barriers to entry and competitive behavior evidence from reforms of cable franchising regulations between 2005 and 2008 19 of the 50 states of the u s reformed the franchising process for cable television significantly easing entry into local markets using a differencein differences approach that exploits the staggered introduction of reforms we find that prices for basic service declined systematically by about 5 5 to 6 8 percent following the reforms but we find no statistically significant effect on average price for the more popular expanded basic service we also find that the reforms led to increased actual entry in reformed states by about 11 6 relative to non reformed states our analysis shows that the decline in price for basic service holds for markets that did not experience actual entry consistent with limit pricing by incumbents to control for potential state level shocks correlated with the reforms we undertake a sample split test examining changes in local markets which faced a greater threat of entry because they were close to a prominent second entrant we find larger declines in prices for both basic and expanded basic services in these markets our results are consistent with limit pricing models that predict incumbents respond to increased threat of entry and suggest that the reforms facilitated entry and modestly benefitted consumers in reformed states

why is on net traffic cheaper than off net traffic access markup as a collusive device abstract mobile telephony networks typically overcharge each other for the termination of incoming calls leading to high prices for off net traffic the existing theory claims that this behavior reduces profits since high termination charges make firms set high marginal prices thus leading to lower subscription fees and reduced profits this paper bridges the gap between theory and reality by incorporating several assumptions in a model that reflects the reality of mobile telephony markets one of the key assumptions is the fact that subscribers tend to place their calls to a limited number of people consisting mostly of friends and relatives the existence of such calling clubs combined with switching costs supports high access fees at the equilibrium we also discuss the implications of our analysis for eu regulation

loss aversion and price volatility as determinants of attitude towards and preference for variable price in the swedish electricity market the results of a survey of a random sample of 488 swedish residents showed that a positive attitude towards and preference for a variable price agreement with the incumbent electricity supplier was negatively affected by loss aversion and a positive attitude also negatively affected by beliefs about price volatility although correlated with attitude and preference age education and current choice of a variable price agreement had no independent effects income and current electricity costs had no effects

retail competition in electricity markets abstract the introduction of competition into retail electricity supply gave rise to great expectations however to date its performance has proven less than stellar owing primarily to the theoretical concepts underpinning this reform which draw heavily on the austrian school neither consumers decision processes nor this sector s technical paradigm were adequately accounted for leading to an uncorrect estimation of the expected impact of opening to competition short and medium term prospects for the evolution of retail markets must be reconsidered from the perspective of greater stability not a generalization of competition but rather a persistent segmentation between active and inactive clients not a large and rapid diffusion of radical innovations in commercialisation with the potential for undermining the incumbents positions

strategic offering for a wind power producer as a result of subsidies and technological maturity renewable electricity producers have grown in some jurisdictions to clearly dominant positions in the market under this context we propose an offering strategy for a wind power producer with market power that participates in the day ahead market as a price maker and in the balancing market as a deviator uncertainty pertaining to wind power production and balancing market price is represented through a set of correlated scenarios the proposed model is a stochastic mathematical program with equilibrium constraints mpec that can be recast as a tractable mixed integer linear programming milp problem which is solvable using available optimization software results from an illustrative example and two case studies show the effectiveness of the proposed model

the effect of entry on r d networks we investigate the effect of potential entry on the formation and stability of r d networks considering farsighted firms we show that the presence of a potential entrant often alters the incentives of incumbent firms to establish an r d link in particular incumbent firms may choose to form an otherwise undesirable r d collaboration in order to deter the entry of a new firm moreover an incumbent firm may refrain from establishing an otherwise desirable r d collaboration expecting to form a more profitable r d link with the entrant finally potential entry may lead an inefficient incumbent to exit the market we also perform a welfare analysisand show that market and societal incentives are often misaligned

risk assessment of virtual power plants offering in energy and reserve markets distributed energy resources ders can be integrated into a single entity namely virtual power plant vpp the integration enables them to participate in competitive wholesale electricity markets according to the different types of uncertainty faced by different ders this integration can also act as a risk hedging mechanism providing a surplus profit in this paper using a two stage stochastic programming approach risk averse optimal offering model for a vpp trading in a joint market of energy and spinning reserve service is presented the conditional value at risk cvar is used to control the risk of profit variability uncertainties involved in generation of renewables consumption of loads calls for reserve service as well as prices in the day ahead market the spinning reserve market rm and the balancing real time market bm are taken into consideration this paper assesses how total and surplus profits of vpp are affected by risk aversion participation in the rm and the pricing system in the bm for this purpose the role of the integration and the trends of energy and reserve transactions under both single and dual pricing systems in the bm are addressed in detail through a numerical study

energy market design for renewable resources imbalance settlements and efficiency robustness tradeoffs this paper examines optimal energy market bidding behavior for stochastic resources when energy imbalance payments are determined endogenously from market clearing conditions some electricity markets require wind producers to settle day ahead offers based on their real time energy production this is usually justified by economic and cost causation principles without considering the effects of these policies on curtailment and system balancing costs under these real time settlement requirements demand and wind forecast errors impact the effective penalty price so strategic behavior affects the penalty price paid by producers this paper formulates a two stage game where producers place energy bids in the day ahead market and then choose a curtailment level in real time and it derives the symmetric subgame perfect equilibrium strategy for producers it details how supply curve convexity and resource correlation can lead wind producers to bid conservatively even when they are not risk averse the results show that market based pricing mechanisms improve tradeoffs between system efficiency and mean squared bid error as compared to the case where penalty levels are determined by alternative policies suggesting additional benefits of market based penalty prices beyond those previously studied

intraday trading of wind energy in this paper we tackle the problem of a wind power producer participating in a short term electricity market that allows for the continuous but potentially illiquid intraday trading of energy considering the realistic case of a wind farm operating in the western danish price area of nord pool we build a simple but effective algorithm for the wind power producer to fully benefit from the elbas intraday market we then investigate the sensitivity of the obtained benefits to the maximum volume of energy the wind power producer is willing to trade in the intraday market the ultimate aim of the trade either to decrease energy imbalances or to increase profits and to the installed capacity of the wind farm our numerical results reveal that the wind power producer can substantially increase his revenues by partaking in the intraday market but with diminishing returns to scale a result that we attribute to the low liquidity of elbas

the value of switching costs we study a dynamic model with an incumbent monopolist and entry in every subsequent period we first show that if all consumers have the same switching cost then the intertemporal profits of the incumbent are the same as if there was only one period we then study the consequences of heterogeneity of switching costs we prove that even low switching cost customers have value for the incumbent when there are more of them its profits increase as their presence hinders entrants who find it more costly to attract high switching cost customers

optimal offering and operating strategies for wind storage systems with linear decision rules the participation of wind farm energy storage systems wf ess in electricity markets calls for an integrated view of day ahead offering strategies and real time operation policies such an integrated strategy is proposed here by co optimizing offering at the day ahead stage and operation policy to be used at the balancing stage linear decision rules are seen as a natural approach to model and optimize the real time operation policy these allow enhancing profits from balancing markets based on updated information on prices and wind power generation our integrated strategies for wf ess in electricity markets are optimized under uncertainty in both wind power and price predictions the resulting stochastic optimization problem readily yields optimal offers and linear decision rules by adding a risk aversion term in form of conditional value at risk into the objective function the optimization model additionally provides flexibility in finding a trade off between profit maximization and risk management uncertainty in wind power generation as well as day ahead and balancing prices takes the form of scenario sets permitting to reformulate the optimization problem as a linear program case studies validate the effectiveness of the strategy proposed by highlighting and quantifying benefits w r t other existing strategies

trading wind generation in short term energy markets even with state of the art forecasting methods the short term generation of wind farms cannot be predicted with a high degree of accuracy in a market situation these forecasting errors lead to commercial risk through imbalance costs when advance contracting this situation is one that needs to be addressed due to the steady increase in the amount of grid connected wind generation combined with the rise of deregulated market orientated electricity systems in the presence of imbalance prices and uncertain generation a method is required to determine the optimum level of contract energy to be sold on the advance markets such a method is presented here using markov probabilities for a wind farm and demonstrates substantial reductions in the imbalance costs the effect of market closure delays and forecasting window lengths are also shown

offering strategy of wind power producer a multi stage risk constrained approach given the significant amount of installed generation capacity based on wind power and also due to current economic downturn the subsidies and incentives that have been widely used by wind power producers to recover their investment costs have decreased and are even expected to disappear in the near future in these conditions wind power producers need to develop offering strategies to make their investments profitable counting solely on the market this paper proposes a multi stage risk constrained stochastic complementarity model to derive the optimal offering strategy of a wind power producer that participates in both the day ahead and the balancing markets uncertainties concerning wind power productions market prices demands bids and rivals offers are efficiently modeled using a set of scenarios the conditional value at risk metric is used to model the profit risk associated with the offering decisions the proposed model is recast as a tractable mixed integer linear programming program solvable using available branch and cut algorithms results of a case study are reported and discussed to show the effectiveness and applicability of the proposed approach

conformity replication of design and business niches conformity affects the choice and design of organizations conformists replicate successful strategies play along with the rules of the game and display inert behavior conformity leads to the dominance of one mode the combined impact of conformity and inertia and the existence of employment costs switching costs and network externalities may exclude equally or superior efficient modes from replacing the incumbent mode the first mover unable to overcome these barriers to entry efficient maverick organizations are forced into niches this is illustrated with respect to niches formed by labor managed firms and ethnic businesses

demand response application by strategic wind power producers this paper considers a wind power producer playing strategically in a day ahead market while willing to set demand response dr contracts with a dr aggregator to this end a bilevel problem including a single leader and two followers is formulated the wind power producer is the leader aiming at maximizing its profit through offering into a day ahead market and clearing its deviation in a balancing market the strategic behavior of the producer in the day ahead market is modeled through the market clearing process follower 1 in addition the dr aggregator behavior is modeled through a revenue function in which the aggregator is able to sell its dr product to the wind power producer other competitors and the day ahead market follower 2 the overall problem is a stochastic mathematical program with equilibrium constraints mpec in which wind power production and imbalance prices are associated with uncertainty the problem is then transformed into a linear programming approach a case of the nordic market is chosen to assess the validity of the given problem

estimating switching costs with market share data an application to medicare part d abstract choice inertia and switching frictions are well documented features of the demand for health insurance in this paper we estimate switching costs in the medicare part d market with aggregate market share data using standard discrete choice models for differentiated products we consider various modelling assumptions myopic and forward looking consumers and with and without random coefficients both myopic and forward looking consumer models with no random coefficients yield switching cost estimates that closely match the actual average switching frequency with implied dollar valued switching costs of 1600 to 2000 we find the inclusion of random coefficients to the myopic consumer model results in smaller estimates of switching costs but only at the expense of the model s fit to the switching frequency the estimated welfare losses from switching frictions are large but they are smaller under the forward looking consumer model amounting to around 500 per enrollee annually compared to over 1000 under the myopic model

a stochastic multi layer agent based model to study electricity market participants behavior this paper presents a new stochastic multi layer agent based model to study the behavior of electricity market participants the wholesale market players including renewable power producers are modeled in the first layer of the proposed multi agent environment the players optimize bidding offering strategies to participate in the electricity markets in the second layer responsive customers including plug in electric vehicle pev owners and consumers who participate in demand response dr programs are modeled as independent agents the objective of the responsive customers is to increase their benefit while retaining welfare the interaction between market players in day ahead and real time markets is modeled using an incomplete information game theory algorithm due to the uncertainties of resources and customers behavior the model is developed using a stochastic framework a case study containing wind power producers wpps pev aggregators and retailers providing dr is considered to demonstrate the usefulness and proficiency of the proposed multi layer agent based model

a supergame theoretic model with consumer loyalty abstract the paper shows in a supergame theoretic framework how the relative market power firms achieve by having loyal consumers hinders collusion furthermore increasing concentration decreases the sustainability of the agreement

minimization of imbalance cost trading wind power on the short term power market present power markets are designed for trading conventional generation for wind generation to participate in a short term energy market lengthy wind power production forecasts are required although wind speed forecasting techniques are constantly improving wind speed forecasts are never perfect and resulting wind power forecast errors imply imbalance costs for wind farm owners in this paper a new method for minimization of imbalance costs is developed stochastic programming is used to generate optimal wind power production bids for a short term power market a wind power forecast error is represented as a stochastic process the imbalance costs resulting from this strategy are then compared to the case when wind power production bids on a short term power market are based directly on a wind speed forecast

clientelization and fragmentation in backward agriculture forward induction and entry deterrence abstract this paper considers a case of fragmented duopoly basu and bell 1991 where firms have a captive segment each and compete in the remaining contested segment in a standard cournot fashion we study a two stage game in the first period the existing firm chooses the size of the captive segment incurring some cost of course and then both the firms choose quantities to sell in the second stage given a small fixed cost relevant to the contested segment the second stage game has three possible equilibria two corner and the interior one these induce a proliferation of subgame perfect nash equilibria in the whole game we use a version of forward induction rationality to refine this set we find the unique equilibrium where the existing firm has monopoly over the entire market some applications and extensions are suggested

price wars triggered by entry abstract to attract customers who incur set up or switching costs new firms offer below market prices when entering a market the incumbent responds with discounts resulting in a price war once new entrants have locked in their customers the price warfare stops and all firms raise their prices during the price war the incumbent s price is not as low as the entrants after the price war the market price is lower and output is greater than the pre entry price and output entrants attract new buyers to the market and depending on the size distribution of set up costs we show that some of the incumbent s customers switch to entrants the model is shown to square with the price and output sequences observed in a price war that was the subject of a recent and prominent antitrust case in the cigarette market

entry deterrence in markets with consumer switching costs in many markets consumers have transaction or learning switching costs between functionally undifferentiated brands new entry into such markets may be deterred either by large customer bases and or large switching costs which deny customers to an entrant or by small customer bases and or small switching costs which mean an incumbent will respond aggressively to an entrant an incumbent threatened by entry may therefore price either lower or higher than otherwise a firm with the right to enter early may make less profits over time than an otherwise identical firm that is unable to enter the market until later

wind power offering strategy in day ahead markets employing demand response in a two stage plan this paper deals with wind power offering strategies in day ahead markets a new plan is proposed in which a wind power producer participates in the day ahead market while employing demand response dr to smooth its power variations in this context a new dr scheme is presented through which the wind power producer is able to achieve dr by establishing various dr agreements with dr aggregators the proposed offering plan involves two stages the first stage clears on the day ahead market the wind power producer decides on day ahead offers as well as dr agreements with the aggregator the second stage takes place on the balancing market in a successive approach the wind power producer determines its energy trading for each period until the whole day is covered additionally proper dr agreements for each period are confirmed here the proposed plan is formulated in a stochastic programming approach where its validity is assessed on a case of the nordic market

application of fuzzy q learning for electricity market modeling by considering renewable power penetration abstract by increasing renewable resource penetration the need for developing fast and reliable market modeling approaches in the presence of these resources has gained greater attention in this paper fuzzy q learning approach is proposed for hour ahead electricity market modeling in presence of renewable resources the proposed approach is implemented on ieee 30 bus test system the effectiveness of the proposed approach is evaluated and compared with q learning approach for both normal and stressful cases simulation results indicate that the proposed approach is able to model electricity market for a range of continuous multidimensional renewable power penetration in considerably less iterations compared with q learning approach moreover the probability of finding nash equilibrium is becoming higher by using fuzzy q learning approach while the other indices such as average social welfare average of locational marginal prices lmps and average standard of deviation of lmps do not change considerably

trading wind generation from short term probabilistic forecasts of wind power due to the fluctuating nature of the wind resource a wind power producer participating in a liberalized electricity market is subject to penalties related to regulation costs accurate forecasts of wind generation are therefore paramount for reducing such penalties and thus maximizing revenue despite the fact that increasing accuracy in spot forecasts may reduce penalties this paper shows that if such forecasts are accompanied with information on their uncertainty i e in the form of predictive distributions then this can be the basis for defining advanced strategies for market participation such strategies permit to further increase revenues and thus enhance competitiveness of wind generation compared to other forms of dispatchable generation this paper formulates a general methodology for deriving optimal bidding strategies based on probabilistic forecasts of wind generation as well as on modeling of the sensitivity a wind power producer may have to regulation costs the benefits resulting from the application of these strategies are clearly demonstrated on the test case of the participation of a multi mw wind farm in the dutch electricity market over a year

on the value of a large customer base in markets with switching costs it is usually acknowledged that firms benefit from a large customer base in markets with switching costs however klemperer 1995 argues that this may not be true if an increase in the size of a firm s customer base induces fierce price competition making the firm worse off this paper shows that such an outcome can be obtained under standard assumptions such as homogeneous goods and uniformly distributed switching costs in the model firms have very limited incentives to fight for market shares and the notion that switching costs make markets less competitive is stronger than previously shown

optimal offering and operating strategy for a large wind storage system as a price maker wind farms and energy storage systems are playing increasingly more important roles in power systems which makes their offering nonnegligible in some markets from the perspective of wind farm energy storage systems wf ess this paper proposes an integrated strategy of day ahead offering and real time operation policies to maximize their overall profit as participants with large capacity in electricity markets can influence cleared prices by strategic offering a large scaled wf ess is assumed to be a price maker in day ahead markets correspondingly the strategy considers influence of offering quantity on cleared day ahead prices and adopts linear decision rules as the real time control strategy these allow enhancing overall profits from both day ahead and balancing markets the integrated price maker strategy is formulated as a stochastic programming problem where uncertainty of wind power generation and balancing prices are taken into account in the form of scenario sets permitting to reformulate the optimization problem as a linear program case studies validate the effectiveness of the proposed strategy by highlighting and quantifying benefits comparing with the price taker strategy and also show the profit enhancement brought to the distributed resources

dynamic price discrimination with asymmetric firms this paper considers variants of a dynamic duopoly model where one firm has a stronger market position than its competitor consumers past purchases may reveal their different valuations for the two firms products price discrimination based on purchase histories tends to benefit consumers if it does not cause the weaker firm to exit otherwise it can harm consumers the effect of price discrimination also depends on firms cost differences market competitiveness and consumers time horizon the stronger firm may price below cost in the presence of consumer switching costs with the purpose and effect of eliminating competition

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

announcement entry and preemption when consumers have switching costs i study the incentives of innovating firms to announce their entry in markets in which consumers incur a cost of switching from one product to another announcing entry can prevent the lock in of potential demand before the launch of the new product at the same time however the incumbent firm learns about the impending entry and has the opportunity to cut prices and preempt the market in equilibrium entrants do not always announce and i show that this behavior maximizes ex ante total welfare by contrast consumers might be better off with a ban on announcements when the entrant s claims are not verifiable vaporware announcements arise in equilibrium and i demonstrate that they can be beneficial for consumers

switching costs and the extent of potential competition in brazilian banking abstract switching costs are a leading cause of customer lock in in banking reducing the extent of competition and increasing market power in this industry this paper tries to estimate these costs using a methodology that does not require customer microdata the estimates obtained here using bank accounting information collected on a quarterly basis from 2009 to 2011 indicate substantial switching costs in the deposit market and such costs tend to be lower for customers of larger banks additionally there is some evidence that much of a bank s market share is due to its continued relationships with customers over time a lock in effect thus the extent of potential competition in brazilian banking could be severely limited by these costs

habit formation and strategic interactions a new gain from trade a two period duopoly model of trade with habit formation displays a pre entry pro competitive effect and the standard pro competitive effect once trade is effective both effects are driven in a different way by transport cost a trade liberalization affects ambiguously welfare

a neoclassical model of unemployment and the business cycle this paper investigates a general equilibrium model of unemployment and the business cycle in which specialization of labor plays a key role a rational expectations equilibrium with fully flexible wages and prices can exhibit unemployment in which the marginal product of employed workers exceeds the reservation wage of those who are without jobs workers are unemployed either because they are in the process of relocating for a better job or because they are waiting for conditions in the depressed sector to improve moreover seemingly small disruptions in the supplies of primary commodities such as energy could be the source of fluctuations in aggregate employment and can exert surprisingly large effects on real output

bargaining versus posted price competition in customer markets abstract we compare posted price and bilateral bargaining or haggle market institutions in 12 pairs of laboratory market sessions each session runs for 50 75 periods in a customer market environment where buyers incur a cost to switch sellers costs evolve following a random walk process coasian and new institutionalist traditions provide competing conjectures on relative market performance we find that efficiency is lower sellers price higher and prices are stickier under haggle than under posted offer

price competition with reduced consumer switching costs the case of wireless number portability in the cellular phone industry wireless number portability wnp is a telecommunication regulatory policy that requires cellular phone service providers to allow customers who switch service subscriptions to retain their original phone numbers the right to retain the number lowers the switching cost for a consumer thus the purpose of the policy is to induce more competition and facilitate the growth of new or small service providers in this paper we show that wnp drives market price downward as expected but with a surprising twistrather than helping the smaller firms grow the policy may accelerate the process of market concentration we find that the main contributing factor to this peculiarity is the discriminatory pricing scheme prevalent in the industrythat is a service provider charges a lower per minute fee for the calls initiated and received within the same network than for the calls connected across two networks under this pricing scheme a consumer who subscribes to a larger network would benefit more than if subscribing to a smaller network despite the relatively higher fixed access fee that the former may charge by lowering the barrier of switching wnp creates a market condition conducive for a larger network to gain market share we support our analysis with the empirical evidence gathered from hong kong where wnp was adopted in march 1999

the kinked demand curve a game theoretic approach in a simple model of duopoly firms price moves are modelled as an extensive form game where firms can respond to undercutting without delay when firms are not too dissimilar kinked demand strategies enforcing an arbitrary price may be nash equilibria however these strategies are dominated and perfect equilibrium is unique at the minimum optimal common price rather than implying price rigidity kinked demand strategies are a device for ensuring compliance with a collusive price leadership

strategic wind power investment this paper considers the problem of identifying the optimal investment of a strategic wind power investor that participates in both the day ahead da and the balancing markets this investor owns a number of wind power units that jointly with the newly built ones allow it to have a dominant position and to exercise market power in the da market behaving as a deviator in the balancing market in which the investor buys sells its production deviations the model is formulated as a stochastic complementarity model that can be recast as a mixed integer linear programming milp model a static approach is proposed focusing on a future target year whose uncertainties pertaining to demands wind power productions and balancing market prices are precisely described the proposed model is illustrated using a simple example and two case studies

how do incumbents respond to the threat of entry evidence from the major airlines this paper examines how incumbents respond to the threat of entry of competitors as distinguished from their response to competitors actual entry it uses a case study from the passenger airline industry specifically the evolution of southwest airlines route network to identify particular routes where the probability of future entry rises abruptly when southwest begins operating in airports on both sides of a route but not the route itself this dramatically raises the chance they will start flying that route in the near future we examine the pricing of the incumbents on threatened routes in the period surrounding such events we find that incumbents cut fares significantly when threatened by southwest s entry into their routes this is true even after controlling in several ways for airport specific operating costs the response of incumbents seems to be limited only to the threatened route itself and not to routes out of nearby competitor airports where southwest does not operate e g fares drop on routes from chicago midway but not chicago o hare the largest responses appear to be restricted to routes that were concentrated beforehand incumbents do experience short run increases in their passenger loads concurrent with these fare cuts this is consistent with theories implying incumbents will try to generate some longer term loyalty among current customers before the entry of a new competitor we examine evidence relating this demand building motive to frequent flyer programs and find suggestive evidence in favor of this notion there is only weak evidence that incumbents increase capacity on the routes

how sensitive are consumer expenditures to retail energy prices abstract there is growing evidence that the primary effect of energy price shocks on the u s economy involves a reduction in consumer spending we quantify the direct effect on real consumption of unanticipated changes in discretionary income shifts in precautionary savings and changes in the operating cost of energy using durables the possibility of asymmetries in the response of real consumption to energy price shocks is also considered we demonstrate that linear models are consistent with the symmetric behavior of real consumption in 1979 when energy prices increased sharply and in 1986 when they fell sharply it is shown that historically energy price shocks have been an important factor in explaining u s real consumption growth but by no means the dominant factor

equilibria in an oligopolistic electricity pool with stepwise offer curves we study the equilibria reached by strategic producers in a pool based network constrained electricity market the behavior of each producer is modeled by a mathematical program with equilibrium constraints mpec whose objective is maximizing profit and whose complementarity constraints describe market clearing the joint solution of all these mpecs constitutes an equilibrium problem with equilibrium constraints epec the equilibria associated with the epec are analyzed by solving the strong stationarity conditions of all mpecs which can be linearized without approximation by mixed integer linear programming milp techniques the resulting mixed integer linear conditions can be reformulated as an optimization problem that allows establishing diverse objectives to differentiate among alternative equilibria

what is a barrier to entry the present article is an attempt to resolve the controversies concerning the concept of barriers to entry we begin by contrasting the definitions of an entry barrier proposed in the economics literature we then introduce a classification system to clear up the existing confusion and we employ it to assess the nature of the barriers posed by scale economies and sunk costs

supplier choice and wtp for electricity attributes in an emerging market the role of perceived past experience environmental concern and energy saving behavior abstract this study analyzes customers preferences and their willingness to pay wtp for certain service attributes in an electricity supplier choice context specifically a stated preference choice experiment is conducted in the canary islands residential market where limited competition exists preferences for different electricity suppliers and three level of service attributes are investigated namely supply reliability share of renewable energies and availability of a complementary energy audit service the results might be interpreted as an indication of different aspects new firms need to consider if they plan to enter in the market there is an opportunity for new companies to establish in the market though evidence of brand loyalty to the current company and or significant switching costs are also found especially in the case of older people regarding the estimated wtp several results should be highlighted first customers who have experienced more serious outages in the past tend to show a higher wtp to reduce the outage frequency second highly educated respondents those who state a great concern for the greenhouse gases ghg emissions and those who carry out energy saving actions in their homes exhibit a larger wtp for renewable energies this empirical evidence provides useful information for authorities responsible for energy policy design

entry deterrence and signaling in markets for search goods abstract this paper studies entry in markets for search goods signaling through prices is studied both when an entrant s quality is private information and when it is common knowledge to the entrant and incumbent when consumers visit a store they are assumed to observe quality and have the option of continuing to search but at a cost when search costs are low an entrant can signal high quality by setting a sufficiently high price so that consumers who find out that its quality is low visit the incumbent entry may be facilitated when search costs are sufficiently low or when the incumbent knows the quality of the entrant s product

a game theoretical pricing mechanism for multi area spinning reserve trading considering wind power uncertainty the rapid development of wind power has led to an increased demand for spinning reserve in power systems today however one of the most severe challenges to china s power systems is the mismatch between wind power installation capacity and the capability for supplying spinning reserve within each independently operated provincial power system coordinating the spinning reserve across multiple areas would providentially improve the accommodation of wind power this paper proposes a game theoretical model for spinning reserve trading between provincial systems that treat spinning reserve as a commodity based on the incomplete information the trading price is calculated by satisfying the bayesian nash equilibrium and then the trading quantity is determined this ensures that both the buyer and the seller are able to maximize their expected profit case studies are performed using a 2 bus interconnected system and a 3 area ieee rts system the results show that the proposed model is valid and effective

mixed pricing in oligopoly with consumer switching costs abstract in this paper we develop an alternative and more natural two period model of duopolistic competition with switching costs we find that overall competition is always less severe when consumers find switching suppliers expensive however the relationship between the strength of competition and the importance of switching costs is not monotonic interestingly competition between ex ante identical firms naturally results in firms having asymmetric market shares in equilibrium

modeling the impact of a wind power producer as a price maker wind energy is present in many countries throughout the world the main types of wind sales in electricity markets are via regulated tariffs or pool based markets production companies choose cost effective options for selling wind energy and some markets like the irish electricity market use regulated tariffs to remunerate wind production this paper aims to provide some answers to explain what effect wind offers may have in an electricity market if wind power producers participated in the day ahead market without receiving any premium or aid a price maker optimization model is used to detect its effect on prices the model encompasses energy offers by other technologies using residual demand curves and detailed modeling of wind imbalances it is observed that wind acting as price maker reduces electricity prices and the imbalance penalties help the system operator to reduce imbalances a realistic case study using data from the irish electricity market illustrates the methodology used comparing the effect of imbalance penalties in the models in terms of profit and total imbalance of the system

a crude shock explaining the short run impact of the 2014 16 oil price decline across exporters abstract the sharp long lasting decline in oil prices in 2014 16 tested the resilience of oil exporters we examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies and derive policy implications as to what factors help to mitigate the negative effects we find that pre existing fundamentals account for about half of the cross country variation in the impact of the shock oil exporters that weathered the shock better tended to have a stronger fiscal position higher foreign currency liquidity buffers a more diversified export base a history of price stability and a more flexible exchange rate regime within this group of countries the impact of the shock is not found to be related to the size of oil exports or the share of oil in fiscal revenue or economic activity

pricing exit and location decisions of firms evidence on the role of debt and operating efficiency abstract we compare pricing and exit decisions of discounters across the business cycle cities containing high debt and or low efficiency firms display higher prices during non recession years during recessions prices increase in cities with less efficient incumbents but decrease in cities with a mix of high and low debt firms high debt firms are more likely to exit cities with lower prices and high debt exiting firms are more likely to be efficient apparently low debt firms strategically lower prices during recessions to force exit of efficient financially constrained rivals weaker competitors face another cost new entrants locate closer

upgrades switching costs and the leverage theory of tying this article investigates the role of product upgrades and consumer switching costs in the tying of complementary products previous analyses have found that a monopolist of one product will not increase its profits and reduce social welfare by tying and leveraging its monopoly position into a complementary market if the initial monopolised product is essential where essential means that all uses of the complementary good require the initial monopolised product we show that this is not true in settings characterised by product upgrades and consumer switching costs we also discuss various extensions including the role of the reversibility of tying

a quick and easy method for estimating switching costs abstract i develop and test a method for a quick and easy calculation of consumer switching costs among brands in a given industry the theory developed and tested here maps observed brands prices and market shares onto the switching costs which deter a consumer of a specific brand from switching to any other competing brand then i demonstrate how users switching costs can be directly calculated in two different industries a the israeli cellular phone market and b the finnish market for bank deposits this calculation method can be used to calculate switching costs in a wide variety of other industries such as airlines health services computers software telecommunications and more

the effect of price on switching among health plans a recent policy change by the university of california uc provides a unique natural experiment for investigating the sensitivity of consumers to health plan premiums when the uc moved to a policy of limiting its contribution to the cost of the least expensive plan out of pocket premiums increased for roughly one third of uc employees we examine the extent to which uc employees switched plans in response to this change in premiums our results indicate a strong response individuals facing premium increases of less than 10 were roughly 5 times as likely to switch plans as those whose premiums remained constant

operational strategies for a portfolio of wind farms and chp plants in a two price balancing market in this paper we explore the portfolio effect of a system consisting of a combined heat and power chp plant and a wind farm the goal is to increase the overall profit of the portfolio by reducing imbalances and consequently their implicit penalty in a two price balancing market for electricity we investigate two different operational strategies which differ in whether the chp plant and the wind farm are operated jointly or independently and we evaluate their economic performance on a real case study based on a chp wind system located in the western part of denmark we present a comprehensive mathematical model for describing the different heat and power production units of the chp plant and suggest different ways of determining its operation in a setup with two trading floors a day ahead market and a balancing market we build a simulation framework that runs in a rolling horizon fashion so that forecasts for heat demand wind power production and market prices are updated at each iteration we conclude that the portfolio strategy is the most profitable due to the two price structure of the balancing market this encourages producers to handle their imbalances outside the market

a robust linear approach for offering strategy of a hybrid electric energy company this paper presents a new approach for determining the day ahead bidding strategies of a large scale hybrid electric energy company the company has both energy generation and energy retailing businesses in a competitive electricity market demand response programs are also considered in the retail side of the company in order to hedge the risk of participation in wholesale market this paper introduces a max min bilevel mathematical programming with equilibrium constraint model for offering a strategy that manages the risk of uncertain forecasted rivals bids by robust optimization the max min bilevel model is converted to its equivalent single level optimization using karush kuhn tucker optimality conditions the duality theory is utilized to find the equivalent ordinary maximization model of the max min problem strong duality theory and big m method are also used to linearize the final model of offering strategy applicability of the proposed approach is shown by implementing it on the ieee 118 bus test system

first mover advantage through distribution a decomposition approach whereas the extant literature on entry order effects establishes that first entrants often earn higher market shares market share advantage the literature on distribution suggests that increased distribution has a positive effect on sales can distribution help us better understand entry order effects on market shares this paper examines how the first entrant in a geographical market achieves a market share advantage through distribution for this purpose i propose a simple method of decomposing sales into physical distribution and sales performance the data come from a manually collected panel on six major japanese convenience store chains from 47 geographical markets between 1991 and 2007 using an instrumental variable approach to address the potential endogeneity of entry order i find first entrants have a positive market share advantage over later entrants specifically the physical distribution measured by the number of outlets in a market drives most of the advantage meanwhile the pos

consumer lock in with asymmetric information abstract a two period version of the rothschild and stiglitz 1976 model of competitive screening in an insurance market is presented its features include repeat purchase of insurance among consumers no commitment among insurers or consumers asymmetric information among insurers about a consumer s accident history and state contingent contracts an equilibrium may exist in this model with full pooling in period one and consumer lock in in period two in such an equilibrium high risk consumers are experience rated and firms earn negative profits in period one and positive profits in period two