reconciling social welfare agent profits and consumer payments in electricity pools under a common condition called profit suboptimality market equilibrium cannot be reached in electricity pools in other words no system marginal price exists for which the profit driven independent generators would self schedule to levels that exactly meet the demand on the other hand although a centrally imposed generation schedule satisfies power balance it may force some agents to operate at a profit below what they could achieve under self scheduling this paper examines these incompatible goals and proposes a conflict resolution scheme based on the notion of generalized uplift functions these functions are defined such that they i change the offered generation cost characteristics so as to increase the system marginal price thus forcing the consumers to compensate the generators for part of their combined loss of profit ii execute an equitable transfer of revenues among the generators so that these also participate in any loss of profit compensation iii ensure market equilibrium at the centralized minimum cost solution and iv ensure that the net sum of the uplifts adds up to zero

taxing food and beverages theory evidence and policy we developed a theoretical framework to examine the effect of a change in sales or excise tax on food and beverage demand after considering that consumers may have imperfect tax knowledge are sometimes inattentive to sales tax may not be informed of a sales tax change and pay no sales tax on eligible food or beverages if using food stamps we conducted simulations to assess how much the sales tax elasticity of demand should be adjusted downward from the price elasticity of demand and quantified the advantage of using an excise tax as an anti obesity policy copyright 2013 oxford university press

demand elasticities for food products in brazil a two stage budgeting system the object of this article is to estimate demand elasticities for a basket of staple food important for providing the caloric needs of brazilian households these elasticities are useful in the measurement of the impact of structural reforms on poverty a two stage demand system was constructed based on data from household expenditure surveys pof produced by ibge the brazilian bureau of statistics in 1987 88 and 1995 96 we have used panel data to estimate the model and have calculated income own price and cross price elasticities for eight groups of goods and services and in the second stage for 11 sub groups of staple food products we estimated those elasticities for the whole sample of consumers and for two income groups

semiparametric estimation and consumer demand this paper considers the implementation of semiparametric methods in the empirical analysis of consumer demand the application is to the estimation of the engel curve relationship and uses the british family expenditure survey household composition is modelled using an extended partially linear framework this is shown to provide a useful method for pooling non parametric engel curves across households of different demographic composition c 1998 john wiley sons ltd

tricks with hicks the easi demand system we invent implicit marshallian demands which combine desirable features of hicksian and marshallian demands we propose and estimate the exact affine stone index easi implicit marshallian demand system like the almost ideal demand aid system easi budget shares are linear in parameters given real expenditures however unlike the aid easi demands can have any rank and its engel curves can have any shape over real expenditures easi error terms equal random utility parameters to account for unobserved preference heterogeneity easi demand functions can be estimated using gmm or three stage least squares and like aid an approximate easi model can be estimated by linear regression

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

energy consumption and urban sprawl evidence for the spanish case residential electricity consumption constitutes one of the largest sources of spanish final energy demand to improve electricity savings policies oriented towards efficiency in residential consumption such as replacement of appliances or the construction of nearly zero energy buildings have been suggested and implemented however the potential relevance of urban structural characteristics such as the increase in detached houses in sprawling residential areas has not often been considered the aim of this research is to analyse the relevance of living in a detached house located in a dispersed urban area to household electricity consumption thus an electricity consumption model is estimated by using household socioeconomic variables and including urban characteristics as its determinants such us the level of urban agglomeration or whether families live in detached sprawling homes the model is estimated by using 2014 household budget survey hbs microdata and applying ordinary least squares ols as well as quantile regressions qr as econometric procedures endogeneity problems are corrected by means of instrumental variables the results confirm that living in a detached house significantly increases electricity consumption whereas urban agglomerations have the opposite effect sprawl is occurring rapidly in spanish cities and according to our results it could constitute a relevant source of increase in electricity demand in the following years

estimating the value and distributional effects of free state schooling the effects of free of charge state education on income distribution are often studied by allocating government education outlays to households assuming that these outlays equal the benefit which households attach to state schooling this paper proposes a demand analysis approach to estimating the true value of state education as perceived by consumers and uses the results to assess the inefficiency of public provision empirical analysis based on data from cyprus suggests that state schooling costs twice the amount households are willing to pay for the implications of this finding for the equality and anti poverty effects of state education are illustrated

how much is a dollar worth tipping versus equilibrium coexistence on competing online auction sites theory models of platform competition predict that prices and buyer seller ratios should be approximately equal on coexisting auction sites using field experiments on ebay and yahoo auctions we find evidence that is inconsistent with equilibrium hypotheses and suggest that the market is tipping prices on ebay are consistently 20 70 percent higher than those on yahoo and ebay attracts two additional buyers per seller on yahoo prices and bidders counts are unaffected by the auction ending rule various differences between the sites cannot account for the magnitude of these disparities however a model of imitation dynamics can rationalize our findings

on walrasian equilibrium for pool based electricity markets we present a single time period decentralized electricity market clearing model that includes reactive power and demand responsiveness in addition to the more common framework of generation side competition for the real power commodity the approach allows self interested agents namely producers and consumers independently to maximize their individual surpluses subject to prices this is consistent with the very notion of a competitive market as defined in equilibrium theory an auctioneer computes equilibrium prices that achieve power balance at every network node as required by kirchhoff s laws the overall scheme is justified by duality theory for which there is a rich theoretical support and convergence is achieved using a newton price updating algorithm

carbon tax simulations using a household demand model abstract the main objective of this paper is to analyse consumer response and welfare effects due to changes in energy or environmental policy to achieve this objective we formulate and estimate an econometric model for non durable consumer demand in sweden that utilises micro and macro data in the simulations we consider two revenue neutral scenarios that both imply a doubling of the co2 tax one that returns the revenues in the form of a lower vat and one that subsidise public transport one conclusion from the simulations is that the co2 tax has regional distribution effects in the sense that household living in sparsely populated areas carry a larger share of the tax burden

standard auctions with financially constrained bidders we develop a methodology for analyzing the revenue and efficiency performance of auctions when buyers have private information about their willingness to pay and ability to pay we then apply the framework to scenarios involving standard auction mechanisms in the simplest case where bidders face absolute spending limits first price auctions yield higher expected revenue and social surplus than second price auctions the revenue dominance of first price auctions over secondprice auctions carries over to the case where bidders have access to credit these rankings are explained by differences in the extent to which financial constraints bind in different auction formats

a time preference measure of the social discount rate for the uk in this study the social discount rate for the uk is estimated the result compared with the treasury approved rate and the main associated policy implications considered a case is argued for reducing the official discount rate in appraisals involving all long term social projects the estimate of the elasticity of the marginal utility of consumption an important component of the discount rate is supported by plausible and statistically valid regression results the need for further work relating to other major european countries is identified so that discount rate comparisons can be made on a consistent basis

new estimates of the elasticity of marginal utility for the uk this paper provides novel empirical evidence on the value of the elasticity of marginal utility eta for the united kingdom eta is a crucial component of the social discount rate sdr which determines the inter temporal trade offs that are acceptable to society using contemporaneous and historical data new estimates are obtained using four revealed preference techniques the equal sacrifice income tax approach the euler equation approach the frisch additive preferences approach and risk aversion in insurance markets a meta analysis indicates parameter homogeneity across approaches and a central estimate of 1 5 for eta the confidence interval excludes unity the value used in official guidance by the uk government the term structure of the sdr is then estimated the result is a short run sdr of 4 5 declining to 4 2 in the very long run this is higher and flatter than the uk official guidance the difference stems from incorrect calibration of social welfare and estimation of the diffusion of growth other things equal the results suggest that current uk guidance might need to be updated

existence and determination of competitive equilibrium in unit commitment power pool auctions price setting and scheduling alternatives the existence determination and effects of competitive market equilibrium for unit commitment power pool auctions are investigated in this paper when an equilibrium does not exist under specific situations conflictive multiple optimal primal solutions may exist when an equilibrium exists multiple primal solutions do not represent conflicts of interest the existence or nonexistence of competitive equilibrium can be determined if the dual problem is solved to optimality if equilibrium does not exist there is excess supply at the optimal dual solution which can be used to define priority orders and price setting alternatives to determine a final schedule and avoid the conflicts of interest and revenue deficiency under disequilibrium the optimal dual variables are not market clearing prices a nonuniform pricing rule that avoids the flaws and complications of other pricing rules such as maximum average cost and price minimization auctions is proposed in the paper the proposed scheduling and price setting alternatives show that unit commitment models can be used in a market environment

best nonparametric bounds on demand responses this paper uses revealed preference inequalities to provide the tightest possible best nonparametric bounds on predicted consumer responses to price changes using consumer level data over a finite set of relative price changes these responses are allowed to vary nonparametrically across the income distribution this is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths engel curves we label these expansion path based bounds on demand responses as e bounds deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterize taste change and to provide a stochastic environment within which violations of revealed preference inequalities can be assessed

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

how serious is the aggregation problem an empirical illustration heterogeneity in consumer behaviour may create problems with aggregation across consumers if so we may not be able to make correct inferences about behaviour based on aggregated data however using micro estimates to predict aggregate demand responses to policy changes may also create a bias if not aggregated properly this may sound like a catch 22 situation but it is not as it is possible to calculate both micro and aggregate demand responses based on microdata the size of the aggregation bias is an empirical question in this article we show how to calculate theoretically consistent aggregate demand responses we use both micro and macro data for norwegian household electricity consumption to illustrate the magnitude and direction of different aggregation biases we find considerable aggregation biases in particular when estimating with macro data

estimating a demand system with nonnegativity constraints mexican meat demand a new information based approach for estimating systems of many equations with nonnegativity constraints is presented this approach called generalized maximum entropy gme is more practical and

non parametric tests of consumer behaviour the neoclassical model of consumer behaviour postulates that a consumer s choice behaviour can be described as deriving from utility maximization subject to a budget constraint one is then naturally led to ask what this model implies about observed behaviour this question has been addressed from two quite distinct approaches the first approach originating in the work of slutsky 1915 and antonelli 1886 derives necessary and sufficient conditions involving the derivatives of the demand functions the second approach originating in the work of samuelson 1938 1947 1948 derives algebraic conditions on the demand functions implied by maximizing behaviour

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

price and income elasticities of residential and industrial electricity demand in the european union this study examines the short and long run price and income elasticities of residential and industrial electricity demand in the european union between 1996 and 2016 instrumental variable models using the between estimator as well as dynamic panel models are employed to present robust estimates and to assess the impact of different methodologies on the reported elasticities the long run price elasticity of residential electricity consumption is estimated between 0 53 and 0 56 these elasticities are more inelastic than that of industrial electricity use which is reported between 0 75 and 1 01 the choice of different econometric methodologies has only moderate impact on the estimates while long run residential income elasticity estimates are moderately inelastic and estimated around 0 61 industrial electricity use tends to be closely tied to income with elasticities between 0 76 and 1 08 electricity demand in all sectors is highly price and income inelastic in the short run additionally population density temperatures and policy measures also influence sectoral electricity use the above estimates can aid the design of european energy and environmental policy

commentary do bids equal values on ebay we argue that the zeithammer and adams paper zeithammer r c adams 2010 the sealed bid abstraction in online auctions marketing sci 29 6 964 987 successfully documents consistent patterns in ebay bidding data that cast doubt on the common assumption that bidders in such auctions follow a bid value strategy these anomalies lend support to the authors alternative model in which some bidders bid reactively and consequently bid below their valuation most of the time the consistency of the authors findings as well as the ability of their alternative explanation to account for all of their test results lends great support to their thesis however we think that several of their empirical tests examine ancillary assumptions about bidder behavior and do not test the bid value assumption directly furthermore although their reduced form model incorporating reactive bidders is a good first attempt at expanding the canonical framework we worry that their counterfactual pricing analysis using the reactive model is suspect because the parameters they estimate are not structural overall the zeithammer and adams paper is a carefully argued critique of empirical methods used to study online auctions and provides valuable ideas to improve on these methods

demand systems with and without errors revealed preference theory assumes that each consumer has demands that are rational meaning that they arise from the maximization of his or her own utility function in contrast econometric or statistical demand models assume that each consumer s demands equal a rational systematic component derived from a common utility function plus an individual specific additive error term this paper reconciles these differences by providing necessary and sufficient conditions for rationality of statistical demand models given individual consumer rationality

bidding behavior and decision costs in field experiments i introduction positive opportunity costs of mental effort may invalidate the predictions of traditional models of rational or hyperrational agents conlisk 1996 uses deliberation costs as a recurring theme when discussing four important reasons for incorporating bounded rationality in economic models smith and walker 1993 and smith and szidarovszky 1999 present effort models that predict individual behavior will more closely match the predictions of rational behavior theories as 1 the stakes of the decision increase and 2 the decision costs decrease smith and walker 1993 find evidence of these two effects in a comprehensive review of 31 published laboratory experiments camerer and hogarth 1999 extend smith and walker s survey by examining 74 experimental papers and find evidence in favor of the cognitive effort theory noting that higher levels of incentives have the largest effects in judgment and decision tasks p 34 although the laboratory evidence is compelling there has been little verificati on of these predictions outside the laboratory 1 the present article fills this gap by examining field data from 214 multiunit sports card auctions carried out in an active marketplace on the floor of a sports card show we auctioned four types of trading cards with book values ranging from 3 to 70 providing significant variation in the stakes of the auction our auctions also included two distinct types of subjects some auctions had sports card dealers bidding against each other whereas others had individual card collectors as the participants this variation allows us to explore the second dimension of decision cost theory do dealers who commonly participate in sports card auctions and therefore likely require less effort to bid optimally bid more rationally than nondealers our measure of rational bidding comes from multiunit auction theory which predicts strategic demand reduction in uniform price auctions 2 for each type of bidder and each type of card we measure this demand reduction behavior in the uniform price auction relative to a control the multiunit vickrey 1961 auction where bidders are predicted to fully reveal their demands our sports card data generated from sales of 428 cards with a combined book value of nearly 10 000 provide two major insights first we find that the predicted strategic behavior is considerably greater when the auctioned cards have higher values second dealers exhibit more of the predicted strategic behavior than do nondealers for both lower and higher priced cards one conjecture to explain this finding is that nondealers may find that the cognitive effort required to bid strategically exceeds the benefits especially for low valued cards by contrast dealers have more experience with auctions and make their living by buying selling trading cards so their cognitive costs are likely much lower than those of nondealers these two findings are consistent with recent theoretical models of monetary rewards and decision costs and extend previous experimental evidence from the laboratory into the field ii experimental design as mentioned recent theoretical literature has suggested that demand reduction inherent in uniform price auctions with multiunit demand can induce inefficient allocations and possible reductions in auction revenue to avoid the inefficiencies associated with the uniform price auction theorists have identified an alternative mechanism the generalized vickrey auction which gives bidders a dominant strategy of revealing their true valuations for all units of the good in this multiunit vickrey auction as in the uniform price auction each bidder can submit up to n different sealed bids on individual units and the highest n bids are declared winners if a bidder submits one or more of the winning bids his or her price for the first unit equals the highest rejected bid submitted by someone else and his or her price for the kth unit equals the kth highest of the rejected bids submitted by others

factoring the elasticity of demand in electricity prices as electricity markets are liberalized consumers become exposed to more volatile electricity prices and may decide to modify the profile of their demand to reduce their electricity costs this paper analyzes the effect that the market structure can have on the elasticity of the demand for electricity it then describes how the consumers behavior can be modeled using a matrix of self and cross elasticities it is shown how these elasticities can be taken into consideration when scheduling generation and setting the price of electricity in a pool based electricity market these concepts are illustrated using a 26 generator system

welfare comparison under exact aggregation new econometric model of aggregate consumer behavior in the united states and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units the model incorporates time series data on quantities consumed prices the level and distribution of income and demographic characteristics of the population it also incorporates cross section data on the allocation of consumer expenditures for households with different demographic characteristics our econometric model is based on the theory of exact aggregation developed by lau 1977a c this theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior one of the most remarkable implications of lau s theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions using the individual demand functions we can analyze the impact of economic policy on consumer welfare

field experiments on the effects of reserve prices in auctions more magic on the internet i present experimental evidence on the effects of minimum bids in first price sealed bid auctions the auction experiments manipulated the minimum bids in a preexisting market on the internet for collectible trading cards from the game magic the gathering i examine a number of outcomes including the number of participating bidders the probability of sale the levels of individual bids and the auctioneer s revenues the benchmark theoretical model is one with symmetric risk neutral bidders with independent private values the results verify a number of the predictions concerning equilibrium bidding many bidders behave strategically anticipating the effects of the reserve price on others bids

the contributions of angus deaton angus deaton was awarded the 2015 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of consumption poverty and welfare this article reviews his contributions to economics

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

decentralized participation of flexible demand in electricity markets part ii application with electric vehicles and heat pump systems realizing the significant demand flexibility potential in deregulated power systems requires its suitable integration in electricity markets part i of this work has presented the theoretical algorithmic and implementation aspects of a novel pool market mechanism achieving this goal by combining the advantages of centralized mechanisms and dynamic pricing schemes based on lagrangian relaxation lr principles part ii demonstrates the applicability of the mechanism considering two reschedulable demand technologies with significant potential namely electric vehicles with flexible charging capability and electric heat pump systems accompanied by heat storage for space heating the price response sub problems of these technologies are formulated including detailed models of their operational properties suitable case studies on a model of the u k system are examined in order to validate the properties of the proposed mechanism and illustrate and analyze the benefits associated with the market participation of the considered technologies

simple tests of distributional effects on macroeconomic equations the presence of distributional effects in macroeconomic equations is shown to coincide with nonlinearity in micro behavioral relationships parameters estimated with aggregate data as in representative agent models contain distributional biases that are not measurable using aggregate data alone tests for distributional effects and other measures of the extent of aggregation problems are derived using distributional data observed over time significant distributional effects are noted for a model of annual aggregate u s commodity expenditure data a static model that accommodates individual heterogeneity is found to be statistically equivalent to a simply dynamic model that accommodates first order autocorrelation

analysis and design of business to consumer online auctions business to consumer online auctions form an important element in the portfolio of mercantile processes that facilitate electronic commerce activity much of traditional auction theory has focused on analyzing single item auctions in isolation from the market context in which they take place we demonstrate the weakness of such approaches in online settings where a majority of auctions are multiunit in nature rather than pursuing a classical approach and assuming knowledge of the distribution of consumers valuations we emphasize the largely ignored discrete and sequential nature of such auctions we derive a general expression that characterizes the multiple equilibria that can arise in such auctions and segregate these into desirable and undesirable categories our analytical and empirical results obtained by tracking real world online auctions indicate that bid increment is an important factor amongst the control factors that online auctioneers can manipulate and control we show that consumer bidding strategies in such auctions are not uniform and that the level of bid increment chosen influences them with a motive of providing concrete strategic directions to online auctioneers we derive an absolute upper bound for the bid increment based on the theoretical upper bound we propose a heuristic decision rule for setting the bid increment empirical evidence lends support to the hypothesis that setting a bid increment higher than that suggested by the heuristic decision rule has a negative impact on the auctioneer s revenue

nonparametric engel curves and revealed preference this paper applies revealed preference theory to the nonparametric statistical analysis of consumer demand knowledge of expansion paths is shown to improve the power of nonparametric tests of revealed preference the tightest bounds on indifference surfaces and welfare measures are derived using an algorithm for which revealed preference conditions are shown to guarantee convergence nonparametric engel curves are used to estimate expansion paths and provide a stochastic structure within which to examine the consistency of household level data and revealed preference theory an application is made to a long time series of repeated cross sections from the family expenditure survey for britain the consistency of these data with revealed preference theory is examined for periods of consistency with revealed preference tight bounds are placed on true cost of living indices

photovoltaics and heat pumps limitations of local pricing mechanisms abstract demand side management has been proposed as one cornerstone for a future sustainable energy system local pricing may contribute to enable a smart behaviour of grid users by providing appropriate incentives in this paper we apply a local pricing algorithm on distribution grid level we analyse its effects for a typical german rural low voltage grid with high penetration of photovoltaics and heat pumps with households using electric heat pumps a potentially flexible consumer type is implemented in detail such setup is used to assess two issues firstly the exploited potential in terms of avoided curtailment and secondly redistributive effects of such local pricing mechanism under use of different stylized policy choices results show that even with given local incentives the consumption adjustment towards an efficient grid usage can frequently not be realized since complementarity of photovoltaics and space heating demand is limited and technical constraints do not allow to overcome this gap furthermore we show that despite limited merits in terms of system costs the redistributive effects of local pricing mechanisms are very significant

pennies from ebay the determinants of price in online auctions this paper presents an exploratory analysis of the determinants of prices in online auctions for collectible united states one cent coins at the ebay web site starting with an initial data set of 20 000 auctions we perform regression analysis on a restricted sample of 461 coins for which we obtained estimates of book value we have three major findings first a seller s feedback ratings reported by other ebay users have a measurable effect on her auction prices negative feedback ratings have a much greater effect than positive feedback ratings do second minimum bids and reserve prices have positive effects on the final auction price in particular minimum bids appear only to have a significant effect when they are binding on a single bidder as predicted by theory third when a seller chooses to have her auction last for a longer period of days this significantly increases the auction price on average

decentralized participation of flexible demand in electricity markets part i market mechanism in the deregulated power systems setting the realization of the significant demand flexibility potential should be coupled with its integration in electricity markets centralized market mechanisms raise communication computational and privacy issues while existing dynamic pricing schemes fail to realize the actual value of demand flexibility in this two part paper a novel day ahead pool market mechanism is proposed combining the solution optimality of centralized mechanisms with the decentralized demand participation structure of dynamic pricing schemes and based on lagrangian relaxation lr principles part i presents the theoretical background algorithmic approaches and suitable examples to address challenges associated with the application of the mechanism and provides an implementation framework non convexities in reschedulable demand participants price response and their impacts on the ability of the basic lr structure to reach feasible market clearing solutions are identified and a simple yet effective lr heuristic method is developed to produce both feasible and high quality solutions by limiting the concentrated shift of reschedulable demand to the same low priced time periods

investigating the ability of demand shifting to mitigate electricity producers market power previous work on the role of the demand side in imperfect electricity markets has demonstrated that its self price elasticity reduces electricity producers ability to exercise market power however the concept of self price elasticity cannot accurately capture consumers flexibility as the latter mainly involves shifting of loads operation in time this paper provides for the first time theoretical and quantitative analysis of the beneficial impact of demand shifting ds in mitigating market power by the generation side quantitative analysis is supported by a multiperiod equilibrium programming model of the imperfect electricity market accounting for the time coupling operational constraints of ds as well as network constraints the decision making process of each strategic producer is modeled through a bi level optimization problem which is solved after converting it to a mathematical program with equilibrium constraints mpec and linearizing the latter through suitable techniques the oligopolistic market equilibria resulting from the interaction of multiple independent producers are determined by employing an iterative diagonalization method case studies on a test market reflecting the general generation and demand characteristics of the gb system quantitatively demonstrate the benefits of ds in mitigating producers market power by employing relevant indexes from the literature

on the role of discrete bid levels in oral auctions abstract bids in oral auctions are restricted to discrete levels this paper both examines the choice of levels at which bids will be allowed and also presents a simple model of the role of the discrete levels in bidding strategy we consider two different distributions of bidders values identifying cases in which revenue is maximized by increasing intervals by constant intervals and by decreasing intervals moreover conditions under which the choice of bid levels that maximizes bid taker revenue also maximizes economic efficiency are developed we present a model of the economic trade off between auction duration and step size we consider the previously undiscussed issue of when economically motivated bidders should skip bid levels and when they should merely make minimum advances and develop a model in which it is equilibrium behavior always to make the minimum allowed advance

effects of minimum bid increments in internet auctions evidence from a field experiment i study the role of minimum bid increments mbi in internet auctions using natural field experiment data from a finnish online auction site huuto net internet auctions are typically viewed as secondprice implying truthful bidding however due to the presence of the mbi equilibrium bidding behavior involves bid shading i sell otherwise identical gift cards while varying the mbi and test between truthful bidding and bid shading truthful bidding is rejected consistently with equilibrium behavior bid shading increases as the mbi increases this implies that real world bidders are capable of reacting rationally even to seemingly small variations in their strategic environment this version september 17 2015 replaces the february 15 2013 version this abstract was borrowed from another version of this item

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

flexible and semiflexible consumer demands with quadratic engel curves in this paper we introduce three flexible consumer demand systems in which expenditures on goods are quadratic functions of income we view these alternatives as to the demand systems used heretofore in the empirical modeling of rank three demands namely those in which expenditure shares are quadratic functions of the logarithm of income curvature conditions required by theory can be imposed locally during the estimation for each and a semiflexible version can be estimated for illustrative purposes we estimate various forms of two of the systems using canadian data on seven categories of goods for the period 1947 to 1995

improving revealed preference bounds on demand responses there are three key dimensions by which revealed preference bounds on consumer demand responses can be improved the first relates to the improvements that arise from using expansion paths for given relative prices e bounds the second concerns the addition of new price information thirdly there are improvements due to assuming separability our previous research has examined the first two cases in this article we show how to impose separability assumptions within a fully nonparametric analysis and distinguish between weak and homothetic separability we also apply these ideas to the analysis of demand responses using united kingdom household level data

the microeconometric approach to modelling energy demand some results for uk households the paper is concerned with the empirical modeling of domestic demand for energy at the level of the individual household a model of household energy expenditures and energy using durable ownership is described estimation takes place using a pooled sample of households drawn from the repeated cross sections of the annual family expenditure survey fes price and income elasticities are found to be highly dependent on individual household characteristics type of house tenure energy using durable ownership and outside temperature finally the results are placed in a policy relevant context copyright 1991 by oxford university press

nonparametric welfare and demand analysis with unobserved individual heterogeneity abstract this paper combines revealed preference and nonparametric estimation techniques to obtain nonparametric bounds on the distribution of the money metric utility and demand functions over a population of heterogeneous households our approach is independent of any functional specification on the household utility functions our method applies the weak axiom of revealed preference to a population of heterogeneous households although this does not produce the sharpest bounds we show that it is computationally attractive and provides narrow bounds we demonstrate the usefulness of our results by applying it to the consumer expenditure survey a us cross sectional consumption data set jel codes d12 c14

auction implementation problems using lagrangian relaxation lagrangian relaxation lr is used as an auction method for bidding in a deregulated environment this paper focuses on the problems that occur while using lr as an auction method identical or similar units can prevent lr from finding the optimal solution if the units are similar lr may have trouble selecting some of them for the optimal solution a feasible solution may thus not be found since a heuristic selection of which unit data to alter has to be applied this is inequitable to the unit s not selected and may result in lawsuit s because the dispatcher has to use heuristic selection there is no fair solution to these problems the authors suggest previously published methods to implement auctions sensitivity analysis has also been applied in this paper to show that the percentage difference of similarity between units may affect the solution found

the paper work of medicine understanding international medical costs this paper draws on international evidence on medical spending to examine what the united states can learn about making its healthcare system more efficient we focus primarily on understanding contemporaneous differences in the level of spending generally from the 2000s medical spending differs across countries either because the price of services differs for example a coronary bypass surgery operation may cost more in the united states than in other countries or because people receive more services in some countries than in others for example more bypass surgery operations within the price category there are two further issues whether factors earn different returns across countries and whether more clinical or administrative personnel are required to deliver the same care in different countries we first present the results of a decomposition of healthcare spending along these lines in the united states and in canada we then delve into each component in more detail administrative costs factor prices and the provision of care received bringing in a broader range of international evidence when possible finally we touch upon the organization of primary and chronic disease care and discuss possible gains in that area

decentralized multi period economic dispatch for real time flexible demand management emerging smart grid enabling technologies will allow an unprecedented degree of observability and control at all levels in a power system combined with flexible demand and storage they could allow procuring energy at minimum cost and environmental impact that however presupposes real time coordination of demand of individual households and industries down at the distribution level with generation at the transmission level this is closely related with the balancing market economic dispatch ed problem which currently does not take into account distribution network constraints and flexible demand characteristics still assuming a suitably modified form of that problem was available due to both computational and communications requirements its centralized solution in its full detail would not be tractable while there is currently a wealth of literature dealing with distributed optimization applications in power systems it typically focuses on smaller parts of the overall energy management problem e g transmission area synchronization or electric vehicles management often without considering its full scale or establishing any association with energy market mechanisms the target of this paper is twofold 1 identify a flexible demand and distribution network inclusive formulation for ed and 2 propose a solution method

naturally occurring markets and exogenous laboratory experiments a case study of the winner s curse we examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain using common value auction theory as our guide we identify naturally occurring settings in which one can test the theory experienced agents bidding in familiar roles do not fall prey to the winner s curse yet experienced agents fall prey to the winner s curse when bidding in an unfamiliar role we conclude that the theory predicts field behaviour well when one is able to identify naturally occurring field counterparts to the key theoretical conditions

influence of price responsive demand shifting bidding on congestion and lmp in pool based day ahead electricity markets this paper investigates the influence of price responsive demand shifting bidding on congestion and locational marginal prices in pool based day ahead electricity markets the market dispatch problem of the pool based day ahead electricity market is formulated as to maximize the social welfare of market participants subject to operational constraints given by real and reactive power balance equations and security constraints in the form of apparent power flow limits over the congested lines the social welfare objective function of the day ahead market dispatch problem maximizes the benefit of distribution companies and other bulk consumers based on their price responsive demand shifting bids and minimizes the real and reactive power generation cost of generation companies the price responsive demand shifting bidding mechanism which has been recently introduced in the literature is able to shift the price responsive demand from the periods of high price to the periods of low price in day ahead electricity markets the comparisons of the price responsive demand shifting bids with conventional price responsive and price taking bids are presented by solving hourly market dispatch problems on five bus ieee 30 bus realistic up 75 bus indian and ieee 118 bus systems for 24 h scheduling period it has been demonstrated that the proposed approach leads to reduction in congestion and locational marginal prices as compared to price responsive and price taking bids and meets the energy consumption targets of distribution companies bulk consumers

nonparametric estimation of exact consumers surplus and deadweight loss we apply nonparametric regression models to estimation of demand curves of the type most often used in applied research from the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss which are the most widely used welfare and economic efficiency measures in areas of economics such as public finance we also develop tests of the symmetry and downward sloping properties of compensated demand we work out asymptotic normal sampling theory for kernel and series nonparametric estimators as well as for the parametric case the paper includes an application to gasoline demand empirical questions of interest here are the shape of the demand curve and the average magnitude of welfare loss from a tax on gasoline in this application we compare parametric and nonparametric estimates of the demand curve calculate exact and approximate measures of consumers surplus and deadweight loss and give standard error estimates we also analyze the sensitivity of the welfare measures to components of nonparametric regression estimators such as the number of terms in a series approximation

the random utility hypothesis and inference in demand systems in this paper the authors examine the consequences of adopting the random utility hypothesis as an approach for randomizing a system of demand equations random utility models are appealing since they allow the usual assumption of deterministic utility maximizing behavior by each consumer to coexist with the apparent randomness across individuals that is exhibited by data their results show that the use of random utility models implies that the disturbances of the demand equations may not be homoskedastic but must be functions of prices and or income copyright 1989 by the econometric society

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

preference heterogeneity and the rank of demand systems this article examines the effect of preference heterogeneity on nonparametric and parametric tests of the rank of demand systems using samples of households drawn from the u k family expenditure survey we find that preference heterogeneity increases the rank of demand systems when the effects of household characteristics on demand are removed by semiparametric techniques a rank 3 demand system appears to be an adequate empirical specification for all samples

the welfare effects and the distributive impact of carbon taxation on italian households in this work the welfare effects and the distributive impact on italian households of the italian carbon tax are calculated the carbon tax has been introduced in italy at the beginning of 1999 asking for smooth increases over a number of years in the prices of most fossil fuels its welfare effects have been calculated using true cost of living index numbers and the compensating variation the parameters have been obtained through estimation of a complete almost ideal demand system using households data from 1985 to 1996 the welfare loss turns out to be quite substantial and affects italian households in a non negligible way but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of carbon taxation as the effect becomes bigger as we move up the income distribution this evidence might encourage the use of carbon taxes at least in the transport sector as cost effective instruments of environmental policy especially after the ratification of the kyoto protocol on climate change

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices