how much damage will climate change do recent estimates two reasons to be concerned about climate change are its unjust distributional impact and its negative aggregate effect on economic growth and welfare although our knowledge of the impact of climate change is incomplete and uncertain economic valuation is difficult and controversial and the effect of other developments on the impacts of climate change is largely speculative the authors find that poorer countries and people are more vulnerable than are richer countries and people a modest global warming is likely to have a net negative effect on poor countries in hot climates but may have a net positive effect on rich countries in temperate climates if one counts dollars the world aggregate may be positive if one counts people the world aggregate is probably negative negative impacts would become more negative and positive impacts would turn negative for more substantial warming the marginal costs of carbon dioxide emissions are uncertain and sensitive to assumptions that partially reflect ethical positions but are unlikely to be larger than 50 per tonne carbon

the limits of market oriented regulatory techniques the case of automotive fuel economy the search for more efficient market oriented regulatory techniques has produced significant recent advances in several areas among these would appear to be the corporate average fuel economy cafe approach to reducing gasoline consumption by the domestic automobile fleet the 1975 energy policy and conservation act required manufacturers to sell fleets with a sales weighted average of 18 miles per gallon in the 1978 model year 19 mpg in 1979 20 mpg in 1980 and 27 5 mpg in 1985 1 the standards for the four intervening years were subsequently set by the national highway traffic safety administration at 22 24 26 and 27 miles per gallon the advantages of the averaging approach over uniform vehicle standards or a gas guzzler tax are two fold first cafe permits each firm to increase its overall fuel efficiency in the cheapest manner since the costs of mileage improvements for different vehicles may be rather different 2 and second it permits the continuation of a diverse product mix to the consumer since a uniform standard would probably result in the demise of certain models these arguments for averaging are now so widely accepted that the principle is being proposed inter alia for automotive emissions standards as well that is instead of maximum allowable emissions for each and every model manufacturers could produce models with various levels of pollutants

transmission network cost allocation based on circuit theory and the aumann shapley method this paper presents a new method to allocate the costs of the transmission system among generators and loads the allocation is calculated for each branch of the transmission system to identify and quantify the individual responsibility of generators and loads a two step method based on the perfect coupling of the circuit theory with the aumann shapley method is proposed here first to determine the participation of the generators in the costs of the transmission network the generators are modeled as current injections and the loads as impedances second to determine the participation of the loads in the cost of the transmission network the loads are modeled as current sources and the generators as impedances the aumann shapley method and the circuit theory are used to calculate the participation of each real and imaginary current component in the allocation of the costs of the transmission system game by considering them as independent agents the properties of the aumann shapley method ensure equitable allocation and recovery of the total costs numerical results are presented and discussed to demonstrate the applicability of the proposed method

feebates rebates and gas guzzler taxes a study of incentives for increased fuel economy abstract us fuel economy standards have not been changed significantly in 20 years feebates are a market based alternative in which vehicles with fuel consumption rates above a pivot point are charged fees while vehicles below receive rebates by choice of pivot points feebate systems can be made revenue neutral feebates have been analyzed before this study re examines feebates using recent data assesses how the undervaluing of fuel economy by consumers might affect their efficacy tests sensitivity to the cost of fuel economy technology and price elasticities of vehicle demand and adds assessments of gas guzzler taxes or rebates alone a feebate rate of 500 per 0 01 gallon per mile gpm produces a 16 percent increase in fuel economy while a 1000 per 0 01 gpm results in a 29 percent increase even if consumers count only the first 3 years of fuel savings unit sales decline by about 0 5 percent but sales revenues increase because the added value of fuel economy technologies outweighs the decrease in sales in all cases the vast majority of fuel economy increase is due to adoption of fuel economy technologies rather than shifts in sales

optimizing multinomial logit profit functions the multinomial logit model is a standard approach for determining the probability of purchase in product line problems when the purchase probabilities are multiplied by product contribution margins the resulting profit function is generally nonconcave because of this standard nonlinear search procedures may terminate at a local optimum which is far from the global optimum we present a simple procedure designed to alleviate this problem the key idea of this procedure is to find a path of prices from the global optimum of a related but concave logit profit function to the global optimum of the true but nonconcave logit profit function

new vehicle feebates new vehicle feebate programs encourage improved fleet wide vehicle fuel efficiency yet analyses of these policies have been limited to ad hoc proposals in this paper we exploit an extensive multi year dataset which includes more than 16 million observations to evaluate the welfare implications of a long standing vehicle feebate program in the canadian province of ontario we 1 show that second best optimal feebates can be written as a function of new vehicle pigouvian taxes 2 find that ontario s feebate program was welfare enhancing relative to a no feebate scenario but that a second best optimal benchmark would have yielded additional welfare while reducing fleet wide emissions and 3 find that ontarian consumers responded asymmetrically to fees versus rebates

transmission cost allocation by cooperative games and coalition formation the allocation of costs of a transmission system to its users is still a pending problem in many electric sector market regulations this paper contributes with a new allocation method among the electric market participants both cooperation and competition are defined as the leading principles to fair solutions and efficient cost allocation the method is based mainly on the responsibility of the agents in the physical and economic use of the network their rational behavior the formation of coalitions and cooperative game theory resolution mechanisms the designed method is applicable to existing networks or to their expansion simulations are made with sample networks results conclude that adequate solutions are possible in a decentralized environment with open access to networks comparisons with traditional allocation systems are shown and cooperative game solutions compare better in economic and physical terms

the distributional incidence of the gasoline tax in chile abstract this paper analyzes the distributional incidence of the excise tax on gasoline in chile using household budget surveys the incidence is calculated with respect to both income and expenditure distributions in order to consider the potential differences between transitory and permanent income the suits index is estimated as a measure of the degree of progressivity of the tax and confidence intervals are calculated using a bootstrap methodology to statistically compare changes in the incidence given changes in the tax the results show that the tax contrary to the evidence for several developed countries is slightly or moderately progressive with a lower degree of progressivity observed in the calculations based on income than those based on expenditure the simulation of the 25 reduction in the tax rate implemented in 2008 shows that in terms of incidence its effect is to reduce the progressivity of the gasoline tax which is the opposite of what was sought by the government with this policy

optimal alliance strategies among retailers under energy deviation settlement mechanism in china s forward electricity market an energy deviation settlement eds mechanism has been proposed to settle the deviation between consumption and energy contracts in china s forward electricity market due to high eds costs of electricity retailers a deviation mutual insurance dmi mechanism is put forward representing an option for electricity retailers to reduce the deviation through contract transfer given this background an optimal alliance strategy is proposed to maximize the utility of different types of individual electricity retailers the alliance income model considers the eds cost reduction and the cooperation cost analyzed based on transaction cost theory tct an improved income allocation method which considers distribution indexes selected by game theory and resource dependence theory rdt is proposed to ensure the comprehensive and reasonable allocation of alliance income considering the expected income and financial risk an evaluation model using conditional value at risk cvar as the financial risk assessment indicator is presented to measure the stability of alliances simulations based on data from a provincial electricity market in china illustrate that the eds costs of retailers can be reduced by selecting appropriate partners for alliance in addition the proposed alliance income allocation method is more reasonable and more targeted than the cooperative game based methods

clearing the air the costs and consequences of higher cafe standards and increased gasoline taxes abstract concerns about energy security and climate change have sparked legislators interest in reducing gasoline consumption by increasing corporate average fuel economy cafe standards using an empirically rich simulation model and cost estimates for anticipated fuel economy technologies we estimate annual costs of reducing long run gasoline consumption by 10 via a 3 8 miles per gallon increase in the standards and the potential cost savings from allowing manufacturers to buy and sell fuel economy credits maximum gasoline savings would be realized only after all existing vehicles were replaced or 14 years in our model a gasoline tax would produce greater immediate savings by encouraging people to drive less and eventually to choose more fuel efficient vehicles we demonstrate the advantage of a tax by comparing the cost of the higher cafe standards over the first 14 years against the cost of a gasoline tax that would save the same amount of gasoline over that time

enforcing time inconsistent regulation i introduction passage of legislation is merely the beginning of the regulatory task the successful translation of policy from legislative debate into regulation is not guaranteed implementation may be especially problematic for regulations that are time inconsistent regulations have the potential for time inconsistency if the government cannot credibly commit itself to enforcement of the original legislation at every relevant point in time consider a law that sets a regulatory standard to be enforced several years in the future the regulation s implementation may take the following course for any given enforcement period first firms are expected to engage in long term investment to move towards meeting the standard second after that investment has been completed an enforcement agency reviews and has the opportunity to modify the standards shortly before the date at which they are to be enforced finally after the agency s review firms make short term investment to meet the standard this process may be repeated for subsequent enforcement periods this sequence of events presents inherent problems for the enforceability of a regulation during the long term investment stage regulated firms know that the relevant administrative agency may be unable to credibly bind itself to future actions given this firms may believe that the agency s enforcement posture depends on their own actions firms may therefore be able to act strategically to induce the regulatory agency to lower the relevant standard before its enforcement date facing such incentives firms may not undertake the desired long term investments upon review the enforcement agency could find that requiring firms to make short term investments to meet the standard may involve substantial social costs facing such costs the agency may grant regulatory relief and relax the standard in these circumstances society s welfare may be greater if firms engaged in the necessary long term investment to meet the standard prior to the enforcement date in order to force firms to make the necessary long term investment however the enforcement agency may need to threaten to punish firms by enforcing the original standard even if firms long term investments are below optimal levels the need to threaten this punishment places the agency in a difficult position if firms do not undertake the desired long term investments it may be in the agency s and society s interests to relax the initial standard to avoid the potentially higher costs associated with short term investments firms will understand this and thus make no ex ante investment towards meeting the standard the regulation is therefore time inconsistent and unenforceable in the case of automobile fuel economy regulations for example congress in 1975 set standards for model years 1978 and afterwards but provided the executive branch in the form of the national highway traffic safety administration nhtsa with discretion to modify the standard for model years after 1984 automobile manufacturers then undertook long term product investment that may have been initiated in order to meet the standards for model years 1985 1986 and 1989 however firms were able to gain regulatory relief from nhtsa at the start of the relevant model years if relief had not been granted there would have been insufficient time for further product innovation and firms would have had to meet the standard by eliminating less fuel efficient vehicles from their fleets a strategy that would have been costly not only to themselves but to their employees and customers as well see kleit 1990 and greene 1991 on the other hand in the 1970s the congress passed laws to be enforced by the environmental protection agency that required automobile companies to invest millions of dollars in pollution control devices while automobile firms achieved some delay in the implementation of the law the devices ultimately were installed

impacts of fuel economy improvements on the distribution of income in the u s abstract we estimate the impacts of passenger car and light truck fuel economy improvements in the u s since 1975 on the real monetary incomes of u s households by income quintile over the period 1980 2014 we limit our analysis to the direct monetary impacts fuel savings minus increased vehicle costs and do not attempt a full welfare analysis we include all vehicle purchases new and used household fuel expenditures come from the u s consumer expenditures surveys ces costs of increased new passenger car and light truck fuel economy were obtained from four national research council nrc studies plus a literature review of earlier estimates the nrc cost functions provide a unique time series of technology supply functions constructed by balanced expert panels and comprised of specific technologies proven to increase fuel economy effects of fuel economy improvements on used vehicle prices are based on an analysis of the ces data retrospective analysis indicates that all income quintiles received net savings and that the effect on the distribution of income was progressive a prospective analysis of future fuel economy improvements produced similar results sensitivity analysis indicates that these findings are relatively robust

robust estimation and forecasting of the long term seasonal component of electricity spot prices when building stochastic models for electricity spot prices the problem of uttermost importance is the estimation and consequent forecasting of a component to deal with trends and seasonality in the data while the short term seasonal components daily weekly are more regular and less important for valuation of typical power derivatives the l ong term seasonal components ltsc seasonal annual are much more diffi cult to tackle surprisingly in many academic papers dealing with electricity spot price modeling the importance of the seasonal decomposition is neglected and the problem of forecasting it is not considered with this paper we want to fill the gap and present a thorough study on estimation and forecasting of the ltsc of electricity spot prices we consider a battery of models based on fourier or wavelet decomposition combined with linear or exponential decay we find that all considered wavelet base d models are significantly better in terms of forecasting spot prices up to a year ahead than all considered sine based models this result questions the validity and usefulness of stochastic models of spot electricity prices built on sinusoidal long term seasonal components

incorporating affirmative action into the welfare state abstract in this paper we discuss a novel aspect of affirmative action policy we examine its redistributive role asking whether in an egalitarian society supplementing the tax transfer system with an affirmative action policy would enhance social welfare we demonstrate that affirmative action could be a desirable policy tool even if racial discrimination does not exist in the labor market

price dynamics among u s electricity spot markets combining recent advances in causal flows with time series analysis relationships among 11 u s spot market electricity prices are examined results suggest that the relationships among the markets vary by time frame in contemporaneous time the western markets are separated from the eastern markets and the electricity reliability council of texas at longer time frames these separations disappear even though electricity transmission between the regions is limited it appears the relationships among markets are not only a function of physical assets such as transmissions lines among markets but by similar and dissimilar institutional arrangements among the markets

volatility transmission and volatility impulse response functions in european electricity forward markets using daily data from march 2001 to june 2005 we estimate a var bekk model and find evidence of return and volatility spillovers between the german the dutch and the british forward electricity markets we apply hafner and herwartz 2006 journal of international money and finance 25 719 740 volatility impulse response function virf to quantify the impact of shock on expected conditional volatility we observe that a shock has a high positive impact only if its size is large compared to the current level of volatility the impact of shocks are usually not persistent which may be an indication of market efficiency finally we estimate the density of the virf at different forecast horizon these fitted distributions are asymmetric and show that extreme events are possible even if their probability is low these results have interesting implications for market participants whose risk management policy is based on option prices which themselves depend on the volatility level

loss allocation in energy transmission networks abstract in this paper we study a cost allocation problem that is inherent to most energy networks the allocation of losses in particular we study how to allocate gas losses between haulers in gas transmission networks we discuss four allocation rules two of them have already been in place in real networks and two others that are defined for the first time in this paper we then present a comparative analysis of the different rules by studying their behavior with respect to a set of principles set forth by the european union this analysis also includes axiomatic characterizations of two of the rules finally as an illustration we apply them to the spanish gas transmission network

cointegration analysis of spot electricity prices insights on transmission efficiency in the western us abstract the us energy policy act of 1992 promoted the development of spot markets for electric power by requiring utilities to open their transmission systems to wholesale power sales in this paper we specify and estimate a vector error correction model using peak and off peak electricity spot prices during 1994 1996 covering 11 regional markets in the western united states and test these prices for evidence of market integration the results show evidence of an efficient and stable wholesale power market

carbon pricing and electricity markets the case of the australian clean energy bill abstract we examine the impact of the clean energy bill on the price behavior of electricity futures contracts in the australian national electricity market first we compute ex ante forward risk premiums in the pre tax period until june 2012 then derive market implied expectations about additional costs of the carbon pricing mechanism cpm on generators as well as pass through rates during the carbon tax july 2012 june 2014 and post tax after july 2014 periods our results suggest that the observed carbon premiums became increasingly higher once the carbon tax had been proposed and subsequently legislated in 2011 during periods where market participants could be relatively certain that the tax would be effective we find expected carbon pass through rates between 67 and 150 which seem to be inversely related to emission intensities in the regional markets our results are also a clear indication of strong policy uncertainty with regards to the cpm and suggest that in the future a stable and long term policy framework would be required for a carbon pricing mechanism to have its full effect

dynamic granger causal networks of electricity spot prices a novel approach to market integration this study uses network theory to analyze the interactions of a representative sample of 13 european eu electricity spot prices during the period 2007 2012 we construct 7651 dynamic multivariate networks where the nodes correspond to different eu countries and the links weight the granger causality between the variations of the respective electricity prices global connectivity is then characterized by the system s density or the total quantity of causal interactivity sustained by the network system which informs about the occurrence of abnormal changes in connectivity we report a considerably large peak lasting from october 2011 to april 2012 where the graph s density over basal jump reached a magnitude of 2 4 times suggesting an improved degree of connectivity of electricity markets during this period by applying the markov regime switching model on the network density we find that this change coincides with the implementation of the european commission s third energy package at the local level the in strength values quantifying the dependence of the electricity price variation of an eu country on other countries validate the reliability of our technique by verifying historical events such as the occurrence of interconnectors commissioning and market coupling on the path to full market integration market networks should be periodically monitored our model which is able to create a time varying network describing the evolving influences between the european electricity prices is able to detect important changes in market integration and can be considered a suitable and promising approach for this task

pounds that kill the external costs of vehicle weight heavier vehicles are safer for their own occupants but more hazardous for other vehicles simple theory thus suggests that an unregulated vehicle fleet is inefficiently heavy using three separate identification strategies we show that controlling for own vehicle weight being hit by a vehicle that is 1000 pounds heavier generates a 40 50 increase in fatality risk these results imply a total accident related externality that exceeds the estimated social cost of us carbon emissions and is equivalent to a gas tax of 0 97 per gallon 136 billion annually we consider two policies for internalizing this external cost a weight varying mileage tax and a gas tax and find that they are similar for most vehicles the findings suggest that european gas taxes may be much closer to optimal levels than the us gas tax language en

energy efficiency policy in a non cooperative world abstract in this paper we explore energy efficiency policies in the presence of a global environmental problem and international cost interdependency associated with r d activities we develop a simple model with two regions where the cost of an appliance in one region depends upon the level of energy efficiency in that region and the level of r d activities by the appliance industry in our model the cooperative outcome can be decentralized by imposing a tax on energy however we show that when regions do not cooperate they have an incentive to adopt additional instruments to increase energy efficiency the reason is that the lack of cooperation leads to under taxation of the environmental externality which in turn creates an incentive to try to reduce emissions produced abroad we illustrate this phenomenon with the californian vehicle greenhouse gas standards

allocation of transmission losses to bilateral contracts in a competitive environment under open access market driven transactions have become the new independent decision variables defining the behavior of the power system understanding the impact of bilateral transactions on system losses is important to be able to allocate a loss component to each individual transaction and improve economic efficiency the theory presented here is based on the argument that it is always possible to compute the exact loss allocation corresponding to an infinitesimal bilateral transaction this leads to a set of governing differential equations whose solution yields the loss allocation for contracts of any size several examples illustrate the properties of both the proposed allocation equations and other methods the dependence of the proposed solution on the path of integration and a number of implementation issues

a representative consumer theory of the logit model the log it model is usually derived from a discrete choice approach with stoc hastic utilities it is shown here that the logit demand system may also be derived from the maximization of a deterministic entropy type utility the latter may be interpreted as the preference function of a representative consumer with variety seeking behavior this altern ative view suggests a generalization of the standard logit which allo ws total demand to be determined endogenously copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the effects of transport regulation on the oil market does market power matter instruments used to regulate the consumption of oil in the transport sector include fuel taxes biofuel requirements and fuel efficiency standards however the effects that these have on oil consumption and price vary if market power is present in the oil market the directions of change in consumption and price might contrast with those in a competitive market as a result the market structure affects not only the effectiveness of the policy instruments used to reduce oil consumption but also the terms of trade and carbon leakage in particular reduced oil consumption as a result of increased fuel efficiency standards will unambiguously increase the price of oil under a monopoly

tradable fuel economy credits competition and oligopoly corporate average fuel economy cafe regulations specify minimum standards for fuel efficiency that vehicle manufacturers must meet independently we design a system of tradeable fuel economy credits that allows trading across vehicle classes and manufacturers with and without considering market power in the credit market we perform numerical simulations to measure the potential cost savings from moving from the current cafe system to one with stricter standards but that allows vehicle manufacturers various levels of increased flexibility we find that the ability for each manufacturer to average credits between its cars and trucks provides a large percentage of the potential savings as expected the greatest savings come from the greatest flexibility in the credit system market power lowers the potential cost savings to the industry as a whole but only modestly loss in efficiency from market power does not eliminate the gains from credit trading

volatility impulse response functions for multivariate garch models an exchange rate illustration we introduce a new concept of impulse response functions tracing the effects of independent shocks on volatility through time while avoiding typical orthogonalization and ordering problems in an empirical study of a bivariate foreign exchange fx rate series we use volatility impulse response functions to discuss the effects of central bank decisions such as direct interventions in the fx market or open market activities on fx market volatility comparing our concept with conditional moment profiles introduced by gallant et al gallant a r rossi p e tauchen g 1993 nonlinear dynamic structures econometrica 61 871 907 we show that for shocks affecting fx rates in an asymmetric way the difference between the two methodologies and their interpretation can be substantial

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

reassessing the integration of european electricity markets a fractional cointegration analysis this study extends existing literature on the assessment of electricity market integration in europe by developing and testing hypotheses on the convergence of electricity wholesale prices and adopting a time varying fractional cointegration analysis in addition the potential impacts of some special events that may affect system capacity new interconnection market coupling increase in share of intermittent generation on spot and forward markets are considered and evaluated daily spot prices from february 2000 to march 2013 of nine european electricity spot markets apx uk apx nl belpex epex fr epex de ipex nordpool omel and ote and month ahead prices in four markets french british german and dutch from november 2007 to december 2012 are investigated results show that unit root tests which are generally used in the literature to test market integration are inadequate for assessing electricity spot market convergence because spot prices are found to be fractionally integrated and mean reverting time series furthermore spot price behaviour and their association with different markets change over time reflecting changes in the eu electrical system one month ahead prices by contrast were found to have become more resilient to shocks and to follow more stable trends

spot and derivative pricing in the eex power market using spot and futures price data from the german eex power market we test the adequacy of various one factor and two factor models for electricity spot prices the models are compared along two different dimensions 1 we assess their ability to explain the major data characteristics and 2 the forecasting accuracy for expected future spot prices is analyzed we find that the regime switching models clearly outperform its competitors in almost all respects the best results are obtained using a two regime model with a gaussian distribution in the spike regime furthermore for short and medium term periods our results underpin the frequently stated hypothesis that electricity futures quotes are consistently greater than the expected future spot a situation which is denoted as contango

comparing flexibility mechanisms for fuel economy standards since 1975 the corporate average fuel economy cafe program has been the main policy tool in the us for coping with the problems of increasing fuel consumption and dependence on imported oil the program mandates average fuel economy requirements for the new vehicle sales of each manufacturer s fleet with separate standards for cars and light trucks the fact that each manufacturer must on its own meet the standards means that the incentives to improve fuel economy are different across manufacturers and vehicle types although the problems associated with fuel consumption do not make such distinctions this paper evaluates different mechanisms to offer automakers the flexibility of joint compliance with nationwide fuel economy goals tradable cafe credits feebates output rebated fees and tradable credits with banking the policies are compared according to the short and long run economic incentives as well as to issues of transparency implementation administrative and transaction costs and uncertainty

a dynamic network analysis of spot electricity prices in the australian national electricity market abstract this study applies dynamic network analysis to the power sector examining the relationship between regional spot electricity prices in the australian national electricity market nem in particular we employ principal component analysis and generate granger causality networks to examine the degree of interconnectedness of the nem in a time varying setting we find that the derived measures of interdependence can be related to actual market events such as price spikes unexpected high demand for electricity sudden increases in price volatility rebidding of dominant generators the temporary or permanent outage of major power stations and upgrades and limitations in transmission capacity in the analysed network we find that stronger dependence is exhibited by regional markets that are linked through interconnectors while the direction of granger causality can be related to interregional trade we further examine the usefulness of the derived measures for forecasting distributional characteristics of spot prices such as the maximum price volatility price spreads or upcoming periods of price spikes our results suggest that the derived network measures have predictive power albeit limited for the behaviour of spot electricity prices in the nem

integration of regional electricity markets in australia a price convergence assessment abstract from an electricity market design perspective it is relevant and practical to know which market structures allow for price convergence and how long this takes to achieve this study employs the phillips and sul 2007 2009 methodology to test for the convergence of wholesale electricity prices across the australian states we identify a long run common price growth pattern that applies to a cluster formed by three eastern states that share common market characteristics and limited physical interconnection we also find another cluster with less competitive market structures that although not interconnected strongly converge towards their own trend these findings confirm theoretical expectations while quantifying the rate of convergence finally we also investigate the role that the carbon tax regime has played in the convergence process with new empirical showing that the previous results are not affected with the notable exception being the case of south australia

the case of negative day ahead electricity prices in recent years germany has significantly increased its share of electricity produced from renewable sources which is mainly due to the renewable energy act eeg the eeg substantially impacts the dynamics of intra day electricity prices by increasing the likelihood of negative prices in this paper we present a non gaussian process to model german intra day electricity prices and propose an estimation procedure for this model most importantly our model is able to generate extreme positive and negative spikes a simulation study demonstrates the ability of our model to capture the characteristics of the data

output and attribute based carbon regulation under uncertainty abstract output based carbon regulations such as fuel economy standards and the rate based standards in the clean power plan create well known incentives to inefficiently increase output similar distortions are created by attribute based regulations this paper demonstrates that despite these distortions output and attribute based standards can always yield strictly greater expected welfare than flat emission standards given uncertainty in demand for output or attributes assuming locally constant marginal damages for fuel economy standards the welfare maximizing amount of attribute or mileage basing is likely small relative to current policy for the electricity sector however an intensity standard may yield greater expected welfare than a flat standard

an empirical comparison of alternate regime switching models for electricity spot prices one of the most profound features of electricity spot prices are the price spikes markov regime switching mrs models seem to be a natural candidate for modeling this spiky behavior however in the studies published so far the goodness of fit of the proposed models has not been a major focus while most of the models were elegant their fit to empirical data has either been not examined thoroughly or the signs of a bad fit ignored with this paper we want to fill the gap we calibrate and test a range of mrs models in an attempt to find parsimonious specifications that not only address the main characteristics of electricity prices but are statistically sound as well we find that the most universal and robust structure is that of an independent spike 3 regime model with heteroscedastic diffusion type base regime dynamics and shifted spike regime distributions

environmental policy and vehicle safety the impact of gasoline taxes i introduction public policy to address the environmental externalities associated with automobile use will likely lead to substantial changes in the composition of the u s passenger vehicle fleet while many economists suggest pigovian taxation as the best approach to this problem anderson et al 2011 the main policy instrument in the united states has been the corporate average fuel economy cafe standards which have recently been dramatically increased environmental protection agency and department of transportation 2012 while most of the improvement in fuel economy will necessarily come from technological improvements an inexpensive way to improve fuel economy is simply to lower vehicle weights indeed the text of the new regulations states that we expect manufacturers to reduce vehicle mass as a compliance strategy p 62741 the reduction in vehicle weight that occurred in response to the oil price shocks of the 1970s and the initial cafe standards was estimated by crandall and graham 1989 to substantially increase automobile accident fatalities the passenger vehicle fleet has changed greatly since 1989 with one of the most notable features being the increase in the prevalence of light trucks a category that includes minivans pickup trucks and sport utility vehicles suvs several authors have suggested that the external impacts on the safety of occupants of other vehicles may exceed the protective benefit afforded to light truck owners so that the now heavier vehicle fleet might actually be detrimental to overall safety see especially gayer 2004 white 2004 and anderson 2008 the negative safety and environmental externalities associated with vehicle weight could potentially be addressed simultaneously via pigovian taxation further strengthening the argument for taxation over fuel economy standards an important problem that must be addressed in interpreting automobile accident data is to disentangle vehicle fatality rates into a vehicle safety component treatment effect and a driver safety component selection effect this paper presents a novel model that allows simultaneous estimation of the relationship of vehicle weight with the safety of the own vehicle occupants internal impacts and that of other vehicle occupants external impacts conditional upon an accident occurring these estimates can then be used to estimate the relative riskiness of drivers of different types of vehicles the model is estimated using maximum likelihood techniques and data from the fatality analysis reporting system fars which includes data on every fatal accident that occurs in the united states but excludes all non fatal accidents the main empirical finding of the paper is that the protective effects of weight on own occupants are diminishing while the destructive external effects on other vehicle occupants are increasing for marginal vehicle weight changes above approximately 3 800 pounds the external costs outweigh the internal benefits in two vehicle crashes while the protective effect of vehicle weight in single vehicle crashes partly compensates for this a substantial fraction of the vehicle fleet is above the weight where net safety costs exceed benefits the safety externalities associated with these heaviest vehicles substantially exceed the environmental externalities associated with carbon emissions the nature of the model lends itself to simulating the potential impact of relatively arbitrary changes to the vehicle fleet composition simulations of hypothetical changes in the vehicle weight distribution establish that reducing vehicle weight can either increase or decrease automobile accident fatalities depending upon whether the reductions are concentrated at the lower or higher end of the current weight distribution recent empirical changes to the weight distribution of cars sold in the united states are incorporated into the simulation model which predicts little impact on accident fatalities

transmission loss allocation a comparison of different practical algorithms a pool operated electricity market based on hourly auctions usually neglects network constraints and network losses while applying its market clearing mechanism this mechanism determines the accepted and nonaccepted energy bids as well as the hourly market clearing prices as a result ex post procedures are needed to resolve network congestions and to allocate transmission losses to generators and demands this paper focuses on transmission loss allocation procedures and provides a detailed comparison of four alternative algorithms 1 pro rata pr 2 marginal allocation 3 unsubsidized marginal allocation and 4 proportional sharing a case study based on the ieee rts is provided different load scenarios covering a whole year are analyzed finally conclusions and recommendations are stated

stochastic price modeling of high volatility mean reverting spike prone commodities the australian wholesale spot electricity market it is commonly known that wholesale spot electricity markets exhibit high price volatility strong mean reversion and frequent extreme price spikes this paper employs a basic stochastic model a mean reverting model and a regime switching model to capture these features in the australian national electricity market nem comprising the interconnected markets of new south wales queensland south australia and victoria daily spot prices from 1 january 1999 to 31 december 2004 are employed the results show that the regime switching model outperforms the basic stochastic and mean reverting models electricity prices are also found to exhibit stronger mean reversion after a price spike than in the normal period and price volatility is more than fourteen times higher in spike periods than in normal periods the probability of a spike on any given day ranges between 5 16 in nsw and 9 44 in victoria

an aumann shapley approach to allocate transmission service cost among network users in electricity markets this work presents a new methodology for the allocation of transmission service cost among network users in energy markets the proposed method is based on an optimization game theoretic framework aumann shapley that retains the desirable properties of other existing methodologies such as the average participations factors apf and long run marginal costs lrmc the approach is shown to be computationally feasible and presents desirable characteristics in terms of economic coherence and isonomy computational results are presented for the brazilian power system and compared with those obtained by three other methodologies lrmc apf and the current method adopted in brazil

modelling interregional links in electricity price spikes abnormally high price spikes in spot electricity markets represent a significant risk to market participants as such a literature has developed that focuses on forecasting the probability of such spike events moving beyond simply forecasting the level of price many univariate time series models have been proposed to dealwith spikes within an individual market region this paper is the first to develop a multivariate self exciting point process model for dealing with price spikes across connected regions in the australian national electricity market the importance of the physical infrastructure connecting the regions on the transmission of spikes is examined it is found that spikes are transmitted between the regions and the size of spikes is influenced by the available transmission capacity it is also found that improved risk estimates are obtained when inter regional linkages are taken into account

short run pricing strategies to increase corporate average fuel economy short run pricing strategies to increase corporate average fuel economy i introduction in 1974 the average fuel efficiency of new automobiles sold in the united states reached a low of 14 2 miles per gallon mpg close on the heels of the arab opec oil embargo of 1973 74 and the ensuing petroleum price shocks congress passed the 1975 energy policy and conservation act the act required each manufacturer to meet sales weighted corporate average fuel economy cafe standards beginning with 18 mpg in 1978 and gradually increasing each year to 27 5 mpg in 1985 figure 1 the expressed purpose of the cafe standards was to stimulate the development of technology to improve fuel efficiency the possibility of raising the relative prices of the least energy efficient models as a strategy to meet the standards was considered but only as a last resort 1 although there continues to be intense debate as to whether fuel price increases or the cafe regulations drove the fuel economy improvements of the 1970s and 80s several studies agree that improvements in automotive engineering and design rather than pricing strategies played an overwhelmingly dominant role 2 no empirical evidence supports the effectiveness of using pricing strategies to increase the overall level of automotive fuel economy every year since 1985 automobile manufacturers have successfully petitioned the national highway traffic safety administration which determines the level of the cafe standard to reduce the target from 27 5 to 26 mpg in 1986 88 and 26 5 mpg in 1989 in each case at least one manufacturer argued that it would be unable to meet the original target with its planned product offerings and would have to resort to other strategies that would result in unacceptable economic costs this paper explores a method of estimating the costs of achieving fuel economy goals when pricing strategies are used to alter the distribution of sales the method employs the closed form equation for consumers surplus derived from the multinational logit model of discrete choice discussed by mcfadden 1973 and assumes that manufacturers must bear the full cost of meeting the fuel economy target the estimated cost represents an upper bound on the losses firms would incur by setting prices to minimize loss of profit using econometric estimates of the sensitivity of vehicle choice to vehicle price together with market shares and fuel efficiencies for 1986 i estimate the costs of short term improvements in average fuel economy using pricing strategies for general motors ford and chrysler minor adjustments of up to 1 mpg cost 1 2 percent of the price of a 10 000 car for improvements of 2 mpg or more however pricing strategies become a costly way to improve fuel economy the technique also estimates the market shares for each car line that correspond to the pricing solution it thereby identifies which car lines would be most affected the technique produces precise price changes and market shares for each car line readers should not place too much weight on the apparent precision but should consider the estimates as an approximation the usefulness of which lies in measuring the difficulty of meeting fuel economy targets via pricing strategies alone one can compare the size of these estimates to the fines for failing to meet the standards 50 per mpg per car or to typical manufacturer rebates to stimulate sales often 100 to 2 000 per car ii a formulation of the pricing problem faced with the cafe requirements a firm can respond with engineering and design improvements or by raising the prices of less efficient models and lowering the prices of those that exceed the standard technological improvements generally require a lead time of three to five years very large fluctuations in fuel prices have occurred in far shorter perids figure 1 creating the risk that a manufacturer s product offering could be out of step with the market

transmission loss allocation through complex power flow tracing this paper presents a new method for transmission loss allocation the method is based on tracing the complex power flow through the network and determining the share of each load on the flow and losses through each line transmission losses are taken into consideration during power flow tracing unbundling line losses is carried out using an equation which has a physical basis and considers the coupling between active and reactive power flows as well as the cross effects of active and reactive power on active and reactive losses a tracing algorithm which can be considered direct to a good extent as there is no need for exhaustive search to determine the flow paths as these are determined in a systematic way during the course of tracing results of application of the proposed method are also presented

new vehicle characteristics and the cost of the corporate average fuel economy standard by 2016 the corporate average fuel economy cafe standard will increase by 40 this article focuses on the medium run effects of fuel economy regulation we estimate consumers willingness to pay for vehicle characteristics we employ a novel empirical strategy that accounts for the characteristics endogeneity by using variation of engine models used in vehicle models the results imply that consumers value an increase in power more than an increase in fuel economy simulations of the effects of an increase in the cafe standard suggest that regulatory costs are significantly smaller in the medium run than in the short run

complex losses allocation to generators and loads based on circuit theory and aumann shapley method this paper presents a new method to allocate active and reactive losses simultaneously to generators and loads the allocation is calculated for each transmission branch identifying and quantifying the buses responsibilities in losses this is a two step process in the first step generators are modeled as current injections and loads as constant admittances in order to determine generator participations in losses in the second step loads are modeled as current sources and generators as constant admittances in order to determine load participations in losses the aumann shapley and circuit theories are used to calculate the participation of each real and imaginary current component considering them as independent players in the complex losses allocation game the properties of the aumann shapley method ensure equitable allocation and recovery of the total active and reactive losses counter flow cross subsidy and negative allocation issues are discussed numerical results are presented and discussed to demonstrate the applicability of the proposed method

fuel economy car class mix and safety fuel economy standards change the composition of the vehicle fleet potentially influencing accident fatality risks i estimate the direction and magnitude of this impact introducing a correction for selection on driver behavior a policy application using my new estimates shows that the present distinction between light trucks and cars in fuel economy rules has very negative consequences for overall safety each mpg increment to the standard results in an additional 150 fatalities per year in expectation my correction for selection is pivotal in this finding i then demonstrate a simple alternative regulation that can produce near zero changes in accident fatalities

modelling price and volatility inter relationships in the australian wholesale spot electricity markets this paper examines the inter relationships of wholesale spot electricity prices among the four regional electricity markets in the australian national electricity market nem namely new south wales queensland south australia and victoria using the constant conditional correlation and tse and tsui s tse y k tsui a k c 2002 a multivariate generalised autoregressive conditional heteroscedasticity model with time varying correlations journal of business and economic statistics 20 3 351 362 and engle s engle r 2002 dynamic conditional correlation a sample class of multivariate generalized autoregressive conditional heteroskedasticity models journal of business and economic statistics 20 3 339 350 dynamic conditional correlation multivariate garch models tse and tsui s tse y k tsui a k c 2002 a multivariate generalised autoregressive conditional heteroscedasticity model with time varying correlations journal of business and economic statistics 20 3 351 362 dynamic conditional correlation multivariate garch model which takes account of the student t specification produces the best results at the univariate garch 1 1 level the mean equations indicate the presence of positive own mean spillovers in all four markets and little evidence of mean spillovers from the other lagged markets in the dynamic conditional correlation equation the highest conditional correlations are evident between the well connected markets indicating the presence of strong interdependence between these markets with weaker interdependence between the not so well interconnected markets

transmission loss unbundling and allocation under pool electricity markets this paper presents a methodology based on the circuit theories for unbundling and allocation of transmission losses among the participants of a pool based electricity market starting from a known operation point and using the basic network equations without additional assumptions an expression of the branch losses based on nodal current injections is derived since the power flow equations and circuit theories are satisfied the methodology turns explicit in a natural way separating the losses at each system branch and assigning the responsibility to the respective market participants it means that the loss allocation of each branch which is produced by each generator and consumer is obtained extensions and strategies considering unsubsidized and predefined proportion based loss allocation as well as issues related with the allocation fairness and transparency are also included comparisons with previous methods and validation tests of the proposed method are reported by using the ieee reliability test system

this is what happened to the oil price macroeconomy relationship abstract many of the quarterly oil price increases observed since 1985 are corrections to even bigger oil price decreases the previous quarter when one looks at the net increase in oil prices over the year recent data are consistent with the historical correlation between oil shocks and recessions

transmission of prices and price volatility in australian electricity spot markets a multivariate garch analysis this paper examines the transmission of spot electricity prices and price volatility among the five regional electricity markets in the australian national electricity market namely new south wales queensland south australia the snowy mountains hydroelectric scheme and victoria a multivariate generalised autoregressive conditional heteroskedasticity model is used to identify the source and magnitude of price and price volatility spillovers the results indicate the presence of positive own mean spillovers in only a small number of markets and no mean spillovers between any of the markets this appears to be directly related to the physical transfer limitations of the present system of regional interconnection nevertheless the large number of significant own volatility and cross volatility spillovers in all five markets indicates the presence of strong autoregressive conditional heteroskedasticity and generalised autoregressive conditional heteroskedasticity effects this indicates that shocks in some markets will affect price volatility in others finally and contrary to evidence from studies in north american electricity markets the results also indicate that australian electricity spot prices are stationary

econometric modeling of regional electricity spot prices in the australian market abstract wholesale electricity markets are increasingly integrated via high voltage interconnectors and inter regional trade in electricity is growing to model this we consider a spatial equilibrium model of price formation where constraints on inter regional flows result in three distinct equilibria in prices we use this to motivate an econometric model for the distribution of observed electricity spot prices that captures many of their unique empirical characteristics the econometric model features supply and inter regional trade cost functions which are estimated using bayesian monotonic regression smoothing methodology a copula multivariate time series model is employed to capture additional dependence both cross sectional and serial in regional prices the marginal distributions are nonparametric with means given by the regression means the model has the advantage of preserving the heavy right hand tail in the predictive densities of price we fit the model to half hourly spot price data in the five interconnected regions of the australian national electricity market the fitted model is then used to measure how both supply and price shocks in one region are transmitted to the distribution of prices in all regions in subsequent periods finally to validate our econometric model we show that prices forecast using the proposed model compares favorably with those from some benchmark alternatives

a weakly conditioned imputation of an impedance branch dissipation power in a sinusoidal steady state circuit how much of an impedance branch dissipation power should be assigned to each source the answer is the basis of electricity transmission pricing such as the pricing of line loss and line security due to thermal limit however it is difficult to obtain a unique and common consent answer because of the nonlinearity of power expression this paper presents two weakly conditioned imputation formulas respectively for dissipation active and reactive power to answer the question first a detailed form of shapley value formula and three weak conditions are proposed on this basis the two imputation formulas are then derived and proved mathematically the imputation formulas are explicitly in terms of source currents voltages thus analytic and easy to compute they possess eight mathematical and economic features that lay a good foundation for electricity transmission pricing the two imputation formulas are also extended to actual power systems where trades are conducted in mwh mvarh instead of amperes volts numerical examples illustrate their computing process and features

strategic bidding and rebidding in electricity markets abstract successful deregulation in electricity markets depends crucially on the ability of market regulation to promote and maintain free competition there are however important physical characteristics in electricity markets such as the constraints imposed by the physical transmission infrastructure that have the potential to undermine competition and provide opportunities for market participants to exploit temporary positions of market power in this paper the regional market of queensland australia is analysed it is found that strategic behaviour by generators exists and is closely related to the occurrence of the kind of extreme price events that characterise many deregulated electricity markets in addition rebidding behaviour by base load generators immediately after extreme price events is shown to have negative impacts on the operation of the market the key message is that promotion of competition in electricity markets can have undesirable consequences unless the regulatory policy is carefully designed to counter strategic behaviour by market participants

why has the introduction of natural gas vehicles failed in germany lessons on the role of market failure in markets for alternative fuel vehicles despite private investments exceeding two billion euros and tax incentives of more than 500 million euros the market share of natural gas vehicles ngvs in germany has lagged far behind expectations and behind market developments in other countries with total cost of ownership being on average lower for ngvs than for gasoline and diesel vehicles this raises the question of the existence of market failure in the german ngv market we use a case study approach where we combine quantitative data with insights from a multi industry expert panel and in depth interviews with experts from industry government and civil society in order to examine whether and how different types of market failure contribute to the status quo in the german market for ngvs we conclude that coordination failure in complementary markets an artificially created monopoly of service stations at motorways imperfect information bounded consumer rationality and principle agent problems are the most prominent market failures inhibiting the development of a functioning market for ngvs our results are instructive for the design of effective public policies and investor strategies aiming to create markets for alternative fuel vehicles

a novel nucleolus based loss allocation method in bilateral electricity markets the situation of current research on power losses allocation in bilateral electricity markets is presented based on cooperative game theory a novel nucleolus theory based method for power losses allocation under the bilateral transactions model is put forward and compared in detail with the shapley value based allocation method the impacts of different market players on network power losses are taken into account with the new method network power losses can be allocated to each transaction reasonably the allocation results would not be affected by the sequence that each transaction is formed and be active the method answers for the open equal and impartial principles of electricity market and can be easily understood and accepted by market players numerical tests validated the equity and validity of the method

vehicle miles not traveled fuel economy requirements vehicle characteristics and household driving abstract a major concern with addressing the negative externalities of gasoline consumption by regulating fuel economy rather than increasing fuel taxes is that households respond by driving more this paper exploits a discrete threshold in the eligibility for cash for clunkers to show that fuel economy restrictions lead households to purchase vehicles that have lower cost per mile but are also smaller and lower performance whereas the former effect can increase driving the latter effect can reduce it results indicate that these households do not drive more suggesting that behavioral responses do not necessarily undermine the effectiveness of fuel economy restrictions at reducing gasoline consumption

electricity wholesale market prices in europe convergence abstract this paper tests the hypothesis that the ongoing restructuring process in the european electricity sector has led to a common european market for electricity based on a principal component analysis pca of wholesale electricity prices in 2002 2006 we reject the assumption of full market integration for several pairs of countries the weaker hypothesis of bilateral convergence is accepted based on unit root tests kpss and adf and a convergence test based on filtered pairwise price relations this indicates that the efforts to develop a single european market for electricity were so far only partially successful we show that the daily auction prices of scarce cross border transmission capacities are insufficient to explain the persistence of international price differentials empirically our findings confirm the insufficiency of explicit capacity auctions as stated in the theoretical literature

integration and shock transmissions across european electricity forward markets abstract new results are presented relating to the integration of the french german british dutch and spanish power markets at day ahead week ahead one month ahead and two month ahead lead times overall there is evidence of market integration increasing over time despite an underlying inefficiency in each market with respect to the forward and spot price convergence the spatial analysis on a financial dimension is undertaken using causality tests cointegration and impulse response techniques for both price levels and volatilities in general we find less influence of the size and proximity of neighbouring markets than other studies more integration at baseload than peak and surprisingly less integration in forwards than spot prices

on the partition of transmission losses among generators due to the introduction of competition in the electrical power industry determining the percentage of transmission grid losses that should be attributed to each generator has become important usually this is accomplished by determining the percentage of each transmission branch losses that should be attributed to each generator using the aumann shapley theory this letter identifies the fairest way to share the nonseparable portion of losses amongst the generators the obtained result validates some approximations assumed in recent papers and contributes to strengthening circuit theory based methods

environmentalism stimulus and inequality reduction through industrial policy did cash for clunkers achieve the trifecta the 2009 american cash for clunkers program which subsidized consumers who scrapped old vehicles and purchased new vehicles was promoted by appealing to multiple constituencies we evaluate the policy and alternatives according to its stated goals emissions reductions economic stimulus and reducing inequality we calibrate a dynamic partial equilibrium portfolio model to match consumer expenditure data from 1998 to 2011 focusing on heterogeneity across cars and trucks we find the program generated 0 17 in environmental benefits 0 28 in consumer surplus and 0 31 in net discounted additional spending per subsidy dollar since subsidies largely went to middle income infra marginal consumers the program exacerbated consumption inequality we evaluate alternative policy designs and find no policy which simultaneously improves all outcomes jel h23 l52 l92 d63

a novel policy for locational marginal price calculation in distribution systems based on loss reduction allocation using game theory in this paper a novel locational marginal price lmp policy for distribution system with significant penetration of distribution generation dg in competitive electricity market is presented this new lmp method is based on remunerating dg units for their participation in reduced amount of energy losses in distribution systems brought about by participation of all dg units in supplying demand also this method is combined with an iterative solution this approach provides an efficient tool for distribution companies discos to estimate the state of the system in the next step which other existing approaches of lmp fail to provide this system state estimation finally in order to expand lmp method and provide effective prediction method for discos to estimate the day ahead state of the system ann tool is employed to predict the market price and demand for the next 24 h this lmp prediction is a powerful operational tool for disco to exert its control over private dg units however prediction methods contain error therefore uncertainty modeling is implemented for modeling the effect of error in prediction on the lmp calculation for the next day

modeling and forecasting multivariate electricity price spikes abstract we consider the problem of forecasting the occurrence of extreme prices in the australian electricity markets from high frequency spot prices in particular we are interested in the simultaneous occurrence of such so called spikes in two or more markets our approach is based on a novel dynamic model for multivariate binary outcomes which allows the latent variables driving these observed outcomes to follow a vector autoregressive process furthermore the model is constructed using a copula representation for the joint distribution of the resulting innovations this has several advantages over the standard multivariate probit model first it allows for nonlinear dependence between the error terms second the distribution of the latent errors can be chosen freely third the computational burden can be greatly reduced making estimation feasible in higher dimensions and for large samples the model is applied to spikes in half hourly electricity prices in four interconnected australian markets the multivariate model provides a superior fit compared to single equation models and generates better forecasts for spike probabilities furthermore evidence of spillover dynamics between the markets is revealed

a long term short term model for daily electricity prices with dynamic volatility abstract in this paper we introduce a new stochastic long term short term model for short term electricity prices and apply it to four major european indices namely to the german dutch uk and nordic one we give evidence that all time series contain certain periodic mostly annual patterns and show how to use the wavelet transform a tool of multiresolution analysis for filtering purpose the wavelet transform is also applied to separate the long term trend from the short term oscillation in the seasonal adjusted log prices in all time series we find evidence for dynamic volatility which we incorporate by using a bivariate garch model with constant correlation eventually we fit various models from the existing literature to the data and come to the conclusion that our approach performs best for the error distribution the normal inverse gaussian distribution shows the best fit

comparing alternative policies to reduce traffic accidents abstract this paper derives and implements formulas for the welfare effects of uniform mileage taxes gasoline taxes per mile insurance premiums and mileage taxes differentiated across vehicle and driver groups for reducing the external costs of passenger vehicle accidents the average external accident cost is estimated at 2 2 6 6 cents per mile accidents costs differ substantially across driver groups but only moderately across vehicles groups annual welfare gains from a mileage tax equal to marginal external costs for each driver vehicle group are 9 4 billion in the benchmark case the uniform mileage tax and per mile insurance reform can achieve 76 and 65 of this welfare gain respectively while the gasoline tax can achieve only 28 of the welfare gain unlike other policies the gasoline tax induces costly improvements in average fleet fuel economy that have little effect on reducing external costs

automobile quality choice under pollution control regulation in this paper we develop a modified quality choice model to study the effects of various mobile source air pollution control regulations we have a single producer that supplies a fixed number of car types two but faces a spectrum of consumers differing in their valuation of car quality the car manufacturer chooses the quality levels of the two car types as well as the sales mix between the two types and the size of the market it wishes to supply by endogenizing both the sales mix and the market size while still allowing quality to be a choice variable we are able to more completely analyze the impact of any car pollution control regulation existing studies of this impact either focus on the model line adjustment response shifts in the quality array or on the price adjustment response changes in the sales mix and market size in allowing for both the model line and the price adjustment options we find that the corporate average fuel efficiency cafe standard is unambiguously welfare superior to the low emission vehicle quantity constraint lev and zero emission vehicle zev programs we also show that the effects of the cafe standard are not equivalent to those of a fuel tax as previously found and that for a given car pollution target the former is preferred to the latter

the effect of vehicle fuel economy standards on technology adoption abstract many countries are tightening passenger vehicle fuel economy standards this paper provides the first empirical evidence on the effects of fuel economy standards on technology adoption we investigate changes in the rate and direction of technology adoption that is the extent to which technology is used to increase fuel economy at the expense of other vehicle attributes we find that recent changes in u s and european standards have both increased the rate of technology adoption and affected the direction of technology adoption producers reduced horsepower and torque compared to a counterfactual in which fuel economy standards remained unchanged we estimate opportunity costs from reduced horsepower and torque to be economically significant relative to the gains from fuel savings

policy watch the economics of fuel economy standards one of the most hotly contested of all energy policy issues involves corporate average fuel economy or cafe standards for new cars and light duty trucks tighter standards would reduce gasoline consumption and hence both greenhouse gas emissions as well as this country s vulnerability to oil price shocks but they would also increase the price of new vehicles worsen traffic congestion and depending on how they are phased in possibly even reduce occupant safety these effects are amenable to economic analysis and we review the evidence to date bearing on this interesting and important question

germany s nuclear power plant closures and the integration of electricity markets in europe this paper examines the potential implications of national policies that lead to a sudden increase of wind power in the electricity mix for interconnected european electricity markets more specifically it examines market integration before and after the closures of eight nuclear power plants that occurred within a period of a few months in germany during 2011 the short and long run interrelationships of daily electricity spot prices from november 2009 to october 2012 in apx endex belpex epex de epex fr nordpool omel and swissix and wind power in the german system are analysed two mgarch multivariate generalized autoregressive conditional heteroscedasticity models with dynamic correlations are used to assess spot market behaviour in the short run and a fractional cointegration analysis is conducted to investigate changes in the long run behaviour of electricity spot prices results show positive time varying correlations between spot prices in markets with substantial shared interconnector capacity a negative association between wind power penetration in germany and electricity spot prices in the german and neighbouring markets and for most markets a decreasing speed in mean reversion

a physical flow based approach to allocating transmission losses in a transaction framework a physical flow based approach to allocating transmission losses in a multiple transaction system is presented the allocation scheme is developed using a framework in which the transactions are explicitly represented the proposed scheme is based on expressing losses explicitly in terms of all the transactions in the system an important property of the allocation scheme is its effective capability to deal with counter flows that result in the presence of specific transactions extensive numerical testing indicates that the allocation scheme produces loss allocations that are appropriate and that behave in a physically reasonable manner test results on several systems are presented

transmission loss allocation i single energy market this paper presents a new methodology for allocating transmission losses to the participants of a single energy market the proposed approach is based on the incremental transmission loss concept and is implemented through two models basic and extended in the basic model the total system losses are estimated through the linear dc load flow equations while the extended model uses the exact ac formulation the concept of center of losses is used a fictitious bus in the system network where all transactions are compensated for transmission losses both models provide a sharing of transmission losses among generators and loads based on a predefined proportion for instance 50 50 for each participant class some important aspects related with the allocation fairness and transparency are illustrated by numerical applications with the ieee reliability test system the extension of this methodology to interconnected energy markets is treated in a companion paper

policy watch corporate average fuel economy standards initially the minimum corporate average fuel economy cafe program was promoted as a policy to reduce u s vulnerability to oil shocks in the past two years however concern about global warming has resulted in new political pressures to raise cafe once again to reduce the growth in u s emissions of carbon dioxide a greenhouse gas in this paper i do not attempt to provide a detailed critique of these two objectives i simply take the goals as given and draw upon estimates from the empirical literature to show that cafe is a very costly instrument for achieving them in addition i compare the costs of meeting the same objectives through a fuel or carbon tax

a novel policy for lmp calculation in distribution networks based on loss and emission reduction allocation using nucleolus theory this paper proposes a new policy to calculate the locational marginal price lmp in the distribution networks containing distributed generation dg the proposed policy is based on remunerating the dg units to reduce the loss and emission of the network lmp at each dg bus is calculated according to the contribution of the dg to the reduced amount of loss and emission an iterative algorithm which is based on the nucleolus theory is proposed to allocate the loss and emission reduction the proposed algorithm will provide a robust state estimation tool for distribution companies discos in the next step of operation the state estimation tool provides the decision maker with the ability to exert its control over private dg units when the loss and emission are minimized also the proposed pricing policy requires decision maker to simply apply its best response strategy to the lmp based on the priority of loss emission and disco s extra benefit the proposed methodology is applied to two realistic distribution networks and efficiency and accuracy of the method are verified