the thrill of victory measuring the incentive to win there is ample evidence that incentive pay structures such as tournaments result in increased performance is this due to selection or increased individual effort and is any increased individual effort caused by pecuniary incentives or merely thirst for the thrill of victory tov prior literature has not separated the different effects we look at performance in horse and dog racing and find that only horses controlled by jockeys during the race exhibit performance corresponding to pecuniary incentives while both respond to selection and tov the results show that pay structures do matter

the real exchange rate conundrum the case of central america abstract this paper evaluates alternative measures of the real exchange rate for mexico and central american countries bilateral and multilateral real exchange rates using the consumer price index wholesale price index and gross domestic product deflator are calculated there are often significant differences between the bilateral and multilateral measures of the real exchange rate real exchange rates based on consumer price indexes and gross domestic product deflators were found to be more closely related to each other than either one was to the wholesale price index

the globalization of steam coal markets and the role of logistics an empirical analysis abstract in this paper we provide a comprehensive multivariate cointegration analysis of three parts of the steam coal value chain export transport and import prices the analysis is based on a rich dataset of international coal prices in particular we combine data on steam coal prices with freight rates covering the period december 2001 until august 2009 at weekly frequency we then test whether the demand and supply side components of steam coal trade are consistently integrated with one another in addition export and import prices as well as freight rates for individual trading routes across regions and globally are combined we find evidence of significant yet incomplete integration we also find heterogeneous short term dynamics of individual markets furthermore we examine whether logistics enter coal price dynamics through transportation costs which are mainly determined by oil prices our results suggest that this is generally not the case

oil price volatility and the asymmetric response of gasoline prices to oil price increases and decreases this paper analyzes the effect of volatility in oil prices on the degree of asymmetry in the response of gasoline prices to oil price increases and decreases several time series measures of the asymmetry between the responses of gasoline prices to oil price increases and decreases and several measures of the oil price volatility are constructed in all models the degree of asymmetry in gasoline prices declines with an increase in oil price volatility the results support the oligopolistic coordination theory as a likely explanation of the observed asymmetry and are not consistent with the standard search theory and the search theory with bayesian updating

how would the gas exporting countries forum influence gas trade the cleanest burning fossil fuel today is natural gas while many businesses have gone global it has remained an exception an impending challenge facing the industry however is the evolution of a cartel from the 5 year old gas exporting countries forum how would this new organization influence the trade of gas globally does its existence imply a threat to the development of gas trade the paper reviews this fairly new organization within the context of the above questions it is mainly a comparative study of the body in relation to opec s historical political and economic development subsequently the author proposes probable influence options available to the forum and the impending consequence of such actions on the market the outcome of this study calls for further analysis and research on new issues and questions of interest

take or pay contract robustness a three step story told by the brazil bolivia gas case abstract neo institutional economics nei has long shown that take or pay top long term contracts provide a robust framework for safeguarding the interests of both upstream and downstream parties in the gas industry the case of gas trade between brazil and bolivia presents an opportunity to re examine empirically and to review the robust nature of the top framework over time this case reveals that the positions of the contractors actually change giving rise to a veritable lifecycle of the contractual arrangement such a contract can be seen to span three successive phases the first phase of the contract cycle begins when it is signed allowing the investments to begin the second phase starts when investments have been completed and the actual trade in gas begins the third phase of the contract cycle comes when the increasing flow of gas comes close to saturating capacity and the volume levels for downstream market volume have been reached these three contract phases are thus distinguished by how robust the alignment of the parties interests is the added value of the paper is then both empirical and analytical the case study provides a brand new lifecycle analysis of the performance of top long term contracting into an nei framework

european market integration for gas volume flexibility and political risk this is a copy of an article originally published by elsevier in energy economics see http www sciencedirect com science journal 03014215 2002 elsevier science b v

common stochastic trends in international stock markets abstract this paper presents evidence concerning the number of common stochastic trends in the equity markets of the u s japan england germany and canada monthly and quarterly data from january 1974 through august 1990 on morgan stanley s capital international indices are used to compute johansen 1990 tests for common trends the results indicate the presence of a single common trend driving these countries stock markets estimates of the factor loadings suggest that this trend is most important in the japanese market and least important in the canadian market to interpret this evidence the paper demonstrates that under weak conditions the unit root and cointegration structure of stock prices should mirror the unit root and cointegration structure of their dividend payments the paper tests this prediction by constructing national dividend series from capital international s dividend yield data as well as by using gnp data as with stock prices the evidence points to a single common trend although the stochastic properties and relative importance of this trend differs somewhat from the trend in stock prices

what can be learned from the free destination option in the lng imbroglio we examine the profitability of flexible routing by lng cargoes for a single supplier taking into account uncertainty in the medium term dynamics of gas markets first we model the trajectory of natural gas prices in asia northern america and europe using a threshold vector autoregression representation tvar in which the system s dynamics switches back and forth between high and low regimes of oil price volatility we then use the generalized impulse response functions girf obtained from the estimated threshold model to analyze the effects of volatility shocks on the regional gas markets dynamics lastly the valuation of destination flexibility in lng supplies is conducted using a real option approach we generate a sample of possible future regional price trajectories using monte carlo simulations of our empirical model and determine for each trajectory the optimal shipping decisions and their profitability our results portend a substantial source of profit for the industry and reveal future movements of vessels we discuss the conditional impact of destination flexibility on the globalization of natural gas markets

oil indexation market fundamentals and natural gas prices an investigation of the asian premium in natural gas trade abstract a heated debate has arisen over whether the asian premium i e higher prices in asia than elsewhere in natural gas trade is due to price discrimination or different market fundamentals determining the origin of this premium can help to guide the gas industries and policy makers in asia especially when the traditional oil indexed price mechanism fades away using a new systemic time series approach this paper explores the extent to which oil prices and market fundamentals contribute to variations in gas prices in japan the united states and germany we find clear cross country differences and time varying patterns gas prices are much less affected by supply and demand factors than oil prices in japan and germany whereas these factors are more important than oil prices in the us market which has a pricing hub through rolling windows and subsample analysis we discover that oil prices were important in japan and germany but the level of importance has declined significantly in recent years though the contribution of fundamentals does not change much the results show that asian gas prices are determined more by oil prices than by the market fundamentals thus the asian premium is more likely due to this oil indexed pricing mechanism rather than market fundamentals this suggests that developing asia s benchmark prices through trading hubs with a better reflection of regional specific fundamentals can lead to a more efficient allocation of gas resources

anchoring in financial decision making evidence from jeopardy abstract this paper analyzes 12 596 daily double wagering decisions of 6064 contestants in the us game show jeopardy we exploit a situation in which a player has to unexpectedly wager on responding correctly to an unknown clue known as a daily double clue we find evidence consistent with the hypothesis of contestants anchoring heavily on the initial dollar value of a clue in wagering this positive relationship remains statistically significant at the one percent level after controlling for other characteristics that may independently affect wagering decisions such as scores clue categories time trends individual jeopardy experience and player fixed effects exploiting within player variation only raising the anchoring amount by 100 translates to an increase of 29 in the wager an alternative explanation of underlying strategic considerations appears unlikely and results are consistent throughout a number of robustness checks overall these findings suggest that anchoring can play a substantial role in financial decision making under pressure

what drives volatility in natural gas prices abstract we examine the primary drivers of u s natural gas price volatility to do so we apply a structural heterogeneous autoregressive var shvar model accommodating structural breaks in both the coefficient and volatility to monthly time series data on natural gas supply demand and price between january 1978 and july 2018 we detect several structural changes in coefficients and shock volatility in the natural gas market our findings indicate that the response of natural gas prices differs significantly depending on the regime and type of shock in the natural gas market while demand shocks specific to the natural gas market are the primary drivers of natural gas price volatility structural supply shocks also play a significant role in explaining movements in natural gas prices our results suggest that failure to consider structural breaks in the coefficient and volatility may result in biased estimates and distorted impulse responses of the impact of shocks on natural gas price volatility

convergence of european natural gas prices abstract over the period 2015 2050 the consumption of natural gas of european oecd countries is expected to grow more than the consumption of any other energy source although these countries are interconnected and in most cases share a common currency their wholesale national gas markets are highly heterogeneous we study the determinants of cross country convergence of natural gas prices for industrial consumers in fourteen european countries our empirical analysis is based on the notions of pairwise relative and convergence we show that there is evidence of pairwise price convergence and that some key characteristics of gas markets such as the existence of trading hubs and the degree of interconnection are positively associated with the existence of a convergence process this result carries over to the notion of convergence and is robust to a number of changes in the implementation of the statistical tests the analysis of relative convergence points to the existence of price growth convergence while price level convergence is not supported by the data lastly we assess the short run implications of price convergence focusing on the speed of reversion to equilibrium after a system wide shock hits the cointegrating relation

cross border constraints institutional changes and integration of the dutch german gas market we evaluate the contribution of nine institutional changes to the integration of the dutch and german gas markets we analyse this contribution through the impact of bottlenecks in the cross border infrastructure on the absolute value of cross border price differences in the period 2007 2013 the absolute value of the differences in price levels between the dutch and the german ncg market decreased indicating more integration we find evidence that the improved connections within the german networks as well as between the dutch and the german network contributed to this the strengthening of the connections with the uk market and the russian supply however had a negative effect on market integration between the dutch and the german ncg market the liquidity enhancing changes within the dutch market had a negligible effect

information transmission and market interactions across the atlantic an empirical study on the natural gas market abstract this paper studies the international information transmission and market interactions in the u s and u k natural gas markets three well documented approaches are used to measure the relative importance on the process of price discovery under a quadvariate system after adjusting the effects of nonsynchronous trading prices robust results indicate our system that includes spot and futures prices within the two countries are driven by one common factor information disseminates efficiently among the four markets concerned the u s futures market dominates as the center for price discovery the u k futures market comes as the second the spot markets in the u s and u k are less efficient than their corresponding futures market where the u k spot market contributes the least and almost zero to the price discovery process asymmetric volatility spillovers are found in three of the four markets volatility in the u s futures market increases with positive returns which illustrates the inverse leverage effect in most of the commodity market volatilities in the spot markets are negatively related to returns which is analogous to the traditional leverage effect prevailing in most of the equity stock markets

cotton market integration and the impact of china s new exchange rate regime this article studies the integration of china s cotton market with the international market especially the u s market investigating the futures prices from the intercontinental exchange ice in the u s and the zhengzhou commodity exchange zce in china with several time series models we find that a long run cointegration relationship exists between these two series the two markets share price transmissions and based on results from an autoregressive conditional heteroskedasticity arch model we find their price volatilities are similar we argue that china s recent exchange rate reform and its gradual liberalization in bilateral cotton trade since it joined world trade organization have had important impacts on these futures markets based on these findings several important economic and policy implications are derived

cooperation among liquefied natural gas suppliers is rationalization the sole objective this paper examines the development of cooperative strategies between countries exporting liquefied natural gas lng and members of the gas exporting countries forum gecf this economic study focuses specifically on an often raised scenario the emergence of a cooperative approach designed with the sole aim of logistic rationalization and which would not have any effect on lng prices we first assess the annual gains that may result from this market power free cooperative approach using a simple static transportation model the numerical results obtained suggest that in the absence of a gain redistribution policy this cooperative strategy will probably not be adopted because cooperation would not be a rational move for some exporters the problem of gain sharing is then formulated using cooperative game theory concepts several gain sharing methods have been studied including the shapley value and various nucleolus inspired concepts our results suggest that the choice of a redistribution policy appears relatively restricted out of the methods studied only one per capita nucleolus satisfies two key requirements core belonging and monotonicity in the aggregate lastly we look at how cooperation may give rise to a coordination cost and try to determine the maximum amount of this cost in view of the low level of this amount and the relative complexity of the sharing method implemented we consider that the credibility of a logistic cooperation scenario exempt from market power should be reappraised

credit and economic activity credit regimes and nonlinear propagation of shocks in this paper we examine empirically whether credit plays a role as a nonlinear propagator of shocks this propagation takes the form of a threshold vector autoregression in which a regime change occurs if credit conditions cross a critical threshold using nonlinear impulseresponse functions we evaluate the dynamics implied by the threshold model these suggest that shocks have a larger effect on output in the tight credit regime than is normally the case and that contractionary monetary shocks typically have a larger effect than expansionary shocks finally using a nonlinear version of historical decompositions we attempt to determine the relative contribution to output growth of shocks and the nonlinear structure

risk transmission mechanism between energy markets a var for var approach abstract the global financial crisis gfc of 2007 2009 that originated in the us has revealed the need for measuring and monitoring the transmission of extreme downside market risk this paper investigates the risk transmission mechanism between the oil and natural gas markets we apply the recently introduced test statistics based on cross quantilogram function and the multivariate quantile regression model var for var to the us oil and natural gas prices which are independently formed our results show two asymmetric patterns first the shocks in the oil market substantially increase the value at risk var in the natural gas market but the reverse impact does not exist second we highlight the significant asymmetric response of gains and losses transmission in energy markets cautioning about the underlying weakness of adopting volatility to measure risk in the energy market moreover an extreme market risk is more easily transmitted across markets than moderate risks our results are in general robust in application to other regional energy markets such as europe and asia but the heterogeneities in responses are underpinned by the different role of natural gas in regions the findings in this paper have important implications for academic researchers policy makers in gas dependent economies and business practitioners in light of projected increases in the use of natural gas worldwide as well as the development of independent gas on gas competitive hub prices in asia and europe

mitigating contractual hazards unilateral options and contract length in this article we consider the ways in which the desire for efficient low cost adaptation to change influences the tradeoff between the design and duration of long term contractual relationships we examine the distortions in contract terms occasioned by nonprice competition for natural gas in the presence of wellhead price regulation deviations from optimal contract incentives significantly raise the cost of being bound to long term agreements and shorten the duration of contracts the approach we adopt suggests a method for empirically assessing the efficiency of alternative contracting practices and legal standards

is china s natural gas market globally connected abstract the rise of the shale gas industry and the need for clean low carbon energy transformation in china has meant that the relationship between domestic and foreign natural gas markets has become closer therefore identifying the changing relationships between the major global natural gas markets and china s natural gas market has important practical value for the current chinese domestic natural gas pricing system this paper used the dcc garch nardl ardl ecm as the analytical framework to study these relationships from which it was found that there was no unified global natural gas market and that china s natural gas market was not yet aligned with this market it was shown that there was no significant asymmetry in the impact of international gas prices on china s gas prices as no flexible adjustment measures were found in china s imported natural gas pricing mechanism moreover while international natural gas prices were found to have a significant impact on china s natural gas prices over the long term there were obvious regional differences over the short term accordingly new pricing policies should be designed to promote market oriented natural gas pricing reforms in acknowledging features such as asymmetry the difference between imported gas sources and the periodicity of price adjustment

have oil and gas prices got separated abstract this paper applies vector error correction models that show that oil and natural gas prices decoupled around 2009 before 2009 us and uk gas prices had a long term equilibrium with crude prices to which gas prices always reverted after exogenous shocks both us and uk gas prices adjusted to the crude oil price individually and departure from the equilibrium gas price on one continent resulted in a similar departure on the other after an exogenous shock the adjustment between us and uk gas prices took approximately 20 weeks on average and the convergence was mediated mainly by crude oil with a necessary condition that arbitrage across the atlantic was possible after 2009 however the uk gas price has remained integrated with oil price but the us gas price decoupled from crude oil price and the european gas price as the atlantic arbitrage has halted the oversupply from shale gas production has not been mitigated by north american export as there has been no liquefying and export capacity

trade with endogenous transportation costs the case of liquefied natural gas abstract this paper investigates the relationship between lng shipping costs and regional natural gas price spreads we use data on natural gas prices and shipping costs to analyze the distribution of trade benefits within the lng value chain when shipping costs are endogenous to price spread developments our empirical analysis suggests that for the 2006 2014 period the lng shipping sector has had an implied scarcity rent on lng shipping capacity of 0 14 mmbtu for the eu us spread 0 32 mmbtu for the asia eu spread and 0 42 mmbtu for the asia us spread we highlight in a counter factual analysis that this distributional effect is not economically negligible we investigate how including endogenous transportation costs affects the measured degree of price convergence between regional natural gas markets we find that price convergence is stronger when we control for variations in transportation costs rather than implicitly assuming fixed or exogenous costs

lessons learned from brazilian natural gas industry reform over the past decades many countries have reformed their infrastructure industries although these reforms have been broadly similar for the most part aiming at introducing competition in potentially competitive segments the contexts in which they have been carried out differ this is due to the past regulatory experience in each country the maturity of the industry and or the number of agents when the reform process started the brazilian natural gas reform stands out due to the country s singular conditions the development of the natural gas industry in brazil was grounded on stepping up supplies through integration with neighboring nations particularly bolivia and establishing a competitive environment by lowering the barriers hampering the arrival of new investors however natural gas is located at the crossroads of two main energy chains oil and hydroelectricity this article analyzes the brazilian natural gas reform and extracts lessons from this process the low capillarity of transportation and distribution systems continues to be the main bottleneck of the country s natural gas industry the challenges of the new legal framework are to encourage investments in networks and guarantee supply to allow the industry to consolidate and mature against a backdrop of rapid changes in the world market

estimating the long run equilibrium relationship the case of city gate and residential natural gas prices this paper examines market cointegration of city gate and residential natural gas prices cointegration of gas prices across different segments of the industry provides evidence that deregulation has resulted into a more integrated competitive natural gas industry where gas prices converge into a long run equilibrium our results indicate prices further down the distribution line the final two points of consumption are cointegrated for a majority of the us states post open access and retail unbundling although we find little evidence of perfect market integration the two price series likewise converge to the long run equilibrium faster post open access and retail unbundling results relative to state level unbundling choice programs reveal mixed outcomes with a few states without retail unbundling exhibiting market integration while some states with full unbundling exhibiting non cointegration

trade policy reform and industrial sector growth in mexico 1960 1991 the purpose of this paper is to analyze how the mexican manufacturing sector was affected by changing trade regimes between 1960 and 1991 this short version of the paper focuses mainly on the trade liberalization of the last decade it also omits most tables and the discussion of the literature after a summary description of the policy regime changes it examines the resulting changes in the incentive structure focusing on the relationship between devaluation and protection then the paper analyzes manufacturing sector growth and structural changes in terms of demand sources the analysis is based on the following data rates of protection from ten kate and de mateo 1989a and 1989b the real exchange rate from fleissig and grennes 1994 and production and trade data from the national accounts inegi 1993 national financiera 1991 this study s conclusions are relevant for the timing and sequencing of future trade policy reforms

field experiments on the anchoring of economic valuations i introduction take the last three digits of your social security number ssn turn those numbers into a dollar value i e if your numbers are 462 then they provide a value of 462 consider whether you would be willing to pay that dollar amount for a first edition of j r r tolkien s the hobbit now how much would you actually pay for a first edition original copy a stylized result from laboratory experiments in economics and psychology is that the answer to the latter valuation question can be strongly influenced by the dollar amount computed at the start 1 critics of neoclassical theory have argued that the influence of uninformative anchors such as the transformed ssn refutes the notion that decision makers preferences are predefined consistent and stable instead they are constructed during the process of choice bettman luce and payne 1998 hoeffler and ariely 1999 slovic 1995 a natural conclusion one might draw from studies of anchoring is that decisions may be influenced by irrelevant circumstances and optimization principles do not apply the laboratory evidence consonant with anchoring effects is considerable tversky and kahneman 1974 make a seminal contribution implementing a protocol similar to the one described above to examine general knowledge questions 2 furnham and boo 2011 provide a recent review of the literature and identify more than 25 studies that report significant anchoring effects substantive areas investigated include general knowledge questions epley and gilovich 2006 tversky and kahneman 1974 probability estimates wright and anderson 1989 legal judgments englich and mussweiler 2001 forecasting switzer and sniezek 1991 and valuation and purchasing decisions ariely loewenstein and prelec 2003 taken together the results suggest strong effects from anchoring protocols even in areas where subjects have significant experience yet the importance of anchoring for economic outcomes remains an open question one reason is that research goals and methods differ across the disciplines of psychology and economics croson 2005 hertwig and ortmann 2001 plott 1996 3 fumham and boo 2011 note that drawing generalizable conclusions from the existing anchoring studies is difficult as many involve undergraduate students engaged with topics they are unlikely to encounter in field settings their observation is consistent with the criticism of the ecological validity of many studies made by gerd gigerenzer and colleauges gigerenzer et al 2008 discussed in our footnote 2 while the results of these studies may help distinguish among competing causal claims about the anchoring process they are less relevant for understanding the potential for anchors to affect market equilibria further many of the studies lack meaningful incentives and we believe that economists are justifiably circumspect about results that may merely reflect mistakes made by unmotivated subjects consistent with this view is the idea that with appropriate incentives and feedback anchoring effects should diminish and behavior more closely match predictions from neoclassical models 4 recent attempts to examine the relevance of anchoring for economic outcomes closely follow ariely loewenstein and prelec 2003 alp hereafter who find statistically and economically significant effects of anchors on willingness to pay wtp for common consumer goods and on willingness to accept wta for unpleasant sounds and tastes bergman et al 2010 and fudenberg levine and maniadis 2012 flm hereafter replicate the consumer goods portion of the alp study with mixed results bergman et al 2010 find significant anchoring results consistent with the earlier work although the magnitude of the effect is smaller implementing an auxiliary protocol they find also that anchoring effects diminish with cognitive ability flm 2012 attempt to anchor both wtp and wta and find no evidence of anchoring in the wtp treatment

lng is linking regional natural gas markets evidence from the gravity model abstract evidence exists that global natural gas markets have become more integrated over time one possible explanation for this increased level of integration is that increased liquefied natural gas trade has increased the opportunity for price arbitrage by decreasing transport costs if this explanation is true then the natural gas market should become relatively more integrated because countries separated by large distances would be more willing to trade with each other we employ a gravity model to test whether trade in liquefied natural gas has helped to de regionalize the total natural gas market using trade in the compressed natural gas market as a comparison benchmark the results indicate that liquefied natural gas is indeed a global commodity whereas the compressed natural gas markets are more regional importantly we find that trade in liquefied natural gas has de regionalized the total natural gas market

increasing wage dispersion and the changes in relative employment and wages in mexico s urban informal sector 1987 1993 this study analyses the role of changes in informal formal relative employment wage levels and wage inequality in explaining increasing wage dispersion in mexico during the 1987 1993 period from 1987 to 1993 the variance of the log of hourly wages for mexican workers increased by more than 50 per cent using data from the encuesta nacional de empleo urbano we find that this increase in the overall wage dispersion was mainly driven by increasing wage dispersion in the formal sector coupled with a faster growth in formal sector employment as a percentage of total employment however compression in the distribution of wages within the informal sector contributed to substantially slowdown the increasing overall wage inequality about 60 per cent of the 1987 1993 4 65 percentage point reduction in the informal sector share of total employment is explained by changes in the structure that determines sectoral employment the rest is explained by changes in the composition of the labour force particularly in

towards a worldwide integrated market new evidence on the dynamics of u s european and asian natural gas prices abstract has the integration of european north american and asian natural gas markets been fostered over the last few years by growing lng export capacities and an increasing market share of spot transactions this is the key question that this article sets out to answer for this purpose we develop bivariate error correction models with structural breaks and asymmetric responses among gas references prices oil prices and coal prices we use daily prices of all reference prices spanning from january 12 2004 to january 12 2018 for the north american asian and european areas we show that if european and u s gas prices are co integrated when multiple breaks are allowed their respective markets cannot be considered integrated however our results show that the degree of interdependence between european and american prices is increasing whereas the degree of interdependence between gas and crude oil prices is decreasing more surprisingly we also highlight that reversions to long term equilibria both between the henry hub hh and the national balancing point nbp and between the hh and the japan korean marker jkm are highly asymmetric a pattern that could be intuitively interpreted as the consequence of market arbitrage strategies by exporting countries in a context of oversupplied markets

real option valuation of free destination in long term liquefied natural gas supplies this paper presents a real option model for the valuation of destination flexibility in long term lng supplies stochastic price dynamics in the different markets is modelled through geometric brownian motion processes mean reversion is considered as well as correlation between markets but instead of the usual correlation in return shocks a price convergence term is introduced representing the arbitrage streams between markets model parameters are estimated from market data on lng prices by maximum log likelihood the goodness of the fit for the proposed model is tested as well as for two alternative models confidence intervals for the parameters are given results for the model are calculated by monte carlo simulation frequency distributions for the main results are plotted the effect of the main parameters of the model is studied i e price volatilities price convergence initial prices in the markets mean reversion extra transportation costs number of alternative markets the value of destination flexibility is found to be an important share of the value of lng

why did the price of solar pv si feedstock fluctuate so wildly in 2004 2009 abstract great attention has been paid to the origin of observed wild price fluctuations of solar pv si feedstock in both contract and spot markets during 2004 2009 this paper sheds light on this issue and tries to resolve it by addressing the following questions what kind of structural shock is underlying the price fluctuations of pv si feedstock how can we quantify the magnitude timing and relative importance of these shocks what are their dynamic effects on the real price of pv si feedstock by carefully studying development conditions the structural decomposition of the real price of pv si feedstock is proposed exchange rate shocks production cost shocks aggregate demand shocks and demand shocks specific to feedstock markets with a structural vector autoregression model the paper quantifies and verifies the impact of structural shocks on pv si feedstock real price changes based on national data an analysis is further taken to confirm the essential role of demand shocks specific to feedstock markets in determining sharper price fluctuations during 2004 2009 the results of this study have important implications for national solar pv development which can be better promoted and administrated if structural shocks in feedstock markets can be carefully evaluated and understood

reverse globalization does high oil price volatility discourage international trade this paper examines whether higher oil price volatility causes a reversal in globalization using a large annual panel data set covering 84 countries all over the world from 1984 to 2008 we investigate the impacts of oil price fluctuations on international trade namely exports and imports we present strong and robust evidence that international trade flows will be lower when oil prices fluctuate significantly we therefore conclude that oil price volatility hurts globalization

anchoring effects evidence from art auctions in order to separate anchoring where an irrelevant message has an effect on the outcome from rational learning where past prices are not irrelevant because they may be used to estimate unobservable quality we use the following strategy we first develop a hedonic prediction of price for both the current sale e g the 2006 sale and the previous sale these hedonic predic tions are based on observable characteristics of each painting and an index of overall prices we then regress actual sale price on our hedonic prediction on the difference between the actual price in the previous sale and our hedonic prediction this expression tests for anchoring and on the difference between the actual price in the previous sale and our hedonic prediction of price in the previous sale this expression controls for unobservable characteristics the test for anchor ing is the extent to which the actual price in the previous sale affects the current sale price we can identify anchoring from other effects because the demand for art which is captured by the average overall price index changes over time whereas the unobservable component of qual ity is assumed to remain constant between auctions this allows us to control for unobserved quality characteristics as long as something drastic has not happened between sales such as a painting has been deemed a fake which is a very rare occurrence the assumption of constant quality is a realistic one

what drives natural gas prices a structural var approach abstract in this study we develop a structural vector autoregressive model var for the german natural gas market our setup allows us to analyze the determinants of the natural gas price in a comprehensive framework in particular we illustrate the usefulness of our approach by disentangling the effects of different fundamental influences on gas prices during three recent supply interruptions the russian ukrainian gas dispute of january 2009 the libyan civil war in 2011 and the withheld russian exports in february 2012 our results show that the natural gas price is affected by temperature storage and supply shortfalls in the short term while the long term development is closely tied to both crude oil and coal prices capturing the economic climate and the substitution relationship between the different energy commodities

how policies affect international biofuel price linkages abstract we estimate the role of biofuel policies in determining which country is the price leader in world biofuel markets using a cointegration analysis and a vector error correction vec model weekly prices are analyzed for the eu us and brazilian ethanol and biodiesel markets in the 2002 2010 and 2005 2010 time periods respectively the us blender s tax credit and brazil s consumer tax exemption are found to play a role in determining the ethanol prices in other countries for biodiesel our results demonstrate that eu policies the consumer tax exemption and blending target tend to determine the world biodiesel price

eu emission allowances and the stock market evidence from the electricity industry this paper constitutes to our best knowledge the first econometric analysis on stock market effects of the eu emission trading scheme eu ets our results suggest that eu emission allowance eua price developments matter to the stock performance of electricity firms eua price changes and stock returns of the most important european electricity corporations are shown to be positively related this effect does not work asymmetrically so that stock markets do not seem to react differently to eua appreciations in comparison to depreciations the carbon market effect is shown to be both time and country specific it is particularly strong for the period of eua market shock in early 2006 and differs with respect to the countries where the electricity corporations analysed are headquartered stock market reactions to eua volatility could not be shown

international market integration for natural gas a cointegration analysis of prices in europe north america and japan this paper investigates the degree of integration of natural gas markets in europe north america and japan in the time period between the early 1990s and 2004 the relationship between international gas market prices and their relation to the oil price are explored through principal components analysis and johansen likelihood based cointegration procedure both of them show a high level of natural gas market integration within europe between the european and japanese markets as well as within the north american market at the same time the obtained results suggest that the european respectively japanese and the north american markets were not integrated

goods prices and exchange rates what have we learned import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country recent research indicates that common currency relative prices for similar goods exported to different markets are highly correlated with exchange rates between those markets this evidence suggests that incomplete pass through is a consequence of third degree price discrimination while distance matters for market segmentation borders have independent effects the source of the border effect has not been clearly identified furthermore there is little evidence yet to suggest substantial market power is implied by the observed price discrimination

the house doesn t always win evidence of anchoring among australian bookies abstract we examine australian horseracing bookmakers responses to late scratches instances in which a horse is abruptly withdrawn after betting has commenced our observed bookies exhibit anchoring on the original odds and fail to re adjust odds fully on the remaining horses after a scratch thereby earning lower profit margins and occasionally creating nominal arbitrage opportunities for bettors we also examine which horses odds bookies adjust after a scratch and demonstrate diminished profit margins even after controlling for these endogenous adjustments our results indicate that bookies adjustments recover approximately 80 of lost profit margin but that bookies forgo the remaining 20 due to systematic under adjustments

external determinants for the adoption of stationary fuel cells infrastructure and policy issues this paper investigates the relevance of external determinants for the adoption of stationary fuel cells fcs by different user groups with respect to the marketability of this innovative technology fcs allow electricity and heat to be decentrally generated in an energy efficient and potentially environmentally friendly manner european energy policy is undertaking efforts to increase the proportion of combined heat and power chp plants a series of studies have spoken of their considerable market potential a qualitative study was conducted with six focus groups consisting of 49 commercial users and six focus groups with 54 private consumers the results of the study show that the specific infrastructure required for decentralisation and policy issues are highly relevant for the user adoption of fcs security of supply when energy generation is more strongly decentralised reliable maintenance of the system and clear political objectives are examples of factors that are considered essential prerequisites for the adoption of this technology

regulation and long term contracting in us natural gas markets this paper addresses the recent experience of the us natural gas industry with contracting and regulation the so called contracts problem between producers and pipelines we develop a simple model of contracting between a single buyer and seller emphasizing the determination of price and minimum purchase take or pay provisions we find that take or pay provisions are likely to emerge in regulated and unregulated markets characterized by uncertainty but that phased deregulation may well exacerbate the problem of contract adjustment our model is supported by empirical evidence drawn from recent samples of contracts between wellhead producers and pipelines

anchored in the past persistent price effects of obsolete vineyard ratings in france abstract although abundant evidence for anchoring in economic valuations has been produced in experimental settings there have been relatively few studies testing for anchoring in actual markets we analyze data on grape and vineyard prices in the champagne region of france to determine whether current prices are anchored on past prices set under a discontinued price setting system the key feature of this system is a vineyard quality rating called the echelle des crus edc the econometric challenge is to separately identify anchoring effects from the effects of relevant information edc era prices may convey about grape and vineyard quality our empirical approach controls for observable attributes of vineyards and time invariant unobserved determinants of vineyard quality that may be revealed to market participants through edc era prices in addition we use an instrumental variables strategy to mitigate confounding influences of time varying unobservables we find strong evidence that anchoring has large effects on prices for grapes and vineyards we also examine whether the anchoring effect is diminishing over time as market participants come to rely more on objective information to determine prices we find instead a persistent effect of the edc many years after it became obsolete

downstream integration of natural gas prices across u s states evidence from deregulation regime shifts abstract this study examines the cointegration between city gate and residential retail natural gas prices at the u s state level using monthly data from 1989 1 to 2012 12 both price series are tested for unit roots using the harris 2009 procedure to endogenously identify structural breaks related to deregulation associated with ferc order no 636 the endogenously determined structural breaks are then used in the saikkonen and lutkepohl 2000a 2000b 2000c maximum likelihood approach to test cointegration of the series tests show cointegration of the two price series for all 50 states estimates of the long run relationship in the pre and post structural break periods result in mixed evidence about the degree of perfect market integration induced by deregulation although the magnitude and variation of parameters indicate increased integration a vector error correction model is used to infer causality in the short and long run dynamics for the pre and post structural break periods for each state the post break period exhibits bidirectional causality in both short and long run dynamics for all states an indication of greater downstream integration of the natural gas market

coherent arbitrariness stable demand curves without stable preferences economic theories of valuation generally assume that prices of commodities and assets are derived from underlying fundamental values for example in finance theory asset prices are believed to reflect the market estimate of the discounted present value of the asset s payoff stream in labor theory the supply of labor is established by the tradeoff between the desire for consumption and the displeasure of work finally and most importantly for this chapter consumer microeconomics assumes that the demand curves for consumer products chocolates cds movies vacations drugs and so forth can be ultimately traced to the valuation of pleasures that consumers anticipate receiving from these products because it is difficult as a rule to measure fundamental values directly empirical tests of economic theory typically examine whether the effects of changes in circumstances on valuations are consistent with theoretical prediction for example whether labor supply responds appropriately to a change in the wage rate whether compensated demand curves for commodities are downward sloping or whether stock prices respond in the predicted way to share repurchases however such comparative static relationships are a necessary but not sufficient condition for fundamental valuation e g summers 1986 becker 1962 was perhaps the first to make this point explicitly when he observed that consumers choosing commodity bundles randomly from their budget set would nevertheless produce downward sloping demand curves

the message in north american energy prices how similar is the price behavior of north american natural gas fuel oil and power prices using current state of the art econometric methodology we explore the degree of shared trends across north american energy markets across these markets there appear to be effective arbitraging mechanisms for the price of natural gas and fuel oil but not for the price of electricity

gas versus oil prices the impact of shale gas abstract what significance will developments in shale gas production have for european gas prices some commentators paint a gloomy picture of the future gas markets but most forecasts for the oil market are positive consequently a view appears to prevail that price trends will differ sharply between oil and gas markets this article looks at developments in us shale gas production and discusses their impact on the movement of european gas prices the relationship between oil and gas prices over time is also analysed

mistake 37 the effect of previously encountered prices on current housing demand based on contrast effects studies from psychology we predicted that movers arriving from more expensive cities would rent pricier apartments than those arriving from cheaper cities we also predicted that as people stayed in their new city they would get used to the new prices and would readjust their housing expenditures countering the initial impact of previous prices we found support for both predictions in a sample of 928 movers from the psid alternative explanations based on unobserved wealth and taste and on imperfect information are ruled out

gas and lng trading hubs hub indexation and destination flexibility in east asia abstract in the east asian gas markets issues like gas trading hubs hub indexed pricing and destination flexibility are being debated this paper examines the impact of a change in east asia s pricing benchmark and contract flexibility on the regional and global gas markets the paper uses the nexant world gas model a linear program with global cost minimization as the objective to our knowledge this study on hub competition price benchmark change and contract flexibility improvement in east asia will be the first in the literature and have real policy relevance the results show that both price benchmark change and contract flexibility improvements will create an overall benefit for the world and east asia importers but the impacts are different among exporters and importers however there is no evidence of competition among different benchmark hubs and no evidence that destination restrictions cause the asia premium it implies that removal of destination clauses has higher priority than the change to hub indexation for japan korea and chinese taipei but both should be treated equally in china the study also suggests that east asian importers should cooperate among themselves and with exporters to facilitate the hub creation and contract changes in east asia

two markets and a weak link abstract we characterise the relationship between two network based oligopoly markets when local players share the interconnection s ownership to that purpose we analyse the case of the bacton uk zeebrugge belgium natural gas pipeline using vector auto regressive representation techniques we conclude that there is a threshold of capacity deployment after which the two local markets split as a result the relationship between local price differentials and capacity utilisation is increasing and convex we also show that the local prices dynamic structure is characterised by convergence features