Price Incentives Research Articles

Flexible-reliable linear AC security constrained unit commitment considering uncertainties and renewable energy sources

In this paper, AC security-constrained unit commitment (AC-SCUC) is presented in the transmission network considering flexibility and reliability limits in the presence of renewable resources, energy storage and demand response plan. This minimization scheme considers the sum of expected operating costs and network reliability minus the benefit of network flexibility as the objective function. This problem is related to AC power flow equations, the operation model of storage, demand response, renewable sources, and non-renewable generation units, technical limits of the network, including indices of operation, reliability, flexibility, security. and the stability of the network. In this plan, load, renewable power, energy price, and availability of network equipment are uncertainties. In this paper, in order to accurately evaluate reliability and flexibility indices, stochastic planning is adopted to model the aforementioned uncertainties. The design has non-linear and non-convex constraints; therefore, to reach a unique solution in low computing time, the linear approximation model is incorporated. AC-SCUC linear modeling along with simultaneous modeling of operation, economic, flexibility, reliability, security, and stability indices along with stochastic modeling of uncertainties to accurately evaluate flexibility and reliability indices are considered as the contributions of this scheme. The obtained numerical results indicate the ability of the proposed scheme in improving the economic and technical condition of the transmission network with regard to the optimal management of energy sources, storage devices, and demand response. So, the scheme can obtain high reliability conditions for the transmission network by considering the high penalty price. Also, by considering a high incentive price for flexibility, non-renewable resources, storage devices, and demand response have been able to achieve high flexibility for the network. Optimal energy management of resources, storage devices, and demand response has significantly enhanced the network's operation status.

A multi-time scale schedulable capacity evaluation method for stations considering user wishes

As a flexible resource, electric vehicles (EVs) can realize various auxiliary services such as peak shaving, reactive power optimization, fault recovery, and emergency power supply. It is essential to quickly and accurately evaluate the EV schedulable capacity to realize auxiliary services. In this context, this paper first simulates EV charging demand using trip chain and Monte Carlo (MC) methods based on the 2017 National Household Travel Survey (NHTS2017) results to provide a multi-time scale estimation of EV charging station schedulable capacity to provide a data foundation. Then, considering incentive price, price sensitivity, and user credit, a demand response model is established to describe the uncertainty of user response and constraints such as differentiated demand on both sides of the grid user, battery charging and discharging state, battery loss, and response uncertainty are integrated to establish a multi-time scale evaluation model of the schedulable capacity of EV charging stations. Finally, the effectiveness of the proposed evaluation model is verified by simulation, and the effects of site area, incentive price, and dispatching time scale on the maximum schedulable capacity of EV charging stations are analyzed.

Incentivizing residential electricity consumers to increase demand during periods of high local solar generation

Increasing amounts of distributed electricity generation require new measures to avoid costly grid expansions. This paper presents the results of a field trial in which households received price incentives when adjusting their daily electricity consumption to local electricity generation. Effects are estimated with a matched control group to establish causality and further enable the identification of average load shifting effects. The results show that price incentives are effective in shifting households’ electricity demand to peak electricity supply times, while at the same time overall daily electricity demand is not increased.

A review of Quality control in food safety for FMCG Products

For humans, food is essential to their well-being. A country's economy and long-term growth depend on the availability of nutritious food of high quality and safety. The quality and stability of the food supply has become a global issue due to the recent rise in food contamination occurrences and product recalls. Quality management measures in food supply are examined in this study, with an emphasis on McDonald's Hong Kong's use of these procedures to ensure the quality of their food supply. Everyday life revolves on food; thus, it is both practical and philosophically necessary to improve food safety risk governance. Using a reputation updating model, this study proposes a three-tier supply model that includes government regulatory agencies, food producers, and consumers. It also investigates the impact of product quality and sales price for food producers, as well as government testing accuracy and regulations' efficacy in ensuring product quality and safety. There is a negative relationship between pricing and government incentives or penalties, according to these findings. By improving accuracy of food sampling tests in addition to increasing rewards and increasing punishments for poor food quality, product quality can be effectively controlled, and prices can be balanced, resulting in increased profits for food producers. There are several insights about food safety risk management in this study, which may be gleaned from the various observations. The image of a firm suffers a catastrophic hit when problems with food quality and safety are made public, even though the process of changing product quality is relatively gradual for manufacturers.

Monitoring the Italian transposition of the EU regulation concerning renewable energy communities and the relevant policies for battery storage

This paper deals with the transposition of the European Union (EU) Directive concerning Renewable Energy Communities (RECs) into the Italian legislation. The methodology aims at identifying those national provisions which do not comply with the EU legislation. Consequently, long and onerous infringement procedures may ultimately limit the development of RECs. Moreover, the proposed methodology quantifies the economic value of national policies concerning the participation of storage assets in RECs. Three policy options are compared against the case without flexible assets. To do so, ad-hoc mixed-integer linear programming optimization problems are developed. The assessment is based on the formulation of three key performance indicators, concerning the revenues and costs of the REC. The main data sources in the work are the actual Italian Wholesale Market prices and the price incentives introduced by relevant Italian authorities to support the operation of the RECs. Results indicate an incorrect transposition of the fundamental rights of the EU law. These concern a significant alteration of the membership criteria for prospective RECs and the introduction of external third-parties, which may bypass fundamental requirements set out in the EU law. Numerical results call for a profound revision of the policy options for battery storage in RECs since the envisaged configurations introduce structural limits to the REC's revenues This work can support researchers and policy makers at both national and EU-level in developing policy options and techno-economic measures that foster the development of new RECs.

A Review of Barriers and Enables in Demand Response Performance Chain

The role of demand response increases considerably with a higher share of renewable energy sources in the energy mix, characterized with more frequent energy market price fluctuations due to mismatch between uncontrollable weather-dependent production and currently relatively inflexible energy consumption. Reallocation of energy consumption from high-price hours to lower price hours helps to avoid extra costs to the entire economy and ensures the possibility to minimize fossil-based energy generation, therefore contributing to the achievement of zero-emission goals. The research aims to analyze involvement stimulating factors of demand-side management and demand response from the angles of various energy sector participants, identifying barriers and enabling a successful implementation and wider development of this important energy transition facilitator. The qualitative methods are as follows: utilizing the conducted literature review; and scrutinizing scientific publications, reports and legal acts. As a result, the authors point out the five main aspects: pricing mechanisms, incentives, technology, government regulation and customer awareness. Demand response requires spectacular human and technological resources and administrative, financial and educational efforts. However, the demand response addresses many challenges, such as cost savings, innovation, integration of renewable energy sources, effective, stable and safe power grid performance, reduced need for costly infrastructure modifications, and greenhouse gas emission reduction. The abovementioned benefits influence what the demand-response brings, and are crucial for modern society and a successful energy transition.

Let's lock them in: Collusion under consumer switching costs

Consumer switching costs reduce the price elasticity of existing customers while increasing competition for new ones, creating an “invest-and-harvest” incentive for firms. This paper examines the effect of this dual pricing incentive on firm behavior in a laboratory experiment both with and without switching costs and the ability to communicate. I find that switching costs reduce the price level for new consumers, while the price level for existing consumers is unaffected and the “harvesting” effect is comparatively muted. Markets with switching costs are more competitive and less tacitly collusive. Moreover, switching costs provide a focal point for price setting in the form of a minimum marginal cost mark-up, which is frequently chosen in tacit market sharing outcomes. The results have implications for antitrust policy.

Enhancing Peak Shaving through Nonlinear Incentive-Based Demand Response: A Consumer-Centric Utility Optimization Approach

This paper presents a comparative study on the implementation of incentive-based demand response programs in power grid management, comparing the results obtained from linear and nonlinear models. The challenges faced by power grids in balancing supply and demand and managing price spikes during peak periods are addressed, and demand response programs are proposed as an effective strategy. The focus is on implementing incentive-based programs where load serving entities determine the optimal incentive price and demand reduction. A novel approach is presented for simulating consumer behavior based on the price elasticity of demand and consumers’ utility function, incorporating both linear and nonlinear economic models. The calculation of demand reduction aims to maximize consumers’ welfare, while the determination of the optimal incentive price maximizes the profit of the load serving entities. Real data are utilized, and the proposed models are implemented using the mixed-integer nonlinear programming (MINLP) method. The results demonstrate the effectiveness of providing incentives to consumers during peak hours compared to other approaches, with a comparison between the linear and nonlinear models.

Hospital response to Activity-Based Funding and price incentives: Evidence from Ireland

Activity-Based Funding (ABF) is a funding policy incentivising hospitals to deliver more efficient care. ABF can be complemented by additional price incentives to further drive hospital efficiency. In 2016, ABF was introduced for public patients admitted to Irish public hospitals. Additionally, a price incentive to perform laparoscopic cholecystectomy as day-case surgery was introduced in 2018. Private patient activity in public hospitals was subject to neither ABF nor price incentive. Using national Hospital In-Patient-Enquiry activity data 2013–2019, we evaluated the impact of ABF and the price incentive for laparoscopic cholecystectomy surgery in Ireland. We exploit variation in hospital payment for public and private patients treated in public acute Irish hospitals and employ a Propensity Score Matching Difference-in-Differences approach. We estimate the funding change impacts across outcomes measuring the proportion of day-case admissions and length of stay. We found no significant impact for either outcomes linked to ABF introduction. Similarly, no impacts linked to the price incentive were observed. It appears providers of laparoscopic cholecystectomy in Irish public hospitals did not react to the new funding mechanisms. The implementation of the funding policies did not improve hospital efficiency. Further strengthening of these new funding mechanisms are required to deliver more efficient care.

DIRECTIONS OF REALIZATION OF THE ORGANIZATIONAL AND ECONOMIC MECHANISM OF FORMATION OF THE ENERGY SECURITY SYSTEM OF UKRAINE: THE ELECTRIC POWER ASPECT

The process of reforming the electricity market has been underway for a long time. The European market liberalization guidelines encourage changes in Ukraine. However, internal contradictions of the domestic market slow down these changes. The basis for these changes is the Law of Ukraine, "On the Electricity Market," adopted in 2017, which lays the foundation for deep reform. This is manifested in the following: all enterprises (producers and suppliers) in the electricity market must operate on separate, self-organized principles; openness and transparency, and free access to the use of networks of all business entities based on public contracts; the law provides for and creates several electricity markets: the intraday market, the balancing market, and the ancillary services market. Each has a separate operating procedure, electricity purchase and sale system, pricing, and the establishment of sales volume standards and quotas. The purpose of the article is to determine the priority areas for implementing the organizational and economic mechanism for the formation of Ukraine's energy security system in the context of the electricity sector. The situation in the electricity market requires significant investments (about USD 25 billion over ten years) to ensure the reliability and continuity of electricity supply. Reform of the electricity market should be based on the following principles: efficiency and transparency of the National Commission for State Regulation of Energy and Public Utilities; separation of electricity generation from distribution; certification of the transmission system operator; updating system, technical, software and information software; optimization of measures and reform of the retail market to meet the needs of consumers; economic justification of pricing to meet the needs and capabilities of consumers, including changes in the cross-subsidization mechanism. Implementing the planned goals and priority areas will help reduce risks in reforming the electricity market, intensify the competitive basis between market participants (entities), create conditions for improving service quality, and limit negative factors' impact on the environment with an incentive pricing policy. The structured structure of the organizational and economic mechanism will allow us to systematize the understanding of the stages of the electricity market functioning. Thus, a unified system of interrelations between the goals of reform, the search for reform methods, sources of financial support, subject and object positions, principles, and methods of their regulation, which directly or indirectly affect the efficiency of the electricity market, will be formed.

Multihoming and market expansion: Effects on media platforms’ pricing and content creation incentives

Conventional assumptions in the classical linear city of Hotelling, the workhorse model in media economics, are (i) that no consumer buys more than one of the goods (they are singlehomers) and (ii) that the market is covered. We relax both assumptions to analyze how exclusive and non-exclusive content affect pricing and profit for media platforms. In contrast to the outcome in a covered market with consumer multihoming, we show that the consumer price in an uncovered market depends on both exclusive and non-exclusive content. If advertisers have a high willingness to pay for exclusive eyeballs, platforms prefer to provide non-exclusive rather than exclusive content.

Captive markets and climate change: revisiting Edith Penrose’s analysis of the international oil firms in the era of climate change

ABSTRACT Edith Penrose’s analysis of the investments of the international oil companies (IOCs) stemmed from her interest in the economics of the large international firm and its implications for developing economies. Her approach highlights the endogenous factors shaping the growth of the large firm and cautions against viewing it as a neutral technocracy where investment automatically responds to price incentives. Drawing on Penrose’s concept of a captive market in oil products, this research develops Penrose’s ideas around motive, profit, self-financing and the international firm to explain why the IOC’s institutional environment still favours investment in fossil fuels. The study collected country and firm level data on investment and production in downstream petrochemical refining. The data show a connection between the captive market and the strategies of the large oil firms in expanding refining capacity as a strategic hedge against regulatory policies to limit climate change. This locks society into a carbon intensive infrastructure, reduces the motivation for investment and adds to global CO2 emissions. The findings indicate that the oil companies need to take greater risks on green investments with their retained earnings. Governments need to direct this investment towards socially useful purposes using coordinated regulatory pressure.

What Could Reduce the Cost of Sugar? The Case of State-owned Sugar Mills in Bangladesh

Since the early 2000’s trade liberalization, the state-owned sugar mills in Bangladesh have started to lose competitiveness. Before that this industry used to be considered a strategic sector because sugar is an essential food and the industry creates thousands of rural employments. In 2020, the government suspended operation of six out of fifteen mills with the excuse of loss. The closure of six mills has reduced the sugar production and negatively impacted the lives of farmers, workers, and businessmen. The government is considering foreign investment without considering the potential of government investment to revive the industry. Therefore, it is important to re-examine the factors that increased the cost and find out how the state could revive the industry under its ownership. This paper analysed the data of 15 state-owned sugar mills for 14 years (2006-07 to 2019-2020) using mixed method (fixed effect regression and interview) to explain the mechanisms of the cost increase. It found that the recovery rate, price of sugarcane, availability of sugarcane, age of mills, and interest payment are the most important determinants of cost. Modernizing the mills, making sugarcane available through sugarcane price incentives, timely payment to farmers, and diversifying products could contribute to cost reduction. Social Science Review, Vol. 39(3), Dec 2022 Page 133-151

Optimal pricing strategy of an on-demand platform with cross-regional passengers

Recent years have witnessed the emergence and prosperity of online ride-hailing, which empowers the traditional taxi industry with information technology. However, the ride-hailing platform has no direct control over drivers, one of the biggest challenges for the platform is how to balance the supply and the demand. Considering the cross-regional demand and the surge demand, this paper focuses on the pricing strategy of the ride-hailing platform, and further introduces strategies such as bonus incentive and information sharing. We find that when facing demand surging and supply shortage in one region, the platform can adopt surge pricing or bonus incentive in the adjacent region before the demand surges to balance the supply and the demand. Specially, the surge pricing strategy benefits the platform when the surge demand is high or the cross-regional demand is low, but the bonus incentive strategy has the opposite effect. The existence of cross-regional demand improves the performance of the bonus incentive strategy but reduces that of the surge pricing strategy. We further show that the platform prefers bonus incentive to surge pricing when only a small number of drivers are required to move. But bonus incentive always improves social welfare better than surge pricing. Extending to information asymmetry, information sharing can also encourage more drivers to move. However, the effect is limited such that the proportion of drivers who move will not exceed a threshold. The platform also has the incentive to share false information, which makes drivers question the credibility of the shared information. In this case, the surge pricing strategy can be used as a costly signal to verify the credibility of the information.

Goat Production, Supply Chains, Challenges, and Opportunities for Development in Vietnam: A Review.

The current situation of goat production and supply chains in Vietnam, along with its difficulties and possibilities, is presented in this review paper. The data and reports of government agencies, scientific journals, and websites were analysed in order to determine the prevailing situation in goat production and marketing. Goats are mainly raised on small-scale farms (73.4% of the total goat population). Goat production is transforming from extensive grazing to cut-and-carry intensive systems. Goat meat and milk supplies have not fully met domestic demand. However, the scale of the domestic market is difficult to ascertain, due to the lack of market research and statistics. Goat marketing is mostly informal and overwhelmingly conducted by small-scale producers and traders, although there are numerous governmental agencies at both the national and local levels regulating formal marketing. The major challenges facing the goat industry are feed shortage; supply inconsistency; limited market infrastructure and research; a lack of sustainable breeding programmes, price incentives, and processing facilities; and competition from foreign suppliers. However, there are opportunities to expand and develop the industry, such as consumers' health consciousness, increasing demand, high-value adding, and strong government support.

Minimum Support Price under the Aegis of Universal Basic Income: Understanding the Implications and Way Forward: A Review

For several decades, the Indian government has established a minimum support price (MSP) program for agricultural commodities to alleviate farmers’ price risks. Concerns have been expressed regarding the MSP approach, which can potentially disrupt market integration of agricultural commodities, change pricing incentives and alter the resource allocation and production among commodities. This review article addresses the current situation of agricultural commodity support pricing, how it can be more successful and whether it can be guaranteed. Following the Indian government’s decision to repeal the three agricultural legislations, it has become increasingly clear that the MSP system needs a significant revision and that a change in discourse is must. MSP poses serious ramifications for soil health and water levels, particularly in rainfed regions that are quickly being converted to irrigated areas. A course correction is required, beginning with the demand and supply balance, while protecting farmers’ interests through remunerative prices and assistance as and when needed. In addition to the use of data-driven technologies for the digitization of land records, issuing unique farm IDs and cropping system analysis, the necessity of pricing differential schemes in India has been explored.

Impact of mechanization on rice fallow pulses in cauvery delta zone of Tamil Nadu

The rice fallow pulses crop is one of the major crop in Thanjavur District of Tamil Nadu state, in recent years the area under rice fallow pulses are dwindling due to use of heavy machinery like combine harvesters and tractor mounted balers. Hence, this study was conducted with an objective to assess the impact of mechanization on the rice fallow pulse and to quantify the economic loss due to non-cultivation of rice fallow pulses. Multistage Stratified Random Sampling method was employed for drawing the 100 numbers of samples farm households from Kumbakonam and Orathanadu blocks of Thanjavur district.Among the various consequences, season skipping was the main consequence of heavy machinery usage in rice farming on pulses cultivation in both the study blocks. The reduction in yield of fallow pulses to the tune of more than 50 per cent was felt as the major impact of mechanization in rice farming. Farmers in both the study blocks have cited that the reduction in yield was the major impact which was due to sub optimal plant population due to use of combine harvesters and tractor mounted balers. Non-availability of labour and associated higher cost for labourers was the prime for preference of heavy machineries like combine harvesters and balers in rice farming. It is suggested for development of paddy harvesters specifically for the regions where rice fallow pulses were practices, promotion of irrigated pulses in alternate season and to extend the price incentive which would incentivize the farmers to bring more area under pulses crops.

Zootechnical performances and profitability of local breed’s pigs fattened through the application of feed and health technological packages in traditional livestock farms in Casamance, Senegal

ABSTRACT This work aims to assess the effects of the application of feed and health technological packages on the zootechnical-economic performance of local breeds pigs in Casamance. It involved 253 young pigs, provided by 44 traditional farms. The feed and health technological package group (FHT) pigs were kept in permanent confinement and fed ad-libitum with a diet containing 15% of dried cashew apple pulp, while the controls and health technological package (HT) pigs were raised in a free-range area and fed in the usual way by the farmers. The zootechnical and economic parameters were collected and processed by ANOVA test and linear regression. The results showed a significant improvement in health status, live body weight, carcass weight of pigs, daily weight gain mean of the pigs in the FHT group compared to the HT and controls (p < 0.05). The production costs of the FHT pigs were lower than those of the HT and control pigs’ groups. They generated on average a gain for the selling in live body weight and a loss for those in carcass weight. The use of feed and health technological packages is advised in pig farming and price incentives are necessary to make the fattening activity sustainable.

HPR45 Analysis of Alternative Access Routes and Time to Access for Paediatric Indication Expansions with Consideration of Regulatory, Pricing, and Access Incentives

Many regulatory organisations provide incentives for the development of paediatric medicines. Data generation in paediatric indications, and even more so orphan paediatric indications, is challenging and as such pharmaceutical manufacturers face evidence and consequently price and access challenges when expanding into these indications. This study aims to evaluate routes of access and time to access for paediatric indication expansions in Germany, France, Italy, Spain, UK, Canada, Japan, and China.

The impact of discriminatory pricing based on customer risk: an empirical investigation using indirect lending through retail networks

PurposeThe purpose of this study is to understand the profit implications of analytics-driven centralized discriminatory pricing at the headquarter level compared with sales force price delegation in the purchase of an aftermarket good through an indirect retail channel with symmetric information.Design/methodology/approachUsing individual-level loan application and approval data from a North American financial institution and segment-level customer risk as the price discrimination criterion for the firm, the authors develop a three-stage model that accounts for the salesperson’s price decision within the limits of the latitude provided by the firm; the firm’s decision to approve or not approve a sales application; and the customer’s decision to accept or reject a sales offer conditional on the firm’s approval. Next, the authors compare the profitability of this sales force price delegation model to that of a segment-level centralized pricing model where agent incentives and consumer prices are simultaneously optimized using a quasi-Newton nonlinear optimization algorithm (i.e. Broyden–Fletcher–Goldfarb–Shanno algorithm).FindingsThe results suggest that implementation of analytics-driven centralized discriminatory pricing and optimal sales force incentives leads to double-digit lifts in firm profits. Moreover, the authors find that the high-risk customer segment is less price-sensitive and firms, upon leveraging this segment’s willingness to pay, not only improve their bottom-line but also allow these marginalized customers with traditionally low approval rates access to loans. This points out the important customer welfare implications of the findings.Originality/valueSubstantively, to the best of the authors’ knowledge, this paper is the first to empirically investigate the profitability of analytics-driven segment-level (i.e. discriminatory) centralized pricing compared with sales force price delegation in indirect retail channels (i.e. where agents are external to the firm and have access to competitor products), taking into account the decisions of the three key stakeholders of the process, namely, the consumer, the salesperson and the firm and simultaneously optimizing sales commission and centralized consumer price.