information transmission cournot and bertrand equilibria we examine how incentives for two duopolists to honestly share information change depending upon the nature of competition cournot or bertrand and the nature of the information structure while in earlier papers uncertainty is about an unknown common demand intercept in the present paper uncertainty is about unknown private costs the different information structure reverses the incentives to share information while with unknown common demand sharing is a dominant strategy with bertrand competition and concealing is a dominant strategy with cournot competition with unknown private costs sharing is a dominant strategy with cournot competition and concealing is a dominant strategy with bertrand competition

heterogeneity in the adoption of photovoltaic systems in flanders abstract we study the determinants of pv adoption in the region of flanders belgium where pv adoption reached high levels during 2006 2012 because of active government intervention based on a unique dataset at a very detailed spatial level we estimate a poisson model to explain the heterogeneity in adoption rates we obtain the following findings first local policies have a robust and significant impact on pv adoption second there is a strong unconditional income effect implying a matthew effect in the subsidization of pvs our third finding is however that this income effect is largely driven by the fact that wealthier households are more likely to adopt because they tend to be higher users are more frequent house owners or own houses that are better suited for pv in several extensions we consider the determinants of the average size of installed pvs and the differential impact of certain variables over time

socio geographic perception in the diffusion of innovation solar energy technology in sri lanka abstract understandings of the diffusion process have tended to emphasize either the adoption perspective which focuses on individual characteristics or the market perspective which focuses on institutional context in this paper we bring these two perspectives together by recognizing that people are embedded in socio geographic contexts that affect their perceptions of their situations which in turn shape the innovativeness of individuals and places focusing on the diffusion of solar home systems shs in sri lanka we explore the role of context at the village by comparing adoption rates among villages and individual by comparing time to adoption among household decision makers in a case study village scales at the village scale we find that expectations of government policy based on interactions related to ethnicity and politicians previous power grid connection promises are significant drivers of shs adoption along with perceived tolerance levels in the village for non conformist behavior among household decision makers within the case study village we analyze relative adoption time and the duration of the innovation decision process and find that perceiving strong village level social control inhibits shs adoption decision making the results add to innovation diffusion theory and provide policy recommendations for agencies promoting solar energy in developing countries

optimal capacity expansion over an infinite horizon the problem of choosing an optimal initial capacity expansion from a finite number of durable facility sizes is affected by potential future expansion decisions as we consider such expansions over longer and longer study horizons the optimal initial facility choice can fluctuate due to end of study effects we discuss an algorithm that will determine for arbitrary deterministic demand profiles how long a horizon is sufficient to reach stability in the first facility choice moreover it is shown that this first choice is the optimal first choice for the infinite horizon problem we also establish an explicit analytical formula for a study horizon guaranteed to provide a first facility size that followed by an infinite horizon expansion strategy will attain a discounted cost within a predetermined maximal error of the optimal infinite horizon cost

a path dependent contingent claims approach to capacity investments this note presents a contingent claims approach to strategic capacity planning we develop models for capacity choice and expansion decisions in a single firm environment where investment is irreversible and demand is uncertain these models illustrate specifically the relevance of path dependent options analysis to planning capacity investments when the firm adopts demand tracking or average capacity strategies it is argued that asian average type real options can explain hysteresis phenomena in addition to providing superior control of assets in place

china s transition to green energy systems the economics of home solar water heaters and their popularization in dezhou city abstract studying the popularization of solar water heaters swhs is significant for understanding china s transition to green energy systems using dezhou as a case study this paper presents new angles on analyzing swh deployment in china by addressing both the economic potential and the institutional dimensions at the local level using estimates from the demand side of hot water for a typical three person household in dezhou the paper evaluates the economic potential of a swh in saving electricity and reducing carbon dioxide emissions then expanding the analysis beyond economics we take an institutionalist approach to study the institutional factors that contribute to dezhou s success in swh adoptions by examining the five main actors in dezhou s energy regime we find that dezhou s swh deployment is driven by an urge to develop businesses and the local economy and its success results from at least five unique factors including the development of swh industrial clusters in dezhou big manufacturers market leadership in swh innovations a tight private enterprise local government relation geographic location within the swh industrial belt and the adaptive attitude of dezhou s households towards natural resource scarcity

multi resource investment strategies operational hedging under demand uncertainty abstract consider a firm that markets multiple products each manufactured using several resources representing various types of capital and labor and a linear production technology the firm faces uncertain product demand and has the option to dynamically readjust its resource investment levels thereby changing the capacities of its linear manufacturing process the cost to adjust a resource level either up or down is assumed to be linear the model developed here explicitly incorporates both capacity investment decisions and production decisions and is general enough to include reversible and irreversible investment the product demand vectors for successive periods are assumed to be independent and identically distributed the optimal investment strategy is determined with a multi dimensional newsvendor model using demand distributions a technology matrix prices product contribution margins and marginal investment costs our analysis highlights an important conceptual distinction between deterministic and stochastic environments the optimal investment strategy in our stochastic model typically involves some degree of capacity imbalance which can never be optimal when demand is known

dynamic replenishment from two sources with different yields costs and leadtimes abstract we study a single item periodic review inventory system with two sources of supply in house production and outsourcing the two sources differ in yields costs and leadtimes demands in consecutive periods are independent random variables and stockout is fully backlogged our problem is to characterize the optimal dynamic policy that simultaneously determines the in house production quantity and the outsourcing quantity for each period to minimize the total discounted cost we show that the optimal policy for in house production can be characterized by a threshold and the production quantity is decreasing in the starting inventory the optimal outsourcing policy however is more complex and a threshold type policy is only optimal under a more restrictive assumption about the yields comparative statics about the effects of yield uncertainty outsourcing on the optimal policy and cost performance are discussed

economic and policy analysis for solar pv systems in indiana in recent years the energy market in the us and globally is expanding the production of renewable energy solar energy for electricity is also expanding in the us indiana is one of the states expanding solar energy with solar photovoltaic pv systems therefore we conduct benefit cost analysis with several uncertain input variables to determine the economics of adopting solar pv systems in indiana based on policy instruments that could increase adoption of solar pv systems the specific objectives are analyses of the cost distribution of solar pv systems compared with grid electricity in homes and estimating the probability that solar can be cheaper than electricity from grids under different policy combinations we first do the analysis under current policy and then the analysis under potential policy options for a variety of scenarios also the results inform government policy makers on how effective the alternative policies for encouraging solar pv systems are the results show that current policies are important in reducing the cost of solar pv systems however with current policies there is only 50 50 chance of solar being cheaper than electricity from grids if potential policies are implemented solar pv systems can be more economical than grid electricity

technological expectations and adoption of improved technology abstract attention is focused upon the adoption demand rather than the creation supply of new technology which improves from time to time based on the expected flow of technological progress over which the firm demander has no control it must decide either to adopt the current best available technology or to postpone adoption the distinguishing features of the model are that more than one technological innovation is anticipated and expectations about the likelihood of such innovations are revised as time passes since the last innovation our analysis shows that the firm will adopt the current best practice if its technological lag exceeds a certain threshold moreover as time passes without new technological advances it may become profitable to purchase a technology that has been available even though it was not profitable to do so in the past

investment and capacity choice under uncertain demand this paper extends the real options literature by discussing an investment problem where a firm has to determine optimal investment timing and optimal capacity choice at the same time under conditions of irreversible investment expenditures and uncertainty in future demand after the project is installed with a certain maximum capacity this capacity is fixed as an upper boundary to the output and cannot be adjusted later on it turns out that in the framework of this once and for all decision uncertainty in future demand leads to an increase in optimal installed capacity but on the other hand it causes investment to be delayed to an extent that even small uncertainty makes waiting and accumulation of further information the optimal decision for large ranges of demand limiting the capacity which may be installed weakens this extreme effect of uncertainty

demand modeling of stochastic product diffusion over the life cycle abstract planning during the product life cycle plc poses a number of challenges for managers due to the pace of change and uncertainties in the marketplace the ability to better understand predict and make decisions based on manifestations of demand forms a set of important operational problems that ultimately affect the profitability of enterprises this paper models the stochastic diffusion of a product in the market as a geometric brownian motion gbm process that has a time varying drift rate the model is calibrated such that model parameters are able to feature different product types and diffusion conditions imperfect information on the expected peak demand is treated as model uncertainty and a bayesian approach is employed to update knowledge on it the demand model demonstrates robust performance over a wide range of conditions despite model uncertainty it provides both qualitative and quantitative information for manufacturers and service providers to design strategies for stochastic plc conditions as well as dynamic production planning

licensing a non drastic innovation under double informational asymmetry this paper deals with the problem faced by a patentee owning a new production process whose value is unknown ex ante the patentee must license the new technology to users in order to profit from it and each potential licensee has production costs using the technology that are unknown to everyone until after contracting at which point each licensee gets private information about her own costs moreover the patentee cannot observe outputs of potential licensees and therefore must use lump sum rather than per unit royalty schedules to license the technology in this setting the optimal licensing scheme from both the industry and the innovator viewpoints is defined as well as the socially optimal dynamic industrial structure to market the technology welfare aspects of regulation on patents length are also discussed in this context

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

regional distribution of photovoltaic deployment in the uk and its determinants a spatial econometric approach abstract photovoltaic pv panels offer significant potential for contributing to the uk s energy policy goals relating to decarbonisation of the energy system security of supply and affordability the substantive drop in the cost of panels since 2007 coupled with the introduction of the feed in tariff fit scheme in 2010 has resulted in a rapid increase in installation of pv panels in the uk from 26 5mwp in 2009 to over 5gw by the end of 2014 yet there has been no comprehensive analysis of the determinants of pv deployment in the uk this paper addresses this gap by employing spatial econometrics methods to a recently available data set at a fine geographical detail following a traditional regression analysis a general to specific approach has been adopted where spatial variations in the relationships have been examined utilising the spatial durbin model using the cross sectional data relating to the uk nuts level 3 data empirical results indicate that demand for electricity population density pollution levels education level of households and housing types are among the factors that affect pv uptake in a region moreover lagrange multiplier test results indicate that the spatial durbin model may be properly applied to describe the pv uptake relationship in the uk as there are significant regional spillover effects

forecast frequency in rolling horizon hedging heuristics for capacity expansion this paper describes a simulation study of the effect of forecast revisions and hedges against demand uncertainty in a rolling horizon heuristic for capacity expansion the model is based on data collected in the utilities division of a large chemical manufacturing plant a seasonal integrated moving average model for the demand is used to generate forecasts while capacity additions are determined by applying a simple timing rule to various hedges around the forecast the simulation results indicate that hedging forecasts by their prediction limits rather than a fixed buffer significantly reduces undercapacity at the expense of a small increase in capacity cost the prediction limit hedge is more robust to delays in reforecasting

the stationary distribution of a stochastic clearing process this research grew out of an investigation of utilization in capacity expansion the utilization at any time is the demand divided by the capacity when there is uncertainty about the evolution of demand it is appropriate to model the demand as a stochastic process and thus the utilization also becomes a stochastic process it was found that a utilization stochastic process associated with exponentially growing stochastic demand is closely related to the stochastic clearing processes introduced and investigated by stidham interest in the impact of uncertainty on utilization led to this study of the impact of uncertainty on the stationary distribution of a stochastic clearing process stidham showed for a large class of clearing processes that the stationary distribution is never the uniform distribution which is characteristic of deterministic models with continuous linear input here it is shown for a larger class of clearing processes that the stationary distribution is always stochastically less than or equal to the uniform distribution in the sense of second order stochastic dominance characterized by the expected value of all nondecreasing concave functions for various special cases stronger stochastic order relations are established for a related capacity expansion model it is shown that greater uncertainty lowers the expected utilization

solar pv where the sun doesn t shine estimating the economic impacts of support schemes for residential pv with detailed net demand profiling abstract countries with low irradiation and solar pv adoption rates are increasingly considering policy support for solar pv although consumer electricity demand and solar generation profiles are often mismatched this paper presents a methodology for policymakers in such conditions to examine more precisely the financial performance of residential solar pv from the consumer perspective as part of an ex ante policy assessment we model a range of prospective policy scenarios and compare policy mechanisms that compensate homeowners for generation those that reduce their upfront costs and those that assist with financing using ireland as a case study the results confirm the intuitive notion that more generous financial remuneration schemes provide quicker payback however we observe that in low irradiance regions there is little difference between upfront grants and feed in tariffs to accelerate payback timeframes we also show the importance of retail tariff structure in consumer payback for solar pv systems with one part tariffs generating shorter paybacks than two part tariff structures although the latter is more likely to secure revenue for electricity infrastructure investment drawing from this analysis the paper proposes some options for the design of policy supports and tariff structures to deliver a sustainable residential renewable electricity system in low irradiance regions

patents licensing and market structure in the chemical industry abstract the strategies of rent appropriation and industry structure are inter dependent how firms use patents depends upon industry structure and in turn affects industry structure in the 19th century market leaders in the chemical industry combined patents and secrecy to deter entry within cartels patents were used to stabilize cartels and organize technology licensing the role of patents changed in the less concentrated post world war ii markets in bulk organic chemicals and petrochemicals chemical producers use licensing as an important means of generating revenue from process innovations the increased importance of technology licensing is closely related to the emergence of a class of specialized process design and engineering firms that have played an important role in the development and diffusion of process innovations

free entry and social inefficiency our goal is to provide a simple yet general exposition of the conditions under which the number of entrants in a free entry equilibrium is excessive insufficient or optimal our analysis compares the number of firms that enter a market when there is free entry with the number that would be desired by a social planner who is unable to control the behavior of firms once they are in the market that is we consider the second best problem of choosing the welfare maximizing number of firms while we take as given their noncompetitive behavior after entry we demonstrate that the crucial conditions for establishing the presence of an entry bias can be stated quite simply in terms of the outcome of the postentry game played by entrants in contrast to previous work we do not need to model this postentry game explicitly

towards a contemporary approach for understanding consumer behaviour in the context of domestic energy use domestic sector energy use is increasing in the uk and currently accounts for 30 of total use policies of liberalised energy markets have allowed greater consumer choice but have not sought to reduce carbon emissions overall sales of energy efficiency products are rising but uk housing stock standards are poor and do not facilitate improved efficiency and further the sales of such products are influenced by their price thus the higher capital costs of products such as boilers and solar systems make them initially unattractive to consumers previous market based research into the adoption of energy efficiency products has often focused on single factors for example demographics this has limited the ability of policy makers to make informed decisions that address a broader range of factors such as individuals cognitive abilities values and attitudes as well as external factors such as social networks marketing and products and services this paper provides a wider critique of the theoretical base related to consumer behaviour product attributes and socio environmental theories that relate to energy use the aim of the paper is to draw together theories relevant to energy use in order to aid policy making in the broader context and to develop the discussion around integrated theories of consumer behaviour

strategic facility location a review abstract facility location decisions are a critical element in strategic planning for a wide range of private and public firms the ramifications of siting facilities are broadly based and long lasting impacting numerous operational and logistical decisions high costs associated with property acquisition and facility construction make facility location or relocation projects long term investments to make such undertakings profitable firms plan for new facilities to remain in place and in operation for an extended time period thus decision makers must select sites that will not simply perform well according to the current system state but that will continue to be profitable for the facility s lifetime even as environmental factors change populations shift and market trends evolve finding robust facility locations is thus a difficult task demanding that decision makers account for uncertain future events the complexity of this problem has limited much of the facility location literature to simplified static and deterministic models although a few researchers initiated the study of stochastic and dynamic aspects of facility location many years ago most of the research dedicated to these issues has been published in recent years in this review we report on literature which explicitly addresses the strategic nature of facility location problems by considering either stochastic or dynamic problem characteristics dynamic formulations focus on the difficult timing issues involved in locating a facility or facilities over an extended horizon stochastic formulations attempt to capture the uncertainty in problem input parameters such as forecast demand or distance values the stochastic literature is divided into two classes that which explicitly considers the probability distribution of uncertain parameters and that which captures uncertainty through scenario planning a wide range of model formulations and solution approaches are discussed with applications ranging across numerous industries

designing a private industry government auctions with endogenous market structure abstract this paper considers government mechanisms for auctioning production rights in which both the winners and the market structure doupoly dual sourcing monopoly sole sourcing or government owned production are a function of the bids in designing the optimal mechanism the government considers the tradeoffs among consumer surplus producer surplus and revenue under incomplete information doupoly is implemented less frequently and government production more frequently than under complete information when bidders are symmetric the optimal mechanism can be implemented as a modified second price auction applications to privatization deregulation and defense procurement are discussed

licensing in the theory of innovation this article analyzes licensing in a noncooperative r d game we ask two questions what are the incentives for licensing a production technology and what is the impact of licensing on the pattern of innovation and the consequent evolution of industry costs and market structure the gainsfrom trading information through licensing contracts are achieved through the replacement of inefficient production techniques the ex post incentive and the elimination of inefficient research expenditures the ex ante incentive in a duopoly the availability of licensing encourages research when the firms initial production technologies are close in costs and discourages research when initial costs are asymmetric

the emperor and the cowboys the role of government policy and industry in the adoption of domestic solar microgeneration systems abstract while domestic solar microgeneration installations have increased in popularity there is potential for their adoption to slow as financial incentives are reduced or phased out this study uses a postal survey of 362 solar adopters in western australia to identify areas of policy improvement for the adoption of domestic solar systems research included quantitative analysis of likert type statements and analysis of qualitative comments by survey respondents including testing the validity of inferences in comments using publicly available data while the vast majority of respondents were satisfied with their systems satisfaction rates were lower for consumers not receiving the premium feed in tariff and where information on systems was not self sourced consumers considered governments to be untrustworthy and information provided by industry was perceived as inconsistent and inaccessible consumers felt they did not receive a fair price for electricity exported to the network and feared that changes in utility prices could render their investment uneconomical concerns regarding members of industry may be allayed by certification schemes but these remain voluntary and limited in effectiveness these findings underscore the need for increased government activity in providing independent information to consumers and regulating the solar industry including commitments to long term policies and certification schemes

technology transfer under asymmetric information licensing contracts for newly patented innovations are observed to vary along several dimensions including the form and size of the payment to the inventor fixedfee versus some output based royalty the degree of exclusivity and the division of rents in this article we show that theform of the contract can be explained by two problems in technology exchange the superiority of a licensor s precontractual information about the economic value of the innovation and thefact that sharing this information with the licensee mayfacilitate imitation we show that a licensor signals her technology type with an output based payment or royalty and may leave some of the rents with the licensee conditions under which exclusive license contracts linear and nonlinear and nonexclusive linear contracts are used to transfer technology are identified

when households go solar determinants of uptake of a photovoltaic scheme and policy insights abstract the need to reduce dependence on fossil fuels has resulted in escalating interest in renewable energy generation yet few countries have seriously tested household potential to produce energy from pv panels propelled by mandatory eu targets for renewable energy and constrained with limited territory the government of malta launched a subsidy scheme with a view to encouraging pv installation by households the scheme reached the desired adoption levels within a very short period of time the study takes an entire country dimension to assess the determinants of household investment in pv panels a unique dataset is specifically constructed for this study we find that the prevalence of younger households higher incomes dwelling ownership and unshared roof space results in higher rates of uptake neither higher educational levels nor the participation in other environmental schemes recycling contribute any explanatory power to uptake of pv panels pro government sentiment captured by voting outcomes significantly and positively influences the take up of the grant and installation of pv panels we conclude by identifying some pointers for policy makers interested in harvesting the potential of households

optimal repeated purchases when sellers are learning about costs abstract a buyer repeatedly purchases some good suppliers privately learn their cost only upon producing at least once efficiency would imply sampling sellers until one is found with cost lower than a increasing with time reservation value then the good would be permanently purchased from the seller with lowest cost a sequence of second price auctions with participation premia and entry fees is shown to be both efficient and optimal for the buyer an alternative calls for price offers by informed sellers with compensations that increase in the offer in both cases the buyer subsidizes competition through participation premia or compensations journal of economic literature classification numbers d44 d83 l14

capacity utilization theoretical models and empirical tests abstract this paper examines the determinants of industry capacity utilization in 40 chemical product industries over a period of roughly two decades a series of testable hypotheses are developed based on three operations research models of capacity expansion the manne model the newsboy model and the whitt luss model the hypotheses are tested on the chemical industries sample using multiple regression analysis the empirical results are consistent with most predictions derived from the newsboy and whitt luss models which suggests that firms made expansion decisions in a manner roughly in accordance with these models capacity utilization was positively related to capital intensity and the trend rate of demand growth and was negatively related to demand variability geographic plant dispersion and plant lumpiness the magnitude of investment scale economies and the extent of multi plant operation had little effect on capacity utilization

intertemporal optimization of the coal production capacity in china in terms of uncertain demand economy environment and energy security abstract as coal is the main energy source in china coal overcapacity and undercapacity have negative impacts on the economy environment and energy security to reveal the optimal production capacity opc an intertemporal optimization model under uncertainty is established by a combined dynamic programming influence factor scenario analysis monte carlo method dp if sa mc the opcs in 1990 2025 are solved to minimize the expected cost to the economy and environment driven by the production capacity pc under energy security in addition we define and calculate the pc deviation pcd or the deviation of the actual pc apc from the opc the results show that compared with the apc the opc has advantages of more stable development more timely adjustment and lower cost and it provides cost savings of 302 857 billion yuan in 1990 2017 according to pcd china s coal industry existed under the risk of overcapacity in 1990 1999 and 2009 2017 and undercapacity in 2000 2008 and it can experience overcapacity for most of the time without capacity reduction policies in future the optimal management of the pc should be based on the opc and pcd over the next 5 10 years rather than the current capacity utilization rate and focus on overcapacity management in the long run

simultaneous capacity and production management of short life cycle produce to stock goods under stochastic demand this paper derives the optimal simultaneous capacity and production plan for a shortlife cycle produce to stock good under stochastic demand capacity can be reduced as well as added at exogenously set unit prices in both cases studied with and without carryover of unsold units a target interval policy is optimal there is a usually different target interval for each period such that capacity should be changed as little as possible to bring the level available into that interval our contribution in the case of no carry over is a detailed characterization of the target intervals assuming demands increase stochastically at the beginning of the life cycle and decrease thereafter in the case of carry over we establish the general result and show that capacity and inventory are economic substitutes the target intervals decrease in the initial stock level and the optimal unconstrained base stock level decreases in the capacity level in both cases optimal service rates are not necessarily constant over time a numerical example illustrates the results

a public perspective on the adoption of microgeneration technologies in new zealand a multivariate probit approach the growing demand for electricity in new zealand has led to the construction of new hydro dams or power stations that have had environmental social and cultural effects these effects may drive increases in electricity prices as such prices reflect the cost of running existing power stations as well as building new ones this study uses canterbury and central otago as case studies because both regions face similar issues in building new hydro dams and ever increasing electricity prices that will eventually prompt households to buy power at higher prices one way for households to respond to these price changes is to generate their own electricity through microgeneration technologies mgt the objective of this study is to investigate public perception and preferences regarding mgt and to analyze the factors that influence people s decision to adopt such new technologies in new zealand the study uses a multivariate probit approach to examine households willingness to adopt any one mgt system or a combination of the mgt systems our findings provide valuable information for policy makers and marketers who wish to promote effective microgeneration technologies

do subsidies work better in low income than in high income families survey on domestic energy efficient and renewable energy equipment purchase in china abstract domestic energy efficient and renewable energy eere equipment shows a great energy saving potential in household energy consumption two rounds of large scale financial subsidy programs have been developed in china since 2010 to promote the adoption of green equipment however how these subsidies attract chinese families of different income levels is not fully explored given this knowledge gap we conducted a self completion questionnaire survey in 2012 to ask 526 respondents about their purchase of domestic eere equipment we explored the effects of subsidy incentives and family incomes on the purchase attitudes and intentions of individuals toward the seven categories of eere equipment we find that family income positively moderates the relationship between eere equipment purchase attitude and behavioral intention and subsidy incentives positively affect the moderating effect of family income in other words a higher family income and better familiarization with subsidy incentives can promote the transformation of green attitudes into eere equipment purchasing intention the results may indicate that the subsidized prices are still high in the view of the low income families this study contributes to the understanding of the effects of chinese subsidy incentives and of the economic concerns of people about the purchase of domestic eere equipment

competitive capacity expansion under demand uncertainty abstract we analyze the capacity expansion behavior of firms in a duopoly faced with an uncertain new market the market demand may be high or low with a given probability mass function firms obtain private information about the market size and build their capacity before the market demand is known once the demand is revealed firms enter a capacity constrained price competition phase which determines their revenues two scenarios are considered first when firms choose their capacities simultaneously in the investment phase and second when they do so sequentially for each case we determine the unique symmetric nash equilibrium excess capacity can occur in equilibrium in the industry it is seen that preempting the competitor in the capacity expansion phase offers first mover benefits we argue that the sequential moves game is more prone to equilibrium excess capacity compared to the simultaneous case we show that preemption is a good strategy if the investing environment is either highly optimistic or highly pessimistic if the industry outlook is only moderately optimistic a capacity planner is still better off preempting his competitor however the industry may encounter overcapacity as a consequence

consumer responses towards home energy financial incentives a survey based study abstract residential energy efficient and renewable energy eere products play an important role in energy conservation and carbon emissions reduction various financial incentive programs have been developed to promote the adoption of these products however their effectiveness in attracting consumers is not very well understood in this study we investigated impacts of financial incentives on homeowner s decision making towards six eere products two forms of incentives tax credits and interest free loans were examined through a household mailing survey in florida the united states results showed that although half of the respondents were interested in eere products the high investment cost was a major concern that hindered their purchase activities homeowners were attracted to financial incentives and valued tax credits much higher than interest free loans the current federal home energy tax credit levels were found to attract only 2 12 percent of homeowners to buy eere products the willingness of participation was especially low for the costly products such as solar panels the participation rate was also very low for lower income i e annual household income below 50 000 families living in older residences this study contributes to the understanding of economic and social aspects of consumer decision making on energy efficiency and alternative energy

economic guideline about financial utilization of flat plate solar collectors fpscs for the consumer segment in the city of eskisehir abstract solar energy systems yield energy savings relative to conventional systems by considering the ecological balance although it still has barriers the most commonly used system of this type is fpsc in turkey which produces hot water by absorbing solar energy through fpscs this study is a kind of guidance about utilization of fpscs in eskisehir that concentrates on a consumer segment the aim of the study is displaying the necessity of transition to renewable energy systems in the local free markets where the place of domestic resources the data is supplied from an original hand collected survey and turkish governmental institutions such as the central bank of the republic of turkey cbrt and the turkish statistical institute turkstat that is used for a possible scenario to show how these systems can become an extensive investment and financed in the city the most significant finding is purchasing a fpsc device which is a rational and profitable investment decision for households in the economic conditions of eskisehir this type of energy system has certain costs including installation credit and annual maintenance costs however after they have been set up fpsc systems yield many ecological advantages that more than offset the associated costs such as fuel savings over the long term and exemptions from tax payments that apply to other types of fuels these advantages benefit both the environment on a global scale and the region in which the system is constructed therefore the global and local economy can improve its structure by utilizing fpscs

subsidies for residential solar photovoltaic energy systems in western australia distributional procedural and outcome justice governments seek to increase renewable energy capacity by providing subsidies to householders opting to install residential solar energy photovoltaic systems the funds used to pay for these subsidies are sourced from tax revenue or electricity tariffs paid by all community members including those on a low income this sees a redistribution of funds from all community members to installers of residential solar energy systems this research compared community attitudes towards distributional justice or the fairness of this redistribution of funds with outcome justice associated with the environmental benefits of renewable energy a randomised survey distributed in four metropolitan and two regional communities in western australian resulted in 295 responses a response rate of 22 33 of community members prioritised distributional justice 30 prioritised outcome justice and 37 indicated that they were unsure about their preference however support for renewable energy was found with 80 of respondents supportive of renewable energy subsidies and 68 supportive of renewable energy taxation including in electricity tariffs qualitative comments indicate that in spite of the preoccupation with distributional justice in the residential solar energy literature community members are concerned with procedural justice issues in this case procedural justice can be interpreted as government commitment to existing policy the expanded scope of renewable energy policy and enhanced regulations

consumer attitudes towards domestic solar power systems the success of the uk policy to reduce carbon emissions is partly dependent on the ability to persuade householders to become more energy efficient and to encourage installation of domestic solar systems solar power is an innovation in the uk but the current policy of stimulating the market with grants is not resulting in widespread adoption this case study using householders in central england investigates householder attitudes towards characteristics of solar systems and identifies some of the barriers to adoption the study utilises diffusion of innovations theory to identify attitudes towards system attributes and isolates the characteristics that are preventing a pragmatic early majority from adopting the technology a group of early adopters and a group of assumed early majority adopters of solar power were surveyed and the results show that overall although the early majority demonstrate a positive perception of the environmental characteristics of solar power its financial economic and aesthetic characteristics are limiting adoption differences exist between the two groups showing support for the concept of a chasm between adopter categories after moore crossing the chasm marketing and selling high tech products to mainstream customers second ed harper perennial new york however if consumers cannot identify the relative advantage of solar power over their current sources of power which is supplied readily and cheaply through a mains system it is unlikely that adoption will follow recommendations concerning the marketing and development of solar products are identified

landfill construction and capacity expansion we study the optimal capacity and lifetime of landfills taking into account their sequential nature such an optimal capacity is characterized by the so called optimal capacity condition particular versions of this condition are obtained for two alternative settings first if all the landfills are to have the same capacity and second if each of them is allowed to have a different capacity in the second case we obtain an optimal control problem with mixed elements of both continuous and discrete time the resulting optimization problems involve dividing a time horizon of planning into several subintervals of endogenously decided length the results obtained may be useful to address other economic problems such as private and public investments consumption decisions on durable goods etc

incentives for information production and disclosure in a duopolistic environment this paper examines the nature of the equilibrium solution to the duopoly problem under various incomplete information structures and the incentives to produce and disclose information attention is focused on the duopolists cost functions the results indicate that disclosure of such information is generally beneficial to the duopolists

economic investment times for capacity expansion problems abstract a simple rule for the determination of the optimal investment time for a capacity expansion problem is provided based on a general class of stochastic demand processes of practical interest the timing rule is shown to be independent of the descriptive characteristics of the demand process and thus can be considered to be robust in nature

capacity expansion for random exponential demand growth with lead times the combination of demand uncertainty and a lead time for adding capacity creates the risk of capacity shortage during the lead time we formulate a model of capacity expansion for uncertain exponential demand growth and deterministic expansion lead times when there is an obligation to provide a specified level of service the service level defined in terms of the ratio of expected lead time shortage to installed capacity is guaranteed by timing each expansion to begin when demand reaches a fixed proportion of the capacity position under this timing rule the optimal facilities to install can be determined by solving an equivalent deterministic problem without lead times numerical results show the effects of the demand parameters and lead time length on the expansion timing the interaction of timing with expansion size is explored for the case when continuous facility sizes are available with economies of scale

exploring the consumer decision process in the adoption of solar energy systems this study examines residential solar energy systems within an adoption and diffusion of innovations framework the findings indicate considerable differences between adopters and nonadopters on many measures multivariate nominal scale analysis is used to develop classification models based on both attribute perceptions of solar energy systems and demographic characteristics

planning for surprise water resources development under demand and supply uncertainty i the general model a study of water resources development in south sweden revealed that water consumption unexpectedly stopped growing after construction had begun on a large project to expand water supplies the project had a long lead time for completion and planning had been based on traditional deterministic forecasts of future water use to explore the implications of such an uncertain structural shift in future consumption patterns we develop a model for determining the timing for initiating such a project in this model the original consumption forecast may be disrupted at some random future time by an event called a surprise as in the swedish situation we have modeled the surprise as an unexpected stagnation in future demand growth and benefit levels we show that this form of uncertainty makes desirable delaying the initiation of the project beyond the time optimal under the original forecast we then extend the model to include the lead time for the project as a variable and demonstrate that the lead time should be reduced from that optimal under a deterministic future finally we incorporate the option of abandoning the project when the surprise occurs and show that higher salvage values for the project lead to earlier optimal commitment times

fees versus royalties and the private value of a patent we compare how much profit an owner of a patented cost reducing invention can realize by licensing it to an oligopolistic industry producing a homogeneous product by means of a fixed fee or a per unit royalty our analysis is conducted in terms of a noncooperative game involving n 1 players the inventor and the n firms in this game the inventor acts as a stackelberg leader and it has a unique subgame perfect equilibrium in pure strategies it is shown that licensing by means of a fixed fee is superior to licensing by means of a royalty for both the inventor and consumers only a drastic innovation is licensed to a single producer

household level innovation diffusion model of photo voltaic pv solar cells from stated preference data we focus on predicting the adoption time probabilities of photo voltaic solar panels by households using discrete choice experiments and an innovation diffusion model the primary objective of this research is cohesively mapping the theory of disruptive innovation into diffusion of innovations to aid policy makers by linking two critical uncertainties of new technology 1 whether households prefer the new attributes of the new technology and how these preferences vary by market segments and 2 when are they going to adopt if at all our study uses recent developments of discrete choice experiments and establishes a causal link between the attributes of the technology attitudinal constructs and socio demographics and adoption time probabilities using the bass diffusion model the data was collected from ontario a province of canada the innovation diffusion model allows us to compute the cumulative probability of adoption over time per household technology awareness and energy cost saving have a significant effect on the adoption probability reinforcing the need for effective education these findings also suggest that campaigns should explain more about investment criteria feed in tariffs and environmental attributes this study findings call for a need to use seeding strategies to accelerate exogenous word of mouth wom for this new technology

capacity expansion under stochastic demands we consider the problem of optimally meeting a stochastically growing demand for capacity over an infinite horizon under the assumption that demand for product follows either a nonlinear brownian motion or a non markovian birth and death process we show that this stochastic problem can be transformed into an equivalent deterministic problem consistent with earlier work by a manne the equivalent problem is formed by replacing the stochastic demand by its deterministic trend and discounting all costs by a new interest rate that is smaller than the original in approximate proportion to the uncertainty in the demand

understanding the uneven diffusion of building scale renewable energy systems a review of household local and country level factors in diverse european countries abstract this review focuses on renewable energy technology deployment in residential buildings which is part of current targets to develop net zero carbon buildings in europe and to promote the deployment of renewable energy we focus on the adoption of four technologies heat pumps solar photovoltaics solar thermal systems for domestic hot water and space heating and advanced biomass heating while there are several studies on households investment criteria a research gap exists because building owners across europe are quite diverse and the european markets exhibit different stages of maturity this article conducts a critical review of the literature on the diffusion of building scale renewable energy solutions in order to answer the following questions 1 to what extent can findings from studies on household adoption criteria be generalized from one country to another and 2 what insights does the literature offer on factors that might explain the differences in adoption patterns between european countries

dynamic capacity expansion for a service firm with capacity deterioration and supply uncertainty motivated by the challenges faced by the telecom industry during the past decade in this paper we study a dynamic capacity expansion problem for service firms there is a random demand for the firm s capacity in each period the demand in excess of the capacity is lost and revenue is generated for the fulfilled demand at the beginning of each period the firm might increase its capacity through purchasing equipment for immediate delivery which is constrained by a random supply limit or it might sign a future contract for equipment delivery in the following period we assume that the firm s capacity might partially become obsolete due to natural deterioration or technology innovation we aim at characterizing optimal capacity expansion strategies and comparing the profit functions as well as the optimal control policies of different options specifically we show that the optimal capacity expansion policy for the current period is determined by a base stock policy compared with the case where no future contracts are available the optimal control parameters of capacity expansion are always smaller we further show that when the obsolescence rate is deterministic the optimal policy for capacity expansion through future contracts is also a base stock type the results are extended to the cases with stochastically dependent capacity supply limits and stochastically dependent demand processes which establish the robustness of the optimal policy in various market conditions

dissemination of solar photovoltaics a study on the government programme to promote solar lantern in india abstract the study examines the reasons for the limited dissemination of solar lanterns in india it uses diffusion of innovation framework to examine the dissemination process the impact of the characteristics of solar lantern on dissemination and also the communication within the community about the product are examined to understand the influence of the characteristics of solar lantern on dissemination and the information source used by adopters a survey of 188 users across 15 locations is carried out the study shows that the benefits promoted by the government programme for disseminating solar lantern are not the reasons for purchase in most cases the results suggest that the emphasis on subsidy by the support programme shifts the focus to the cost of the solar lantern than its benefits contrary to expectation there is no significant difference in the profile of early and late adopters the subsidy for solar lanterns and the targets set for government officials are the possible influence on the observed profile for adopter categories the early majority who can afford the solar lantern and take up the innovation on its merits are expected to disseminate the innovation the programme on the contrary not only fails to identify and promote to the early adopters but focus on the disadvantaged groups there are therefore no champions for the innovation and an absence of word of mouth communication the information source is restricted to government agencies while the potential user looks for evaluative information on the product from existing users the application of diffusion of innovation framework to understand the dissemination process of solar lantern suggests reworking the support programmes designed to promote solar lanterns the lessons can be extended to programmes designed for dissemination of other solar photovoltaic products

hydropower externalities a meta analysis this paper presents a meta analysis of existing research related to the economic valuation of the external effects of hydropower a database consisting of 81 observations derived from 29 studies valuing the non market impacts of hydropower electricity generation is constructed with the main aim to quantify and explain the economic values for positive and negative hydropower externalities different meta regression model specifications are used to test the robustness of significant determinants of non market values including different types of hydropower impacts the explanatory and predictive power of the estimated models is relatively high whilst controlling for sample and study characteristics we find significant evidence for public aversion towards deteriorations of landscape vegetation and wildlife caused by hydropower projects there is however only weak evidence of willingness to pay for mitigating these effects the main positive externality of hydropower generation the avoidance of greenhouse gas emission positively influences welfare estimates when combined with the share of hydropower in national energy production sensitivity to scope is detected but not linked to specific externalities or non market valuation methods

capacity expansion with interrupted demand growth abstract in most long range planning problems accurate forecasting of demand growth is often difficult sometimes unexpected shocks in the economy occur and disrupt the predicted growth rate of demand for example growth can unexpectedly cease for and indeterminate length of time due to crucial occurrnces such as wars economic recessions or oil price shocks in this paper we examine the effects of unforeseen demand plateaus on the capacity expansion problem of sizing and timing production facilities we assume that demand for capacity follows a stochastic process that is we allow for plateaus to happen at random future times and to continue for an uncertain duration when the demand process is generated by an alternating renewal process we show that demand plateaus result in a modified discounting rate and a modified import cost

competition and regulation in vertically related markets in an industry where naturally monopolistic and competitive activities are vertically related should the natural monopolist be allowed also to operate in the deregulated competitive sector unlike much of the literature on vertical integration this paper assumes that monopoly pricing behaviour is regulated and therefore the effect of vertical integration on the task of regulation is central to the analysis in the model there is both imperfect information and imperfect competition when vertical integration by the monopolist is allowed the regulator s task is made harder insofar as the monopolist has anticompetitive incentives to raise rivals costs on the other hand integration may lead to there being fewer firms in the deregulated sector and hence less duplication of fixed costs the overall welfare comparison between separation and integration is ambiguous as two simple examples illustrate various extensions to the analysis are also considered one of the central questions in debates on regulatory reform is how to organize industries that contain both naturally monopolistic and potentially competitive activities electricity transmission and distribution are characterized by natural monopoly cost conditions but electricity generation is not in the gas industry pipeline services may be naturally monopolistic but supply to larger customers is not in telecommunications natural monopoly is more a feature of local network operations than of long distance operations and is not present in apparatus manufacture and supply or in the provision of value added services in railways while the infrastructure of track and stations is naturally monopolistic the supply of train services might not be policy developments notably those associated with privatization in britain and deregulation in the united states have sometimes led to radical structural reform in these industries at t for decades a vertically integrated monopolist was required under the 1982 settlement of its long running antitrust case against the u s government to divest itself of its local network operations the central electricity generating board cegb in england and wales was restructured both vertically transmission grid activities were separated from generation and horizontally before privatization in 1990 1991 by contrast british telecom was privatized as a vertically integrated dominant firm bt now faces competition from mercury and others especially in the long distance market but its dominance of local network operations might affect competition there and in other areas such as apparatus supply the local network monopoly would of course have to be regulated in any event but its link via ownership to vertically related and potentially competitive activities poses additional regulatory questions many of the efforts of the regulatory body oftel notably in relation to interconnection between bt s and rivals 1 for a general account of the theory and british experience of regulatory reform in the utility industries

a coordinated production planning model with capacity expansion and inventory management motivated by a problem faced by a large manufacturer of a consumer product we explore the interaction between production planning and capacity acquisition decisions in environments with demand growth we study a firm producing multiple items in a multiperiod environment where demand for items is known but varies over time with a long term growth and possible short term fluctuations the production equipment is characterized by significant changeover time between the production of different items while demand growth is gradual capacity additions are discrete therefore periods immediately following a machine purchase are characterized by excess machine capacity we develop a mathematical programming model and an effective solution approach to determine the optimal capacity acquisition production and inventory decisions over time through a computational study we show the effectiveness of the solution approach in terms of solution quality and investigate the impact of product variety cost of capital and other important parameters on the capacity and inventory decisions the computational results bring out some key insights increasing product variety may not result in excessive inventory and even a substantial increase in set up times or holding costs may not increase the total cost over the horizon in a significant manner due to the ability to acquire additional capacity we also provide solutions and insights to the real problem that motivated this work

strategic capacity investment under uncertainty this article considers investment decisions within an uncertain dynamic and duopolistic framework each investment decision involves to determine the timing and the capacity level the simultaneous analysis of timing and capacity decisions extends work on entry deterrence accommodation to consider a timing delay element we find that when applying an entry deterrence policy the first investor or incumbent overinvests in capacity for two reasons first it delays the investment of the second investor or entrant second the entrant will invest in less capacity we also find that greater uncertainty makes entry deterrence more likely

dynamic replenishment production and pricing decisions in the face of supply disruption and random price sensitive demand abstract we study a joint decision problem for replenishment production pricing strategies in the face of both supply and demand uncertainties the supply of the raw material suffers from a potential supply disruption while the demand for the finished goods is price sensitive and random we assume that the raw material is storable and unfilled demands are fully backordered we characterize the optimal policies for raw material replenishment finished goods production and pricing we find that the optimal replenishment policy is an order up to type for a given finished goods stock level while it is a threshold type for a given raw material stock level for either a given finished goods stock level or a given raw material stock level the optimal production policy is a threshold type and the optimal pricing policy is a modified list price type respectively

time to build option value and investment decisions abstract investment decisions and outlays are often made sequentially for example the rate at which construction proceeds is usually flexible and can be adjusted with the arrival of new information traditional discounted cash flow methods which treat the pattern of investment as fixed ignore this flexibility and understate the value of the project this paper uses contingent claims analysis to derive optimal decision rules and to value such investments we determine the effects of time to build opportunity cost and uncertainty on the investment decision for reasonable parameter values we show how a simple npv rule can lead to gross errors

power to change analysis of household participation in a renewable energy and energy efficiency programme in central australia the australian government funded a national solar city program 2008 2013 to support communities to increase adoption of energy efficiency measures and renewable energy technology one community was alice springs a town with about 9000 households in the geographic centre of australia the programme offered a package of support free energy audits discounts for the purchase of renewable energy technology and energy efficiency measures and ongoing information households that adopted solar hot water and photovoltaic systems reduced their electricity usage immediately after adoption by 10 and 34 respectively and this was maintained in the long term a small rebound effect of 15 was observed in the photovoltaic adopters it was observed that on average households that adopted only energy efficiency measures did not have a significant reduction in their electricity usage over the long term however consistent with expectations this study did show that there was a significant correlation between the number of energy efficiency measures adopted and the greatest household reduction in electricity usage these contrary results indicate that there are additional factors involved the connection between the effective use of measures coincident behavioural change or increased energy awareness and greater energy reduction is discussed