optimal dynamic pricing of inventories with stochastic demand over finite horizons in many industries managers face the problem of selling a given stock of items by a deadline we investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm s objective is to maximize expected revenues examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry which markets space such as seats on airline flights cabins on vacation cruises and rooms in hotels that become worthless if not sold by a specific time we formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity resp price as a function of the stock level and the length of the horizon for a particular exponential family of demand functions we find the optimal pricing policy in closed form for general demand functions we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity finally we extend our results to the case where demand is compound poisson only a finite number of prices is allowed the demand rate is time varying holding costs are incurred and cash flows are discounted the initial stock is a decision variable and reordering overbooking and random cancellations are allowed

unemployment and effort at work we measure the sensitivity of work effort to local labour market conditions using self reported non work at the workplace in the american time use survey atus 2003 12 non work at work is quantitatively significant and varies positively with local unemployment but in opposite directions at the extensive and intensive margins the fraction of workers reporting positive values declines with unemployment while time spent in non work conditional on any such time rises with unemployment the results speak to issues of labour hoarding efficiency wages and the cyclicality of labour productivity we also demonstrate a relationship between the incidence of non work and unemployment benefits in state data linked to the atus there are also pronounced occupational differences in the incidence and intensity of non work

hymer and public policy in ldcs initially this paper was titled stephen hymer s influence on public policy in ldcs in an attempt to research this impossible subject i conducted a citation search in the ssci the ssci listed 442 citations in 192 different journals over the period 1977 to 1983 a count that places hymer in the top five writers on international business and the multinational enterprise over that period his writings were cited in journals devoted to law history philosophy sociology psychology political science geography business anthropology broadcasting peace research statistics migration and urban regional agricultural trade financial labor industrial and development economics they were cited in journals devoted to the study of africa asia latin america as well as europe australia new zealand and north america and they were cited by authors across the spectrum from arch conservative to radical political economists the breadth of discipline geography and viewpoint of the authors who found hymer s writings useful in their analysis reflects hymer s multidisciplinary approach to problems the originality of his insights the clarity of his thought and the forcefulness of his writing although hymer is best known for his work on the multinational enterprise mne he also was intensely concerned with problems of less developed countries ldcs and the public policies they might use to alleviate the problems arising from trade and foreign direct investment fdi in his analyses hymer started from his base in economics especially the economics of the mne but also used the insights of historical political and sociological analysis to illuminate these complex subjects in using this approach hymer may have fallen between two camps in the analysis of public policy issues in ldcs the pure economists who have often viewed him as a bright but misguided and ultimately fallen angel on the one side and the radical political economists who have viewed him as a rising if somewhat backward star on the other side instead of bridging the gap hymer may have fallen into it his insights cited but his conclusions discounted as faulty or half formed this is unfortunate since hymer writing in the 1960 s and early 1970 s speaks directly to many of the concerns of today and of the future the new international economic order the north south dialogue and the basic needs of those at the bottom of the income distribution in high income and lowincome countries alike hymer s writings addressed two major questions how best should a small developing country interact with the world economy through trade inward and outward fdi and technology licensing how best should such a country organize its internal economic activity to meet the needs of all its people especially those in the lower two thirds of the income distribution to understand hymer s approach to the analysis of these two questions and his contribution to public policy in ldcs it is useful to set them within the context of his background education and experience hymer was a canadian he grew up and received his first university degree in canada a country with a small open economy which largely exports raw materials and imports manufactured products and whose manufacturing energy and mining sectors are dominated by subsidiaries of mnes in many ways canada was and is akin to the ldcs and his interests naturally turned in their direction he was educated as an industrial organization economist at mcgill and mit his experience and education therefore gave him a knowledge of large multinational enterprises and the tools to analyze them after mit hymer worked in ghana where he saw professor school of business administration university of western ontario london ontario n6a 3k7 canada i am grateful for partial funding from the centre for international business studies and the fund for excellence u w o

the impact of wind power generation on the electricity price in germany abstract this paper investigates the relationship between intermittent wind power generation and electricity price behaviour in germany using a garch model i evaluate the effect of wind electricity generation on the level and the volatility of the electricity price in an integrated approach the results show that variable wind power reduces the price level but increases its volatility this paper s results also indicate that regulatory change has stabilised the wholesale price the electricity price volatility has decreased in germany after a modification of the marketing mechanism of renewable electricity this gives confidence that further adjustments to regulation and policy may foster a better integration of renewables into the power system

slovak electricity market and the price merit order effect of photovoltaics abstract this paper analyses slovak electricity market with a focus on photovoltaic energy it evaluates the impact of the solar electricity penetration into electricity mix on spot prices seeks evidence of the merit order effect in the slovak electricity market and quantifies it based on hourly data the multivariate regression analysis covers the period 2011 2016 the rather small merit order effect estimated by an ols time series model leads to the small decrease of slovak electricity wholesale prices this spot price reduction attributable to the photovoltaics does not outweigh the costs of the support scheme borne by end users what implies a consumer loss

productivity and unemployment over the business cycle abstract the low correlation between cyclical unemployment and productivity over the post war period hides a large sign switch in the mid 1980s from significantly negative the correlation became significantly positive using a search model of unemployment with nominal rigidities and variable labor effort i show that technology shocks can generate a positive unemployment productivity correlation whereas non technology shocks i e aggregate demand shocks tend to do the opposite in this context i identify two events that can quantitatively explain the increase in the correlation i a sharp drop in the volatility of non technology shocks in the mid 1980s and ii a decline in the response of productivity to non technology shocks which from procyclical became acyclical in the last 25 years

changes to gate closure and its impact on wholesale electricity prices the case of the uk abstract the electricity supply industry in the united kingdom underwent a number of regulatory reforms since late 80 s that have transformed the trading and pricing of the energy market herein we provide empirical evidence that the modification proposal p12 mod p12 that took place in 7 2 2002 moving the gate closure gc interval from 3 5 h to 1 h before real time has caused a permanent alteration in the uk spot price volatility using a combination of recurrence plot rp and recurrence quantification analysis rqa we find that after the the change in the gc time short term price volatility significantly decreased between 2001 and 2008 while long term price volatility is not affected by cg change similar results are obtained by means of spectral analysis on the price series showing a significant reduction in its variability the results of our analysis suggest that a dynamical regime shift of the price occurred and such shift is linked to the gc change whereby shorter gc intervals facilitate short term forecasting on electricity demand and better reliability on the supply side therefore gc closer to real time is associated to reduced price fluctuations in the wholesale market

procyclical labor productivity and competing theories of the business cycle some evidence from interwar u s manufacturing industries we study the phenomenon of short run increasing returns to labor srirl in a sample of 10 interwar u s manufacturing industries our main findings are that srirl was common in the interwar period and that the pattern of srirl across industries was similar to that observed in the postwar period we argue that since presumably the depression was not caused by technical regress these findings are inconsistent with the claim of real business cycle theorists that srirl is in general due to procyclical technical shocks we propose tests for discriminating between two other leading explanations of srirl but find that our conclusions differ by industry

a spot forward model for electricity prices with regime shifts 2014 elsevier b v all rights reserved this is the authors manuscript preprint to the article

the impact of renewable energy forecast errors on imbalance volumes and electricity spot prices abstract this paper contributes to the general consideration of whether a policy of incentivising system operators to improve the quality and market availability of forecasts for renewable energy outputs would be beneficial using data from the german electricity market we investigate the effect of wind and solar energy forecasts errors on imbalance volumes and subsequent spot electricity prices we use ordinary least squares regression quantile regression and autoregressive moving averages to identify these relationships using variables that have a quarter hourly data granularity the results show that higher wind and solar forecast errors increase the absolute values of imbalance volumes and that these can pass through into higher spot prices we find that wind forecast errors in germany impact spot prices more than solar forecasting errors policy incentives to improve the accuracy and availability of renewable energy forecasts by the system operators should therefore be encouraged

price trends and dynamic pricing in perishable product market consisting of superior and inferior firms abstract we consider the problem of a firm that sells perishable products with a dynamic pricing scheme in the presence of a firm offering a superior product we provide a probabilistic characterization of the optimal price process under the existence of such a firm for an aggregate demand model and for a multinomial logit demand model our results demonstrate that if the seller takes the price of the other firm into account in their optimal policy then the optimal price process tends to increase over time before the inventory level falls to one after which it decreases otherwise the price process decreases and then increases this path is called a j shaped curve before the inventory level falls to one if the price of the other firm is relatively low and the customer s valuation remains unchanged over time early in the sales period we also demonstrate numerically that when the firm uses a monopolistic policy and the difference in service quality between the two firms is large the switching time between the downward and upward trends takes place in the early stage of the sales period and in particular this j shaped phenomenon is strongly observed

retrospectives the cyclical behavior of labor productivity and the emergence of the labor hoarding concept the concept of labor hoarding at least in its modern form was first fully articulated in the early 1960s by arthur okun 1963 by the end of the 20th century the concept of labor hoarding had become an accepted part of economists explanations of the workings of labor markets and of the relationship between labor productivity and economic fluctuations the emergence of this concept involved the conjunction of three key elements the fact that measured labor productivity was found to be procyclical rising during expansions and falling during contractions a perceived contradiction with the theory of the neoclassical firm in a competitive economy and a possible explanation based on optimizing behavior on the part of firms each of these three elements fact contradiction and explanation has a history of its own dating back to at least the opening decades of the twentieth century telling the story of the emergence of the modern labor hoarding concept requires recounting these three histories histories that involve the work of economists motivated by diverse purposes and often not mainly if at all concerned with the questions that the labor hoarding concept was ultimately used to address as a final twist to the story the long standing positive relationship between labor productivity and output in the us economy began to disappear in the late 1980s and during the great recession labor productivity rose while the economy contracted

balancing energy strategies in electricity portfolio management traditional management of electricity portfolios is focused on the day ahead market and futures of longer maturity within limits market participants can however also resort to the balancing energy market to close their positions in this paper we determine strategic positions in the balancing energy market and identify corresponding economic incentives in an analysis of the german balancing energy demand we find that those strategies allow an economically optimal starting point for real time balancing and create a marketplace for flexible capacity that is more open than alternative marketplaces the strategies we proffer in this paper we believe will contribute to an effective functioning of the electricity market

wages productivity and work intensity in the great depression we show that u s manufacturing wages during the great depression were importantly determined by forces on firms intensive margins short run changes in work intensity and the longer term influence of potential productivity combined to influence real wage growth by contrast the external effects of unemployment and replacement rates had much less impact empirical work is undertaken against the background of a simple efficient bargaining model that embraces earnings employment hours of work and work intensity

dynamic pricing in the presence of strategic consumers and oligopolistic competition we present a dynamic pricing model for oligopolistic firms selling differentiated perishable goods to multiple finite segments of strategic consumers who are aware that pricing is dynamic and may time their purchases accordingly this model encompasses strategic behavior by both firms and consumers in a unified stochastic dynamic game in which each firm s objective is to maximize its total expected revenues and each consumer responds according to a shopping intensity allocation consumer choice model we prove the existence of a unique subgame perfect equilibrium provide equilibrium optimality conditions and prove monotonicity results for special cases the model provides insights about equilibrium price dynamics under different levels of competition asymmetry between firms and multiple market segments with varying properties we demonstrate that strategic behavior by consumers can have serious impacts on revenues if firms ignore that behavior in their dynamic pricing policies moreover ideal equilibrium responses to consumer strategic behavior can recover only a portion of the lost revenues a key conclusion is that firms may benefit more from limiting the information available to consumers than from allowing full information and responding to the resulting strategic behavior in an optimal fashion

on the market impact of wind energy forecasts this paper presents an analysis of how day ahead electricity spot prices are affected by day ahead wind power forecasts demonstration of this relationship is given as a test case for the western danish price area of the nord pool s elspot market impact on the average price behaviour is investigated as well as that on the distributional properties of the price by using a non parametric regression model to assess the effects of wind power forecasts on the average behaviour the non linearities and time variations in the relationship are captured well and the effects are shown to be quite substantial furthermore by evaluating the distributional properties of the spot prices under different scenarios the impact of the wind power forecasts on the price distribution is proved to be considerable the conditional price distribution is moreover shown to be non gaussian this implies that forecasting models for electricity spot prices for which parameters are estimated by a least squares techniques will not have gaussian residuals hence the widespread assumption of gaussian residuals from electricity spot price models is shown to be inadequate for these model types the revealed effects are likely to be observable and qualitatively similar in other day ahead electricity markets significantly penetrated by wind power

jobless recoveries stagnation or structural change within the existing literature a number of competing explanations for jobless recoveries have emerged on the one hand there is evidence of dynamic structural change including offshoring globalization and technological advances that are resulting in the loss of middle skill routine employment other studies emphasize a less dynamic economy with slower growth reduced labor market fluidity a decline in startup activity and even economic stagnation this study exploits variation among u s states to assess the degree that stagnation and or important structural changes in the economy contribute to the recent phenomenon of jobless recoveries we find support for both the stagnation and structural change theories of jobless recoveries on the stagnation side we find evidence that lower startup rates are a significant predictor of jobless recoveries we also find evidence that links dynamic structural change to the jobless recovery phenomenon more specifically states experiencing a long run downward trend in the share of routine employment are more likely to experience a jobless recovery our results are consistent with the polarization theory where routine replacing technological advances permanently reduce demand for middle skill labor thus contributing to jobless recoveries jel e32 e24

work rules featherbedding and pareto optimal union management bargaining this article examines a model of semiefficient bargaining in which the union and the firm bargain over wages and various types of work rules the results are compared to the outcomes that are associated with fully efficient bargaining i e over wages and the level of employment and bargaining solely over wages

contract durations in the electricity market causal impact of 15 min trading on the epex spot market abstract the european power exchange epex introduced two new products in 2011 and 2014 which reduce the delivery duration of electricity from 1 h to 15 min intervals these changes to the market design aim to better reflect the intermittent power generation from renewable energy sources however little is known about trading in shorter intervals and its impact on the existing market as a remedy our evaluation first shows that the market has quickly adopted the new 15 min contracts second we estimate a bayesian structural time series which measures a causal decrease of electricity prices depending on the model specification our results indicate that the reduction can be as high as 28 for existing hourly contracts subsequent to the introduction of 15 min trading third the use of 15 min contracts coincides with intermittent power generation as it incentivizes renewable energy providers to offer additional electricity altogether our findings suggest that 15 min trading is used to balance the intra hour volatility of renewable energy sources consequently this presents a blueprint for policy makers who can attain similar price reductions and larger feed ins from renewable energy sources without direct costs in all countries with high shares of renewable energy sources

short term electricity trading for system balancing an empirical analysis of the role of intraday trading in balancing germany s electricity system abstract previous studies have noted that unexpectedly germany s dramatic expansion of wind and solar energy coincided with a reduction of short term balancing reserves this observation has been dubbed the german balancing paradox this paper provides further and updated evidence since 2011 wind and solar energy have nearly doubled while both reserve requirements and reserve use have declined by 50 the paper quantitatively explores one reason for reduced balancing needs increased and improved short term wholesale electricity trading on the intraday market trading is now commonly done around the clock and based on quarter hour rather than full hour contracts the shift to quarter hourly products alone explains a decrease in balancing energy by 17 there is also strong evidence that market parties respond efficiently to imbalance charges suggesting that incentive based approaches to electricity balancing work

a behavioral explanation for nominal wage rigidity during the great depression nominal wages in manufacturing were left unchanged by the large decline in nominal demand that marked the first two years of the great depression this rigidity in nominal wages is explained using the tools of the behavioral theory of the firm the emphasis is on the reasons firms changed their decision rules linking fluctuations in final sales to changes in nominal wages

the economic crisis from a neoclassical perspective abstract this paper assesses the 2007 2009 recession using neoclassical business cycle theory i find that the 2007 2009 u s recession differs substantially from other postwar u s recessions and also from the 2008 recession in other countries in that lower labor input accounts for virtually all of the decline in income and output in the united states while lower productivity accounts for much of other u s recessions and the 2007 2009 recession in other countries i also find that existing classes of models including financial market imperfections models do not explain the u s recession this is because the 2007 2009 recession is almost exclusively related to what appear to be labor market distortions that drive a wedge between the marginal product of labor and the marginal rate of substitution between consumption and leisure a topic about which current classes of financial imperfection models are largely silent i discuss future avenues for developing this class of models and i consider alterna

nominal wage stickiness and aggregate supply in the great depression building on earlier work by eichengreen and sachs we use data for 22 countries to study the role of wage stickiness in propagating the great depression recent research suggests that monetary shocks transmitted internationally by the gold standard were a major cause of the depression accordingly we use money supplies and other aggregate demand shifters as instruments to identify aggregate supply relationships we find that nominal wages adjusted quite slowly to falling prices and that the resulting increases in real wages depressed output these findings leave open the question of why wages were so inertial in the face of extreme labor market conditions

a monopolistic and oligopolistic stochastic flow revenue management model this paper studies a one shot inventory replenishment problem with dynamic pricing the customer arrival rate is assumed to follow a geometric brownian motion homogeneous customers have an isoelastic demand function and do not behave strategically we find a closed form optimal pricing policy which utilizes current demand information under this pricing policy the inventory trajectory is deterministic and a retailer sells all inventory we show that dynamic pricing coordinated with the inventory decision achieves significantly higher profits than does static pricing furthermore under oligopolistic competition we establish a weak perfect bayesian equilibrium for the price and inventory replenishment game we find the pricing equilibrium to be cooperative even in a noncooperative environment but that inventory competition results in overstock and damages profits finally we examine the trade off between dynamic pricing and price precommitment and find that flexible pricing is still beneficial provided competition is not too intense

excess labor and the business cycle this paper compares the medoff fay estimates of labor hoarding during troughs which are based on data from manufacturing plants with aggregate estimates of excess labor on hand the two sets of estimates seem consistent which provides a strong argument in favor of the excess labor hypothesis this is one of the few examples in macroeconomics where a hypothesis has been so strongly confirmed using detailed micro data this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abs this abstract was borrowed from another version of this item

price volatility in commodity markets with restricted participation abstract in commodity markets price volatility may rise significantly if the product granularity increases to gain insights into the underlying drivers we analyze price volatility based on the example of german electricity markets we develop a theoretical model to reproduce the price formation in the day ahead and intraday auction which are sequential short term electricity markets with 60 minute and 15 minute products as cross border trade is allowed in the day ahead but not in the intraday auction the model accounts for the impact of restricted market participation the theoretical model is then transferred into an empirical analysis to first validate the modeling approach and second to comparatively assess the impact of increasing product granularity and restricted market participation the empirical results indicate that the disproportional rise in quarter hourly price volatility is mainly triggered by limited market participation and not only by the high volatility of renewable supply and demand since restricted market participation refers to a lack of market coupling we derive a proxy for efficiency losses ranging from eur 55 million to eur 108 million that may be reduced if markets are coupled

bargaining power fear of disagreement and wage settlements theory and evidence from u s industry the paper develops and estimates a theoretical model of wage determination and union nonunion wage differentials in order to overcome the institutional ctiticisms of the formal bargaining literature the paper generalizes the nash zeuthen harsanyi model by linking the solution to the institutional concepts of bargaining power and fear or cost of disagreement and by making the outcome depend not only on endogenous but also on exogenous factors an operational specification of bargaining power and fear of disagreement allows the model to be estimated with data covering twelve companies and trade unions during the period from mid 1950 s to the late 1970 s while giving limited support to the nashzeuthen harsanyi solution the empirical analysis indicates that the bargaining outcome usually deviates from the nash zeuthen harsanyi point and in accordance with the institutionalist claim that it varies significantly with exogenous factors contrary to the traditional labor economics view the results do not support the general conclusion that the bargaining solution lies on the marginal revenue product curve of labor instead the relevant coefficients suggest that for many firms and unions the outcome might be better characterized by the efficient contract vertical contract curve

the impact of renewable energies on eex day ahead electricity prices in this paper we analyze the impact of renewable energies wind and photovoltaic on the formation of day ahead electricity prices at eex we give an overview of the policy decisions concerning the promotion of renewable energy sources in germany and discuss their consequences on day ahead prices an analysis of electricity spot prices reveals that the introduction of renewable energies enhances extreme price changes in the frame of a dynamic fundamental model we show that there has been a continuous electricity price adaption process to market fundamentals furthermore the fundamental drivers of prices differ among hours with different load profiles our results imply that renewable energies decrease market spot prices and have implications on the traditional fuel mix for electricity production however the prices for the final consumers increased overall because they must pay in addition the feed in tariffs for the promotion of renewable energy

multi period pricing in the presence of competition and social influence abstract this paper examines single and dynamic pricing policies of two competing firms over two periods in the presence of social influence assuming two firms adopt the same pricing policy we find that under either pricing policy firm profits always decrease with the degree of social influence firms prefer dynamic pricing policy when social influence is either relatively weak or sufficiently strong for firms under dynamic pricing policy to set zero prices in the first period otherwise single pricing policy is more preferable the conclusions are similar when the market size varies over periods except that dynamic pricing policy is always more profitable if the market size in period 2 is sufficiently large we have further compared the two pricing policies with posted pricing policy the results show that dynamic pricing policy dominates when social influence is relatively weak while posted pricing policy dominates when social influence is sufficiently strong because of the synergy between social influence and the reference price effect finally when each firm freely chooses either single or dynamic pricing policy we find that if the degree of social influence is relatively small two asymmetric equilibria exist where two firms adopt different pricing policies if the degree of social influence is very large however the unique equilibrium is both firms adopting dynamic pricing policy these findings provide important implications for firms to make more informed pricing decisions in an increasingly competitive environment with strong social influence

revenue management for low cost providers low cost providers have emerged as important players in many service industries the most predominant being low cost or the so called discount airlines this paper presents models and results leading toward understanding the revenue management outlook for a discount pricing firm a framework and model is formulated specifically for the airline industry but is generalizable to low cost providers in similar revenue management settings we formulate an optimal pricing control model for a firm that must underprice to capture a segment of exogenous demand two specific model formulations are considered a continuous deterministic version and a discrete stochastic version structural results are derived for the deterministic case providing insight into the general form of optimal underpricing policies the stochastic results support the structural insight from the deterministic solution and illuminate the effect of randomness on the underpricing policies

theoretical foundations for sticky wages abstract the paper compares three different types of theoretical explanation of sticky wages they are implicit contracts efficiency wage models and insider outsider models it then reconsiders keynes rationale for sticky wages which focuses on relative wage issues finally the paper considers possible directions for future research

the value of forecasts quantifying the economic gains of accurate quarter hourly electricity price forecasts abstract we propose a multivariate elastic net regression forecast model for german quarter hourly electricity spot markets while the literature is diverse on day ahead prediction approaches both the intraday continuous and intraday call auction prices have not been studied intensively with a clear focus on predictive power besides electricity price forecasting we check for the impact of early day ahead da exaa prices on intraday forecasts another novelty of this paper is the complementary discussion of economic benefits a precise estimation is worthless if it cannot be utilized we elaborate possible trading decisions based upon our forecasting scheme and analyze their monetary effects we find that even simple electricity trading strategies can lead to substantial economic impact if combined with a decent forecasting technique

excessive wages and the return on capital received wisdom suggests that excessive wages defined as the part of real wages that do not follow labour productivity developments are adversely associated with the return on capital this paper argues that excessive wages and profits are better thought of as responses to changes in the economic political and institutional environment and there is no a priori reason for a negative relationship between them we thus investigate whether there is a causal effect of excessive wages on capital return using aggregate panel data for 19 oecd countries for the period 1970 2000 we account for the endogeneity of excessive wages by exploiting variations in institutional and labour market characteristics our main finding is that excessive wages do not affect the return on capital this result remains robust to alternative empirical specifications and to alternative definitions of profitability and excessive wages and questions the standard advice by international economic organizations on wage moderation copyright the author 2011 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

econometric analysis of 15 minute intraday electricity prices abstract the trading activity in the german intraday electricity market has increased significantly over the last years this is partially due to an increasing share of renewable energy wind and photovoltaic which requires power generators to balance out the forecasting errors in their production we investigate the bidding behaviour in the intraday market by looking at both last prices and continuous bidding in the context of a reduced form econometric analysis a unique data set of 15 minute intraday prices and intraday updated forecasts of wind and photovoltaic has been employed price bids are explained by prior information on renewables forecasts and demand supply market specific exogenous variables we show that intraday prices adjust asymmetrically to both forecasting errors in renewables and to the volume of trades dependent on the threshold variable demand quote which reflects the expected demand covered by the planned traditional capacity in the day ahead market the location of the threshold can be used by market participants to adjust their bids accordingly given the latest updates in the wind and photovoltaic forecasting errors and the forecasts of the control area balances

the effect of wind and solar power forecasts on day ahead and intraday electricity prices in germany abstract this study analyzes the effects of wind and solar power generation forecasts on electricity prices converse to the existing empirical literature in this area we apply a panel data analysis to control for endogeneity due to unobserved heterogeneity we use a dataset with 24 daily observations of day ahead and intraday prices from 2010 to 2016 and we apply a fixed effects regression under consideration of robust driscoll kraay standard errors a noteworthy element of the regression model is the simulation based design of a variable indicating the power generation technology that is price determining at a certain point in time in this context we differentiate between the fuel types coal gas and others to model the nonlinear price behavior for a varying demand for 2016 we find price dampening effects of both wind and solar power of approximately 0 6 mwh per additional gwh of feed in along with the rapidly increasing shares of wind and solar power of the total power generation during the last years their price dampening effect has declined since 2013 due to a drop in fuel prices another finding is that a reduction in forecasting errors on the power generation from wind and solar and smoothing of the cyclical demand would lead to a decreased price volatility

wind power integration and power system flexibility an empirical analysis of extreme events in germany under the new negative price regime abstract in this article the flexibility of the german power market with respect to the integration of an increasing share of electricity from renewable energy sources was analysed flexibility limiting system components which cause negative prices are explained and illustrated for the german market the decision of the european energy exchange in leipzig to allow negative price bids is then explained the empirical data illustrate the flexibility of conventional generating capacities in germany from october 2008 to december 2009 of the 86 h of negative spot prices 19 h were significantly negative with prices of at least 100 mwh these extreme hours were analysed in greater detail by the examination of different system components thereby load wind power infeed and conventional generation by fuel type were observed as well as the market for negative tertiary reserve as indicators for market tightness although the market situations were found to be severe under the current conditions it could have been much worse in order to enable the market to clear at all times policy recommendations are provided and long run implications of an increasing res e share on the conventional generation capacity are discussed the article concludes with an outlook on additional power system flexibility options

list pricing versus dynamic pricing impact on the revenue risk abstract we consider the problem of a firm selling multiple products that consume a single resource over a finite time period the amount of the resource is exogenously fixed we analyze the difference between a dynamic pricing policy and a list price capacity control policy the dynamic pricing policy adjusts prices steadily resolving the underlying problem every time step whereas the list pricing policy sets static prices once but controls the capacity by allowing or preventing product sales as steady price changes are often costly or unachievable in practice we investigate the question of how much riskier it is to apply a list pricing policy rather than a dynamic pricing policy we conduct several numerical experiments and compare expected revenue standard deviation and conditional value at risk between the pricing policies the differences between the policies show that list pricing can be a useful strategy when dynamic pricing is costly or impractical

a multiproduct dynamic pricing problem and its applications to network yield management a firm has inventories of a set of components that are used to produce a set of products there is a finite horizon over which the firm can sell its products demand for each product is a stochastic point process with an intensity that is a function of the vector of prices for the products and the time at which these prices are offered the problem is to price the finished products so as to maximize total expected revenue over the finite sales horizon an upper bound on the optimal expected revenue is established by analyzing a deterministic version of the problem the solution to the deterministic problem suggests two heuristics for the stochastic problem that are shown to be asymptotically optimal as the expected sales volume tends to infinity several applications of the model to network yield management are given numerical examples illustrate both the range of problems that can be modeled under this framework and the effectiveness of the proposed heuristics the results provide several fundamental insights into the performance of yield management systems

understanding real business cycles he 1 960s were a time of great optimism for macroeconomists many economists viewed the business cycle as dead the keynesian model was the reigning paradigm and it provided all the necessary instructions for manipulating the levers of monetary and fiscal policy to control aggregate demand inflation occurred if aggregate demand was stimulated excessively and unemployment arose if demand was insufficient the only dilemma faced by policymakers was determining the most desirable location along this inflation unemployment tradeoff or phillips curve the remaining intellectual challenge was to establish coherent microeconomic foundations for the aggregate behavioral relations posited by the keynesian framework but this was broadly regarded as a detail that should not deter policymakers in their efforts to stabilize the economy the return of the business cycle in the 1970s after almost a decade of economic expansion and the accompanying high rates of inflation came as a rude awakening for many economists it became increasingly apparent that the basic keynesian framework was not the appropriate vehicle for understanding what happens during a business cycle nor did it seem capable of providing the empirically correct answers to questions involving changes in the economic environment or changes in monetary or fiscal policy the view that keynesian economics was an empirical success even if it lacked sound theoretical foundations could no longer be taken seriously the essential flaw in the keynesian interpretation of macroeconomic phenomenon was the absence of a consistent foundation based on the choice theoretic framework of microeconomics two important papers one by milton friedman 1968 and the other by robert lucas 1976 forcefully demonstrated examples of

dynamic price competition with discrete customer choices abstract for many years dynamic pricing has proven to be an effective tool to increase revenue in the airline and other service industries most studies however focused on monopolistic models and ignored the fact that nowadays consumers can easily compare prices on the internet in this paper we develop a game theoretic model to describe real time dynamic price competition between firms that sell substitutable products by assuming the real time inventory levels of all firms are public information we show the existence of nash equilibrium we then discuss how a firm can adapt if it knows only the initial but not the real time inventory levels of its competitors we compare a firm s expected revenue under different information structures through numerical experiments

a continuous time dynamic pricing model knowing the competitor s pricing strategy abstract in this paper we consider a dynamic pricing model for a firm knowing that a competitor adopts a static pricing strategy we establish a continuous time model to analyze the effect of dynamic pricing on the improvement in expected revenue in the duopoly we assume that customers arrive to purchase tickets in accordance with a geometric brownian motion we derive an explicit closed form expression for an optimal pricing policy to maximize the expected revenue it is shown that when the competitor adopts a static pricing policy dynamic pricing is not always effective in terms of maximizing expected revenue compared to a fixed pricing strategy moreover we show that the size of the reduction in the expected revenue depends on the competitor s pricing strategy numerical results are presented to illustrate the dynamic pricing policy

firm leverage consumer demand and employment losses during the great recession this article argues that firms balance sheets were instrumental in the transmission of consumer demand shocks during the great recession using micro level data from the u s census bureau we find that establishments of more highly levered firms experienced significantly larger employment losses in response to declines in local consumer demand these results are not driven by firms being less productive having expanded too much prior to the great recession or being generally more sensitive to fluctuations in either aggregate employment or house prices likewise at the county level we find that counties with more highly levered firms experienced significantly larger declines in employment in response to local consumer demand shocks accordingly firms balance sheets also matter for aggregate employment our results suggest a possible role for employment policies that target firms directly besides conventional stimulus

the nairu unemployment and monetary policy this paper examines the precision of conventional estimates of the nairu and the role of the nairu and unemployment in forecasting inflation the authors find that although there is a clear empirical phillips relation the nairu is imprecisely estimated forecasts of inflation are insensitive to the nairu and there are other leading indicators of inflation that are at least as good as unemployment this suggests deemphasizing the nairu in public discourse about monetary policy and instead drawing on a richer variety of leading indicators of inflation

the merit order effect of wind and photovoltaic electricity generation in germany 2008 2016 estimation and distributional implications abstract generation from renewable energy sources in germany has experienced a considerable uptake in recent years mainly responsible for this development is the german renewable energy sources act erneuerbare energien gesetz eeg this paper considers redistributive implications of the eeg for different electricity consumers using time series regression analysis we show that electricity generation by wind and pv has reduced spot market prices considerably by 6 mwh in 2010 rising to 10 mwh in 2012 we use these results to build a near term forecasting tool for merit order effects projected to reach 14 16 mwh in 2016 on the other hand the costs of the eeg are passed forward to consumers in the form of a surcharge our findings highlight significant redistributive transfers under the current design of the eeg in particular some energy intensive industries are benefiting from lower wholesale electricity prices whilst being largely exempted from contributing to the costs of the scheme we also highlight implications of our results for other areas for reform of the eeg such as adequate remuneration mechanisms that ensure efficient operation and investment decisions are made under the scheme more generally these findings suggest that policy makers need to integrate distributional assessments into policy design and implementation