frictionless commerce a comparison of internet and conventional retailers there have been many claims that the internet represents a new nearly frictionless market our research empirically analyzes the characteristics of the internet as a channel for two categories of homogeneous products books and cds using a data set of over 8 500 price observations collected over a period of 15 months we compare pricing behavior at 41 internet and conventional retail outlets we find that prices on the internet are 9 16 lower than prices in conventional outlets depending on whether taxes shipping and shopping costs are included in the price additionally we find that internet retailers price adjustments over time are up to 100 times smaller than conventional retailers price adjustments presumably reflecting lower menu costs in internet channels we also find that levels of price dispersion depend importantly on the measures employed when we compare the prices posted by different internet retailers we find substantial dispersion internet retailer prices differ by an average of 33 for books and 25 for cds however when we weight these prices by proxies for market share we find dispersion is lower in internet channels than in conventional channels reflecting the dominance of certain heavily branded retailers we conclude that while there is lower friction in many dimensions of internet competition branding awareness and trust remain important sources of heterogeneity among internet retailers

returns with wholesale price discount contract in a newsvendor problem abstract we consider a newsvendor problem in a supply chain that consists of a manufacturer and a retailer the manufacturer is the stackelberg leader and the retailer is the follower we examine how the manufacturer can contract a wholesale price only agreement with its retailer that maximizes its profit we also propose a returns policy with a wholesale price discount scheme returns discount contract that can achieve supply chain coordination using the wholesale price only contract as a benchmark we show how the manufacturer sets a discounted wholesale price in a returns discount contract that enhances both profits of the manufacturer and the retailer as well as improves the supply chain efficiency

optimal pricing and return policies for perishable commodities this paper considers the pricing decision faced by a producer of a commodity with a short shelf or demand life a hierarchical model is developed and the results of the single period inventory model are used to examine possible pricing and return policies the paper shows that several such policies currently in effect are suboptimal these include those where the manufacturer offers retailers full credit for all unsold goods or where no returns of unsold goods are permitted the paper also demonstrates that a policy whereby a manufacturer offers retailers full credit for a partial return of goods may achieve channel coordination but that the optimal return allowance will be a function of retailer demand therefore such a policy cannot be optimal in a multi retailer environment it is proven however that a pricing and return policy in which a manufacturer offers retailers a partial credit for all unsold goods can achieve channel coordination in a multi retailer environment this article was originally published in marketing science volume 4 issue 2 pages 166 176 in 1985

hedging and liquidity this article develops a model for evaluating alternative hedging strategies for financially constrained firms a key advantage of the model is the ability to capture the intertemporal effects of hedging on the firm s financial situation we characterize the optimal hedge a wide range of alternative hedging strategies can be specified and the model allows us to determine in each case if the hedging strategy raises or lowers firm value and by how much we show that hedging firm value hedging cash flow from operations and hedging sales revenue are not optimal the article highlights the fact that every hedging strategy comes packaged with a borrowing strategy which requires careful consideration futures markets often provide the most liquid and convenient instruments for managing risk however because futures contracts are marked to market it is often impossible to simultaneously hedge cash flows and values for example a futures contract that locked in the value of gold that a corporation planned to extract in one year would generate an uncertain cash flow pattern over the year this article examines how liquidity and cash flow timing problems associated with different hedging strategies can affect a firm s value in our model the objective for hedging is to increase the firm s financial flexibility an optimal hedge maximizes the firm s liquidityslack in the form of excess cash or unused debt capacitywhen liquidity is most valuable this lowers the danger of costly financial distress reduces the effective cost of external financial constraints and makes value maximizing investments affordable a firm with no financial constraints does not gain from hedging and the higher the firm s financial constraints the greater the potential value of hedging the value of hedging depends critically on the design of the hedging strategy we show that the optimal hedge minimizes the variability in the marginal value of the firm s cash balances such a hedge efficiently redistributes cash balances across different states and periods taking cash from those states for which the marginal cost of the financial constraint is low and giving cash to those states for which the marginal

the economics of rising stars this paper analyzes an occupation in which there is substantial uncertainty about individual performance and past performance is correlated with future outcomes in equilibrium only the young enter the occupation and only the successful stay on the young are numerous and earn incomes well below what their current alternative o ffers success is rare and rewarded highly the implied distribution of earnings must have positive skewness copyright 1988 by american economic association

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

oscillating currents the changing rationale for government intervention in the electricity industry the appropriate role for government in the electricity industry has emerged as a major issue throughout the world this is explained using the terms of neoclassical economics by shifts in the rationales for government intervention in that industry the two historic rationales natural monopoly and public good have been diminishing in importance while the need to deal with negative environmental externalities has been given increasing attention this paper details the changes in each rationale and then synthesizes this information to probe the implications for policy a key conclusion is that while there will be pressures toward similar policy responses and similar models for the electricity sector there will remain opportunities and justification for significant differences between regions and countries

measuring managerial efficiency the case of baseball in economic analysis the role of the entrepreneur is paramount to the production process the entrepreneur is engaged in a darwinian game of efficiently transforming scarce resource inputs into outputs in the modern business organization this role is delegated to managers despite the conceptual importance of the role of management in the production function very little is known about the actual effect on output of variations in managerial skill in part this is due to the lack of proprietory data in part it is due to difficulties in measuring the outputs and inputs of complex production processes in a meaningful way a number of investigators have employed the concept of the frontier production function as developed by forsund and hjalmarsson 1 and timmer 6 and more recently by schmidt and lovell 3 to measure the effect on technical and price efficiency of various property rights structures or institutional constraints to our knowledge estimates of managerial efficiency have not been obtained with firm specific data except for some regulated industries in this study we estimate managerial efficiency by manager and by firm managerial marginal revenue product the rate of change in managerial efficiency over years of experience and relative factor price efficiency we use major league baseball teams over the period 1961 1980 as our data source what is particularly appealing about the choice of major league baseball teams as the industry for analysis is that outputs win percent and inputs player skills are unambiguously measured and the production function is simply specified as shown by scully 5 our results indicate that managerial skill in baseball contributes very substantially to the production process the paper will evolve as follows first the concept of the frontier production function is briefly outlined then estimates of managerial efficiency by manager and by team are provided and discussed a managerial efficiency learning curve is estimated an estimate of managerial marginal revenue product provided and the managerial efficiency

joint pricing and procurement of fashion products in the existence of clearance markets abstract this paper focuses on the joint pricing and procurement of fashion products in the existence of clearance markets it is assumed that the expected regular season demand is a linear decreasing function of the price and the end of period excess inventory is sold at a known discounted price in a clearance market where the demand is a random variable that follows a general distribution it is shown that the expected profit function is unimodal and the optimal procurement quantity and price can be found from the first order conditions existence of a clearance market increases the profit price and the procurement quantity in order to prove this the optimal procurement and pricing policy of a price setting retailer who does not have a clearance market is provided as opposed to the literature it is shown that the expected profit function of this problem is unimodal as well a numerical study demonstrating the magnitude of the increase in profit procurement quantity and price is reported

double sided auction mechanism design in electricity based on maximizing social welfare an efficient electricity double sided auction mechanism should control market power and enhance the social welfare of the electricity market based on this goal the paper designs a new double sided auction mechanism in the new mechanism the social welfare contribution of each participant plays a pivotal role because this contribution is the critical factor in market clearing payment settling and transaction matching rules in particular each winner of the auction can gain transfer payments according to his contribution to social welfare in the electricity market and this gives the mechanism the ability to control the market power of some participants at the same time this mechanism ensures that the market organizer balances his budget we then conduct a theoretical and empirical analysis based on the spanish electricity market both of the results show that compared to the uniform pricing mechanism the new mechanism can reduce market power of participants and enhance the social welfare of the electricity market

regulatory performance analysis case study britain s electricity industry the success or failure of the privatisation and liberalisation of electricity supply industries has more often been judged in terms of process than of outcomes in this paper in contrast this performance is assessed in terms of the performance of its associated system of regulatory governance taking the uk s electricity supply industry between 1989 and 2000 as case study initially a vertical cross section of the regulation system gives a finding matrix for the various stakeholders involved and identifying winners and losers from the standpoint of funding flows next a horizontal cross section provides the environmental distributive allocative dynamic and productive efficiencies grid for this system the survey shows that the performance of the british esi regulation system produced benefits although not for all stakeholders and not as fairly as possible the chosen path did not seem sustainable and failed to respect intergenerational transfers as a way of fostering sustainability and equity it was unable to underpin simultaneous improvements in efficiencies over time while redistributing industry s funding flows among the players in a regressive manner

gender differences in first jobs for economists over the last several decades women have made substantial progress into traditionally maledominated professions reflecting this trend much recent research has focused on explaining the choice of profession and the gender composition of the workforce 5 23 16 however a focus on occupation choice may conceal interesting patterns within professions because a profession can include a number of different job types with a distinct mix of professional activities the dual labor market phenomenon of primary and secondary jobs may also be present although perhaps to a lesser extent within a particular profession 17 gender differences in composition of employment among the various jobs within a profession could thus affect the status pay and advancement of women in the occupation if women primarily place in secondary type jobs the advantages of entering a profession will be lower for women relatively little is known about career choice within a profession 15 in this paper we model the first job choice of economists among several careers and use data on new ph d economists over the last thirty years to examine whether career choices differ by gender over a period of low but increasing representation of women an advantage of our single profession analysis is that it contains a relatively homogeneous set of workers with quantitative human capital measures that other studies of job choice suggest are important 7 there is significant variation in career choices available within economics that permits possible market segmentation 2 there are research and teaching academic jobs and the government and private sectors employ large numbers of economists we find significant structural differences in the placements of male and female economists indicating that the choices of female economists differ from those of their male counterparts both within academia and between this and other sectors the economics profession provides a useful background to examine gender differences in the career choices of professionals in a male dominated occupation over the last 30 years the average number of ph d s conferred annually in the u s has increased from approximately 300 to over 800 reflecting increased opportunities for economists within economics departments and expansion of other academic government and private sector jobs at the same time the proportion

application of mechanism design to electric power markets republished as competition is introduced across the electric power industry around the world market design for the industry is urgently needed to shape its future structure and performance when generator companies compete with one another in a deregulated market they may not be willing to share the information needed to perform an economic dispatch of the generation using game theory this paper designs a new mechanism that achieves efficiency economic dispatch in spite of this information problem in this mechanism when each company acts in the best of its own interest the outcome is efficient the paper demonstrates the merits of the mechanism by simulations including the ieee 14 bus case this paper contained an incorrect graphic when it originally appeared in the ieee transactions on power systems vol 16 no 1 p 1 8 2001 it is republished here with the correct graphic

demand uncertainty and returns policies for a seasonal product an alternative model abstract marvel and peck international economic review 36 1995 691 714 considered the following seasonal product problem a manufacturer sets wholesale price p w unit and return credit r unit the retailer then sets retailer price p r unit and order quantity q how should the manufacturer set p w and r demand uncertainty consists of two components valuation and customers arrivals our more realistic models reveal effects unobservable from marvel peck s e g i setting r 0 benefits the manufacturer much more than the retailer ii valuation but not customer arrival uncertainty is imperative for the retailer without it the manufacturer can set p w and r such that he reaps most of the profits

ordering policy and coordination of a supply chain with two period demand uncertainty abstract we develop a two period game model of a one manufacturer and one retailer supply chain to investigate the optimal decisions of the players where stock out and holding costs are incorporated into the model the demand at each period is stochastic and price sharply drops in mid life we assume the retailer has a single order opportunity and decides how much inventory to keep in the middle of selling season we show that both the price protection mid life and end of life returns pme scheme and the only mid life and end of life returns me scheme may achieve channel coordination and access a win win situation under some conditions the larger the lowest expected profit of the retailer the lower the possibility of win win situation will be combined with the analysis of feasible regions for coordination policies we find that pme scheme is not always better than me scheme from the perspective of implementable mechanism finally we find that adopting the dispose down to ddt policy can bring a larger improvement of the expected channel profit in the centralized setting and it is interesting that by using ddt policy double marginalization occurs only at period 1 and however does not plague the retailer in period 2

merger in the english electricity industry this paper compares consumer prices under vertical integration and verticial separation of the electricity industry in england and wales and considers the costs and benefits of mergers between electricity supply and water companies the impact of vertical integration is important given the proposals for merger between electricity generating and supply companies in 1996 the paper concludes that there could be small benefits to consumers if competition in the electricity industry is limited in a fully competitive industry the impact of vertical integration on the consumer is neutral regarding competition vertical merger might limit the extent of new firm entry in the electricity supply market after liberalisation in 1998 inter industry merger will yield cost savings but may limit new firm entry in electricity supply

distributed generation storage demand response and energy efficiency as alternatives to grid capacity enhancement the need for investment in capital intensive electricity networks is on the rise in many countries a major advantage of distributed resources is their potential for deferring investments in distribution network capacity however utilizing the full benefits of these resources requires addressing several technical economic and regulatory challenges a significant barrier pertains to the lack of an efficient market mechanism that enables this concept and also is consistent with business model of distribution companies under an unbundled power sector paradigm this paper proposes a market oriented approach termed as contract for deferral scheme cds the scheme outlines how an economically efficient portfolio of distributed generation storage demand response and energy efficiency can be integrated as network resources to reduce the need for grid capacity and defer demand driven network investments

efficient supply contracts for fashion goods with forecast updating and two production modes we examine the problem of developing supply contracts that encourage proper coordination of forecast information and production decisions between a manufacturer and distributor of high fashion seasonal products operating in a two mode production environment the first production mode is relatively cheap but requires a long lead time while the second is expensive but offers quick turnaround we focus on contracts of the form w1 w2 b wherewi is the wholesale price offered for production modei andb is a return price offered for items left over at the end of the season we find that such a contract can coordinate the manufacturer and distributor to act in the best interest of the channel the pricing conditions needed to ensure an efficient solution vary depending on the degree of demand forecast improvement between periods and the manufacturer s access to forecast information we also examine whether these conditions ensure a pareto optimal solution with respect to two traditional production settings

integrated risk management for an electricity producer abstract electricity suppliers face two sources of risk uncertainty of spot prices and uncertainty of production costs uncertainty in selling the output is usually solved by signing forwards and the two sources of risk are dealt with separately however managing the integrated risk optimally is the direction we will suggest we intend to analyse the problem a power producer is confronted to upon acting in a market where spot and forward agreements are available since forwards allow to sell production in advance at a given price but do not hedge against cost volatility the total risk can be reduced by selling also in the spot market the analysis is further detailed to encompass the spread option inherent in electricity production we find a benchmark value for forwards to sign and the optimal spot forward combinations the analysis is carried out by accounting for market figures for input and output variables in the german market eex

business to business electronic commerce just as the industrial revolution mechanized the manufacturing functions of firms the information revolution is automating their merchant functions four types of potential productivity gains are expected from business to business b2b electronic commerce cost efficiencies from automation of transactions potential advantages of new market intermediaries consolidation of demand and supply through organized exchanges and changes in the extent of vertical integration of firms the article examines the characteristics of b2b online intermediaries including categories of goods traded market mechanisms employed and ownership arrangements and considers the market structure of b2b e commerce

the right to return this article studies the allocation of responsibility for unsold inventory provision for which is made in practically every distribution contract the two extreme cases are the consignment contract which allocates all the burden to the manufacturer and the no return contract in which retailers purchase the merchandise outright and assume responsibility for unsold inventory contract choices are shown to vary across countries industries products and types of transactions the article identifies six main factors affecting this choice optimal inventory policy in a stochastic retail demand environment relative advantage in disposing of the unsold inventory optimal risk allocation incentives to invest in promotions and provide services to increase consumer demand information asymmetry and costs associated with the consignment contract per se several testable implications are presented and the choice of contracts in the publishing industry is shown to be consistent with the predictions of the model

inducing truthful revelation of generator reliability abstract liberalised electricity markets often include a capacity remuneration mechanism to allow generation firms recover their fixed costs various de rating factors and or penalties have been incorporated into such mechanisms in order to reward the unit based on the contribution they make to system security which in turn depends on the unit s reliability however this reliability is known to the firm but not to the regulator we adopt a mechanism design approach for capacity payments based on a declaration by the firm of their reliability the mechanism scales payments and penalties according to this declared reliability such that the firm s profit maximising strategy is to truthfully reveal its reliability a stochastic mixed complementarity problem mcp is used to model the interactions between the firms and we apply this methodology to a test system using irish electricity market data truth telling is induced increasing the efficiency of capacity payments while eliminating the requirement for the regulator to allocate resources to discovering reliability

draining the pool the reform of electricity trading in england and wales abstract the british government has decided to abolish the pool the electricity spot market in england and wales and replace it with a series of bilateral markets the government believes that the pool has been biased against coal fired generators and that its price setting rule all generators are paid the bid of the marginal unit has inflated the level of prices in practice many of the perceived problems in the pool are the result of market power not the basic design of the pool which is capable of sending the right price signals to generators efficient bilateral markets could well produce similar results prices could rise however if buyers are more risk averse and less good at trading than sellers

optimal ordering quantities for multi products with stochastic demand return cvar model abstract multi product ordering problem with stochastic demand is often optimized by the expected cost reduction or the expected profit improvement in most of previous works moreover risk preference of decision maker is often ignored evidently this approach is impracticable when the corresponding volatility is larger based on the outstanding characteristics of conditional value at risk cvar as a risk measure the paper proposes an optimal order model for multi product with cvar constraints also the model is finally formulated as a linear programming problem the model is simulated for the case of a newsvendor to analyze to what degree it succeeds the solution in fact is bound consistent fully with the decision maker s intuition on return risk decision making finally results of return cvar model and the classical model are compared and shows that return cvar model is more flexible than the classical model

returns policy new model introduction and consumer welfare abstract this paper investigates how economic outcomes differ for new model introduction between two extreme contracts outright sales contract and returns policy contract with full credit under the outright sales contract we show that the retailer s incentive to introduce a new model can lead to a reduction of consumer welfare when the retailer is moderately risk averse the primary conclusion from this study is that the returns policy contract resolves this conflict between firms and consumers and that the supply chain introduces the new model only when consumer surplus from the new model is higher than that from the old model

uncertainty in electricity markets from a semi nonparametric approach abstract this paper introduces a semi nonparametric snp methodology for the modeling of skewness leptokurtosis and high order moments in electricity markets we highlight the importance of accurately measuring these features in many contexts e g design of power plants with different technologies fuel prices and energy demand and the need for using flexible non normal densities we show that the snp approach describes the uncertainty in an electricity markets reducing the limitations that normality and parametric density functions impose our application covers a wide variety of colombian electricity variables including spot price national energy demand the climate index oni and the series of hydrologic inflows for different rivers for such variables we find that the snp outperforms the normal distribution in terms of accuracy measures based on maximum likelihood estimation as a result our methodology has direct applications for risk analysis and portfolio choice related to electricity markets and for implementing policies on electricity markets that improve efficiency and sustainability

a new index for electricity spot markets abstract different indexes are used in electricity markets worldwide to represent the daily behavior of spot prices however the peculiarities of these markets require a careful choice of the index based on mathematical formulation and its statistical properties choosing a bad index may influence the financial policies of market players since derivative pricing and hedging performance can be deeply affected in this paper with an initial theoretical analysis we intend to show that the most widely used indexes simple arithmetic average and weighted average with current volumes are poor representatives of the spot market we will then perform an analysis of the hedging strategy on a derivative instrument an asian option written on a reference index the resulting simulations applied to omel spain and eex germany are sufficiently clear cut to suggest that the decision to adopt an index to represent properly a market must be taken very carefully finally we will propose a new index fast index and after comparing it with the previous indexes will show that both theoretically and practically this index can be taken as a good electricity market synthetic indicator

optimal returns policy for supply chain with e marketplace abstract we study in this paper a supply chain which is integrated by a returns policy in the past owing to a lack of sales channels the returned products would worth very little now with the advance of the e commerce the returned products can be sold with a higher price on the e marketplace in light of this we first investigate the optimal returns policy under the existence of the e marketplace through a mean variance analysis we further study the risk issue associated with the optimal policy extensive simulations are then carried out and the managerial insights are discussed

theoretical ambiguity and the weight of historical heritage a comparative study of the british and norwegian electricity liberalisation britain and norway have been european pioneers in liberalising their electricity systems but they have done so in very different ways both attempted to create a system in which the potentially competitive activities generation and supply to final consumers were opened up to market forces however britain has liberalised by privatisation leaving generation largely concentrated in a few companies norway has maintained a dominant public ownership but has sought to create a competitive environment through a decentralised production structure the british capitalist and the norwegian structuralist approaches both exhibit clear market oriented features but with the dynamics placed respectively on the ownership side and on decentralised competition yet the two models are also reflections of two historical heritages the differences in political style help to explain the more dramatic and controversial character of the british reform as compared to the rather pragmatic norwegian process the difference between the two reform models also has a bearing on their strengths and weaknesses the norwegian model with its small scale municipal orientation is almost ideal for a competitive free trade market in a closed economy but problematic in a larger international competitive context for the british model the concentration and advanced capitalist ownership strategies create regulatory dilemmas such as the current wave of takeovers that are not easily handled

a study of basic bidding strategy in clearing pricing auctions this paper models bidding behaviors of suppliers in electricity auction markets under clearing pricing rule and with some simplified bidding assumptions optimal bidding strategy of suppliers is derived by solving a set of differential equations that specify the necessary conditions for bidders to maximize their expected payoffs the derived result indicates that bidders have incentives to mark up their bids above their costs of production the amount of markup depends on the probability of winning below and on the margin that are computed from the cost distribution of all suppliers market demand and the number of suppliers participating in the auction

auction design in day ahead electricity markets competition in day ahead electricity markets has been established through auctions where generators and loads bid prices and quantities different approaches have been discussed regarding the market auction design multi round auctions despite its implementation complexity allow market participants to adapt their successive bids to market prices considering their operational and economic constraints however most of the day ahead electricity market implementations use noniterative single round auctions this paper presents a market simulator to compare both auction models different auction alternatives such as the spanish single round auction that takes into account special conditions included in the generator bids and multi round auctions with different stopping rules are analyzed the results and acquired experience in the simulation of the spanish market started in january 1998 are presented hourly market prices average daily price price demand correlation and several economic efficiency indicators such as generator surplus consumer surplus and social welfare are compared to derive conclusions regarding the performance of the auction alternatives

tacit collusion in repeated auctions uniform versus discriminatory within an infinitely repeated game i compare the level and conduct of collusion under uniform and discriminatory auctions for this purpose i characterize the optimal collusive schemes and sets of sustainable profits under these auction formats i show that uniform auctions facilitate collusion more than discriminatory auctions the optimal penal code is equally severe under the two formats but bidders deviation incentives are weaker in uniform auctions given that the payoff irrelevant bids can be used to relax the enforcement problem this discussion is particularly relevant after the recent reforms in the electricity industry in england wales and elsewhere

application of mechanism design to electric power markets as competition is introduced across the electric power industry around the world market design for the industry is urgently needed to shape its future structure and performance when generator companies compete with one another in a deregulated market they may not be willing to share the information needed to perform an economic dispatch of the generation using game theory this paper designs a new mechanism that achieves efficiency economic dispatch in spite of this information problem in this mechanism when each company acts in the best of its own interests the outcome is efficient the paper demonstrates the merits of the mechanism by simulations including the ieee 14 bus case

gaming the uniform price spot market quantitative analysis in this paper a range of indices have been derived to quantify the incentives to game the uniform price spot market the gain of a portfolio generator due to withdrawing capacity and or inflating the price bid has been found to be proportional to the in merit market share of the gaming generator and the inverse combined price elasticity of supply demand a gaming index has also been derived as a modification of the herfindahl hirschman index which takes into account the reduction in the number of competitors as the demand goes up and the benefit the portfolio generators take from gaming price elastic loads reduce gaming opportunities but do not remove them application of the indices has been illustrated using the the spot market in england and wales the results seem to confirm practical evidence from many countries that spot markets are vulnerable to gaming

note the role of returns policies in pricing and inventory decisions for catalogue goods manufacturers often use returns policies to encourage retailers to stock and price items more aggressively we focus on the effect that such policies have on both a retailer s and a manufacturer s profits when the retailer must commit prior to the selling season to both a stocking quantity and a price at which to sell an item such a commitment is often necessary for retailers who sell primarily through catalogues

analysis of the probability distribution of lmp by central limit theorem the main goal of this paper is to provide an analytical study on the statistical behaviors of the electricity price at various conditions of the load and the network in order to achieve this goal a novel two step modeling is proposed for the electricity price at the first step it is proved that there is a linear relationship between the locational marginal prices lmp and the strategies of generating companies gencos in this linear relationship the lmp is decomposed to the weighted summation of the strategies of marginal units plus constant value at the second step the lmp is modeled by classic central limit theorem clt using this model an analytical relationship is derived between the price discovery mechanism and characteristics of its probability density function pdf as a result this paper shows analytically that increasing system load causes the price pdf deviates from the normal distribution on the other hand by decreasing system load the electricity price distribution tends toward the normal distribution the statistical studies on the real power markets data confirm these analytical results furthermore the simulation results of the ieee 300 bus test system illustrate the efficiency of the proposed model

market definition and dominant position abuse under the new electricity trading arrangements in england and wales abstract the electricity regulator in england and wales has published a consultation paper on the application of the uk competition act 1998 to the energy sectors the consultation is vital the law and economics of detecting anti trust violations in energy are still evolving in both the us and europe at the heart of anti trust analysis are the reasons why prices deviate from marginal cost scarcity rent static market power and dynamic tacit collusion under the new electricity trading arrangements neta market definition could be quite confusing and the absence of an indicator of locational value clouds the signals for investments in generation and transmission moreover large players in a pay as bid auction as applied in neta possess an informational advantage which helps establish a dominant position the irony is that many of the policy difficulties associated with market definition and dominant position abuse under the pool the market instituted upon privatisation in 1990 are unlikely to be resolved completely under neta

multi stage flexible expansion co planning under uncertainties in a combined electricity and gas market natural gas is an important fuel source in the power industry electricity and natural gas are both energy that can be directly consumed to improve the overall efficiency of the energy infrastructure it is imperative that the expansion of gas power plants electricity transmission lines and gas pipelines can be co planned the co planning process is modeled as a mixed integer nonlinear programming problem to handle conflicting objectives simultaneously we propose a novel model to identify the optimal co expansion plan in terms of social welfare to evaluate the robustness of plans under different scenarios the flexibility criterion is used to identify each plan s adaptation cost to uncertainties such as demand growth fuel cost and financial constraints etc we developed a systematic and comprehensive planning model to understand develop and optimize energy grids in order to reach higher social welfare and is therefore of great importance in terms of supporting and guiding investment decisions for the power and gas industry meanwhile we use the sequential importance sampling sis to perform scenario reduction for achieving a higher computational efficiency a comprehensive case study on the integrated ieee 14 bus and a test gas system is conducted to validate our approach

baseball specific human capital why good but not great players are more likely to coach in the major leagues the career choice of retiring athletes provides an interesting example of a midcareer transition conditioned on specific human capital previous research examines the determination of earnings in professional sports 3 5 14 but does not consider how skills developed during an athlete s playing years affect subsequent opportunities in this paper i test the hypothesis that skills specific to baseball increase the probability a player will choose to coach the empirical work confirms the importance of baseball specific human capital in the decision to coach and provides some of the first formal evidence that the opportunities of star players differ distinctly from players that are marginally less talented in the theoretical section i develop a random utility model in which a retiring player chooses between coaching and non coaching careers on the basis of potential earnings and a random taste component earnings in either career are determined by a vector of career attributes that embody the player s productivity in each if the random taste component is normally distributed the probability a player chooses a coaching career can be estimated using probit the empirical results support the predictions of the model that baseball specific human capital is positively correlated with the probability of a player coaching and that star players are unlikely to coach because their marginal skill advantage is not baseball specific in particular the findings imply that players with long but unexceptional careers are more likely to coach in the major leagues an extension of the empirical model is applied to the issue of discrimination the insignificance of a black dummy variable suggests that black players have the same probability of coaching as comparably skilled white players however a more complex interactive specification suggests that relatively poor opportunities for black stars outside the game leads to their crowding out those black players who if they were white would most likely coach