truthful bundle multiunit double auctions we address the mechanism design problem for a market with multiple buyers and sellers each buyer demands some bundle s of various commodities and each seller supplies multiple units of one commodity to design truthful double auction mechanisms we propose a novel padding method that intentionally creates imbalances between the supply availability and demand requirement by introducing a phantom buyer with unlimited budget to the best of our knowledge this padding method leads to a class of mechanisms that are the first strategy proof individually rational budget balanced and asymptotically efficient mechanisms for the specified exchange environment furthermore these mechanisms dominate known truthful bundle single unit mechanisms with higher efficiency lower buying prices and higher selling prices

cleaner energy for sustainable future this special issue of the journal of cleaner production focuses on energy for sustainable future it is designed to mirror the increasing relevance of renewable energy sources and improved efficiency as crucial topics for practitioners in industry for governmental policy makers as well as for civic service providers researchers and educators the purpose of this special issue is to serve as a catalyst for dialogue the global warming related to co2 emissions coupled with steeply rising energy prices and the recent global financial institutional melt down are causing massive societal concerns and give rise to increasing demand for ways to improve societal and individual energy efficiency and for ways to shift increasingly to alternative low or non carbon based energy systems until recently industrial energy efficiency improvements have focused on improvements on efficiency rather than on the integration of renewable sources the aim of this special issue is the identification of policies to support the development and implementation of technologies and management approaches we can employ to make the transition to more sustainable societies the collection of papers in this special issue provide a foundation for students researchers scholars practitioners and policy makers interested in making sustainable development more than a metaphor the papers include focus upon ways for a improving industrial process to achieve improvements in energy efficiency b minimising waste disposals and reducing their impact through better management c reducing co2 emissions by making progress toward lower carbon renewable energy based systems d improving production of biofuels and hydrogen production systems facilitated by employing cleaner production and novel lca tools e improving integration of advanced materials and energy efficient equipment in different industrial sectors current and future developments in national and world economies are closely connected to sustainable efficient and safe usage of raw materials and upon energy based on cleaner production concepts and approaches that are ecologically and economically appropriate for the short and for the long term future of society these challenges have received considerable attention in the media and scientific journals over the last several years the idea of developing a specialised conference focussed upon them was put forward on various occasions focus upon them became reality on the 5th and 6th may 2008 in the historic castle of veszprem hungary the current premises of the hungarian academy of science which hosted the workshop the workshop was a stimulating event and an overwhelming success with nearly 100 contributors from africa north america asia and europe representing 28 countries after a comprehensive selection and thorough reviewing procedure 11 papers were selected for this special issue

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

semi nonparametric estimates of interfuel substitution in u s energy demand abstract this paper focuses on the demand for crude oil natural gas and coal in the united states in the context of two globally flexible functional forms the fourier and the asymptotically ideal model aim estimated subject to full regularity using methods suggested over 20 years ago by gallant and golub gallant a ronald and golub gene h imposing curvature restrictions on flexible functional forms journal of econometrics 26 1984 295 321 and recently used by serletis and shahmoradi serletis a shahmoradi a 2005 semi nonparametric estimates of the demand for money in the united states macroeconomic dynamics 9 542 559 in the monetary demand systems literature we provide a comparison in terms of a full set of elasticities and also a policy perspective using for the first time parameter estimates that are consistent with global regularity

allocative inefficiency and the capital energy controversy abstract the purpose of the paper is to estimate a system of input demands for greek manufacturing deviating from the standard practice of assuming strict cost minimization the study allows for the presence of price distortions and allocative inefficiency in the decision process this assumption affects parameter estimates and estimated elasticities materially and throws new light on the capital energy controversy in greek manufacturing

energy consumption and economic growth in south africa reexamined a nonparametric testing apporach this paper is an effort to investigate claims concerning granger causality relationship from energy consumption to economic growth in south africa we adopt a nonparametric bootstrap method to reassess evidence supporting granger causality and unravel findings of long run unidirectional causality running from energy consumption to economic growth this implies that energy conservation policies will negatively impact economic growth in south africa in addition the results of this study have implications on co2 emissions in south africa given that coal accounts for about 72 of energy this suggests that energy use would have a long run effect of raising the country s co2 emission levels hence there might be a need to develop a more balanced energy structure which will include higher share of renewable energy a further monte carlo experiment performed reveals that asymptotic granger causality test suffers size distortion problem for south african data these findings provide support for use of a bootstrap methodology and also imply that the results presented in this study are likely to be more reliable

energy substitution effect on transport sector of pakistan a trans log production function approach abstract transport sector of pakistan is one of the highest fossil fuel consumption and carbon dioxide co2 emission sector as a key user of fossil fuel energy pakistan s transport sector has created many problems i e noise air pollution co2 emissions and environmental problem in this study trans log production function model for pakistan s transport sector is established and input factors of labor capital and energy consumption are comprised the output elasticity of an individual input elasticity between a pair of factors and elasticity of substitution between input factors are analyzed to manage the multicollinearity issue ridge regression is applied at different values of k from 1991 to 2018 the outcomes show that output elasticities and a pair of input factor s elasticities are increasing the elasticities of substitutions between labor energy consumption and capital energy consumption show higher outcomes because of the more elevated amount of substitution elasticities the substitution elasticity between labor and capital starts from 0 9797 to 0 9326 with slightly decreasing trend the outcomes suggest that maximum output can be achieved by increasing capital and energy technologies by allocating the maximum capital in the transport industry energy saving technologies substitution between energy and capital and substitution among capital labor can enhance environmental protection in the above s view function the present study estimates the level of energy saving and co2 emissions reduction under the different scenarios from 2015 to 2018 the policy suggestions of the results are given below

separability functional form and regulatory policy in models of interfuel substitution abstract counter intuitive results such as positive own price elasticities have been found in some studies of interfuel substitution this paper examines three possible reasons for this problem first including energy materials in petroleum and coal aggregates is found to contribute to incorrect signs second the mathematical properties of the translog function contribute to concavity violations in contrast the linear logit model of cost shares is found to provide more sensible estimates of own price elasticities across alternative model specifications finally natural gas curtailment policies and environmental regulations are found to be significant factors influencing us industrial fuel demand although omission of these factors does not directly contribute to curvature violations

estimates of inter fuel substitution possibilities in chinese chemical industry abstract the chemical sector is a key driver of china s remarkable growth record and accounts for about 10 of the country s gdp this has made the industry energy intensive and consequently a major contributor to greenhouse gas emissions ghg and other pollutants this study has attempted to investigate the potential for inter fuel substitution between coal oil natural gas and electricity in chinese chemical sector by employing a translog production and cost function ridge regression procedure was adopted to estimate the parameters of the function estimation results show that all energy inputs are substitutes in addition the study produces evidence that the significant role of coal in the chinese chemical fuel mix converges over time albeit slowly these results suggest that price based policies coupled with capital subsidy programs can be adopted to redirect technology use towards cleaner energy sources like electricity and natural gas hence retaining the ability to fuel the chemical sector while also mitigating ghg emissions notwithstanding one must understand that the extent to which substituting electricity for coal will be effective depends on the extent to which coal or oil is used in generating electricity the findings of this study provide general insights and underscore the importance of chinese government policies that focus on installed capacity of renewable electricity energy intensity targets as well as merger of enterprises

auction design for the efficient allocation of service capacity under congestion we consider the problem of efficiently allocating the capacity of a number of service facilities prone to congestion to a set of users with private information regarding their willingness to pay for different combinations of throughput versus latency auction mechanisms can be used to schedule the service capacity of available facilities however the interdependency of users valuations implies that simple uniform price adjustment processes e g tatonnement either fail to effectively clear or are subject to strategic manipulation in this paper we propose an iterative auction design and show that i it is efficient i e the auction closes with the allocation of service that maximizes the social welfare and ii it is strategy proof that is it is a dominant strategy for users to truthfully reveal their demand for service capacity throughout the auction

causal independence between energy consumption and economic growth in liberia evidence from a non parametric bootstrapped causality test abstract this contribution investigates causal interdependence between energy consumption and economic growth in liberia and proposes application of a bootstrap methodology to better reflect causality employment is incorporated as additional variable the study demonstrates evidence of distinct bidirectional granger causality between energy consumption and economic growth additionally the results show that employment in liberia granger causes economic growth and apply irrespective of the short run or long run evidence from a monte carlo experiment reveals that the asymptotic granger causality test suffers size distortion problem for liberian data suggesting that the bootstrap technique employed in this study is more appropriate given the empirical results implications are that energy expansion policies like energy subsidy or low energy tariff for instance would be necessary to cope with demand exerted as a result of economic growth in liberia furthermore liberia might have the performance of its employment generation on the economy partly determined by adequate energy therefore it seems fully justified that a quick shift towards energy production based on clean energy sources may significantly slow down economic growth in liberia hence the government s target to implement a long term strategy to make liberia a carbon neutral country and eventually less carbon dependent by 2050 is understandable

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

ghanaian energy economy inter production factors and energy substitution abstract industries in ghana depend highly on petroleum to fuel their operations which has brought immerse environmental threat from greenhouse emission gas ghg this study tried to investigate potential substitutability of factor inputs and fuel inputs among capital labor petroleum and electricity in ghana by adopting the translog production and cost function approach we used ridge regression technique to estimate the parameters after our data show possibility of multicollinearity our result shows that all inputs are substitutes with their relative technological progress also showing evidence of convergence this suggests that redirecting resources into the improvement of technology towards cleaner energy production like electricity will be a success over time and this will mean that the fueling of the economy will be done in a cleaner environment and mitigating mitigate co2 emissions as well the improvement of electricity production and the promotion of its use require government policies that will enable industries to adjust to the switch from one input to the other through capital subsidies and tax rebates also energy labor and capital energy being substitutes in our findings suggest that removal of all energy subsidies will reduce the use of energy and increase capital and labor intensiveness input switch by industries will promote merger of smaller firms with bigger firms that have cost advantage during the switch period and requires a clear government merger control policies in a nutshell our findings provide an insight into policies to promote the use of renewable energy energy intensity and merger policies

short run and long run elasticities of import demand for crude oil in turkey abstract the aim of this study is to attempt to estimate the short run and the long run elasticities of demand for crude oil in turkey by the recent autoregressive distributed lag ardl bounds testing approach to cointegration as a developing country turkey meets its growing demand for oil principally by foreign suppliers thus the study focuses on modelling the demand for imported crude oil using annual data covering the period 1980 2005 the bounds test results reveal that a long run cointegration relationship exists between the crude oil import and the explanatory variables nominal price and income but not in the model that includes real price in domestic currency the long run parameters are estimated through a long run static solution of the estimated ardl model and then the short run dynamics are estimated by the error correction model the estimated models pass the diagnostic tests successfully the findings reveal that the income and price elasticities of import demand for crude oil are inelastic both in the short run and in the long run

truthful approximation mechanisms for restricted combinatorial auctions when attempting to design a truthful mechanism for a computationally hard problem such as combinatorial auctions one is faced with the problem that most efficiently computable heuristics can not be embedded in any truthful mechanism e g vcg like payment rules will not ensure truthfulness we develop a set of techniques that allow constructing efficiently computable truthful mechanisms for combinatorial auctions in the special case where each bidder desires a specific known subset of items and only the valuation is unknown by the mechanism the single parameter case for this case we extend the work of lehmann o callaghan and shoham who presented greedy heuristics we show how to use if then else constructs perform a partial search and use the lp relaxation we apply these techniques for several canonical types of combinatorial auctions obtaining truthful mechanisms with provable approximation ratios

determining optimal price and order size for a price setting newsvendor under cycle service level abstract there has been significant interest in the single period newsvendor problem where besides determining the order size the decision maker has to set the selling price the model is applicable when demand for the product is a stochastic function of the selling price although there have been several studies the problem needs exploration given that retailers prefer using service level rather than the shortage cost to model the economic consequence of a stock out we analyze the problem using a chance constrained formulation and provide a procedure for determining the optimal price and order size for a price setting newsvendor

energy transition towards economic and environmental sustainability feasible paths and policy implications this paper focuses on growth feasibility in an era of increasing scarcity of fossil fuels a stylised dynamic model illustrates the implications of investing in smooth technological progress in the field of renewable energy positive rates of gdp growth sustained by fossil fuels entail on the one hand more income available for r d in renewable energy sources and on the other an acceleration of the exhaustible resource depletion time our model explores such a trade off and highlights the danger of high growth rates policies should target low growth rates stimulate investment in alternative energy sources and discourage consumption growth

energy use efficiency in the indian manufacturing sector an interstate analysis abstract this paper approaches the measurement of energy efficiency from a production theoretic framework and uses data envelopment analysis to measure energy efficiency in the indian manufacturing sector using data from the annual survey of industries for the years 1998 99 through 2003 04 the study compares the energy efficiency in manufacturing across states based on several models the results show considerable variation in energy efficiency across states comparing the results across our models we find that the relative pricing of energy does not provide the appropriate incentives for energy conservation a second stage regression analysis reveals that states with a larger share of manufacturing output in energy intensive industries have lower energy efficiency also higher quality labor force associates with higher energy efficiency finally the power sector reforms have not yet had any significant impact on achieving energy efficiency

existence and convergence of equilibria in the buyer s bid double auction this paper concerns a bayesian game model of the buyer s bid double auction which is a procedure for organizing trade that selects a market clearing price from a list of offers bids strategic misrepresentation by traders may make the outcome of trade inefficient satterthwaite and williams 1989 showed that misrepresentation and inefficiency quickly converge to zero as the number of traders on each side of the market increases this is extended here to cases in which the number of buyers may differ from the number of sellers the existence of equilibria in a generic instance of the model is also proven this paper concerns a market in which each trader privately knows his own preferences such a trader may have an incentive to misrepresent his preferences in order to influence the market price in his favour a buyer for instance may bid less than his true evaluation of the good for sale in an attempt to drive the price down similarly a seller may ask for more than he is willing to accept with behaviour of this kind a seller s offer could exceed a buyer s bid even though a mutually profitable trade between them exists in the market as a whole a price may be determined at which all potential gains from trade are not achieved strategic misrepresentation may therefore cause inefficiency our confidence in markets rests upon the belief that this inefficiency is insignificant when there are a large number of small traders a small trader in a large market is unlikely to have much influence on the market price as a consequence he has little incentive to misrepresent and the market is therefore almost fully efficient this argument however is vague about a very important point when is a trader relatively small and how many traders constitute a large market the meaning of small and large in this context is critical to understanding when this intuitive argument applies this argument is investigated here by thoroughly analyzing a particular model of trade a market is considered in which money may be exchanged for indivisible units of a good for n m 1 there are n sellers each of whom has a unit to sell and m buyers each of whom wishes to buy a unit each trader is therefore small in that he trades at most one unit we shall consider arbitrary values of n and m however trade is organized with the following rules each seller submits an offer while each buyer submits a bid the n m offers bids are ordered in a list sl s2 sn m any

unimodality of price setting newsvendor s objective function with multiplicative demand and its applications abstract we present a general solution framework for the price setting newsvendor problem with a multiplicative stochastic demand under mild assumptions such as increasing price elasticity on the mean demand function and increasing generalized failure rate on the distribution of the random factor we first prove that both the profit function with respect to price and its derived function with respect to order quantity are quasi concave three applications are then studied under our solution framework 1 we consider a wholesale price only contract by which a manufacturer sets a wholesale price and a newsvendor determines an order quantity and the retail price and show that the manufacturer s profit function is unimodal with respect to retailing price or stocking factor under certain conditions 2 we consider a newsvendor problem in which the demand depends on both the retail price and the level of sales effort and the cost exerting the sales effort is proportional to the order quantity we prove that there exists a unique pair of price and sales effort levels that maximize the total profit this result is established under a set of mild assumptions on the demand and cost functions 3 we identify a property in the single period profit function that satisfies condition 1 of huh and janakiraman 2008 which in turn guarantees the optimality of s s policy for an infinite stationary dynamic inventory price control system with lost sales and fixed order costs finally the unimodality of the newsvendor problem with a general stochastic and price sensitive demand is studied

the rate of convergence to efficiency in the buyer s bid double auction as the market becomes large a trader who privately knows his preferences may misrepresent them in order to influence the market price this strategic behaviour may prevent realization of all gains from trade in this paper trade in a simple market with an explicit rule for price formation is modelled as a bayesian game we show that the difference between a trader s bid and his reservation value is maximally 0 1 m where m is the number of traders on each side of the market competitive pressure as m increases thus quickly overcomes the inefficiency private information causes and f ces the market towards an efficient allocation

a dynamic analysis of interfuel substitution in u s industrial energy demand using data for 1960 92 to analyze interfuel substitution in the u s industrial sector a dynamic linear logit model is shown to provide superior global properties than a comparable dynamic translog model confirming earlier static results by t j considine 1989 the linear logit model provides a direct unbiased estimate of the rate of dynamic adjustment indicating a median response lag of less than two years excluding fuels used for nonenergy purposes yields larger estimates of the price elasticities for coal and oil and indicates generally greater potential for interfuel substitution than when using aggregate data

energy substitution efficiency and the effects of carbon taxation evidence from china s building construction industry as buildings are constructed to be more energy efficient and environmental friendly the building construction industry which is a basic and leading industry of the national economy development has become one of the key sectors for energy conservation and emission reduction in china this paper aims at quantifying both inter factor and inter energy substitution for china s building construction industry and investigate the main driving forces behind energy efficiency changes as well as the co2 abatement effect of a uniform carbon tax in this sector the model is established employing provincial pooled data over 2003 2012 in china by regions hence results between different regions are compared the main findings indicate that i energy and non energy are substitutes whereas individual energy inputs are complementary in china s building construction industry the substitution effect varies across regions due to different factor endowments and marketization levels ii energy price increase and construction scale expansion leads to energy efficiency improvement while substitution and technology present negative influences on energy efficiency iii approximately 3 of the co2 emissions in china s building construction industry can be reduced by carbon taxation based on the integrated own and cross price elasticities of each energy

a decision support framework for evaluating revenue performance in sequential purchase contexts abstract this paper studies the product ordering problem in sequential purchase contexts where sellers aim to maximize their revenue faced with budget constrained buyers we propose a multi layered decision support framework that combines empirical data with simulation optimization and econometric methods to address this problem our framework allows sellers to i compare revenue performances of limited information sequencing strategies ii quantify benchmark revenue levels that can be achieved via the optimal sequence based on detailed buyer information iii determine the costs of limited information and strategic buyers to the seller and iv identify the moderators of sequencing strategy performance we illustrate our framework through two applications in a business to business used car auction setting contrary to previous studies reporting practitioners tendency to sequence items from the lowest value to the highest our results suggest that the best performing limited information sequencing strategy depends on buyers bidding behavior we also find that the revenue difference between the optimal sequence and a limited information sequencing strategy can be substantial our results show that a significant portion of this revenue difference is associated with the seller s limited information on buyers budgets and product valuations our applications also provide various sensitivity analyses and develop new propositions on the moderators of the relationship between the seller s revenue and sequencing strategies

substitution possibilities and determinants of energy intensity for china abstract this paper measures technological change factor demand and inter factor and inter fuel substitutability measures for china we use individual fuel price data and a two stage approach to estimate total factor cost functions and fuel share equations both inter factor and inter fuel substitution elasticities are calculated and the change in energy intensity is decomposed into its driving forces the results suggest that energy is substitutable for capital regionally and for labor nationally capital substitutes for energy more easily than labor does energy intensity changes vary by region but the major drivers seem to be budget effect and the adoption of energy intensive technologies which might be embodied in high level energy using exports and sectors capital investment and even old technique and equipment imports whether the trend in rising energy intensity continues will be significant for china and the rest of the world

dynamic multilevel modelling of industrial energy demand in europe previous studies of industry level energy demand have not accounted for the hierarchical nesting of industries within a system that also adequately allows for country specific determinants of energy demand the principal contribution of this paper is therefore to analyse energy demand for european industries over the period 1995 2009 using a dynamic multilevel model that accounts for this hierarchical data structure among other things we find firstly that our dynamic multilevel model suggests that if industry income and the industry energy price increase by 10 long run energy demand will increase by 8 1 and fall by 6 8 respectively secondly we find that the corresponding long run income and price elasticities are substantially larger in a standard dynamic model of industry level energy demand which does not account for the hierarchical data structure our results therefore suggest that not accounting for the hierarchical data structure results in unreliable estimates of energy demand elasticities from a policy perspective we argue that it is imperative that future industry level energy demand studies account for the hierarchical structure of the data this is to prevent energy policy making being based on industry level evidence that substantially inflates the responsiveness of long run energy demand to income and price changes

can market oriented economic reforms contribute to energy efficiency improvement evidence from china since china accelerated its market oriented economic reforms at the end of 1992 its energy intensity has declined 3 6 annually over 1993 2005 however its energy intensity declined 4 2 annually during its first reform period 1979 1992 therefore can we conclude that the accelerated marketization since the end of 1992 has made no contribution to its energy efficiency improvement in order to answer this challenging question we examine the changes of energy own price elasticity as well as the elasticities of substitution between energy and non energy capital and labor in china during the periods of 1979 1992 and 1993 2003 generally in transition or developing economies holding the technology and output level fixed if the energy own price elasticity algebraic value declines or the substitution elasticity between factors rises they will contribute to energy efficiency improvement our empirical study finds that 1 during 1979 1992 the energy own price elasticity is positive 0 285 and capital energy labor energy are both morishima complementary which indicates a distorted energy price and inefficient allocation and 2 during 1993 2003 the own price elasticity for energy is negative 1 236 and capital energy and labor energy are both morishima substitute all factor demands become more elastic and all elasticities of substitution increase the implication is that the accelerated marketization contributes substantially to energy efficiency improvement since 1993 c 2006 elsevier ltd all rights reserved

technical change inter factor and inter fuel substitution possibilities in pakistan a trans log production function approach abstract energy consumption in pakistan increased significantly over the last two decades primarily due to industrialization in order to meet the growing energy needs the government adopted short term policies by setting up thermal power projects which are more expensive both in terms of fiscal cost and environmental damages as compared to hydro power projects the former has exposed pakistan to international oil price shocks and environmental degradations this study therefore attempts to analyze technical change using trans log production function by employing non energy factors i e capital and labor and energy factors i e petroleum and natural gas to estimate elasticity of substitution the purpose of the study is to provide policy suggestions to the government on how to achieve high economic growth vis a vis improved energy security and environmental sustainability the results reveal that capital energy and labor energy are substitutes thereby suggesting the need for an increased focus on technological advancement and skilled employment generation to conserve energy and reduce co 2 emission a gradual elimination of energy subsidies which will make energy price reflects its true cost is required to further discourage increased energy consumption and promote capital intensive production methods a scenario analysis based on the elasticity of substitution between capital energy and petroleum gas shows the potential of energy conservation and emission mitigation the results further suggest the importance of a diversified energy supply mix characterized by abundant hydro and other renewable energy resources alongside natural gas

estimates of electricity saving potential in chinese nonferrous metals industry the paper analyzes the electricity saving potential of nonferrous metals industry in china the cointegration method is applied to estimate electricity intensity of chinese nonferrous metals industry in an effort to predict future electricity saving potential the results show that there is a long run equilibrium between electricity intensity and factors such as r d intensity industrial electricity price enterprise scale and labor productivity by means of scenario analysis we evaluate different possible measures that might be adopted to narrow down the electricity efficiency gap between nonferrous metals industry in china and that of japan the results indicate that more active electricity conservation policies are needed in order to reduce the electricity intensity of chinese nonferrous metals industry we also find that the electricity efficiency gap could be significantly narrowed by 2020 if proper electricity conservation policy is adopted finally based on the results of the scenario analysis future policy priorities are suggested

china s energy economy technical change factor demand and interfactor interfuel substitution with its rapid economic growth china s primary energy consumption has exceeded domestic energy production since 1994 leading to a substantial expansion in energy imports particularly of oil china s energy demand has an increasingly significant impact on global energy markets in this paper allen partial elasticities of factor and energy substitution and price elasticities of energy demand are calculated for china using a two stage translog cost function approach the results suggest that energy is substitutable with both capital and labor coal is significantly substitutable with electricity and complementary with diesel while gasoline and electricity are substitutable with diesel china s energy intensity is increasing during the study period 1995 2004 and the major driver appears to be due to the increased use of energyintensive technology

quasi fixed inputs in u s and japanese manufacturing a generalized leontief restricted cost function approach in this paper a generalized leontief variable cost function is develope d which permits analytical derivation of steady state levels of quasi fixed inputs and capacity output and does not require specification of a numeraire input this framework is then used to evaluate the fa ctor demand patterns of japanese and u s manufacturing based on bot h one quasi fixed capital input and two quasi fixed capital and la bor input specifications and both static and dynamic optimization t he findings provide evidence of considerable flexibility of demand re sponses in japan which may have contributed to japan s relatively st rong economic performance in the volatile 1970s copyright 1988 by mit press

major oecd country industrial sector interfuel substitution estimates 1960 1979 abstract a range of static and dynamic translog based expenditure shares models are estimated for non energy producing industrial sectors of the major seven countries of the oecd area sectoral energy volume and fuel efficiency bias variables are shown to be significant over and above individual prices in explaining individual fuel expenditure shares statistically significant own price and cross price elasticities of demand are presented for individual countries with some magnitudes varying considerably across alternative model specifications

interfuel substitution a meta analysis interfuel substitutability has been of longstanding interest to the energy economics and policy community however no quantitative meta analysis has yet been carried out of this literature this paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector manufacturing industry or subindustries or macro economy of a variety of developed and developing economies publication bias is controlled for by including the primary study sample size in the meta regression results for the shadow elasticities of substitution between coal oil gas and electricity for forty six primary studies show that at the level of the industrial sector there are easy substitution possibilities between all the fuel pairs with the exception of gas electricity and coal electricity substitution possibilities seem more constrained at the macro level and less constrained in sub industries estimates also vary across countries publication bias does not seem to be present but model and data specification issues very significantly affect the estimates derived by each individual study estimates from cross section regressions are generally largest fixed effects panel estimates intermediate in magnitude and time series estimates are mostly much smaller econometric research suggests that the fixed effects estimates are likely the best among the existing studies though biased downwards

the demand for energy in the large scale manufacturing sector of pakistan abstract the extent of interfuel substitution as well as substitution between energy and non energy inputs in the large scale manufacturing sector of pakistan has been examined the model has been estimated in two stages in the first stage input demand for various energy components is estimated and hence an aggregate divisia index is constructed in the second stage this index is used as an instrument to estimate aggregate input demand for capital labour and energy along with their price and substitution elasticities it seems that there is little interfuel substitution the results also show that energy and labour are substitutes while energy and capital are complement

a nested ces approach to capital energy substitution abstract this paper uses the nested constant elasticity of substitution ces production function to estimate elasticities of substitution between capital labour energy and materials over the 1971 1976 period around the initial energy crisis elasticities are estimated for each of the two digit sic industries within us manufacturing using more disaggregate four digit sic data the nested ces function makes it possible to distinguish between engineering and economic elasticities of substitution capital and energy are estimated to be slight engineering substitutes and economic complements labour energy and materials are estimated economic substitutes

trade reduction vs multi stage a comparison of double auction design approaches with the growth of electronic markets designing double auction mechanisms that are applicable to emerging market structures has become an important research topic in this paper we investigate two truthful double auction design approaches the trade reduction approach and the multi stage design approach and compare their resulting mechanisms in various exchange environments we find that comparing with the trade reduction approach the multi stage design approach offers mechanisms applicable to more complicated exchange environments furthermore for the known trade reduction mechanisms we prove that the corresponding mechanisms under the multi stage design approach are superior in terms of both social efficiency and individual payoffs in each exchange environment of interest our computational tests show that the mechanisms under the multi stage design approach achieve very high efficiency in various scenarios

energy substitution effect on transport sector of pakistan based on trans log production function abstract transport sector because of the growing industrialization and urbanization of pakistan is one of fastest growing sector in terms of output energy consumption and co 2 emission its current performance and future outlook has the potential to leave behind problems related to the global issues of energy security and environmental sustainability the extents to which energy and non energy inputs are substitutable are the core issue in planning and designing of energy policies for this purpose we establish a trans log production function for pakistan transport sector and the input factors capital labor and energy are included output elasticities of each factor and the substitution elasticities between these factors have been estimated and analyzed for the sample period of 1980 2013 the results show higher output elasticity and that all pairs of factor inputs are substitutes because of the higher level of substitution elasticities the results suggest that by allocating more capital in the transport sector the relevant energy saving technology could be promoted thereby realizing the substitution between capital and energy and reduction of co 2 emission as a result it further suggest that by continuous upgrading of the capital substitution between energy and labor can also be achieved and the transition of pakistan transport sector from labor intensive to capital intensive can be realized

the importance of ordering in sequential auctions to date the largest part of literature on multi unit auctions has assumed that there arek homogeneous objects being auctioned where each bidder wishes to win exactly one or all ofk units these modeling assumptions have made the examination of ordering in sequential auctions inconsequential the aim of this paper is to introduce and highlight the critical influence that ordering can have on the efficiency of an auction we study a buyer who outsources via sequential 2nd price auctions two heterogeneous jobs and faces a diverse set of suppliers with capacity constraints

a dominant strategy double auction a double auction mechanism that provides dominant strategies for both buyers and sellers is analyzed this mechanism satisfies the 1n convergence to efficiency of the buyer s bid double auction in addition the mechanism always produces full information first best prices the inefficiency arises because the least valuable profitable trade may be prohibited by the mechanism the mechanism has an oral implementation utilizing bid and asked prices

the energy demand in the manufacturing sector of pakistan some further results abstract the purpose of this study was to re examine the role of energy in the manufacturing sector of pakistan using a partial equilibrium approach gl restricted cost function along with the factor demand equations were estimated using zellner s iterative procedure higher energy prices do not seem to adversely affect investment in capital substitution possibilities between energy and non energy inputs are very limited and therefore energy price hikes may directly affect the cost of production inter fuel cross price elasticities indicate that there are substitution possibilities between electricity and gas

the demand for energy in greek manufacturing abstract this paper considers an econometric approach to measuring substitutability of three types of energy i e crude oil electricity and diesel with capital and labour in the manufacturing sector of greek industry during the period 1970 1990 a general dynamic framework is developed under the assumption that the structure of the production process is weakly separable in capital labour and energy aggregates the translog total cost function is used to represent the production technology the main advantages of the proposed dynamic structure are that it is both disaggregated in energy components and consistent with the neo classical theory of production

the validation of granger causality through formulation and use of finance growth energy indexes abstract the paper aims to investigate the finance growth energy nexus validity in pakistan by taking large range of relevant variables and developing indexes focus of the paper is to evaluate the long run relationship between financial development economic development and energy consumption after extracting the indices granger s ordinary least squares ols regression and correlation is used to explain short run deviation in the nexus in order to capture co integration eagle granger approach is applied lastly hurst exponent are used to estimate annual rescaled range statistics to explain deviation during period of analysis granger causality has been empirically tested in a robust way incorporating large range of relevant variables on overall nexus of finance growth energy that has been hardly tested in such depth index formation through econometric analysis is novel part of this study which revealed that in short run financial development index fdi and energy price have significant relationship with energy consumption however in long run analysis has endorsed the concept of granger casualty especially on feedback hypothesis study has practical and theoretical contribution to the literature that could be highly beneficial to policy makers

sustainable newsvendor models under trade credit abstract governments and industry are actively seeking means of reducing global warming the management of supply chains while taking into account the effects on the environment is an important issue therefore we present newsvendor models that take into account carbon emissions trade credit and product recycling in which the credit period affects the risk of default and the demand is uncertain in this paper the objective of these models is to determine the optimal ordering quantity credit period and recycle price in order to maximize total profits three carbon emission incentives are taken into account 1 carbon tax 2 direct cap 3 carbon cap and trade we also incorporate risk management methods to limit risk of default providing a solution for each type of carbon emission incentive numerical analysis is used to illustrate the implementation of solutions and the degree to which system parameters affect profits and decision making the results show that higher carbon taxes reduce recycle prices order quantities and total profits increasing the carbon cap leads to increases in recycle price order quantity and total profit a higher carbon price drives down the recycle price order quantity and total profits

measuring the energy input substitution and output effects of energy price changes and the implications for the environment abstract previous studies of decomposition of factor inputs have limited their analysis on the estimation of substitution and output effects however this paper develops a two step approach to estimate the substitution and output effects of changes in energy demand resulting from changes in prices and further examines the implications of these effects on co2 emissions using european industrial dataset over the period 1995 2007 in our empirical estimations instead of relying only on isur model like previous studies we introduced a multilevel model which is a more befitting model to our data our analysis covers industry as a whole and for different sector types the primary results emerged from our analysis suggest a strong evidence using the multilevel model generally our results show that production inputs are substitutable we find the substitution and output effects to be negatively related to co2 emissions however the substitution effects dominate from policy perspectives our results suggest that output adjustments may not play a significant role in reducing emissions we find the overall effects of changes in energy demand to be moderate then we argue that increment in energy taxes should be complemented by cleaner factor substitution and sustainable growth to achieve a desirable carbon reduction

interfuel substitution in the united states in this paper we use the locally flexible translog functional form to investigate the demand for energy and interfuel substitution in the united states and to provide a comparison of our results with most of the existing empirical energy demand literature motivated by the widespread practice of ignoring theoretical regularity we follow barnett s 2002 suggestions and estimate the model subject to theoretical regularity using methods developed by diewert and wales 1987 and ryan and wales 2000 in an attempt to produce inference consistent with neoclassical microeconomic theory moreover we use the most recent data published by the u s energy information administration eia and in addition to investigating interfuel substitution possibilities in total u s energy demand we follow serletis et al 2009 and also examine interfuel substitution possibilities in energy demand by sector moreover we test for weak separability with the objective of discovering the structure of the functional form in total energy demand as well as energy demand by sector

newsvendor problem with clearance pricing abstract the newsvendor nv problem assumes that the salvage clearance price at which the leftover inventory is disposed of is a given parameter of the problem in this paper we relax this assumption and consider the nv problem with the salvage clearance price as a decision variable we have drawn from the literatures on the nv problem and clearance markdown dynamic pricing to develop three stochastic models in this paper in the first model we assume that while the seasonal demand is exogenous and stochastic the end of season demand is endogenous and deterministic the second model extends the first model by assuming that the end of season demand is endogenous and stochastic finally the third model considers that both the seasonal and end of season demands are endogenous and stochastic we have provided solution procedures for solving the stochastic optimization problems we have also performed sensitivity analyses to assess the sensitivity of the optimal expected profit and order quantity to different problem parameters specifically we have found that the optimal expected profit is most sensitive to the variable cost per unit mean seasonal demand and market potential of end of season demand our models will be useful for retailers of products with a short selling season and a short end of season period for clearance sale of leftover inventory such that there is a single replenishment opportunity at the beginning of the season and a single opportunity for setting the salvage price for clearance sale based on the leftover inventory and end of season demand pattern the paper is concluded with possible directions for future research

the capital energy substitutability debate a new look over the last twenty years many studies have been made of the elasticity of substitution between capital and labor the reported estimates are highly variable and reveal an apparent dichotomy between cross sectional and time series studies the former suggest that capital and energy are substitutes while the latter suggest the converse all these studies reported allen partial elasticities of substitution we suggest that the morishima elasticity may be a more useful measure for the issues of concern to capital energy substitution we calculate the morishima elasticities from parameters estimated in a selection of earlier studies and find no excessive variability nor any evidence of the time series cross section dichotomy capital and energy are morishima substitutes copyright 1995 by mit press

an elasticity approach to the newsvendor with price sensitive demand we introduce a measure of elasticity of stochastic demand called the elasticity of the lost sales rate which offers a unifying perspective on the well known newsvendor with pricing problem this new concept provides a framework to characterize structural results for coordinated and uncoordinated pricing and inventory strategies concavity and submodularity of the profit function as well as sensitivity properties of the optimal inventory and price policies are characterized by monotonicity conditions or bounds on the elasticity of the lost sales rate these elasticity conditions are satisfied by most relevant demand models in the marketing and operations literature our results unify and complement previous work on price setting newsvendor models and provide a new tool for researchers modeling stochastic price sensitive demand in other contexts

electricity demand and conservation potential in the chinese nonmetallic mineral products industry newhuadu business school research fund ministry of education foundation 10jzd0018 10jbg013 china sustainable energy program g 1103 13921 national social science foundation 09zd050

modelling energy and non energy substitution a brief survey of elasticities estimating the degree of substitution between energy and non energy inputs is the key for any evaluation of environmental and energy policies yet given the variety of substitution elasticities the central question arises as to which measure would be most appropriate apparently allen s elasticities of substitution have been the most used measures in applied production analysis in line with frondel 2004 this paper argues that cross price elasticities are preferable for many practical purposes this conclusion is based on a survey of classical substitution measures such as those from allen morishima and mcfadden the survey highlights the fact that cross price elasticities are their essential ingredients

understanding technological progress and input price as drivers of energy demand in manufacturing industries in india abstract this paper presents a comprehensive analysis of energy demand behaviour of seven energy intensive manufacturing industries and the aggregate manufacturing sector in india during 1973 74 to 2011 12 the policy perform achieve and trade pat has mandated energy efficiency targets for these manufacturing industries in india we focus on two major drivers of energy demand technological progress and energy price productivity growth accounting and estimation of parametric cost function using annual survey of industry data bring out important implications regarding the role of these two drivers results suggest that these industries experienced technological progress over the study period 1973 74 to 2011 12 with significant energy saving bias during 1998 99 to 2011 12 increase in energy price has led to reduction in energy demand and augmented technological progress in most of the industries energy and material inputs are mostly substitutes during 1998 99 to 2011 12 productivity growth of energy input was induced by both technological progress and increase in energy price estimates of inter factor substitution suggest that price induced reduction in energy demand can be a capital intensive process in case of some industries rebound effect has never taken back full gains of energy efficiency policies in the context of these industries

industry level production functions and energy use in 12 eu countries abstract in the eu context industrial sectors have significantly reduced their energy consumption in the last decade despite significant disparities existing across industry branches comparative studies focused on the effect of energy use in the production growth of the different industry branches are limited and not related to the eu countries this study undertakes a production growth approach to analyze the effect of energy use in different industry branches through the estimation of translog production functions based on data from 12 eu countries during the 2000 2014 period in addition two sub periods are studied to evaluate if industrial energy efficiency has been improving through time specifically from 2007 findings confirm the existence of different behavior patterns with respect to energy use in the considered sectors and from one sub period to another as a result policy measures should be sector specific since no general production energy use patterns can be obtained

truthful double auction mechanisms following the multistage design approach we propose two asymptotically efficient truthful double auction mechanisms the bc lp mechanism and the mbc mechanism for an exchange market with many buyers and sellers in this market each buyer wants to procure a bundle of commodities and each seller supplies one unit of a commodity furthermore various transaction related costs will be incurred when a buyer trades with a seller we prove that under both mechanisms truthful bidding is a dominant strategy for all buyers and sellers when the buyers bundle information and the transaction cost information are common knowledge the bc lp mechanism can be implemented by just solving two linear programs whereas the mbc mechanism has a higher complexity the empirical study shows that the mbc mechanism achieves higher efficiency over the bc lp mechanism and that both outperform the ksm tr mechanism the only known truthful mechanism for a more restrictive exchange market

three laws of energy transitions the paper formulates and explores a hypothesis on three general energy transition laws the law of stable long term energy costs to income ratio the law of improving energy quality and the law of growing energy productivity these laws are essential for shaping long term projections and checking for their consistency all three are rooted in amazingly stable in time and universal across countries energy costs to income ratios limited energy purchasing power sets up thresholds which if exceeded bring asymmetry to energy demand to price elasticity the author believes that the theoretical postulate on the substantial substitution among production factors which is used in the production functions theory may be incorrect in reality innovations mainly lead to the substitution of a low quality production factor with the same yet of a better quality improving energy quality with stable costs to income ratio is accompanied by growing energy productivity energy costs to income thresholds are indicators allowing for better projections of oil prices

oil price fluctuation volatility spillover and the ghanaian equity market implication for portfolio management and hedging effectiveness abstract this study attempts to contribute to the literature on stock markets and energy prices by examining the dynamic volatility and volatility transmission between oil and ghanaian stock market returns in a multivariate setting using the recently developed var garch var agarch and dcc garch frameworks in turn the models results are used to compute and analyze the optimal weights and hedge ratios for oil stock portfolio holdings for comparison purposes and to put the paper more in the perspective of west africa the nigerian stock market is also included in the analysis our findings point to the existence of significant volatility spillover and interdependence between oil and the two stock market returns while spillover effects are stronger for nigeria the transmission of volatility is much more apparent from oil to stock than from stock to oil in the case of ghana also the study demonstrates evidence of short term predictability in oil and stock price changes through time and reveals that conditional volatility changes more rapidly as result of substantial effects of past volatility rather than past news shocks for all market returns moreover we show that there is a slightly more effective hedge in the two stock markets under the dcc garch framework our preferred model compared to the other two models although hedging effectiveness is much greater for ghana on the whole our findings for optimal hedge ratios are consistent with other studies and particularly the view that oil assets should be an integral part of a diversified portfolio of stocks and suggest that a better understanding of volatility links is crucial for portfolio management in the presence of oil price risk finally the existence of multivariate asymmetric effects and dynamic conditional correlations as revealed by the var agarch and dcc garch models make it clear that the assumptions of symmetric effects and constant conditional correlations are not supported empirically

supply and demand uncertainty reduction efforts and cost comparison abstract in industries like health care consumer goods and agriculture shortages are widely observed and the consequences can be costly one of the main drivers of such shortages is the uncertain nature of supply and demand to reduce uncertainties sufficient information about supply and demand can be obtained by gathering relevant data e g auditing suppliers and conducting market research in this paper we conduct an analysis to examine the impacts of supply uncertainty demand uncertainty and uncertainty reduction efforts on production quantity and total cost we show that in the absence of uncertainty reduction efforts when the financial consequences of shortages are large or when the unit benefit is large supply uncertainty is more costly than demand uncertainty in addition exerting supply uncertainty reduction effort always causes the firm to produce fewer units than exerting demand uncertainty reduction effort although supply uncertainty reduction effort delivers a larger degree of improvement to total cost and hence is more efficient reduced supply uncertainty still leads to a higher system cost than does reduced demand uncertainty

a risk tolerance analysis for a joint price differentiation and inventory decisions problem with demand leakage effect abstract price differentiation is a commonly used practice in revenue management rm to improve a firm s profitability however most studies in the literature have considered a risk neutral firm to demonstrate the benefits of price differentiation the main contribution of this paper is in considering several important objectives while determining the optimal product prices and order production quantities for a risk adjusted firm with demand leakage effects in the presence of a price dependent stochastic demand the objectives considered include the maximization of a firm s expected profit and maximizing the probability of exceeding the risk adjusted expected revenue closed form expressions for optimal product prices and production quantities are derived for several of these objectives a numerical study is also presented to calibrate the impact of a firm s risk tolerance and other factors such as demand leakage market demand variability on the firm s profitability and its optimal decision

fossil fuel flexibility in west european power generation and the impact of system load factors this paper analyzes short run interfuel substitution in west european power generation and the impact of system load factors on fossil fuel choice the problems are studied within a restricted translog cost share model the paper concludes that interfuel substitution in existing power plants is substantial especially that between oil and gas this is consistent with the notion that short run fuel substitution takes place in dual or multi fired plants by switching load between different single fired plants and by some conversions of power plants to be able to burn alternate fuels the empirical investigation also indicates that the system load factor is a notable determinant of fossil fuel choices in west europe and the paper ends with an assessment of the fuel consequences of some load management schemes in the region

delving into liberia s energy economy technical change inter factor and inter fuel substitution abstract the industrial energy mix of liberia is dominated by petroleum products this has generated serious environmental problems contributing immensely to co 2 emissions and other pollutants in the country this study has attempted to investigate the potential for inter factor and inter fuel substitution between capital labor petroleum and electricity in liberia by employing a translog production and cost function approach ridge regression procedure has been adopted to estimate the parameters of the function due to multicollinearity in the data estimation results show that all inputs are substitutes these suggest that price based policies coupled with capital subsidy programs can be adopted to redirect technology use towards cleaner energy sources like electricity hence retaining the ability to fuel the economy while also mitigating greenhouse gas ghg emissions substitution between energy and labor and energy and capital implies that removal of price ceilings on energy in liberia would tend to reduce energy use and increase capital and labor intensiveness notwithstanding the study seems to show no evidence of convergence in relative technological progress of the four inputs implying that petroleum will continue to play a dominant role in the energy consumption mix of liberian industry while labor investment will continue to outweigh capital inputs finally the findings of this study provide general insights and underscore the importance of policies that focus on installed capacity of renewable electricity energy intensity targets as well as merger of enterprises

the relationship between electricity consumption electricity prices and gdp in pakistan abstract this study analyzes the relationship among electricity consumption its price and real gdp at the aggregate and sectoral level in pakistan using annual data for the period 1960 2008 the study finds the presence of unidirectional causality from real economic activity to electricity consumption in particular growth in output in commercial manufacturing and agricultural sectors tend to increase electricity consumption while in residential sector growth in private expenditures is the cause of rising electricity consumption the study concludes that electricity production and management needs to be better integrated with overall economic planning exercises this is essential to avoid electricity shortfalls and unplanned load shedding

energy capital substitutability complementarity the dichotomy abstract changes in the price of energy affect not only the demand for energy but also the rates of capital formation and labour utilization these changes depend on the functional relationship between energy and the primary factor inputs in particular the relationship between energy and capital has been characterized by major conflicting evidence time series data classify the two inputs as complements by contrast pooled cross section studies conclude that capital and energy aresubstitutes in the production process in this case higher priced energy will stimulate the demand for investment while several reconciliation attempts on this disparity deserve marked attention the most prominent explanation is that time series studies reflect short term relationships and cross section analyses capture long term effects

valuing chinese feed in tariffs program for solar power generation a real options analysis newhuadu business school research fund china sustainable energy program g 1305 18257 national social science foundation of china 12zd059 ministry of education 10gbj013

models for iterative multiattribute procurement auctions multiattribute auctions extend traditional auction settings to allow negotiation over nonprice attributes such as weight color and terms of delivery in addition to price and promise to improve market efficiency in markets with configurable goods this paper provides an iterative auction design for an important special case of the multiattribute allocation problem with special preferential independent additive structure on the buyer value and seller costs auction additive discrete provides a refined design for a price based auction in which the price feedback decomposes to an additive part with a price for each attribute and an aggregate part that appears as a price discount for each supplier in addition this design also has excellent information revelation properties that are validated through computational experiments the auction terminates with an outcome of a modified vickrey clarke groves mechanism this paper also develops auction nonlinear discrete for the more general nonlinear case a particularly simple design that solves the general multiattribute allocation problem but requires that the auctioneer maintains prices on bundles of attribute levels

factor and fuel substitution in china s iron steel industry evidence and policy implications climate change which is induced from energy consumption and co2 emissions has got people s attention hence many strategies and ways are being adopted to mitigate co2 emissions energy substitution is crucial to the promotion of energy conservation and co2 emissions reduction the purpose of this paper is to estimate both inter factor and inter fuel substitution in china s iron steel industry during the period 1985 2011 empirical results show several conclusions for china s iron steel industry 1 own price elasticity of energy is negative so increase in energy price will reduce energy input 2 energy and capital and energy and labor are substitutes and the substitution in energy capital is relatively stronger 3 though coal oil and electricity are also substitutes the substitution effect is not so obvious because of pricing distortions in china the driving forces of energy efficiency change are further discussed and the results show that technology progress is the key factor determining energy intensity therefore market oriented reforms in terms of energy prices improvement in energy substitution including inter factor and inter fuel substation and promotion of energy saving technologies are important means for ensuring future energy conservation and co2 emissions reduction practices in china s iron steel sector

agent competition double auction mechanism this paper proposes an agent competition double auction mechanism to simplify decision making and promote transactions for the customer to customer marketplaces under the proposed double auction mechanism bidding one s true valuation private information is the best strategy for each individual buyer and seller even when shipping costs and sales taxes are different across various possible transactions the proposed mechanism also achieves budget balance and asymptotic efficiency furthermore these results not only hold for an environment where buyers and sellers exchange identical commodities but also can be extended to an environment with multiple substitutable commodities

a smart market for industrial procurement with capacity constraints we address the problem of designing multi item procurement auctions for a monopsonistic buyer in capacity constrained environments using insights from classical auction theory we construct an optimization based auction mechanism smart market relying on the dynamic resolution of a linear program minimizing the buyer s cost under the suppliers capacity constraints suppliers can modify their offers in response to the optimal allocation corresponding to each set of bids giving rise to a dynamic competitive bidding process to assist suppliers we also develop a bidding suggestion device based on a myopic best response mbr calculation that solves an associated optimization problem assuming linear costs for the suppliers we study within a game theoretic framework the sequence of bids arising in this smart market under a weak behavioral assumption and some symmetry requirements an explicit upper bound for the winning bids is established we then formulate a complete behavioral model and solution methodology based on the mbr rationale and show that the bounds derived earlier continue to hold we analytically derive some structural and convergence properties of the mbr dynamics in the simplest nontrivial market environment which suggests further possible design improvements and investigate bidding dynamics and incentive compatibility issues via numerical simulations