Cost Elasticity Research Articles

Electric power distribution system expansion planning considering cost elasticity of demand

Demand side participation is a fundamental property of modern power distribution networks. Time-of-use pricing is a common strategy to persuade customers to shift a part of their consumption to low consumption hours. In flat time-of-use pricing, it is not the price that changes over a period, it is the cost of energy. The aim of this paper was to quantify impact of cost elasticity of demand on investment plans over a multi-stage horizon, where the time-of-use pricing was taken into account. On one hand, time-of-use pricing was modeled with three load levels as peak, medium-peak and off-peak. On the other hand, the tendency of customers to participate in reduction of demand was modeled where it shows rate of response of customers to change in cost of energy and it determines maximum demand response penetration. So, it was examined how time-of-use pricing and responsive customers can postpone the investments. Mixed integer linear programming method was utilized to solve the optimal distribution expansion planning problem. Simulations were performed on an 18-node distribution network. Results revealed effectiveness of the proposed model and showed that consideration of cost elasticity of demand in expansion planning, changes optimal configuration of network and significantly influences total costs.

Effect of on-street parking pricing on motorists’ mode choice

The aim of this study is to assess and predict the effects of on-street parking cost elasticity on the mode choice behaviour of motorists. The stated preference method was used for data collection in the central business district of Qazvin, Iran, and the mode choice behaviour of motorists was modelled through different pricing scenarios. Using a multinomial logit model, it can be concluded that the price value of the motorist's car, car ownership per household, hourly parking rate, maximum hourly parking rate that the users are willing to pay, trip purpose and the education level of the users are significant in users' mode choice utility due to pricing. The results have indicated that by increasing the parking hourly rate from 500 to 60 000 IRR (Iranian Rial), 74% of users will shift their modes from private cars. Shares of choosing a taxi or bus will increase 28 and 18%, respectively.

ANALYTICAL STUDY OF THE DETERMINANTS OF PRODUCTION AND COST FUNCTIONS OF ONION SANDY LANDS, BENI SUEF GOVERNORATE

Productivity efficiency is defined as a measure of the efficiency or efficiency of a particular production component of the production component when used with other elements. This section will address the estimation of the production functions and production efficiency of onion crop in Beni Suef Governorate. Problem and purpose of research To identify the most important problems and obstacles faced by onion production farmers in Beni Suef Governorate Of its strategic importance in Beni Suef Governorate. In light of this, the study aimed to identify the most important problems and problems faced by onion farmers in Beni Suef Governorate, the development of Egyptian onion production. Studying the functions of producing onion crop in sandy soils to find out the most important elements of production that affect its production. Study the cost functions of the onion crop in the land to the sandy to find out the most important elements of production that affect the production. The total production elasticity was 1.12, with production elasticity in the first 0.77 category, while the second category production flexibility was 1.2. Where the productive flexibility in the third category was 1.01. The cost categories revealed that the total cost elasticity was 0.23, with cost elasticity in the first category of 0.09, indicating the elasticity of the costs of the second category 2.1, where the elasticity of the costs of the third category was 0.30.

Alonso and the Scaling of Urban Profiles

How urban characteristics change with total population, their scaling behavior, has become an important research field since one needs to better understand the challenges of urban densification. Yet urban scaling research is largely disconnected from intra‐urban structure, and this seriously limits its operationalization. In contrast, the monocentric model of Alonso provides a residential choice‐based theory to urban density profiles. However, dedicated comparative static analyses do not completely solve how the model scales with population. This article bridges this gap by simultaneously introducing power laws for land, income and transport cost in the Alonso model. We show that the equilibrium urban structure of this augmented model matches recent empirical findings about the scaling of European population density profiles and satisfactorily represents European cities. This result is however not compatible with the observed scaling power of housing land profiles, and challenges current empirical understanding of wage and transport cost elasticities with population. Our results call for revisiting theories about land development and housing processes as well as the empirics of agglomeration benefits and transport costs.

ECONOMICAL BEHAVIOR ANALYSIS OF AGRICULTURAL COMPANIES IN IRAQ USING TRANSLOG COST FUNCTION

This research aims to identify the productive relationship nature among the elements used in the agricultural companies by estimating the translog cost function. It also aims to recognize the possibility of substituting these elements with each other, to identify the nature of revenues, and economies scale through elasticity of other cost. This research goes further to define the typical use of resources, identify the performance of the companies and their contribution in controlling their cost, and estimating elasticity of substitution (Allen-Uzawa), (Morishima). The translog cost function was estimated so as the total cost of the agricultural companies is a function of the prices of production and production quantity output elements. The shares of production elements (labor, capital, commodity and services requisites) were derived from this translog cost function by using SUR method and Eviews9 after applying symmetry and homogeneity. It was clear, in the translog cost function or in the production elements share functions, that there is a strong correlation between the prices of the production elements and the total costs. If prices increase, their contribution share in the total costs increases. Calculation were made among production elements, the self demand, cross, and substitution elasticity. Results show that the self demand was ( 0.64،2.01 ، 0.02،2.28). This result clarifies the share of the production elements (labor, capital, commodity and services requisites) in the total costs of the agricultural companies. The results show that increasing in the wage of labor, capital prices, and commodity and services requisites with 1% had led to increase in the demand on labor, capital prices, and commodity and services requisites with ( 0.64%, 2.10%, 0.02%, and 2.28% ) respectively. The elasticity (Allen – Uzawa) of partial substitution between the labor and capital was 0.0009. This indicates that increasing the capital price value to the labor wage with rate of 1% will decrease the capital element rate to the labor wage with 0.0009%. This is a very low rate. The elasticity of partial substitution (Morishima) for the elements of production shares was (2.1, 0.02, 2.27, and 0.06).

Modeli kvantitativne analize elastičnosti

This paper describes models of price elasticity using quantitative indicators. By observing the interdependence between the elasticity of the demand for some goods and the total consumption expenditure for this commodity, which can be equated with the total income of producers who place those goods on the market, the elasticity can be expressed as a function. Accordingly, the elasticities of prices and demand have been calculated and analyzed for different product categories. The obtained results indicate that the higher the price of these goods, the higher the costs of customers, and thus the higher the sales revenue. On the other hand, the lower the price - the lower the expenses of customers, and therefore the lower the income of sellers. The elasticity of total costs in relation to the supply of goods was also analyzed and it has been shown that the coefficients of elasticity for average and total costs differ from one another by one.

A secure storage scheme with key-updating in hybrid cloud

As cloud computing continues to evolve, the role of hybrid cloud security becomes more and more important in the progress of cloud research. In order to improve the multi-user data sharing mechanism in hybrid cloud and enhance the security of hybrid cloud, this paper proposes a new security storage model of hybrid cloud, which combines the public cloud's cost savings and elasticity with the private cloud's security and customisation. In addition, by exploring the security of data storage and interoperability of the hybrid cloud, this paper adopts a forward-secure key-updating encryption scheme, so as to ensure the security of privacy data in hybrid clouds.

Influence of pricing on mode choice decision in Jakarta: A random regret minimization model

To reduce traffic congestion, the Government of Jakarta is planning to implement electronic road pricing (ERP) for commuters who pass through arterial roads in Jakarta’s CBD area. This paper studies the implementation of ERP, which in this study is called contribution cost, by utilizing the recently introduced alternative choice model approach called random regret minimization (RRM). In RRM when deciding, individuals are assumed to minimize their anticipated regret as opposed to maximizing their utility. A stated preference (SP) survey has been conducted with 507 respondents. Four alternative modes (public transport, park and ride, car, and motorcycle) were presented with several attributes such as travel time, travel cost, waiting time, transfer, parking cost, and contribution cost. The SP survey was divided into two parts, part 1 used for Model 1 with all attributes including contribution cost, and part 2 used for Model 2 with only travel time and travel cost (without the contribution costs). In total 6003 observations for 12 scenarios in Model 1, and 4011 observations for 8 scenarios in Model 2 were obtained. Comparing model fit and prediction accuracy, Model 2 outperforms Model 1. Regarding the value of travel time savings (VTTS), it appears that the incorporation of contribution cost (and other attributes) results in substantially higher VTTS for Model 1 compared to Model 2. Finally demand elasticities are larger than one for public transport, park and ride and car travel time. The results also show that car contribution cost elasticity is substantially higher than motorcycle contribution cost elasticity.

Information in Tullock contests

In Tullock contests in which the common value of the prize is uncertain and the elasticity of the marginal cost of effort is increasing (decreasing), the effect of changes of players’ information on the equilibrium efforts and payoffs is unambiguous: if information is symmetric, then expected effort decreases (increases) as players become better informed; in two-player contests, the expected effort of a player with information advantage is less (greater) than that of his opponent. Sharper results arise when the cost of effort is linear: Under symmetric information, expected effort and payoff are invariant to changes in the players’ information. In two-player contests, both players exert the same expected effort regardless of their information, although expected effort is smaller when one player has information advantage than when both players have the same information. Interestingly, the expected payoff of a player with information advantage is larger than that of his opponent, even though he wins the prize less frequently.

Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010

Cities around the world are experiencing unprecedented vertical growth. Yet, the economics of skyscrapers remain empirically understudied. This paper analyzes the determinants of the urban height profile by combining a micro-geographic data set on tall buildings with a unique panel of land prices covering 140 years. We provide novel estimates of the land price elasticity of height, the height elasticity of construction cost, and the elasticity of substitution between land and capital for tall build-ings. In line with improvements in construction technology, the land price elasticity of height increased substantially over time, rationalizing a trend to ever taller buildings. The land price elasticity of height is larger for commercial than for residential buildings, suggesting that the typical segregation of land uses within cities is not exclusively shaped by the demand side, but also by the supply side.

Improving Predictions of Upward Cost Adjustment and Cost Asymmetry at the Firm-Year Level

ABSTRACTThis study introduces a new method for predicting cost elasticity with respect to changes in sales that incorporates cost asymmetry at the firm-year level. The new method is based on widely available factors that are expected to influence cost behavior. The new method is subject to fewer data restrictions than the method proposed by Weiss (2010). By extending the cost variability and cost stickiness (CVCS) model of Banker and Chen (2006), we find that incorporating firm-year-specific proxy measures for upward cost adjustment and cost asymmetry significantly enhances earnings forecasts. However, this improvement in forecast accuracy is not reflected in contemporaneous stock returns, pointing toward a partial understanding of cost behavior by capital markets. We further find that predicted cost stickiness is associated with lower analysts' forecast accuracy and a weaker effect of earnings surprises on market reactions, confirming the results reported in Weiss (2010) for his measure of cost asymmetry.JEL Classifications: M41; G12.

Cost Efficiencies in the Management of Commodity Mutual Funds

This article examines the determinants of cost efficiencies in the U.S. commodity mutual fund industry from 2001 to 2016. Empirical results show that cost increases in the U.S. commodity mutual fund industry have been less than proportional to increases in fund assets, pointing to economies of scale for the industry. Average cost elasticity varies by fund size, existence of 12b-1 fees, load versus no-load funds, and institutional versus retail funds. Funds without a 12b-1 plan show larger economies of scale than funds with a 12b-1 plan. Institutional funds show greater economies of scale than retail funds since 2010.

The Costs of Agglomeration: House and Land Prices in French Cities

AbstractWe develop a new methodology to estimate the elasticity of urban costs with respect to city population using French house and land price data. After handling a number of estimation concerns, we find that the elasticity of urban costs increases with city population with an estimate of about 0.03 for an urban area with 100,000 inhabitants to 0.08 for an urban area of the size of Paris. Our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure, the elasticity of unit house and land prices with respect to city population, and within-city distance gradients for house and land prices.

Estimation of the Income Elasticity of Health Costs in Iran

Estimation of the income elasticity of health costs is important in determining the policies adopted in health sector. Previous studies in this area has been done with the assumption of the model certainty; while ignoring the problem of model uncertainty can lead to bias and overlooking parameters that result is inappropriate forecasts and incorrect statistical inference. Thus, the main objective of this study is to estimate income elasticity of health costs in Iran under uncertainty of model from 1979 to 2013. For this purpose, the Bayesian approach was used because of its favorable characteristics for the assumption of model uncertainty. Estimation of 40000 regression and Bayesian averaging from the coefficients of the 24 effective variables on per capita costs of the health sector shows that per capita income is the most important determinant of these costs. The income elasticity of health costs is estimated approximately 0.7, that shows health an essential commodity in Iran. Accordingly, we propose that health services be financed by governmental budget that is necessary in health services and provision. Based on other results, the effects of urbanization, per capita public health costs, dependency ratio, physicians per capita and the unemployment rate per capita are certain and strong on health sector costs in the long run.JEL Classification: C11, I1, J2

Supplier Concentration and Cost Structure

The last three decades witnessed an increasing prevalence of concentrated supplier bases, which lead to higher supply disruption risk. We predict that firms with high supplier-base concentration will choose a more elastic cost structure in response to the increased supply disruption risk. Using a unique dataset of 4,530 firm-year observations hand-collected from supplier information disclosed by Chinese listed firms, we document a positive association between supplier-base concentration and cost elasticity. Furthermore, results from five different cross-sectional tests are consistent with supply disruption risk motivating firms with high supplier-base concentration to increase cost elasticity. Finally, additional tests indicate that firms with high supplier-base concentration use more variable capital assets to achieve higher cost elasticity. Our study contributes to the cost management literature by providing the first large-sample empirical evidence on firms’ cost structure decisions in response to supply-side risk factors.

Uncertainty and Private Investment Decision in Malaysia

This study examines the effects of uncertainty on irreversible aggregate investment using data from 1971-2010. Results provide evidence to support the argument that macroeconomic uncertainties are important in the forward-looking investment decision-making process. This study concludes that the demand and lagged demand uncertainties have a relatively stronger effect on investments compared with other macro uncertainties. The structure of the economy, the depth of the financial system, and the promotion of trade openness reduce the negative impact of uncertainties on investment. The study also finds the elasticity of the user cost of capital to be less than unity, indicating limited scope for governments to influence investment through tax incentives.

Time compression (dis)economies: An empirical analysis

Research Summary: To investigate time compression diseconomies (TCD), this study estimated time–cost elasticities using 459 oil and gas global investment projects (1997–2010). Results show that the average cost of accelerating investments is negative: a firm could cut $6.3 million in costs of a single project by accumulating asset stocks 1 month faster. About 88% of the projects exhibit negative time–cost elasticities with over 39% of unrealized economies of time compression. Only 12% of the projects are subject to TCD. These time inefficiencies or frictions do not negate the existence of TCD, but suggest they are less prevalent than assumed in the literature. Management experience, R&D investment, firm size, economic development, and political stability are shown to be associated with greater time compression efficiency. Managerial Summary: How fast should firms invest? The conventional view is that acceleration increases market revenues but also inflates costs. However, there is no recent empirical evidence of this tradeoff. Our article systematically investigates the costs of compressing time in investment projects. Results show that most firms in the oil and gas industry are significantly time inefficient in their operations. Specifically, by accelerating investments, firms would also substantially decrease costs. We estimate the magnitude of these time inefficiencies for specific oil and gas industries and firms and study which strategies might mitigate this problem. This fine‐grained analysis should help firms assess their financial incentives to accelerate projects and prove informative to stock market analysts’ valuations of firm investment timing.

Measuring Market Power in the Iranian Banking Industry According to the Boone Efficient-based Approach

The main objective of this paper is to evaluate the structure of the Iranian banking system and to measure the market power factor based on the Boone approach. In this paper, we investigated the Iranian organized money market, including 18 banks operating in the period of 2008-2015. To calculate the marginal cost (MC), we used a Translog Stochastic Frontier Cost Function. Findings based on the Boone approach confirm that the size of efficient-based competition is low in Iranian organized money market. Based on the Boone index, this value in the Iranian banking market equals -0.022, and Bank Melli and Bank Mellat due to having high marginal cost elasticity with respect to market share, have a higher power in market transformations and distortion of market structure towards monopoly. In contrast, Karafarin Bank, Post Bank, Sarmayeh, and Sina Bank have produced the least distortion in market structure.

Elasticity Analysis of Hierarchical Road Network Performance Based on Modified Logit Models

This paper investigates the impact of Variable Message Sign (VMS), stochasticity and hierarchy on the performance of a road network in the context of four typical Logit model types. These models are multinomial Logit (MNL), C-Logit (CL), Path Size Logit (PSL) and Cross-nested Logit (CNL). We quantify the road hierarchy and use the quantified hierarchy to calculate generalized path costs. Then, VMS information is quantified and integrated with the hierarchical property to calculate road “length. Furthermore, these calculation methods are applied to propose modified versions of the MNL, CL, PSL and CNL. Numerical calculations produce negative values of the dispersion elasticity and hierarchical elasticity of total travel time costs obtained from each Logit model. The results also show that the dispersion parameter, hierarchical structure and VMS information have significant and different impacts on the elasticity. The quantitative interactions among these factors, models and performance are practically useful for network design and management.

Designing a Multi Agent System Architecture Based on IOT Middleware for Smart Parking

This paper presents a dynamic smart parking architecture that offers many services to the driver based on multi-agent, expert systems and IOT Middleware. We have integrated the different technologies together in order to achieve a system which is the most efficient, reliable, secure and inexpensive. The Cloud Computing paradigm has been selected for designing and developing the mentioned architecture, since it exhibits interesting features, such as cost reduction, agility, scalability and elasticity, among others. And to improve intelligence of our system it is necessary to integrate the learning aspect in our agents to ensure services with a maximum degree of accuracy, efficiency and good performance. Agents are sophisticated computer programs that act autonomously on behalf of their users, across open and distributed environments, to solve a growing number of complex problems.