the electricity generation adequacy problem assessing dynamic effects of capacity remuneration mechanisms abstract following liberalization reforms the ability of power markets to provide satisfactory incentives for capacity investments has become a major concern in particular current energy markets can exhibit a phenomenon of investment cycles which generate phases of under and over capacity and hence additional costs and risks for generation adequacy to cope with these issues new mechanisms called capacity remuneration mechanisms crm have been or will be implemented this paper assesses the dynamic effects of two crms the capacity market and the strategic reserve mechanism and studies to what extent they can reduce the investment cycles generation costs and shortage costs of both mechanisms are also compared to conclude on their effectivity and economic efficiency a simulation model based on system dynamics is developed to study the functioning of both crms and the related investment decisions the results highlight the benefits of deploying crms to solve the adequacy issue shortages are strongly reduced compared to an energy only market besides the capacity market appears to be more beneficial since it experiences fewer shortages and generation costs are lower these comparisons can be used by policy makers in particular in europe where these two crms are mainly debated to determine which crm to adopt

alcohol prices consumption and traffic fatalities we examine the relationships among alcohol prices consumption and traffic fatalities using data across u s states from 1982 to 2000 some previous studies have found large negative associations between alcohol taxes and fatalities however commonly used price data suggest little or no connection between alcohol prices and fatalities these apparently conflicting findings may result from measurement error and or endogeneity in the price data which biases ordinary least squares estimators toward a finding of no price effects using alcohol taxes as instrumental variables fatali ties are found to be negatively related to prices in addition alcohol consumption is strongly posi tively related to fatalities however biases may still remain because taxes are not entirely suitable as instruments

tax perceptions and preferences over tax structure in the united kingdom do voters know their tax liabilities accurately or do they systematically misperceive them could such misperceptions influence voters choices over alternative tax structures proposed by politicians this paper assesses the accuracy of individuals tax perceptions in the uk using micro data from the british social attitudes survey 1995 and tests an empirical model of the determinants of tax structure preferences including tax misperceptions a systematic bias towards over estimation of income and expenditure tax vat liabilities is found and individ uals tax preferences appear to be both dominated by self interest and distorted by tax misperceptions whether using a traditional utility maximisation framework or a variety of public choice frameworks economists agree that consumer voters or taxpayer voters dislike taxes taxes lower the consumption possibility set and thereby utility politicians proposing higher taxes expect to lose votes unless they can persuade voters that the utility gain from the use of those taxes will exceed the tax induced utility loss of course the extent of individuals losses will depend on their circumstances and how revenues are raised the tax structure traditional tax incidence and excess burden analyses and models of political costs associated with the tax structure hettich and winer 1984 1988 each provide guidance on the extent to which different individuals may be expected to suffer and vote differently under alternative tax structures much will depend on attitudes towards and perceptions of specific taxes especially personal income taxes and consumption taxes underlying most such analyses are two common presumptions i tax preferences are dictated by self interest and ii individuals accurately assess their tax liabilities and so make informed choices two largely independent areas of literature have challenged these assumptions first models incorporating altruism

a dynamic analysis of a demand curve based capacity market proposal the pjm reliability pricing model because of high generation adequacy standards in the power industry some peaking capacity operates for a limited time during the year and may not receive sufficient energy revenues to meet its fixed costs this is particularly true when energy prices are capped in order to mitigate market power the northeastern u s independent system operators isos have responded to this issue by establishing capacity obligations for loads and markets for installed capacity thus providing a capacity revenue stream to generators the installed capacity icap markets in the northeastern u s markets are a response to this need for additional incentives to construct generation the federal energy regulatory commission ferc has accepted the pjm interconnection s pjm proposal to replace the present fixed icap requirement that is placed upon load serving entities lses with a demand curve based system in which the iso would be responsible for acquiring residual capacity on behalf of lses the demand curve approach pays more when reserve margins are smaller and provides a reduced incentive for investment when installed reserves are above the target another goal is to make revenues more predictable for generators making investment less costly and ultimately lowering prices for consumers a dynamic representative agent model is presented for projecting effects upon reserve margins generator profitability and consumer costs and is applied to alternative demand curves proposed for the pjm market the consumer costs resulting from a sloped demand curve are robustly lower compared to the present fixed requirement under a wide range of assumptions concerning behavior of generation owners including risk attitudes bidding behavior and willingness to build capacity as a function of forecast profit the cost savings arise from lower capital costs to generators due to reduced risk and risk premiums also average installed capacity is less for the same level of reliability because of reduced fluctuations in installed reserves

the demand for home produced and imported alcoholic beverages in cyprus the aids approach the purpose of this paper is to investigate the demand and its composition between home produced and imported for alcoholic beverages in cyprus the methodological approach used is the almost ideal demand system aids both in static and dynamic terms empirically the aids both in its static and dynamic version was estimated using time series 1970 1992 for three sets of data which include 1 alcoholic beverages wine beer other brandies broken down between home produced and imported model a 2 alcoholic beverages only without disaggregation between home produced and imported model b and 3 aggregate alcoholic beverages wine beer other brandies and food model c zellner s iterative estimation procedure was used for estimating the model the empirical findings 1 strongly support the dynamic version of the aids over its static alternative and 2 provide certain guidelines concerning economic policies relating to an increase in government revenues and changing the composition between

the complex attitudes to alcohol taxation alcoholic beverages are taxed at very different rates across the eu which implies extensive cross border shopping therefore there is an ongoing debate about harmonization of alcohol taxes among countries sweden with a tradition of high alcohol taxes due to public health arguments has the highest excise duties on spirits in the eu but because of this the occurrence and possible problems caused by cross border shopping are also extensive using a questionnaire survey i analyse the swedes attitudes to alcohol taxation and find that these two sides of the coin are important determinants many respondents want to decrease the alcohol tax while some even want to increase it those most positive to alcohol taxation are those who regard increased alcohol consumption as a worrying problem and those living in areas where many adults are treated for alcohol related diseases however the ordered probit analysis also shows that those who support the eu membership are more supportive of reduced taxation to

modeling long term dynamics of electricity markets in the last decade many countries have restructured their electricity industries by introducing competition in their power generation sectors although some restructuring has been regarded as successful the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long term behavior long term prices and long term supply reliability are now center of interest this concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long term supply adequacy and the stability of power markets in order to gain significant insight into the long term behavior of liberalized power markets in this paper a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response the simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins and consequently stable long term price levels because of feedback loops embedded in the structure of power markets and the existence of some time lags the long term market development might exhibit a quite volatile behavior by varying some exogenous inputs a sensitivity analysis is carried out to assess the influence of these factors on the long run market dynamics

simulating price patterns for tradable green certificates to promote electricity generation from wind abstract this article uses computer simulation to anticipate the price dynamics in a market for tradable green certificates tgcs these markets have been used in europe to promote generation of electricity from renewable resources like wind similar markets have been proposed in the united states of america usa where the certificates are called renewable energy credits recs the certificates are issued to the generating companies for each megawatt hour of renewable electricity generation the companies may sell the certificates in a market and the revenues from certificate sales provide an extra incentive to invest in new generating capacity proponents argue that this market based incentive can be designed to support government mandates for a growing fraction of electricity generation from renewable sources in the usa these mandates are set by the states and are known as renewable portfolio standards rps we simulate the price dynamics of a market designed to support an aggressive mandate for wind generation in the northwestern usa the simulations show that the certificate price climbs rapidly to the cap in the early years after the market opens investors then react to these high prices with construction of new wind capacity after a few years wind generation meets and then exceeds the requirement we show that this pattern appears again and again when the simulations are repeated with wide variations in the estimates of behavioral parameters we use the model to study the impact of different trading strategies by the wind companies and by the distribution companies we also study the simulated market response if the usa adopts the carbon allowance market envisioned in the climate stewardship act the article concludes with recommendations for policy makers involved in tgc market design

traffic accidents deaths and alcohol consumption the main goal of this article is to analyse the relationship existing among prices of alcoholic beverages alcohol consumption and traffic fatalities for the spanish autonomous communities during the time interval 1998 to 2002 among the main results we highlight a positive correlation between alcohol consumption and traffic mortality rate basically governments implement two kinds of policies to reduce the traffic mortality rate one is oriented to control the supply of alcohol by increasing alcohol taxes the other is oriented to preserve traffic security increasing the number of sanctions for traffic rule infraction we find evidence that both policies exert a positive influence in the reduction of traffic fatalities there is no empirical evidence to indicate that being a novice driver increases the tendency to be involved in a mortal traffic accident

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

integrating real options analysis with long term electricity market models abstract in liberalized electricity markets the investment postponement option is deemed decisive for understanding the addition of new generating capacity basically it refers to the possibility for investors to postpone projects for a period while waiting for the arrival of new and better information about the market evolution when such development involves major uncertainties the generation business becomes riskier and the investors wait and see behavior might limit the timely addition of new power plants in that sense the literature provides solid empirical evidence about the occurrence of construction cycles in the deregulated electricity industry however the strategic flexibility inherent to the option to defer new power plants has not yet been rigorously incorporated to investment signals in existing market models therefore this paper proposes a novel methodology to assess the long term development of liberalized power markets based on a more realistic approach for valuing generation investments the work is based on a stochastic dynamic market model built upon system dynamics simulation approach the decision making framework considers that the addition of new capacity is driven by the economic value of the strategic flexibility associated with deferring investments under uncertainties thus the value of the postponement option is quantified in monetary terms through real options analysis simulations confirm the cyclical behavior of the energy only market in the long run as suggested by the empirical evidence found in the literature in addition sensitivity analysis regarding some relevant exogenous variables depicts an even more fluctuating evolution of the capacity due to the combination of strong demand growth rates with large volatilities finally the model validity is assessed through a formal procedure according to the scope of system dynamics modeling approach

demand and distance evidence on cross border shopping while many studies have documented deviations from the law of one price in international settings evidence is scarce on the extent to which consumers take advantage of price differentials and engage in cross border shopping we use data from 287 swedish municipalities to estimate how responsive alcohol sales are to foreign prices and relate the sensitivity to the location s distance to the border typical results suggest that the elasticity with respect to the foreign price is around 0 4 in the border region moving 200 400 kilometers inland reduces it to 0 2 0 1 given that cross country price differences for alcohol and other products are often caused by taxes our evidence has implications for the debate on tax competition harmonization

trips trade and technology transfer a north south model of unintentional technology transfer is developed where the stringency of southern patent protection provides the institutional backdrop for a strategic game in a high tech goods market the appropriability regime is set endogenously and combines elements of imperfect southern patent protection with the protection afforded by market made northern technology masking less stringent protection of northern intellectual property can work much like other strategic trade policies therefore developed countries appear to be right in demanding discussion of intellectual property rights in gatt

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

do politicians preferences correspond to those of the voters an investigation of political representation this paper investigates political representation by exploring the relationship between citizens preferences and the preferences of their elected representatives using swedish survey data the empirical analysis shows that voters and politicians have significantly different preferences for local welfare services implying that voters do not elect representatives with the same preferences as their own the results show that when comparing a politician of a certain age gender educational level and marital status with a voter with identical characteristics the politician still has preferences for a significantly higher level of spending on the locally provided services hence our results indicate that the representation of different socio economic groups does not necessarily lead to a larger degree of representation of these groups agendas moreover we find the observed difference to be largest for the least salient expenditure item we do however not find any evidence for differences in preferences between the two groups being associated with a decline in trust for politicians among voters

new estimates of the optimal tax on alcohol in this paper i use a new data set to estimate the optimal alcohol tax rate as a benchmark the empirical results imply that the optimal tax rate is over 100 percent of the net of tax price however alcohol taxation is a second best solution to the problems associated with alcohol abuse i conclude that the optimal alcohol tax rate would be much lower if punishment for drunk driving were more certain and severe government provision of information about the health consequences of heavy drinking would also remove part of the efficiency rationale for alcohol taxes

the impact of investors risk aversion on the performances of capacity remuneration mechanisms abstract this paper analyses the impact of risk aversion on the performances of capacity remuneration mechanisms with investors facing an uncertain peak load three market designs are studied for this purpose a competitive energy only market a capacity market and a strategic reserve mechanism a simulation model based on system dynamics is developed in order to represent investment decisions and analyse the behaviour of each market design risk aversion is modelled through the computation of conditional value at risk the results are discussed in terms of impact on the reliability ability to limit shortages and cost total generation costs of the studied market designs when comparing the three market designs the capacity market seems to be the least affected by the introduction of risk aversion both in terms of cost and reliability this result suggests that implementing a capacity market is preferable in order to deal with the adverse effects of risk aversion given the simulations and parameters that were used

are alcohol tax hikes fully passed through to prices evidence from alaska on 1 october 2002 the state of alaska increased taxes on malt beverages from 0 35 per gallon to 1 07 per gallon increased taxes on wine from 0 85 per gallon to 2 50 per gallon and increased taxes on distilled spirits from 5 60 per gallon to 12 80 per gallon the net effect is that the tax on a standard serving rose from about 3 cents for beer 2 cents for wine and 4 cents for spirits to a uniform tax of 10 cents per standard serving of each type of alcohol beverage this paper uses primary data on alcoholic beverage prices in alaska to study a very basic question what was the impact of the tax hikes on prices an alcohol tax hike is often viewed as a public health policy tool to discourage excessive alcohol consumption and alcohol related problems such as drunk driving the impact of a tax hike on alcoholic beverage prices is a key link in the chain of the causality from the tax to public health economic theory and previous empirical studies mainly of taxes on goods other than alcoholic beverages do not provide very much guidance on what to expect following a tax hike it is an empirical question to answer the question i conducted telephone surveys just before and a year after the tax hike of on premise and off premise alcohol retail establishments across alaska

the net effect of an alcohol tax increase on death rates in middle age alcohol excise taxation increases prices and reduces per capita consumption cook and george tauchen 1982 christopher j ruhm 1995 douglas j young and agnieszka bielinska kwapisz 2003 in principle a taxinduced reduction in per capita consumption of alcohol may be the result of both a reduction in the prevalence of alcohol abuse and the prevalence of moderate drinking with opposite effects on mortality rates the net effect on mortality could be either positive or negative and has not been established empirically some specific mechanisms by which drinking creates health risks and benefits are well documented for all age groups episodes of alcohol intoxication cause death from overdose or from injury resulting from accident or intentional violence ralph hingson and michael winter 2003 chronic heavy drinking may cause death due to organ damage including liver cirrhosis jurgen rehm et al 2003 on the other hand chronic drinking confers some health benefits on middle aged people defined here as persons aged 35 69 alcohol acts as an anti cholesterol drug and epidemiological evidence suggests that moderate drinking is associated with reduced mortality from heart disease and stroke giovanni corrao et al 2000 thus an increase in alcohol excise taxes may reduce mortality rates to the extent that it induces a lower incidence of risky drinking and lower prevalence of chronic heavy drinking but if older people drink too little in response to higher prices then the result may be increased cardiovascular death rates in what follows we combine new estimates of the effect of per capita alcohol consumption on drinking patterns with a summary estimate from the epidemiology literature of relative risks associated with different levels of drinking we calculate that a permanent reduction of 1 percent in alcohol consumption per capita induced by a tax increase or some other mechanism would have little net effect on mortality in middle age our sensitivity experiments suggest that the effect may be positive or negative but is always close to zero since there is no health benefit from drinking for younger people and considerable risks we conclude that the public health case for increased alcohol taxation is strong

sensitivity of reserve margin to factors influencing investment behaviour in the electricity market of england and wales abstract the electricity generation and distribution industries of england and wales have recently undergone major re structuring as part of the privatization process of taking them out of the public sector on the generation side three major companies have been created which compete both with each other and with the new independent companies who are expected to enter the market trading between generators and distributors is controlled centrally by a pool system which attempts to ensure the optimal operation of the system in the short term and gives a pricing signal for longer term investment this pricing signal depends upon an a priori loss of load probability this paper is intended to provide insights into how the investment in capacity for generation could evolve according to various regulatory conditions economic assumptions degrees of competition and the strategic behaviour of the separate companies using a system dynamics approach a simulation model of investment is developed to generate insights into the volatility of the reserve margin variations in the loss of load probability and the various market share scenarios the degree of uncertainty in the demand the amount of information exchange between competitors and the degree of foresight in planning are considered as well as different financial or market share objectives for companies

from nuclear phase out to renewable energies in the swiss electricity market abstract liberalisation and the ever larger share of variable renewable energies vres e g photovoltaic pv and wind energy affect security of supply sos we develop a system dynamics model to analyse the impact of vres on the investment decision process and to understand how sos is affected we focus on the swiss electricity market which is currently undergoing a liberalisation process and simultaneously faces the encouragement of vres and a nuclear phase out our results show that nuclear production is replaced mainly by pv and imports the country becomes a net importer this evolution points to a problem of capacity adequacy the resulting price rise together with the subsidies needed to support vres lead to a rise in tariffs in the presence of a high share of hydro the de rated margin may give a misleading picture of the capacity adequacy we thus propose a new metric the annual energy margin which considers the energy available from all sources while acknowledging that hydro storage can function as a battery this measure shows a much less reassuring picture of the country s capacity adequacy

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

are weak patent rights a barrier to u s exports abstract this paper assesses whether how and to what extent u s exports are sensitive to national differences in patent rights i estimate bilateral trade equations that account for trade distortions related to patent rights using data on state to country manufacturing exports in 1992 i find that weak patent rights are a barrier to u s exports but only to countries that pose a strong threat of imitation e g china the stronger patent rights required under the wto agreement increase u s exports to these high threat markets alternatively strengthening patent rights in countries that pose a weak threat of imitation reinforces monopoly power and reduces u s exports to these markets

economic consequences of a capacity market implementation the case of poland abstract this paper investigates the potential economic consequences of setting up a capacity market in poland a computable model of the polish power generation system is developed and employed to analyse the impact of this mechanism two scenarios are designed for this study i a reference scenario that reflects the energy only market and ii a capacity market scenario that assumes the implementation of such an instrument to assess the economic consequences the following parameters are estimated i annual electricity prices ii loss of load hours iii expected energy not served and only for the capacity market scenario iv market clearing price v total budget of the capacity market and vi increase in electricity price due to the introduction of the capacity market the findings of the study indicate that the long term maintenance of the energy only market results in higher electricity prices when compared to putting a capacity market into operation introducing a capacity market enables existing resources to be used effectively without excessive capital expenditure the methods and conclusions presented in this paper provide valuable findings and policy insights regarding the potential economic consequences of a capacity mechanism in a power system mostly dominated by coal and undergoing an energy transition

the sale of alcohol in denmark recent developments and dependencies on prices taxes how do prices affect the choice of types of alcohol in denmark we study the danish sale of alcoholic beverages in a time series framework first we look at annual data from 1980 investigating the hypothesis of a fairly stable level of sales we conclude stationarity of sales and we also find that the income elasticity of total sales has been zero second we analyse the composition of the alcohol sale between beer wine and spirits in a multivariate model conditional on the development in prices for this analysis we use johansen cointegration techniques again we test that income can be omitted from the model and we use the model to derive the effects on the composition of alcohol sales of three different sets of changes in the alcohol taxation

how similar are alcohol drinkers international evidence stigler and becker 1977 argue that tastes neither change capriciously nor differ importantly between people it is differences in prices and incomes that determine differences in behaviour in this paper we analyse the alcohol consumption patterns of drinkers from 8 industrialized countries we identify a number of empirical regularities and verify stigler and becker s hypothesis that income and price elasticities of demand are international constants by showing that alcohol consumption patterns in the eight countries exhibit intriguing similarities the income and price elasticities of alcohol are found to be about 0 8 and 0 6 respectively in all eight countries

consumption taxes in a life cycle framework are sin taxes regressive we construct measures of tax incidence over the life cycle and compare these measures to traditional measures based on annual data annual measures of the incidence of taxes on consumption goods may differ from life cycle measures for three reasons first annual measures of income reflect transitory components which should have smaller effects on consumption than permanent changes in income second income measured in a single period differs from lifetime income due to age related differences in earnings third consumption of certain items follows life cycle patterns independent of changes in income surprisingly we find that these effects cause little change in the assessment of the incidence of taxes on cigarettes for alcohol we find that a tax on its consumption is slightly less regressive when measured with respect to lifetime income than when measured with respect to annual income copyright 1995 by mit press

sensitivity of energy system investments to policy regulation changes too many too fast abstract in this paper we argue that the interaction of energy policy regulations in the european electricity sector may be described by the slow fast class of dynamical systems such systems may exhibit drastic changes in their dynamics known as bifurcations one important being the so called blue sky catastrophe once reaching such a state the slow system becomes unresponsive to the changes in the fast system for the energy policy nexus this translates into the energy system becoming unresponsive to policy interventions leading to a freeze in the system dynamics application of this result allows us to argue that caution is needed when updating economic policies to achieve a faster transition towards a low carbon energy supply structure to avoid this risk the policy design should be aimed at long term incentive structures with less frequent but more consistent interventions

capacity adequacy in power markets facing energy transition a comparison of scarcity pricing and capacity mechanism this article analyses how a capacity mechanism can address security of supply objectives in a power market undergoing an energy transition that combines energy efficiency efforts to stabilise demand and a rapid increase in the proportion of renewables to analyse this situation power markets are simulated over the long term with a system dynamics model integrating new investment and closure decisions this last trait is relevant to studying investment in power generation in mature markets undergoing policy shocks the energy only market design with a price cap with and without a capacity mechanism is compared to scarcity pricing in two investment behaviour scenarios with and without risk aversion the results show that the three market designs lead to different levels of risk for peaking unit investment and results thus differ according to which risk aversion hypothesis is adopted assuming a risk neutral investor the results indicate that compared to an energy only market with a price cap at 3 000 mwh an energy only market with scarcity pricing and the market design with a capacity mechanism are two efficient options to reach similar levels of load loss but under the hypothesis of risk aversion the results highlight the advantage of the capacity mechanism over scarcity pricing

how trade related are intellectual property rights abstract there is little empirical evidence about whether differing international levels of patent protection influence trade flows if a nation strengthens its patent laws it could experience higher or lower imports we specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income trade barriers and patent laws patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables the results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies

international standards for intellectual property protection and r d incentives abstract we examine the effect of alternative standards for intellectual property protection uniform protection based on the gatt principle of non discrimination provides domestic and foreign firms with the same level of protection discriminatory protection based on section 337 of the u s trade laws provides different levels of protection depending upon where the firm is located we show that discriminatory protection may not increase and may decrease domestic r d the effect of asymmetric patent protection depends on whether the rivals have pre existing products on the costs of r d and on the value of the potential innovation

market design and investment incentives the purpose of this study was to understand how market design affects market performance through its impact on investment incentives for this purpose we model capacity choices by two ex ante identical firms which compete in the product market we analyse a number of different market design elements including i two commonly used auction formats the uniform price and discriminatory auctions ii price caps and iii bid duration we find that although the discriminatory auction tends to lower prices this does not imply that investment incentives at the margin are poorer indeed aggregate capacity is the same under both auction formats

an improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment many countries have experienced restructuring in their electric utilities this restructuring has presented the power industries with new challenges the most important of which is long term investment planning under uncertain conditions this paper presents an improved mechanism for capacity payment the mechanism has been investigated based on system dynamic modeling in our proposed mechanism generators will recover a part of their investment through capacity payment while the payment for any plant remains constant during the operation period it depends on the investment needed to build it the main factors affecting long term planning have been considered in our model the approach can be used to investigate the effects of fixed as well as variable capacity payment in market investment we used the probability density function of load as a new concept to calculate average market price delays in unit constructions estimation of demand and market capacity growth during construction periods have been included in the proposed algorithm as parameters which affect the regulator s decision for changing capacity payment the model can be used by regulators to investigate strategies that may affect the fluctuations in the market

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

risk based assessment of the cost efficiency and the effectivity of renewable energy support schemes certificate markets versus feed in tariffs the introduction of renewable energy sources in the electricity generation mix has the potential to reduce power sector s emissions and countries dependence on imported oil climate change concerns and highly volatile oil prices have attracted governments interest and support to sustain investments in renewable energy capacity and different support policies have been implemented in many countries around the world this paper analyzes the effects of investors risk aversion on the performance of support schemes the analysis compares two policy options a feed in tariff mechanism with a certificate market system results show that while a tariff mechanism could obtain better results than a certificate market its performance is strictly dependent on regulator choices a certificate market instead permits to obtain the desired level of renewable energy market share with good cost efficiency as long as investors risk aversion is moderate moreover discounting future cash flows with higher social discount rates further benefits a certificate system making it preferable to feed in tariffs

a dynamic game of r and d patent protection and competitive behavior a theory of dynamic optimal resource allocation to r and d in an n firm industry is developed using differential games this technique represents a synthesis of the analytic methods previously applied to the problem static game theory and optimal control the use of particular functional forms allows the computation and detailed discussion of the nash equilibrium in investment rules this paper addresses the problem of resource allocation to research and development among the important issues that a firm engaging in r and d must evaluate are uncertainty regarding the feasibility and profitability of a particular innovation the possibility of a protracted development period the possibility that a rival firm may innovate first capturing either a patent or a significant share of the new market the possibility that a rival firm may imitate the innovation and appropriate some of the profits in the new market in what follows we will develop a theory of optimal resource allocation to research and development which incorporates the aspects of r and d enumerated above we will use a dynamic game theoretic analysis determining the nash equilibrium strategies for n identical firms the availability of perfect patent protection is shown to accelerate development of the innovation and the effect of increasing rivalry is addressed the impact of increasing rivalry on nash equilibrium investment in r and d depends upon the degree of appropriability of rewards if patent protection is perfect then increasing the number of nash rivals results in increased r and d effort however when imitation is rewarded the opposite may be true finally some notions of competitive and perfectly competitive equilibrium are examined in the context of the model developed below

long term assessment of power capacity incentives by modeling generation investment dynamics under irreversibility and uncertainty abstract in actual energy only markets the high volatility of power prices affects the expected returns of generators when dealing with irreversibility under uncertainty deferring decisions to commit in new power plants waiting for better information is therefore a rational approach theoretical and empirical evidence suggests that such investment pattern determines the occurrence of construction cycles which strongly compromise supply security in order to supplement generators revenues several remuneration mechanisms have been devised over past years along this line this work addresses the long run dynamics of capacity adequacy and market efficiency with both a price based and a quantity based capacity remuneration policy for that purpose a recently developed stochastic simulation model is used as a benchmark hence the optimal postponement of generation investment decisions is integrated into a long run power market model by formulating the decision making problem in the framework of real options analysis results suggest that policymakers may exchange supply security effectiveness for energy prices to be paid by consumers efficiency when designing and implementing capacity remuneration mechanisms by doing so this article contributes to the ongoing debate regarding the design of incentive policies and efficient power markets by considering the microeconomics of investors decision making under irreversibility and uncertainty