economies of scale in energy use in adult only households the residential sector is responsible for 18 of australia s primary energy use thus improved knowledge about household energy use is vital to future energy management this study examines economies of scale in energy use and expenditure among adult only households and across three adult only household types significant economies of scale are found in all cases small households suffer a double penalty of greater per capita energy use and higher charge per unit of energy with older households the most affected the trend towards smaller average household size means that economies of scale are continually being lost offsetting gains in energy efficiency achieved through other means

the carbon footprint of uk households 1990 2004 a socio economically disaggregated quasi multi regional input output model this paper presents a socio economically disaggregated framework for attributing co2 emissions to people s high level functional needs based around a quasi multi regional input output qmrio model the study in theory takes into account all co2 emissions that arise from energy used in production of goods and services to satisfy uk household demand whether the emissions occur in the uk or abroad results show that co2 emissions attributable to households were 15 above 1990 levels in 2004 and that although absolute decoupling occurred between household expenditure and co2 during the uk s switch from coal to gas in the early 1990s since then only slight relative decoupling is evident the proportion of co2 that arises outside uk borders in support of uk consumption is rising and reducing these emissions is particularly problematic in a global trading system investigation into the carbon footprint of different segments of the uk population shows wide variation the segment with the highest carbon footprint emits 64 more co2 than the segment with the lowest results show that recreation and leisure are responsible for over one quarter of co2 emissions in a typical uk household in 2004 we conclude that expanding lifestyle aspirations are significant factors in driving household co2 emissions but the study also emphasizes that attention must be paid to the infrastructures and institutions that result in considerable amounts of co2 being locked up in basic household activities through which people meet their everyday needs for subsistence protection and communication with family and friends the findings highlight the sheer scale of the challenge facing uk policy makers and suggest that policies should be targeted towards segments of society responsible for the highest carbon footprints

contracts as a barrier to entry it is shown that an incumbent seller who faces a threat of entry into his or her market will sign long term contracts that prevent the entry of some lower cost producers even though they do not preclude entry completely moreover when a seller possesses superior information about the likelihood of entry it is shown that the length of the contract may act as a signal of the true probability of entry

price discrimination through offers to match price in this paper a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop if the list price elsewhere is lower the firm will be successful in discrimination the list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers furthermore if sellers coordinate they discriminate more efficaciously and increase their profits by increa sing their total sales copyright 1987 by the university of chicago

the structural changes and determinants of household energy choices and energy consumption in urban china addressing the role of building type abstract understanding the energy use and choice behaviors in urban china is essential to curb its energy consumption and air pollutant emissions current energy consumption estimates for urban households in china rarely account for the effects of building types on energy choice behavior thus may lead to biased policy implications in this paper we estimate the determinants of household energy consumption for different energy choice scenarios through the seemingly unrelated regression sur model using urban household data the empirical results show that household use of various energy carriers is driven by household income fuel price demographics building attributes and lifestyles results show building types have a significant effect on household energy consumption behaviors households living in old houses have less access to clean energy such as piped gas income and price elasticities of energy consumption vary with energy type in each scenario and there exist certain substitution effects among different types of energy carriers in particular inter fuel substitute elasticities between coal and clean energy are asymmetric our study highlights the significance of city planning and infrastructure expansion policies and also offers a better basis for coordinating and designing energy policies in urban china and other developing countries

does the per se rule deter vertical price fixing i introduction beginning with the wide scale introduction of branded goods in the late nineteenth century manufacturers have often tried to dictate minimum resale prices to the retail outlets carrying their products and since roughly the same time antitrust experts have debated why they would do so 1 less attention has focused on what manufacturers do when they can not impose minimum prices even though legal obstacles have forced them to look for alternatives so what do manufacturers do when they cannot legally set the prices their outlets charge 2 many antitrust officials believe they go right on setting prices either flaunting the law or finding some means to circumvent it barrett 1991 quotes former new york state antitrust chief lloyd constantine as saying that the practice is ubiquitous but based upon winks and nods rather than written agreements that could be used in court new york attorney general robert abrams 1991 argues that vertical price fixing is endemic claiming that antitrust officers can recount scores of tales of retailers calling our offices too scared to give their names telling of coercion and intimidation by manufacturers representatives and rival dealers because their prices were too low former ftc commissioner terry calvani argues that a manufacturer practicing resale price maintenance would have to have an i q two points lower than a carrot to get caught 3 the prospects for wink and nod resale price maintenance are not hard to appreciate for example suppose a manufacturer wants to impose a 500 sanction on any discount outlet if it cannot do so overtly it may instead impose a lump sum charge of 500 on all outlets and ex post reward non discount outlets with a 500 rebate given this scheme s transparency courts legislators and antitrust officials should not be fooled yet the rebates could be indirect and discreet they could be spread over several periods and parceled out in small quantities as compensation for point of sale services to defray overhead to pay for advertising or training and so forth hence it may be hard for outsiders to prove a link between what the manufacturer pays each retailer and that retailer s price moreover in some instances antitrust officials may want an excuse to loosen the legal restrictions on resale price maintenance and may themselves wink and nod at these practices finally antitrust officials cannot always and perhaps not often distinguish legitimate cost sharing arrangements from maneuvers to influence resale prices as such they must proceed carefully manufacturers can employ two other legal means to fix resale prices first manufacturers can coordinate retailers meet the competition guarantees antitrust experts have long believed that on occasion retailers can independently offer meet the competition guarantees to their customers to discourage price competition 4 here a manufacturer coordinates retailers efforts by financing some or all of the meet the competition related rebates they make so in equilibrium all retailers adopt the suggested price while previous models of meet the competition guarantees focus on tacit horizontal price fixing this paper examines explicit vertical price fixing second the manufacturer can persuade retailers to charge its suggested price by guaranteeing the margins of those victimized by price cutting rivals in equilibrium no outlet wants to cut price first so discounting does not occur at all manufacturers have various other means to influence their dealers resale prices in addition to such well known instruments as consignment sales and exclusive territories manufacturers can agree to buy back dealers unsold inventories or parcel out merchandise only as demand for it materializes they can also use devices such as markdown allowances to influence when and by how much dealers discount if demand turns out low presumably this list does not exhaust the possibilities for innovative manufacturers seeking to subsidize dealers that cooperate and to discriminate against those that do not

most favored customer protection versus price discrimination over time how should a seller price capacity that has no salvage value to heterogeneous customers whose valuations are private information there are two periods and the seller cannot precommit to prices in the later period one option is price discrimination first price high then discount later if excess capacity remains by offering most favored customer protection the seller can charge more in advance but will leave capacity unsold with positive probability she favors the mfc protection when capacity is large and leans toward price discrimination when customers are more uncertain about the degree of excess demand in the first period

price matching policy and the principle of minimum differentiation this paper shows that if duopolists are allowed to choose their product locations a price matching policy and their prices sequentially and independently both tacit collusion and minimum differentiation occur copyright 1995 by blackwell publishing ltd

traders expectations in asset markets experimental evidence we elicit traders predictions of future price trajectories in repeated experimental markets for a 15 period lived asset we find that individuals beliefs about prices are adaptive and primarily based on past trends in the current and previous markets in which they have participated most traders do not anticipate market downturns the first time they participate in a market and when experienced they typically overestimate the time remaining before market peaks and downturns occur when prices deviate from fundamental values belief data are informative to an observer in predicting the direction of future price movements and the timing of market peaks

modelling household energy expenditures using micro data this paper is concerned with the empirical modeling of domestic demand for energy in the united kingdom at the level of the individual household a two stage budgeting model of household demand for energy conditional on durable ownership is developed at the first stage income is allocated between energy and nonenergy consumption while at the second stage energy expenditure is disaggregated the second stage allocation is assumed to be between gas electricity and a composite good other fuels estimation takes place using a sample of some 50 000 households drawn from the annual u k family expenditure survey for the years 1972 83 a source that has not been fully exploited in the analysis of energy demand to date copyright 1989 by royal economic society

on the competitive effects of price matching policies abstract this paper challenges the conventional wisdom that price matching policies lead to supracompetitive prices by reducing firms incentives to undercut rivals i argue that price matching and price beating policies are more appropriately viewed as a means of price discrimination and develop a model that demonstrates their use as such analysis of this model shows that in contrast to the results of the existing literature price matching and price beating may raise or lower equilibrium prices relative to the equilibrium in which firms may not adopt such policies

residential energy use and conservation economics and demographics energy consumption in the residential sector offers an important opportunity for conserving resources however much of the current debate regarding energy efficiency in the housing market focuses on the physical and technical determinants of energy consumption neglecting the role of the economic behavior of resident households in this paper we analyze the extent to which the use of gas and electricity is determined by the technical specifications of the dwelling as compared to the demographic characteristics of the residents our analysis is based on a sample of more than 300 000 dutch homes and their occupants the results indicate that residential gas consumption is determined principally by structural dwelling characteristics such as the vintage building type and characteristics of the dwelling while electricity consumption varies more directly with household composition in particular income and family composition combining these results with projections on future economic and demographic trends we find that even absent price increases for residential energy the aging of the population and their increasing wealth will roughly offset improvements in the energy efficiency of the building stock resulting from policy interventions and natural revitalization

most favored customer pricing product variety and welfare abstract most favored customer mfc clauses are usually seen as anticompetitive co ordination devices that firms adopt for the purpose of higher prices here i examine the welfare impact of mfc clauses under endogenous product variety product variety is relevant because prospective higher prices from mfc clauses can be anticipated by multi product firms in their provision of product lines under such circumstances i find that these clauses can be socially harmful but this is not always the case they tend to be socially neutral for relatively large fixed costs of product line assortment harmful for intermediate costs and beneficial for relatively small costs

residential energy expenditures and the relevance of changes in household circumstances this paper analyses the impact that dwelling characteristics and characteristics and behaviours of household members have on per capita energy expenditures it also analyses whether changes in household socio economic circumstances translate in changes in energy expenditures socio economic characteristics have a moderate impact while dwelling characteristics and especially household size have much larger impacts the largest changes in energy expenditures are due to changes in household size the recent socio demographic trends will make it harder to design policies to effectively reduce the carbon footprint of a country while policies influencing cohabitation and family size may have positive indirect effects

price and variety in the spokes model the spokes model of nonlocalized spatial competition provides a new analytical tool for dierentiated oligopoly and a representation of spatial monopolistic competition an increase in the number of rms leads to lower equilibrium prices when consumers have relatively high product valuations but surprisingly to higher equilibrium prices for in termediate consumer valuations new entry alters consumer and social welfare through price market expansion and matching eects with free entry the market may pro vide too many or too few varieties from a social welfare perspective and the equilibrium price remains above marginal cost even when the number of rms is arbitrarily large

price controls and market structure evidence from gasoline retail markets in this paper we study the effect of price floor regulations on the organization and performance of markets the standard interpretation of the effects of these policies is concerned with short run market distortions associated with excess supply since price controls prevent markets from clearing they lead to higher prices while this analysis may be correct in the short run it does not consider the dynamic equilibrium consequences of price controls we demonstrate that price floor regulations can have important long run effects on the the structure of markets by crowding them and creating endogenous barriers to entry for low cost retailers moreover we show that these factors can indirectly lower productivity and possibly even prices we test this in the context of an actual regulation imposed in the retail gasoline market in the canadian province of quebec and show that the policy led to more competition between smaller less efficient stations this resulted in lowered sales and despite the reduction in efficiency did not increase prices

determinants of residential space heating expenditures in germany abstract we first examine the determinants of household expenditures on space heating and hot water supply in germany a number of socio economic characteristics of households are included along with building characteristics our analysis covers information on more than 12 000 households in germany for the years 1998 and 2003 the analysis continues by investigating whether different kinds of households are affected differently by increases in energy prices households in owner occupied properties are less affected compared to those in rented accommodation this could be because owners are more likely to have installed energy efficient heating and hot water supply systems and landlords have less of an incentive to improve the conditions of their rented accommodations an energy policy targeting especially the latter group might benefit not only households in rented accommodation but might also increase energy efficiency and reduce greenhouse gas emissions as well

switch off the light please energy use aging population and consumption habits abstract in parallel with worldwide population growth europe is experiencing a fast demographic shift widely studied but generally undervalued by policymakers population aging may imply smaller household sizes and more home based energy consumption which will change the energy mix consumer preference shifts and different attitudes towards environment among the generations determine additional effects study of the link between an aging population and energy demand is even more important for italy because its energy dependence is almost complete and its population is aging quickly this paper aims to assess the role of changing generational preferences in the energy expenditure trend in italy by distinguishing between a pure age effect and a cohort effect the decomposition shows significant differences in the shape of age and cohort effects thus confirming that beside an aging effect we must consider that recent generations have a higher residential energy expenditure indeed the energy culture of post war italian generations seems more linked to thermal comfort heating and air conditioning than to environmental attitudes

optimal best price policy abstract a best price policy bp is a promise by a seller to give her customer a refund if she reduces her price after the customer has already purchased the product we characterize the optimal bp policy as when the seller can control both the policy length when the promise expires and the refund scale what portion of the price difference is refunded we explain why the policy length is finite and varies across industries in a setting where consumers valuations decline over time we show that a finite length bp allows the seller to commit to not lowering her price too soon while at the same time letting her capture some of the benefits of intertemporal price discrimination however because the decline in consumers valuations is uncertain a bp does not allow the monopolist to achieve the profit she could earn with a full commitment

on the incidence and variety of low price guarantees abstract this paper provides evidence of the incidence and variety of low price guarantees promises to match or beat a rival s price using data obtained from newspaper advertisements in 37 metropolitan areas in the united states we have a total of 515 low price guarantees in our sample we document their features and we infer firms motives and effects from these features the evidence suggests that the majority of low price guarantees are not consistent with their use as a facilitating device because they tend to apply only to rival firms advertised prices or they are associated with high hassle costs the evidence also suggests that price beating and price matching guarantees differ significantly in their features the former are associated with higher hassle costs apply disproportionately to rival firms advertised prices and are more likely to allow postsale search than are price matching guarantees

durable good monopoly and best price provisions best price provisions guarantee buyers that the prices they pay are the lowest available if the seller subsequently cuts price then each previous buyer is entitled to a refund a durable good monopolist who offers certain forms of these provisions can construct a consistent plan yielding the same profits as rental agreements and contracts with explicit quantity commitments the provisions require special circumstances to be practical but they are simple and effective and appear in a variety of economic settings three applications are discussed international commodity agreements markets for electric turbogenerators and markets for financial claims copyright 1990 by american economic association

dynamic duopoly with best price clauses this article investigates best price clauses as a strategic devise to facilitate collusion in a dynamic duopoly game best price clauses guarantee rebates on the purchase price if a customer finds a better price after his purchase two different price clauses are distinguished most favored customer and meet or release i examine the collusive potential of both clauses in a finite horizon duopoly model with homogeneous durable goods in each period new consumers enter the market i show that in this context meet or release clauses have a greater anticompetitive potential than most favored customer clauses

energy performance certificates and investments in building energy efficiency a theoretical analysis abstract in the european union energy performance certificates epcs provide potential buyers or tenants with information on a property s energy performance by mitigating informational asymmetries on real estate markets the conventional wisdom is that they will reduce energy use increase energy efficiency investments and improve social welfare we develop a model that partly contradicts these predictions although epcs always improve social welfare in the absence of market failures other than asymmetric information their impact on energy use and investments is ambiguous and depends both on the time horizon considered and the distribution of energy needs in the population this implies that in a second best world where energy externalities are under priced epcs can damage social welfare

how low is a guaranteed lowest price a game based on the bertrand duopoly model is constructed to study the effects of price guarantee policies before it chooses a list price a firm can make a binding commitment to match or beat its competitor s price the effectiveness of these price guarantee policies in facilitating price collusion depends on the solution concept used furthermore there exists an equilibrium in which neither firm offers any price guarantees and each firm sets price equal to marginal cost

densification what does it mean for fuel poverty and energy justice an empirical analysis energy is increasingly at the forefront of the global political agenda while there is a longstanding literature relating to fuel poverty and increasingly energy justice there remains little evidence which explores its link with the urban form specifically the purpose of this study is to explore the relationship between the urban consolidation hypothesis and the cultivation of energy justice in australia this study uses data from the household income and labour dynamics in australia hilda survey years 2007 2014 a national probability sample and indefinite life panel the substantive findings of this study demonstrate that for low income and renting households greater urban density corresponds to a higher likelihood of experiencing fuel poverty further for households with a dwelling type described as an apartment two or three storeys there is a separate and quite generalisable indication that this type of dwelling is associated with a lower likelihood of experiencing fuel poverty this study connects the debate regarding urban consolidation and energy consumption to the fuel poverty and energy justice literature alongside this contribution this study also provides policymakers and planners with new evidence to inform remediation policies that are directed at supporting the fuel poor

not irrational but habitual the importance of behavioural lock in in energy consumption abstract a substantial body of literature has shown that our behaviour is often guided by habits the existence of habits not fully conscious forms of behaviour is important as it contradicts rational choice theory their presence thus calls for the setting of new instruments as they make it unlikely that consumers be capable of exercising control over their energy consumption in reaction to given incentives this is further increased in the evolutionary perspective where the current carbon based socio technical system constrains and shapes consumers choices through structural forces habits being potentially counterintentional they may explain the efficiency paradox in energy as well as the continued increase of energy consumption despite the rising environmental awareness among the population policies aiming at reducing energy consumption should thus specifically address the performance context of habits for instance targeting new residents has proven to be more effective given that their preceding habits have been disturbed the results of our empirical analysis confirm this idea by showing how a change of context makes people more receptive to a proposed measure our analysis of the role played by habits also suggests that individuals do not consider the need to change existing habits as an obstacle even though this is contradicted implicitly in the answers they provided to open questions this unconsciousness is one of the most delicate features of habits and it should thus be accounted for when designing measures given the other characteristics of habits the joint use of feedbacks and commitment strategies appears promising

the antitrust prohibition of excessive pricing abstract excessive pricing by a dominant firm is unlawful in many countries to assess whether it is excessive the dominant firm s price is often compared with price benchmarks we examine the competitive implications of two such benchmarks a retrospective benchmark where the price that prevails after a rival enters the market is used to assess whether the dominant firm s pre entry price was excessive and a contemporaneous benchmark where the dominant firm s price is compared with the price that the firm charges contemporaneously in another market we show that the two benchmarks restrain the dominant firm s behavior when it acts as a monopoly but soften competition when the dominant firm competes with a rival moreover a retrospective benchmark promotes entry but may lead to inefficient entry

who emits most associations between socio economic factors and uk households home energy transport indirect and total co2 emissions abstract does the association between household characteristics and household co2 emissions differ for areas such as home energy transport and indirect emissions this question is policy relevant because distributional implications of mitigation policies may vary depending on the area of emissions that is targeted if specific types of households are likely to have higher emissions in some areas than in others so far this issue has not been examined in depth in the literature on household co2 emissions using a representative uk expenditure survey this paper compares how household characteristics like income household size education gender worklessness and rural or urban location differ in their association with all three areas as well as total emissions we find that these associations vary considerably across emission domains in particular whilst all types of emissions rise with income low income workless and elderly households are more likely to have high emissions from home energy than from other domains suggesting that they may be less affected by carbon taxes on transport or total emissions this demonstrates that fairness implications related to mitigation policies need to be examined for separate emission domains

unilateral most favored customer pricing a comparison with stackelberg abstract if one firm in a price setting duopoly adopts a most favored customer pricing policy it can commit to a price which is higher than the bertrand price the equilibrium price however must be lower than the stackelberg leader price

can low price guarantees deter entry abstract this paper examines the strategic use of low price guarantees lpgs as an entry deterrent the entire space of contemporaneous lpg messages is partitioned according to their ability to deter entry and or increase the incumbent s profits while most price matching and price beating guarantees cannot deter entry into a perfectly contestable market there do exist special classes of price beating guarantees that enable the incumbent to prevent entry interestingly both price matching and price beating can be a part of the incumbent s strategy in subgame perfect equilibria of the game where the firms choose lpgs from 14 classes defined in the paper

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

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

determinants of residential space heating expenditures in great britain in great britain several policy measures have been implemented in order to increase energy efficiency and reduce carbon emissions in the domestic sector this could for example be achieved by improving space heating efficiency and thus decreasing heating expenditure however in order to efficiently design and implement such policy measures a better understanding of the determinants affecting heating expenditure is needed in this paper we examine the following determinants socio economic factors building characteristics heating technologies and weather conditions in contrast to most other studies we use panel data to investigate household demand for heating in great britain our data sample is the result of an annual set of interviews with more than 5000 households starting in 1991 and ending in 2005 the sample represents a total of 64 000 observations over the fifteen year period our aim is to derive price and income elasticities both for britain as a whole and for different types of household our results suggest that differences exist between owner occupied and renter households these households react differently to changes in income and prices our results also imply that a number of socio economic criteria have a significant influence on heating expenditure independently of the fuel used for heating understanding the impacts of different factors on heating expenditure and impact differences between types of household is helpful in designing target oriented policy measures

carbon tax incidence on household demand effects on welfare income inequality and poverty incidence in thailand abstract studying the impact of a carbon tax on household demand can be relevant in terms of securing public acceptance of a carbon tax and clarifying the implications for policy design this paper aims to fill a gap in the academic literature by simulating carbon tax scenarios and estimating distributional effects of the tax on household welfare income inequality and poverty rates based on household consumption in thailand the study employs a microsimulation model incorporating the economy wide effects of the tax on prices and consumers behavioral responses to changes in prices the results indicate that a carbon tax is progressive in thailand under revenue recycling scenarios by expanding social transfer programs when carbon tax revenues are recycled through pensions for elderly people the carbon tax could reduce the poverty rate and improve the welfare of households in the lowest quintile the results imply that the distributional impacts of environmental taxes could result in favorable outcomes for income inequality and poverty reduction in developing countries

the ex post impact of an energy tax on household energy demand this paper presents an econometric study dealing with household demand for energy in the netherlands the main objective of the paper is to present an estimation of the actual impact of an already implemented energy tax introduced in the netherlands in 1996 the approach differs from the existing literature in that 1 it uses panel data for the same period in which the tax was introduced and 2 it estimates a demand function that controls for a large set of variables such as outside temperature type of house and of house insulation household cooking behavior and an extensive number of durable goods and electrical appliances the study concludes that in the short term the energy tax had a small but significant impact on energy consumption in the netherlands concretely the yearly average demand reduction was of 8 for electricity and 4 4 for gas additionally the influence of variables other than price and income on household energy demand is discussed using this information the impact that the energy tax had on household energy use can be compared with the energy reduction that could have been achieved when using other policy instruments

modeling household energy expenditure in the united states abstract energy consumption is one of the main source of air pollution greenhouse gas emission and global warming reducing household energy consumption is a key goal of policymakers we develop statistical models using socio economics and demographics building characteristics location temperature and energy prices to estimate household energy expenditure in the u s we use household energy expenditure for more than 560 000 households in the u s from 2010 to 2012 we first employ multivariate regression models to investigate and identify the impacts of the explanatory variables on household energy expenditure next we use principal component analysis pca to convert correlated co linear explanatory variables into orthogonal components and estimate household energy expenditure by principal component regression we find newer attached buildings to be effective in decreasing household energy expenditure particularly among educated people in metropolitan areas with sufficient data availability our model could be used by state regional or even city level policymakers and planners to optimize their infrastructural investments

vertical price controls with uncertain demand a manufacturer distributes output before knowing demand and thus risks making more than its rivalrous independent retailers can sell at the monopoly price if demand is low retailers may therefore resell more than the joint profit maximizing output anticipating this they will not pay as much for the merchandise ex ante as they would if the manufacturer could commit to preventing rivalry the manufacturer has many options including vertical integration chain outlets restricted output buy backs just in time deliveries and minimum resale prices the article discusses each option s advantages and disadvantages and concludes that all roads lead to resale price maintenance the article closes with an alternative to the dealercartel hypothesis for minimum resale prices

non discrimination clauses in the retail energy sector the british energy regulator will soon review a non discrimination licence condition which it imposed to ensure that energy retailers charge the same mark up in different regions many consumers are loyal to incumbent firms necessitating heavy discounting by entrants to attract customers which had led to regional price discrimination matching characteristics of the energy market to models of discrimination we identify the necessary conditions for the licence condition to have a positive effect for consumers and explore whether the policy has helped potentially vulnerable consumers we conclude that the most likely effect of the licence condition is to reduce competition in the mainstream energy markets and welcome the regulator s latest review of the retail market

on the use of low price guarantees to discourage price cutting abstract this paper formulates a novel test to assess whether and to what extent firms might be using low price guarantees to discourage their rivals from cutting prices the test is based on a comparison of paired observations of advertised prices that are set by competing firms at the same point in time on similar items where one price is set by a firm that has a low price guarantee and the other by a firm that does not have a low price guarantee using data on retail tire prices we find that the majority of paired observations involving firms that have price matching guarantees are consistent with what one would expect if firms were using them to discourage price cutting whereas the majority of paired observations involving firms that have price beating guarantees are not this suggests that price matching and price beating guarantees may be serving different purposes the evidence also suggests that guarantees that apply to advertised prices only may be serving different purposes than guarantees that apply to both advertised and selling prices

what do facilitating practices facilitate an empirical investigation of most favored nation clauses in natural gas contracts long term contracts often include most favored nation clauses mfns which are nondiscrimination guarantees that obligate a buyer or seller to treat all trading partners symmetrically in pricing decisions recent theoretical work has shown that such clauses can facilitate tacit collusion by increasing the cost of selective price changes aimed at attracting new business an alternative view is that mfns serve to facilitate efficient price adjustment in extended exchange relationships we test these competing hypotheses using data from long term natural gas contracts many of which employ mfns our conclusion is that the pattern of mfn adoption in conjunction with the structure of the nondiscrimination regions and the parallels with other nonstrategic price escalation provisions lends strong support to the efficiency rationale

matching own prices rivals prices or both many retailers promise that they will not be undersold by rivals and extend their promise to include their own future prices that is many retailers combine elements of both price matching guarantees and retroactive most favored customer clauses this is puzzling because the extant literature has shown that each practice independently has the potential to facilitate supracompetitive prices and thus one might think the two practices are substitutes in this paper we show that price matching guarantees and most favored customer clauses complement each other when offered unilaterally by a single firm and can lead to higher prices than either one could have facilitated by itself

bilateral most favored customer pricing and collusion in a two period differentiated products duopoly model most favored customer mfc pricing policies allow firms to commit to prices above the bertrand prices it is shown here however that unless a restrictive and unappealing assumption is made about demand there is no equilibrium in which both firms adopt mfc policies the restrictive assumption is that at least one firm s demand is more responsive to changes in its opponent s price than to changes in its own price otherwise firms have an incentive to deviate from a greater than bertrand price in the first period

residential energy demand in the united states analysis using static and dynamic approaches abstract the residential sector is the main consumer of energy in the united states and reducing energy consumption is an important goal for policymakers in each state to know how reducing residential energy demand could be achieved this study develops a set of static and dynamic models to investigate and identify the impact of socio economic and demographic characteristics building age energy prices and weather conditions on residential energy demand at the state level from 2005 to 2013 next this study proposes two alternative scenarios to reduce residential energy demand based on the most precise model for every 10 000 dollars of per capita income in each state 1 increasing residential electricity price by 1 cent per kw h and 2 decreasing average building age by 1 in the first scenario the findings indicate that annual residential electricity demand would decrease by 7 3 on average with the highest reductions in washington 11 9 north dakota 10 9 and idaho 9 7 in the second scenario residential gas demand would decrease by an average of 15 8 annually with the highest reduction in connecticut 33 2 followed by new york 33 0 and massachusetts 30 7 these proposed scenarios assist policymakers in optimizing decisions and investments to reduce residential energy consumption

opportunism in multilateral vertical contracting nondiscrimination exclusivity and uniformity comment an input supplier selling to competing downstream firms would benefit from publicly committing at the outset to all contracts efficient commitment however would require complete contracts the authors study instead bilateral contracting without commitment regarding others terms each firm then fears that the supplier might opportunistically renegotiate another s contract to increase bilateral profit at the firm s expense the authors show that nondiscrimination clauses generally cannot curb such third party opportunism even with symmetric firms to reassure firms crude forms of commitment may be adopted this could explain the pervasiveness of exclusivity arrangements and the striking uniformity and intertemporal rigidity of franchise contracts copyright 1994 by american economic association

who rebounds most estimating direct and indirect rebound effects for different uk socioeconomic groups this study estimates the combined direct and indirect rebound effects from various types of energy efficiency improvement and behavioural change by uk households and explores how these effects vary with total expenditure the methodology is based upon estimates of the expenditure elasticity and ghg intensity of 16 categories of goods and services and allows for the capital cost and embodied emissions of the energy efficiency measures themselves the study finds that rebound effects in ghg terms are modest 0 32 for measures affecting domestic energy use larger 25 65 for measures affecting vehicle fuel use and very large 66 106 for measures that reduce food waste furthermore measures undertaken by low income households are associated with the largest rebound effects with direct emissions forming a larger proportion of the total rebound effect for those households measures that are subsidised or affect highly taxed energy commodities may be less effective in reducing aggregate emissions these findings highlight the importance of allowing for rebound effects within policy appraisals as well as reinforcing the case for economy wide carbon pricing

a model of duopoly and meeting or beating competition this paper analyzes the use of meeting and beating competition clauses in duopoly markets a differentiated products price setting model is considered in which firms have the option of precommitting themselves to contracts which bind their own price to be some prespecified function of their competitor s price the analysis establishes conditions under which these contracts facilitate oligopoly coordination under which they result in price discrimination and under which they can actually be procompetitive

the welfare losses from price matching policies several recent papers argue that price matching policies raise equilibrium prices we add to this literature by considering potential welfare losses which have two sources harberger triangles from high prices and posner rectangles from over entry we compare price matching markets with entry to monopoly and price matching markets without entry and find that price matching with entry creates greater welfare losses than monopoly in markets with a low ratio of fixed to marginal cost we illustrate this result using parameters from the us wholesale gasoline and air travel markets and relate our model to price matching among nasdaq market makers

a decentralized market with common values uncertainty non steady states we analyse a market where i trade proceeds by random and anonymous pairwise meetings with bargaining ii agents are asymmetrically informed about the value of the traded good and iii no new entrants are allowed once the market is open we show that information revelation and efficiency never obtain in equilibrium even as discounting is removed this holds whether the asymmetry is two sided or one sided in some cases there exist equilibria where a substantial amount goes untraded this contrasts with the earlier literature which was based on the steadystate equilibria of a model where agents enter the market every period

allocative efficiency of markets with zero intelligence traders market as a partial substitute for individual rationality we report market experiments in which human traders are replaced by zero intelligence programs that submit random bids and offers imposing a budget constraint i e not permitting traders to sell below their costs or buy above their values is sufficient to raise the allocative efficiency of these auctions close to 100 percent allocative efficiency of a double auction derives largely from its structure independent of traders motivation intelligence or learning adam smith s invisible hand may be more powerful than some may have thought it can generate aggregate rationality not only from individual rationality but also from individual irrationality

research note price matching guarantees retail competition and product line assortment price matching guarantees pmgs are offers to match a competitor s price on a specific item such guarantees are extremely common in u s retail practice and their impact has been studied in several published papers the existing analytic literature models each retailer as a single product seller most work assumes that each retailer s product is identical with or completely substitutable for the competitor s product in reality competing retailers often sell multiple products and these products do not always overlap or may overlap partially but not totally furthermore retailers that offer pmgs routinely exclude certain offerings from pmg coverage this raises the interesting question of how product variety and product stocking factors affect retailer decisions about offering pmgs in this paper we simultaneously consider three factors of retailing importance that imply results consistent with pmg use and nonuse the ability to choose to stock the same product as or a product differentiated from a competitor s offering the possibility of shelf space limitations on the ability to stock complete variety and the category demand enhancing effect of variety these are sensible and realistic descriptive factors shaping retailers product and pricing decisions and because they have not been considered jointly in the prior literature on pmgs their joint consideration helps to expand our understanding of the drivers of pmg implementation and impact in the presence of these three factors we examine retailers decisions about whether to offer a pmg what product s to stock and how to price the product s stocked our results show that shelf space limitations have an important influence on pmg provision in particular when retailers are shelf space constrained and product substitutability in the category is sufficiently large choosing to use pmgs which by definition also requires stocking identical products is strictly less profitable than enduring bertrand price competition but enjoying retail product differentiation the result that pmgs can be profit reducing relative to head to head retail competition is a novel one driven in our model by the opportunity costs of stocking identical products i e the inability to benefit from the demand enhancing effects of variety and the differential small or large between bertrand pricing and pmg pricing levels we further show that under asymmetric shelf space availability either product variety will be severely limited or retailers will offer a different array of products weak substitution between products leads to the latter with pricing between the differentiated products bertrand and monopoly levels strong substitution leads to the former with pricing at the monopoly level our results also show that with unlimited shelf space both competing retailers offer pmgs stock the entire available product line and enjoy monopoly pricing given our focus on product variety issues we also relate our results to the literature on branded variants our results demonstrate that the nature of product variety the availability of retail shelf space and the category demand enhancing effect of variety are key market characteristics that jointly and strongly affect the optimality of pmgs and the resulting pricing and profitability characteristics of the market

the most favored nation pricing policy and negotiated prices previous work has viewed the most favored nation mfn contract as a practice capable of facilitating collusion among sellers but this paper shows that even a monopoly seller may gain by including the mfn provision in sales contracts we consider a case in which the seller negotiates price separately with each of two buyers by including a mfn clause in her contract with the first buyer the seller raises her cost of granting price concessions to the second buyer this increases the seller s bargaining strength with respect to the second buyer thereby helping her negotiate a higher price

information revelation in a market with pairwise meetings the paper presents a simple pairwise meetings model of trade the new feature is that agents have asymmetric information about the true state of the world the focus is on the transmission of the information through the process of trade the qualitative question is to what extent is the information revealed to uninformed agents through the trading process when the market is in some sense frictionless in particular does the decentralized process give rise to full revelation results as derived by the literature on rational expectations for centralized and competitive environments in the context of the model of this paper it turns out that the information is not fully revealed to uninformed agents even when the market is in some sense approximately frictionless

information percolation in large markets we introduce a simple model of the percolation of information of common interest through a large market as agents encounter each other over time and reveal information to each other some of which they may have received earlier from other agents we are particularly interested in the evolution over time of the cross sectional distribution in the population of the posterior probability assignments of the various agents we provide a market example based on privately held auctions and obtain a relatively explicit solution for the cross sectional distribution of posterior beliefs at each time our results contribute to the literature on information transmission in markets hayek 1945 argues that markets allow information that is dispersed in a population to be revealed through prices grossman s 1981 notion of a rational expectations equilibrium formalizes this idea in a setting with price taking agents milgrom 1981 pesendorfer and swinkels 1997 and reny and perry 2006 provide strategic foundations for the rational expectations equilibrium concept in centralized markets a number of important markets however are decentralized these include over the counter markets and private auction markets wolinsky 1990 and blouin and serrano 2002 study information transmission in decentralized markets in contrast to these two papers equilibrium behavior in our market example leads to full revelation of information we happily acknowledge conversations with manuel amador frank kelly jeremy stein and pierre olivier weill and research assistance from sergey lobanov rubinstein and wolinsky 1985 and gale 1986a 1986b study decentralized markets without asymmetric information satterthwaite and shneyerov 2003 study decentralized market with private value asymmetric information amador and weill 2006 study a more abstract setting regarding transmission of common and private i nformation

follies subdued informational efficiency under adaptive expectations and confirmatory bias abstract we study the informational efficiency of a market with a single traded asset the price initially differs from the fundamental value about which the agents have noisy private information which is on average correct a fraction of traders revise their price expectations in each period the price at which the asset is traded is public information the agents expectations have an adaptive component and a social interactions component with confirmatory bias we show that taken separately each of the deviations from rationality worsens the informational efficiency of the market however when the two biases are combined the degree of informational inefficiency of the market measured as the deviation of the long run market price from the fundamental value of the asset can be non monotonic both in the weight of the adaptive component and in the degree of confirmatory bias for some ranges of parameters two biases tend to mitigate each other s effect thus increasing informational efficiency

strategic wholesale pricing in a supply chain with a potential entrant this paper develops an adverse selection model for a two stage supply chain with one supplier one retailer and a potential outside entrant supplier who makes a partially substitutable product the work is different from most research on entry deterrence that only considers a single stage model our main interest is to investigate how the incumbent supplier can strategically maximize her profit by a wholesale pricing policy when facing the potential entrant we focus on a model where the entrant supplier will sell her product through the same incumbent retailer we derive the optimal decisions for each player and study the comparative statics of the equilibrium to investigate how the supply chain structure may affect the deterrence strategy of the incumbent supplier we also consider three alternative models with different channel structures when both suppliers sell their products directly when the entrant has another independent retailer and when the entrant sells her product directly through the comparison we find that the existence of the common downstream retailer often enhances the deterring motivation of the incumbent supplier

the impact of singapore s residential electricity conservation efforts and the way forward insights from the bounds testing approach abstract this article provides fresh empirical evidence of residential electricity demand in singapore over the period of 1980 2014 using the bounds testing procedure to cointegration the residential electricity demand comprises of income price temperature rainy days old age dependency and the impact of energy efficiency policies our results are consistent with previous studies where income and price elasticities are inelastic hence from a policy perspective subsidies will not be effective in reducing electricity demand we also found that old age dependency is an important determinant that reduces electricity consumption at least in the short run suggesting that policies that target the younger population may bring more savings the model findings suggest that in general energy efficiency interventions introduced after 2007 which comprises of both informational strategies and efficiency standards were effective in reducing household electricity consumption however in order to realise greater electricity reduction potential policy efforts have to intensify into the future with the main objectives being to permanently change energy habits and consider the role of hassle costs when rolling out energy saving measures

are prosumer households that much different evidence from stated residential energy consumption in germany abstract this paper discusses the effect of residential energy prosuming on households energy consumption behavior with the objective of finding evidence of a prosumer rebound effect on energy consumption prosuming is the partial self consumption of distributed energy production we hypothesize that prosumer households are systematically different from consumer households with regard to housing situation and socio economic characteristics we ensure an appropriate quasi randomized comparison by using propensity score matching as our identification strategy we employ data from a nationwide online survey among homeowners in germany while the data show a correlation between lower energy consumption and prosumer households we find no significant difference in energy consumption behavior between prosumers and non prosumers in a comparable sample with regard to socio economic and housing characteristics instead the lower energy consumption of prosumer households is attributed to more energy efficient technical equipment and thus to purchasing behavior our results do not show evidence of either negative or positive externalities of prosuming on residential energy consumption behavior and therefore we conclude that there is no need for additional governmental measures e g in the form of taxation or subsidies to address behavioral changes in energy prosuming

platform monopolization by narrow ppc bpg combination booking et al abstract the price parity clauses ppcs that online booking platforms impose have come under antitrust scrutiny wang and wright 2017 show how by preventing showrooming a narrow ppc can reduce search costs and benefit consumers under between platform competition in response to having to give up its wide ppc to hotels booking com emphasized its best price guarantee bpg to customers we observe that a narrow ppc combined with a low hassle costs bpg leaves only wang and wright s price parity and monopoly equilibrium ppme in which consumers are worse off than with no platform operating at all a more efficient incumbent platform can deter entry with the bpg while the narrow ppc eliminates competition from direct sales channels an equally efficient platform could enter and compete consumer prices down because of the existence of hassle costs yet this equilibrium is fragile to network effects if sellers have incentives not to price differentiate between platform s and their direct sales channel a narrow ppc alone suffices to sustain the ppme in both cases the detrimental pricing contract combination that we point out calls for different platform competition policy