Hypothetical Market Research Articles

Sensitivity of Future Regional and Global Energy Markets and Macroeconomic Activity to a Hypothetical International Energy Market Disruption

Sensitivity of Future Regional and Global Energy Markets and Macroeconomic Activity to a Hypothetical International Energy Market Disruption

Enhancing affordability and profit in a non-cooperative, coordinated, hypothetical pediatric vaccine market via sequential optimization.

This study considers a hypothetical global pediatric vaccine market where multiple coordinating entities make optimal procurement decisions on behalf of countries with different purchasing power. Each entity aims to improve affordability for its countries while maintaining a profitable market for vaccine producers. This study analyzes the effect of several factors on affordability and profitability, including the number of non-cooperative coordinating entities making procuring decisions, the number of market segments in which countries are grouped for tiered pricing purposes, how producers recover fixed production costs, and the procuring order of the coordinating entities. The study relies on a framework where entities negotiate sequentially with vaccine producers using a three-stage optimization process that solves a MIP and two LP problems to determine the optimal procurement plans and prices per dose that maximize savings for the entities' countries and profit for the vaccine producers. The study's results challenge current vaccine market dynamics and contribute novel alternative strategies to orchestrate the interaction of buyers, producers, and coordinating entities for enhancing affordability in a non-cooperative market. Key results show that the order in which the coordinating entities negotiate with vaccine producers and how the latter recuperate their fixed cost investments can significantly affect profitability and affordability. Furthermore, low-income countries can meet their demands more affordably by procuring vaccines through tiered pricing via entities coordinating many market segments. In contrast, upper-middle and high-income countries increase their affordability by procuring through entities with fewer and more extensive market segments. A procurement order that prioritizes entities based on the descending income level of their countries offers higher opportunities to increase affordability and profit when producers offer volume discounts.

Estimating the cost of first-generation rent control in Italy: the case of Florence, 1950–1963

ABSTRACT Among the many costs of rent control, one is the cost imposed upon landlords. This cost is measured as the difference between the controlled rent and the hypothetical free market rent that would prevail in the absence of rent controls. Although recent studies estimate the size of this particular cost in modern contexts, there are relatively few research contributions on pre-1970s European rent controls, largely as a consequence of the absence of easily-accessible data for older rental markets. This study addresses this issue by using original historical data on 362 controlled and uncontrolled housing units in Florence between 1950 and 1963 in order to estimate the hypothetical free market rent of those units, and the cost imposed on landlords by rent control. Analysis of a sample of 4,081 apartments-years, 3,574 of which are controlled apartments-years while 507 are uncontrolled apartments-years, indicates that per-room rents on controlled units were between about €19.5 and €22 lower than those on free-market units, depending on the subsample and the type of analysis. Based on 317 separate five-room housing units, inverse probability weighting approach estimates suggest that the aggregate cost to landlords of rent control is almost €31,000 per month, or about €370,000 per year.

Analysis of willingness to pay of farmers on irrigation networks maintenance fees in the Gonggang reservoir, Magetan

Irrigation network maintenance is very important to ensure the function of irrigation run well. Therefore, maintenance fee is necessary to maintain the irrigation network. The problem is the maintenance cost of irrigation network is expensive, the second highest cost after rehabilitation costs. Thus, participation of farmers in irrigation network maintenance is essential. One of participation by farmers is in the form of regular fees. This study aims to determine the number of fees farmers are willing to pay to maintain irrigation networks through the willingness-to-pay approach. This study was conducted in the irrigation area of the Gonggang reservoir in Magetan District. The subject is farmers who use irrigation – the data collection technique used by observation, interview, questionnaire, and documentation. The data analysis technique used is the contingent valuation method with steps (1) determining the hypothetical market, (2) obtaining bids, (3) estimating average willingness to pay, (4) estimating bid curves, and (5) aggregating data. The result shows that the amount of farmers’ willingness to pay the maintenance fees for irrigation networks at Gonggang reservoir irrigation area in Magetan District by using the contingent valuation method is IDR 90,621 (USD 5.45) for each hectare for each planting period with total willingness to pay in the population of IDR 116,188,708 (USD 7,951.59) for each planting period.

Stochastic modeling of decarbonizing strategy, policy, and market-induced incentives for the US electricity sector

In line with the global pursuit of achieving net-zero carbon emissions, integrating carbon capture and storage (CCS) and renewable energy (RE) technologies is important in power production. This study evaluates the profitability of CCS and RE technologies as alternative ways of achieving climate change goals. While past research focused on costs, technological advancements, and capture methods, there is a need for more studies on assessing the financial feasibility of these climate change solutions under uncertain conditions, alongside specific performance goals and strategies to entice power producers. Using a comprehensive framework featuring deterministic and stochastic modeling approaches, this research explores the impact of policy and market incentives on CCS and RE investments within the U.S. power sector. It analyzes the interactions of variables such as market uncertainties, technical factors, and policy dynamics on the financial viability of adopting CCS and RE for targeted CO2 reductions. The results reveal that, given the status quo of policies, RE and CCS exhibit annualized net present values of $4.62 and $1.76, respectively, for each metric ton (MT) of CO2. Uncertainties in policy incentives emerge as a primary hindrance to achieving cost-effective carbon reduction mandates using CCS, while changes in the green electricity price premium cause high variability in RE returns. The study proposes a hypothetical market, featuring the sale of CCS-linked net-zero electricity at a distinctive premium price of $0.03/kWh. The study's findings underscore the importance of both policy and market incentives to enable power producers to deploy carbon management technologies at a large scale.

An income-distributional analysis of the rent control subsidy

AbstractRent control measures are typically in place to assist low-income households and decrease segregation. Yet, there is little empirical research on the social impact of such policies and specifically the role of how rent-controlled apartments are allocated. This study analyzes the income-distributional effects of rent control with a novel dataset that includes characteristics of those who received rent-controlled apartments between 2011 and 2016 in central Stockholm, Sweden. Specifically, this paper provides analysis of the impact of allocating apartments through a centrally managed queue with apartments from both public and private landlords. To quantify the rent subsidy, we estimate hypothetical market rents by taking the owner-occupied market as a point of deviation. We find a positive relationship between the rent subsidy and time in que. Apartments in the fourth quartile of subsidy require on average 21 years in que, while those in the first quartile require 10 years on average. There is considerably heterogeneity in the level of rent subsidy, and tenant income. Even as allocating through queuing should benefit high-income households less than allocation based on landlord preferences, we find several regressive effects. Controlling for time in queue, we find that tenants in the fourth quartile of annual income receive monthly rent subsidies that are substantially higher than renters in the first quartile of income. Similarly, rental apartments in the fourth quartile of the subsidy have older tenants with substantially higher incomes compared to less subsidized apartments. The regressive effect is driven by high earners renting larger apartments with larger absolute subsidies and being able to wait longer in queue.

Risk Preference Types, Limited Consideration, and Welfare

We provide sufficient conditions for semi-nonparametric point identification of a mixture model of decision making under risk, when agents make choices in multiple lines of insurance coverage (contexts) by purchasing a bundle. As a first departure from the related literature, the model allows for two preference types. In the first one, agents behave according to standard expected utility theory with CARA Bernoulli utility function, with an agent-specific coefficient of absolute risk aversion whose distribution is left completely unspecified. In the other, agents behave according to the dual theory of choice under risk combined with a one-parameter family distortion function, where the parameter is agent-specific and is drawn from a distribution that is left completely unspecified. Within each preference type, the model allows for unobserved heterogeneity in consideration sets, where the latter form at the bundle level—a second departure from the related literature. Our point identification result rests on observing sufficient variation in covariates across contexts, without requiring any independent variation across alternatives within a single context. We estimate the model on data on households’ deductible choices in two lines of property insurance, and use the results to assess the welfare implications of a hypothetical market intervention where the two lines of insurance are combined into a single one. We study the role of limited consideration in mediating the welfare effects of such intervention.

Economic assessment of the environmental services of PNA Cerro Mohinora, Guadalupe y Calvo, Chihuahua

The Cerro Mohinora Protected Natural Area (PNA) located in Guadalupe y Calvo, Chihuahua, Mexico has ecosystems in a good state of conservation that include trees of genera such as Picea, Abies and Pseudotsuga. The objective was to determine the willingness to pay (WTP) by the visitors through the Contingent Valuation Method (CVM) in order to conserve the environmental services (SA) provided by the area and to know their perception of the current state of the Hill. 210 surveys were carried out to simulate a hypothetical market, where they asked what is the maximum amount they would be willing to pay to preserve and/or improve the SA of the PNA. The main results show that 90.48% of the visitors gave a positive WTP, 48.57% of the visitors are local and 55.24% have a university degree. 60.48% of the visitors do ecotourism on the Hill. The main suggestion to improve the area was the maintenance of the roads (55.00%) and the provision of more environmental education (32.69%). The only variable that influenced a positive WTP and that was statistically significant was the “Perception of good ecosystem quality (PGEQ)”. The average WTP calculated was 90.48 MXN, with a minimum and maximum of 68.12 MXN and 97.60 MXN, respectively, and a standard deviation of 5.55 MXN. The WTP should be established according to the number of visitors and use of the place, considering that it currently has no cost and that most visitors are willing to pay to enter and show concern for conservation.

E-cigarette Price Impacts legal and Black-Market Cigarette Purchasing Under a Hypothetical Reduced-Nicotine Cigarette Standard.

The Tobacco Control Act gives the U.S. Food and Drug Administration authority to establish a reduced-nicotine content standard in combusted cigarettes. This future potential regulation may pose a significant public health benefit; however, black markets may arise to meet demand for normal-nicotine content cigarettes among smokers unwilling to transition to or use an alternative product. We determined the behavioral-economic substitutability of illicit normal-nicotine content cigarettes and e-cigarettes for reduced-nicotine content cigarettes in a hypothetical reduced-nicotine regulatory market. Adult cigarette smokers were recruited online to complete hypothetical cigarette purchasing tasks for usual-brand cigarettes, reduced-nicotine content cigarettes, and illicit normal-nicotine content cigarettes, as well as a cross-commodity task in which reduced-nicotine content cigarettes were available across multiple prices and illicit cigarettes were concurrently available for $12/pack. Participants completed two three-item cross-commodity purchasing tasks in which e-cigarettes were available for $4/pod or $12/pod alongside reduced-nicotine content cigarettes and illicit cigarettes. Usual-brand cigarette purchasing was greater than illicit normal-nicotine content cigarettes and less than reduced-nicotine content cigarettes. In the cross-commodity purchasing tasks, illicit cigarettes and e-cigarettes both served as economic substitutes for reduced-nicotine content cigarettes; however, when e-cigarettes were available for $4/pod, they were purchased at greater levels than illicit cigarettes and resulted in greater reductions in reduced-nicotine content cigarettes purchasing than when available for $12/pod. These data suggest that some smokers are willing to engage in illicit cigarette purchasing in a reduced-nicotine regulatory environment, but e-cigarette availability at lower prices may reduce black-market engagement and shift behavior away from combusted cigarette use. E-cigarettes available at low, but not high, prices were stronger substitutes for legal, reduced-nicotine content cigarettes than illegal, normal-nicotine content cigarettes in a hypothetical reduced-nicotine tobacco market. Our findings suggest the availability of relatively inexpensive e-cigarettes may reduce illicit cigarette purchasing and combusted cigarette use under a reduced-nicotine cigarette standard.

The importance of contingently public goods

The importance of contingently public goods

Analysis of Consumer Willingness to Pay for Community Solar Business Using Contingent Valuation Method

Electricity production using renewable energy instead of fossil-fuel-based energy sources has been expanding worldwide. Recently, the South Korean government has set a transition from a government and power company-led energy system to a public-participatory energy system as a basic policy direction in terms of power production. It has been actively providing budgetary and institutional support. A comprehensive understanding of the consumer (public)-oriented preferences of potential business participants is crucial for implementing a successful community solar business. This study analyzes the preferences of potential participants in the community solar business from the perspective of policymakers to derive policy implications. We used the contingent valuation method of the stated preference approach targeting potential participants (public) to create a hypothetical market for community solar businesses and measured the value by inducing survey respondents to trade for goods or services. The monthly average willingness-to-pay was estimated to be 25,572 won (USD 21.90), and gender, photovoltaic business experience, and income were the main influencing factors. Based on the results of this study, the preferences of potential consumers in South Korea were analyzed to contribute to the effectiveness of the national energy policy.

Participatory management of weed infestation in Lake Tana - setting a better future in the front mirror

Lake Tana is one of the biosphere reserves in Ethiopia registered by the United Nations Educational, Scientific, and Cultural Organization (UNESCO). Water hyacinth is expanding in the lake owing to increased nutrient load from the watershed. As efforts from the government alone could not bring the anticipated change, local peoples’ engagement and contribution are believed to sustainably and effectively manage the watershed and prevent the weed’s spreading. This study, therefore, aims to estimate households’ contribution (willingness to pay–WTP–and willingness to contribute labor–WTCL–) to prevent and control water hyacinth and hence improve lake ecosystem services through a hypothetical watershed management in Lake Tana. This study applied quantitative and qualitative methods. It was conducted among 560 randomly selected households of the Libo-kemkem district using a contingent valuation method from March to April/2021. Eleven key informant interviews were also conducted. Bivariable and multivariable interval regression models were used to identify the determinants of households’ potential contribution. Thematic analysis was used to analyze the qualitative data. As the weed is believed negatively impact the ecosystem services provided by the lake, 72% of the respondents showed willingness to contribute to the proposed management program. About 32 and 39% of the respondents were willing to pay in cash and to contribute labor, respectively, to prevent weed infestation. On the other hand, 28% of them were neither willing to contribute in cash nor in labor to the hypothetical market. The findings showed respondents’ mean annual WTP and WTCL were 632.8 Ethiopian birr and 30.1 man-days per household, respectively. The place of residence, educational status, farm plot area, household income, family size, and conference participation significantly influenced WTP and/or WTCL. In this hypothetical improvement scenario, an estimated annual WTP and WTCL of nearly 12 million Ethiopian birr and 700 man-days per year, respectively, are reported considering the total households in the study area. Therefore, collaborative efforts by different stakeholders are the next steps to realize the hypothetical contributions.

Research on Dynamic Programming Game Model for Hydropower Stations

In the condition of the electricity market, the benefit is the result of market gaming for hydropower stations with price-making ability. The traditional energy maximization model is not appropriate in this circumstance. To study long-term operation variation in the market, a dynamic programming game model of hydropower stations is proposed to obtain a Nash equilibrium solution in long-term time series. A dynamic programming algorithm iteratively solves the model. The proposed approach is applied to hydropower stations of Longtan, Xiaowan, and Goupitan in a hypothetical pure hydropower market. The results show that the dynamic programming game model clearly outperforms the energy maximization model in terms of hydropower station benefit, and the operation results differences using the game model and optimization model are analyzed. For the studied cascaded reservoirs, the benefit increasing percentages can be 4.1%–8.2% with 0.2%–3.8% energy loss in this hypothetical electricity market, comparing the game model to the energy maximization model.

On the use of contingent valuation method to assess factors affecting the contribution of local people for the management of water hyacinth in Lake Tana, northwestern Ethiopia.

The colonization of freshwater lakes by invasive alien species is increasingly alarming primarily owing to nutrient loads from the watersheds. For the sustainable management of invasive weeds, preventive methods, such as watershed management and sustainable agricultural practices, are recommended. Watershed protection activities by the upstream local community are believed to be effective measures to reduce nutrient loading to the receiving water bodies and hence help prevent the spread of water hyacinth. However, their willingness and potential contributions determine the effectiveness of watershed management activities. The objective of this study is, therefore, to evaluate the preferences and contributions (willingness to pay and willingness to contribute labor) of the local community for the management of water hyacinth in Lake Tana (Ethiopia). A contingent valuation method for a hypothetical market "prevention of water hyacinth infestation of Lake Tana through watershed management program" was used to collect data from 560 randomly selected households. A multivariable interval regression model was used to identify factors affecting the contribution of local people. The mean yearly willingness to pay and to contribute labor of the respondents was 435.4 Ethiopian Birr (US$ 10) and 22.4 man-days, respectively. The place of residence (rural/urban), educational level, private farm plot area, annual income, and water hyacinth-related conference participation significantly influenced the willingness to pay. Similarly, the willingness to contribute labor was strongly associated with place of residence, location, educational level, and household family size. The economic value derived from this study reflects community preferences, which could be an input for informed and evidence-based decision-making regarding the prevention of weed expansion and sustainable use of ecosystem services. Therefore, local, regional, and national authorities are advised to mobilize the local community to contribute labor and/or money so as to halt the expansion of the weed.

Economic valuation of Kampung Rawa tourism development by CVM approach in Bejalen Village, Semarang Regency

One of the tourist attractions in Semarang Regency is Kampung Rawa in Bejalen Village, Semarang Regency. The existence of Kampung Rawa becomes an instrument of local economic development in Bejalen Village. So, Kampung Rawa needs to be developed by making a selfie spot in Kampung Rawa interesting to visitors. This study aims to develop a hypothetical market development of selfie tourist attractions. The method in this study is a survey method for calculating economic value using contingent valuation methods (CVM). The results of this research are visitors are willing to pay (WTP) for the development of Kampung Rawa tourism. The average value of the WTP can be used as a reference for determining entry tickets for visitors allocated to develop Kampung Rawa tourism in Bejalen Village.

Are consumers willing to pay for beef that has been produced without the use of uncontrolled burning methods? A contingent valuation study in North-West Spain

Land burning has long been used as an effective means of land management. Used in a controlled manner, the burning of vegetation to clear land can have minimal effects on the natural environment. However, uncontrolled land burning, where fires are allowed to spread beyond the intended area, can have severe and detrimental effects on ecosystem functioning. This paper examines the premium residents of the Cantabria region of Spain are willing to pay for beef that has been reared without the use of uncontrolled land burning. Using the single bounded contingent valuation method, the result indicates that the average respondent is willing to pay an 84% price premium (€11.31 more per kilogram) for beef that has been farmed using a more environmentally means of land management. Willingness to pay is influenced by several factors including; price, age of the consumer, level of education, number of dependants in the respondents household and historical beef consumption preferences. Further to this, the results of the bivariate probit model suggest that not all factors influencing the decision to enter the hypothetical market, influence willingness to pay. This demand-side analysis suggests that there is a viable market for Pasiego beef in the Cantabria region with more environmentally favourable production credentials.

Fishing for Litter: Creating an Economic Market for Marine Plastics in a Sustainable Fisheries Model

This paper studies an economy specialized in fisheries facing a rising marine litter problem. We present a dynamic optimization model to explain the mechanism through which marine litter causes inefficiencies in the fishery sector. We do so by investigating the properties of the model when the marine litter externality is internalized through the price of fish. We find that if the marine litter externality is neglected, fish harvest increases, and ocean quality deteriorates. We subsequently explore the possibility of introducing an incentive scheme where marine litter can be traded in a hypothetical market. The introduction of a so-called fishing-for-litter market removes the inefficiencies caused by fishermen neglecting marine litter and provides a direct incentive for them to maximize overall welfare through resource recovery, i.e. by converting plastic waste into a new valuable resource.

Assessing the diversification risk of a single equity market: evidence from the largest European stock indexes

Abstract Diversification of financial securities is considered a substantial element of portfolio risk. In this context, the construction of an optimal portfolio is an ongoing concern for portfolio managers. This study measures the risk–reward tradeoffs linked to the stock indexes of Germany, Spain, Italy, France, and England. First, the stock indexes are analyzed as individual portfolios and later compared to the hypothetical common equity index. The results show diversification benefits gained from a hypothetical common European stock market. Individual stock prices and trade volumes are collected weekly from January 1, 2008 to December 31, 2018. The results indicate that, on average, the most well-diversified equity indexes are IBEX35, FTSE MIB, and FTSE100. In contrast, DAX, MDAX, and CAC40 on average tend to be less diversified. The diversification risk for DAX, MDAX, and CAC40 decreases from joining a common hypothetical stock market, while for FTSE100, FTSE MIB, and IBEX it increases.

How do You Want to restore?--Assessing the Public Preferences and Social Benefits of Ecological Restoration for Natural Rubber Plantation in China

Revealing the public’s preference for ecological restoration projects will help increase public support and improve social benefits evaluation accuracy, which is a prerequisite for implementing ecological restoration projects. This study aimed to reveal the public’s preference for natural rubber plantation restoration projects and then quantify the social benefits of these projects to provide valuable references for related policy design. Based on choice experiments, we built a hypothetical market of ecological products and conducted a field survey to obtain the public’s preferences and willingness to pay (WTP) for natural rubber plantation restoration projects. Then, a random parameters logit model was applied to obtain public preference information, and then the social benefits brought by different restoration scenarios were calculated and compared. The results showed that: 1) residents of Hainan Province had a positive attitude toward ecological restoration for natural rubber plantations and were willing to bear a personal cost. 2) respondents had significant differences in preference for attributes of restoration projects. 3) a restoration project covering 2.1 million mu of rubber plantations, prioritizing the water source protection area, focusing the implementation on state farms, and developing the under-forest breeding economy would gain more social benefits, precisely, 337.543 million yuan/year. Ecological restoration policies should pay more attention to public needs and incorporate them into future guidelines. Policymakers should focus on restoration quality instead of the restoration area. Priority should be given to rubber plantations close to the water source protection area and small householders, and an appropriate under-forest economy should be considered. This study can provide a valuable reference for policy-making related to rubber plantation restoration.

Willingness to Pay dan Karakteristik Konsumen Daging Ayam Halal Berdasarkan Pendekatan Pasar Hipotetik

Willingness to Pay (WTP) or the price level at which consumers are willing or willing to pay per unit (kg) of halal chicken meat. This study aims to (1) determine the amount of Willingness to Pay (WTP) for halal chicken meat (CM), and (2) the characteristics of halal chicken consumers who are willing to pay the WTP price. A total of 50 halal chicken consumers taken from 2 traditional markets were interviewed as respondents. To determine WTP, a hypothetical market approach is used with the Continget Valuation Method (CVM). WTP prices are divided into two categories; WTP0 corresponds to the market price, and WTP1 increases 5% above the market price. Data were analyzed by descriptive statistics, and variable logistic regression. The results showed that 85.35% of consumers were willing to pay a 5% price increase, while 14.65% were not. With this 5% price increase, halal chicken suppliers get an additional sales turnover of IDR 16.8 million per month or 201.6 million per year. Characteristics of respondents who determine WTP are education level, household income, and consumer awareness of halal products. The study concluded that the halal WTP allows suppliers to build small-scale halal slaughterhouses (200-300 heads) per day