Efficient Trade Research Articles

Fixed-Price Approximations to Optimal Efficiency in Bilateral Trade

This paper studies fixed-price mechanisms in bilateral trade with ex ante symmetric agents. We show that the optimal price is particularly simple: it is exactly equal to the mean of the agents' distribution. The optimal price guarantees a worst-case performance of at least 1/2 of the first-best gains from trade, regardless of the agents' distribution. We also show that the worst-case performance improves as the number of agents increases, and is robust to various extensions. Our results offer an explanation for the widespread use of fixed-price mechanisms for size discovery, such as in workup mechanisms and dark pools.

Monopolistic and Game-Based Approaches to Transact Energy Flexibility

The appearance of the flexible behavior of end-users based on demand response programs makes the power distribution grids more active. Thus, electricity market participants in the bottom layer of the power system, wish to be involved in the decision-making process related to local energy management problems, increasing the efficiency of the energy trade in distribution networks. This paper proposes monopolistic and game-based approaches for the management of energy flexibility through end-users, aggregators, and the Distribution System Operator (DSO) which are defined as agents in the power distribution system. Besides, a 33-bus distribution network is considered to evaluate the performance of our proposed approaches for energy flexibility management model based on impact of flexibility behaviors of end-users and aggregators in the distribution network. According to the simulation results, it is concluded that although the monopolistic approach could be profitable for all agents in the distribution network, the game-based approach is not profitable for end-users.

Research on Optimization of Cross-border E-commerce Marketing Strategy of Agricultural Products under the Background of Environmental Protection

At present, China’s agriculture is in a critical period of transition to modern agriculture. In order to broaden agricultural product export channels, establish a new type of agricultural production service system, and promote modern agricultural development, it is necessary to solve the growing problem of agricultural ecological environment deterioration. Strengthen the win-win goal of environmental protection and food safety, open cross-border trade in agricultural products, reduce the trade-specific environment, save the intermediate cost of trade, and improve the trade efficiency of agricultural products. Based on the theoretical background, the paper studies how to formulate cross-border e-commerce marketing strategies for agricultural products under the environment of environmental protection. It is expected to provide suggestions for cross-border e-commerce of agricultural products in China.

Transit tariff optimization model for Russia and Central Asia energy cooperation

The purpose of this article is to develop an optimization model for determining transit tariffs for energy resources, ensuring maximum efficiency of energy cooperation between Russia and the countries of Central Asia. The informational basis of the study was the statistical values of the indicators in the context of the countries studied for 2010-2017: gross domestic product (GDP), exports, energy imports, CO2 emissions, the level of transit tariffs for oil and gas. In order to achieve the objectives set by the method of multidimensional factor and integral analysis, the effectiveness of export-import relations between the studied countries was evaluated. The regression analysis method determined the elasticity coefficients of the export-import potential of countries and the transit tariff, with their impact on the efficiency of energy trade. Using a non-linear method of the generalized decreasing gradient, a model has been developed for calculating the optimal levels of transit tariffs for oil and gas, at which maximum efficiency of energy cooperation in the framework of export-import operations between Russia and Central Asia is achieved. The developed model for calculating the optimization of transit tariffs for hydrocarbons is based on the mutual reduction of their level between countries and the principle of equivalence. Practical application of the obtained optimal values of transit tariffs will ensure the intensification of export-import operations with hydrocarbons between countries on mutually beneficial economic conditions. It will be the basis for the development of effective strategies for the development of dense energy cooperation in the future.

Measuring the Impacts of International Trade on Carbon Emissions Intensity: A Global Value Chain Perspective

ABSTRACT Global international trade has had a tremendous impact on global economic development and carbon dioxide (CO2) emissions. By making the link between embodied CO2 emissions and the global value chain in the context of global multiregional input–output models, this study constructs a macro carbon trade intensity index to measure the carbon efficiency of international trade. Empirical results on 14 major economies from 1995 to 2009 are presented as follows: (1) The characteristics of the carbon trade vary between developing economies (or transition economies) and developed economies. On average, developing and transition economies have an export carbon intensity (ECI) 3.5 times that of their import carbon intensity (ICI), whereas the latter have an ICI 2.0 times that of their ECI; (2) The three carbon intensity indices in almost all economies decreased compared with 1995; however, the degree of reduction vary from 2% to 52%; (3) China’s ECIs showed little change compared with those of India. Russia’s ECIs were higher than those of China and India. In addition, countries with higher intensity are generally developing and transition economies.

Global Risks of Trade and Economic Cooperation of Ukraine With Countries of the Northern American Region

As a result of the study, it was determined that global challenges and risks hinder the development of trade and economic cooperation between countries. For Ukraine, which has been influenced by (N бN‹ на Ð?иN ала which has faced geopolitical challenges) geopolitical challenges, the development of partnership with the countries of North America, recognized global economy leaders, is essential in terms of realizing national interests and defending state sovereignty. From the ability of Ukraine to anticipate and minimize the effects of negative exogenous, through methods of economic diplomacy, and especially endogenous factors, to isolate their components and identify trends, turning the challenges into opportunities, will depend on the country's economic growth and increased efficiency of trade and economic cooperation. The purpose of the article is to assess the impact of global risks on the formation and implementation of trade and economic cooperation between Ukraine and the countries of North America on the basis of methodological approaches of leading international economic institutions and organizations. Critical for its possible consequences for Ukraine is the protectionist US global policy, cyberattacks, disinvestment of capital due to political instability, multi-directional integration intentions and steps, changes in global flows of goods and capital.

A new era of private securities: Application of Blockchain in private capital markets infrastructure

This paper explores the use of emerging distributed ledger technology in capital markets infrastructure with the aim of improving the efficiency of private securities issuance, settlement and trading. It emphasises the current inefficiencies in the private securities market and highlights the implications of the tokenisation process of private securities and the advantages of DLT-native digital and tokenised securities over securities issued in the traditional form. The paper also highlights the aspects of issuance of securities on permissioned or semi-public Blockchain versus public Blockchains and the use of Blockchain protocol level smart contracts versus token-based smart contracts for adoption by capital markets. It stresses the legal grounds for security tokens and the position of regulators towards a new form of securities issuance.

A Secure and Efficient Blockchain-Based Data Trading Approach for Internet of Vehicles

In this paper, we propose a secure and efficient blockchain-based data trading approach for the Internet of Vehicles (IoV). First, we apply consortium blockchain technologies to ensure secure and truthful data trading, and propose a general blockchain-based data trading framework for IoV. Second, to improve the efficiency of data trading and encourage more participants to trade data, we propose an iterative double auction mechanism with the purpose of achieving social welfare maximization, in which pricing rules of buyers and sellers are designed to induce participants to submit bids and to decide the amount of traded data and its price among buyers and sellers. In particular, in our algorithm, the hidden information of individuals can be extracted gradually so that the privacy of participants in data trading can be protected well. Finally, the experimental results show the efficiency of our proposed algorithm. Moreover, the correctness of social welfare maximization, incentive compatibility, individually rationality, and weakly budget balance of our auction mechanism are verified in the experiments.

Consumers’ Beliefs about the Effects of Trade

Consumers are often skeptical about purchasing foreign products and many voters are resistant to economic globalization. To better understand the factors underlying these trends, we consider consumers’ intuitive understanding of international trade. We find that consumers are intuitive mercantilists — they equate wealth with currency, resulting in a number of biased beliefs relative to economists’ prescriptions. Consumers believe that exports are beneficial while imports are harmful and, therefore, immoral (Study 1). These beliefs can be greatly reduced by framing transactions in a way that emphasizes the equality of currency flows across countries, but not by other frames which emphasize the efficiency of international trade (Study 2). These mercantilist beliefs also infect consumers’ own willingness to purchase foreign products, particularly from developing countries, because consumers incorporate the moral cost of imports into their willingness-to-pay (Study 3). These results have implications both for marketers of foreign products and for policymakers who wish to capture the economic benefits of trade.

Effectiveness of filter trading as an intraday trading rule

PurposeFilter trading is a technical trading rule that has been used extensively to test the efficient market hypothesis in the context of long-term trading. In this paper, the authors adopt the rule to analyze intraday trading, in which an open position is not left overnight. This paper aims to explore the relationship between intraday filter trading profitability and intraday realized volatilities. The bivariate thin plate spline (TPS) model is chosen to fit the predictor-response surface for high frequency data from the Hang Seng index futures (HSIF) market. The hypotheses follow the adaptive market hypothesis, arguing that intraday filter trading differs in profitability under different market conditions as measured by realized volatility, and furthermore, the optimal filter size for trading on each day is related to the realized volatility. The empirical results furnish new evidence that range-based realized volatilities (RaV) are more efficient in identifying trading profit than return-based volatilities (ReV). These results shed light on the efficiency of intraday high frequency trading in the HSIF market. Some trading suggestions are given based on the findings.Design/methodology/approachAmong all the factors that affect the profit of filter trading, intraday realized volatility stands out as an important predictor. The authors explore several intraday volatilities measures using range-based or return-based methods of estimation. The authors then study how the filter trading profit will depend on realized volatility and how the optimal filter size is related to the realized volatility. The bivariate TPS model is used to model the predictor-response relationship.FindingsThe empirical results show that range-based realized volatility has a higher predictive power on filter rule trading profit than the return-based realized volatility.Originality/valueFirst, the authors contribute to the literature by investigating the profitability of the filter trading rule on high frequency tick-by-tick data of HSIF market. Second, the authors test the assumption that the magnitude of the intraday momentum trading profit depends on the realized volatilities and aims to identify a relationship between them. Furthermore, the authors consider several intraday realized volatilities and find the RaV have the higher prediction power than ReV. Finally, the authors find some relationship between the optimal filter size and the realized volatilities. Based on the observations, the authors also give some trading suggestions to the intraday filter traders.

Understanding market functionality and trading success.

We examine individual-level trading data from several markets in the PredictIt exchange to determine what strategies correlate with financial success. PredictIt provides many markets with futures contracts linked to political issues, ranging from ongoing policy outcomes to political elections. High fees along with restrictions blocking automatic trading and constraining a one-to-one match between people and accounts, combine to severely limit the upside to investment returns over the fixed costs: this ensures that traders are all retail investors. We have the individual-level data from two markets: Democratic and Republican Iowa Caucuses in 2016. This data includes all orders and trades from every trader across the markets. We are able to fully reconstruct market activity and study trader behavior both within and between markets. We show that understanding how markets and trades works is more important to financial success than proxies for (1) confidence or funding (2) information or objectivity in trading. The work should be a call-to-action in favor of simplifying markets and trading for any exchange with retail investors, and for more research into effects of differential trading efficiency in all financial markets.

Toward efficient, reliable, and autonomous optical networks: the ORCHESTRA solution [Invited

Optical networks have historically been designed to be operated statically. Connections are overprovisioned so that they remain uninterrupted over several (e.g., 10) years, using high physical-layer margins to cover the evolution of the physical conditions and modeling uncertainties. As a first step, we can increase the efficiency without sacrificing network reliability by removing uncertainties and reducing long-term margins, observing and adjusting them at intermediate periods. This requires certain automation steps in monitoring and data processing. Increasing the efficiency further, and thus further reducing the margins, comes at a trade-off in reliability, and should be done according to service classes and the level of network automation. The ORCHESTRA network makes use of coherent optical transponders as software-defined optical performance monitors (soft-OPMs) to improve the optical network observability. ORCHESTRA developed digital signal processing (DSP) OPM algorithms and a hierarchical monitoring plane to carry and process physical-layer monitoring data. ORCHESTRA uses data analytics methods to understand the physical-layer conditions and feed cross-layer optimization algorithms. ORCHESTRA closes the observe–decide–act control loop, automating the mechanisms required to trade efficiency for reliability.

Strengthening of energy security & low-carbon growth in Asia: Role of regional energy cooperation through trade

Prudent demand-supply management of energy is pivotal for the energy security of the countries and transitions towards the sustainable low-carbon energy system. This study empirically investigates the existing demand-supply gaps of energy in the South-though-East Asian (StEA) countries and analyzes how the gaps can be minimized most efficiently through intraregional energy trade. Stochastic Frontier Gravity model extended with the determinants of efficiency models used for both primary energy and Renewable Energy Goods (REG) trade. The result implies that for most of the countries, intraregional export of primary energy, as well as REG, are positively influenced by Gross Domestic Products (GDP) of the exporting and importing countries. Tariff and distance adversely affect the exports while the implication of cross exchange ratio seems minimal in both cases. Regional Trade Agreements (RTA) are also found to have notable positive impact on intraregional trade. Results show that China and Thailand are the most-efficient in this intraregional primary energy export, while Bangladesh and Myanmar remain the least-efficient. China and Japan are the most-efficient in REG exports, while Bangladesh remains the least-efficient. On average, the whole region has the weighted export efficiency of 56.5% in intraregional primary energy trade and 63.1% in REG trade. The determinants of efficiency model reveals that institutional quality, better infrastructure, goods market efficiency, and technological readiness have reasonable impacts to enhance the countries’ intraregional energy trade efficiencies.

ASEAN or plus alpha? The effectiveness of regional economic cooperation

This study examines the effectiveness of regional trading blocs in Southeast Asia utilizing the gravity model of international trade. The primary objective of this study is to determine which trading bloc – ASEAN, ASEAN3 or ASEAN6 – is most effective in creating preferential trading arrangements. We examine a comprehensive panel data for a sample of ASEAN's 10-member state countries spanning bilateral trade with 29 major trading partners over 17 years. The results reveal that the export volume of ASEAN member countries to AEAN6 member countries is 2.5 to 4 times higher than to non-member countries, thus indicating that ASEAN6 is the optimal group. In the latter portions of this paper, this paper provides policy implications to create effective and efficient trading arrangements.

On the optimality of monetary trading

People have long been trading in a “monetary” way. This persistence of monetary trading suggests that it might be an efficient trading mechanism. We formalize this intuition in a random-matching, absence-of-double-coincidence-of-wants environment. The record-keeping technology is operated by an information-processing center which summarizes and updates individuals’ past trading behavior in a binary variable. A trading mechanism consists of an updating rule and an individual trading behavior rule. To capture the difficulties in collecting and processing information about others’ past behavior, we assume that the center faces costs, both fixed and variable, to operate. We show that (1) any non-autarkic equilibrium trading mechanism is, in terms of aggregate variables (such as consumption and frequency of trade), observationally equivalent to a monetary trading mechanism and (2) any non-autarkic optimal equilibrium trading mechanism is a monetary trading mechanism.

Analysis of CDS Spread Fluctuations with an Application to the Negative Basis Arbitrage

In this article, we first construct the empirical measure of spread (EMS) to capture the dynamics of quoted CDS spreads. It is the measure of creditworthiness of a company derived from the asset model in Egami and Kevkhishvili [2017]. We then use the information provided by the EMS to derive a refined negative CDS-bond basis trading strategy. Our contributions are twofold. By analyzing the period encompassing the global financial crisis, we find that the EMS is a forward-looking or leading indicator and can explain the movement of near future CDS spreads (20 or 30 days ahead). We then demonstrate that this feature of the EMS is present in non-crisis periods as well: therefore, the EMS could be used to predict future movement of CDS spreads. The second contribution is to improve efficiency in negative basis arbitrage trading. Specifically, we set up a finite-horizon optimal stopping problem for an investor who uses CDS contracts to hedge a long position in a zero-coupon bond. Using this problem, we provide a trading tool for the investor and show that the information obtained from the EMS can enhance the gain from negative CDS-bond basis arbitrage.

Developing the methodology for analyzing the efficiency of foreign trade as part of economic security management

Developing the methodology for analyzing the efficiency of foreign trade as part of economic security management

Mutual Fund and Foreign Institutional Investors: Pre and Post Crisis Dynamics

Institutional investors are smart traders and their informational advantage about firm values may propel them to play a significant role in price discovery. The trust of the market on institutional trade may also induce herding leading to faster price correction or even deviation due to overreaction. Foreign institutional investors (FII) may often score over domestic mutual funds (MF) in efficient trading decisions due to perceived superiority in analytical skills and investment experience. Researchers contradicting such views cited familiarity of the local environment and absence of linguistic or cultural barriers for domestic mutual funds as the reason of their superiority in security valuation, market timing, and trade decision. This paper was an attempt to find an answer to a controversial question about who is better informed about firm values, FIIs or the domestic mutual funds.

THE EFFICIENCY OF MANUFACTURING TRADE BETWEEN TURKEY AND THE EUROPEAN UNION

In this study, the manufacturing trade efficiency of Turkey with the European Union-25 (EU-25) is examined by applying stochastic frontier gravity model over the period of 2006–2016. In addition, this study is analyzed whether there is a convergence in efficiency of manufacturing trade between Turkey and the EU-25. Findings show that Turkey’s average trade efficiency score is 56,3% and it ranged from 0,01% to 92,5% for all countries. Manufacturing trade flow of Turkey is significantly affected by income, market size of the trading partner and the distance between them. The findings also suggest that trade flows are affected by the global financial crisis.

Impacts of national agricultural trade policies on food self-sufficiency: Case of selected products in Niger

Most of Sub-Saharan African agricultural studies are focused on rainfall variability, low use of technologies and inputs in agriculture to explain the recurrence of food insecurity and famine in these regions. However, agriculture sector relies on other sectors such as trade. So, an evaluation of the efficiency of trade tools on main foodstuffs could very helpful for policymaker in stabilizing their countries agricultural product prices. Additionally, the evaluation of self-sufficiency and import dependency is a significant step in estimating the country resources capacity in satisfying its domestic demand especially for main foodstuffs. Hence, this article aims at evaluating the impacts of National Agricultural Trade Policies on Food Self-Sufficiency of main agricultural foodstuffs (cowpea, maize, millet, and sorghum) in Niger during 1990-2015. The findings revealed that Niger national resources can satisfy the countrywide demand for the main foodstuffs except for maize. In conclusion Niger policy makers should review the country agricultural trade policy by applying efficient trade’s tools and measures to stabilize the inter-annual price volatility of main agricultural foodstuffs.