welfare dominance an application to commodity taxation in this paper the authors propose a method to identify commodity tax changes that will be favored by all individuals who can agree on certain weak assumptions with regard to the social welfare function the method is based on an extension of the criterion of second degree stochastic dominance and is illustrated using data from israel copyright 1991 by american economic association

lorenz domination and global tax progressivity a reply the concept of tax progressivity at a point local progressivity is well defined and accepted but the concept of overall progressivity of a tax schedule global progressivity is not as precise and clearly defined even though it is an important concept and is widely used in evaluating the redistributive impact of tax policies public finance economists have been comparing tax schedules and making statements on one as more progressive than another without being very precise about the basis of comparison in my earlier paper in the may 1985 issue of this journal liu 1985 i attempted to unify the two concepts of local and global progressivity two requirements are imposed when a tax schedule is characterized as globally progressive one of which is structural and the other redistributive and hence normative in nature drawing on the earlier work of jakobsson 1976 musgrave thin s measure was shown to satisfy both requirements two recently proposed measures by suits 1977 and kakwani 1976 were shown to be unappealing from both a positive and a normative viewpoint in their comment on my paper formby smith and sykes pointed out an error in a proposition by jakobsson thereby showing that the link between the pointwise concept of residual progression and the global concept of lorenz domination is weaker than indicated by jakobsson and me this reduces the appeal of musgrave thin s global measure as structurally consistent with pointwise progressivity everywhere in the tax schedule the implication is that if we insist on this structural consistency the basis for comparison of tax schedules will be too restrictive since comparison will require one post tax income distribution to lorenz dominate another for all instead of for any pre tax income distributions hence despite my earlier effort the device of a global measure of tax progressivity that is consistent with pointwise

a review of renewable investment and power system operational issues in bangladesh generation investments especially large scale variable renewable energy requires careful scrutiny of the state of the power system power system planning and operations in a developing country like bangladesh can often achieve significant improvements in economics and security of supply through modest and prudent investments a review of the bangladesh power sector is presented in this paper that highlights a changes to dispatch protocols to undertake fuel constrained dispatch optimization and ancillary services co optimization and pricing b issues related to the allocation of natural gas between sectors and c a technology neutral investment framework the study uses an hourly dispatch and ancillary services co optimization model that also optimizes short to medium term investment decisions the results demonstrate bangladesh can a reduce its production costs by 63 through more efficient dispatch b reduce production costs by 77 by using an additional natural gas quota of 212 mmcfd or a 23 increase and c should have invested in power import and baseload gas coal rather than expensive solar pv projects proposed in 2011 at substantially higher cost at the time when a carbon price is imposed in the model the implied break even cost to justify the solar program is very high in excess of 150 tonne

cournot equilibrium calculation in power networks an optimization approach with price response computation since deregulated power markets are very often oligopolistic ones efficient models that are able to describe strategic behavior of firms must be developed in particular transmission constraints can easily increase the opportunities of market players to exercise market power this paper presents a model that describes the firms strategic interaction based on nash cournot equilibrium when the power network is taken into account specifically this paper introduces a new iterative algorithm that explicitly considers how the production at a certain bus affects the whole network and consequently models the opportunities for the firms of exercising market power taking into account their ability to influence the composition of the set of constrained lines the theoretical basis of the method as well as a case study based on the central european network is included

modeling greenhouse gas reduction from the australian electricity sector the australian electricity sector is expected to undergo major changes to reduce the current sectoral co2 emission of 190 million tons to 96 million tons by 2050 this paper summarizes two major modeling studies that have been undertaken since 2006 to understand the full set of investment price and financial impact on existing generators especially coal based generators we have used a long term capacity and dispatch optimization model to comprehensively analyze both least cost and market led expansion of the system to accommodate alternative emission reduction targets from a shallow cut to a deep cut the modeling results demonstrate the cost of meeting the target can be over 30 billion in npv terms a mix of clean coal technologies gas and nuclear technologies is expected to displace the existing stock of conventional coal which varies significantly depending on the emission reduction target the analysis also show that mandatory renewable targets or technology standards are inefficient policies in comparison to a market based policy such as the proposed emissions trading scheme

single crossing conditions in comparisons of tax progressivity statements to the effect that one tax is more progressive than another are frequently made but seldom explained starting from a criterion of lorenz domination this paper shows how an intuitively appealing single crossing condition on appropriately normalized tax schedules may be used in progressivity comparisons this condition is closely related to and illuminates the necessary and sufficient condition derived by jakobsson 1976 for the distributional implications of alternative taxes to be inferred from their schedules alone

energy and reserve market designs with explicit consideration to lost opportunity costs the primary goal of this work is to investigate the basic energy and reserve dispatch optimization cooptimization in the setting of a pool based market of particular interest is the modeling of lost opportunity cost introduced by reserve allocation the authors derive the marginal costs of energy and reserves under a variety of market designs they also analyze existence algorithm and multiplicity of optimal solutions the results of this study are used to support the reserve market design and implementation in iso new england control area

income redistribution and local tax progressivity a reconsideration this paper investigates and clarifies the relation between global tax progressivity as measured by musgrave and thin s effective progression and pointwise local progression as measured by the elasticity of after tax income with respect to pre tax income residual progression liu s 1985 vigorous defence of the global measure of effective progression is shown to rest upon an erroneous proposition of jakobsson 1976 a counter example is presented demonstrating that the link between residual progression and lorenz domination is much weaker than the work of liu and jakobsson suggests redistribution des revenus et mesure ponctuelle de la progressivite de l imp6t un re examen ce memoire examine et clarifie les rapports entre la progressivite globale de l impot telle que mesuree par l indice de progression effective de musgrave et thin et la progressivite ponctuelle de l imp6t telle que mesuree par l elasticite du revenu apres impot par rapport au revenu avant impot la progression residuelle on montre que la vigoureuse defense de liu 1985 de la mesure globale de progression effective est batie sur une proposition erronnee de jakobsson 1976 un exemple montre bien que le lien entre la progression residuelle et la domination au sens de lorenz est bien plus faible que ne le suggerent les travaux de liu et jakobsson

connecting the intraday energy and reserve markets by an optimal redispatch electricity markets based on simple bids provide a very high degree of transparency and simplicity however simple bids fail to capture many well known characteristics of generating units and therefore the responsibility for obtaining feasible schedules is transferred to market participants the purpose of this paper is to help the generating utility to automatically analyze the last energy program cleared in the market and in case this program is technically unfeasible to provide an alternative schedule by re dispatching the generating units this is achieved by formulating an optimization problem where the objective is to find the cheapest and feasible instantaneous power trajectory of each generator trying to minimize the differences between its hourly average values and the last energy program as the objectives of the utility can vary during the day three different models are presented two of them are formulated as a joint energy and reserve dispatch in order to take into account possible commitments acquired in the ancillary services market of agc regulation in this sense a novel approach for considering discontinuous ancillary regulation curves is proposed some numerical examples are included to illustrate the essential features of the models

bidding strategy of virtual power plant for participating in energy and spinning reserve markets part i problem formulation this paper addresses the bidding problem faced by a virtual power plant vpp in a joint market of energy and spinning reserve service the proposed bidding strategy is a non equilibrium model based on the deterministic price based unit commitment pbuc which takes the supply demand balancing constraint and security constraints of vpp itself into account the presented model creates a single operating profile from a composite of the parameters characterizing each distributed energy resources der which is a component of vpp and incorporates network constraints into its description of the capabilities of the portfolio the presented model is a nonlinear mixed integer programming with inter temporal constraints and solved by genetic algorithm ga

strategic bidding in secondary reserve markets electricity markets are based on several sequential energy and reserve trading mechanisms to constantly maintain the balance between generation and demand during the last years reserve markets are getting much importance all around the world with the increasing social awareness of the renewable energy benefits additional reserve quantities and larger remunerations are being implemented by the regulators since this renewable energy is highly dependent on weather conditions uncertainties utilities are therefore demanding more and more powerful models to better optimize their reserve bidding curves to be sent to the system operators this paper describes a new methodology to obtain an optimized real bidding curve for the secondary spinning reserve market the approach is based on the maximization of a company profit assuming a set of residual demand curves scenarios for its competitors representation and considering the day ahead market opportunity cost to build the reserve cost curve the case study validates the main features of the proposed methodology by its application to the spanish secondary reserve market this methodology is being daily used by one of the most important electricity companies in spain

impact of optimal storage allocation on price volatility in energy only electricity markets recent studies show that the fast growing expansion of wind power generation may lead to extremely high levels of price volatility in wholesale electricity markets storage technologies regardless of their specific forms e g pump storage hydro large scale or distributed batteries are capable of alleviating the extreme price volatility levels due to their energy usage time shifting fast ramping and price arbitrage capabilities in this paper we propose a stochastic bilevel optimization model to find the optimal nodal storage capacities required to achieve a certain price volatility level in a highly volatile energy only electricity market the decision on storage capacities is made in the upper level problem and the operation of strategic regulated generation storage and transmission players is modeled in the lower level problem using an extended stochastic bayesian cournot based game the south australia sa electricity market which has recently experienced high levels of price volatility and a 30 bus ieee system are considered as the case studies our numerical results indicate that 50 price volatility reduction in the sa electricity market can be achieved by installing either 430 mwh regulated storage or 530 mwh strategic storage in other words regulated storage firms are more efficient in reducing the price volatility than strategic storage firms

operating reserve model in the power market most of the current research on operating reserve markets assumes that the required capacity is predetermined which means that the demand of operating reserve capacity is inelastic this paper considers that operating reserve capacity in a power system is flexible and that one should optimize it by cost benefit analysis based on the reliability evaluation of the generation system a clearing model of the operating reserve market is proposed to determine the optimal reserve capacity and simultaneously clear the operating reserve market the model is discussed on both uniform price and pay as bid auction mechanisms by using a heuristic method we suggest an efficient algorithm to solve the model case studies for reliability test system rts96 demonstrate the usefulness and efficiency of the proposed model

energy and reserve dispatch in a multi zone electricity market competitive bidding for ancillary services a s in addition to bidding for energy is increasingly recognized as an important part of electricity markets in this paper an lp based approach is presented for solving the multi product i e energy and a s products multi zone area physical market dispatch problem the approach can explicitly represent various constraints such as reserve requirement constraints network security limits and sharing of constrained resource capacity e g maximum unit generation between energy and reserve the joint dispatch method which dispatches energy and reserve market concurrently is extended to allow inter zonal reserve trading in a multi zone competitive pool numerical examples are included to demonstrate the salient characteristics of the joint dispatch solution

uniform progressivity residual progression and single crossing abstract the relationship between lower residual progression and single crossing conditions as necessary and sufficient conditions for one tax system to be conditionally more progressive or uniformly more progressive than another are clarified

personal income tax progressivity and output volatility evidence from oecd countries this paper investigates empirically the effect of personal income tax progressivity on output volatility using macro data from a sample of oecd countries over the period 1982 2009 our measure of progressivity is based on the difference between the marginal and the average personal income tax rate for the average production worker we find supportive empirical evidence for the hypothesis that higher personal income tax progressivity leads to lower output volatility this effect comes in addition to the stabilizing impact of government size and it is equally important in economic terms all other factors constant countries with more progressive personal income tax systems seem to benefit from stronger automatic stabilizers

lorenz domination and global tax progressivity the paper clarifies the concept of global progressivity as opposed to pointwise progressivity and proposes a summary measure for global progressivity on the basis of lorenz domination as a ranking criterion for income distributions by extending the work of musgrave and thin 1948 and jakobsson 1976 other ad hoc summary measures for global progressivity are evaluated from both a positive and a normative viewpoint domination selon le critere de lorenz et progressivite globale de la fiscalite ce memoire clarifie le concept de progressivite globale par opposition au concept de progressivite ponctuelle et propose une mesure sommaire de progressivite globale fondee sur la domination selon le critere de lorenz ce critere pour la comparaison de distributions de revenus est developpe en prolongeant certains travaux de musgrave et thin 1948 et de jakobsson 1976 l auteur examine aussi de fa on critique d autres mesures sommaires de progressivite globale dans une optique normative et positive

security constrained unit commitment for simultaneous clearing of energy and ancillary services markets this paper introduces a security constrained unit commitment scuc model with emphases on the simultaneous optimization of energy and ancillary services markets benders decomposition is used to decouple the scuc into a unit commitment uc master problem and hourly network security checking subproblems lagrangian relaxation is used to decouple the uc problem into individual single unit commitment problems dynamic programming is used to find the optimal commitment decision a simultaneous marginal curve algorithm is proposed to find the optimal values of energy and ancillary services a six bus system with three units and the ieee 118 bus system with 54 units are analyzed to illustrate the proposed model

transmission analysis by nash game method this paper describes an open access transmission method for maximizing profits in a power system the proposed method is based on the nash bargaining game for power flow analysis in which each transaction and its optimal price are determined to optimize the interests of individual parties transmission losses are considered by the proposed method and test cases and results are discussed to present the merits of the proposed method

some calculations of lifetime tax incidence this paper reports a set of lifetime tax incidence calculations using a life cycle simulation model for canada due to davies 1979a 1982 a repeatedly stated qualification to annual calculations in the empirical tax incidence literature is that it would be more satisfactory to make calculations on a lifetime basis even though it is acknowledged that lifetime tax incidence could well differ from annual it is widely believed that data and other difficulties make such calculations next to impossible indeed the widespread acceptance of the data problems of lifetime calculations seems also to have inhibited speculation about how lifetime tax incidence might differ from annual as a result redistributive tax policy judgments continue to be based on annual incidence calculations in spite of the reservations many have about their usefulness our paper is intended to reorient discussion towards lifetime tax incidence by providing some initial null hypotheses about the shape of lifetime tax profiles our main finding is that under the standard competitive assumptions common in the incidence literature lifetime and annual incidence calculations both produce mild progression in tax rates across household deciles ignoring the bottom decile in the annual calculation while the income tax is less progressive in lifetime than in annual calculations other taxes are for the most part less regressive also lifetime incidence calculations are much more robust to alternative shifting assumptions than annual calculations in the lifetime context key distributions such as earnings transfer payments and consumption are less heavily concentrated in particular percentiles of the population than is true in annual data as a result changing the allocative series for any particular tax does not have the large effect on incidence results found in annual calculations each component of the tax system is allocated to households grouped by lifetime income using particular distributive series following a procedure similar to that employed in annual incidence calculations for example richard musgrave et al 1974 joseph pechman and benjamin okner 1974 edgar browning and william johnson 1979 w irwin gillespie 1980 in the process we are able to compare lifetime and annual incidence calculations using the same data set in both lifetime and annual calculations we allocate five groups of taxes among households using distributive series which come partly from the 1971 statistics canada survey of consumer finances scf and partly from our life cycle simulation model the scf data are used to construct synthetic longitudinal lifetime profiles of earnings and transfer payments for a sample of 500 households the latter are assigned inheritances by simulating patterns of mortality and bequest these data are then used in the life cycle model to generate lifetime consumption profiles and bequests the earnings transfer and inheritance data plus the model output provide the distributive series on which alternative incidence calculations are based while the incidence calculations presented in this paper use canadian data results would likely be similar for the united states

multicommodity spatial cournot model for generator bidding analysis conventional behavioral models such as cournot to analyze generator behavior do not reflect many of the complexities of advanced electricity markets dispatch and pricing in a number of advanced pool based electricity markets worldwide explicitly recognize the co optimization of ancillary services as well as transmission constraints this paper discusses the development of and experiments with a multimarket cournot model that deals with co optimization of multiple commodities namely energy and various classes of ancillary services and deals with transmission constraints that separate these commodity markets spatially we also discuss the multimarket extension of the cournot model to deal with bilateral contracts for energy a nonlinear programming formulation of the proposed model and the analysis of nodal prices are presented followed by a detailed set of experiments using a simple three node system the model is expected to add to understanding of complex interactions between energy and ancillary services markets and further the impact transmission capacity limits may have on exercise of market power of each of these markets

residual demand curves for modeling the effect of complex offering conditions on day ahead electricity markets residual demand curves rdcs can be used to represent the strategic interaction of participants in electricity markets rdcs relate the energy that an agent can buy or sell in one hour with the clearing market price that would be obtained in such hour assuming the market is organized as simple bid independent auctions despite the fact that they have been widely used in the literature the existence of time and or spatial constraints in the market clearing algorithm makes the rdcs not directly applicable this paper tries to overcome these difficulties by extending the concept of rdcs to zonal pricing markets where complex offering conditions and transmission constraints are taken into account therefore the rdcs are redefined in order to capture such effects which are usually neglected or oversimplified a new method for computing the redefined rdcs is established and its application to the iberian electricity market is presented the results show that modeling complex conditions and transmission constraints in rdcs can have a significant effect when compared to the standard approach found in the literature therefore the method presented in this paper modeling the effect of firm s decisions on market prices in a more accurate way

linear complementarity models of nash cournot competition in bilateral and poolco power markets two cournot models of imperfect competition among electricity producers are formulated as mixed linear complementarity problems lcps and a simple example is presented to illustrate their application the two models simulate bilateral markets the models include a congestion pricing scheme for transmission but other transmission pricing approaches can also be represented in this framework the two models differ from each other in that one has no arbitrage between nodes of the network while in the other model arbitragers erase any noncost based differences in price the latter bilateral model turns out to be equivalent to a cournot model of a poolco the models differ from other cournot market models in that they include both of kirchhoff s laws via a dc approximation can include arbitragers possess unique solutions and are readily solved by efficient lcp algorithms the key assumption that permits their formulation as lcps is that each producer naively assumes that its output will not affect transmission prices

managing price risk in a multimarket environment in a competitive electricity market a generation company genco can manage its trading risk through trading electricity among multiple markets such as spot markets and contract markets the question is how to decide the trading proportion of each market in order to maximize the genco s profit and minimize the associated risk based on the mean variance portfolio theory this paper proposes a sequential optimization approach to electric energy allocation between spot and contract markets taking into consideration the risks of electricity price congestion charge and fuel price especially the impact of the fuel market on electric energy allocation is analyzed and simulated with historical data in respect of the electricity market and other fuel markets in the u s simulation results confirm that the proposed analytic approach is consistent with intuition and therefore reasonable and feasible for a genco to make a trading plan involving risks in an electricity market

forecasting functional time series with a new hilbertian armax model application to electricity price forecasting a functional time series is the realization of a stochastic process where each observation is a continuous function defined on a finite interval these processes are commonly found in electricity markets and are gaining more importance as more market data become available and markets head toward continuous time marginal pricing approaches forecasting these time series requires models that operate with continuous functions this paper proposes a new functional forecasting method that attempts to generalize the standard seasonal armax time series model to the l 2 hilbert space the structure of the proposed model is a linear regression where functional parameters operate on functional variables the variables can be lagged values of the series autoregressive terms past observed innovations moving average terms or exogenous variables in this approach the functional parameters used are integral operators whose kernels are modeled as linear combinations of sigmoid functions the parameters of each sigmoid are optimized using a quasi newton algorithm that minimizes the sum of squared errors this novel approach allows us to estimate the moving average terms in functional time series models the new model is tested by forecasting the daily price profile of the spanish and german electricity markets and it is compared to other functional reference models

an empirical study of applied game theory transmission constrained cournot behavior restructured energy markets present opportunities for the exercise of market power meaning market players can potentially maintain prices in excess of competitive prices in this paper we investigate cournot equilibrium in a simple example network we analyze three market players in a transmission constrained system and consider nonconstant marginal cost several scenarios are evaluated that show a pure strategy equilibrium can break down even when a transmission constraint exceeds the value of the unconstrained cournot equilibrium line flow

capacity and energy only markets under high renewable penetration this paper presents a multi nodal intertemporal cournot gaming model with transmission constraints and uses it to simulate energy only and capacity energy market designs in the presence of uncertainties stemming from intermittent renewable power generation both market paradigms are compared to a competitive benchmark in order to determine which one performs better in a concentrated market with significant penetration of wind and solar generation as a specific example the model is applied to the south australian zone of the australian national electricity market nem the simulation results for the time interval 2013 2030 show that the capacity energy market has the potential to induce significant new capacity and push prices much closer to the competitive level in contrast to the current energy only market design

a simulation model for a competitive generation market the simulation of a wholesale electricity market should go beyond a simple optimization based on the operating costs of the generating units a model of a competitive electricity market must consider the market structure the strategy of the market participants and any other factor that lead to prices different from costs this paper presents cosmee a model of a wholesale electricity market based on simple bids that estimates expected bid prices and quantities system hourly prices and generation schedules taking into account the bidding strategies of generators and the structure of the market the model reflects the profit maximizing behavior of the market agents subject to different types of constraints cosmee has been used to simulate a real wholesale market

progressive taxation redistribution and labor supply the analysis of the effect of progression on labor supply is extended to a model with many consumers the condition for progression to increase labor supply given constant aggregate tax revenue is derived and shown to depend on the income effects resulting from redistribution it is then shown that the optimal linear income tax schedule involves a degree of progression which on the margin does reduce labor supply