how to best ensure remuneration for creators in the market for music copyright and its alternatives the focus of this essay is to examine the market for copyrighted works with a particular emphasis on the sound recording market this market is currently in a state of flux some would say disarray due to the ability of the internet to lower transmission costs for both authorized and unauthorized copies with the latter being at this time far more prevalent in this essay we discuss the intent of copyright the role of copying and file sharing and some alternative production consumption schemes meant to strengthen or to replace copyright

the inherent inefficiency of simultaneously feasible financial transmission rights auctions abstract empirical evidence from the new york iso shows that the clearing prices for point to point congestion revenue rights also known as financial transmission rights ftrs resulting from centralized auctions conducted by independent system operators differ significantly and systematically from the realized congestion revenues that determine the accrued payoffs of these rights the question addressed by this paper is whether such deviations are due to price discovery errors which will eventually vanish or due to inherent inefficiencies in the auction structure we show that even with perfect foresight of average congestion rents the clearing prices for the ftrs depend on the bid quantity and therefore may not be priced correctly in the financial transmission right ftr auction in particular we prove that quantity limits on the ftr bids may cause the auction clearing prices to differ from the bid prices this phenomenon which is inherent in the theoretical properties of the optimization algorithm used to clear the auction is further illustrated through numerical simulations with test systems we conclude that price discovery alone would not remedy the discrepancy between the auction prices and the realized values of the ftrs secondary markets or frequent reconfiguration auctions are necessary in order to achieve such convergence

section 337 and the protection of intellectual property in the united states the complainants and the impact under section 337 of the tariff act of 1930 a firm can challenge imports that infringe its u s intellectual property rights such as patents copyrights and trademarks based on publicly available information this paper examines the characteristics of firms that file complaints under section 337 and also evaluates how firms are affected by the outcomes we find a complaining firm compared with peer firms in the same industry is typically larger produces a more diverse range of products has invested more in intangibles and is no less profitable a finding of no violation significantly depresses the filing firm s profits compared to peers section 337 appears to protect innovators but its effectiveness in promoting more innovation cannot be demonstrated so clearly copyright 1996 by mit press

price formation in electricity forward markets and the relevance of systematic forecast errors since the liberalisation of the european electricity sector forward and futures contracts have gained significant interest of market participants due to risk management reasons for pricing of these contracts an important fact concerns the non storability of electricity in this case according to economic theory forward prices are related to the expected spot prices which are built on fundamental market expectations in the following article the crucial impact parameters of forward electricity prices and the relationship between forward and future spot prices will be assessed by an empirical analysis of electricity prices at the european energy exchange and the nord pool power exchange in fact price formation in the considered markets is influenced by historic spot market prices yielding a biased forecasting power of long term contracts although market and risk assessment measures of market participants and supply and demand shocks can partly explain the futures spot bias inefficiencies in the analysed forward markets cannot be ruled out

stochastic modeling of financial electricity contracts abstract we discuss the modeling of electricity contracts traded in many deregulated power markets these forward futures type contracts deliver either physically or financially electricity over a specified time period and is frequently referred to as swaps since they in effect represent an exchange of fixed for floating electricity price we propose to use the heath jarrow morton approach to model swap prices since the notion of a spot price is not easily defined in these markets for general stochastic dynamical models we connect the spot price the instantaneous delivery forward price and the swap price and analyze two different ways to apply the heath jarrow morton approach to swap pricing either one specifies a dynamics for the non existing instantaneous delivery forwards and derives the implied swap dynamics or one models directly on the swaps the former is shown to lead to quite complicated stochastic models for the swap price even when the forward dynamics is simple the latter has some theoretical problems due to a no arbitrage condition that has to be satisfied for swaps with overlapping delivery periods to overcome this problem a practical modeling approach is analyzed the market is supposed only to consist of non overlapping swaps and these are modelled directly a thorough empirical study is performed using data collected from nord pool our investigations demonstrate that it is possible to state reasonable models for the swap price dynamics which is analytically tractable for risk management and option pricing purposes however this is an area of further research

market price behavior of wholesale electricity products texas abstract applying a regression based approach to a newly developed sample of over 60 000 hourly observations for 01 01 2011 12 30 2017 we answer the question what moves the day ahead market dam prices for energy and ancillary services as and the real time market rtm price for energy in the electric reliability council of texas ercot our answer comprises the following findings that capture the interdependence of ercot s energy and as products 1 the dam energy price increases with the day ahead forecasts of natural gas price system load and as requirements but declines with nuclear and wind generation s forecasts 2 the as prices increase with the dam energy price and the as procurement forecasts but decline with the as offer forecasts and 3 the rtm energy price increases with the dam energy price but diverges from the dam energy price due to forecasting errors related to the dam energy price s fundamental drivers these findings imply that texas can reduce the prices for day ahead energy day ahead as and real time energy via wind generation development and demand side management further texas can improve its electricity trading efficiency by improving ercot s forecast accuracy to narrow the rtm energy price s divergence from the dam energy price

the structure of licensing contracts industrial organization theory has explored several issues related to licensing but empirical analyses are extremely rare we amass a new and detailed dataset on licensing contracts and use it to present some simple facts concerning licensing behavior our analysis reveals robust cross industries differences in several contractual features such as exclusivity cross licensing ex ante versus ex post technology transfers and licensing to related versus unrelated parties we offer an interpretation of these facts based on cross industry variation in the strength of intellectual property rights

a general equilibrium analysis of software development implications of copyright protection and contract enforcement abstract we develop a general equilibrium model to study the implications of a legal environment on the organization of software production we show that contract enforcement determines the organizational mode i e in house versus outsourcing of customized software development while copyright protection affects both packaged software as well as customized software development we obtain some testable results when copyright protection is weak only customized software will be developed when copyright protection is strong both customized software and packaged software will be developed environment changes in one software market affect the equilibrium in the other software market

limits to database protection fair use and scientific research exemptions a trend running diametrically opposed to the expansion of intellectual property rights ipr is the increasing awareness that dominant positions sustained by ipr may be mitigated through exemptions and statutory or compulsory licences it is argued that there are compelling economic reasons to protect valuable assets that are prone to copying but that there are equally compelling reasons to limit monopolistic claims and stimulate cross licensing practices compulsory licensing may serve as a stimulus to the bargaining process with private parties and research institutions alike another important category of information is public sector information access to information has become a concern and the european commission has followed up on its green paper on public sector information in the information society with a directive implementing its vision on affordable access for all and exploitation potential the right of access to information may be enforced through the european convention on human rights it not only guarantees the freedom of speech it also recognises the freedom to receive information

intellectual property litigation activity in the usa abstract brand names or trademarks carry incredible economic power and prestige there is increasing recognition by world bodies that intellectual property ip whether manifested in patents trademarks copyrights or trade secrets is highly valuable and must be protected through robust ip enforcement the usa is an interesting natural laboratory as patent trademark and copyright litigation battles have been raging domestically for some time the paper discusses the four main forms of ip assets the legal remedies that are available to enforce the property rights inherent in each type of ip asset the basic damages theory relating to each form of ip and how damages may be calculated when each type of asset is presumed to be infringed the increased recognition of the value of ip has led to stronger enforcement of ip protection an increase in ip litigation and growing policy actions that are focused on how that protection should be manifested an empirical analysis of how the ip litigation activity in the usa has changed over time is also presented

electricity derivatives pricing with forward looking information in order to increase overall transparency on key operational information power transmission system operators publish an increasing amount of fundamental data including forecasts of electricity demand and available capacity we employ a fundamental model for electricity prices which lends itself well to integrating such forecasts while retaining ease of implementation and tractability to allow for analytic derivatives pricing formulae in an extensive futures pricing study the pricing performance of our model is shown to further improve based on the inclusion of electricity demand and capacity forecasts thus confirming the general importance of forward looking information for electricity derivatives pricing however we also find that the usefulness of integrating forecast data into the pricing approach is primarily limited to those periods during which electricity prices are highly sensitive to demand or available capacity whereas the impact is less visible when fuel prices are the primary underlying driver to prices instead

strategizing by firms in the presence of markets for resources strategizing by firms from the resource based view is concerned with the process through which firms acquire a distinctive bundle of resources that is costly and time consuming for competitors to duplicate or imitate a central question facing any firm therefore is its strategy for accumulating the resources that underpin its production activities in this article the process of resource accumulation is discussed as one involving potentially both internal resource development and external resource acquisition from the perspective of the strategic issues involved in making a choice between these options emerging markets for technologies and know how through licensing and other forms of resource exchange have opened up new avenues through which firms may jostle for advantage the article is concerned with three major aspects of this process illustrating the discussion with cases from biotechnology and pharmaceuticals first the strategizing by firms around the internal development vs external sourcing issue is discussed as informed by the practices of leading firms and how these lend greater variety of strategic options for firms second the potential competitive advantages as well as disadvantages to be secured by firms through the process of external sourcing as compared with the well known potential advantages accruing to incumbents through internal development such as time compression diseconomies and causal ambiguity and third the criteria to be used by firms to strategically evaluate resources individually as contrasted with the strategic evaluation of the resource bundle or totality these criteria it is argued turn on the issues of marginal value contribution resource complementarities and synergies resource variety and transferability involving intellectual property issues successful firms it is argued expand their options through blending internal resource accumulation with external resource leverage thereby deepening their distinctive dynamic capabilities this approach extends the framework of the rbv enabling it to encompass resource driven schumpeterian competition and such aspects of industrial dynamics as specialization modularization and imitative challenge copyright 2003 oxford university press

an introduction to the law and economics of intellectual property although economists have written on topics of intellectual property for a long time the impact of economics on public policy in this area has been slight especially as compared to the influence of professional writings in areas such as antitrust and taxation we believe that too few of the profession s resources have been devoted to these issues and that of those resources that have been employed too few have been devoted to empirical analyses we hope that this introductory essay and the three papers that follow will stimulate interest in this subject this introductory essay first describes some of the basic economic tradeoffs involved in intellectual property law and then describes the framework of the law in the six areas described above patent copyright semiconductor protection trademark trade secret and misappropriation it is intended both to provide thumbnail descriptions of the various intellectual property regimes to economists working in this area and to indicate where additional economic research might be useful

bond pricing and the term structure of interest rates a new methodology for contingent claims valuation this paper presents a unifying theory for valuing contingent claims under a stochastic term structure of interest rates the methodology based on the equivalent martingale measure technique takes as given an initial forward rate curve and a family of potential stochastic processee for its subsequent movements a no arbitrage condition restricts this family of processes yielding valuation formulae for interest rate sensitive contingent claims which do not explicitly depend on the market prices of risk examples are provided to illustrate the key results in relation to the term structure of interest rates arbitrage pricing theory has two purposes the first is to price all zero coupon default free bonds of varying maturities from a finite number of economic fundamentals called state variables the second is to price all interest rate sensitive contingent claims taking as given the prices of the zero coupon bonds this paper presents a general theory and a unifying framework for understanding arbitrage pricing theory in this context of which all existing arbitrage pricing models are special cases in particular vasicek 1977 brennan and schwartz 1979 langetieg 1980 ball and torous 1983 ho and lee 1986 schaefer and schwartz 1987 and artzner and delbaen 1988 the primary contribution of this paper however is a new methodology for solving the second problem i e the pricing of interest rate sensitive contingent claims given the prices of all zero coupon bonds the methodology is new because i it imposes its stochastic structure directly on the evolution of the forward rate curve ii it does not require an inversion of the term structure to eliminate the market prices of risk from contingent claim values and iii it has a stochastic spot rate process with multiple stochastic factors influencing the term structure the model can be used to consistently price and hedge all contingent claims american or european on the term structure and it is derived from necessary and more importantly sufficient conditions for the absence of arbitrage the arbitrage pricing models of vasicek 1977 brennan and schwartz 1979 langetieg 1980 and artzner and delbaen 1988 all require an iformerly titled bond pricing and the term structure of interest rates a new methodology

european electricity market integration with mixed market designs part i formulation the integration of the day ahead electricity markets in europe shall lead to one multi area market that will substitute the local national ones in view of the target model that will be enforced in all european markets in conjunction with their forthcoming coupling integration a centralized market splitting algorithm is implemented in this paper respecting the standard market regulatory framework of power exchanges pxs and power pools including 1 block offers bids linked block offers bids flexible hourly offers bids and convertible block offers in power exchanges and 2 unit technical commitment constraints and system operating constraints in power pools the problem is formulated as a mixed integer linear programming milp model which can be solved using commercial milp solvers the performance and computational requirements of an implementation in pan european level is presented in the companion paper the model is tested in terms of problem solvability to its limits considering a day ahead market clearing time threshold equal to one hour

the effect of trade secret legal protection on venture capital investments evidence from the inevitable disclosure doctrine abstract this study investigates how the inevitable disclosure doctrine a form of trade secret legal protection affects venture capital vc investment using a data set of vc deals realized in the united states from 1980 to 2012 we find that a rule in favor of inevitable disclosure increases the amount of vc investment we address mechanisms that can explain these findings by assessing how the inevitable disclosure doctrine a displays a different impact on vc investments according to the characteristics of the state and the industry where the start ups operate and b affects the performance of vc backed firms we also discuss managerial and policy implications of our findings

a preliminary assessment of the market coupling arrangement on the kontek cable this paper presents a preliminary assessment of the market coupling arrangement on the kontek kt cable between east denmark and germany and an assessment of the original auction mechanism kt the new spot price area was introduced in germany on october 5 2005 to facilitate a market coupling arrangement on the kt cable between east denmark and germany we would expect the kt price to correlate more with the european energy exchange eex price because arbitrage normally levelizes the price however spot prices in late 2005 were both high and volatile because congestion management practices in sweden transferred internal bottlenecks to the cable between sweden and east denmark since spot prices were equal in east denmark and the kt area for a substantial time it implies that some hours had no congestion on the kt cable market players valued the previous monthly auctions for transmission capacity more than the daily auctions compared to the daily auctions market players received smaller payoffs on average for the market coupling arrangement and the smallest payoffs for the monthly auctions

common and unique factors influencing daily swap returns in the nordic electricity market 1997 2005 this paper demonstrates that electricity swap returns can be explained by a set of uncorrelated common and unique risk factors electricity swap returns differ from return data in other markets by a significant portion of overall risk being unaccounted for by common factors it follows that hedging a given exposure with an exposure in another segment of the swap market could be fallible furthermore the volatility function common to all swaps may have to be augmented by unique risk in applied pricing applications

forecasting day ahead electricity prices utilizing hourly prices abstract the daily average price of electricity represents the price of electricity to be delivered over the full next day and serves as a key reference price in the electricity market it is an aggregate that equals the average of hourly prices for delivery during each of the 24 individual hours this paper demonstrates that the disaggregated hourly prices contain useful predictive information for the daily average price in the nord pool market multivariate models for the full panel of hourly prices significantly outperform univariate models of the daily average price with reductions in root mean squared error of up to 16 substantial care is required in order to achieve these forecast improvements rich multivariate models are needed to exploit the relations between different hourly prices but the risk of overfitting must be mitigated by using dimension reduction techniques shrinkage and forecast combinations

the effects of increased copyright protection an analytic approach previous authors who have considered partially nonexcludable goods have claimed that an increase in copyright protection will have the following two effects on social welfare first it will decrease the social welfare loss due to underproduction second it will increase the social welfare loss due to underutilization in this paper we investigate these claims in a formal setting by analyzing a model in which consumers vary only in terms of their costs of obtaining a reproduction our analysis provides partial support to the first claim of these previous authors while giving little or no support to the second claim

self employment the role of intellectual property right laws little is known about the impact of intellectual property rights iprs on typically imitative self employment ipr laws have contrasting dual innovation creation and access effects on self employment activity the first effect is positive where strong ipr laws promote innovation and so create new opportunities for self employment the second effect is negative where strong ipr laws restrict access to innovation and technology used as inputs to self employed businesses using a 33 country dataset over the period 1995 2000 we estimate the impact of ipr laws on self employment helping to fill the vacuum of empirical evidence that has plagued policy decision making in this area we find that patent activity has a negative effect on self employment however overall we find that more extensive and strong ipr laws have a net positive effect on self employment activity

intellectual property rights and the welfare effects of agricultural r d the profound changes that have affected agriculture in modern times are perhaps best illustrated by the evolution of production techniques due to mechanization new chemical inputs such as herbicides pesticides and fertilizers genetic selection of crops and animals new crop varieties and countless other technical and organizational improvements these innovations have allowed a generalized increase in physical output while at the same time agriculture has suffered a massive exodus of labor forces towards the non farm sectors indeed a stylized fact of developed countries post war growth is that productivity in agriculture has grown faster than in other sectors jorgenson and gollop 1992 this remarkable record naturally begs the question of what is at its root and a view that commands considerable consensus is that agricultural productivity growth is due to past investments in scientific research and development r d

efficiency of financial transmission rights markets in centrally coordinated periodic auctions electricity market design in the united states is increasingly dominated by locational marginal pricing lmp of energy and transmission lmp markets are typically coupled with periodic auctions of financial transmission rights ftrs to hedge transmission price risks while lmp designs offer considerable advantages forward price discovery in these markets requires participants to form efficient expectations on spot congestion price differences in this paper we examine trends in the efficiency of one of the early lmp markets the new york independent system operator nyiso analyzing a panel data set of over 9000 contracts over a six year period beginning september 2000 we show that nyiso ftr markets were inefficient in their early years but that market participants learned to predict forward prices and thus efficiency improved for ftrs not solely within the new york city long island sub region ftrs within this sub region which has a number of special characteristics remain relatively inefficient

fighting software piracy which governance tools matter in africa this article integrates previously missing components of government quality into the governance piracy nexus in exploring governance mechanisms by which global obligations for the treatment of iprs are effectively transmitted from international to the national level in the battle against piracy it assesses the best governance tools in the fight against piracy and upholding of intellectual property rights iprs the instrumentality of ipr laws treaties in tackling piracy through good governance mechanisms is also examined findings demonstrate that 1 while all governance tools under consideration significantly decrease the incidence of piracy corruption control is the most effective weapon 2 but for voice and accountability political stability and democracy ipr laws treaties are instrumental in tackling piracy through government quality dynamics of rule of law regulation quality government effectiveness corruption control and press freedom hence the need for a policy approach most conducive to expanding development is to implement an integrated system of both iprs and corollary good governance policies moreover our findings support the relevance of good governance measures in developing countries wishing to complement their emerging ipr regimes

limits to arbitrage in electricity markets a case study of miso abstract we study the case of financial traders in the midwest electricity market where they are expected to arbitrage price differences that result in inefficiencies using exogenous variation in financial trading from the financial crisis and a period of high transaction costs we show speculators had only a weak effect moreover while arbitrage was restricted by transaction costs imposed by regulation some financial players bet in exactly the opposite direction of the pricing gap sustaining large losses while doing so we show this is consistent with price manipulation intended to increase the value of a related instrument that bets on local price differences ftrs

capitalists and workers knowledge and the strategic role of investment within the firm does the ownership of capital confer a strategic advantage within the firm the formation of a firm frequently represents an attempt by an individual to secure a return on knowledge and we demonstrate that in this context there can be an incentive to precommit capital before contracting with other members of the firm that is to be the capitalist results are also obtained on the investment level and wage rate the key ingredient of the model is emergence of a product market entry threat from within the firm this contrasts with the anonymous external potential entrant prevalent in the literature

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

patents and other intellectual property rights in this article the author reviews intellectual property rights iprs with some emphasis on the protection of agricultural and life sciences innovations the main institutional features of iprs are first discussed along with a brief historical background and an articulation of the main rationale for the existence of such rights this is followed by an overview of the principal economic issues related to iprs the author explains the main benefit cost trade offs of allowing patents and other iprs and then analyzes specific issues in some depth including the scope of patent protection the effects of patent races and the problems arising when iprs concern cumulative and or complementary innovations the author further illustrates the economics of iprs by considering instruments alternative to patents such as prizes and government procurement contracts finally the author briefly discusses some open policy issues in this area

the benefits of integrating european electricity markets this paper builds on and extends work under contract ener b1 491 1 2012 published as newbery et al 2013

pricing reliability options under different electricity price regimes abstract reliability options are capacity remuneration mechanisms aimed at enhancing security of supply in electricity systems they can be framed as call options on electricity sold by power producers to system operators this paper provides a comprehensive mathematical treatment of reliability options their value is first derived by means of closed form pricing formulae which are obtained under several assumptions about the dynamics of electricity prices and strike prices then the value of the reliability option is simulated under a real market calibration using data of the italian power market we perform sensitivity analyses to highlight the role of the level and volatility of both power and strike price of the mean reversion speeds and of the correlation coefficient on the reliability options value finally we calculate the parameter model risk to quantify the impact that a model misspecification has on the equilibrium value of the ro

the measurement of intellectual property rights protection this research improves upon empirical studies that examine the measurement of intellectual property rights ipr protection prior measures examine only one type of law or lack a component that addresses the actual enforcement of these laws the measure presented here uses three types of ipr laws and enforcement components for them

the influence of regulations on innovation a quantitative assessment for oecd countries abstract regulatory framework conditions have been identified as important factors influencing the innovation activities of companies industries and whole economies however in the empirical literature the impacts of regulation have been assessed as rather ambivalent for innovation different types of regulations generate various impacts and even a single type of regulation can influence innovation in various ways depending on how the regulation is implemented the endogenous growth approach developed by carlin and soskice 2006 and empirically applied by crafts 2006 which determines endogenously the rate of technological progress and therefore innovation allows a conceptual analysis of the influence of different types of regulation on innovation in general the negative effect of compliance costs should be compared with the more dynamic effect of regulations generating additional incentives for innovative activities based on this approach we derive hypotheses on the impact of different specific regulations on innovation we differentiate between economic social and institutional regulations following the oecd taxonomy on regulations existing economic analyses are surveyed which are characterised by rather heterogeneous approaches data bases and results the paper aims to apply a comprehensive and comparative approach to investigate quantitatively the innovation impacts in 21 oecd countries using panel data for the period between 1998 and 2004 in summary the empirical results confirm the hypotheses derived from the conceptual theoretical framework determining technical progress and innovation endogenously and allowing a distinction between short term and long term effects consequently the theoretical approach is an appropriate starting point for the empirical analysis of the influence of different regulations on innovation

exploiting the conditional density in estimating the term structure an application to the cox ingersoll and ross model we propose an empirical method that utilizes the conditional density of the state variables to estimate and test a term structure model with known price formulae using data on both discount and coupon bonds the method is applied to an extension of a two factor model due to cox ingersoll and ross 1985 cir our results show that estimates based on only bills imply unreasonably large price errors for longer maturities we reject the original cir model using a likelihood ratio test and conclude that the extended cir model also fails to provide a good description of the treasury market

stochastic factor model for electricity spot price the case of the nordic market this paper presents a stochastic factor based approach to mid term modeling of spot prices in deregulated electricity markets the fundamentals affecting the spot price are modeled independently and a market equilibrium model combines them to form spot price main advantage of the model is the transparency of the generated prices because each underlying factor and the dynamics between factors can be modeled and studied in detail paper shows realistic numerical examples on the forerunner scandinavian electricity market the model is used to price an exotic electricity derivative

technology adoption learning spillovers and the optimal duration of patent based monopolies abstract the paper analyses an often overlooked aspect of the patent system namely that a monopoly franchise for production of a new good could lead to a second best welfare optimum event when there was no future prospect of inventions being induced by the patent it is shown that a paten may improve economic welfare relative to a regime of competitive supply when there are learning externalities or spillovers from experience in the process of production comparative statics show that stronger learning effects at low levels of experience tend to strengthen the case for ex post grant of a monopoly franchise

merit order effects of renewable energy and price divergence in california s day ahead and real time electricity markets abstract we answer two policy questions 1 what are the estimated merit order effects of renewable energy in the california independent system operator s caiso s day ahead market dam and real time market rtm and 2 what causes the hourly dam and rtm prices to systematically diverge the first question is timely and relevant because if the merit order effect estimates are small california s renewable energy development is of limited help in cutting electricity consumers bills but also has a lesser adverse impact on the state s investment incentive for natural gas fired generation the second question is related to the efficient market hypothesis under which the hourly rtm and dam prices tend to converge using a sample of about 21 000 hourly observations of caiso market prices and their fundamental drivers during 12 12 2012 04 30 2015 we document statistically significant estimates p value 0 01 for the dam and rtm merit order effects this finding lends support to california s adopted procurement process to provide sufficient investment incentives for natural gas fired generation we document that the rtm dam price divergence partly depends on the casio s day ahead forecast errors for system loads and renewable energy this finding suggests that improving the performance of the caiso s day ahead forecasts can enhance trading efficiency in california s dam and rtm electricity markets

software copyright infringement among college students in recent years the issue of infringement in the software industry has gained international attention as the demand for software continues to grow the growing presence of unauthorized reproduction of copyrighted products inhibits full potential growth and discourages creative activity this study analyses the extent of software copyright infringement among college students and attitudes of these students with regard to risk of apprehension and conviction this study finds a significantly higher likelihood of infringement for computer majors and male students and a decrease in the likelihood of infringement for older students this study also uncovers differences in attitudes toward risk of apprehension and conviction between majors in scientific fields and those in business and economics whereas the first group of majors appears to exhibit risky behaviour the latter tends to be more risk averse

valuation anomalies for interconnector transmission rights whilst the acquisition of physical transmission interconnector rights between two or more electricity markets can be structured as spread options on the spot prices of electricity between connected markets empirical evidence suggests that actual prices may be quite different this raises issues for the valuation of transmission rights particularly in the european context of market harmonisation and the use of transmission rights with increasing levels of wind penetration we examine the price differentials between the irish and british electricity markets where explicit transmission capacity auctions have been persistently undersubscribed and transmission rights acquired but not fully utilised we find significant empirical indications that auction prices for transmission rights are undervalued against both arbitrage and spread option valuations we also find significant power flows against the efficient price spread direction a survey of a group of experts with an interest in trading power between ireland and britain inform a number of possible explanations for the apparent inefficiencies these include ex post pricing in the irish market intermittent wind and strategic behaviour by dominant firms

the welfare implications of unauthorized reproduction of intellectual property in the presence of demand network externalities this paper finds that unauthorized reproduction of intellectual property in the presence of demand network externalities can not only induce greater firm profits relative to the case where there is no copying it can lead to a pareto improvement in social welfare ceteris paribus when network externalities are present firms have a greater incentive to expand output because marginal revenue is higher and or they may wish to create preemptive installed bases this paper suggests that unauthorized copying can be a relatively efficient means of achieving this by allowing the firm in effect to price discriminate among different classes of consumers copyright 1994 by blackwell publishing ltd

valuation of physical transmission rights an analysis of electricity cross border capacities between germany and the netherlands abstract the purpose of this paper is to discuss market coherent valuation of physical transmission rights for cross border capacities between germany and the netherlands aiming at a fair valuation of these contracts the most important stylized facts of electricity prices such as mean reversion spikes and correlations of regional prices have to be considered we present different approaches to the valuation of physical transmission rights and perform a quantitative analysis of the results on the one hand various challenges of modeling regional price spreads are analyzed on the other hand we indicate a structural undervaluation of physical transmission rights in all model constellations i e market prices are below theoretical prices of ptr s flexibility we discuss several reasons for this undervaluation and finally state that regulatory modifications have to be made to avoid missing incentives for the extension of cross border capacities

pricing of forwards and other derivatives in cointegrated commodity markets abstract we analyze cointegration in commodity markets and propose a parametric class of pricing measures which preserves cointegration for forward prices with fixed time to maturity we present explicit expressions for the term structure of volatility and correlation in the context of our spot price models based on continuous time autoregressive moving average dynamics for the stationary components the term structures have many interesting shapes and we provide some empirical evidence from refined oil future prices at nymex defending our modeling idea motivated from these results we present a cointegrated forward price dynamics using the heath jarrow morton approach in this setting the concept of cointegration is extended to what we call cointegration in the limit which is an asymptotic form of the notion the margrabe formula for spread option prices is shown to hold with an explicit plug in volatility we present several numerical examples showing that cointegration leads to significantly cheaper spread options compared to the complete market case where cointegration disappears with respect to the pricing measure

realized volatility and price spikes in electricity markets the importance of observation frequency abstract this paper uses high frequency spot price data from eight wholesale electricity markets in australia canada and the united states to estimate realized volatility and the frequency of price spikes i find similar levels of realized volatility in australia and north america with estimates ranging from 1500 to 2700 much greater than estimates reported previously in the literature in hourly data the frequency of price spikes ranges from approximately 35 to 40 in seven of eight markets i present evidence that increasing the lag length in the calculation of bipower variation improves jump detection in electricity prices

uk gas markets the market price of risk and applications to multiple interruptible supply contracts we employ the schwartz and smith schwartz e and j smith 2000 short term variations and long term dynamics in commodity prices management science 46 893 911 model to explore the dynamics of the uk gas markets we discuss in detail the short term and long term market prices of risk borne by the market players and how deviations from expected cyclical storage affect the short term market price of risk finally we illustrate an application of the model by pricing interruptible supply contracts that are currently traded in the uk

jump processes in commodity futures prices and options pricing empirical evidence shows that log return relatives on commodity futures prices are not normally distributed this departure from normality seems to be caused by large price changes occurring in the commodity markets with the arrival of important new information this suggests that a jump diffusion model may be a plausible choice for modeling the stochastic process underlying commodity option prices merton 1976a develops a jump diffusion option pricing model assuming that jump risk is unsystematic however the jump diffusion model developed by bates 1991 is more appropriate for commodity option pricing since it allows jump risk to be systematic in this article recent transactions data on futures and futures options are used to test out of sample options using american versions of black s diffusion and bates s jump diffusion models the results show that bates s model performs considerably better than black s model jump diffusion asian option prices are also shown to differ considerably from geometric brownian motion asian option prices

which countries protect intellectual property the case of software piracy david g steel using data on software piracy we examine how protection of intellectual property varies across countries consistent with other studies we find that intellectual property receives greater protection in developed economies high income countries have lower piracy rates we also find that protection depends on cultural factors countries with an individualist culture have lower piracy rates than do countries with a collectivist culture piracy rates are also lower in countries that have strong institutions that enforce contracts and protect property from expropriation these results suggest that national policies toward intellectual property reflect not only economic concerns but also national culture and institutions jel 034 l86 i introduction intellectual property rights are a recurring focus of international negotiation developed nations argue that such rights are essential for promoting innovation and economic growth many developing nations on the other hand argue that intellectual property rights inhibit economic development by restricting use of existing knowledge a generation of theoretical research has demonstrated that there is truth in both arguments depending on circumstances individual countries may reasonably favor different levels of protection for intellectual property 1 surprisingly little is known however about how such protection is actually determined only a handful of previous studies have analyzed cross national variation in intellectual property rights 2 these studies relate patent rights as formalized in the laws of individual countries to a range of social and economic variables the main empirical finding is that developed countries provide stronger patent protection in this article we extend this line of research by examining cross national variation in piracy of computer software the business software alliance and the software publishers association 1998 have estimated piracy rates the ratio of illegally copied units to total units for business software in more than 70 countries for 1994 97 these rates vary substantially in some countries essentially all new software was pirated in other countries less than 40 of software was pirated what explains these differences consistent with previous studies we find that developed countries provide greater protection for intellectual property than do developing countries high income countries tend to have lower piracy rates this is true both in a simple comparison of piracy rates with per capita income and to a lesser extent in regressions that control for other factors as we discuss below the causal interpretation of this correlation is not obvious the correlation is consistent with the hypothesis that intellectual property rights promote economic development however it may also reflect reverse causality e g if developing nations offer less protection so that they can use the intellectual property of developed nations or common causation by other factors many commentators have suggested that culture may also explain differences in piracy rates western countries they argue have individualist cultures that naturally embrace individual ownership of intellectual property whereas many non western countries have collective cultures that emphasize sharing over individual ownership as a result these societies have been reluctant to adopt western conceptions of intellectual property rights to test whether differences in culture lead to differences in intellectual property rights we relate piracy rates to an index of individualism and collectivism developed by hofstede 1980 1983 we find strong evidence that culture matters 3 countries with a tradition of individualism pirate much less than do countries with a tradition of collectivism this is true both in simple comparisons of piracy rates with individualism and in regressions that control for other factors

a space time random field model for electricity forward prices abstract stochastic models for forward electricity prices are of great relevance nowadays given the major structural changes in the market due to the increase of renewable energy in the production mix in this study we derive a spatio temporal dynamical model based on the heath jarrow morton hjm approach under the musiela parametrization which ensures an arbitrage free model for electricity forward prices the model is fitted to a unique data set of historical price forward curves as a particular feature of the model we disentangle the temporal from spatial maturity effects on the dynamics of forward prices and shed light on the statistical properties of risk premia of the noise volatility term structure and of the spatio temporal noise correlation structures we find that the short term risk premia oscillates around zero but becomes negative in the long run we identify the samuelson effect in the volatility term structure and volatility bumps explained by market fundamentals furthermore we find evidence for coloured noise and correlated residuals which we model by a hilbert space valued normal inverse gaussian levy process with a suitable covariance functional

parametric model risk and power plant valuation abstract the fact that model and parameter risk are important sources of uncertainty in option pricing models and for risk management procedures has recently been recognised for financial markets see cont 2006 morini 2011 bannor and scherer 2013 in the context of energy markets investment decisions are often based on the valuation of fossil power plants as real options depending on various underlying processes such as the power carbon emission certificate and gas price to capture parametric model risk inherent in the valuation procedure of fossil power plants we use a methodology recently established in bannor and scherer 2013 as gas fired power plants are seen as flexible and low carbon sources of electricity which are important building blocks in terms of the switch to a low carbon energy generation we consider the model risk in this asset class in detail our findings reveal that spike risk is by far the most important source of parametric model risk

copying and indirect appropriability photocopying of journals creators and owners of intellectual properties are alarmed by the growth of technologies that ease the tasks of copying these properties this paper however shows that the unauthorized copying of intellectual properties need not be harmful and actually may be beneficial the empirical impact of photocopying on publishers of journals is examined in an attempt to discover if publishers can indirectly appropriate revenues from users who are not original purchasers the evidence indicates that publishers can indirectly appropriate revenues from users who do not directly purchase journals and that photocopying has not harmed journal publishers 18 references 1 table

managing the financial risks of electricity producers using options abstract electricity producers participating in electricity markets face risks pertaining to both selling prices and the availability of the production units among electricity derivatives options represent an adequate instrument to manage these risks in this paper we propose a multi stage stochastic model to determine the optimal selling strategy of a risk averse electricity producer including options forward contracts and pool trading a detailed case study highlights the advantages of an option vs a forward contract to hedge against the financial risks related to pool prices and unexpected unit failures

selective hedging in hydro based electricity companies abstract we analyze risk management trends in electricity commodity markets using the production and transaction data and written hedging policies of 12 norwegian hydropower companies the scope of our analysis is the hedging of physical electricity production using the power derivatives available at nasdaq omx commodities in their hedging policy these companies either use a cashflow at risk c far approach or a hedge ratio approach or follow no explicitly stated approach we find that the derivative cashflows constitute substantial profits for these companies furthermore hedging contributes to reducing the c far for 10 of the companies these findings are surprising considering that we expect hedging to yield zero expected profit and to smooth the earnings overall our findings reveal that a practice of incorporating market views in hedging decisions is widespread in the sample companies as both sanctioned in their written hedging policy and as indicated by the substantial hedging profits

court decisions and equity markets estimating the value of copyright protection abstract we construct a database of u s federal court decisions pertaining to copyright and changes in federal statutory copyright law and use this database to assemble indices measuring changes in the breadth of copyright protection we combine our indices with information on excess returns to equity from a quarterly panel of firms and estimate how the breadth of copyright affects the market valuation of firm equity a typical statute that increases copyright breadth generates an increase in a firm s excess return to equity of 40 209 basis points depending on the exact time frame the size of the firm and the importance of the change in statutory law a typical high court decision expanding copyright generates a 13 105 basis point increase in excess returns our results are robust across 4 5 year subsamples and the size distribution of firms our statutory findings are strongest in the most recent portion of the sample

social norms and emission tax multiple equilibria in adopting pollution abatement device the effect of social norm is addressed in an adoption game where an emission tax is used to motivate oligopolistic firms to adopt a pollution abatement device we ask if the intrinsic motivation from social norm alone can motivate firms to participate in adoption the multiple equilibria in the adoption game indicates two possibilities this intrinsic motivation may or may not enhance adoption the existing literature on equilibrium selection further suggests that the most likely outcome is that it cannot enhance adoption next by keeping the assumption of symmetry we show that if cooperation is an option for firms then the presence of two coordination effects social norm on adoption and cooperation benefits on output will result in the existence of asymmetric adoptions

economic benefits and costs of biotechnology innovations in agriculture the conceptual model necessary for an assessment of biotechnology s economic benefits and costs is outlined emphasizing the need to account for the proprietary nature of biotechnology innovations the model is illustrated with an application to roundup ready soybeans the estimated value of this innovation is sizeable with consumers and innovators claiming the larger share of net benefits also disparities in intellectual property rights protection across countries affect the distribution of benefits consumer resistance toward genetically modified organisms gmos and the issues of labeling and market segregation complicate the economic evaluation of biotechnology innovations and a number of related regulation and public policy issues are discussed emerging output trait gmos are potentially less controversial and ma y bring more benefits to all participants in the agri food sector but this outcome depends crucially on the development of an effective credible and internationally harmonized regulatory system

sustainable energy systems role of optimization modeling techniques in power generation and supply a review electricity is conceivably the most multipurpose energy carrier in modern global economy and therefore primarily linked to human and economic development energy sector reform is critical to sustainable energy development and includes reviewing and reforming subsidies establishing credible regulatory frameworks developing policy environments through regulatory interventions and creating market based approaches energy security has recently become an important policy driver and privatization of the electricity sector has secured energy supply and provided cheaper energy services in some countries in the short term but has led to contrary effects elsewhere due to increasing competition resulting in deferred investments in plant and infrastructure due to longer term uncertainties on the other hand global dependence on fossil fuels has led to the release of over 1100 gtco2 into the atmosphere since the mid 19th century currently energy related ghg emissions mainly from fossil fuel combustion for heat supply electricity generation and transport account for around 70 of total emissions including carbon dioxide methane and some traces of nitrous oxide this multitude of aspects play a role in societal debate in comparing electricity generating and supply options such as cost ghg emissions radiological and toxicological exposure occupational health and safety employment domestic energy security and social impressions energy systems engineering provides a methodological scientific framework to arrive at realistic integrated solutions to complex energy problems by adopting a holistic systems based approach especially at decision making and planning stage modeling and optimization found widespread applications in the study of physical and chemical systems production planning and scheduling systems location and transportation problems resource allocation in financial systems and engineering design this article reviews the literature on power and supply sector developments and analyzes the role of modeling and optimization in this sector as well as the future prospective of optimization modeling as a tool for sustainable energy systems

how broad should the scope of patent protection be i explore the trade off between a patent s length that is its lifetime and its width that is its scope of coverage a wider patent generally reduces the distortion of consumers choices between the patented brand of the product and unpatented lower priced varieties sold by competitors but also permits higher prices which increase relative to profits the deadweight losses from consumers switching consumption out of the product class i show under what conditions infinitely lived but very narrowly focused patents are the socially efficient way to reward innovation and under what conditions very short lived but very broad patents are optimal

measuring the impact of market coupling on the italian electricity market abstract this paper evaluates the impact on the italian electricity market of replacing the current explicit auction mechanism with market coupling maximising the use of the cross border interconnection capacity market coupling increases the level of market integration and facilitates the access to low cost generation by consumers located in high cost generation countries thus it is expected that a high priced area such as italy could greatly benefit from the introduction of this mechanism in this paper the welfare benefits are estimated for 2012 under alternative market scenarios employing the optimal dispatch model elfo the results of the simulations suggest that the improvement in social surplus is likely to be significant especially when market fundamentals are tight

effective tax rates and guarantees in the afdc program 1967 1982 estimates of effective tax rates on earned and unearned income and estimates of effective guarantees in the afdc program by state are provided for the period 1967 1982 the results indicate that effective real guarantees fell every year from 1967 to 1981 but stabilized in 1982 effective tax rates on unearned income rose steadily from 1967 to 1981 and took a particularly large additional jump in 1982 effective tax rates on earned income fell after 1967 but then gradually rose throughout the 1970s until 1982 when they took a much larger jump thus guarantees fell and tax rates rose over the 1970s as tight budgets forced states to restrict benefits and in the early 1980s tax rates were pushed even higher by federal legislation

an assessment of the danish german cross border auctions abstract this paper presents an analysis of the auction prices at the cross border auction between west denmark and germany and between east denmark and germany the kontek cable monthly and annual transmission capacities appear to be more highly valued than daily transmission capacity on average the two cross border auctions show different trends the auctions between west denmark and germany exhibit a higher level of prices in the southbound direction and between east denmark and germany higher prices in the northbound direction we find a relatively strong correspondence in the pricing of products over different time frames daily monthly and annual auctions between west denmark and germany and a weak correspondence for the products between east denmark and germany in the daily auctions market players can decide whether to use their capacity after the clearing of the day ahead market while in the monthly and annual auctions they must decide whether to use their capacity prior to clearing if they choose not to use their capacity the use it or lose it principle applies the capacity is then subsequently released to the daily market since the daily cross border auctions are free of commitment they should be valued as options likewise in the monthly and annual auctions market players can choose not to nominate their capacity but as this must occur before the clearing of the day ahead market they will not know the directions of the power flows a priori if they nominate the capacity they must use it if the direction turns out to be wrong it is then possible to purchase capacity in the opposite direction in the daily auctions if market players can accurately predict the outcome of the spot markets day ahead the value of monthly and annual capacity should more closely reflect the value of an option thus one would expect the value of the monthly and annual capacity to be between the value of an option and an obligation although this suggests that the average price of daily capacity should be greater than monthly and annual capacity our data do not support this hypothesis the daily monthly and annual capacity auctions do not reflect the value of the underlying asset as specified by the appropriate valuation of the energy price differentials between west denmark and germany and east denmark and germany therefore market players are exposed to substantial variation in fees for congestion management on the cross border we study whether arbitrage improves over time and discern no obvious trend since the explicit auction procedure has not been cost efficient a better approach appears to be the new market coupling arrangement introduced on the kontek cable and on the border between west denmark and germany with the result that market players will pay a congestion management fee i e area price difference equal to the energy price differential resulting from the market coupling mechanism

time zero efficiency of european power derivatives markets abstract we study time zero efficiency of electricity derivatives markets by time zero efficiency is meant a sequence of prices of derivatives contracts having the same underlying asset but different times to maturity which implies that prices comply with a set of efficiency conditions that prevent profitable time zero arbitrage opportunities we investigate whether statistical tests based on the law of one price and trading rules based on price differentials and no arbitrage violations are useful for assessing time zero efficiency we apply tests and trading rules to daily data of three european power markets germany france and spain in the case of the german market after considering liquidity availability and transaction costs results are not inconsistent with time zero efficiency however in the case of the french and spanish markets limitations in liquidity and representativeness are challenges that prevent definite conclusions liquidity in french and spanish markets should improve by using pricing and marketing incentives these incentives should attract more participants into the electricity derivatives exchanges and should encourage them to settle otc trades in clearinghouses publication of statistics on prices volumes and open interest per type of participant should be promoted

volatility and price jumps in agricultural futures prices evidence from wheat options revised version published in american journal of agricultural economics vol 86 number 4 november 2004 1018 1031

pricing of contracts for difference in the nordic market abstract the purpose of this paper is to give an introduction to and a pricing analysis of a new forward locational price differential product contracts for difference cfd introduced the 17th of november 2000 at nord pool the nordic electricity exchange to our knowledge there is no literature available of how the nordic cfds are priced the cfd is a forward market product with reference to the difference between the future seasonal area price and system price by using available historical trading prices and spot prices for four seasonal contracts and one yearly contract we analyze the relationships between the contract prices and the value of the underlying asset for the first four seasonal contracts it appears that cfds traded at nord pool are mostly over priced relative to the underlying asset pricing theory for forward contracts explains this by the presence of a majority of risk averse consumers who are willing to pay a risk premium for receiving the future price differential we utilize statistical analysis with regard to the contract prices and the underlying asset and find some interesting relationships the analysis is preliminary due to the fact that the cfd market is relatively new

entrepreneurs and new ideas we study how early stage new ideas are turned into successful businesses even promising ideas can be unprofitable if they fail on one dimension such as technical feasibility correspondence to market demand legality or patentability to screen good ideas the entrepreneur needs to hire experts who evaluate the idea along their dimensions of expertise sharing the idea however creates the risk that the expert would steal it yet the idea thief cannot contact any other expert lest he should in turn steal the idea thus stealing leads to incomplete screening and is unattractive if the information of the other expert is critical and highly complementary in such cases the entrepreneur can form a partnership with the experts thus granting them the advantage of accessing each other s information yet very valuable ideas cannot be shared because it is too tempting to steal them

constructing forward price curves in electricity markets we present and analyze a method for constructing approximated high resolution forward price curves in electricity markets because a limited number of forward or futures contracts are traded in the market only a limited picture of the theoretical continuous forward price curve is available to the analyst our method combines the information contained in observed bid and ask prices with information from the forecasts generated by bottom up models as an example we use information concerning the shape of the seasonal variation from a bottom up model to improve the forward price curve quoted on the nordic power exchange

why and how to regulate power exchanges in the eu market integration context abstract the european union eu market integration is leading to increasingly monopolistic electricity market infrastructures which has opened a debate on the regulation of these so called power exchanges in this paper we start by stating that there are two types of power exchanges in europe i e merchant and cost of service regulated power exchanges we then discuss how regulation can be used to better align their incentives with the main power exchange tasks we conclude that adopting the cost of service regulated model for all power exchanges in europe could be counterproductive in the current context but that regulation can help ensure that the benefits of the eu market integration materialize promising regulatory actions include tempering the reinforced market power of power exchanges and quality of service regulation for the ongoing cooperation among power exchanges to organize trade across borders

the moral legitimacy of intellectual property claims american business and developing country perspectives private property forms the bedrock of the business society relationship in a market economy in one way or another most societies limitwhat people can claim as property as well as theextent of claims they can make regarding it in the international arena today intellectual property rights are a focal point of debate many developing countries do not recognize the monopoly claims of patents and copyrights asserted by business as legitimate this paper reviews contemporary areas of dispute and then presents the tasks facing the construction of a fair intellectual property rights regime

intellectual property rights in china the changing political economy of chinese american interests we review the evolution of modern chinese intellectual property right ipr laws and enforcement and explore economic and political forces involved in international conflicts over chinese ipr protection our analysis considers why the us and china moved from conflict to cooperation over intellectual property rights structural and institutional aspects of the political economy of iprs within each country are considered and data on chinese us trade in intellectual property intensive goods are examined we conclude that although enforcement of iprs within china continues to be relatively weak chinese ipr institutions are converging on those in the oecd nations

implicit auctioning on the kontek cable third time lucky implicit auctioning in europe is about eliminating cross border trade inefficiencies by internalizing crossborder trade into the day ahead auction procedures of the power exchanges that are already organizing trade nationally on the kontek cable implicit auctioning has first been implemented with no coupling between the relevant power exchanges followed by a volume coupling implementation and finally a one way price coupling implementation that is still operational today the main contribution of this paper is to compare the theoretical properties of these three implementations and to analyze their performance empirically we find that the third implementation is significantly outperforming the previous two implementations but in this third implementation stakeholders partly abandoned the volume coupling approach they initially believed to be a viable alternative and institutionally easier to implement

an agent based approach with collaboration among agents estimation of wholesale electricity price on pjm and artificial data generated by a mean reverting model abstract this study examines the performance of mais multi agent intelligent simulator equipped with various learning capabilities in addition to the learning capabilities the proposed mais incorporates collaboration among agents the proposed mais is applied to estimate a dynamic change of wholesale electricity price in pjm pennsylvania new jersey mainland and an artificial data set generated by a mean reverting model using such different types of data sets the methodological validity of mais is confirmed by comparing it with other well known alternatives in computer science this study finds that the mais needs to incorporate both the mean reverting model and the collaboration behavior among agents in order to enhance its estimation capability the mais discussed in this study will provide research on energy economics with a new numerical capability that can investigate a dynamic change of not only wholesale electricity price but also speculation and learning process of traders

south north trade intellectual property jurisdictions and freedom to operate in agricultural research on staple crops international food policy research institute washington d c center for the application of molecular biology to international agriculture canberra university of california berkeley the authors are listed alphabetically philip pardey is a senior research fellow and patricia zambrano a senior research assistant at the international food policy research institute carol nottenburg is director of intellectual property at the center for the application of molecular biology to international agriculture and brian wright is a professor and eran binenbaum a ph d student in the department of agricultural and resource economics university of california berkeley stephen stohs bonwoo koo and yuan liang provided excellent research assistance and agapi somwaru usda ers collaborated with us in compiling the trade data richard jefferson provided invaluable comments on earlier drafts research for this paper was made possible in part by a grant from the swedish international development agency sida

location taxation and governments an exchange theory of intellectual property abstract the standard economic model of intellectual property is an efficient property rights solution to a market failure problem of investment in a non rival and non excludable good we propose an exchange theory of intellectual property based on a contracting approach in the context of market making and enforcement of economic rights in exchange for monopoly taxation rights we use a hotelling 1929 type spatial model to show the relationship between location and pricing decisions of innovating firms under differing intellectual property institutional quality and taxation regimes

how much should we pay for interconnecting electricity markets a real options approach abstract an interconnector is an asset that gives the owner the option to transmit electricity between two locations in financial terms the value of an interconnector is the same as a strip of real options written on the spread between power prices in two markets we model the spread based on a seasonal trend mean reverting gaussian process and mean reverting jump process and express the value of these real options in closed form the valuation tool is applied to five pairs of european neighboring markets to value a hypothetical one year lease of the interconnector using different assumptions about the seasonal component of the spread and different liquidity caps which proxy for the depth of the interconnected power markets we derive no arbitrage lower bounds for the value of the interconnector in terms of electricity futures contract and find that depending on the depth of the market the jumps in the spread can account for between 1 and 40 of the total value of the interconnector the two markets where an interconnector would be most resp least valuable are germany and the netherlands resp france and germany finally we provide rules of thumb to interpret the different interconnector values

how valuable are the patents behind section 337 cases a us patent protects the owner of the intellectual property from imitators producing in the us and foreign imitators selling in the us market there are two venues for filing infringement cases against international infringement of us patents with the international trade commission itc using section 337 of the tariff act of 1930 or with federal district courts three indicators of patent value suggest that patents litigated under section 337 are on average more valuable however their values tend to be more variable the latter suggests that some firms may be using section 337 not for protection against international infringement of us patents but for protection against imports

the dynamics of welfare fraud an econometric duration model in discrete time an important source of errors in transfer payments programs is the fraudulent misreporting of earnings received by recipients we propose a model of the recipient s decision to report income and the expected penalties if caught engaging in fraud we discuss several features of the detection and penalty structures in the afdc and food stamps programs and present estimates of a model of the duration of fraudulent earnings misreporting episodes we find that recipients respond to increases in the returns to fraud by lengthening their episodes of misreporting however the level of fraudulent activity at any given time is rather low

strips of hourly power options approximate hedging using average based forward contracts we study approximate hedging strategies for a contingent claim consisting of a strip of independent hourly power options the payoff of the contingent claim is a sum of the contributing hourly pa