measuring the financial impact of demand response for electricity retailers abstract due to the integration of intermittent resources of power generation such as wind and solar the amount of supplied electricity will exhibit unprecedented fluctuations electricity retailers can partially meet the challenge of matching demand and volatile supply by shifting power demand according to the fluctuating supply side the necessary technology infrastructure such as advanced metering infrastructures for this so called demand response dr has advanced however little is known about the economic dimension and further effort is strongly needed to realistically quantify the financial impact to succeed in this goal we derive an optimization problem that minimizes procurement costs of an electricity retailer in order to control demand response usage the evaluation with historic data shows that cost volatility can be reduced by 7 74 peak costs drop by 14 35 and expenditures of retailers can be significantly decreased by 3 52

demand response with locational dynamic pricing to support the integration of renewables abstract electricity production from centralised and decentralised renewable energy resources in europe is gaining significance resulting in operational challenges in the electricity system although these challenges add to the locational and time dependency of the underlying cost of operating the system this variability in time and location is not reflected in residential tariff schemes consequently residential users are not incentivised to react to varying system conditions and to help the integration of renewable energy resources therefore this paper provides a theoretical framework for designing a locational dynamic pricing scheme this can be used to assess existing tariff structures for consumption and injection and can serve as a theoretical background for developing new tariff schemes starting from the underlying costs this paper shows that the potential for locational dynamic pricing depends on the locational and time dependency of its cost drivers when converting costs into tariffs the tariff design should be determined this includes the advance notice of sending tariffs to users and the length of price blocks and price patterns this tariff design should find a balance between tariff principles related to costs practicality and social acceptability on the one hand and the resulting demand response incentive on the other

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

international entrepreneurship in internet enabled markets abstract despite the increasing numbers of businesses that are already using the internet to pursue international opportunities and the latent potential for such activity from rising internet adoption levels the international entrepreneurship literature has paid limited attention to the phenomenon to address this gap we review past research in international entrepreneurship as well as the broader fields of entrepreneurship international business marketing management and management information systems to identify firm level resources that are associated with the successful pursuit of international opportunities in internet enabled markets we identify three such internet related firm level resources online reputation online technological capabilities and online brand communities we develop a propositional inventory of the expected relationships identify measures expected to be useful to future scholars in this area and present the implications of our review for future international entrepreneurship research

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

redistribution effects of energy and climate policy the electricity market abstract energy and climate policies are usually seen as measures to internalize externalities however as a side effect the introduction of these policies redistributes wealth between consumers and producers and within these groups while redistribution is seldom the focus of the academic literature in energy economics it plays a central role in public debates and policy decisions this paper compares the distributional effects of two major electricity policies support schemes for renewable energy sources and co2 pricing we find that the redistribution effects of both policies are large and they work in opposed directions while renewables support transfers wealth from producers to consumers carbon pricing does the opposite more specifically we show that moderate amounts of wind subsidies can increase consumer surplus even if consumers bear the subsidy costs co2 pricing in contrast increases aggregated producer surplus even without free allocation of emission allowances however not all types of producers benefit these findings are derived from an analytical model of electricity markets and a calibrated numerical model of northwestern europe our findings imply that if policy makers want to avoid large redistribution they might prefer a mix of policies even if co2 pricing alone is the first best climate policy in terms of allocative efficiency

generation capacity adequacy in interdependent electricity markets this paper deals with the practical problems related to long term security of supply in regional electricity markets with transmission constraints differences between regulatory policies and market designs in terms of generation adequacy policies may distort the normal functioning of the neighboring markets as well as the reliability of supply we test the effect of heterogeneous regulatory design between two interdependent markets energy only market price capped market without capacity mechanisms and price capped markets with forward capacity contracts obligation we rely on a long term market simulation model in system dynamics that characterizes expansion decision in a competitive regime the results show that differences in market designs affect both price and reliability of supply in the two markets we examine both the short and long terms effect and how free riding may occur where capacity adequacy policies are adopted in one market but not the other the main finding is that the lack of harmonization between local markets in policies to ensure capacity adequacy may lead to undesirable side effects

concentration and dispersion in global industries remote electronic access and the location of economic activities we explore how the possibility of remote electronic access to markets resources and knowledge enabled by the new information and communication technologies icts might change the motivations of firms to locate activities internationally and in turn affect worldwide dispersion and concentration in an industry preliminary results from an exploratory analysis of the spatial distribution of firms in financial services suggest that the introduction of a business to business b2b trading network increases the global market participation of firms from peripheral countries but does not appear to reduce the importance of locational clusters a set of propositions is derived that provide guidance for more detailed research on the impact of icts on the strategy and structure of global industries

monopoly pricing and diffusion of social network goods abstract i present a model of dynamic pricing and diffusion of a network good sold by a monopolist in the model the network good is a subscription social network good this means that in each period each consumer has to pay a subscription price to use the good and the utility derived from subscribing to the good increases as more of her neighboring consumers subscribe consumers myopically optimize their subscription decisions and the monopolist chooses a sequence of subscription prices that maximizes his discounted sum of per period profits three main results emerge first i characterize a unique steady state of the monopoly market second i find that optimal sequences of subscription prices oscillate around the subscription price at the steady state third i analyze how changes in the monopolist s discount factor and the density of the social network affect the subscription price subscription rate and deadweight loss at the steady state

renewable electric energy integration quantifying the value of design of markets for international transmission capacity abstract integrating large quantities of variable renewable electricity generation remains a political and operational challenge one of the main obstacles in europe to installing at least 200 gws of power from variable renewable sources is how to deal with the insufficient network capacity and the congestion that will result from new flow patterns we model the current methodology for controlling congestion at international borders and compare its results under varying penetrations of wind power with models that simulate an integrated european network using nodal localised marginal pricing the nodal pricing simulations illustrate that congestion and price patterns vary considerably between wind scenarios and within countries and that a nodal price regime could make better use of existing network capacity introducing substantial operational cost savings and reducing marginal power prices in the majority of european countries

incentives and discrimination optimal incentive mechanisms may require that agents are rewarded differentially even when they are completely identical and are induced to act the same we demonstrate this point by means of a simple incentive model where agents decisions about effort exertion is mapped into a probability that the project will succeed we give necessary and sufficient conditions for optimal incentive mechanisms to be discriminatory we also show that full discrimination across all agents is required if and only if the technology has increasing return to scale in the non symmetric framework we show that negligible differences in agents attributes may result in major differences in rewards in the unique optimal mechanism this abstract was borrowed from another version of this item

tacking stock of the eu power target model and steering its future course abstract the european union took more than 20 years to start defining a common market design for its internal electricity market a european power target model and a further 10 years to fully implement it meanwhile the reference generation set of that model has shifted from ccgt burning gas to res plants transforming intermittent natural resources could the existing eu target model continue to work well for the short term operation and long term investment if not can the existing eu institutions easily produce an res resilient new power target model

reappraising the eclectic paradigm in an age of alliance capitalism this article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of mne activity in particular it argues that due to the increasing porosity of the boundaries of firms countries and markets the eclectic or oli paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter firm transactions the growing interdependencies of many intermediate product markets and the widening of the portfolio of the assets of districts regions and countries to embrace the external economies of interdependent activities

network externality an uncommon tragedy economists have defined network externality and have examined putative inframarginal market failures associated with it this paper distinguishes between network effects and network externalities where the latter are market failures the authors argue that while network effects are important network externalities are theoretically fragile and empirically undocumented some network externalities are merely pecuniary network ownership or transactions among network participants can internalize some network effects the type of market failure that has been associated with these externalities is a transition problem that has little to do with externality

explaining the internationalization of ibusiness firms information and communication technologies have given rise to a new type of firm the ibusiness firm these firms offer a platform that allows users to interact with each other and generate value through user co creation of content because of this ibusiness firms face different challenges when they internationalize compared with traditional firms even those online in this article we extend existing internationalization theory to encompass this new type of organization we theorize that because ibusiness firms produce value through the creation and coordination of a network of users these firms tend to suffer greater liabilities of outsidership when expanding abroad and therefore concentrate on network and diffusion based user adoption processes as they internationalize based on a multi case investigation of a sample of ibusiness firms we develop new theory and testable hypotheses thus we make an important contribution by expanding internationalization theory to a new set of firms

a note on dynamic monopoly pricing under consumption externalities we analyze dynamic monopoly pricing under consumption externalities focusing on pricing under negative externalities we also attempt to generalize models in the previous literature which encompass both negative and positive externalities by incorporating a consumer s discount factor for past sales as a parameter analyzing our model reveals oscillation as the optimal price path in the presence of negative externalities

the economics of organization the transaction cost approach the transaction cost approach to the study of economic organization regards the transaction as the basic unit of analysis and holds that an understanding of transaction cost economizing is central to the study of organizations applications of this approach require that transactions be dimensionalized and that alternative governance structures be described economizing is accomplished by assigning transactions to governance structures in a discriminating way the approach applies both to the determination of efficient boundaries as between firms and markets and to the organization of internal transactions including the design of employment relations the approach is compared and contrasted with selected parts of the organization theory literature

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

market failures of market coupling and counter trading in europe an illustrative model based discussion the horizontal integration of the energy market and the organization of transmission services remain two open issues in the restructured european electricity sector the coupling of the french belgian and dutch electricity markets the trilateral market in november 2006 was a real success the extension of the system to germany in november 2010 also proceeded smoothly and the intent is to continue with the same market architecture but market coupling is based on a zonal system which has often failed in meshed grids this may cast doubts on what will happen in the future when electricity demand picks up again and wind develops the nodal system has generally been more successful than zonal architectures but its implementation is not currently foreseen in the eu this paper analyzes versions of market coupling that differ by the organization of counter trading while underplayed in current discussions counter trading could become a key element of market coupling as its geographic coverage expands and wind penetrates we simplify matters by assuming away strategic behavior between the energy and counter trading markets and conduct the analysis on a stylized six node example taken from the literature we simulate market coupling for different assumptions of zonal decomposition and coordination of transmission system operators tsos we show that these assumptions matter even in the absence of strategic behavior market coupling can be quite vulnerable to the particular situation on hand countertrading can work well or completely fail and it is not clear beforehand what will prevail our analysis relies on standard economic notions such as social welfare and generalized nash equilibrium but the use of these notions is probably novel the nodal organization is the reference first best scenario different zonal decompositions and degrees of coordination are then studied with respect to this first best solution

dynamic monopoly pricing with network externalities abstract in this paper we study the optimal dynamic monopoly pricing for a good which exhibits positive network externalities when network externalities are of sufficient magnitude we show that contrary to the coase theorem 1 there is no time inconsistency problem 2 subgame perfect equilibrium prices increase as time passes from this point of view positive network externalities allow the monopoly to commit itself credibly to increasing future prices ce papier etudie la tarification optimale intertemporelle d un monopole qui vend un bien exhibant des externalites positives de reseau lorsque ces externalites sont suffisamment importantes nous montrons que contrairement au theoreme de coase 1 il n y a pas de probleme d incoherence temporelle 2 les prix d equilibre parfait croissent avec le temps de ce point de vue les externalites positives de reseau permettent au monopole de s engager crediblement sur une politique de prix futurs a la hausse

internalization theory for the digital economy we study the internationalization of digital service multinational enterprises smncs focusing on how digitalization alters internalization theory s assumptions about the nature of firm specific assets fsas and the theory s predictions about governance choices in cross border transactions we invoke simon s proc am philos soc 106 6 467 482 1962 near decomposability concept to explain how digitalization enables two distinct types of fsas technology and human capital applying the ideas of modularity and skill complexity we further distinguish between core versus peripheral technology fsas and between generic versus advanced human capital fsas building on the transferability and appropriability of these strategic assets we theorize on the fsas internalization propensity in the digital age we propose that with rising digitalization the network plays a dual role as a governance mode and as a strategic resource integrating insights from network economics particularly increasing returns to scale we propose that network advantages on emerge as a distinct strategic resource that merits separate investigation from the traditional asset based oa and transaction based ot advantages

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

explaining the growth of e commerce corporations eccs an extension and application of the eclectic paradigm the emergence of the internet has created a dynamic electronic marketplace where a new species of e commerce corporations are taking root however the factors affecting the growth of these e commerce corporations is a relatively unexplored area in international business this study contributes to the international business literature in two significant ways first it attempts to critically evaluate the major international business theories to identify the variables affecting the growth of e commerce corporations second the proposed framework in the study extends the explanatory power of the eclectic paradigm not only by interpreting the paradigm in the context of e business but also by including an element of network based advantages to the oli configuration

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

network externalities and the coase conjecture abstract this paper addresses two general questions first what is the effect of market structure on the development of a network in a dynamic model with rational expectations secondly is the intuition that network externalities are economies of scale on the demand side correct these questions are examined in a model of durable good production in the presence of network externalities two results are presented first the coase conjecture fails in its strongest sense when network benefits are increasing in the current network size secondly a committed monopolist may be socially preferable to a time consistent producer when network externalities are sufficiently large the analysis indicates an analogy between network externalities and learning by doing

network effects market structure and industry performance abstract this paper analyzes oligopolistic markets with network externalities exploiting a minimal complementarity structure on the model primitives that allows for pure network goods we prove existence of non trivial fulfilled expectations equilibrium we formalize the concept of industry viability investigate its determinants and show that it improves with more firms in the market and or by technological progress these results enlighten some well known conclusions from case studies in the management strategy literature we also characterize the effects of market structure on industry performance which depart substantially from ordinary markets the approach relies on lattice theoretic methods supplemented with basic insights from nonsmooth analysis

assessment of the required share for a stable eu electricity supply until 2050 power system balancing will become increasingly important to secure a reliable european energy supply as the share of intermittent supply increases e g variable generation from wind and solar pv this paper shows in a quantitative way the limitations of relying exclusively on flexibility in generation as the future shares of intermittent supply increase literature and data on intermittent supply and existing scenarios are reviewed costs related to increasing shares of intermittent supply are assessed quantifiable indicators relevant for electricity systems with a high share of intermittent supply are developed namely a flexible supply generation units that can quickly change output b balancing need which measures the needed flexibility of the power system as the difference between peak and off peak residual demand net of intermittent supply there is an externality of increasing the share of intermittent supply by increasing the power system balancing costs if the cost of integrating intermittent generation was to be limited to about 25 billion eur per year which is an addition of 24 per unit intermittent generation cost the intermittent supply share cannot reach more than 40 in the european power market the final choice of an acceptable cost increase will be a political choice

transaction cost economics in real time this paper attempts to place the theq of the boundaries of thejirm within the context of the passage of time more precisely it resurrects and places in a modem frame some of the insights of the chsical and marshallian theories of organization the modem reinterpretation of those theories centers around the capabilities view of the jirm taken together with governance costs the capabilities ofjirm and market determine the boundaries of the jirm in the short run ovw time capabilities change as firms and markets learn which implies a kind of information or knowledge cost the cost of trandewing the firm s capability to the market w vice versa these dynamic governance costs are the costs of persuading negotiating and coordinating with and teaching others they arise in the face of change notably txchnological and organizational innovation in fit they are the costs of not having the capabilities you need when you need them dynamic transaction costs provide an explanation for vertical integration that is arguably more general than those dominant in the literature in the face of uncertainty and divwgent views ofthe future common ownership of multiple stages of production is a supwior institutional arrangement for coordinating systemic change asset specrfity is neither necessary nor suffient for this to be true dynamic governance costs may also affit internal organization it may sometimes be costly in 3 terms of persuasion negotiation and teaching to create within the firm capabilities readily available on the market indeed in cases in which systemic coordination is not 4 the issue the market may turn out to be the superior institution of coordination in e 2 genwal the capabilities view of the jirm suggests that we look atfim2 and market as alternative and sometimes overlapping institutions of learning 1 transaction costs in the long rzln and the short 9 x classical and neoclassical perspectives

e commerce readiness institutional environment and international competitiveness a systematic cross country analysis of e commerce activity reveals that although physical infrastructure explains much of the variation in basic internet use e commerce activity also depends significantly on a supportive institutional environment chief among the characteristics of such an environment are national respect for the rule of law and secondarily the availability of credible payment channels such as credit cards these results suggest that an institutional environment that facilitates the building of transactional integrity is critical to the development of e commerce

the influence of hymer s dissertation on the theory of foreign derect investment the great contribution of stephen hymer s seminal dissertation 1960 was to escape from the intellectual straightjacket of neoclassical type trade and financial theory and move us towards an analysis of the multinational enterprise mne based upon industrial organization theory the magnitude of this breakthrough can be put into perspective by considering the state of the art when hymer wrote twenty five years ago in 1960 the prevailing explanation of international capital movements relied exclusively upon a neoclassical financial theory of portfolio flows in this frictionless world of perfect competition with no transaction costs capital moves in response to changes in interest rate or profit differentials see carl iversen 1936 according to this arbitrage theory capital is assumed to be transacted between independent buyers and sellers that is there is no role for the mne at the time there was no separate theory of foreign direct investment fdi the work did not even ask the question of why is there fdi despite the evidence of sectoral cross investments and the existence of large mnes with intra industry trade if anything the early work on fdi focused upon the where of investment in a particular nation or industry for example dunning 1958 was chiefly interested in explaining u s fdi in britain there was little interest in understanding the reasons for the mne or the nature of its operations the pioneering conceptual insight of hymer was to break out of the arid mold of international trade and investment theory and focus attention upon the mne per se this permits us to treat fdi as a modality by which firms extend their territorial horizons abroad the unique feature of fdi is a mechanism by which the mne maintains control over productive activities outside its national boundaries that is fdi means international production in this view fdi is more than a process by which assets or claims are exchanged internationally see robert aliber 1970 1983 hymer s great insight was in focusing attention upon the mne as the institution for international production rather than international exchange until hymer articulated the process of fdi as an international extension of industrial organization theory it was not possible to understand why the mne transfers intermediate products such as knowledge or technology among its units across different nations while still retaining property rights over such assets today it is widely recognized that the theory of fdi i e international production is primarily about the transfer of nonfinancial and ownershipspecific intangible assets by the mne which needs to appropriate and control the rate of use of its internalized advantage s see rugman 1981 david teece 1981 1982 richard caves 1982 and mark casson 1983 in this paper we first acknowledge hymer s contribution to the theory of fdi and then move on to reinterpret his dissertation in the light of the modern theory of the mne we tdiscussants raymond vernon harvard university robert z aliber university of chicago paul streeten boston university

how to correct for long term externalities of large scale wind power development by a capacity mechanism this paper deals with the practical problems related to long term security of supply in electricity markets in the presence of large scale wind power development the success of recent renewable promotion schemes adds a new dimension to ensuring long term security of supply it necessitates designing second best policies to prevent large scale wind power development from distorting long run equilibrium prices and investments in conventional generation and in particular in peaking units we rely upon a long term simulation model which simulates electricity market players investment decisions in a market regime and incorporates large scale wind power development in the presence of either subsidized or market driven development scenarios we test the use of capacity mechanisms to compensate for long term effects of large scale wind power development on prices and reliability of supply the first finding is that capacity mechanisms can help to reduce the social cost of large scale wind power development in terms of decrease of loss of load probability the second finding is that in a market based wind power deployment without subsidy wind generators are penalised for insufficient contribution to the long term system s reliability

short term projects and emergent careers evidence from hollywood the hollywood film industry is considered as a system of recurrent ties among the various major participants who usually work under short term contracts for single films this form of project based organization in seen as a response to uncertainty and risk in the film industry the paper examines the ways in which independent contractors producers directors cinematographers and actors organize and operate to reduce uncertainty and risk and to increase profits the analysis of data from 2 430 films made in the period 1965 80 establishes patterns of recurrent ties among participants who are at comparable levels of cumulative productivity with respect to earnings oscars oscar nominations and number of previous films the paper also considers the degree to which film earnings are influenced by the past productivity of the major participants