competitive procurement of ancillary services by an independent system operator this paper discusses the competitive procurement of ancillary services by an independent system operator iso the paper assumes the existence of an underlying market for energy and explains why this energy market must be accompanied by a market for ancillary services these services include operating reserves and automatic generation control agc both of which may require generators that are infra marginal in the energy market to choose between supplying energy or ancillary services the paper discusses the design of an auction for these services that has formed the basis for the california iso s ancillary services market the paper also discusses the real time dispatch of ancillary services

a cost function of greek non ferrous metal industry abstract a translog cost function in the form of a third order series taylor expansion was used for the estimation of cost in the greek non ferrous metal industry which is based on an annual time series for the period 1969 1990 concerning the price of production factors the production volume and the total cost of production the estimated cost function permit us to have average and marginal cost curves of typical form for each time point also it is useful for projecting costs and the optimum scale of production under conditions which concern 1 i the development of prices production and product factors and 2 ii demand

getting deals done the use of social networks in bank decision making economic actors confront various forms of uncertainty making decisions and how they deal with these obstacles may affect their success in accomplishing their goals this study examines the means by which relationship managers in a major commercial bank attempt to close transactions with their corporate customers it is hypothesized that under conditions of high uncertainty bankers will rely on colleagues with whom they are strongly tied for advice on and support of their deals drawing on recent network theory it is also hypothesized that transactions in which bankers use relatively sparse approval networks are more likely to successfully close than are transactions involving dense approval networks both hypotheses are supported bankers are faced with a strategic paradox their tendency to rely on those they trust in dealing with uncertainty creates conditions that render deals less likely to be closed successfully this paradox represents an example of unanticipated consequences of purposive social action

economies of vertical integration in the swiss electricity sector over the last two decades several european nations have introduced reforms to their electricity sector generally these reforms require a legal and functional unbundling of vertically integrated companies these unbundling processes may reduce the possibilities that exist to fruitfully exploit the advantages of vertical integration the goal of this paper is to empirically analyze the presence of economies of scale and vertical integration in the swiss electricity sector economies of vertical integration between electricity production and distribution result from reduced transaction costs better coordination of highly specific and interdependent investments and less financial risk different econometric specifications for panel data including a random effects and a random coefficients model have been used to estimate a quadratic multi stage cost function for a sample of electricity companies the empirical results reflect the presence of considerable economies of vertical integration and economies of scale for most of the companies considered in the analysis moreover the results suggest a variation in economies of vertical integration across companies due to unobserved heterogeneity

transmission access and pricing with multiple separate energy forward markets california s congestion management protocols provide comparable access and prices to all users of the transmission system power exchange and bilateral contract parties the users implicitly bid for capacity on major transmission paths between zones the independent system operator iso allocates the available transmission capacity on these paths so that it maximizes the value of this capacity as measured by the users bids everyone scheduling flow on a congested path is charged the marginal cost based price for using the path the iso keeps each party s portfolio of generation and load individually in balance when adjusting schedules to relieve congestion on interzonal paths by keeping the portfolios of the different parties separate the iso clears its transmission market without arranging energy trades between parties parties are responsible for arranging their own trades the iso does not become involved in the energy forward markets

risk assessment of virtual power plants offering in energy and reserve markets distributed energy resources ders can be integrated into a single entity namely virtual power plant vpp the integration enables them to participate in competitive wholesale electricity markets according to the different types of uncertainty faced by different ders this integration can also act as a risk hedging mechanism providing a surplus profit in this paper using a two stage stochastic programming approach risk averse optimal offering model for a vpp trading in a joint market of energy and spinning reserve service is presented the conditional value at risk cvar is used to control the risk of profit variability uncertainties involved in generation of renewables consumption of loads calls for reserve service as well as prices in the day ahead market the spinning reserve market rm and the balancing real time market bm are taken into consideration this paper assesses how total and surplus profits of vpp are affected by risk aversion participation in the rm and the pricing system in the bm for this purpose the role of the integration and the trends of energy and reserve transactions under both single and dual pricing systems in the bm are addressed in detail through a numerical study

market structure and the pricing of electricity and natural gas us electricity and natural gas markets have traditionally been serviced by one of two market structures in some markets electricity and natural gas are sold by a regulated dual product monopolist while in other markets electricity and natural gas are sold by separate regulated single product monopolies i analyze whether electricity and natural gas prices depend on the market structure and compare these results to the predictions of a number of theories the results are most consistent with the political economy theories suggesting that regulators respond to interest group activity

measuring economies of diversification a frontier approach the purpose of this article is to improve the statistical analysis of multiproduct firm behavior specifically we are interested in modeling and estimating multiproduct technology focusing on size and product line variation thus we offer a new empirical technique that can be used to directly analyze issues such as subadditivity expansion path subadditivity economies of scope and economies of diversification although applied papers employ a wide variety of theoretical multiproduct cost concepts previous work uses nonfrontier estimation techniques we show how to introduce frontier approaches to multiproduct cost analysis that can be applied to any of these concepts and improve the statistical analysis specifically we introduce an empirical test using frontier techniques that allows for direct measures of economies of diversification at the firm specific level

multiproduct monopoly regulation and firm costs regulation of public utiilties has traditionally been justified on the grounds that firm long run average costs fall with increased output in these industries for this reason it has been argued that cost efficiency dictates that a single firm supply the product ideally regulation of public utilities prevents monopolistic pricing while still permitting the most cost efficient industrial structure a large amount of theoretical and applied research has shown however that regulation in these industries generally does not guarantee that regulated firm costs are held at the lowest possible level for a given amount of output it seems then that regulation results in a tradeoff between cost savings from efficient industrial organization and cost inefficiencies generically known as x inefficiencies in this paper a new dimension of this tradeoff is examined specifically the paper explores whether cost efficiencies that are thought to characterize multiproduct public utilities are offset by increased costs permitted by a lack of inter energy competition in the next section a framework is constructed that is capable of identifying the cost structure for multiproduct firms and its relationship to efficient industrial structure section iii examines the sources of multiproduct economies and diseconomies for regulated multiproduct public utilities the cost structure is then estimated in section iv for single and multiproduct electricity and natural gas utilities section v considers the implications of the empirical analysis

a nonparametric test for economies of scope this paper presents a simple test for economies of scope using nonparametric methods rather than elaborate estimation techniques the test reveals that nonporfit hospitals diversified into psychiatric services realize neither economies nor diseconomies of scope the test may be useful for policy markers concerned about whether diversification activities by certain groups of firms enhance efficiency or produce anticompetitive effects

x inefficiency and interfirm rivalry evidence from the electric utility industry competition from the natural gas industry is shown to increase the efficiency of the work force of electric power utilities this conclusion is qualified to the extent that duopoly rivalry does not represent perfect competition in a free market as natural gas reserves decline however the impetus to improve efficiency will diminish but this will be offset by technological advances in both power generation and power transmission if regulators develop policies to encourage competitive interplay utility performance is more likely to improve 38 references 3 tables dck

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

can rural electric cooperatives survive in a restructured us electric market an empirical analysis this paper examines the ability of rural electric distribution cooperatives to continue operating in their present form in a restructured electricity market more specifically i develop and estimate a quadratic cost model which unlike many of the cost functions employed in studies of this nature conforms to all of the properties of a proper cost function using 1996 data i find that these firms are not operating in a cost minimizing fashion this finding seems to occur because each is too small in terms of the quantity of electricity distributed as a result mergers between these firms could yield substantial savings and help ensure their survival in their present form in a deregulated market

systematic departures from the frontier a framework for the analysis of firm inefficiency departures from a production or cost frontier may reflect the systematic effect of conditions that contribute to inefficiency to test whether some portion of frontier function departures can be systematically explained the frontier inefficiency error component is modeled as a function of various causal factors and a random component the functional form of the inefficiency error term model is chosen to assure strict one sidedness preliminary empirical results generated from electric utility data suggest the superiority of including both systematic and random components in the inefficiency error term

the measurement of vertical economies and the efficient structure of the electric utility industry in this article the concept of multiproduct cost economies is modified to the case of production at vertically related stages to derive an explicit and general measure of economies of vertical integration the utility of this measure is then demonstrated by estimating the vertical cost structure of the electric utility industry and by carrying out the calculations necessary to determine the magnitude of vertical economies in this industry the results provide empirical evidence of the existence of significant economies of vertical integration between the generation and transmission distribution stages of electricity supply copyright 1991 by blackwell publishing ltd

an oligopolistic model of an integrated market for energy and spinning reserve in this paper a model for oligopolistic competition in electricity markets is presented most previous proposed models have been static and focused only on the energy market incentives for strategic behavior in contrast in this paper a multiperiod market for energy and spinning reserve sr is considered by including such factors the competition among participants is modeled with more realism competition in the energy market is modeled by means of conjectured supply functions while conjectured reserve price response functions are used to consider the generators ability to alter the sr prices the resulting equilibrium problem is modeled in terms of complementarity conditions based upon a complementarity model the opportunity cost between the energy and sr markets is derived for oligopolistic markets the proposed model is illustrated by a six node network using a dc approximation

getting a bonus social networks performance and reward among commercial bankers research on the effects of social networks on individual status attainment has exploded in recent years but the results remain equivocal varying across network structures types of ties and outcome variables the focus in this literature has been on two primary outcomes performance benefits and rewards including promotion and compensation these two types of outcomes have often been conflated however despite the fact that high levels of one do not guarantee high levels of the other we examined the effects of job performance network tie strength and network structures on the size of the year end bonuses received by 71 relationship officers in a major multinational commercial bank we found that in networks based on information acquisition both strong ties and sparse networks are positively associated with high bonuses as is the combination of the two in networks based on approval and support for one s deals neither tie strength nor density predicts bonus size but the benefits of strong ties increase as network density increases our results demonstrate the importance of distinguishing networks based on collegial relations from those based on authority as well as the importance of distinguishing the network factors that improve performance from those that generate favorable evaluations independent of performance

product line deregulation and the cost structure of us savings and loan associations recent legislative actions restrict thrift powers which were broadened by deregulatory actions in the early 1980s using nationwide data for savings and loans s ls evidence is found that these restrictions may rise intermediation costs for s ls by limiting their ability to exploit economies of scope between mortgage related and other outputs in addition economies of scale for a wide size range of s ls are found evidence is also found to suggest that insolvent s ls have higher costs for the same level of outputs than solvent s ls

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

characteristics of the prices of operating reserves and regulation services in competitive electricity markets in this paper characteristics of the prices of reserves and regulation services in the ontario new york and ercot electricity markets are studied more specifically price variability price jumps long range correlation and non linearity of the prices are analyzed using the available measures in the literature for the ontario electricity market the prices of 10 min spinning 10 min non spinning and 30 min operating reserves for the period may 1 2002 to december 31 2007 are analyzed for the new york market prices of the same reserves plus regulation service are studied for the period february 5 2005 to december 31 2008 for the ercot market we analyze the prices of responsive reserve regulation up and regulation down services for the period january 1 2005 to december 31 2009 the studied characteristics of operating reserve and regulation prices are also compared with those of energy prices the findings of this paper show that the studied reserve and regulation prices feature extreme volatility more frequent jumps and spikes different peak price occurrence time and lower predictability compared to the energy prices

are combination gas and electric utilities multiproduct natural monopolies gas and electric services are provided in some locations by a single firm in others by two firms the loss of competition inherent in single firm provision can be justified by the presence of both economies of scope and product specific economies of scale for each output in multiproduct production the estimation of a multiproduct hybrid translog cost function shows no evidence of such economies at the mean combination utility output vector copyright 1987 by mit press

networks diversity and productivity the social capital of corporate r d teams we argue that the debate regarding the performance implications of demographic diversity can be usefully reframed in terms of the network variables that reflect distinct forms of social capital scholars who are pessimistic about the performance of diverse teams base their view on the hypothesis that decreased network density the average strength of the relationship among team members lowers a team s capacity for coordination the optimistic view is founded on the hypothesis that teams that are characterized by high network heterogeneity whereby relationships on the team cut across salient demographic boundaries enjoy an enhanced learning capability we test each of these hypotheses directly and thereby avoid the problematic assumption that they contradict one another our analysis of data on the social networks organizational tenure and productivity of 224 corporate r d teams indicates that both network variables help account for team productivity these findings support a recasting of the diversity performance debate in terms of the network processes that are more proximate to outcomes of interest

pricing energy and ancillary services in integrated market systems by an optimal power flow a detailed ac opf based formulation for procuring pricing and settling energy and ancillary service in simultaneous auctions by integrated market systems is presented the paper provides clear definitions of locational marginal prices for energy and ancillary service marginal prices in terms of lagrange multipliers the characteristics of the prices are analyzed especially when economic substitution among ancillary services is required the paper also evaluates the conditions under which opportunity costs are incurred to units that provide ancillary services it is particularly shown that the intuitive belief that the provision of regulation down service does not incur opportunity cost to the provider in general is not true

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

informal hiring and income in the labor market this note explores the generalizability of the conventional belief that jobs found through weak social ties and through work related social ties provide higher incomes than jobs found through other means data are analyzed from a sample which is representative of a complete cross section of a large metropolitan labor market the results show that zero order relationships generalize in most instances to broadly defined populations however the effectiveness of weakly tied and work related informal contacts becomes greatly diminished when controls are added for measures of worker productivity characteristics

scheduling and pricing for expected ramp capability in real time power markets higher variable renewable generation penetrations are occurring throughout the world on different power systems these resources increase the variability and uncertainty on the system which must be accommodated by an increase in the flexibility of the system resources in order to maintain reliability many scheduling strategies have been discussed and introduced to ensure that this flexibility is available at multiple timescales to meet variability that is the expected changes in system conditions two recent strategies have been introduced time coupled multi period market clearing models and the incorporation of ramp capability constraints to appropriately evaluate these methods it is important to assess both efficiency and reliability but it is also important to assess the incentive structure to ensure that resources asked to perform in different ways have the proper incentives to follow these directions which is a step often ignored in simulation studies we find that there are advantages and disadvantages to both approaches we also find that look ahead horizon length in multi period market models can impact incentives this paper proposes scheduling and pricing methods that ensure expected ramps are met reliably efficiently and with associated prices based on true marginal costs that incentivize resources to do as directed by the market case studies show improvements of the new method

electric power distribution economies of scale mergers and restructuring electricity distribution is generally viewed as a natural monopoly and therefore as having the least potential for the kinds of reforms that have swept the electric power sector in many countries mergers among distribution companies and efforts at retail competition have nonetheless altered the operation of the distribution stage this research into us electric utilities uses a much larger and less selective data base than previously available to examine the scale properties of distribution with respect to output distance and customer numbers and for different functions within distribution it finds significant economies at low output levels holding system size and customer density constant but the cost gradient is otherwise modest it also finds that geographic size and customer numbers are quite important and that economies are significantly stronger for the infrastructure or wires business than for the marketing function performed by distribution utilities these results lend credence to effort

differential evolution algorithm for security constrained energy and reserve optimization considering credible contingencies reserve services are an essential part of a standard market design and are under development in major electricity markets this paper presents the development of differential evolution algorithm for optimal allocation of energy and spinning reserve the optimization is performed in an integrated market with biddable spinning reserve and sectional price offer curves while considering all security and power systems constraints in steady state and system credible contingencies the effectiveness of the proposed method is examined by application of the proposed algorithm on the ieee 30 bus test system some comparisons are made with analytical and evolutionary methods in various cases

the evolving design of rto ancillary service markets abstract although the markets for ancillary services at the north american independent system operators are often structured in quite different ways there is an emerging set of core design elements that represent a rough consensus as to what the optimal design configuration for ancillary services should be albeit with some regional variation this paper looks back at how the design of ancillary services markets has recently evolved to put this development in context thereafter it examines the methods by which ancillary services are procured by highlighting the procurement practices at a number of different independent system operators principally those in california new york new england texas and the pjm interconnection in an attempt to tease out the remaining reasons why the ancillary service markets are still so different this is important as there are many innovations that are not rooted in regional differences but reflect genuine technical advances and economic efficiency gains and can be replicated across other isos to produce more efficient designs greater reliability and lower costs

finite mixture estimation of multiproduct cost functions this paper presents a technique of cost function estimation based on the theory of finite mixture distributions which allows for the simultaneous existence of multiple technologies of production when the researcher does not know which observations correspond to which technologies the finite mixture technique provides estimates of the proportions of firms using the various technologies facilitates comparisons between technologies and preserves the traditional interpretations of cost estimation after describing the mixture procedure the technique is illustrated on a large sample of savings and loan associations and it is concluded that this industry exhibits multiple technologies of production copyright 1991 by mit press

the cost of air pollution abatement using data from the u s census bureau the authors have developed comprehensive estimates of pollution abatement costs by industry sector for several major air pollutants their results provide conservative benchmarks for benefit cost analysis of pollution control strategies in developing countries they also provide striking evidence of inefficiency in u s command and control regulation the cost estimates reflect the experience of about 100 000 u s manufacturing facilities under actual operating conditions they are based on a complete accounting of costs including capital labor energy materials and services so they should be more useful for benefit cost analysis than idealized engineering estimates but they also reflect strict pollution control regulation and input prices which are probably somewhat higher on average than those in developing countries they should be interpreted as conservative estimates for environmental planning in developing countries regulatory options that are judged to have high net benefits using these numbers would probably look even better if local abatement cost data were available the estimates in this paper can provide useful information for pollution charges they can also help make targeted regulation more cost effective with scarce resources for monitoring and enforcement new regulatory institutions in developing countries will want to focus initially on industry sectors that are the main sources of locally dangerous pollutants after those sectors are identified targeted regulation should be informed by sectoral differences in abatement cost the estimates suggest for example that cost effective control of suspended particulate emissions will focus on wood pulping rather than steelmaking when both are major sources of suspended particulates the reason average particulate abatement costs are four times higher in steelmaking

framework for energy brokerage system with reserve margin and transmission losses the power industry in the united states is presently participating in a changing business environment while planning to meet future peak demand is still a concern the efficient utilization of existing generation and transmission resources is fast becoming of primary interest this interest suggests to move from cost based market operations to price based market operations in such a business environment a need for a mechanism to determine the pricing of various ancillary services is desired as the ancillary services go together with electrical power transfer the proposed approach develops a novel method of pricing mechanism for reserve margins and transmission losses as a part of the overall transaction in an energy brokerage system the brokerage model described in this paper is based on formulations using linear programming