an update and extension of the canadian evidence on gender wage differentials the paper utilizes the 1989 labour market activity survey to examine the gender wage differential in canada the aim is to update previous studies and extend earlier analysis in two significant ways first occupation is treated as endogenously determined secondly the zabalza and arrufat 1985 imputation method is utilized to estimate the level of female labour market experience the results suggest that the level of estimated gender discrimination is sensitive to the measure of labour market experience the paper also concludes that intra occupation wage effects explain most of gender wage gap

production with learning and forgetting in a competitive environment abstract it has been shown that learning by doing enables firms to reduce marginal production costs but that this effect weakens due to organizational forgetting in order to assess the impact of both learning and forgetting on long term competitiveness and a firm s profitability we model an experience accumulation process with depreciation and consider two competing firms that produce fully substitutable products in this model unit production costs decrease with the firm s experience due to the proprietary learning process as well as the spillover of experience from the competing firm firms can either share or hide from each other their information about the state of their respective experience throughout the game we found that in an equilibrium steady state if the organizational forgetting is sufficiently large larger than the spillover rate value then information sharing compared to information hiding results both in less competitiveness and increased profits for firms conversely if the organizational forgetting is small and the spillover opportunities are relatively large then information sharing promotes both long term competitiveness and firm profits accordingly firms are better off in the long term by deliberately limiting expanding their experience accumulation process whenever organizational forgetting is relatively large small a high ability of proprietary learning however can interfere in this relationship so that limiting the firms experience process will always be compatible with higher profitability

a dynamic analysis of the marketable permits approach to global warming policy a comparison of spatial and temporal flexibility abstract this paper presents a generalized dynamic model of greenhouse gas emissions trading under constraints on the volume of transactions an empirical version of the model is used to evaluate potentially cost saving flexibility mechanisms joint implementation and clean development mechanism and potentially cost adding restrictions supplementarity of the kyoto protocol the results indicate the greatest gains would stem from extending permit trading spatially among industrialized nations although sizable gains would also emanate from the inclusion of developing countries gains from intertemporal trading banking and borrowing are meager restrictions on the volume of permit purchases have by far the most costly effect when developing countries are incorporated into trading sensitivity tests with respect to differential discount rates across countries and technological change indicate the results are robust

the specification and estimation of interrelated factor demands under uncertainty abstract this paper studies a model of the firm s interrelated demands for the factors of production incorporating exogenous variables with uncertain future values multiple quasi fixed factors depreciation in use and non symmetric internal costs of adjustment the inputs considered are production labor non production workers capital inventories of non finished goods and capacity and non production worker utilization rates a simultaneous system of factor demand equations with constraints is estimated and using u s manufacturing data the model is shown to be tractable under certain assumptions the results are encouraging given the complexity and the nature of the model

analyzing the indirect production function for u s manufacturing in recent years there has been considerable research conducted in applied production economics to estimate the firm s structure of technology and its production characteristics the main concept used in this research is the duality principle relating production and cost or profit together with the use of flexible form econometric specifications for estimating production technologies under the assumption of cost minimization or proft maximization duality implies that for any production function there exists a cost or profit function that provides an equivalent description of the technology what is less well known however is that the firm s technology can be equally well described by the indirect production function a production analog of the indirect utility function in consumer theory 5 8 9 the indirect production function is based on the firm s output maximization subject to a budget constraint on input costs of course it is evident enough that a firm choosing inputs to maximize output for a given input cost produces that output at the minimum cost by implication the indirect production and cost functions are equivalent ways of characterizing the firm s technology and as will be seen there exists a unique correspondence between the two functions in empirical application however the choice between the two functions hinges on the exogeneity or endogeneity of output for the indirect production function the level of output is an endogenous variable in the case of the cost function on the other hand output is exogenously given in most situations it is the indirect production function not the cost function that is more compatible with observed behavior of firms and industries while numerous studies have been conducted recently to estimate the cost or profit function in a variety of firms and industries 1 2 3 6 no attempts have been made to employ the indirect production function as a working tool in applied production analysis this paper attempts to provide empirical evidence from analyzing the indirect production function within the context of an application of the duality principle using the well known data set utilized by berndt and wood 3 and berndt and khaled 2 it reexamines the production structure of u s manufacturing based on a translog specification of the indirect production function for the underlying technology an important question is how the choice of a model the indirect production or cost function

welfare effects of expansions in equilibrium models of an electricity market with fuel network the welfare of electricity producers and consumers depends on congestion in the transmission grid generation costs that consist mainly of fuel costs and strategic behavior we formulate a game theoretic model of an oligopolistic electricity market where generation costs are derived from a fuel supply network the game consists of a fuel dispatcher that transports fuels at minimum cost to meet generator demands generators that maximize profit in cournot competition and an independent system operator iso that sets nodal prices to balance electricity supply with linear demand functions we prove the existence of an equilibrium if fuel supplies are unlimited the same equilibria hold in a simplified version of the game in which each generator optimizes its fuel acquisition from the network in some very simple examples under different assumptions about the rationality of generators with respect to iso decisions paradoxical effects on total welfare can occur from expanding either electricity transmission capacity or the transportation capacity of low cost fuel we find some instances in which the paradox occurs only under bounded rationality of the generators others where it occurs only if the generators are fully rational and still others where it occurs to different degrees under the two rationality assumptions

using market intelligence for the opportunistic shipping of fresh produce abstract the main goal of this paper is to develop an opportunistic shipment policy that increases a farmer s commercialization reach within a secondary market with minimal or no capital investment once a base market has been established basically the operation would consist of sending fresh produce items into a secondary market from the base whenever momentary price differentials allows two market transactions with a high probability of profit a theoretical model is developed that maximizes potential operational revenues based on arbitrage opportunities existent within two market structures ultimately the validity and applicability of this model is demonstrated through the application of a case study the results of the case study show that using the decision making strategy defined by the proposed theoretical model cannot only increase the long term profits of two market operations but can also lower the profit variability in comparison to only commercializing in a single base market

non cooperative competition among revenue maximizing service providers with demand learning this paper recognizes that in many decision environments in which revenue optimization is attempted an actual demand curve and its parameters are generally unobservable herein we describe the dynamics of demand as a continuous time differential equation based on an evolutionary game theory perspective we then observe realized sales data to obtain estimates of parameters that govern the evolution of demand these are refined on a discrete time scale the resulting model takes the form of a differential variational inequality we present an algorithm based on a gap function for the differential variational inequality and report its numerical performance for an example revenue optimization problem

market equilibrium under incomplete and imperfect information in bilateral electricity markets in contrast to the centralized pool model bilateral markets present a decision making situation in which information plays a major role along with the physical and operative constraints of the network we propose a model that includes network constraints for competitive bilateral electricity markets based on an evolutionary bipartite complex network in which the nodes and weighted links represent the players and transactions respectively the strong stable equilibrium of the network is applied to detect possible market equilibria obtained through a dynamic game with incomplete and imperfect information in which the players form an evolutionary network while trying to maximize their own utilities the model is conceptually illustrated with a four bus test system and then applied to the ieee30 test system to analyze the impact of the transmission network and information on the equilibria and market performance

estimation of the internal adjustment costs model using longitudinal establishment data this paper develops estimates of the internal costs measured in terms of foregone current output associated with the introduction of new plant and equipment into manufacturing establishments using the census bureau s longitudinal establishment data file a very large and rich source of production and investment data our estimates provide strong support for the internal adjustment costs hypothesis they indicate that one dollar increases in expansion and replacement investment cause on the average 35and 21 cent reductions respectively in current output the internal cost of adjusting to equipment appears to be higher than the cost of adjusting to plant

a mixed complementarity based equilibrium model of natural gas markets we present a new multiseasonal multiyear natural gas market equilibrium model based on the concept of a competitive equilibrium involving the market participants producers storage reservoir operators peak gas operators pipeline operators marketers and consumers the first three classes are depicted as price takers consistent with perfect competition the pipeline operations are described with regulated tariffs but also involve congestion pricing as a mechanism to allocate scarce pipeline capacity the marketers are price takers in all markets except in sales to consumers in which they compete as nash cournot players finally consumers are described by demand curves for each of the four sectors residential commercial industrial and electric power we show that the equilibrium model is an instance of a mixed nonlinear complementarity problem ncp and provide sufficient detail not generally seen in previous complementarity models of natural gas the ncp formulation is derived from considering the karush kuhn tucker optimality conditions of the optimization problems faced by these participants under mild conditions we show that this ncp has a solution and under additional reasonable conditions we show that the market prices are unique we also validate the model on a representative sample network with nine market participants and three seasons using four scenarios

strategic response to pollution taxes in supply chain networks dynamic spatial and organizational dimensions abstract this paper presents a model of the strategic behavior of firms operating in a spatial supply chain network the manufacturing and retailing firms engage in an oligopolistic noncooperative game by sharing customer demand such that a firm s decisions impact the product prices which in turn result in changes in all other firms decisions each firm s payoff is to maximize its own profit and we show that in response to such changes in prices and to exogenous environmental taxes the manufacturing firms may strategically alter a variety of choices such as make buy decisions with respect to intermediate inputs spatial distribution of production product shipment patterns and inventory management environmental tax payment vs recycling decisions and timing of all such choices to sustainably manage the profit and the environmental regulations an important implication is that effects of a tax depends on the oligopolistic game structure with respect to methods we show that this dynamic game can be represented as a set of differential variational inequalities dvis that motivate a computationally efficient nonlinear complementarity ncp approach that enables the full exploitation of above mentioned salient features we also provide a numerical example that confirms the utility of our proposed framework and shows substantial strategic reaction can be expected to a tax on pollution stocks

the distribution of the male female earnings differential 1970 1990 the authors examine the male female earnings differential between 1970 and 1990 their objective is to provide consistent estimates that can be compared and interpreted over time and to assess the sensitivity of their results to alternative specifications the authors find that women made modest gains over the period standard decomposition techniques reveal that gender differences in observable characteristics do not explain much of the earnings differential most of the improvement in women s relative earnings has come by a decline in the unexplained component the authors also find that the differential varies systematically across age and education groups and across high and low income women coauthors are dwayne benjamin andree desaulniers and mary grant

an exact solution method for binary equilibrium problems with compensation and the power market uplift problem abstract we propose a novel method to find nash equilibria in games with binary decision variables by including compensation payments and incentive compatibility constraints from non cooperative game theory directly into an optimization framework in lieu of using first order conditions of a linearization or relaxation of integrality conditions the reformulation offers a new approach to obtain and interpret dual variables to binary constraints using the benefit or loss from deviation rather than marginal relaxations the method endogenizes the trade off between overall societal efficiency and compensation payments necessary to align incentives of individual players we provide existence results and conditions under which this problem can be solved as a mixed binary linear program we apply the solution approach to a stylized nodal power market equilibrium problem with binary on off decisions this illustrative example shows that our approach yields an exact solution to the binary nash game with compensation we compare different implementations of actual market rules within our model in particular constraints ensuring non negative profits no loss rule and restrictions on the compensation payments to non dispatched generators we discuss the resulting equilibria in terms of overall welfare efficiency and allocational equity

oligopolies in pollution permit markets a dynamic game approach abstract we reconsider the pollution permit concept in a setting extended to include dynamics spatially diversified firms and an oligopoly in product markets the firms can manage their pollution emissions or stocks by 1 buying pollution permits and emitting pollution 2 shipping pollutants to other nodes and paying such shipping costs or 3 paying environmental costs to mitigate or recycle pollution firms manage these controls strategically to maximize net profits while facing non cooperative rivals within this setting we show that the non cooperative competition among firms may be represented as a differential variational inequality dvi framework furthermore we propose decision rules on permit purchase establish necessary conditions and prove the existence of solution in the formalism of the dvi we also show that the dvi can be equivalently converted to a nonlinear complementarity problem ncp and show this problem despite high dimensions is efficiently solvable using off the shelf software gams with the path solver we illustrate this method s feasibility with a computationally intensive numerical example

design of sustainable supply chains under the emission trading scheme increase in environmental concerns together with legislations are forcing industries to take a fresh look at the impact of their supply chain operations on the environment this paper introduces a mixed integer linear programming based framework for sustainable supply chain design that considers life cycle assessment lca principles in addition to the traditional material balance constraints at each node in the supply chain indeed the framework distinguishes between solid and liquid wastes as well as gaseous emissions due to various production processes and transportation systems the framework is used to evaluate the tradeoffs between economic and environmental objectives under various cost and operating strategies in the aluminum industry the results suggest that current legislation and emission trading schemes ets must be strengthened and harmonized at the global level in order to drive a meaningful environmental strategy moreover the model demonstrates that efficient carbon management strategies will help decision makers to achieve sustainability objectives in a cost effective manner

an oligopolistic model of an integrated market for energy and spinning reserve in this paper a model for oligopolistic competition in electricity markets is presented most previous proposed models have been static and focused only on the energy market incentives for strategic behavior in contrast in this paper a multiperiod market for energy and spinning reserve sr is considered by including such factors the competition among participants is modeled with more realism competition in the energy market is modeled by means of conjectured supply functions while conjectured reserve price response functions are used to consider the generators ability to alter the sr prices the resulting equilibrium problem is modeled in terms of complementarity conditions based upon a complementarity model the opportunity cost between the energy and sr markets is derived for oligopolistic markets the proposed model is illustrated by a six node network using a dc approximation

optimal fuel power and load based emissions trades for electric power supply chain equilibrium this paper proposes a model to determine equilibrium fuel power and emissions trades in an electric power supply chain fuel generation transmission distribution consumption framework with a load based lb emissions trading program the model represents the oligopolistic gaming behavior of generation companies gencos and load serving entities lses and equilibrium conditions for fuel power and emissions allowance markets which are integrated through endogenous prices the model is solved by using a practical heuristic method based on the fisher burmeister nonlinear complementarity function ncp and smoothing technique an application to a four node system with three gencos and lses is also presented to illustrate the effects of emission allowances trading renewable energy generation and network congestion on equilibrium solutions

expectations and factor demand this paper develops and estimates a model of interrelated factor demand with rational expectations in the presence of internal adjustment costs invariant technological parameters are distinguished from the firm s adjustment parameters which change when the exogenous processes faced by the firm change the capital demand equation is derived by solving the euler equations which stem from minimization of the present value of costs future exogenous variables are supplied from solutions of arima equations the model is tested on postwar quarterly data for u s manufacturing a regime change in the process for energy prices is simulated as is a temporary suspension of the investment tax credit

bidding strategy of virtual power plant for participating in energy and spinning reserve markets part i problem formulation this paper addresses the bidding problem faced by a virtual power plant vpp in a joint market of energy and spinning reserve service the proposed bidding strategy is a non equilibrium model based on the deterministic price based unit commitment pbuc which takes the supply demand balancing constraint and security constraints of vpp itself into account the presented model creates a single operating profile from a composite of the parameters characterizing each distributed energy resources der which is a component of vpp and incorporates network constraints into its description of the capabilities of the portfolio the presented model is a nonlinear mixed integer programming with inter temporal constraints and solved by genetic algorithm ga

integrated supply chain management for perishable products dynamics and oligopolistic competition perspectives with application to pharmaceuticals abstract we propose an integrated supply chain management framework that allows us to explicitly consider the impact of product perishability on a broad scale that includes manufacturers distribution centers wholesalers and demand markets the framework proposed herein also makes it possible to consider the oligopolistic competition across wholesalers that drives price and demand fluctuations furthermore the supply chain decision rules are derived from necessary conditions in the framework the inclusion of such salient features allows the framework to generate outcomes that suggest realistic managerial insights we provide a numerical example in which two multi national pharmaceutical firms producing a homogeneous medicinal drug and four oligopolistic wholesalers are considered

optimal pollution permit endowments in markets with endogenous emissions abstract in a permit market with endogenous emissions both firms and citizens purchase permits presented here are static and dynamic models of pollution permit markets with endogenous emissions the optimal permit endowments are characterized when the regulator faces uncertainty about damages and uncertainty about the severity of the citizens collective action problem due to the possibility of learning over time the regulator issues a larger number of permits in the first period of the dynamic model than in the static model

the gender wage gap a comparison of australia and canada using data from the 1989 canadian labour market activity survey and for australia the 1989 90 income distribution survey the authors investigate the reasons for the significantly lower gender wage gap in australia than in canada key similarities and differences between these two countries the authors argue make them a good basis for a natural experiment to investigate the effects of different labor market institutions in particular australia has a stronger union movement and a greater degree of centralization in wage determination than canada and most of its workers are covered by legally binding minimum working conditions the authors conclude that several differences between the countries in labor market structure notably a lower rate of return to education a lower rate of return to labor market experience and a lower level of wage inequality in australia than in canada are largely responsible for the smaller gender wage gap in australia

union wage differentials in the public and private sectors a simultaneous equations specification the paper attempts to integrate new approaches to estimating union wage effects with the analysis of public private sector wage differentials estimates of the union differential in both public and private sectors allowing for the endogeneity of union status are presented the hypothesis that the recently measured rents to public sector employment primarily reflect the recent increase in unionization in that sector is examined and receives considerable empirical support there was evidence of positive selection into the union sector especially for private sector workers union status appears to be strongly influenced by the expected wage gain from joining the union sector

effects of trade unions on the earnings differential between males and females canadian evidence this paper examines whether trade unions have affected the earnings gap between male and female workers in canada based on a sample of 4 093 individuals derived from the survey of union membership the results of regression analysis suggest that unions have increased the relative earnings of male workers even after the difference in the level of unionization between males and females is accounted for the results also indicate that the relative wage effect differs substantially between the public and private sectors

the effect of market conduct on international steam coal trade abstract this paper is concerned with the determinants of international steam coal trade most quantitative work in explaining such trade has been stymied by the apparent failure of the competitive model to account for observed and anticipated trade flows in general authors have sought institutional explanations for this failure the hypothesis explored by this paper is that the exercising of market power by certain agents in the market can lead to trade patterns consistent with those observed and anticipated this hypothesis is explored through a simple model of imperfect market equilibrium in addition to perfect competition we examine cournot nash monopoly south africa duopoly south africa australia and duopoly monopsony south africa australia japan with a competitive fringe of producers us canada poland china colombia using the equilibrium model of coal trade we examine these market structures and evaluate the extent to which they can explain existing and anticipated trade patterns

strategic management of multi year natural gas contracts in electricity markets combined cycle gas turbine ccgt plants show some advantages such as better economies of scale or lower co2 emission rates in comparison to other technologies in addition due to their flexible operation ccgt plants are a useful support for the integration of the growing renewable energy installed capacity consequently during the last years ccgt plants have proliferated in electricity systems increasing the global demand of natural gas ng in order to guarantee the ng supply and to hedge the price volatility electricity generation companies gencos sign supply contracts with ng producers typically ng producers force long term contracts in order to recover their huge capital investments therefore gencos should optimize the exercise of the supply contracts in the long term scope in order to maximize their profits in the electricity market however the optimal exercise of the supply contracts on behalf of the gencos could be impeded because of possible bottlenecks in the ng system accordingly this paper proposes a methodology to incorporate both the characteristics of ng supply contracts and the congestions in the ng system in an electricity market model that could support the decision making process on behalf of the gencos a study case illustrates the methodology

incentives and prices in an emissions trading scheme with updating abstract emissions trading schemes where allocations are based on updated baseline emissions give firms less incentive to reduce emissions for a given quota or allowance price nevertheless according to bohringer and lange on the design of optimal grandfathering schemes for emission allowances europ econ rev 49 2005 2041 2055 such allocation schemes are cost effective if the system is closed and allocation rules are identical across firms in this paper we show that the cost effective solution may be infeasible if marginal abatement costs grow too fast moreover if a price cap or banking borrowing is introduced the abatement profile is no longer the same as in the case with an auction or lump sum allocation in addition we show that with allocation based on updated emissions the quota price will always exceed marginal abatement costs possibly misguiding policy makers and investors about abatement costs numerical simulations indicate that the quota price most likely will be several times higher than marginal abatement costs unless a significant share of allowances is auctioned

the impact of unionization on male female earnings differences in canada the impact of unionization on male female earnings differences in canada is analyzed using data spanning 1981 to 1988 a period in which the male female unionization gap narrowed considerably gender differences in union density union wages and nonunion wages are decomposed into characteristics related and discriminatory components we find that the drop in the gender unionization gap prevented an increase of 7 percent in the overall wage differential between men and women also male female earnings differences in the nonunion sector make a substantially larger contribution to the gender earnings gap than do those in the union sector

permit banking in emission trading competition arbitrage and linkage abstract several existing or proposed climate policies have considered bankable permits in a cap and trade c t program that covers beyond a single sector e g electric power or allows the program to link to external c t programs in other regions this paper develops a model of permit banking under imperfect competition and imperfect inter temporal arbitrage in which the firms in one dominant sector can exert market power in both product and permit markets while those in other sectors or linked programs are perfectly competitive a simple analytical model is developed to generate contestable hypothesis we further extend the model to account for the physical power system institutional rules and market conditions and then apply it to the pennsylvania jersey maryland pjm market we show that if the dominant firm has market power then the permit price rises at a higher rate than the discount rate contrary to perfectly competitive permit market where the permit price rises at the discount rate following the classic hotelling s rule furthermore under a declining emissions cap system with the permits front loaded in early time periods the dominant firm has an incentive to suppress the permit prices monopsony when buying the permits in early periods and then inflate the permit prices monopoly when selling them in later periods numerical results of the pjm case are consistent with the analytical conclusion

a comparison of foreign exchange forward and futures prices abstract in theory futures resettlement should create systematic pricing differences between futures and forward contracts however previous empirical studies do not demonstrate such differences in the foreign exchange markets on the other hand inferences from these studies are suspect since they do not directly implement theortical measures of resettlement effects and are unadjusted for sub gaussian data properties in this paper these limitations are addressed through the use of the multivariate autoregressive moving average model our findings provide evidence of systematic pricing influences arising from futures resettlement

electricity market near equilibrium under locational marginal pricing and minimum profit conditions this paper provides a tool to determine the near equilibrium of an electric energy market this market works under locational marginal pricing i e generating units and demand loads are paid and pay respectively the locational marginal prices corresponding to the nodes they are connected to the near equilibrium is defined as the energy transaction levels for which generating companies maximize their respective profits and consumption companies maximize their respective utilities an independent system operator clears the market maximizing the social welfare conditions that ensure minimum profit for generating units can be included however these conditions may render a generating unit uncompetitive and expel it from the market demands are taken to be non constant and values are determined as part of the solution the near equilibrium is obtained through the solution of a mixed integer quadratic problem equivalent to a mixed linear complementarity problem that includes the minimum profit conditions it is important to note that the near equilibrium concept presented in this paper does not solve a market equilibrium when indivisibilities such as start up costs or the like are present lastly we validate the proposed model on a case study using data from the ieee reliability test system

a sustainable vegetable supply chain using plant factories in taiwanese markets a nash cournot model abstract sustainable plant factory systems are able to provide steady and high quality plants to markets while using less labor water nutrition and pesticides a plant factory is a controlled environment for plant production systems with artificial light temperature humidity carbon dioxide water supply and cultivation solution this paper focuses on the entry and competition of a plant factory supply chain in vegetable markets using a nash cournot model to simulate this competition the lagrangian multiplier method is used to derive kkt optimality conditions for the model combining the optimality conditions yields a linear complementarity problem lcp which is solved by gams and path a case study of the plant factory supply chain in nine taiwanese vegetable markets is presented the research simulates the impact of the location of plant factories number of firms and different market demands the results show that total production and profits of the plant factory supply chain increase as transportation costs decrease in addition the producer surplus consumer surplus and total surplus of the plant factory supply chain in taiwanese markets improve when factories are located close to the markets a sensitivity analysis is conducted which shows the impact of market share and production cost on the plant factory supply chain while the case study focuses on the taiwanese agricultural commodity production the methodology and analysis procedures have generalizability to similar plant production industry problems in other contexts

capacity utilization and depreciation in use in this paper the effect capacity utilization has on the depreciation of capital goods is studied starting from a quadratic approximation to a normalized short run cost function expressions for the optimal rate of capacity utilization the demands for labour and energy and for investment are obtained investment is a function of past capital stock expected future capital stock expected future relative prices and expected future depreciation rates expectations are modelled via instruments the model is tested using us total manufacturing quarterly data depreciation dependent upon usage is found to be both statistically and economically significant

the optimal size of a permit market regulating the emissions of non uniformly mixed pollutants with a permit market carries the risk of hot spot formation which can be reduced by dividing the regulation area into trading zones the trading zone approach has been extensively discussed for the full information case we consider incomplete information concerning the emitters abatement costs their locations and pollution dispersion we derive the optimal number of trading zones and the optimal number of permits per zone and analyze under which conditions a system of independent trading zones is superior to other policy measures our results show that appropriately sized permit markets are well suited to regulating non uniformly mixed pollutants under informational constraints if firms are not too heterogeneous only for substantial heterogeneity and a highly non linear damage function can it be optimal to use command and control strategies

oligopolistic competition of gencos in reactive power ancillary service provisions the need for a market based approach for reactive power procurement has been recognized by ferc due to the localized characteristic of reactive power regulatory mechanisms are necessary to mitigate the possibility of holding market power by generators the regulator is responsible for devising the regulatory mechanisms that provide incentives to generators to supply reactive power while preventing the abuse of market power this paper proposes a mathematical model to simulate the strategic behavior of generators supplying reactive power while considering the system operator s schedule the proposed method can be used by the regulator to simulate the market behavior in the reactive power supply we further study how regulatory policies affect the strategic behavior an alternative price cap method has been proposed and tested in the numerical example to mitigate the effect of strategic behavior of generators in reactive power procurement by the system operator the numerical examples are tested on the nordic 32 bus system

implications of the eu emissions trading system for the south east europe regional electricity market as part of its climate policy the european union eu aims to reduce greenhouse gas ghg emissions levels by 20 by the year 2020 compared to 1990 levels although the eu is projected to reach this goal its achievement of objectives under its emissions trading system ets may be delayed by carbon leakage which is defined as a situation in which the reduction in emissions in the ets region is partially offset by an increase in carbon emissions in the non ets regions we study the interaction between emissions and hydropower availability in order to estimate the magnitude of carbon leakage in the south east europe regional electricity market see rem via a bottom up partial equilibrium framework we find that 6 3 to 40 5 of the emissions reduction achieved in the ets part of see rem could be leaked to the non ets part depending on the price of allowances somewhat surprisingly greater hydropower availability may increase emissions in the ets part of see rem however carbon leakage might be limited by demand response to higher electricity prices in the non ets area of see rem such carbon leakage can affect both the competitiveness of producers in ets member countries on the periphery of the ets and the achievement of eu targets for co2 emissions reduction meanwhile higher non ets electricity prices imply that the current policy can have undesirable outcomes for consumers in non ets countries while non ets producers would experience an increase in their profits due to higher power prices as well as exports the presence of carbon leakage in see rem suggests that current eu policy might become more effective when it is expanded to cover more countries in the future

a combined modeling approach for wind power feed in and electricity spot prices abstract wind power generation and its impacts on electricity prices has strongly increased in the eu therefore appropriate mark to market evaluation of new investments in wind power and energy storage plants should consider the fluctuant generation of wind power and uncertain electricity prices which are affected by wind power feed in wpf to gain the input data for wpf and electricity prices simulation models such as econometric models can serve as a data basis this paper describes a combined modeling approach for the simulation of wpf series and electricity prices considering the impacts of wpf on prices based on an autoregressive approach thereby wpf series are firstly simulated for each hour of the year and integrated in the electricity price model to generate an hourly resolved price series for a year the model results demonstrate that the wpf model delivers satisfying wpf series and that the extended electricity price model considering wpf leads to a significant improvement of the electricity price simulation compared to a model version without wpf effects as the simulated series of wpf and electricity prices also contain the correlation between both series market evaluation of wind power technologies can be accurately done based on these series

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

equilibrium pricing and lead time decisions in a competitive industry pricing and lead time are two crucial decisions to a success in today s competitive markets this paper examines the equilibrium pricing and lead time decisions in a duopoly industry consisting of two large and several smaller firms with competition we solve the sufficient karush kuhn tucker kkt optimality conditions for the nash equilibrium solution we characterize the existence and uniqueness of the nash equilibrium solution of pricing and lead time decisions for both homogenous and heterogeneous firms our case study provides important managerial insights about firms behavior under price and lead time competition in a semiconductor manufacturing industry

an oligopolistic power market model with tradable no sub x permits models formulated as complementarity problems have been applied previously to assess the potential for market power in transmission constrained electricity markets here we use the complementarity approach to simulate the interaction of pollution permit markets with electricity markets considering forward contracts and the operating reserve market because some power producers are relatively large consumers of permits there could be interaction between market power in the permits and energy markets market power in the energy market is modeled using a cournot game while a conjectured price response model is used in the permits market an illustrative application is made to pennsylvania new jersey maryland interconnection pjm which we represent by a 14 node dc load flow model and the usepa ozone transport commission no sub x budget program the results show that forward contracts effectively mitigate market power in pjm energy market and both simulated solutions of perfect and cournot oligopoly competition are a good approximation to actual prices in 2000 except that the cournot model yielded higher peak prices the no sub x market influences the cournot energy market in several ways one is that cournot competition lowers the price of no sub x permits which in turn affects on low and high emission producers differently in general because pollution permits are an important cost high concentration in the market for such permits can exacerbate the effects of market power in energy markets

dynamic factor demands and market structure under rational expectations some estimates for the italian manufacturing system this paper deals with a dynamic model of the behaviour of firms under rational expectations the adjustment cost framework is followed to describe production technologies the objective of firms is to maximize the stream of future profits under rational expectation first order conditions for the optimum are derived with respect to input demands and one output supply the output market structure is modelled in order to test price taking behaviour the adjustment costs of quasi fixed inputs are internal and interrelated the model is estimated for the italian manufacturing system with encouraging results

markets for tradeable emission and ambient permits a dynamic approach this paper discusses trade mechanisms in pollutionpermit markets proofs are given that sequential bilateral trade in tradeable emissions permitsconverges to a market equilibrium with minimal totalcosts of pollution control if ambient or depositionpermits are traded the convergence of bilateraltransactions occurs only in the case of a singlereceptor for multiple receptors the proof ofconvergence for tradeable emissions and ambientpermits is given for two trade mechanisms sequential multilateral trade and a walrasian auction

efficient determination of cournot equilibria in electricity markets this paper analyzes the deregulated electricity market using game theory and investigates the properties of cournot equilibrium points a new algorithm for the calculation of the cournot equilibrium of an electricity market in the absence of transmission constraints is presented the algorithm is based on the transformation of the cournot game into a three level decision making scheme with economic signal exchange the algorithm is tested on a hypothetical market in order to demonstrate the effects of market concentration and demand elasticity case studies indicate that the algorithm is very efficient computationally and therefore suitable for use with multi period production scheduling models for the electricity market

transfer costs spatial arbitrage and testing for food market integration conventional tests for food market integration ask often misleadingly whether prices in different locations move together in this paper an alternative methodology the parity bounds model pbm is developed which uses information on transfer costs in addition to food prices to assess the efficiency of spatial arbitrage monte carlo experiments using data generated by a point space spatial price equilibrium model show the pbm to be statistically reliable an application to philippine rice markets demonstrates that the pbm detects efficient arbitrage when other tests do not

market integration efficiency of arbitrage and imperfect competition methodology and application to u s celery this paper develops and applies a methodology to test for efficiency of interregional commodity arbitrage application of the methodology requires only time series data on prices for alternative cities regions countries or product forms yet the approach is capable of generating evidence on a number of market parameters including market integration arbitrage efficiency the magnitude of marketing margins product substitutability and competitiveness of markets estimation is based on a switching regression model with three regimes efficient arbitrage relative shortage and relative glut results from application of the model to u s celery marketing indicated significant departures from efficient arbitrage for both california and florida celery

sustainable transmission planning in imperfectly competitive electricity industries balancing economic and environmental outcomes abstract we explore the role of a transmission system operator tso that builds a transmission line to accommodate renewable energy in order to lower emissions as required by government policy in contrast to central planning a tso in a deregulated electricity industry can only indirectly influence outcomes through its choice of the transmission line capacity via a bi level model we show that this results in less transmission capacity and with limited emissions control in a perfectly competitive industry vis a vis a benchmark centrally planned system a carbon charge on industry that fully accounts for the cost of pollution damage leads to a perfect alignment of incentives and maximised social welfare only under perfect competition by contrast a carbon charge may actually lower social welfare under a cournot oligopoly as the resulting reduction in consumption facilitates the further exercise of market power

price maker self scheduling in a pool based electricity market a mixed integer lp approach this paper addresses the self scheduling problem faced by a price maker to achieve maximum profit in a pool based electricity market an exact and computationally efficient mixed integer linear programming milp formulation of this problem is presented this formulation models precisely the price maker capability of altering market clearing prices to its own benefits through price quota curves no assumptions are made on the characteristics of the pool and its agents a realistic case study is presented and the results obtained are analyzed in detail

the effect of unionization on the gender earnings gap in canada 1971 1981 the male female earnings differential in canada is investigated with particular attention to the effect of trade unions on the gender earnings gap an augmented version of the human capital theory based earnings equation is used as the empirical framework of the study gender specific earnings equations are estimated using cross sectional aggregate data for metropolitan cities and regions in canada for 1971 and 1981 the empirical results for 1971 indicate that unionization increases the annual earnings of males more than of females whereas the 1981 results indicate that trade unions decrease the male female earnings gap however the latter evidence is not statistically significant the study suggests that the increase in female participation in trade unions was an important factor in reducing the gender earnings gap over the period 1971 1981

transmission congestion and competition on power generation expansion generation expansion planning involves decisions on location and capacity of new generation which may lead to adding or relieving congestion in transmission lines and to increasing or reducing competition in deregulated markets generation expansion may encounter congestion in the transmission network by constrained single line flows as well as flowgate transfer capabilities in this paper a model to study the interaction between competition and transmission congestion on power generation expansion is proposed the generation expansion problem is modeled as a cournot competition game network transmission constraints are included in the optimal generation expansion problem to comply with power flow limits results from a five bus power network and the ieee 24 bus system are presented and discussed

linear complementarity models of nash cournot competition in bilateral and poolco power markets two cournot models of imperfect competition among electricity producers are formulated as mixed linear complementarity problems lcps and a simple example is presented to illustrate their application the two models simulate bilateral markets the models include a congestion pricing scheme for transmission but other transmission pricing approaches can also be represented in this framework the two models differ from each other in that one has no arbitrage between nodes of the network while in the other model arbitragers erase any noncost based differences in price the latter bilateral model turns out to be equivalent to a cournot model of a poolco the models differ from other cournot market models in that they include both of kirchhoff s laws via a dc approximation can include arbitragers possess unique solutions and are readily solved by efficient lcp algorithms the key assumption that permits their formulation as lcps is that each producer naively assumes that its output will not affect transmission prices

mill pricing versus spatial price discrimination under bertrand and cournot spatial competition this paper asks two questions about spatial competition first does spatial price discrimination lead to lower prices and higher welfare than mill pricing if firms hold the bertrand conjecture the answer is yes for most values of fixed cost but for the cournot conjecture the opposite is true second does the introduction of space into the oligopoly models of bertrand and cournot change their results the answer is generally no however spatial bertrand prices exceed marginal cost unlike their spaceless counterparts these answers are obtained using models of spatial competition of which the cournot mill pricing models are new in spatial competition significant transport costs and economies of scale bestow market power upon firms this paper addresses two questions about spatial competition first does spatial price discrimination yield lower prices and higher social welfare producer plus consumer surplus than fo b mill pricing under spatial price discrimination differences in the delivered prices charged by a firm bear no necessary relationship to differences in transport costs in contrast a mill pricing firm sets a single price at its plant and customers bear the cost of transport this paper answers this question for the cases in which firms adopt the bertrand or cournot conjectures concerning how rivals will react to price and output changes this question is important because of the superficial appeal of mill pricing which stems from its imitation of the spatial structure of marginal costs the presence of spatial price discrimination by contrast is often considered to be evidence of the presence of market power at least in part for these reasons the us robinson patman antitrust act and great britain s price commission favor mill pricing nevertheless spatial price discrimination remains ubiquitous in the us europe and japan greenhut 1981 the second question is how does the introduction of space into the original oligopoly models of cournot and bertrand change their results cournot

a robust linear approach for offering strategy of a hybrid electric energy company this paper presents a new approach for determining the day ahead bidding strategies of a large scale hybrid electric energy company the company has both energy generation and energy retailing businesses in a competitive electricity market demand response programs are also considered in the retail side of the company in order to hedge the risk of participation in wholesale market this paper introduces a max min bilevel mathematical programming with equilibrium constraint model for offering a strategy that manages the risk of uncertain forecasted rivals bids by robust optimization the max min bilevel model is converted to its equivalent single level optimization using karush kuhn tucker optimality conditions the duality theory is utilized to find the equivalent ordinary maximization model of the max min problem strong duality theory and big m method are also used to linearize the final model of offering strategy applicability of the proposed approach is shown by implementing it on the ieee 118 bus test system

dynamic firm behavior and regional deadweight losses from a u s oil import fee this paper analyzes the national and regional efficiency aspects of a 5 per barrel fee on crude oil imported into the united states the emphasis of the paper is twofold firstly a dynamic model of firm behavior capturing explicitly both expectations formation and resource nonrenewability is used to assess the impact of the fee on domestic firm behavior and secondly the regional breakdown of the producer and consumer surplus changes tariff revenues and deadweight losses or gains is performed by taking explicit account of stock ownership in oil producing and oilconsuming corporations and consumption by end use sector the import fee is a politically contentious issue but one that refuses to go away in political circles the perceived benefits of the fee are usually seen as increased energy security and aid to a beleaguered domestic oil and gas industry perceived drawbacks are usually inflation and regional inequities the last point is the political downfall of the tariff producing states are seen to gain from the higher prices brought on by the tariff and consuming states are seen to lose representatives from states with little or no production and this of course covers most states are hard pressed to sell the idea to constituents this paper thus deals with two of the most important questions from a policy perspective the regional incidence of the tariff and its impact on domestic output in a related paper 20 i discuss the economic rationales for an oil import fee i find that any optimal tariff arguments based on u s monopsony power in the world oil market are not valid in today s market estimates show an import supply curve of approximately infinite elasticity and thus an optimal tariff near zero i dispense with the energy security rationale for a tariff as well arguing that any risk of a disruption of imports in the future and that risk may be small in today s market is best handled with other policy tools such as government owned or subsidized stockpiles these conclusions imply that a tariff would impose deadweight losses on the u s economy by encouraging overproduction of domestic petroleum resources and underconsumption of petroleum imports how much overproduction results from the tariff is the focus of section ii below a

spatial market integration in the presence of threshold effects a large body of research has evaluated price linkages in spatially separate markets much recent research has applied models appropriate for nonstationary data such analyses have been criticized for their ignorance of transactions costs which may inhibit price adjustments and thus affect tests of integration this analysis utilizes threshold autoregression and cointegration models to account for a neutral band representing transactions costs we evaluate daily price linkages among four corn and four soybean markets in north carolina nonlinear impulse response functions are used to investigate dynamic patterns of adjustments to shocks our results confirm the presence of thresholds and indicate strong support for market integration though adjustments following shocks may take many days to be complete in every case the threshold models suggest much faster adjustments in response to deviations from equilibrium than is the case when threshold behavior is ignored a large amount of empirical research has evaluated the extent to which spatially separate markets are integrated though the term is used loosely in the literature tests of market integration usually consider the extent to which shocks are transmitted among spatially separate markets the integration of markets can have important implications for price discovery and the operation of the market since persistent deviations from integration may imply riskless profit opportunities for spatial traders