the single european market and smes a comparison of its effects in the food and clothing sectors in the uk and portugal smallbone d cumbers a syrett s and leigh r 1999 the single european market and smes a comparison of its effects in the food and clothing sectors in the uk and portugal reg studies 33 51 62 the creation of a single european market in 1992 represented an attempt to accelerate the process of european economic integration however in terms of the actual impact of the single market process most of the attention so far has concentrated upon the implications for the large firm corporate sector in comparison there has been a lack of in depth analysis of the effects of the single market for small and medium sized enterprises smes despite the contribution to employment generation that is often prescribed for them in policy terms this paper seeks to stimulate a more informed debate about the consequences of the single market for smes by contrasting the effects on firms in different spatial and sectoral contexts drawing upon original survey evidence of smes in the food and clothing sectors in t

the impact of aid on growth revisited do donor motives matter abstract the typical identification strategy in aid effectiveness studies assumes that donor motives do not influence the impact of aid on growth we call this homogeneity assumption into question constructing a model in which donor motives matter and testing the assumption empirically

price determination in the eu ets market theory and econometric analysis with market fundamentals abstract we investigate the price determination of the european union emission allowance eua of the european union emissions trading scheme eu ets we postulate an uncertain permit price and risk averse firms which have the possibility to hedge in the forward market the firms produce final goods abate their emissions and trade permits in the permit market the dependence of the equilibrium permit price on exogenous variables is studied in a permit market model we test our theoretical findings with empirical data from 2005 to 2010 in the eu ets market we use daily forward prices of eua as our dependent variable we use several econometric models with multiple stationary time series to discover that there is a strong relationship between the fundamentals such as german electricity prices and gas and coal prices with the price of eua we find that the eua forward price depends on fundamentals especially on the price of electricity as well as on the gas coal difference in a statistically significant way

a seasonal copula mixture for hedging the clean spark spread with wind power futures abstract the recently introduced german wind power futures have brought the opportunity to address the problem of volume risk in wind power generation directly in this paper we study the hedging benefits of these instruments in the context of peak gas fired power plants by employing a strategy that allows trading in the day ahead clean spark spread and wind power futures to facilitate hedging decisions we propose a seasonal copula mixture for the joint behavior of the day ahead clean spark spread and the daily wind index the model describes the data surprisingly well both in terms of the marginals and the dependence structure while being straightforward and easy to implement based on monte carlo simulations from the proposed model the results indicate that significant benefits can be achieved by using wind power futures moreover a comparison study shows that accounting for asymmetry tail dependence and seasonality in the dependence structure is especially important in the context of risk management

genco s integrated trading decision making to manage multimarket uncertainties fossil fuel generation companies gencos trade in multiple uncertain energy markets fuel and carbon markets on upstream side while electricity market on downstream side global economic and environmental benefits lead these markets to pursue overlapping goals making them highly interactive gencos may identify optimal trading strategies for upstream and downstream trading in an integrated framework to manage an overall secure and profitable position further severe unpredictability of energy market prices may necessitate a genco to make trading plans which perform better meeting its goals under severe uncertainty of involved markets this paper proposes information gap decision theory igdt based approach to select three interrelated trading portfolios in an integrated framework results from a realistic case study provide a comprehensive decision insight to address risk averse and risk seeking behavior of genco explicitly highlighting importance of co variation in prices of interactive markets

price setting supergames with capacity constraints this paper examines the role of industry capacity in enforcing collusion in the context of repeated games for a fixed capacity per firm it is shown that changes in the number of firms have a non monotone effect on the best enforceable cartel price this is due to the fact that while an additional firm lowers the share that each of the other firms enjoys at the collusive price it also increases the losses to each firm should the cartel fail

origins and development of the eu ets the successful creation of the european union emissions trading scheme eu ets was not inevitable countries such as canada and japan which might be thought to have a less complex and more cohesive cultural and institutional context failed to do so europe succeeded for a number of reasons with a single market for the economy the logic of a single market for environment is inexorable the european commission which had failed in its earlier efforts to introduce a carbon energy tax made the case for trading with great skill and persistence on the basis of qualified majority voting which meant no country had a veto the uk and denmark initiated their own national schemes and there was a serious risk of balkanising the market with up to 27 different schemes with the losses of scale and scope this would entail meeting the union s kyoto commitments required a substantive pan european response and eu ets was the most credible and effective way of doing so the european parliament and environmental non governmental organisations played a constructive role pushing for more auctioning of allowances and less of them allocated centrally free allocation managed by member states ms was a necessary condition to achieve the support needed so they failed to achieve these objectives in the initial phase but they characterize the commission s proposals post 2012

repeated auctions with impatient bidders and externalities author affiliation ki eun rhee krhee kdischool ac kr acknowledgment i am grateful to kyle bagwell for providing invaluable advice and support throughout the research process i also thank michael riordan eiichi miyagawa and two anonymous referees for helpful comments 1 introductioncollusive bidding behavior has been conventionally studied in a static setup often relying on some unspecified repeated interaction story for the enforcement of a cartel 1 it is not clear however whether the results from static auctions immediately carry over to a repeated setup when bidders are impatient and the enforcement or the participation constraint is binding moreover many empirical analyses for detecting collusion rely on an explicitly repeated structure rendering a theoretical analysis of collusion in a repeated setup necessary 2 several recent theoretical developments in repeated auctions have been made by aoyagi 2003 2007 skrzypacz and hopenhayn 2004 and blume and heidhues 2006 taking standard auctions as stage games these articles present various collusive bidding schemes with asymmetric punishments that outperform the bid rotation scheme which is known to be optimal in static auctions mcafee and mcmillan 1992 this article studies collusive bidding behavior in repeated auctions among both patient and impatient bidders when the outside option of the participation constraint is endogenized because of externalities a stage game involves negative externalities among the bidders when any losing bidder is worse off if a rival wins the good than if no one wins it auctions with externalities have been introduced most notably by jehiel and moldovanu 1996 and jehiel moldovanu and stacchetti 1996 these auctions describe environments in which the outcomes of auctions affect the nature of ensuing market interactions among potential bidders a wide variety of situations in which bidders are a set of oligopoly firms competing in the same market apply to this setting for example procurement auctions for highway construction contracts studied empirically by porter and zona 1993 may qualify as repeated independent private value auctions with negative externalities except that the lowest bidder wins 3 consecutive highway lettings were distributed by the department of transportation dot to a set of oligopoly firms competing in the same industry negative externalities may arise because a firm that wins the auction may experience learning by doing which provides the winning firm with a comparative cost advantage or because the winning firm may gain a reputation that gives the firm an advantage in future private sector competition as jehiel and moldovanu 1996 and jehiel moldovanu and stacchetti 1996 discuss the issue of participation is nontrivial in auctions with externalities because the ex ante payoff a bidder expects by not participating is no longer zero as in standard auctions but is rather endogenously determined by the actions of the other bidders thus an analysis of collusive bidding behavior under both nonbinding and binding participation constraints seems especially worth studying for these auctions the main findings of this article are that i there are no bidding wars along the equilibrium path and bidders expect to receive the maximal continuation values when they are both patient and impatient when bidders are impatient the optimal collusive bidding scheme involves ii a lower threshold type above whom bidding starts when externalities are small or iii more frequent jumps i e more sorting of bidders types when externalities are large in both cases seller s ex ante profit is higher when bidders are impatient if we consider patient bidders to be the ones that are interacting in a stable market 4 results carry an empirical implication either less frequent sales or fewer bid levels in auctions that are let out in stable markets will be observed

hedging and liquidity this article develops a model for evaluating alternative hedging strategies for financially constrained firms a key advantage of the model is the ability to capture the intertemporal effects of hedging on the firm s financial situation we characterize the optimal hedge a wide range of alternative hedging strategies can be specified and the model allows us to determine in each case if the hedging strategy raises or lowers firm value and by how much we show that hedging firm value hedging cash flow from operations and hedging sales revenue are not optimal the article highlights the fact that every hedging strategy comes packaged with a borrowing strategy which requires careful consideration futures markets often provide the most liquid and convenient instruments for managing risk however because futures contracts are marked to market it is often impossible to simultaneously hedge cash flows and values for example a futures contract that locked in the value of gold that a corporation planned to extract in one year would generate an uncertain cash flow pattern over the year this article examines how liquidity and cash flow timing problems associated with different hedging strategies can affect a firm s value in our model the objective for hedging is to increase the firm s financial flexibility an optimal hedge maximizes the firm s liquidityslack in the form of excess cash or unused debt capacitywhen liquidity is most valuable this lowers the danger of costly financial distress reduces the effective cost of external financial constraints and makes value maximizing investments affordable a firm with no financial constraints does not gain from hedging and the higher the firm s financial constraints the greater the potential value of hedging the value of hedging depends critically on the design of the hedging strategy we show that the optimal hedge minimizes the variability in the marginal value of the firm s cash balances such a hedge efficiently redistributes cash balances across different states and periods taking cash from those states for which the marginal cost of the financial constraint is low and giving cash to those states for which the marginal

the potential of decentralized power to heat as a flexibility option for the german electricity system a microeconomic perspective abstract one fundamental challenge of the german energy transition for the electricity market is the growing imbalance between inflexible generation and generally inelastic load against this background we investigate the future potential of decentralized power to heat p2h as an additional demand side flexibility option for the german electricity system precisely we analyze the case of hybrid systems where conventional gas and oil condensing boiler systems are equipped with an electric heating rod in contrast to previous approaches we set our focus on the economic incentives at household level only if the switch to a p2h hybrid system can reduce individual heating expenses significantly a considerable number of these systems will be installed for this purpose we implemented an integrated approach combining three distinct simulation modules first a stochastic simulation of the electricity spot market prices in 2020 was conducted second average heat load profiles were generated based on a standard bottom up analysis both results were then fed into an optimization model calculating the cost minimizing paths of heat generation at household level during the year 2020 the simulated annual savings prove modest as long as household electricity prices are not heavily reduced through political influence

a study of collusion in first price auctions this paper examines the bidding for school milk contracts in florida and texas during the 1980s in both states firms were convicted of bid rigging the data and legal evidence suggest that the cartels in the two states allocate contracts in different ways one cartel divides the market among members while the other cartel also uses side payments to compensate members for refraining from bidding we show that both forms of cartel agreements are almost optimal provided the number of contracts is sufficiently large in the auction the cartel bidder may face competition from non cartel bidders the presence of an optimal cartel induces an asymmetry in the auction the selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non cartel bidder the data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels

bid rigging and the threat of government prosecution in this article i develop a simple bidding model in which collusion is endogenous buyers at a first price sealed bid auction decide whether to rig their bids given that they face the threat of government prosecution a legal authority chooses whether to investigate the buyers on the basis of the bids tendered in the unique sequential equilibrium of the game buyers rig their bids with positive probability but the legal authority can never ascertain on the basis of the bids alone that a conspiracy has formed

dispatch planning using newsvendor dual problems and occupation times application to hydropower abstract we consider price driven dispatch planning under price uncertainty a storable commodity is optimally sold and purchased over time first we consider models where the storage level is constrained in expectation the dual of the corresponding optimization problem is related to the newsvendor problem exact solutions of bang bang type are given the second methodology is for high frequency dispatch decisions in multistage stochastic programming models to overcome the curse of dimensionality prices are modeled by occupation times at price levels in a case study we consider a pumped storage hydropower plant numerical solutions are given which have similar patterns as for the first exactly solvable problems

fairness in the international allocation of development aid this paper assesses the allocative performance of foreign aid donors it does so by identifying the consistency of the share of donor aid allocated to each developing country with these their shares of global poverty a given donor s allocative performance is maximised if the share of its aid to each developing country exactly equals its share of global poverty this is equated with fairness in the international allocation of aid the allocative performance of all donors all bilateral donors all multilateral agencies all non dac donor countries the eu france germany japan the united kingdom and the united states for the years 2010 15 is assessed the best performance is exhibited by all bilateral donors while that for an individual donor is exhibited by the united kingdom non dac donors exhibit the worst performance the paper also identifies which developing countries receive the most and least aid relative to their shares of global poverty

optimal operation of a chp plant participating in the german electricity balancing and day ahead spot market abstract during the last years operators of combined heat and power chp plants are challenged by changing circumstances in the electricity markets while ensuring a stable heat and power supply for customers chp plant operators seek to maximise the profitability of the chp plant operation we propose a comprehensive concept and illustrate its potential for increasing the profitability when operating a chp plant with heat storage by participating in multiple electricity markets for this purpose the structure of the decision making process consisting of bid submission market clearing and chp plant operation planning is represented a multistage stochastic mixed integer linear programming milp model is developed that simultaneously optimises the operation of the chp plant with heat storage and bidding in sequential electricity markets price uncertainty is captured by means of stochastic processes the proposed concept is applied to the real case of a municipal energy supply company that participates in the german day ahead spot and balancing market results of the case study illustrate how trading in sequential electricity markets can result in an increased profitability of the chp plant operation where additional revenues from trading offset higher generation costs furthermore we exemplify how the optimal operation of the chp plant and heat storage device are adjusted according to revenue potential in multiple electricity markets

greener more integrated and less volatile a quantile regression analysis of italian wholesale electricity prices abstract this paper provides estimates of quantile regression models of the relationship between italian day ahead electricity prices the supply of renewables and the inception of a new cable sapei linking sardinia with the italian peninsula in the 2006 2015 time window the results confirm the merit order effects detected in the existing literature both for photovoltaics and wind power more strongly in market conditions characterised by moderately low price levels and with some implied increase in volatility the new cable has apparently challenged the ability of power generating companies to extract value through price spikes has mitigated volatility and its effects have been complementary with those of renewables effects from photovoltaics are more sensitive to robustness checks differences across zonal markets are nonetheless detected

the human development index yet another redundant composite development indicator abstract in its human development report 1990 the united nations development program undp proposes yet another composite indicator of development levels the human development index hdi the hdi assesses intercountry development levels on the basis of three so called deprivation indicators life expectancy adult literacy and the logarithm of purchasing power adjusted per capita gdp using simple statistical analysis this paper questions both the composition of the hdi and its usefulness as a new index of development it concludes that the hdi is both flawed in its composition and like a number of its predecessors fails to provide insights into intercountry development level comparisons which preexisting indicators including gnp per capita alone cannot

high penetration wind generation impacts on spot prices in the australian national electricity market this paper explores wind power integration issues for the south australian sa region of the australian national electricity market nem by assessing the interaction of regional wind generation electricity demand and spot prices over 2 recent years of market operation sa s wind energy penetration has recently surpassed 20 and it has only a limited interconnection with other regions of the nem as such it represents an interesting example of high wind penetration in a gross wholesale pool market electricity industry our findings suggest that while electricity demand continues to have the greatest influence on spot prices in sa wind generation levels have become a significant secondary influence and there is an inverse relationship between wind generation and price no clear relationship between wind generation and demand has been identified although some periods of extremely high demand may coincide with lower wind generation periods of high wind output are associated with generally lower market prices and also appear to contribute to extreme negative price events the results highlight the importance of electricity market and renewable policy design in facilitating economically efficient high wind penetrations

double sided auction mechanism design in electricity based on maximizing social welfare an efficient electricity double sided auction mechanism should control market power and enhance the social welfare of the electricity market based on this goal the paper designs a new double sided auction mechanism in the new mechanism the social welfare contribution of each participant plays a pivotal role because this contribution is the critical factor in market clearing payment settling and transaction matching rules in particular each winner of the auction can gain transfer payments according to his contribution to social welfare in the electricity market and this gives the mechanism the ability to control the market power of some participants at the same time this mechanism ensures that the market organizer balances his budget we then conduct a theoretical and empirical analysis based on the spanish electricity market both of the results show that compared to the uniform pricing mechanism the new mechanism can reduce market power of participants and enhance the social welfare of the electricity market

risk constrained self scheduling of hydro wind units for short term electricity markets considering intermittency and uncertainty abstract in view of the intermittency and uncertainty associated with both the electricity production sector of restructured power system and their competitive markets it is necessary to develop an appropriate risk managing scheme so that it is desirable to trade off between optimum utilization of intermittent generation resources i e renewable energy resources uncertain market prices and related risks in order to maximize participants benefits and minimize the corresponding risks in the multi product market environment the main goal of this paper is to investigate risk management by introducing a novel multi risk index to quantify expected downside risk edr which is caused by both the wind power and market price uncertainties value at risk var method is used to assess the mentioned risk issue by the proposed weighted edr so that an optimal trade off between the profit and risk is made for the system operations also the roulette wheel mechanism is employed for random market price scenario generation wherein the stochastic procedure is converted into its respective deterministic equivalents moreover the autoregressive integrated moving average arima model is employed to characterize the stochastic wind farm wf generation by predetermined mean level and standard deviation of wind behavior as well as temporal correlation the problem is formulated as a mixed integer stochastic framework for a hydro wind power system scheduling and tested on a generation company genco

valuation and optimal operation of electric power plants in competitive markets we present an algorithm for the valuation and optimal operation of hydroelectric and thermal power generators in deregulated electricity markets real options theory is used to derive nonlinear partial integro differential equations pides for the valuation and optimal operating strategies of both types of facilities the equations are designed to incorporate a wide class of spot price models that can exhibit the same time dependent mean reverting dynamics and price spikes as those observed in most electricity markets particular attention is paid to the operational characteristics of real power generators for thermal power plants these characteristics include variable start up times and costs control response time lags minimum generating levels nonlinear output functions and structural limitations on ramp rates for hydroelectric units head effects and environmental constraints are addressed we illustrate the models with numerical examples of a pump storage facility and a thermal power plant this pide framework can achieve high levels of computational speed and accuracy while incorporating a wide range of spot price dynamics and operational characteristics

auctions or grandfathering the political economy of tradable emission permits despite the prevalence of grandfathered permits we still observe that a hybrid policy in which a fraction of initial emission permits is distributed through auctions is adopted in some cases we also observe that some polluting industries support auctioned permits and that most environmental groups support grandfathered permits this paper attempts to explain these phenomena from the perspective of political economy and investigates the conditions under which grandfathering auctions or a hybrid instrument will be the equilibrium policy by constructing a two stage lobbying game in which the type of policy instrument auction grandfathering or a hybrid instrument is determined in the first stage and then the number of permits is decided in the second stage we highlight the strategic interaction of the lobbying activities between the two stages in explaining the behavior of the lobbying groups

on the design of optimal grandfathering schemes for emission allowances to meet its commitment under the kyoto protocol the eu plans to implement an emissions trading system whith grandfathering of allowances besides having distributional impacts the choice of the grandfathering scheme may affect efficiency if firms anticipate how future allocations depend on upcoming decisions in this paper we determine central design rules for optimal grandfathering within a simple two period model we find that for small open trading systems where allowance prices are exogenous first best second period grandfathering schemes must not depend on firm specific decisions in the first period second best schemes correspond to a ramsey rule of optimal tax differentiation and are generally based on both previous emissions and output however ofr closed emissions trading systems i e endogeneous allowance prices firstand second best rules coincide and must not depend on previous output levels they consist of an assignment proportional to the emissions in the first period plus a term which does not depend on firm specific decisions in either of the two periods

joint price and volumetric risk in wind power trading a copula approach abstract this paper examines the dependence between wind power production and electricity prices and discusses its implications for the pricing and the risk distributions associated with contracts that are exposed to joint price and volumetric risk we propose a copula model for the joint behavior of prices and wind power production which is estimated to data from the danish power market we find that the marginal behavior of the individual variables is best described by arma garch models with non gaussian error distributions and the preferred copula model is a time varying gaussian copula as an application of our joint model we consider the case of an energy trading company entering into longer term agreements with wind power producers where the fluctuating future wind power production is bought at a predetermined fixed price we find that assuming independence between prices and wind power production leads to an underestimation of risk as the profit distribution becomes left skewed when the negative dependence that we find in the data is accounted for by performing a simple static hedge in the forward market we show that the risk can be significantly reduced furthermore an out of sample study shows that the choice of copula influences the price of correlation risk and that time varying copulas are superior to the constant ones when comparing actual profits generated with different models

competing for the island lifeline european law state aid and regional public services bennett p 2006 competing for the island lifeline european law state aid and regional public services regional studies 40 953 966 ensuring the freedom to provide services in europe often means that state subsidies for loss making but essential services are subject to competitive tendering for the past three decades lifeline ferry services to the islands of western scotland have been operated by the state owned company caledonian macbrayne state owned companies are not exempt from european union state aid and procurement rules however and the scottish executive is about to issue an invitation to tender for these services this paper examines the aims of european union rules on state aid procurement and services of general economic interest and their application to ferry services in the spatial periphery of europe the advantages and disadvantages of competitive tendering are then considered focusing on the consequences for efficiency labour quality and investment and the likelihood o

on quota violations of opec members abstract over the last decades quota violations have become a norm for opec countries however the academic literature on opec focuses more on its production behavior than on analyzing the quota allocation process or characterizing quota violation patterns this paper offers a theoretical model with empirical evidence to explain opec members incentives for abiding or violating quotas we first offer a cartel model with a quota allocation rule and an endogenous capacity choice the model highlights the trade off between building spare capacity to bargain for a higher legitimate quota versus risking quota violation punishment using the quarterly data from 1995 to 2007 we empirically support the main results and intuitions for the model our empirical evidence is consistent with a theoretical framing in which capacity constraints work as an enforcement mechanism in good times and opec s quota system disciplining its members in bad times

land conversion at the urban fringe a comparative study of japan britain and the netherlands in the 1980s the multiplier between land values for agricultural and urban uses was found to run at 50 200 times or even higher in the areas surrounding expanding cities in japan and britain co

the allocation of aid among developing countries a comment on mcgillivray s performance index abstract mcgillivray s paper in this journal proposed an index which he claimed ranks donors by the progressiveness with which they allocate their development aid among recipients it is shown here that his index contains a small country bias so that a donor may improve its performance by taking aid from a poor large country and giving it to a small richer one

collusion in uniform price auctions experimental evidence and implications for treasury auctions in uniform price auctions of shares there exist collusive equilibria in which bidders capture the entire surplus from the auction as well as competitive equilibria in which the auctioneer captures the entire surplus from the auction we provide experimental evidence that in uniform price auctions non binding pre play communication facilitates convergence to collusive equilibrium outcomes on the other hand regardless of the opportunities for communication in discriminatory auction experiments subject strategies conform closely with the unique equilibrium in undominated strategies in which bidders gains are equal to the smallest tick size in the bidding schedule this evidence suggests that uniform price auctions of treasury securities may result in lower revenues than the currently employed discriminatory procedure

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

future wind and solar power market values in germany evidence of spatial and technological dependencies abstract achieving ambitious climate targets entails an extensive utilisation of renewable energy sources however due to weather dependent fluctuations generation from variable renewable energy vre sources is characterised by significantly lower market values in comparison to conventional technologies reinforced by a decline in electricity prices this development poses interesting questions as to its drivers and to what extent market values of wind and solar power can be influenced by the design of electricity markets against this background a scenario based analysis is conducted to trace the future development of market values using endogenously derived electricity prices considering different regional and technological vre diversification strategies and investments into vre technologies on a myopic basis the results show a continued decline in market values with increasing regional discrepancies indicating a growing importance of interregional interdependencies for assessing the profitability of vre furthermore from a system point of view a more distributed allocation of onshore wind capacities to contend with declining market values does not always prove to stabilise market values by facilitating a more constant feed in pattern contrary to expectation finally replacing onshore with offshore wind energy appears to be beneficial as it can lead to an overall increase in the market values of offshore onshore as well as pv generation technologies compared to other mitigation strategies this result raise interesting questions about the systemic economic value of offshore wind despite its higher lcoe in the context of market integration of vre

agent based analysis of capacity withholding and tacit collusion in electricity markets this paper employs agent based simulation to study energy market performance and in particular capacity withholding and the emergence of tacit collusion among the market participants the energy market is formulated as a repeated game where each stage game corresponds to an hourly energy auction each hourly energy auction is cleared using locational marginal pricing generators are modeled as adaptive agents capable of learning through the interaction with their environment following a reinforcement learning algorithm the sa q learning algorithm a modified version of the popular q learning is used test results on a two node power system with two and eight competing generator agents demonstrate the development of tacit collusion among generators even under competitive conditions

integrated risk management for an electricity producer abstract electricity suppliers face two sources of risk uncertainty of spot prices and uncertainty of production costs uncertainty in selling the output is usually solved by signing forwards and the two sources of risk are dealt with separately however managing the integrated risk optimally is the direction we will suggest we intend to analyse the problem a power producer is confronted to upon acting in a market where spot and forward agreements are available since forwards allow to sell production in advance at a given price but do not hedge against cost volatility the total risk can be reduced by selling also in the spot market the analysis is further detailed to encompass the spread option inherent in electricity production we find a benchmark value for forwards to sign and the optimal spot forward combinations the analysis is carried out by accounting for market figures for input and output variables in the german market eex

the allocation of aid among developing countries a multi donor analysis using a per capita aid index abstract this paper seeks to measure the relative aid giving performance of aid donors in terms of the inter recipient distribution of their aid performance is taken to be the extent to which a donor bases its aid allocation on the relative needs of recipient countries donor performance is measured by an income weighted per capita aid index formulated in this paper this index was calculated using the per capita allocations to a sample of 85 recipient countries in the years 1969 84 the performance of 17 dac members plus that of a number of multilateral agencies and that of the dac and these agencies combined is identified results indicate that the performance of four countries belgium finland denmark and norway was generally superior to that of other donors

where do all the windmills go influence of the institutional setting on the spatial distribution of renewable energy installation abstract promoting renewable energy sources is one policy response to climate change not only is there currently a debate over the best policy instrument it is also discussed whether the renewable energy production should be expanded centralized at locations with the highest production potential or decentralized close to load it is yet not fully understood what influences the spatial distribution of renewable energy installation i assess the effect of subsidy scheme and market design on the spatial distribution of wind energy installations by comparing a feed in tariffs versus market premiums and b uniform versus nodal pricing the analysis is based on theoretical considerations and using a six node test model that reflects the consumption and renewable resource distribution in several countries and regions the institutional setting has great influence on the spatial distribution and resulting system costs with uniform pricing a market premium only leads to a more decentralized expansion of renewable energy production than a tariff when sites share similar wind conditions spatially more distributed expansion of wind power performs better in terms of total costs and share of wind power in final demand when networks are restricted

a regime switching copula approach to modeling day ahead prices in coupled electricity markets abstract the recent price coupling of many european electricity markets has triggered a fundamental change in the interaction of day ahead prices challenging additionally the modeling of the joint behavior of prices in interconnected markets in this paper we propose a regime switching ar garch copula to model pairs of day ahead electricity prices in coupled european markets while capturing key stylized facts empirically substantiated in the literature this model easily allows us to 1 deviate from the assumption of normal margins and 2 include a more detailed description of the dependence between prices we base our empirical study on four pairs of prices namely germany france germany netherlands netherlands belgium and germany western denmark we find that the marginal dynamics are better described by the flexible skew t distribution than the benchmark normal distribution also we find significant evidence of tail dependence in all pairs of interconnected areas we consider as a first application of the proposed model we consider the pricing of financial transmission rights and highlight how the choice of marginal distributions and copula impacts prices as a second application we consider the forecasting of tail quantiles and evaluate the out of sample performance of competing models

do performance measures of donors aid allocation underperform indices of donor performance abound their recent popularity has occurred within the context of pessimism over aid s impact and optimism over the effect of changes in donor behaviour rankings of donor allocative performance aim to change donor behaviour either through direct pressure on governments or indirectly through public engagement the indices themselves rely on descriptive measures and typically claim methodological superiority over positive alternatives due to their simplicity however there are two problems first measures do not seem robust to simple variations in methodology second correlation amongst competing indices is low leading to a host of contradictory judgements this offers neither clear technical guidance nor consistent political pressure the advantages and disadvantages of the approach are discussed building upon the more general critique of aggregate indices i suggest a graphical solution that embraces the advantages of the descriptive approach including ease of public communication while avoiding some of its major weaknesses which typically stem from aggregation

an equal opportunity approach to the allocation of international aid abstract how should international aid be distributed the most common view is according to some utilitarian formula in order to maximize the average growth rate of aid recipients or the growth rate of income of the class of recipient countries recently the the world bank the world bank 1998 assessing aid world bank policy research report has published a study demonstrating the importance of good economic management within a recipient country in transforming aid into economic growth we identify good economic management with effort and ask how should aid be distributed to equalize opportunities among recipient countries for achieving growth according to roemer s theory of equal opportunity roemer j e 1998 equality of opportunity harvard university press cambridge ma

providing cheap land for social housing breaching the state aid regulations of the single european market tasan kok t groetelaers d a haffner m e a van der heijden h m h and korthals altes w k providing cheap land for social housing breaching the state aid regulations of the single european market regional studies european union member states are not permitted to provide aid that will distort competition by favouring certain undertakings or the production of certain goods which may then undermine trading in the european market this prohibition also affects government authorities that are willing to provide cheap land for social and affordable housing this paper reviews the ways in which land is provided for social housing in the netherlands and explores possibilities for reshaping current practices to make them compatible with the regime of the single european market tasan kok t groetelaers d a haffner m e a van der heijden h m h and korthals altes w k

understanding how land is exchanged co ordination mechanisms and transaction costs this paper seeks to increase our understanding of how land is exchanged between suppliers and demanders most current land price theories and the land use models which are derived from them assume that co ordination between suppliers and demanders is achieved through the price mechanism there are however other possible co ordination mechanisms including imposed rules and mutual trust in order to take account of these the effect of institutions has to be included in the theories transaction cost economics as one strand of institutional economics seeks to explain which co ordination mechanism is chosen in practice in this paper the application of these ideas is illustrated with findings from a detailed survey of how dutch housing associations acquire land it appears that these housing associations choose to acquire land through the mechanism of mutual trust when there is a network in place which they can use and to acquire through the market when that mechanism is not available this applicat

spatial dependence in wind and optimal wind power allocation a copula based analysis abstract the investment decision on the placement of wind turbines is neglecting legal formalities mainly driven by the aim to maximize the expected annual energy production of single turbines the result is a concentration of wind farms at locations with high average wind speed while this strategy may be optimal for single investors maximizing their own return on investment the resulting overall allocation of wind turbines may be unfavorable for energy suppliers and the economy because of large fluctuations in the overall wind power output this paper investigates to what extent optimal allocation of wind farms in germany can reduce these fluctuations we analyze stochastic dependencies of wind speed for a large data set of german on and offshore weather stations and find that these dependencies turn out to be highly nonlinear but constant over time using copula theory we determine the value at risk of energy production for given allocation sets of wind farms and derive optimal allocation plans we find that the optimized allocation of wind farms may substantially stabilize the overall wind energy supply on daily as well as hourly frequency

collusive pricing with capacity constraints in the presence of demand uncertainty we explore the response of collusive prices to changing demand conditions when firms operate under capacity constraints in the presence of demand uncertainty we find support for the conventional view that periods of low demand lead through the emergence of excess capacity to a breakdown of collusive pricing we also find that the nature of price wars depends on the degree of excess capacity in the industry while small amounts of excess capacity can lead firms to engage in mild price wars characterized by uniform price reductions and market share stability more severe price wars characterized by price undercutting and market share instability can emerge if excess capacity is sufficiently great finally our results lend support to the view that market share instability is a symptom of ineffective collusion

uncertainty in electricity markets from a semi nonparametric approach abstract this paper introduces a semi nonparametric snp methodology for the modeling of skewness leptokurtosis and high order moments in electricity markets we highlight the importance of accurately measuring these features in many contexts e g design of power plants with different technologies fuel prices and energy demand and the need for using flexible non normal densities we show that the snp approach describes the uncertainty in an electricity markets reducing the limitations that normality and parametric density functions impose our application covers a wide variety of colombian electricity variables including spot price national energy demand the climate index oni and the series of hydrologic inflows for different rivers for such variables we find that the snp outperforms the normal distribution in terms of accuracy measures based on maximum likelihood estimation as a result our methodology has direct applications for risk analysis and portfolio choice related to electricity markets and for implementing policies on electricity markets that improve efficiency and sustainability

a new index for electricity spot markets abstract different indexes are used in electricity markets worldwide to represent the daily behavior of spot prices however the peculiarities of these markets require a careful choice of the index based on mathematical formulation and its statistical properties choosing a bad index may influence the financial policies of market players since derivative pricing and hedging performance can be deeply affected in this paper with an initial theoretical analysis we intend to show that the most widely used indexes simple arithmetic average and weighted average with current volumes are poor representatives of the spot market we will then perform an analysis of the hedging strategy on a derivative instrument an asian option written on a reference index the resulting simulations applied to omel spain and eex germany are sufficiently clear cut to suggest that the decision to adopt an index to represent properly a market must be taken very carefully finally we will propose a new index fast index and after comparing it with the previous indexes will show that both theoretically and practically this index can be taken as a good electricity market synthetic indicator

the emissions trading paradox abstract this article considers the price history of co2 allowances in the eu emission trading scheme since european emissions trading started in 2005 the prices of allowances have varied between less than one and thirty euro per ton of co2 this previously unpredicted volatility and more notably a significant price crash in may 2005 led to the hypothesis that electricity producers might use their market power to influence the prices of allowances besides market power the combination of information asymmetry and price interdependencies between prices of primary goods especially electricity and allowances plays an important role in explaining the emissions trading paradox the model presented will show that banking can lead to such a price crash if market participators act rationally furthermore in such a scenario banking can be profitable for sellers at the cost of buyers

weekly self scheduling forward contracting and pool involvement for an electricity producer an adaptive robust optimization approach abstract this paper addresses the optimization under uncertainty of the self scheduling forward contracting and pool involvement of an electricity producer operating a mixed power generation station which combines thermal hydro and wind sources and uses a two stage adaptive robust optimization approach in this problem the wind power production and the electricity pool price are considered to be uncertain and are described by uncertainty convex sets to solve this problem two variants of a constraint generation algorithm are proposed and their application and characteristics discussed both algorithms are used to solve two case studies based on two producers each operating equivalent generation units differing only in the thermal units characteristics their market strategies are investigated for three different scenarios corresponding to as many instances of electricity price forecasts the effect of the producers approach whether conservative or more risk prone is also investigated by solving each instance for multiple values of the so called budget parameter it was possible to conclude that this parameter influences markedly the producers strategy in terms of scheduling profit forward contracting and pool involvement these findings are presented and analyzed in detail and an attempted rationale is proposed to explain the less intuitive outcomes regarding the computational results these show that for some instances the two variants of the algorithms have a similar performance while for a particular subset of them one variant has a clear superiority

modeling the price dynamics of co2 emission allowances abstract in this paper we analyze the short term spot price behavior of carbon dioxide co 2 emission allowances of the new eu wide co 2 emissions trading system eu ets after reviewing the stylized facts of this new class of assets we investigate several approaches for modeling the returns of emission allowances due to different phases of price and volatility behavior in the returns we suggest the use of markov switching and ar garch models for stochastic modeling we examine the approaches by conducting an in sample and out of sample forecasting analysis and by comparing the results to alternative approaches our findings strongly support the adequacy of the models capturing characteristics like skewness excess kurtosis and in particular different phases of volatility behavior in the returns

tradeable carbon permit auctions how and why to auction not grandfather abstract an auction of carbon permits is the best way to achieve domestic carbon caps designed to limit global climate change to minimize administrative costs permits would be required at the level of oil refineries natural gas pipe lines natural gas liquid sellers and coal processing plants to maximize liquidity in secondary markets permits would be fully tradable and bankable the government would conduct quarterly auctions a standard ascending clock auction in which price is gradually raised until there is no excess demand would provide reliable price discovery an auction is preferred to grandfathering giving companies permits based on historical output or emissions because it allows reduced tax distortions provides more flexibility in distribution of costs provides greater incentives for innovation and reduces the need for politically contentious arguments over the allocation of rents

a theory of land prices when land is supplied publicly the case of the netherlands most attempts to explain land prices assume free competition between suppliers and demanders of land if there are constraints on this competition e g land use planning this is added as a modification to the theory when however the supply of building land is in the hands of public agencies which determine the volume and price of supply specified by land use and location a different theoretical approach is needed in this situation certain economic principles apply which determine the maximum and minimum prices at which land will be bought for development and at which serviced building land will be supplied for development however both the limits of this range and the actual land prices within it will depend on political choices made by the public agencies in the netherlands municipalities dominate the supply of land for development and redevelopment information about the way dutch municipalities make the political choices and about the actual land prices there suggests they make the politic

bidder collusion at forest service timber sales allegations of bidder collusion at forest service timber sales in the pacific northwest were common in the 1970s of course prices may be low for reasons other than collusion we formulate an empirical model that allows for both bidder collusion and supply effects and in which we control for demand conditions noncooperative behavior in which a single unit is sold the standard auction model is a special case it is found to be definitively outperformed by a model of collusion we also find that supply effects are dominated by collusion in determining the winning bids in the market

bid rotation and collusion in repeated auctions this paper studies bidder collusion with communication in repeated auctions when no side transfer is possible it presents a simple dynamic bid rotation scheme which coordinates bids based on communication history and enables intertemporal transfer of bidders payoffs the paper derives a sufficient condition for such a dynamic scheme to be an equilibrium and characterizes the equilibrium payoffs in a general environment with affiliated signals and private or interdependent values with ipv it is shown that this dynamic scheme yields a strictly higher payoff to the bidders than any static collusion scheme which coordinates bids based only on the current reported signals

targeting aid to the needy and deserving nothing but promises by reallocating aid to where it is needed most and where a productive use is most likely donors could help alleviate poverty in developing countries the rhetoric of donors suggests that this insight has increasingly shaped the allocation of aid we assess the poverty and policy orientation of bilateral and multilateral aid in different ways in addition to presenting stylised facts based on bivariate correlations we apply a tobit model that captures both altruistic and selfish donor motives we find little evidence supporting the view that the targeting of aid has improved significantly most donors provide higher aid to relatively poor countries but so far the fight against poverty has not resulted in a stronger focus on needy recipients with favourable local conditions the estimation results reveal that the policy orientation of aid critically depends on how local conditions are measured in general however donors appear to be less policy oriented than poverty oriented the response of donors to changing institutional and policy conditions in recipient countries turns out to be fairly weak we reject the proposition that multilateral aid is clearly superior to bilateral aid in terms of rewarding poor countries with better policies and institutions

european co2 prices and carbon capture investments we assess the option to install a carbon capture and storage ccs unit in a coal fired power plant operating in a carbon constrained environment we consider two sources of risk namely the price of emission allowance and the price of the electricity output first we analyse the performance of the eu market for co2 emission allowances specifically we focus on the contracts maturing in the kyoto protocol s first commitment period 2008 to 2012 and calibrate the underlying parameters of the allowance price process then we refer to the spanish wholesale electricity market and calibrate the parameters of the electricity price process we use a two dimensional binomial lattice to derive the optimal investment rule in particular we obtain the trigger allowance prices above which it is optimal to install the capture unit immediately we further analyse the effect of changes in several variables on these critical prices among them allowance price volatility and a hypothetical government subsidy we conclude that at current permit prices immediate installation does not seem justified from a financial point of view this need not be the case though if carbon market parameters change dramatically carbon capture technology undergoes significant improvements and or a specific governmental policy to promote these units is adopted

the tyranny of international index rankings abstract international index rankings are popular but perhaps too persuasive they emphasize country differences where similarity is the dominant feature rankings based on doing business the human development index and freedom house can be misleading not because of wrong indicators but because the estimation of the scores ignores inherent uncertainty re estimated with a method that captures this uncertainty it becomes clear that ranking every adjacent country is a rather courageous activity

an ex post analysis of the effect of renewables and cogeneration on spanish electricity prices abstract growing concerns about climate change and energy dependence are driving specific policies to support renewable or more efficient energy sources such as cogeneration in many regions particularly in the production of electricity these policies have a non negligible cost and therefore a careful assessment of their impacts seems necessary in particular one of the most debated impacts is their effect on electricity prices for which there have been some ex ante studies but few ex post studies this article presents a full ex post empirical analysis by looking at use of technologies and hourly electricity prices for 2005 2009 in spain to study the effects that the introduction of renewable electricity and cogeneration has had on wholesale electricity prices it is particularly interesting to perform this study in spain where an active system of public support to renewables and cogeneration has led to a considerable expansion of these energy sources and electricity pricing is at the center of intense debate the paper reports that a marginal increase of 1 gwh of electricity production using renewables and cogeneration is associated with a reduction of almost 2 per mwh in electricity prices around 4 of the average price for the analyzed period

key worker housing welfare reform and the new spatial policy in england raco m key worker housing welfare reform and the new spatial policy in england regional studies under the labour government the character of spatial policy in england has been subject to significant change the emphasis has increasingly been on spatial policy as an active social policy this paper uses the example of public sector key worker housing programmes in england to exemplify and analyse the character of these changes it argues that the new approach also contains an explicit recognition that social policies can and should be re oriented towards the wider objectives of accumulation and competitiveness and this has broader implications for the organization and character of the welfare state raco m le logement des travailleurs essentiels la reforme du syteme de protection sociale et la nouvelle politique regionale au r u regional studies sous le gouvernement travailliste la politique regionale s est sensiblement modifiee de plus en plus on met l accent sur la politique regionale comme pol

tacit collusion in repeated auctions uniform versus discriminatory within an infinitely repeated game i compare the level and conduct of collusion under uniform and discriminatory auctions for this purpose i characterize the optimal collusive schemes and sets of sustainable profits under these auction formats i show that uniform auctions facilitate collusion more than discriminatory auctions the optimal penal code is equally severe under the two formats but bidders deviation incentives are weaker in uniform auctions given that the payoff irrelevant bids can be used to relax the enforcement problem this discussion is particularly relevant after the recent reforms in the electricity industry in england wales and elsewhere

25 years of aid allocation practice whither selectivity the 4p framework poverty population policy and proximity is introduced as a way of understanding a donor s aid allocation we use the two part model and examine the period 1982 2006 the results indicate that recent conclusions of increasing selectivity are misplaced for the seven major donors analyzed who together represent the majority of development aid indeed the effect of each of the commonly mentioned time trends selectivity the end of the cold war and the commencement of the global war on terror is much smaller than the role of donor heterogeneity which appears sizeable and entrenched

investments in eop technologies and emissions trading results from a linear programming approach and sensitivity analysis abstract this paper offers a general approach to valuating investments in end of pipe technologies eop technologies with special regard to an emissions trading scheme since investments of this kind affect production it is necessary to derive the required payments for a financial valuation and the constraints from production theory and production planning on this basis it is possible to develop a valuation model this model considers joint production activity level dependent and independent payments and specifically includes the indivisibility of the investment applying duality theory enables us to examine the determinants of the price ceiling for such an investment sensitivity analysis shows that tradable permits have several effects on an investment and do not always encourage environmentally beneficial investments in particular cases they may even be counterproductive

the anarchy of numbers aid development and cross country empirics the recent literature contains many stories of how foreign aid affects economic growth aid raises growth in countries with good policies or with difficult economic environments or outside the tropics or on average but with diminishing returns the diversity of the results suggests that many are fragile seven important aid growth papers are tested for robustness using 14 minimally arbitrary tests deriving mainly from differences among the studies themselves this approach investigates the importance of potentially arbitrary specification choices while minimizing the arbitrariness in testing choices all of the results appear fragile especially to sample expansion

does renewable energy generation decrease the volatility of electricity prices an analysis of denmark and germany although variable renewable energy vre technologies with zero marginal costs decrease electricity prices the literature is inconclusive about how the resulting shift in the supply curves impacts price volatility because the flexibility to respond to high peak and low off peak prices is crucial for demand response applications and may compensate for the losses of conventional generators caused by lower average prices there is a need to understand how the penetration of vre affects volatility in this paper we build distributed lag models with danish and german data to estimate the impact of vre generation on electricity price volatility we find that in denmark wind power decreases the daily volatility of prices by flattening the hourly price profile but in germany it increases the volatility because it has a stronger impact on off peak prices our analysis suggests that access to flexible generation capacity and wind power generation patterns contribute to these differing impacts meanwhile solar power decreases price volatility in germany by contrast the weekly volatility of prices increases in both areas due to the intermittency of vre thus policy measures for facilitating the integration of vre should be tailored to such region specific patterns

analyzing online b2b exchange markets asymmetric cost and incomplete information this research applies the discriminating auction to analyze the online b2b exchange market in which a single buyer requests multiple items and several suppliers having equal capacity and asymmetric cost submit bids to compete for buyer demand in the present model we examine the impact of asymmetric cost and incomplete information on the participants in the market given the complete cost information each supplier randomizes its price and the lower bound of the price range is determined by the highest marginal cost in addition the supplier with a lower marginal cost has a larger considered pricing space but ultimately has a smaller equilibrium one than others with higher marginal costs when each supplier s marginal cost is private information the lowest possible price is determined by the number of suppliers and the buyer s reservation price comparing these two market settings we find whether it is beneficial to buyers or suppliers depends on the scale of the bid process and the highest marginal cost when the number of suppliers and the difference between the highest marginal cost and the buyer s reservation price are sufficiently large each supplier can gain a higher profit if the marginal costs are private information on the contrary when the highest marginal cost approaches the buyer s reservation price complete cost information benefits the suppliers

energy income causality in oecd countries revisited the key role of capital stock abstract this paper applies a recent advance in panel analysis to estimate the panel cointegration and panel vector error correction models for a set of 22 oecd countries using annual data covering the period 1960 2001 we investigate the relationship between energy consumption and income using an aggregate production function and controlling for the capital stock as well as by exploring the dynamic directions of the causality among these three variables we firstly obtain solid and convincing evidence of a fairly strong long run equilibrium relationship among them secondly it is found that the capital stock is much more productive than energy consumption third it is observed that neglecting the impact of the capital stock on income tends to overestimate the effect of energy consumption finally the panel causality test shows bi directional causal linkages exist among energy consumption the capital stock and economic growth overall the findings reveal that the capital stock plays a critical role in realizing the dynamic relationship between energy and income

spatial dependencies of wind power and interrelations with spot price dynamics abstract wind power has seen strong growth over the last decade and increasingly affects electricity spot prices in particular prices are more volatile due to the stochastic nature of wind such that more generation of wind energy yields lower prices therefore it is important to assess the value of wind power at different locations not only for an investor but for the electricity system as a whole in this paper we develop a stochastic simulation model that captures the full spatial dependence structure of wind power by using copulas incorporated into a supply and demand based model for the electricity spot price this model is calibrated with german data we find that the specific location of a turbine i e its spatial dependence with respect to the aggregated wind power in the system is of high relevance for its value many of the locations analyzed show an upper tail dependence that adversely impacts the market value therefore a model that assumes a linear dependence structure would systematically overestimate the market value of wind power in many cases this effect becomes more important for increasing levels of wind power penetration and may render the large scale integration into markets more difficult

free euas and fuel switching abstract this paper focuses on the impact of euas on the optimal policy of a competitive electricity producer the effect of grandfathering is consistently shown to introduce significant distortions to the system it is theoretically shown that there is a threshold value of carbon price so that for prices above this the eua becomes an incentive for reduced production rather than a penalty for inefficient producers these theoretical results are supported by the data of one producer from italy and one from germany furthermore the empirical evidence concludes that the high level of free allowances may generate a shift in production from less to more polluting technologies

analysis of the probability distribution of lmp by central limit theorem the main goal of this paper is to provide an analytical study on the statistical behaviors of the electricity price at various conditions of the load and the network in order to achieve this goal a novel two step modeling is proposed for the electricity price at the first step it is proved that there is a linear relationship between the locational marginal prices lmp and the strategies of generating companies gencos in this linear relationship the lmp is decomposed to the weighted summation of the strategies of marginal units plus constant value at the second step the lmp is modeled by classic central limit theorem clt using this model an analytical relationship is derived between the price discovery mechanism and characteristics of its probability density function pdf as a result this paper shows analytically that increasing system load causes the price pdf deviates from the normal distribution on the other hand by decreasing system load the electricity price distribution tends toward the normal distribution the statistical studies on the real power markets data confirm these analytical results furthermore the simulation results of the ieee 300 bus test system illustrate the efficiency of the proposed model

discriminatory versus uniform treasury auctions evidence from when issued transactions abstract we use when issued transactions data to assess the treasury s current experiment with uniform auctions when issued volume is higher under uniform as compared to discriminatory auctions suggesting a higher information release which should reduce pre auction uncertainty and the winner s curse under uniform auctions when issued volatility falls after the auction and again after the outcome announcement the pattern is the opposite for discriminatory auctions this is further evidence that uniform auctions increase pre auction information and lower the short squeeze a direct comparison of markups in uniform and discriminatory auctions yields mixed results

market definition and dominant position abuse under the new electricity trading arrangements in england and wales abstract the electricity regulator in england and wales has published a consultation paper on the application of the uk competition act 1998 to the energy sectors the consultation is vital the law and economics of detecting anti trust violations in energy are still evolving in both the us and europe at the heart of anti trust analysis are the reasons why prices deviate from marginal cost scarcity rent static market power and dynamic tacit collusion under the new electricity trading arrangements neta market definition could be quite confusing and the absence of an indicator of locational value clouds the signals for investments in generation and transmission moreover large players in a pay as bid auction as applied in neta possess an informational advantage which helps establish a dominant position the irony is that many of the policy difficulties associated with market definition and dominant position abuse under the pool the market instituted upon privatisation in 1990 are unlikely to be resolved completely under neta

aid quality and donor rankings this paper offers new measures of aid quality covering 38 bilateral and multilateral donors as well as new insights about the robustness and usefulness of such measures the 2005 paris declaration on aid effectiveness and the follow up 2008 accra agenda for action have focused attention on common donor practices that reduce the development impact of aid using 18 underlying indicators that capture these practices derived from the oecd dac s survey for monitoring the paris declaration the new aiddata database and the dac aid tables the authors construct an overall aid quality index and four coherently defined sub indexes on aid selectivity alignment harmonization and specialization compared with earlier indicators used in donor rankings this indicator set is more comprehensive and representative of the range of donor practices addressed in the paris declaration improving the validity reliability and robustness of rankings one of the innovations is to increase the validity of the aid quality indicators by adjusting for recipient characteristics donor aid volumes and other factors despite these improvements in data and methodology the authors caution against overinterpretation on overall indexes such as these alternative plausible assumptions regarding weights or the inclusion of additional indicators can still produce marked shifts in the ranking of some donors so that small differences in overall rankings are not meaningful moreover because the performance of some donors varies considerably across the four sub indexes these sub indexes may be more useful than the overall index in identifying donors relative strengths and weaknesses

financing property s contribution to regeneration attracting investment and finance into inner city and other renewal areas poses particular difficulties and is frequently reliant on strong public sector commitment through special incentives or other mechanisms to provide the conditions to lever private sector activity this paper initially links the concept of market failure and the rationale for regeneration and examines policy responses from uk european and us perspectives followed by a consideration of public and private sector financing approaches international perspectives draw particularly upon the use of tax based mechanisms in regeneration notably those used in the us in the european context the paper highlights implications for regeneration stemming from the interpretation of state aid rules and competition policy conclusions reflect upon the complexity of regeneration and the importance of the different stakeholders within the regeneration process

aid allocation and poverty reduction the authors derive a poverty efficient allocation of aid and compare it with actual aid allocations they build the poverty efficient allocation in two stages first they use new world bank ratings of 20 different aspects of national policy to establish the current relationship between aid policies and growth onto that they add a mapping from growth to poverty reduction which reflects the level and distribution of income they compare the effects of using headcount and poverty gap measures of poverty they find the actual allocation of aid to be radically different from the poverty efficient allocation in the efficient allocation for a given of poverty aid tapers in with policy reform in the actual allocation aid tapers out with reform in the efficient allocation aid is targeted disproportionately to countries with severe poverty and adequate polices the type of country where 74 percent of the world s poor live in the actual allocation such countries receive a much smaller share of aid 56 percent than their share of the world s poor with the present allocation aid is effective in sustainably lifting about 30 million people a year out of absolute poverty with a poverty efficient allocation this would increase to about 80 million people even with political constraints introduced to keep allocations for india and china constant poverty reduction would increase to about 60 million reallocating aid is politically difficult but it may be considerably less difficult than quadrupling aid budgets which is what the authors estimate would be necessary to achieve the same impact on poverty reduction with existing aid allocations

a robust optimization approach to energy and reserve dispatch in electricity markets abstract to a large extent electricity markets worldwide still rely on deterministic procedures for clearing energy and reserve auctions however increasing shares of the production mix consist of renewable sources whose nature is stochastic and non dispatchable as their output is uncertain and cannot be controlled by the operators of the production units stochastic programming models allow the joint determination of the day ahead energy and reserve dispatch accounting for the uncertainty in the output from these sources however the size of these models gets quickly out of hand as a large number of scenarios are needed to properly represent the uncertainty in this work we take an alternative approach and cast the problem as an adaptive robust optimization problem the resulting day ahead energy and reserve schedules yield the minimum system cost accounting for the cost of the redispatch decisions at the balancing real time stage in the worst case realization of the stochastic production within a specified uncertainty set we propose a novel reformulation of the problem that allows considering general polyhedral uncertainty sets in a case study we show that in comparison to a risk averse stochastic programming model the robust optimization approach progressively trades off optimality in expectation with improved performance in terms of risk these differences however gradually taper off as the level of risk aversion increases for the stochastic programming approach computational studies show that the robust optimization model scales well with the size of the power system which is promising in view of real world applications of this approach

how emission certificate allocations distort fossil investments the german example despite political activities to foster a low carbon energy transition germany currently sees a considerable number of new coal power plants being added to its power mix there are several possible drivers for this dash for coal but it is widely accepted that windfall profits gained through free allocation of ets certificates play an important role yet the quantification of allocation related investment distortions has been limited to back of the envelope calculations and stylized models so far we close this gap with a numerical model integrating both germany s particular allocation rules and its specific power generation structure we find that technology specific new entrant provisions have substantially increased incentives to invest in hard coal plants red to natural gas at the time of the ets onset more precisely disproportionate windfall profits compared more than half the total capital costs of a hard coal plant moreover shorter periods of free allocations would not have turned investors favours towards the cleaner natural gas technology because of pre existing economic advantages for coal in contrast full auctioning of permits or a single best available technology benchmark would have made natural gas the predominant technology of choice

optimal penal codes in price setting supergames with capacity constraints this paper constructs optimal pure strategy penal codes for a broad class of symmetric bertrand supergames with capacity constraints the results should simplify the analysis of bertrand supergames because the punishments comprising the penal codes constructed below have a very simple form and the associated payoffs are often easy to calculate it is also shown that for a commonly employed subclass of the games considered the admission of mixed strategies does not allow severer punishments the analysis draws heavily on the pathbreaking work of abreu 1984 he demonstrated that in the search for optimal penal codes attention can be restricted to simple penal codes simple penal codes are characterized by a vector of outcome paths one for each player the ith outcome path is interpreted as the punishment to be imposed on the ith player if he deviates from the equilibrium path or from any punishment path section 2 explains the basic framework of analysis the class of bertrand games studied is very general no particular rationing rule is imposed some mild restrictions are placed on the firms sales functions instead the commonly used models of levitan and shubik 1972 and beckman 1965 are special cases of the games analysed below it is assumed throughout that there is a price firms can be induced to charge if the punishment for charging a different price gives the offending firm a payoff equal to its security level for the supergame thus either there must exist a static nash equilibrium in pure strategies or else the discount factor must not be too close to zero in section 3 optimal penal codes are constructed and it is established that the punishments comprising them always drive punished firms to their security levels the arguments employed make clear that optimal penal codes are not generally unique this issue is addressed in section 4 where it is also shown that the levitan shubik rationing rule exhibits more types of optimal penal codes than do other rules in particular if the levitan shubik rule is employed then punishments that are analogous to abreu s 1986 symmetric two phase punishments for cournot games can be used to construct optimal penal codes in bertrand games this property does not hold generally however

adapting auctions for the provision of ecosystem services at the landscape scale abstract auctions or competitive tenders can overcome information asymmetries to efficiently allocate limited funding for ecosystem services most auctions focus on ecosystem services on individual properties to maximise the total amount provided however for many services it is not just the total quantity but their location in the landscape relative to other sites that matters for example biodiversity conservation may be much more effective if conserved sites are connected adapting auctions to address ecosystem services at the landscape scale requires an auction mechanism which can promote coordination while maintaining competition multi round auctions in which bidding is spread over a number of rounds with information provided between rounds on the location of other bids in the landscape offer an approach to cost effectively deliver landscape scale ecosystem services experimental economic testing shows these auctions deliver the most cost effective environmental outcomes when the number of rounds is unknown in advance which minimises rent seeking behaviour it also shows that a form of bid improvement rule facilitates coordination and reduces rent seeking where the biophysical science is well developed such auctions should be relatively straightforward to implement and participate in and have the potential to provide significantly better outcomes than standard one shot tenders