyze the technological improvement strategy to the low carbon development the main results indicate that technological progress of the three urban agglomerations is biased toward electricity thereby shows a electricity saving effect fdi shows electricity saving and carbon reduction effects but rd the impacts of import and export on the factor biased technological progress are weak furthermore the path of technological progress is highly related to the level of economy when gdp per capita is higher than 37 000 yuan indigenous innovation is the main driver for low carbon development

financialization fundamentals and the time varying determinants of us natural gas prices abstract increasing empirical evidence shows that natural gas prices have decoupled from oil prices yet there remains an open question as to what are the determining factors of natural gas prices following the demise of oil indexation this paper aims to address this question using a dynamic model averaging dma approach dma can help identify key important price determinants and importantly does so within a time varying framework allowing us to document how the set of determinants has evolved in response to key market changes using time series data between 2001 and 2018 we demonstrate a clear declining role of oil prices in the natural gas pricing mechanism verifying the demise of indexation market or fundamental factors such as weather demand and supply conditions have at the same time become more important in addition our results illustrate an increasing role from financial markets captured by speculation related variables providing empirical evidence to support the recent literature on commodity market financialization the rising impact of speculation to natural gas prices introduces questions over how to balance market efficiency and risk management in the post indexation regime

the impact of the shale gas revolution on the u s and japanese natural gas markets we investigated whether the increase in the us shale gas production changed the structures of the us and japanese natural gas markets using market data for the period 2002 5 2012 5 our analysis consists of a structural break test and market integration analysis the bai and perron structural break test detected a break point of natural gas prices and consumption in 2005 as well as other external shocks hurricane katrina and the lehman shock that are irrelevant to shale gas development we eliminated the impact of these shocks by separating the data set using the breaks identified in our analysis we found the breaks skewed the estimation a market linkage existed between the us and japanese markets in the original data set while it did not in the separated data the vector autoregressive var model also indicated a significant change before and after the break point the us market had a one side influence on the japanese market before 2005 but the influence disappeared after 2005 our results implied that the shale gas revolution triggered by the increase in shale gas production in 2005 caused the change in the relationship between the us and japanese natural gas markets

structural breaks in international tourism demand are they caused by crises or disasters it is recognised that the tourism industry is vulnerable to some form of crises or disaster however despite the attention given to the nature and consequences of tourism crises and disasters there is a gap in the literature regarding the ex post detection of these events in this article we estimate both the number and date of structural breaks in international tourism arrival series for 25 countries and madeira island using the bai and perron 1998 structural break test we compare the date of tourism crises and disasters to the dating of these structural breaks we observe that tourism crises and disasters are largely consistent with the dates of breaks therefore this method allows us to solve a gap in the tourism industry related to the correct allocation of negative shocks in international tourism arrival demand to crisis or disaster phenomena

information and bargaining in the hold up problem this article incorporates an information structure with partial information into the canonical hold up problem the optimal information structure balances the tradeoff between ex ante efficiency the information rent effect and ex post efficiency the bargaining disagreement effect with one shot bargaining it occurs at an intermediate level of information asymmetry when there is repeated bargaining it is attained with perfect asymmetry asymmetric information the parameter that is frequently ignored in the literature turns out to be an important welfare instrument for the hold up problem our results therefore provide a basis for institutional design regarding the optimal control of information flow

asymmetric information and overinvestment in quality in a standard adverse selection world asymmetric information about product quality leads to quality deterioration in the market suppose that a higher investment level makes the realization of high quality more likely then if consumers observe the investment but not the realization of product quality before purchase they can infer the probability distribution of high and low quality that may be put on the market we uncover two effects that may lead the firm to overinvest in quality compared to a market with full information first an adverse selection effect according to which a sufficiently large investment can avoid adverse selection and second an efficiency effect according to which a larger investment reduces the probability of having in the market low quality products that are not socially valuable

informationally robust trade and limits to contagion abstract two agents can each accept or reject a proposed deal whose value for each agent depends on an unknown state and may be positive or negative the deal takes place only if both accept each agent can be imperfectly informed in an arbitrary way about both her own value and the other agent s in such environments contagious adverse selection may prevent the deal from being reached even when it is mutually beneficial ex post we give an upper bound on the ex ante expected welfare loss in equilibrium due to such contagion valid for any information structure the welfare loss is small if negative values are unlikely ex ante and under an assumption of known aggregate gains from the deal our bound is sharp the bound has a succinct description even though the equilibrium itself in any given information structure may be hard to describe explicitly

biased technical change and the malmquist productivity index the malmquist productivity index has many attractive features one is that it can be epxressed as the product of a technical efficiency change index and a technical change index in this paper we express the technical change index as the product of a magnitude index and a bias index we then express the bias index as the product of an output bias index and an input bias index and we state conditions under which each bias index makes no contribution to productivity change

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

further evidence on the debate of oil gas price decoupling a long memory approach abstract the long run oil gas price relationship has been challenged more often in recent years as these two prices have shown evidence of decoupling from each other this paper proposes the use of a long memory approach and a rolling windows method to model the time varying oil gas price relationship in three markets namely the united states europe and japan the results extend existing research conclusions on the oil gas price relationship and answer the question of whether it is a temporary phenomenon or a permanent market change our findings indicate that the us oil gas relationship remains nonstationary at almost all windows and illustrate strong evidence of decoupling conversely the european and asian oil gas prices exhibit temporary decoupling over time although the overall relationship still favours the oil indexation hypothesis the us experience suggests that oil and gas do not share the same fundamentals and a pricing hub can better reflect the true value of natural gas policy makers in europe and asia should reinforce their efforts towards a market based pricing mechanism for gas

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

gas versus oil prices the impact of shale gas abstract what significance will developments in shale gas production have for european gas prices some commentators paint a gloomy picture of the future gas markets but most forecasts for the oil market are positive consequently a view appears to prevail that price trends will differ sharply between oil and gas markets this article looks at developments in us shale gas production and discusses their impact on the movement of european gas prices the relationship between oil and gas prices over time is also analysed

world crude oil and natural gas a demand and supply model abstract this paper examines world markets for crude oil and natural gas over the period 1918 1999 it analyzes the time series properties of output and prices and estimates demand and supply elasticities during 1918 1973 and 1973 1999 oil and gas prices were stable during the first period they became volatile afterwards reflecting deep changes in the market structure following the oil shock in 1973 demand price elasticities were too low however demand income elasticities were high supply price elasticities were also too low the elasticity estimates help to explain the market power of the oil producers and price volatility in response to shocks and corroborate elasticity estimates in energy studies

gas and lng trading hubs hub indexation and destination flexibility in east asia abstract in the east asian gas markets issues like gas trading hubs hub indexed pricing and destination flexibility are being debated this paper examines the impact of a change in east asia s pricing benchmark and contract flexibility on the regional and global gas markets the paper uses the nexant world gas model a linear program with global cost minimization as the objective to our knowledge this study on hub competition price benchmark change and contract flexibility improvement in east asia will be the first in the literature and have real policy relevance the results show that both price benchmark change and contract flexibility improvements will create an overall benefit for the world and east asia importers but the impacts are different among exporters and importers however there is no evidence of competition among different benchmark hubs and no evidence that destination restrictions cause the asia premium it implies that removal of destination clauses has higher priority than the change to hub indexation for japan korea and chinese taipei but both should be treated equally in china the study also suggests that east asian importers should cooperate among themselves and with exporters to facilitate the hub creation and contract changes in east asia

on durable goods markets with entry and adverse selection we investigate the nature of trading and sorting induced by the dynamic price mechanism in a competitive durable good market with adverse selection and exogenous entry of traders over time the model is a dynamic version of akerlof 1970 identical cohorts of durable goods whose quality is known only to potential sellers enter the market over time we show that there exists a cyclical equilibrium where all goods are traded within a finite number of periods after entry market failure is reflected in the length of waiting time before trade the model also provides an explanation of market fluctuations jel classification d82 a propos des marches de biens durables quand il y a entree de nouveaux commercants et selection adverse les auteurs analysent la nature du commerce et du triage engendres par le mecanisme dynamique des prix dans un marche concurrentiel de biens durables quand il y a selection adverse et entree exogene de nouveaux commercants dans le temps ce modele est une version dynamique du modele d akerlof 1970 des cohortes identiques de biens durables dont la qualite est connue seulement des vendeurs potentiels arrivent sur le marche dans le temps il semble qu il y ait plus de commerce actif que ce qui est prevu par un modele statique en particulier on montre qu il existe un equilibre cyclique ou tous les biens sont transiges a l interieur d un nombre fini de periodes apres leur arrivage et que a chaque phase du cycle l eventail de qualite des biens transiges s accroit les commercants qui transigent des produits de plus haute qualite attendent plus longtemps et l imperfection du marche se traduit par la longueur de temps d attente avant la transaction le modele fournit aussi une explication des fluctuations du marche

the role of underground storage in the dynamics of the us natural gas market a threshold model analysis abstract natural gas is an important source of energy in the global economy hence understanding the drivers of its prices is of significant interest for the many economic agents this paper investigates the role of inventories for the dynamics of the u s natural gas market our contribution is twofold first within the threshold structural var framework we demonstrate that in a low inventory regime spot prices are more responsive to economic fundamentals in comparison to situation in which the inventories are high second we present evidence that the level of natural gas inventories have a significant effect on the relationship between spot and futures prices