the globalization of steam coal markets and the role of logistics an empirical analysis abstract in this paper we provide a comprehensive multivariate cointegration analysis of three parts of the steam coal value chain export transport and import prices the analysis is based on a rich dataset of international coal prices in particular we combine data on steam coal prices with freight rates covering the period december 2001 until august 2009 at weekly frequency we then test whether the demand and supply side components of steam coal trade are consistently integrated with one another in addition export and import prices as well as freight rates for individual trading routes across regions and globally are combined we find evidence of significant yet incomplete integration we also find heterogeneous short term dynamics of individual markets furthermore we examine whether logistics enter coal price dynamics through transportation costs which are mainly determined by oil prices our results suggest that this is generally not the case

natural resource prices will they ever turn up abstract natural resource theory predicts that natural resource rents should increase over time however technical progress in resource extraction environmental constraints or great natural abundance could result in stagnant or declining product prices thus there is no theoretical reason to believe that product prices will rise in the near future the prediction of product prices by time series methods is shown to depend critically upon whether the series are modeled as difference or trend stationary dickey fuller and lagrange multiplier tests are used to show that the series are difference stationary long and short sample series are tested trend stationary modeling strongly predicts rising resource prices the result from difference stationary modeling is that there is only a weak supposition that natural resource prices will rise

equivalence of auctions and posted prices abstract we determine the equilibrium in two transaction mechanisms auctions and posted prices agents choose whether to participate in markets where trades are consummated by auctions or in markets where sellers post prices we show that the selling mechanisms are practically equivalent previous studies have shown that auction markets emerge as a unique evolutionary stable equilibrium when compared to bargaining markets posted price markets dominate bargaining markets similarly journal of economic literature classification numbers c78 c73 d44

oil and gas markets in the uk evidence from a cointegrating approach the paper examines the relationship between uk wholesale gas prices and the brent oil price over the period 1996 2003 in order to investigate whether oil and gas prices decoupled during this period as orthodox gas market liberalisation theory suggests tests for unit roots and cointegration are carried out and it is discovered that a long run equilibrium relationship between uk gas and oil prices exists moreover this relationship pre dates the opening of the uk mainland europe interconnector following a recursive methodology hansen h and johansen s 1999 some tests for parameter constancy in cointegrated var models econometrics journal 2 306 333 it was found that the cointegrating relationship is present throughout the sample period however the long run solutions seem to be more volatile evidence is provided that the short run relationship is linear and impulse response functions are used to examine the effects that a shock in oil would have on gas these findings do not support the assumption that gas prices and oil prices decouple

auctions with a stochastic number of bidders abstract auction theory is generalized by allowing the number of bidders to be stochastic in a first price sealed bid auction with bidders having constant absolute risk aversion the expected selling price is higher when the bidders do not know how many other bidders there are than when they do know this thus the seller should conceal the number of bidders if he can moreover a bidder s ex ante expected utility is the same whether or not there is a policy of concealing the number of bidders concealment therefore pareto dominates announcement with risk neutral bidders the optimal auction is the same whether or not the bidders know who their competitors are

testing for common features in north american energy markets abstract using recent advances in the field of applied econometrics we explore the strength of shared trends and shared cycles between north american natural gas and crude oil markets in doing so we use daily data from january 1991 to april 2001 on spot u s henry hub natural gas and wti crude oil prices the results show that there has been decoupling of the prices of these two sources of energy as a result of oil and gas deregulation in the united states we also investigate the interconnectedness of north american natural gas markets and find that north american natural gas prices are largely defined by the u s henry hub price trends

optimal auctioning and ordering in an infinite horizon inventory pricing system we consider a joint inventory pricing problem in which buyers act strategically and bid for units of a firm s product over an infinite horizon the number of bidders in each period as well as the individual bidders valuations are random but stationary over time there is a holding cost for inventory and a unit cost for ordering more stock from an outside supplier backordering is not allowed the firm must decide how to conduct its auctions and how to replenish its stock over time to maximize its profits we show that the optimal auction and replenishment policy for this problem is quite simple consisting of running a standard first price or second price auction with a fixed reserve price in each period and following an order up to basestock policy for replenishing inventory at the end of each period moreover the optimal basestock level can be easily computed we then compare this optimal basestock reserve price auction policy to a traditional basestock list price policy we prove that in the limiting case of one buyer per period and in the limiting case of a large number of buyers per period and linear holding cost list pricing is optimal list pricing also becomes optimal as the holding cost tends to zero numerical comparisons confirm these theoretical results and show that auctions provide significant benefits when 1 the number of buyers is moderate 2 holding costs are high or 3 there is high variability in the number of buyers per period

simultaneous use of auctions and posted prices abstract i consider a model in which several identical objects are sold simultaneously via an auction and a posted price mechanism the model explains several empirical regularities regarding bidding behavior in ebay auctions such as the finding that some bidders bid multiple times over the course of the auction and that bidders tend to bid with greater frequency near the end of the auction than the beginning i also show that sellers prefer to simultaneously use auctions and posted prices than to use either mechanism individually

optimal dynamic auctions for revenue management we analyze a dynamic auction in which a seller withc units to sell faces a sequence of buyers separated intot time periods each group of buyers has independent private values for a single unit buyers compete directly against each other within a period as in a traditional auction and indirectly with buyers in other periods through the opportunity cost of capacity assessed by the seller the number of buyers in each period as well as the individual buyers valuations are random the model is a variation of the traditional single leg multiperiod revenue management problem in which consumers act strategically and bid for units of a fixed capacity over time for this setting we prove that dynamic variants of the first price and second price auction mechanisms maximize the seller s expected revenue we also show explicitly how to compute and implement these optimal auctions the optimal auctions are then compared to a traditional revenue management mechanism in which list prices are used in each period together with capacity controls and to a simple auction heuristic that consists of allocating units to each period and running a sequence of standard multiunit auctions with fixed reserve prices in each period the traditional revenue management mechanism is proven to be optimal in the limiting cases when there is at most one buyer per period when capacity is not constraining and asymptotically when the number of buyers and the capacity increases the optimal auction significantly outperforms both suboptimal mechanisms when there are a moderate number of periods capacity is constrained and the total volume of sales is not too large the benefit also increases when variability in the dispersion in buyers valuations or in the number of buyers per period increases

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

how do selling mechanisms affect profits surplus capacity and prices with unknown demand i analyze a model in which a seller wishes to sell multiple homogeneous goods to a large group of buyers with unknown demand the seller may either sell objects via a posted price mechanism a discriminatory price auction a uniform price auction their open bid analogs or a revelation mechanism in which the seller first asks all potential buyers to report their valuations and then sets a reserve price i show that the revelation mechanism leads to the greatest profits the auction mechanisms result in identical expected profits and the posted price mechanism results in the smallest profits however the more profitable mechanisms impose stronger informational requirements that may make these mechanisms infeasible in practice and the posted price mechanism also results in the greatest total surplus i also find the seller chooses a lower capacity and reserve price in an auction than in the posted price mechanism

home field advantage location decisions of portuguese entrepreneurs an investor s home bias in industrial location decisions may stem from personal factors social capital other non transferable assets and imperfect information about the urban and regional environment this paper explores the distinction between home base and non home location decisions in portugal we reach two important conclusions first the introduction of a variable accounting for prior base of economic activity significantly improves the statistical results second we find that the weighting of distinct location attributes differs between home and non home locations notably non home location choices are strongly governed by agglomeration economies and proximity to major urban centers possibly replicating prior location decisions to economize on search costs the results also enable us to quantify the investor s willingness to opt for a possible home field advantage for example entrepreneurs accept over three times higher labor costs to compete in their resident area of business 2002 elsevier science usa all rights reserved

auctions an introduction abstract this is a detailed introduction to auction theory it begins with a simple analysis of standard auctions and then uses a strikingly simple general solution of symmetric private values auctions to prove the payoff equivalence of many auction rules the basic framework is then modified to admit risk aversion multi unit and repeated auctions as well as collusion then follows an introduction to optimal auctions with and without stochastic entry and to common value auctions and the winner s curse problem the survey closes with a sample of applications from the regulation of natural monopolies to price competition in oligopoly and the government securities market

the evolutionary stability of auctions over bargaining this paper considers equilibrium in transaction mechanisms in an environment with homogeneous buyers and sellers which eliminates the advantage auctions possess of matching buyers and sellers both auctions and bargaining are equilibria however only auctions are evolutionarily stable this identifies a new advantage of auctions over bargaining arising from the division of the gains from trade journal of economic literatureclassification numbers c78 c73 d44

auctions versus posted price selling two popular selling methods posted price selling and auctions are compared here in an independent private values model without auctioning costs auctioning is always optimal when auctioning is costly auctions are still preferable if the marginal revenue curve is sufficiently steep the global steepness of the marginal revenue curve is found to coincide with the dispersion around the mean for a number of standard distributions finally the prices of the monopoly seller and of the social optimum are compared copyright 1993 by american economic association

trends in natural resource commodity prices deterministic or stochastic abstract the type of trend be it stochastic or deterministic exhibited by the price of a resource commodity should play a critical role in the development and empirical verification of theories which may explain its long run behavior the nature of the trend however can only be discerned through empirical testing to this end we present a menu of unit root testing procedures for characterizing observed trends in any economic time series including natural resource commodity prices we examine the prices of 11 resource commodities the evidence suggests that five price series exhibit stochastic trends while the remaining six price series appear to be stationary around a deterministic trend

selecting optimal selling format of a product in b2c online auctions with boundedly rational customers abstract the advancement of internet technology has enabled new formats for selling products in the b2c online auctions at present on the major online auction sites there exist three popular selling formats namely the posted price pure auction and buy price auction formats it is an important decision problem for a firm to select the most profitable format to sell its products through the internet the customer behavior is of course a crucial element of the decision process to the best of our knowledge most models available today assume that customers are perfectly rational to better understand the decision process in this paper we incorporate the concept of bounded rationality into consideration we first present a behavior choice function to characterize the behavior of the customers with bounded rationality then corresponding to each selling format we construct a revenue model based on the bounded rationality for analysis finally we conduct some elaborate computational experiments to investigate the performance of each revenue model for developing new managerial insights our computational results clearly demonstrate how the bounded rationality of customer behavior affects the choice of a preferable selling format for a b2c firm in an online auction

auction theory with private values for many centuries auctions have been a common form of selling procedure although auction methods vary across country and product the two most frequently observed are the open ascending bid or english auction and the sealed bid auction recent theoretical research has led to a theory of equilibrium bidding in these two auctions and a wide range of alternatives as well as a result it has been possible to compare the revenue extracted by the seller under different auction methods and even to characterize the revenue maximizing auction the revenue equivalence theorem see for example william vickrey 1961 roger myerson 1981 and riley and william samuelson 1981 asserts that when each bidder s reservation price for a unit of an indivisible good is an independent draw from the same distribution and bidders are risk neutral the sealed bid auction generates the same expected revenue as the open auction much recent research has involved weakening each of the main hypotheses risk neutrality identically distributed values and independence of values in turn we shall illustrate some of the principal conclusions of this work by considering the properties of open and sealed bid auctions in a model of two bidders whose reservation prices can assume only two values and by comparing these auctions to the optimal or revenuemaximizing auction i revenue equivalence

dual mechanism for an online retailer abstract while posted price and auction have typically been seen as alternatives to each other we observe web stores selling a product at a posted price and simultaneously running auctions for the identical product a phenomenon that has not been studied fully in this article we study a dual mechanism where an online retailer combines the two conventional mechanisms posted price and auction for multiple units of a product we demonstrate that the dual mechanism can be used to achieve market segmentation when customers discount the expected utility of auctions we characterize the customer s decision rule and formulate a retailer s profit function under the dual mechanism finally we compare the performance of three selling mechanisms posted price auction and dual through computational experiments

demand effects and speculation in oil markets theory and evidence abstract we present evidence showing the existence of stable cointegrating vectors connecting four important variables in the u s and global oil markets oil production stocks of crude oil the real price of oil and broad measures of income our data are monthly and go back to the 1930s split into sub samples which correspond to periods before and after the 1973 crisis we further show that the cointegrating vectors found in the data accord well with an extended commodity storage model which allows for demand growth dynamics and for supply regimes specifically inventories and price move in opposite directions when supply is flexible but the relationship reverses so that they comove when supply is inflexible

grade selection under uncertainty least cost last and other anomalies abstract grade selection rules for heterogeneous resource deposits with increasing marginal extraction costs are derived it is shown that contrary to the conventional wisdom it can be optimal to extract the least cost deposits last there are a number of rules that are compatible with dynamic profit maximization under certainty nevertheless none explains empirical regularities in actual extraction patterns when uncertainty about future price is introduced however the theoretical model conforms closely not only to observed grade selection patterns but also to observed mineral industry price paths

vertical versus horizontal tax externalities an empirical test abstract we study taxation externalities in federations of benevolent governments where different hierarchical government levels tax the same base one can observe two types of externalities a horizontal externality working among governments of the same level and leading to tax rates that are too low compared to the social optimum and a vertical externality working between different levels of government and leading to suboptimally high tax rates building on the model of keen and kotsogiannis keen michael j kotsogiannis christos 2002 does federalism lead to excessively high taxes american economic review 92 1 363 370 we derive a discriminating hypothesis to distinguish vertical and horizontal tax externalities based on measurable variables this test is applied to a panel data set on local taxes in a sample of swiss municipalities that feature direct democratic fiscal decision making so as to maximize the correspondence with the benevolent governments of the theory we find that vertical externalities dominate they are thus an observed empirical phenomenon as well as a notable extension to the theory of tax competition

buy price english auction abstract consider an english auction for a single object in which there is an option for a bidder to guarantee a purchase at a seller specified buy price b at any time we show that there exist v and v v such that a bidder purchases at the buy price immediately if his valuation v is no less than v or v v v and at least one other bidder is participating in the auction if b v v he purchases at the buy price once the current bid reaches a strategically chosen threshold price a properly set buy price increases expected social welfare and the expected utility of each agent when either buyers or seller are risk averse

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices

assessing the effects of local taxation using microgeographic data we study the impact of local taxation on the location and growth of firms our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation our approach improves on existing work as it corrects for unobserved establishment heterogeneity for unobserved time varying site specific effects and for the endogeneity of local taxation applied to data for english manufacturing establishments we find that local taxation has a negative impact on employment growth but no effect on entry

market size and tax competition abstract with international externalities different country sizes imperfect competition and trade costs tax competition for mobile firms is efficiency enhancing with respect to the free market outcome under both scenarios the resulting inefficiencies in international specialization and trade flows vanish when trade costs are low enough otherwise only international tax coordination can implement the efficient spatial distribution of firms

do agglomeration economies reduce the sensitivity of firm location to tax differentials recent theoretical work in economic geography has shown that agglomeration forces can mitigate race to the bottom tax competition by partly or fully offsetting firms sensitivity to tax differentials we test this proposition using data on firm births across swiss municipalities we find that corporate taxes deter firm births less in more spatially concentrated sectors firms in sectors with an agglomeration intensity in the top quintile are less than half as responsive to differences in corporate tax burdens as firms in sectors with an agglomeration intensity in the bottom quintile hence agglomeration economies do appear to attenuate the impact of tax differentials on firms location choices

selecting a selling institution auctions versus sequential search we consider the seller s choice between sequential search and an auction when selling n homogeneous units of a good in the presence of informational asymmetries discounting and transaction costs our analysis shows that the expected return per unit from sequential selling decreases in n the number of units being sold for the auction with suitable restrictions the expected return per unit increases in n thus sequential search is the preferred institution if n is small whereas the auction is preferred if n is large historical details of the evolution of livestock markets closely fit our theoretical results

competing trade mechanisms and monotone mechanism choice abstract we investigate the choice between posted prices and auctions of competing sellers with private valuations assuming that buyers face higher hassle costs in auctions we show the existence of monotone pure strategy equilibria where sellers offer posted prices rather than auctions if and only if they have a sufficiently high reservation value posted prices sell with lower probability but yield a larger revenue in case of trade using an empirical strategy to compare revenues of posted prices and auctions that takes selling probabilities explicitly into account we find our theoretical predictions supported by data from ebay auctions on ticket sales for the euro 2008 european football championship

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

competitive storage and commodity price dynamics by buying cheap and selling dear risk neutral commodity speculators can smooth commodity prices and induce serial dependence in price even when none would exist under a simple process of supply and demand commodity prices are variable and strongly positively correlated from one year to the next the variability is often explained by supply factors and the autocorrelation by the activities of speculators we show that this explanation is not consistent with the evidence speculation can substantially increase autocorrelation for prices that are weakly autocorrelated in its absence but not to the high levels that are observed in the data

the location choices of foreign investors a district level analysis in india this paper analyzes the determinants of the location choices made by foreign investors at the district level in india to gauge the relative importance of economic geography factors local business conditions and the presence of previous foreign investors we employ a discretechoice model and poisson regressions to control for the potential violation of the assumption of independence of irrelevant alternatives our sample includes about 19 500 foreign investment projects approved in 447 districts from 1991 2005 we find that foreign investors strongly prefer locations where other foreign investors are they are also attracted to industrially diverse locations and those with better infrastructure we conclude that the concentration of fdi in a few locations could fuel regional divergence in post reform india

stationarity changes in long run energy commodity prices abstract situated at the intersection of the literatures on speculative storage and non renewable commodity scarcity this paper considers whether changes in persistence have occurred in long run u s prices of the energy commodities crude oil natural gas and bituminous coal we allow for a structural break when testing for a break in persistence to avoid a change in the stochastic properties of prices being confounded by an unaccounted for deterministic shift in the price series we find that coal prices are trend stationary throughout their evolution and that oil prices change from stationarity to non stationarity in the decade between the late 1960s to late 1970s the result on gas prices is ambiguous our results demonstrate the importance of accounting for a possible structural shift when testing for breaks in persistence while being robust to the exact date of the structural break based on our analysis we caution against viewing long run energy commodity prices as being non stationary and conclude in favor of modeling commodity market fundamentals as stationary meaning that speculative storage will tend to have a dampening effect on prices we also cannot reject that long run prices of coal and with some hesitation gas follow a hotelling type rule in contrast we reject the hotelling rule for oil prices since the late 1960s early 1970s

auctions versus posted price selling the case of correlated private valuations two popular selling methods are compared in a one period correlated private values model the seller of an object has to decide whether to sell it by posting a fixed price or by an auction without auctioning costs an auction with a reserve price is always preferable with positive auctioning costs the authors find that an auction is still preferable when the distribution of buyers valuations is sufficiently dispersed or when the object value is sufficiently high the relations between these and previous results are also discussed

advance selling effects of interdependent consumer valuations and seller s capacity we examine the impact of consumer valuation interdependence and capacity on a firm s optimal selling strategies we consider a seller who can offer a single product to consumers twice in advance and in spot consumers choose whether and when to buy but if they buy in advance they are uncertain about their own valuations whether they buy in advance or in spot consumers valuations are realized in the spot period and they may range from fully independent to perfectly correlated creating markets with different characteristics of aggregate demand for the seller facing these consumers the seller chooses a portion of the total capacity to offer in advance and prices in both periods we describe how the optimal strategy and benefits of advance selling depend on the interdependence of consumer valuation as well as capacity level and other market parameters we find that a change in valuation interdependence can lead to dramatically different policies for the seller for example when individual valuations are highly diverse and the consumer population is large the seller must offer a discount during advance selling but may limit the advance sales on the other hand when valuations are highly correlated the seller can charge a premium price during advance selling for the same valuation interdependence the qualitative nature of the optimal strategy changes with available capacity this paper was accepted by martin lariviere operations management

the impact of corporate and personal income taxes on the location of firms and on employment some panel evidence for the swiss cantons abstract the impact of corporate income taxes on location decisions of firms is widely debated in the tax competition literature tax rate differences across jurisdictions may lead to distortions of firms investment decisions empirical evidence on tax induced relocation and subsequent economic development in the us and europe is still inconclusive much the same applies to switzerland while there is some evidence on personal income tax competition between swiss cantons evidence on the impact of intercantonal corporate income tax differences on the location of business within switzerland is missing in this paper we present econometric evidence on the influence of corporate and personal income taxes on the regional distribution of firms in 1981 and 1991 and on cantonal employment using a panel data set of the 26 swiss cantons from 1985 to 1997 the results show that corporate and personal income taxes deter firms to locate in a canton and subsequently reduce cantonal employment

non renewable resource prices deterministic or stochastic trends in this paper we examine temporal properties of 11 natural resource real price series from 1870 to 1990 recent studies by ahrens and sharma trends in natural resource commodity prices deterministic or stochastic j environ econom manage 33 1997 59 74 berck and roberts natural resource prices will they ever turn up j environ econom manage 31 1996 65 78 and slade grade selection under uncertainty least cost last and other anomalies j environ econom manage 15 1988 189 205 among others find that many non renewable resource prices have a stochastic trend we revisit this issue by employing a lagrangian multiplier unit root test that allows for two endogenously determined structural breaks with and without a quadratic trend contrary to previous research we find evidence against the unit root hypothesis for all price series our findings support characterizing natural resource prices as stationary around deterministic trends with structural breaks we additionally show that both pre testing for unit roots with breaks and allowing for breaks in the forecast model can improve forecast accuracy overall the results in this paper are important in both a positive and normative sense without an appropriate understanding of the dynamics of a time series empirical verification of theories forecasting and proper inference are potentially fruitless

firm location decisions regional grants and agglomeration externalities we examine whether discretionary government grants influence where domestic and multinational firms locate new plants and how the presence of agglomeration externalities interacts with these policy instruments we find that a region s existing industrial structure has an effect on the location of new entrants grants do have a small effect in attracting plants to specific geographic areas but importantly we find that firms are less responsive to government subsidies in areas where there are fewer existing plants in their industry this suggests that these subsidies are less effective in influencing firms location decisions in the face of countervailing co location benefits