Price Formation Research Articles

Price volatility across scales and farmer maneuvering in Lao cassava markets

ABSTRACT Lao PDR is undergoing a rapid agrarian transformation, underpinned by a growing commercial production of commodity crops such as cassava by smallholder farmers. The global nature of commodity crop markets increases the exposure of potentially vulnerable smallholder farmers to global price dynamics. We apply a cross-scalar and mixed-methods approach to investigate the role of institutional structures and the global-regional-domestic context in local price formation mechanisms at the farm gate. We focus our analysis on policy shocks created by the Chinese government’s temporary purchase and storage policy (TSPS) for maize, and the experience and price risk mitigation strategies of smallholder cassava farmers in Lao PDR during this period. We find that the price level and volatility experienced by farmers are shaped by local-level market structures as much as global price dynamics and regional trade integration, demonstrating the importance of institutions across scales in price formation and transmission.

Движущие силы мирового продовольственного кризиса

The food crisis, which is expressed primarily in significantly increasing prices in the absence of a serious shortage of food, has become one of the principal issues on the global agenda. The global food inflation began long before the military conflict in Ukraine, which Western countries are trying to declare the key cause of the global food crisis. It has been stated that the crisis in the energy and fertilizer markets, the military conflict and sanctions imposed on Russia, as well as extreme climatic conditions undoubtedly exacerbated the food crisis. The rapid rise in world prices for energy and other resources has led to higher production costs and, ultimately, higher food prices, but has not become a driver of food inflation. It has been inferred that the causes of the crisis can be explained by the modern arrangement of the world food system. These include, first of all, the structure of world agriculture and the formation of food prices under the influence of financial speculation in agricultural raw-material markets. It has been found that mitigation and even removal of restrictions on the supply of agricultural goods and fertilizers from Russia cannot be the only and complete solution to the food crisis, which is based on the fundamental reasons. The dynamics of the indicators of the consumer price index for food products in the world according to the estimates of the Food and Agriculture Organization of the United Nations (Food and Agriculture Organization of the United Nations - FAO) has been illustrated.

Рыбохозяйственный комплекс России: нарративный анализ тенденций и стратегические задачи развития производства и потребления продукции

The role and importance of the fishing industry in the country᾿s economy and international trade and economic relations are outlined, the main problems of its development in modern conditions are considered. The main indicators and targets for the development of the Russian fishing industry are presented in accordance with the “Strategy for the development of the fisheries complex of the Russian Federation for the period up to 2030”, the role of exports and the current mechanism for distributing quotas for fish products on the volume of its consumption and factors determining the formation of prices for various types of marine biological resources are analyzed. The dynamics of the number of fishing and fish farming enterprises as well as the catch of fish and the main types of biological resources and the production and consumption of fish products in the country for 2010-2022, including by its regions (by federal districts) and per capita are analyzed. The main indicators characterizing conditions, problems and prospects of the fishing fleet development, its deployment and financing of the construction of new vessels are analyzed. The ways of increasing the efficiency of the industry᾿s functioning based on the actualization of modern organizational, technical, innovative and economic mechanisms for the implementation of its goals, in particular by improving the mechanism of “investment quotas” and the creation of production and technological fish clusters, are proposed. A narrative approach which does not entirely fit into the fields of scientific knowledge has been used. Nevertheless its obvious interdisciplinarity makes it possible to use its tools quite successfully within the framework of the modern, interpretive direction in the development of economic sciences.

Unlocking market secrets: Revealing wholesale electricity market price dynamics with a novel application of spectrum analysis

Understanding market participants' competitive behaviour is essential for optimising financial performance in liberalised electricity markets. However, this is challenging due to complex market structures, generation dependent on different primary energy sources and lack of transparency. This paper introduces a novel approach using power spectrum analysis applied to wholesale electricity markets to uncover hidden patterns. Applying this novel method to the Western Australian Wholesale Electricity Market (WEM) revealed periodic cycles in different fuel types and technologies that offered insights into competitor behaviour not immediately evident in the dataset. Surprisingly, the approach uncovered that in a power system with high penetration of renewable generation, there is a weak price response to demand changes, challenging assumptions about the direct link between demand and price formation. These insights could be applied gain a competitive edge in capital investment decisions and tactical bidding behaviour.

Рентный подход как метод повышения эффективности лесной отрасли

The subject of the research in this paper is the pricing system in the forest complex; essences and classifications of approaches to pricing are considered and analyzed. The purpose of the study is to analyze the currently existing pricing system efficiency in the forest industry, improve the system for assessing forest stands using the rental approach when harvesting timber in a leased forested area. These are the main ideas of the research. Pricing is one of the most important components of the forest industry, since the role of resource price formation is not only to provide the enterprise with revenue, but should also contribute to the effective implementation of the state policy for the forest fund reproduction. This proves the need to develop a methodology that solves the issue of natural resources efficient use. A computational experiment on calculating the cost of producing round timber when renting forests for the purpose of harvesting timber makes it possible to identify rent that contributes to a more rational use of the forest fund. In the field of forestry, various approaches to pricing are used such as comparative, costly, profitable, systemic, mathematical and rental ones. Pricing in the forest industry implies the presence of three economic components necessary for the implementation of an effective state policy, namely the social component, reproduction and innovation. A computational experiment on calculating the cost of a standing crop on a forest plot located on the territory of the Yambatorsky district forestry of the Mari-Turek forestry in the Mari El Republic showed that the natural rent makes up 27,6 %, and taking into account the standard profit, the rent totals 39,7 %. The relative value of the minimum payment rates for standing crop for the trial forest area is 1,5 % of the market value of the assortments. The result of the study is to develop measures aimed at improving the efficiency of the pricing system. The proposed approach to calculating the cost of standing crop as a whole will allow taking into account the main rent-forming factors and increasing the efficiency of forest management from the point of view of the state policy, as well as establishing equal economic opportunities for forest users.

Управление экономической безопасностью страны посредством механизма инфляции

The article updates the problem of maintaining inflation at a consistently low level. The subjects of management of this process have been identified. 
 The study provides price formation mechanisms using the example of the construction industry. The dynamics of the cost of basic materials used in construction is presented and described. Using these examples from the construction industry, the main drivers of local inflation are identified. 
 The concept of “cost-push inflation scissors” is considered. Some features and prerequisites for inflation and its impact on the economic security of the country's macroeconomic system have been identified. 
 The meaning of effective demand and its role in ensuring the economic security of the macroeconomic system of the state is clarified. The mechanism of inflation targeting is described. Conclusions are drawn about possible scenarios for combating inflation and opportunities to minimize the consequences of its impact. The mechanisms and factors influencing demand and inflation are analyzed: quantitative easing, current accounts. An assessment of the issue of means of payment by the Federal Reserve System is given.

Transition risk: Investment signals in a decarbonising electricity system

Zero‑carbon electricity is a pre-requisite for decarbonisation of the wider economy and many scenarios envisage rapid expansion of renewables. IEA estimates a need to double the annual rate of investment to 2030. A rapid transition to low carbon electricity creates a risk to investors because projects being financed now will generate their revenue in a zero‑carbon electricity system for which there is no track record of price formation. Although the cost of renewable power has fallen greatly, future revenues from renewables are still affected by market price risks that are often outside the control of generators. If risks are difficult to quantify, they may be mis-priced, leading to inefficient premiums being added to the cost of capital, which could increase the overall cost of the transition. In this context many countries around the world provide support for low carbon energy, such as the UK Contracts for Difference. In this paper we investigate exposure to price risk caused by uncertainty over the mix of technologies used to achieve decarbonisation, which we term ‘transition risk’, and how this varies under different technology mixes, and for different policy regimes. We show that exposing investors to transition risk could increase the cost of delivering the renewables needed for a zero‑carbon electricity system by around 25% or £7bn/year compared to policy options that reduce exposure to wholesale market price risk. The paper concludes that as long as transition risks remain high, de-risking policy mechanisms can help to minimise the overall cost of achieving net-zero.

Market impact and efficiency in cryptoassets markets

We analyze markets for cryptoassets (cryptocurrencies and stablecoins), investigating market impact and efficiency through the lens of the market order flow. We provide evidence that markets where cryptoassets are exchanged between themselves play a central role on price formation and are more efficient than markets where cryptocurrencies are exchanged with the US dollar. For the first set of markets we observe some evidence of the presence of insiders/contrarians, instead in the latter we observe the predominance of herding and trend-followers.

The coupling effect of carbon emission trading and tradable green certificates under electricity marketization in China

To accelerate the low-carbon transition in the energy sector, China is gradually promoting the construction of the national electricity market and carbon market. Carbon emission trading (CET) and tradable green certificates (TGCs) are advocated as promising tools to control carbon emissions. However, the efficacy of these concurrent low carbon regulations remains an open question, especially considering that their implementation schemes are quite different. Therefore, herein, the coupling effect of carbon emission trading and tradable green certificates is examined under electricity marketization in China. An interactive system dynamics (SD) model is established to capture the internal linkages among CET, TGCs and electricity market. Different markets are connected through the investment behaviour of market participants and the price formation mechanism, and the dynamic equilibrium process of multiple markets is analysed based on the current electricity marketization in China. The simulation results based on real-world data in China show that the coordination of TGCs and CET alleviates the pressure of the fiscal deficit of renewable energy and promotes the low-carbon transition in the energy sector, and relevant policy recommendations are put forward. Hopefully, our work can provide a useful reference and insight for low-carbon policy design and energy market construction.

Brent vs. West Texas Intermediate in the US petro derivatives price formation

In this paper, we apply the spatial panel model to explore the relationship between the dynamic of two types of crude oil prices (WTI and Brent crude oil) and their refined products over time. Considering the turbulent months of 2011, when Cushing Oklahoma had reached capacity and the crude oil export ban removal in 2015 as breakpoints, we apply this method both in the full sample and the three resultant regimes. First, results suggest our results show that both WTI and Brent display very similar behaviour with the refined products. Second, when attending to each regime, results derived from the first and third regimes are quite similar to the full sample results. Therefore, during the second regime, Brent crude oil became the benchmark in the petrol market, and it influenced the distillate products. Furthermore, our model can let us determine the price-setters and price-followers in the price formation mechanism through refined products. These results possess important considerations to policymakers and the market participants and the price formation.

Identification Of Behavioral Signature: Benford’s Law In Online Auctions

For a forensic implication of online auction market earnings, we study networked overlapping online auctions and underlying agent strategy. Bidder type identification provides efficient prior information for price formation process. Especially early-stage recognition of specific bidder types enables faster ex-ante revenue estimation. Characterizing behavioral pattern of bidding strategies, we identify unique digital signatures of heterogeneous bidder types. Given that the bidder types impose direct impact on the revenue, we further extend the conceptual domain to the potential bidding fraud which undermines overall revenue structure. We highlight the method of agent signature identification through Benford’s law and power law. In our findings, there exists a bidder class which confirms the distributional pattern of Benford’s law and their revenue impact is significant. Explicit characterization is conducted based on the power law. Participating agent strategy reflects their agent cost, surplus as well as market earnings.

EU capital markets at a crossroads: Getting the MiFID II/MiFIR review right to unlock Europe’s growth potential

This paper explores the aims and scope of the MiFID II/MiFIR Review and its significance in unlocking Europe’s growth potential amid current socioeconomic challenges. The EU’s capital markets currently underperform globally, necessitating urgent structural reforms to enhance competitiveness and participation. The Markets in Financial Instruments Directive II (MiFID II)/ Markets in Financial Instruments Regulation (MiFIR) regime, designed to foster fair competition and investor confidence, has fallen short due to market fragmentation and regulatory inconsistencies. Addressing these issues requires transparent, resilient and integrated capital markets that prioritise liquidity, price formation and investor protection. Fragmentation in the EU equity market is a pressing concern, with off-book volumes increasing and exchanges experiencing a decline in trading flow. Enhancing transparency requirements, minimum order sizes and the dark trading cap, while simplifying waivers and deferrals, can help address these challenges. Implementing a consolidated tape (CT) to increase transparency in off-exchange trading is also crucial, with a phased-in approach recommended for reliable and high-quality data. Placing societal interests at the heart of these reforms is vital for achieving the EU’s strategic autonomy and ensuring long-term economic growth. The MiFID II/MiFIR Review presents an opportunity to promote transparency, efficiency and investor protection, garnering citizen support and contributing to critical societal challenges. Readers can expect to gain knowledge of the current state of EU capital markets, the shortcomings of the MiFID II/MiFIR regime and the necessary reforms to unlock Europe’s growth potential. They will understand the challenges posed by market fragmentation, the importance of transparency and liquidity and the role of a CT in enhancing the investment climate.

MiFIR review: The right balance

Trading in shares in the European Union (EU) is fragmented across a large number of execution venues applying varying degrees of transparency. The review of the Markets in Financial Instruments Regulation (MiFIR) aims at creating the right conditions for the establishment of an entity, the consolidated tape provider, that provides a consolidated picture of core trading data to the market. Co-legislators principally disagreed on whether or not such a consolidated picture should include close to real-time data on prices and volumes on all pre-trade transparent trading venues (pre-trade data). Authors argue that important use-cases require the inclusion of pre-trade data and that the provisional political agreement reached on 29th June rightly recognises this. The review of MiFIR also includes amendments to the conditions under which individual execution venues are required to publish such pre-trade data. While there are good reasons for allowing ‘dark trading’, too much dark trading could harm the quality of price formation for shares. There is no strong evidence that the ‘volume cap’ which caps certain variants of dark trading has positive effects. The authors argue in this paper that a holistic and data-based approach to capping dark trading can contribute to the quality of price formation for shares. The consolidated tape will provide relevant data for such an approach.

Future-proof electricity prices for consumers

European electricity systems are undergoing unprecedented changes in response to the profound transformation of our modes of production from fossil fuels to decarbonised energy, to our shift to electricity for heating and transport, the emergence of decentralised energy sources (e.g. solar PV on the rooftop), and to the gas crisis we face. In response, the price formation and signals sent by both the electricity markets and the networks are changing, too. This article summarizes how the energy transition and the latest developments in the energy market affect prices and what policies and regulations can be introduced to keep energy consumption affordable.

Analisis Structure, Conduct and Performance (SCP) pada Pemasaran Daging Sapi di Kabupaten Kubu Raya

<p><em>Structural problems of domestic cattle and beef marketing include: marketing infrastructure, market structure and price formation, and the existence of domestic marketing policies and regulations. The purpose of this study was to determine the description of beef marketing in Sungai Subdistrict, Kubu Raya Regency and to calculate the marketing efficiency of beef cattle using market structure, market conduct, and market performance (SCP) analysis approaches. The research was carried out in November-December 2021. Respondents were 60 farmers, and 32 sub-district traders, district traders, and retailers. The method used is a survey using a questionnaire. Descriptive analysis for marketing margins and analysis of market structure, market behavior and market appearance. The results showed that beef marketing in Sungai Raya Subdistrict consisted of 3 marketing channels, namely: 1) Breeders – Collector Traders, Sub-District Traders – Retailers – Consumers; 2) Breeders – District Collectors – Retailers – Consumers. ; 3) Jakarta Retailers-PT Agro Boga Utama Pontianak (Prov Distributor)-Regency/City Traders in West Kalimantan Province-Consumers. With a market structure approach, the beef market in Sungai Raya District tends to be less concentrated (low concentration). From market behavior, the payment system is good. Meanwhile, market performance shows that the distribution of margin, farmer's share, and profit ratio is evenly distributed in each marketing institution. From the SCP indicators above, it can be seen that beef marketing in Sungai Raya District is efficient.</em></p>

Использование статистического анализа при формировании цен на продукцию в условиях рынка

The purpose of this article is to develop recommendations on the use of statistical analysis in the formation of product prices. Such a process as price formation, especially in market conditions, requires a reasonable approach that takes into account the results of the analysis of variation, dynamics and correlation of prices in time and space. In turn, such an analysis requires the availability of certain statistical information, therefore, the article consistently discusses: the principles underlying the formation of prices and the list of those types of evaluation for which this information is needed; factors that should be taken into account at the stage of product pricing, as well as their impact on demand curves; assessment of demand elasticity, which in turn allows to assess the profitability of sales and, accordingly, the estimated profit from sales. The article presents the directions and methods of statistical analysis necessary for the formation of product prices.

A Systematic Bibliometric Analysis of the Real Estate Bubble Phenomenon: A Comprehensive Review of the Literature from 2007 to 2022

This article presents the results of a bibliometric review of the study of real estate bubbles in the scientific literature indexed in Web of Science and Scopus, from 2007 to 2022. The analysis was developed using a sample of 2276 documents, which were reviewed in R software and analyzed with the assistance of the Bibliometrix package of the same software. The results indicate that there has been considerable productivity on the topic of real estate bubbles since 2007, with an emphasis on housing price formation processes and the social effects when bubbles burst. The authors found that there were not many case studies located in Latin America or Africa, nor were there approaches with advanced predictive modeling techniques using machine learning or artificial intelligence. The article provides an understanding of the state of the art in real estate bubble research and situates new research in front of the influential literature previously published.

The role of quality in the grain market: wheat prices formation in eighteenth-century Northern Italy

Abstract The aim of this paper is to analyse the role of wheat quality in the formation of wheat prices in the early modern period, adopting eighteenth-century northern Italy as a case study. Wheat prices have been widely used by economic historians to calculate living standards, determine the degree of market integration, and date famines. Rarely, however, have economic historians focused on how wheat prices were determined. By looking at the wheat supply chain, we will try to make more visible the extent to which wheat quality was crucial in determining the value of wheat and, as a consequence, the final price of grain.

Marx’s general rate of profit: How turnover time, accumulation and rate of surplus value affect the formation of prices of production

Most scholars interpret Marx’s prices of production as those which achieve simple reproduction assuming profit rates are equal and all capitals turn over completely each year. The dynamics of equalization, as circulation intertwines with production over the business cycle, is absent. The traditional ‘Marxist’ equation for the profit rate likewise considers only simple reproduction. This leaves a gap in our understanding of Marx, particularly regarding the impact of turnover time on the profit rate, one of Ricardo’s original problems which Marx claimed to solve. Starting from a critique of Veronese Passarella’s and Baron’s attempt to extend the traditional equation to expanded reproduction, I develop a more general equation showing how changes in turnover times, rate of surplus value and accumulation affect the equalization process, the formation of the general profit rate and hence of prices of production. Finally, considering Moseley’s introduction to the recently published translation of a 27-page excerpt from Marx’s Economic Manuscript of 1867–1868, I suggest an equation for decomposing the profit adjustment during equalization. JEL Classification: B24, B51, E11.

Study on Dynamic Pricing Strategy for Industrial Power Users Considering Demand Response Differences in Master–Slave Game

With the deepening of power market reform, further study on power trading mechanisms has become the core issue of power market study. The development stage of the industrial electricity market requires efficient and flexible pricing mechanisms. Currently available pricing strategies are inadequate for demand response management. Therefore, this paper provides an in-depth study of the pricing mechanism in the industrial electricity market in the context of electricity market reform. It proposes a demand–response-based dynamic pricing strategy for industrial parks. The method proposes a dynamic pricing strategy for demand-side response in industrial parks based on master–slave game by establishing an exogenous model of demand-side response and incentives. Compared with the existing strategies, the strategy is more efficient and flexible, and effectively improves the economic efficiency of power trading and load regulation. Firstly, an exogenous model of demand-side response and incentive is built to characterize the demand-side response cost. The method focuses more on describing the exogenous characteristics of user incentives and response quantities. It only needs to analyze the exogenous indicators and random errors in various typical scenarios. The description of user demand-side response is more efficient. Secondly, a master–slave-game-based dynamic pricing strategy for industrial parks with demand-side response is proposed. The strategy is composed of a two-stage optimization. The primary regulation of customers is achieved by day-ahead time-of-use tariffs. The secondary regulation of customers is achieved by means of the same-day regulation of demand and purchase regarding clean electricity. The proposed two-stage price formation mechanism is more economical, more effective in load regulation, and improves the flexibility of industrial pricing. Finally, a case study is conducted on an industrial power user in a park in Liaoning Province. The results show that the proposed method is significantly better than existing methods in terms of improving the economic efficiency and load control effectiveness of the pricing strategy.