insider trading revisited a recent article in this journal argued that insider trading is an unethical practice leading to an inefficiently functioning market the debate on this topic has primarily pitted ethical defenses of prohibition against economic arguments extolling its allowance in addition to being incomplete this approach ignores other unwanted economic effects of prohibition itself and unethical implications of its existence this article shows that adam smith s free market concept when properly interpreted provides all the incentive structure necessary for an efficient and ethical marketplace even when insider trading is permitted

marginal loss modeling in lmp calculation this paper discusses the pricing of marginal transmission network losses in the locational marginal pricing approach recently deployed in the iso new england iso ne standard market design smd project implemented by alstom s t d energy automation and information eai business the traditional loss model is studied and a new model is proposed the new model achieves more defendable and predictable market clearing results by introducing loss distribution factors to explicitly balance the consumed losses in the lossless dc power system model the distributed market slack reference is also introduced and discussed the lmp components produced by the two models are studied and compared under changes in slack reference numerical examples are presented to further compare the two models

experience with pjm market operation system design and implementation this paper outlines the fundamental features of the pjm day ahead energy market and real time energy market the day ahead market is based on a voluntary least cost security constrained unit commitment and dispatch with several fundamental design features that ensure the market is robust and competitive this market offers market participants the option to lock in energy and transportation charges at binding day ahead prices the flexibility of the day ahead market rules provide all participants with equal access to the day ahead market through consistent price signals and by providing all participants with the ability to submit virtual demand bids and virtual supply offers these mechanisms promote liquidity in the markets economic incentives drive the convergence of the day ahead and real time market prices the real time energy market is based on security constrained economic dispatch and is cleared based on the actual system operating conditions the lmp based markets support reliable grid operations through efficient price signals

insider trading outside search and resource allocation why firms and society may disagree on insider trading restrictions we show that entrepreneurs may prefer to allow insider trading even when it is not socially optimal we examine a model in which an insider manager allocates resources on the basis of his private information and outside information conveyed through the secondary market price of the firm s shares if the manager is allowed to trade he will compete with informed outsiders reducing the equilibrium quality of outside information while the benefits to production of outside information are the same for society and entrepreneurs we show that the social and private costs are different thus entrepreneurs and society may disagree on the conditions under which insider trading restrictions should be imposed article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

where should the line be drawn on insider trading ethics finance ethics have drawn increasing attention from both government regulators and academic researchers this paper addresses the issue of insider trading ethics previous studies on insider trading ethics have failed to provide convincing arguments and consistent results in particular the arguments against insider trading are based primarily on moral and philosophical grounds and lack empirical rigor this study intends to establish and examine the relationship between the ethical issue and economic issue of insider trading we argue that the ethics of insider trading is in essence an economic rather than a moral issue it is so far not clear to what extent insider trading may increase or decrease shareholders wealth until then we must take care to avoid over regulating insider trading

ma and sun on insider trading ethics ma and sun have recently argued that some forms of insider trading are ethically acceptable we argue that the authors fail to prove three key premises of their argument which is therefore unsound

the role of ethics in finance the role of ethics in the financial community today seems to be limited to its role in financial economic theory contemporary financial economists view ethics in the context of objective wealth maximization in this context ethics functions primarily as a constraint on behavior this view is both illogical and ambiguous it is illogical because it may actually sanction unethical behavior if such behavior can be shown to lead to material gain it is ambiguous because throughout he 2000 year history of moral philosophy ethics has generally been viewed as a behavioral motivation not as a constraint if a conception of ethics as the fundamental objective in all human endeavor is disseminated in the financial community there is real hope that ethics will be accepted as both logically consistent and desirable

shareholder wealth maximization business ethics and social responsibility the primary objective of this article is to develop a framework for analyzing the ethical foundations and implications of shareholder wealth maximization swm distinctions between swm and the more widely examined construct of profit maximization are identified the most significant being the central role played in swm by the market mechanism for pricing the corporation s securities it is argued that empirical tests concerned with evaluating the ethical implications of swm will almost surely involve a joint hypothesis a number of recent empirical studies aimed at testing hypotheses with explicit ethical content are reviewed

deliverable robust ramping products in real time markets the increasing penetration of variable energy resources has led to more uncertainties in power systems flexible ramping products frp have been adopted by several electricity markets to manage the uncertainties we reveal that neglected line congestion for frp may not only cause infeasibility but also result in a failure of cost recovery to address the deliverability issues on frp this paper proposes a new concept deliverable robust ramping products drrp in real time markets the drrp includes generation ramping reserve and generation capacity reserve the drrp is deliverable and immunized against any predefined uncertainty it also fully addresses the bid cost recovery issue caused by the line congestion in existing frps the prices of drrp are derived within the affine adjustable robust optimization aaro framework these prices can be used to identify valuable reserves among available reserves and quantify the values of flexible resources that provide reserves this paper also proposes a general approach to obtaining the time decoupled prices for drrp and generation which can be used for the market settlement of the first interval only in real time markets simulations on a 3 bus system and the ieee 118 bus system are performed to illustrate the concept of drrp and the advantages of drrp compared to existing frp

the ethics of insider trading despite the fact that a number of economists and philosophers of late defend insider trading both as a viable and useful practice in a free market and as not immoral i shall question the value of insider trading both from a moral and an economic point of view i shall argue that insider trading both in its present illegal form and as a legalized market mechanism undermines the efficient and proper functioning of a free market thereby bringing into question its own raison d etre it does so and is economically inefficient for the very reason that it is immoral thus this practice cannot be justified either from an economic or a moral point of view

ex post pricing in the co optimized energy and reserve market this paper discusses an alternative to the ex post pricing model currently under development within iso new england s iso ne ancillary service market since iso ne s real time ancillary service market co optimizes both energy and reserve products ex post pricing is needed for both energy and reserve a co optimization approach for ex post pricing requires defining complex pricing rules and implementing heuristics to ensure consistent binding constraints with the ex ante dispatch in order to avoid complexity and uncertainty of required heuristics a new ex post pricing schema is proposed to calculate the ex post energy and reserve prices in a decoupled way while recognizing the coupling effect of energy and reserve in the proposed approach ex post energy prices are first computed by incorporating the ex ante marginal opportunity cost of reserve in the energy offer the ex post reserve prices are then calculated by considering the ex post marginal opportunity cost of energy this approach simplifies the implementation of ex post pricing rules in the iso ne market numerical examples are presented to further demonstrate the validity of this approach

analyzing insider trading from the perspectives of utilitarian ethics and rights theory the common view is that insider trading is always unethical and illegal but such is not the case some forms of insider trading are legal furthermore applying ethical principles to insider trading causes one to conclude that it is also sometimes ethical this paper attempts to get past the hype the press reports and the political grandstanding to get to the truth of the matter the author applies two sets of ethical principles utilitarianism and rights theory in an attempt to determine when and in what circumstances insider trading is ethical the views of henry manne an early proponent of insider trading are critically examined as are the major arguments against insider trading is insider trading good for the company if it is used as a form of executive compensation which makes it possible to pay lower salaries than would otherwise be the case does insider trading cause the stock market to work more efficiently if insider trading does increase efficiency is that sufficient to call for its total legalization or are there other things to be considered several arguments against insider trading have been put forth over the last few decades but there are problems with all of them one of the main arguments is the fairness argument the problem with this argument is that different people have different definitions of unfairness a closely related argument is the level playing field argument which advocates wider dissemination of information so that it is less asymmetric one problem with the level playing field argument is that it is better applied to sporting competitions than to trading in information some economists argue that forcing the disclosure of nonpublic information can actually result in more harm than good and must necessarily involve the violation of property rights other arguments examined in this chapter include the fiduciary duty argument the problem of outside traders the misappropriation doctrine and the restrictions that insider trading laws place on freedom of speech and press the article concludes by setting forth some principles or guidelines to determine when insider trading should be punished and when it should not

negotiating bilateral contracts in electricity markets in mixed pool bilateral electricity markets participants can sign forward bilateral contracts several months in advance of its delivery in addition generators may sell to and loads may buy from the pool at the spot price through the day ahead or balancing markets forward bilateral contracts have the advantage of price predictability in comparison with the uncertain spot price however the risk is that such a contract commits the partners to a price that may be disadvantageous compared to the spot price here we propose a systematic negotiation scheme through which a generator and load can reach a mutually beneficial and risk tolerable forward bilateral contract either physical or financial under this approach the generator and load respond rationally to a stream of bilateral bids counter bids and offers counter offers considering their respective benefits while accounting for the risks incurred by the prediction uncertainty in the pool spot price and other market parameters over the length of the contract each negotiating party can choose its own definition of risk which can be influenced by regret value at risk or dispersion from the mean numerical tests show that this flexible negotiating approach can be readily put into practice

market potential for smart growth neighbourhoods in the usa a latent class analysis on heterogeneous preference and choice with data from a 2011 national association of realtors community preference survey we examined individuals preferences and the resulting market potential for smart growth neighbourhoods in the usa using a latent class choice model we discovered four classes of individuals that reveal distinctive behaviours when choosing smart growth neighbourhoods based on the interplay between aspects of community design socioeconomic characteristics and personal attitudes based on these results we estimated the demand for smart growth neighbourhoods given the way they are planned and built by linking the results of the latent class choice to a market diffusion model we were able to evaluate the effectiveness of a proposed smart growth neighbourhood design in inducing less sprawling development

an experiment testing the determinants of non compliance with insider trading laws recent stories of corporate insiders avoiding losses and in some cases generating enormous personal profits as their companies crumbled have led investors to question the integrity of american business and the fairness of the united states stock markets the sec tries to ensure the fairness of the stock markets by making and enforcing laws against unfair practices such as insider trading in the united states when insiders trade stock based on non public information they have broken the law and betrayed the trust that has been placed in them

compact development and preference heterogeneity in residential location choice behaviour a latent class analysis the success of compact development depends in part on accurately gauging its public demand and understanding residents preferences towards it drawing upon a stated preference survey in the wasatch front region in utah this paper estimates preferences for compact walkable and transit friendly neighbourhoods through the application of a discrete choice experiment results derived from a latent class analysis reveal significant heterogeneity in residential location preferences overall strong preferences for compact development are more likely to occur among families with fewer school age children low income and renter occupied households and those who appreciate social heterogeneity and have less desire for privacy these tastes are also associated with personal preferences for walking and biking and supportive opinions toward environmental protection and urban growth boundary policies by comparing respondents preferences to their actual residential and travel choices in two contrasting subregions we further address the complex relationships between environment preferences residential locations and travel

strong formulations for multistage stochastic self scheduling unit commitment with the increasing penetration of renewable energy into the power grid system the volatility of real time electricity prices increases significantly this brings challenges for independent power producers to provide optimal bidding strategies the traditional approaches of only attending the day ahead market might not be profitable enough without taking advantage of real time price volatility in this paper we study the optimal bidding strategies for the independent power producers utilizing self scheduling strategies to participate in the real time market considering real time electricity price volatility with the objective of maximizing the total expected profit considering the correlations of renewable energy generation outputs among different time periods the correlations of real time prices are captured in our modeling framework in which we explore a multistage stochastic scenario tree to formulate the price uncertainties accordingly the derived multistage stochastic self scheduling unit com

impact of data quality on real time locational marginal price the problem of characterizing impacts of data quality on real time locational marginal price lmp is considered because the real time lmp is computed from the estimated network topology and system state bad data that cause errors in topology processing and state estimation affect real time lmp it is shown that the power system state space is partitioned into price regions of convex polytopes under different bad data models the worst case impacts of bad data on real time lmp are analyzed numerical simulations are used to illustrate worst case performance for ieee 14 and ieee 118 networks

pricing electricity in pools with wind producers this paper considers an electricity pool that includes a significant number of wind producers and is cleared through a network constrained auction one day in advance and on an hourly basis the hourly auction is formulated as a two stage stochastic programming problem where the first stage represents the clearing of the market and the second stage models the system operation under a number of plausible wind production realizations this formulation co optimizes energy and reserve and allows deriving both pool energy prices and balancing energy prices these prices result in both cost recovery for producers and revenue reconciliation a case study of realistic size is used to illustrate the functioning of the proposed pricing scheme

insider trading in a rational expectations economy it is often argued that efficiency considerations require society to freely permit insider trading in this article an opposing efficiency argument is formalized the model incorporates an investment stage followed by a trading stage if outsiders expect insiders to take advantage of them in trading outsiders will reduce their investment the insiders loss from this diminished investor confidence may more than offset their trading gains consequently a prohibition on insider trading may effect a pareto improvement insiders are made better off if they can precommit not to trade on their privileged information govemment regulation accomplishes exactly this jel 022 026 313 the traditional rationale articulated for insider trading regulation and other securities law is that such rules promote confidence in markets indeed president franklin d roosevelt justified the first major u s securities legislation by saying it should give impetus to honest dealing in securities and thereby bring back public confidence similar language is still invoked half a century later in connection with enforcement efforts against insider trading and in proposals for tightened stock

the ethics of insider trading revisited following manne 1966 insider trading and the stock market new york free press we introduce a distinction between insider trading and market manipulation on the one hand and corporate insiders versus misappropriators on the other hand this gives rise to four types of alleged inside transactions we argue that the literature on insider trading has often targeted inside transactions type ii iii and iv but that these arguments do not necessarily hold for type i transactions we look for consequentionalist as well as non consequentionalist arguments against type i transactions and demonstrate that these are hard to find throughout the article we refer extensively to the economic literature on insider trading in order to overcome a relative divide between the economic legal and philosophical discussion on insider trading

an international review of the implications of regulatory and electricity market structures on the emergence of grid scale electricity storage abstract energy storage systems ess have the potential to make a significant contribution to planning and operation practises in power systems while ess can be used to provide multiple benefits in the power sector widespread use has been restricted by high technology costs lack of deployment experience and the barriers and uncertainties caused by the present electricity market and regulatory structures that were designed for conventional electricity systems this paper reviews countries with high renewable targets and with significant current or planned ess deployments to ascertain the common problems affecting the use of ess on the grid and to establish where changes have been made or proposed to the electricity market and regulatory frameworks three major problems were identified as the undetermined asset class for ess and unbundled electricity system limiting stakeholders from determining and realising multiple ess benefits low electricity market liquidity and changing market conditions and a lack of common standards and procedures for evaluating connecting operating and maintaining ess based on the established barriers recommendations to update or create policies regulation and market arrangements to increase the viability and wider use of grid level ess are discussed the three key regulatory and policy recommendations were identified as an alignment of renewable policies to that of ess creating a separate asset class for ess and associated rules for regulated and competitive operations and standardising assessment frameworks connection and operational procedures for the use of ess finally three main electricity market recommendations include updating rules to support simultaneous ess operation across wholesale ancillary services and capacity markets updating market rules to allow compensation for flexible and highly accurate responsive demand and generation technologies such as ess and updating market ancillary services energy requirements

data perturbation based sensitivity analysis of real time look ahead economic dispatch in this paper the sensitivity of look ahead economic dispatch in real time power markets with respect to data perturbation is studied in the look ahead dispatch optimization problem a small change in the data that are used for setting the interspatial and temporal equality inequality constraints and the objective function may negatively affect normal operations such as the calculation of real time wholesale electricity prices and operating costs this could lead to more distorted prices and larger operating costs with the look ahead dispatch than with a static dispatch that use data for a single future time we perturb karush kuhn tucker conditions of the look ahead dispatch optimization formulation and then using them derive a linear sensitivity matrix that assesses the impact of data corruption on look ahead dispatch this matrix illustrates the changing optimal solution of look ahead dispatch subject to potential corruption in various types of spatial and temporal data generator s bidding cost coefficients capacity limits for generators and transmission lines ramp rates and the estimate of initial generation output with ramp constraints and multiple time series of the forecast load for the look ahead horizon the results of the simulation are illustrated with numerical examples in the ieee 14 bus system

estimation and analysis of preference heterogeneity in residential choice behaviour effective and efficient planning and development of residential environments require clarifying the nature of residential preferences in reality residential preferences are heterogeneous so the standard econometric models that assume only one type of preference are not optimal in this study conjoint choice experiment methods are employed with a mixed logit approach the findings reveal significant heterogeneity with regard to some residential attributes the determinants of preference heterogeneity were also investigated by conducting regression analyses on the attributes that were valued heterogeneously overall the relationships observed between the explanatory variables and the heterogeneity in the valuations were understandable however coefficient of determination values for each model were low indicating that the bulk of preference heterogeneity results from unobservable factors

the use of information system technology to develop tests on insider trading and asymmetric information issues related to insider trading remain popular research topics empirical studies using historical data are limited by two key factors 1 the inability to identify exactly who possesses inside information and 2 the inability to identify the accuracy of information possessed advances in information system technology enable us to overcome these problems in the laboratory using this technology we create a research shell to conduct experiments where we can identify the exact type and quality of information accessible by each trader our system includes the capability to monitor individual activities in accessing inside information the system can automatically impose a monetary penalty if random monitoring identifies a trader accessing inside information our experiments involve traders who receive access to inside information without initial knowledge of the quality of that information the results indicate that traders were able to outperform the market if penalties for being caught accessing such information were not included once penalties were included however no significant performance differences were observed finally in a second set of experiments involving a simplified market with infrequent electronic monitoring and low penalty amounts inside information seemed to be rapidly and effectively disseminated to traders possessing no inside information

on ex post pricing in the real time electricity market this paper proposes a new framework in calculating the ex post prices for the spot electricity market the proposed method finds a set of prices that are as consistent as possible with the actual outputs of resources correctly following their dispatch instructions two alternative consistency metrics are proposed in the paper one measures the difference between the actual performance of an individual resource and its bid based profit maximizing response to the ex post prices in a perfectly competitive market another measures the difference between the ex post price and the price that supports the actual response of an individual resource compared to the existing approaches adopted in the real time electricity markets in the u s the proposed method solves the ex post energy and ancillary service prices directly and simultaneously it does not require heuristics that are hard to justify and has a much clear definition for the pricing problem than the existing approaches do moreover the proposed approach is flexible in the price control required by the market operators numerical examples are presented to further demonstrate the validity of this approach

demand side management for regulation service provisioning through internal pricing we develop a market based mechanism that enables a building smart microgrid operator smo to offer regulation service reserves and meet the associated obligation of fast response to commands issued by the wholesale market independent system operator iso who provides energy and purchases reserves the proposed market based mechanism allows the smo to control the behavior of internal loads through price signals and to provide feedback to the iso a regulation service reserves quantity is transacted between the smo and the iso for a relatively long period of time e g a one hour long time scale during this period the iso follows shorter time scale stochastic dynamics to repeatedly request from the smo to decrease or increase its consumption we model the operational task of selecting an optimal short time scale dynamic pricing policy as a stochastic dynamic program that maximizes average smo and iso utility we then formulate an associated nonlinear programming static problem that provides an upper bound on the optimal utility we study an asymptotic regime in which this upper bound is shown to be tight and the static policy provides an efficient approximation of the dynamic pricing policy equally importantly this framework allows us to optimize the long time scale decision of determining the optimal regulation service reserve quantity we demonstrate verify and validate the proposed approach through a series of monte carlo simulations of the controlled system time trajectories

latent class model or mixed logit model a comparison by transport mode choice data this article applies two recently stated choice survey datasets of japan to investigate the difference between the latent class model lcm and the mixed logit model mlm for transport mode choice a detailed comparison is carried out focusing on comparing values of time savings direct choice elasticities predicted choice probabilities and prediction success indices furthermore a test on nonnested model is also utilized to help determine which model is superior to another one the results suggest that the lcm performs better than the mlm in both datasets