multimarket optimal bidding for a power producer this paper considers a profit maximizing thermal producer that participates in a sequence of spot markets namely day ahead automatic generation control agc and balancing markets the producer behaves as a price taker in both the day ahead market and the agc market but as a potential price maker in the volatile balancing market the paper provides a stochastic programming methodology to determine the optimal bidding strategies for the day ahead market uncertainty sources include prices for the day ahead and agc markets and balancing market linear price variations with the production of the thermal producer results from a realistic case study are reported and analyzed conclusions are duly drawn

optimal bidding scheduling and deployment of battery systems in california day ahead energy market an optimal supply and demand bidding scheduling and deployment design framework is proposed for battery systems it takes into account various design factors such as the day ahead and real time market prices and their statistical dependency as well as the location size efficiency lifetime and charge and discharge rates of the batteries utilizing second life used batteries is also considered without loss of generality our focus is on the california independent system operator iso energy market and its two available bidding options namely self schedule bidding and economic bidding while the formulated stochastic optimization problems are originally nonlinear and difficult to solve we propose a methodology to decompose them into inner and outer subproblems accordingly we find the global optimal solutions within a short amount of computational time all case studies in this paper are based on real market data

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

efficiency and equalization payments in a federal system of government a synthesis and extensions of recent results this paper investigates the rationale for a system of equalization transfers in a federal system of government the existing sources of inefficiency of resource allocation in economies with more than one level of government are synthesized in the framework of a simple decentralized multiprovince model with mobile factors of production the sources of inefficiency arise first because migrants respond at the margin to incorrect signals owing to the phenomena of rent sharing and fiscal exterality and second because of global rather than local inefficiencies the model is then extended to consider the role of the federal government in providing intergovernmental transfers in the face of such inefficiencies in addition to synthesizing the sources of inefficiency in federal models the equity arguments for equalization are briefly recounted efficacite et paiements de perequation dans un systeme federal de gouvernement synthese et extensions de certains resultats recents ce memoire examine la logique qui soustend un systeme de paiements de perequation dans un systeme fdderal de gouverement les auteurs utilisent un modele simple d un systeme multi provincial decentralise avec des facteurs de production mobiles pour definir les sources d inefficacite dans l allocation des ressources dans les dconomies qui possedent plus d un niveau de gouvernement ces inefficacites proviennent de ce que d abord ceux qui se deplacent le font en reponse a la marge a des signaux incorrects engendres par le partage de la rente sur la base de la residence et par les phenomenes d exteralites fiscales elles sont aussi le resultat d inefficacites globales plutot que locales dans le cadre de ce modele les auteurs analysent le role du gouvernement federal effectuant des transferts inter gouverementaux pour corriger ces inefficacites en plus de presenter une synthese des sources d inefficacite dans les regimes federaux les auteurs font un bref rappel en passant a l ensemble des arguments fondes sur l equite qu on utilise pour rationaliser les paiements de perequation this paper is a linear combination of two papers presented at the may 1982 meetings of the canadian economics association in halifax entitled the case for equalization payments by the authors and recent developments in the theory of regional economic policy in canada by boadway the authors are grateful for comments by the discussants jim johnson and baxter macdonald and by jack mintz brian scarfe gerard belanger david sewell tom courchene and the referees we are especially heavily indebted to dan usher for many stimulating comments and suggestions while the work was in progress some of the above persons will undoubtedly disagree with the emphasis we have chosen to put on various aspects of the analysis for policy purposes support for some of this work has been provided by the economic council of canada and is gratefully acknowledged canadian journal of economics revue canadienne d economique xv no 4 november novembre 1982 printed in canada imprimd au canada 0008 4085 82 0000 0613 01 50 1982 canadian economics association this content downloaded from 207 46 13 127 on wed 12 oct 2016 04 27 47 utc all use subject to http about jstor org terms 614 robin boadway and frank flatters

returns to regionalism the past decade has witnessed a renewed interest in regional trade agreements with many policymakers and academics seeming to believe that these provide more than the traditional gains from trade this article examines several possible benefits that regional trade agreements may confer on their partners including credibility signaling bargaining power insurance and coordination it assesses the necessary conditions for each possible channel to work gives stylized examples of specific types of policy where the benefit might be applicable examines cases where the explanation might be relevant and discusses their overall plausibility it concludes by examining the north american free trade agreement and the europe agreements

a new transmission tariff allocation model based on bilevel programming this paper proposes a flow based approach for the transmission tariff allocation problem based on the notions of long run marginal cost lrmc and nodal exchange factors nefs a worst case power flow expressed in terms of nefs is formulated to characterize the system state additionally the nefs optimal values are determined considering a specific criterion to compute tariffs the resulting problem is formulated as a bilevel program the upper level is a worst case power flow that maximizes line flows taking into account the transmission tariffs computed in the lower level the criterion considered in the lower level aims to minimize the variation range of transmission tariffs which is particularly desirable to provide incentives for renewable sources installed far away from load centers the resulting bilevel problem may have multiple solutions here the uniqueness in tariffs is preserved by solving an alternative problem once both the generation dispatch and the variation range of transmission tariffs are known numerical results are provided for a 6 bus system and the ieee 118 bus system

financial intermediary coalitions abstract in this article an environment in which the investment opportunities of agents are private information is studied and it is shown that financial intermediaries arise endogenously within that environment it is established that financial intermediaries are part of an efficient arrangement in the sense that they are needed to support the authors private information core allocations these intermediaries which are coalitions of agents exhibit the following characteristics in equilibrium they borrow from and lend to large groups of agents they produce information about investment projects and they issue claims that have different state contingent payoffs than claims issued by ultimate borrowers

trading relations is the roadmap from lome to cotonou correct one of the reasons behind the re negotiation of the lome convention resulting in the cotonou agreement was the alleged inability of the trade provisions of lome to increase the african caribbean and pacific acp countries market share of the european union eu market the cotonou agreement may lead to the more advanced acps being granted future market access to the eu under a generalized system of preferences gsp in conformity with world trade organization wto rules to this end this paper makes a comparative analysis of the effects of the eu s lome convention and gsp on exports of developing countries using a gravity type of model the results indicate positive and statistically significant export effects of the both the lome convention and the gsp the export effects are greater in case of the lome convention throughout the study period running from 1973 to 1992 in addition the paper illustrates the eu country distribution of the export effects and shows that belgium and the netherlands ar

returns to regionalism an analysis of nontraditional gains from regional trade agreements the past decade has witnessed a renewed interest in regional trade agreements with many policymakers and academics seeming to believe that these provide more than the traditional gains from trade this article examines several possible benefits that regional trade agreements may confer on their partners including credibility signaling bargaining power insurance and coordination it assesses the necessary conditions for each possible channel to work gives stylized examples of specific types of policy where the benefit might be applicable examines cases where the explanation might be relevant and discusses their overall plausibility it concludes by examining the north american free trade agreement and the europe agreements

famous myths of fiat money the paper re evaluates the conventional wisdom regarding the existence of moneys that supposedly circulated without any legal status or intrinsic value economists call these objects fiat money i re examine the most famous examples of such objects from primitive societies such as the stone money of yap and seashells which have been cited by some of the most prominent monetary economists i find that actually none of these cases is an evidence of fiat money a general conclusion is that one needs to seriously study the society in question before making a claim that it has used fiat money

where enterprises lead people follow links between migration and fdi in germany abstract standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter yet these two assumptions are violated if agglomeration forces among factors from specific source countries are at work agglomeration implies that factors behave as complements and that the country of origin matters this paper analyzes agglomeration between capital and labor empirically we use state level german data to answer the question whether and how migration and foreign direct investment fdi are linked stocks of inward fdi and of immigrants have similar determinants and the geography of factor market integration matters there are higher stocks of inward fdi in german states hosting a large foreign population from the same country of origin this agglomeration effect is confined to higher income source countries

on the solution of revenue and network constrained day ahead market clearing under marginal pricing part ii case studies this paper presents the numerical analysis of the bilevel programming approach for revenue and network constrained market clearing developed in its companion paper the impact of minimum revenue conditions and minimum declared profits on generation and consumption levels as well as on locational marginal prices for energy is examined in detail through three case studies first the results from an illustrative example including minimum revenue conditions are comprehensively analyzed the second case study is based on the ieee reliability test system and considers minimum declared profits in the third case study a modified version of the ieee 118 bus system is tested while accounting for minimum revenue conditions in addition the computational behavior of the proposed approach is illustrated with several case studies including the ieee 300 bus system numerical results show the effectiveness of the proposed approach to handle revenue constraints as well as its superiority over the heuristic currently implemented in the iberian electricity market moreover simulations reveal that unlike previous works in the literature generation revenue constraints can be precisely incorporated in day ahead market clearing while explicitly considering the standard economic dispatch based marginal pricing scheme and without requiring price uplifts

banking a new monetarist approach we develop a model where i banks take deposits and make investments ii their liabilities facilitate third party transactions other models have i or ii not both although we argue they are intimately connected we show that they both emerge from limited commitment we describe an environment characterize desirable allocations and interpret the outcomes as banking arrangements banks are essential without them the set of feasible allocations is inferior as a technical contribution we characterize dynamically optimal credit allocations with frictions show they involve backloading and analyse how this interacts with banking we also confront the theory with economic history copyright 2013 oxford university press

on the future of macroeconomics a new monetarist perspective this article argues that a pressing goal for macroeconomics is to incorporate financial considerations but we need models with solid microfoundations in particular the use of assets in facilitating exchange as well as different credit or other financial arrangements should be outcomes of not inputs to theories as a preview i suggest that mainstream macro does a good job explaining many phenomena and a financial crisis does not disprove such theory but understanding crises requires better incorporating factors related to money credit banking and liquidity the approach called new monetarist economics can help a lot in this regard

a three level static milp model for generation and transmission expansion planning we present a three level equilibrium model for the expansion of an electric network the lower level model represents the equilibrium of a pool based market the intermediate level represents the nash equilibrium in generation capacity expansion taking into account the outcomes on the spot market and the upper level model represents the anticipation of transmission expansion planning to the investment in generation capacity and the pool based market equilibrium the demand has been considered as exogenous and locational marginal prices are obtained as endogenous variables of the model the three level model is formulated as a mixed integer linear programming milp problem the model is applied to a realistic power system in chile to illustrate the methodology and proper conclusions are reached

an econometric view on the estimation of gravity models and the calculation of trade potentials this paper presents an ar 1 model in the spirit of hausman and taylor zero differences between actual and in sample predicted trade flows large systematic differences between observed and in sample predicted trade flows only indicate model misspecification and econometric problems out of sample predictions make sense if countries of interest are in an early stage of the transformation process the gravity model remains an interesting tool for the calculation of counterfactuals e g the impact of catching up in gdp per capita in the ceec or of the reduction of trade costs via infrastructure investments or tariffs on bilateral trade etc for this line of research the difference between short term and long term influences could provide interesting insights

transboundary pollution and household mobility are they equivalent abstract recent research has shown that perfect household mobility can serve as a disciplinary mechanism inducing national policy makers to internalize interregional externalities caused by transboundary pollution this paper develops a differential game to illustrate that the result is not necessarily robust when migration costs and explicit dynamics are introduced the paper shows that if governments constantly reoptimize imperfect household mobility leads to a tragedy of the commons and individual countries overemit even when pollution is purely local moreover these dynamic externalities get worse as the degree of household mobility increases and there is a qualitative difference between almost perfect and perfect mobilty that is a discontinuity at zero migration costs

increasing returns migrations and convergence abstract the paper investigates the link between convergence and factor mobility it contrasts the predictions of exogenous growth models where factor mobility is found to promote convergence with endogenous growth models where factor mobility invariably leads to a cumulative process of regional divergence the paper develops a simple model of regional growth with mobile factors increasing returns to scale and diminishing returns to the reproducible factor it also tries to provide more solid microfoundations to the specification of the migration choice because of diminishing returns to the reproducible factor the economy will not be able to generate endogenous self sustaining growth nevertheless the results suggest that even in the context of an exogenous growth model convergence is not warranted however convergence may occur for some particular constellations despite the presence of increasing returns to scale more precisely it is shown that convergence is more likely the greater is the scope for scale economies and somewhat paradoxically the lower is the degree of labor mobility

an optimization model for the electricity market clearing problem with uniform purchase price and zonal selling prices electricity markets can be designed in different ways one rule that is sometimes enforced is the uniform purchase price under this pricing method all the consumers pay the same price regardless of the zone they belong to by contrast each producer receives its zonal price this asymmetry in the price paid and received makes the clearing process not easily treatable through standard optimization techniques within the framework of marginal pricing this paper shows how it is possible to formulate the market clearing problem with uniform purchase price and zonal selling prices as a computationally tractable mixed integer linear programming problem the proposed approach is tested using real data from the italian day ahead market which is actually based on the aforementioned rule

impact of forecast errors on expansion planning of power systems with a renewables target abstract this paper analyzes the impact of production forecast errors on the expansion planning of a power system and investigates the influence of market design to facilitate the integration of renewable generation for this purpose we propose a programming modeling framework to determine the generation and transmission expansion plan that minimizes system wide investment and operating costs while ensuring a given share of renewable generation in the electricity supply unlike existing ones this framework includes both a day ahead and a balancing market so as to capture the impact of both production forecasts and the associated prediction errors within this framework we consider two paradigmatic market designs that essentially differ in whether the day ahead generation schedule and the subsequent balancing re dispatch are co optimized or not the main features and results of the model set ups are discussed using an illustrative four node example and a more realistic 24 node case study

offering strategies and simulation of multi item iterative auctions of energy contracts the objective of this work is threefold we firstly present an optimization model for a price taker hydrothermal generation company genco to devise bidding strategies in multi item iterative auctions of long term contracts the bidding model calculates a bidder s best response function which takes into account the key issues on the auctioned contracts such as its time horizon the risk factors that affect the future contract outcomes interdependence between auctioned products and the agents risk profile the risk profile of the gencos are represented as piecewise linear utility functions and a practical specification approach is proposed we finally present a simulator of a uniform pricing and iterative multi item contract auction where the set of auction rules is implemented and the optimization model developed is used to determine the gencos s best responses at each auction round the simulator enables auctioneers and generators to estimate the auction s competitive equilibrium price and to study the auction dynamics a real multiproduct descending clock auction is simulated for the brazilian power system under the proposed bidding scheme

models as economies the distinction between actual economies and stylized general equilibrium models is no t sharp general equilibrium models with such key elements as uncerta inty spatial separation private information limited communication and limited commitment provide a catalogue that one can use to inter pret actual economies further a general equilibrium model can provi de a framework one can use to trace out the logic of some premise for joint economy wide phenomena a web to tie together seemingly unrel ated observations also in tolerating wide variations in environment s general equilibrium models provide laboratories one can use to con duct relatively inexpensive policy experiments copyright 1987 by royal economic society

risk constrained generation asset arbitrage in power systems a competitive generating company genco can maximize its payoff by optimizing its generation assets this paper considers the genco s arbitrage problem using stochastic price based unit commitment while considering the associated risks the genco may consider arbitrage opportunities in purchases from qualifying facilities qfs as well as simultaneous trades with spot markets for energy ancillary services fuel and emission allowance the tradeoff between maximizing expected payoffs and minimizing risks due to market price uncertainties is modeled explicitly by including the expected downside risk as a constraint the downside risk is defined as the unfulfilled profit the monte carlo simulation is applied to generate scenarios and scenario reduction techniques are applied to reduce the number of scenarios while maintaining a good approximation of the exact solution the proposed case studies illustrate the significance of arbitrage in multi commodity markets and the importance of considering the uncertainty of market prices

computation of extremal nash equilibria in a wholesale power market using a single stage milp this letter proposes a new approach to the computation of extremal nash equilibria in a wholesale power market with transmission constraints the approach uses linearization techniques to formulate the extremal nash equilibrium problem as a single stage mixed integer linear programming problem which can be solved with standard software through the introduced concept of extremal nash equilibria the derived structure can efficiently locate all nash equilibria of the game we show that this approach offers significant performance improvements over existing approaches to computing nash equilibria

opening up international trade with eastern europe trade with eastern europe carl b hamilton and l alan winters previous economic policy in the soviet union and eastern europe sought to restrict international trade with market economies hence liberalization and reform should now lead to a huge increase in such trade this will have a major impact both on the reforming economies and on their new trade partners first we develop an empirical model of trade flows between existing market economies and use this to forecast long run trade flows as the former soviet union and eastern europe are reabsorbed into the world economy second we provide a more detailed analysis of one key sector agricultural trade we compare and contrast three regime changes reform in the east admission of the east to the ec cap and worldwide success on agricultural liberalization in the gatt third we adduce evidence of high quality human capital in eastern europe and argue that this will tend to confer a comparative advantage in quite sophisticated products we conclude by stressing that since trade cannot be permanently and profoundly unbalanced western market economies can enjoy potential gains from trade only if they allow market access to emergent producers from the former soviet union and eastern europe

optimal immigration and cultural assimilation this article develops a model that examines the role of cultural conflict in immigration and immigration policy cultural differences lead to frictions between natives and immigrants unless the latter make a costly investment to assimilate this article s key contribution is the joint analysis of the assimilation and migration decisions which highlights the inefficiency of some commonly advocated policy tools to achieve the first best u s data provide preliminary support for the model s implications

optimal multiperiod contracts and the gain from enduring relationships under private information informational asymmetries can play a key role in explaining the existence and nature of multiperiod contracts in an illustrative risk sharing model even relatively short two period contracts can be mutually beneficial if there is private information though one period contracts suffice otherwise further contracts which are pareto optimal relative to the environment and the information structure are defined and partially characterized an example illustrates how otherwise inefficient intertemporal tie ins can be used optimally to mitigate incentive problems the obvious borrowing lending schemes are not private information pareto optimal in these period by period actions are not sufficiently constrained discounting affects the form of the optimal contract but none of these qualitative conclusions

money and credit redux do we need both money and credit in models with explicit roles for payment instruments we show the answer is no if credit is easy money is useless if credit is tight money can be essential but then credit is irrelevant and changes in debt limits are neutral real balances respond endogenously to leave total liquidity constant this is true for exogenous or endogenous policy and debt limits secured or unsecured credit and fairly general preferences and pricing mechanisms while we also show how to overturn some results the benchmark model suggests credit conditions matter less than some people think

fiscal inequivalence incentive equivalence and pareto efficiency in a decentralized urban context abstract we develop a simple urban model consisting of a center and a suburb populated by a fixed number of identical individuals who can migrate costlessly between jurisdictions land ownership ranges from rent sharing to an absentee landlord who owns all urban land we discuss laissez faire equilibrium and show that it is pareto efficient we then introduce local governments which are only concerned about the welfare of their residents and which can collect head and land taxes whereas the former is purely local the latter will extend to both jurisdictions if individuals own a positive share of the entire urban land and beyond if there is an absentee landlord this produces a simple kind of fiscal inequivalence tax exporting since local governments do not provide public goods their role is limited to stopping the flow of resources leaving their jurisdiction they then redistribute this revenue as a head subsidy to the residents of their jurisdiction if it just happens that the head subsidy is equal between jurisdictions the equilibrium is both pareto efficient and a preferable to laissez faire from the viewpoint of urban residents if however it varies between jurisdictions the equilibrium is pareto inefficient the jurisdiction providing a higher per head subsidy becomes overpopulated we thus arrive at a classic market failure in the literature of competing regions correction involves aggregate interjurisdictional transfers to equalize head subsidies which in the literature must be undertaken by a central government following myers j public econ 43 107 121 1990 we treat this as an assumption rather than a necessity we show that if aggregate transfers become a local instrument the nash equilibrium will be both pareto efficient and preferable to laissez faire this happens because free mobility compels noncooperative local governments to act in a cooperative way we then extend this result to public goods which need be neither purely public congestion nor purely local spillovers we conclude by discussing implications for the existing urban literature

the determinants of cross border equity flows abstract we explore a new panel data set on bilateral gross cross border equity flows between 14 countries 1989 1996 we show that a gravity model explains international transactions in financial assets at least as well as goods trade transactions gross transaction flows depend on market size in source and destination country as well as trading costs in which both information and the transaction technology play a role distance proxies some information costs and other variables explicitly represent information transmission an information asymmetry between domestic and foreign investors and the efficiency of transactions the geography of information is the main determinant of the pattern of international transactions while there is weak support in our data for the diversification motive once we control for the informational friction we broaden the scope of our results by presenting some evidence linking the results on equity transactions to equity holdings

decentralized and efficient control of transboundary pollution in federal systems abstract decentralized control of transboundary pollution in federal systems can be efficient when population crowding is socially costly in this paper an upstream region abates pollution or makes an interregional income transfer to the downstream region with the sole intent of deterring immigration because either instrument abatement expenditure or interregional income transfer alone implements an efficient population distribution between the regions interregional income transfers are unnecessary for efficiency without explicit income transfers each region provides the efficient portion of the aggregate level of pollution abatement in the nash equilibrium

climbing the development ladder economic development and the evolution of occupations in rural china we study how occupations evolve across space and time during the development of an economy using a data set on more than 200 villages from 8 provinces in china we examine the main occupations that have characterised china s labour markets since the economic reforms our findings reveal a systematic evolutionary pattern of occupational emergence the evolution of occupations proceeds from traditional and fairly simple forms of subsistence agriculture to modern more complex manufacturing and service firms our findings suggest that rural development in china is being built by a process that can be described by the climbing of a development ladder with each step up the ladder denoting the economy s transition into a more complex occupational regime

nash equilibrium in strategic bidding a binary expansion approach this paper presents a mixed integer linear programming solution approach for the equilibrium problem with equilibrium constraints epec problem of finding the nash equilibrium ne in strategic bidding in short term electricity markets a binary expansion be scheme is used to transform the nonlinear nonconvex ne problem into a mixed integer linear problem milp which can be solved by commercially available computational systems the be scheme can be applicable to cournot bertrand or joint price quantity bidding models the approach is illustrated in case studies with configurations derived from the 95 gw brazilian system including unit commitment decisions to the price maker agents

immigration from poor to wealthy countries experience of the united states the u s experience with immigration from poor countries is examined using the results of two projects carried out by the national bureau of economic research questions considered include what determines the supply of immigrants how such immigrants fare in the u s job market and how this immigration affects the prospects of native born workers annotation

privatization market liberalization and learning in transition economies privatization and market liberalization are widely considered to be complementary reforms in transition economies this article challenges this view and the closely related big bang approach when pursued too vigorously privatization may impede the transition process following liberalization our result is based on an explicit model of market learning compared to a mature market a market in transition is characterized by greater uncertainty regarding market conditions including equilibrium prices and quanti ties economic actors must learn about these conditions through their participation in the market process less than full privatization is optimal if the costs of learning are sufficiently important

capacity expansion equilibria in liberalized electricity markets an epec approach this paper presents a novel way to model the generation capacity expansion problem in a liberalized framework via a multi year bilevel equilibrium model in the upper level the competing generation companies maximize their individual profits while the lower level represents the market using a conjectured price response approach which allows us to vary the strategic spot market behavior to see how much the reigning competitive behavior impacts investment decisions the bilevel equilibrium model is formulated as an equilibrium problem with equilibrium constraints transformed into a mixed integer linear program and solved as such using diagonalization in order to verify equilibria we present a case study to apply this new modeling approach and to demonstrate that the proposed equilibrium problem with equilibrium constraints can have multiple solutions whose respective investments can vary

economic organization with limited communication this paper presents formal stylized representations of communication accounting systems oral assignment portable object written message and telecommunication systems are considered the environments that allow this formalization are characterized by spatial separation private information and a need to keep track of past actions transfers and shocks in environments that have spatial separation and private information beneficial multilateral arrangements can depend critically on agents ability to communicate to one another values of contemporary shocks and to keep track of histories of past transfers or past announced shocks this paper formalizes this idea and focuses on com

social welfare in a common property oligopoly output in a markov nash cournot equilibrium to a noncooperative differential game in which in oligopolists extract a common property nonrenewable resource is bounded by the output of in firm and in i firm static oligopolies we discuss the welfare effects of the number of firms and of the divergence between private and social discount rates we compare extraction under the markov and open loop equilibria and then offer an explanation for the possibility that the resource is exhausted instantaneously in a continuous time game this explanation does not depend on the fact that the period of commitment is infinitesimal this essay models the extraction by an oligopolistic industry of a common property nonrenewable resource we characterize the markov perfect equilibrium mpe in a game amongst firms and then provide general conditions under which the resource is exhausted instantaneously if there is unrestricted access to a resource agents perceive its shadow value to be 0 and extract too rapidly when access is restricted to a finite number of agents in none of whom possess exclusive property rights an additional complication may arise if firms behave as oligopolists in the product market they have an incentive to extract the resource too slowly in order to increase the price thus where m firms exploit a resource in the absence of property rights there are conflicting tendencies the absence of property rights encourages excessive exploitation whereas the finite number of firms encourages insufficiently rapid exploitation there are a number of situations where the lack of property rights and the presence of market power coexist examples include i national fisheries which are large enough to affect fish populations and output prices ii common exploitation of aquifers or rivers where individual use affects the price of an agricultural output or of another input iii production by oligopolistic firms which degrades the environment we consider the case of nonrenewable resources such as oil this implies a simple equation of motion for the stock of the resource and emphasizes the role of the number of firms and the stock size such models are often appropriate even if the resource is not literally nonrenewable for example tropical forests or groundwater aquifers are potentially renewable given enough time as indeed oil deposits may be however the rate of replenishment may be insignificant given

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

on the solution of revenue and network constrained day ahead market clearing under marginal pricing part i an exact bilevel programming approach the first of this two paper series addresses a practical day ahead auction model where generation revenue constraints are explicitly incorporated in the problem formulation as routinely done in several national electricity markets across europe the revenue constrained market clearing procedure includes the effect of the transmission network inter temporal constraints associated with generation scheduling demand side bidding and marginal pricing this auction design is an instance of price based market clearing which features two major complicating factors first locational marginal prices become decision variables of the optimization process in addition producer revenues are formulated as bilinear and highly nonconvex products of power outputs and market clearing prices the resulting problem is formulated as a mixed integer nonlinear bilevel program with bilinear terms for which available solution techniques rely on heuristics approximations or modeling simplifications this paper presents a novel and exact methodology whereby the original problem is recast as an equivalent single level mixed integer linear program as a consequence finite convergence to optimality is guaranteed and the use of standard commercial software is allowed the proposed transformation is based on duality theory of linear programming karush kuhn tucker optimality conditions and integer algebra results in the second part of this two paper series numerical results from several case studies illustrate the effective performance of the proposed solution approach

modeling strategic investment decisions in spatial markets abstract markets for natural resources and commodities are often oligopolistic in these markets production capacities are key for strategic interaction between the oligopolists we analyze how different market structures influence oligopolistic capacity investments and thereby affect supply prices and rents in spatial natural resource markets using mathematical programming models the models comprise an investment stage and a supply stage in which players compete in quantities we compare three models a perfect competition and two cournot models in which the product is either traded through long term contracts or on spot markets in the supply stage tractability and practicality of the approach are demonstrated in an application to the international metallurgical coal market results may vary substantially between the different models the metallurgical coal market has recently made progress in moving away from long term contracts and more towards spot market based trade based on our results we conclude that this regime switch is likely to raise consumer rents but lower producer rents while the effect on total welfare is negligible

assessing market structures in resource markets an empirical analysis of the market for metallurgical coal using various equilibrium models abstract the prevalent market structures found in many resource markets consist of high concentration on the supply side and low demand elasticity market results are therefore frequently assumed to be an outcome of strategic interaction between producers common models to investigate the market outcomes and underlying market structures are games representing competitive markets strategic cournot competition and stackelberg structures that take into account a dominant player acting first followed by one or more players we add to the literature by expanding the application of mathematical models and applying an equilibrium problem with equilibrium constraints epec which is used to model multi leader follower games to a spatial market using our model we investigate the prevalent market setting in the international market for metallurgical coal between 2008 and 2010 whose market characteristics provide arguments for a wide variety of market structures using different statistical measures to compare model results with actual market outcomes we find that two previously neglected settings perform best first a setting in which the four largest metallurgical coal exporting firms compete against each other as stackelberg leaders while the remainders act as cournot followers second a setting with bhpb acting as sole stackelberg leader

unemployment labour markets and structural change in eastern europe labour markets in eastern europe michael burda unemployment is a major concern in the transforming economies of central and eastern europe the modern flow approach to labour markets suggests both that unemployment is an important component of the transformation process and that the labour market institutions adopted will influence the rate of unemployment in the long run to date eastern european countries exhibit considerable divergences in several of these institutions especially in unemployment benefit systems collective bargaining structures and active labour market policies an aggregate matching function is successfully estimated for data from czech and slovak employment offices emerging labour markets in the east function not so differently from those in the west the implied dynamics make both big bang and benign neglect unattractive strategies for transformation a mixed bang is more appropriate quantitative evidence about the effects on unemployment of different labour market institutions in oecd countries is used to make long term projections of equilibrium rates of unemployment in central and eastern europe given the labour market institutions now in place there with the possible exception of the czech republic high unemployment is likely to be pervasive and persistent

an individual welfare maximization algorithm for electricity markets an algorithm that allows a market participant to maximize its individual welfare in electricity spot markets is presented the use of the algorithm in determining market equilibrium points called nash equilibria is demonstrated the start of the algorithm is a spot market model that uses the optimal power flow opf with a full representation of the transmission system and inclusion of consumer bidding the algorithm utilizes price and dispatch sensitivities available from the hessian matrix and gradient of the opf to help determine an optimal change in an individual s bid the algorithm is shown to be successful in determining local welfare maxima and the prospects for scaling the algorithm up to realistically sized systems are very good nash equilibria are investigated assuming all participants attempt to maximize their individual welfare this is done by iteratively solving the individual welfare maximization algorithm until all individuals stop modifying their bids

coordination failures and government policy a model with applications to east asia and eastern europe abstract poor countries must specialize in standardized labor intensive commodities middle income countries may have a richer menu of options if their labor force is reasonably well educated and skilled the multiplicity of equilibria is due to a coordination problem inherent in activities that require specialized inputs if no intermediate inputs are presently produced there may be little incentive for any single firm to do so on its own the economy may get stuck in a low wage low tech equilibrium an investment subsidy or a minimum wage policy can enhance welfare by moving the economy to a superior equilibrium

interregional spillovers in the presence of perfect and imperfect household mobility abstract when households are immobile across regions the decentralized provision of public goods that generate interregional benefit spillovers is inefficiently low we analyze this problem in an environment of interregional household migration and obtain the following results if households are perfectly mobile across regions then the decentralized provision of public goods generating spillovers is socially efficient there is no need for central government intervention if households are attached to particular regions for cultural or nationalistic reasons however at least one of two regions undersupplies the public good central government intervention can enhance efficiency

a bilevel model for electricity retailers participation in a demand response market environment abstract demand response programmes are seen as one of the contributing solutions to the challenges posed to power systems by the large scale integration of renewable power sources mostly due to their intermittent and stochastic nature among demand response programmes real time pricing schemes for small consumers are believed to have significant potential for peak shaving and load shifting thus relieving the power system while reducing costs and risk for energy retailers this paper proposes a game theoretical model accounting for the stackelberg relationship between retailers leaders and consumers followers in a dynamic price environment both players in the game solve an economic optimisation problem subject to stochasticity in prices weather related variables and must serve load the model allows the determination of the dynamic price signal delivering maximum retailer profit and the optimal load pattern for consumers under this pricing the bilevel programme is reformulated as a single level milp which can be solved using commercial off the shelf optimisation software in an illustrative example we simulate and compare the dynamic pricing scheme with fixed and time of use pricing we find that the dynamic pricing scheme is the most effective in achieving load shifting thus reducing retailer costs for energy procurement and regulation in the wholesale market additionally the redistribution of the saved costs between retailers and consumers is investigated showing that real time pricing is less convenient than fixed and time of use price for consumers this implies that careful design of the retail market is needed finally we carry out a sensitivity analysis to analyse the effect of different levels of consumer flexibility

human capital investment and migration in an integrated europe the short and longer term regional consequences of migration for european aggregate supply are examined in a simple model in which human capital enters the production function externally the planner chooses a reallocation of population across east and west that cannot be replicated by the market without taxes or subsidies the market solution in this model with free migration is always associated with an efficiency loss and might lead to the mezzogiorno syndrome in the east excerpt

the determinants of east west german migration some first results determinants of the propensity to migrate are explored using data collected in a survey of east german residents following german reunification in 1991 the author notes that in the period 1989 1992 some 870000 individuals migrated to west germany representing about 5 of the total east german population and 10 of the work force he suggests that recent developments in the literature on the option value of waiting may yield important insights into these determinants excerpt

trade creation and trade diversion in the eec the lafta and the cmea 1960 1994 in a simplified version of the gravity model appropriate dummy variables have been introduced to analyse the effects of both trade creation and trade diversion by three economic organizations the european economic community eec the latin american free trade association lafta and the council of mutual economic assistance cmea for the period 1960 94 five year intervals are the main subject of measurement the results show that both trade creation dummies and trade diversion dummies have statistically significant coefficients which show the appropriateness of this new approach the trade creation effect and trade diversion effect of each institution are proved to be generally weakening during the 1990s it is also observed that each organization has a distinctive international trade character for japanese trade a similar approach is used to analyse nonaligned trade by japan with particular interest in the effects of these three institutions on trade with japan the result is that there is no s

trade capital and the transition in central europe the potential for export oriented growth and the impact of official capital injections is assessed for five central european countries in the years 1990 2000 by means of a neoclassical simulation model export growth is essential for the transition to a market oriented economy and the recovery of central europe implying the need for trade liberalization by both the east and the west if this condition is being met satisfactory gdp growth rates appear possible even without external financial support

agent based modeling in electrical energy markets using dynamic bayesian networks due to uncertainties in generation and load optimal decision making in electrical energy markets is a complicated and challenging task participating agents in the market have to estimate optimal bidding strategies based on incomplete public information and private assessment of the future state of the market to maximize their expected profit at different time scales in this paper we present an agent based model to address the problem of short term strategic bidding of conventional generation companies gencos in a power pool based on the proposed model each genco agent develops a private probabilistic model of the market using dynamic bayesian networks employs an online learning algorithm to train the model sparse bayesian learning and infers the future state of the market to estimate the optimal bidding function we show that by using this multiagent framework the agents will be able to predict and adapt to approximate nash equilibrium of the market through time using local reasoning and incomplete publicly available data the model is implemented in matlab and is tested on four test case systems two generic systems with 5 and 15 genco agents and two ieee benchmarks 9 bus and 30 bus systems both the day ahead da and hour ahead ha bidding schemes are implemented the results show a drop in market power in the 15 agent system compared to 5 agent system along with a pareto superior equilibrium in the ha scheme compared to the da scheme which corroborates the validity of the proposed decision making model also the simulations show that introduction of an ha decision making stage as an uncertainty containment tool leads to a more stable and less volatile price signal in the market which consequently results in flatter and improved profit curves for the gencos

attachment to home and efficient purchases of population in a fiscal externality economy abstract this paper examines the efficiency properties of an economy characterized by strategically competing regions and individuals with varying degrees of attachment to home in an otherwise standard fiscal externality setting regional authorities may make interregional transfers in purchasing preferred populations however there is a range of distributions of resources over which neither region makes transfers nevertheless all equilibrium allocations resulting from the nash behavior of regional authorities including those that involve no transfers are efficient therefore in contrast to the standard conclusions of the fiscal externality literature there is no efficiency role for a central authority

an institutional approach to cross national distance cross national distance is a key concept in the field of management previous research has conceptualized and measured cross national differences mostly in terms of dyadic cultural distance and has used the euclidean approach to measuring it in contrast our goal is to disaggregate the construct of distance by proposing a set of multidimensional measures including economic financial political administrative cultural demographic knowledge and global connectedness as well as geographic distance we ground our analysis and choice of empirical dimensions on institutional theories of national business governance and innovation systems in order to overcome the methodological limitations of the euclidean approach we calculate dyadic distances using the mahalanobis method which is scale invariant and takes into consideration the variance covariance matrix we empirically analyze four different foreign expansion choices of us companies to illustrate the importance of disaggregating the distance construct and the usefulness of our distance calculations which we make freely available to managers and scholars

waves of international banking integration a tale of regional differences abstract we propose an original measure of international banking integration based on gravity equations and a spline function on a panel of 14 countries and their 186 partners between 1999 and 2012 contrary to the conventional wisdom we uncover that 1 the international banking integration outside the euro area has been tenaciously increasing since 1999 and has even strengthened after the crisis 2 in contrast the international banking integration of the euro area has been cyclical since 1999 with a peak in 2006 and a complete reversal since then 3 this decline is not a correction of previous overshooting but a marked disintegration 4 outside the euro area the level of income does not affect the shape of banking integration

generation capacity expansion in liberalized electricity markets a stochastic mpec approach this paper proposes a bilevel model to assist a generation company in making its long term generation capacity investment decisions considering uncertainty regarding the investments of the other generation companies the bilevel formulation allows for the uncoupling of investment and generation decisions as investment decisions of the single investing generation company are taken in the upper level with the objective to maximize expected profits and generation decisions by all companies are considered in the lower level the lower level represents the oligopolistic market equilibrium via a conjectured price response formulation which can capture various degrees of strategic market behavior like perfect competition the cournot oligopoly and intermediate cases

the compleat fish wars biological and dynamic interactions abstract in this article we study an example of a fishery in which there are two agents each harvesting two species of fish there are two externalities in the model the dynamic externality studied in levhari and mirman 1980 and the biological externality examined in fischer and mirman 1992 this model allows us to study the interactions between agents in a model in which the species of fish interact we find the unique closed loop nash equilibrium in the context of a differential game and we compare the resulting catch ratios to the results of the earlier papers which allow for only one externality we also study the efficiency of the solution

risk constrained scheduling and offering strategies of a price maker hydro producer under uncertainty this paper presents a stochastic mixed integer linear programming smilp approach to maximize total expected profit of one price maker hydro producer in a pool based electricity market head dependence commitment decisions discharge ramping startup costs and forbidden zones are all effectively handled in our approach uncertainty about the competitors offers is adequately represented by residual demand curves rdcs scenarios the management of risk is suitably addressed by conditional value at risk cvar to provide the efficient frontier i e the solutions set for which the expected profit may not be augmented without enlarging the variance of profit appropriate offering strategies to the pool are also developed consisting of supply functions built for different risk levels a representative cascaded hydro system with 7 reservoirs is considered to analyze and compare risk neutral versus risk averse results

trade and exchange rate policies in formerly centrally planned economies this paper examines the international economic policies of the eastern european and soviet successes states in the early 1990s which provide one of those wide open windows of opportunity when powerful vested interests are not lobbying for retention of an existing tariff structure moreover the simultaneous abandonment of central planning by over two dozen countries provided a natural experiment in which a range of differing policies might have been pursued policymakers in transition economies have generally ended up pursuing liberal non discriminatory trade and foreign exchange policies there are exceptions and the majority may be wrong but the presumption is that perhaps after a learning or trial and error process decision makers have found the rules of thumb suggested by economists to be their best guide to international economic policy this paper notes that integration of transition economies into the global trading system has been surprisingly successful almost all the countries in transition from central planning have accepted the wto rule based system in principle even if there are variations in trade policies and performance and have generally pursued multilateral non discriminatory trade policies in particular the potential danger of regionalism proving more attractive than multilateralism has not eventuated the revealed behaviour of policymakers suggests that trade liberalisation is a good rule of thumb and regional groupings among transition economies have been insignificant despite a proliferation of new currencies varying exchange rate regimes and differing degrees of currency convertibility the general pattern has been to accept convertibility for current account transdactions and in many cases to extend this to a de jure commitment and to allow substantial capital account convertibility a general policy conclusion in favour of more open and non discriminatory trade and exchange policies have passed the test of acceptability by policymakers in over two dozen countries in this category

strategic bidding under uncertainty a binary expansion approach this work presents a binary expansion be solution approach to the problem of strategic bidding under uncertainty in short term electricity markets the be scheme is used to transform the products of variables in the nonlinear bidding problem into a mixed integer linear programming formulation which can be solved by commercially available computational systems the be scheme is applicable to pure price pure quantity or joint price quantity bidding models it is also possible to represent transmission networks uncertainties scenarios for price quantity plant availability and load financial instruments capacity reinforcement decisions and unit commitment the application of the methodology is illustrated in case studies with configurations derived from the 80 gw brazilian system

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

strategic bidding for price taker hydroelectricity producers this paper introduces a stochastic programming model that integrates strategic bids or offers for electricity in quantities and prices in a deregulated electricity market the model is designed to maximize the profits of a producer of electricity who manages a series of power plants along a river the model is compared with a previously reported stochastic model where the bidding process is disregarded the superiority of the new model is empirically demonstrated on historical data

liquidity a new monetarist perspective this essay surveys the new monetarist approach to liquidity work in this literature strives for empirical and policy relevance plus rigorous foundations questions include what is liquidity is money essential in achieving desirable outcomes which objects can or should serve in this capacity when can asset prices differ from fundamentals what are the functions of commitment and collateral in credit markets how does money interact with credit and intermediation what can and should monetary policy do the research summarized emphasizes the micro structure of frictional transactions and studies how institutions like monetary exchange credit arrangements or intermediation facilitate the exchange process

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

risk constrained bidding strategy with stochastic unit commitment this paper develops optimal bidding strategies based on hourly unit commitment in a generation company genco that participates in energy and ancillary services markets the price based unit commitment problem with uncertain market prices is modeled as a stochastic mixed integer linear program the market price uncertainty is modeled using the scenario approach monte carlo simulation is applied to generate scenarios scenario reduction techniques are applied to reduce the size of the stochastic price based unit commitment problem and postprocessing is applied based on marginal cost of committed units to refine bidding curves the financial risk associated with market price uncertainty is modeled using expected downside risk which is incorporated explicitly as a constraint in the problem accordingly the proposed method provides a closed loop solution to devising specific strategies for risk based bidding in a genco illustrative examples show the impact of market price uncertainty on genco s hourly commitment schedule and discuss the way gencos could decrease financial risks by managing expected payoffs

international migration capital mobility and transitional dynamics much of recent thinking on the problems of the central and east european countries ceecs centres on how long it will take them to catch up to oecd economies and how various policies will hasten or hinder the transition this paper using a highly stylized framework focuses on a quite different set of issues how the nature of the transition can effect the nature of the long run equilibrium the mechanism we focus on is factor mobility and factor complementarity excerpt

market power assessment and mitigation in hydrothermal systems the objective of this paper is to investigate market power issues in bid based hydrothermal scheduling initially market power is simulated with a single stage nash cournot equilibrium model market power assessment for multiple stages is then carried through a stochastic dynamic programming scheme the decision in each stage and state is the equilibrium of a multi agent game thereafter mitigation measures specially bilateral contracts are investigated case studies with data taken from the brazilian system are presented and discussed

finding multiple nash equilibria in pool based markets a stochastic epec approach we present a compact formulation to find all pure nash equilibria in a pool based electricity market with stochastic demands the equilibrium model is formulated as a stochastic equilibrium problem subject to equilibrium constraints epec the problem is based on a stackelberg game where the generating companies gencos optimize their strategic bids anticipating the solution of the independent system operator iso market clearing a finite strategy approach both in prices and quantities is applied to transform the nonlinear and nonconvex set of nash inequalities into a mixed integer linear problem milp a procedure to find all nash equilibria is developed by generating holes that are added as linear constraints to the feasibility region the result of the problem is the set of all pure nash equilibria and the market clearing prices and assigned energies by the iso a case study illustrates the methodology and proper conclusions are reached

trade reorientation and recovery in transition economies how do we define transition and when can we say that transition to a market economy is complete here we suggest that one way of addressing this issue is to analyse current economic data and ask whether in ignorance of the past we can identify countries in central and eastern europe as being somehow different from comparable western market economies in this paper we focus on international trade and argue that several indicators such as the geographical structure of trade and the undervaluation of the exchange rate cannot distinguish the more advanced countries in central and eastern europe we also seek to explain how the reorientation of trade towards the west has been achieved and in particular assess whether improvements on design and quality are a prerequisite for export expansion copyright 1997 by oxford university press

optimal bidding strategies for hydro electric producers a literature survey in a competitive environment with bid based markets power generation companies desire to develop bidding strategies that maximize their revenue in this paper we ask what approaches and methodologies have been used to model the bidding problem for hydro electric producers we present the problem s developments over time and through reviewing different variants of the problem progressively build to the case in which the agent is a price maker hydro electric producer in each variant of the bidding problem we examine how the approaches used to solve it may or may not be applicable to other variants last for the price maker hydro electric producer s bidding problem we recognize the most recent developments and illuminate a path for future efforts