Market Design Research Articles

Will fuel switching ever happened in China’s thermal power sector? The rule of carbon market design

Will fuel switching ever happened in China’s thermal power sector? The rule of carbon market design

The influence of perceived country of origin image on Chinese consumers’ purchase intention of imported wine

Purpose This study aims to examine how consumers’ propensity to purchase imported wines is influenced by their attitudes and perceptions toward the countries of origin (COO) of those wines. Design/methodology/approach The questionnaires were distributed online and 298 valid completed questionnaires were received. This study measured the perception of the wines’ countries of origin by adopting two independent dimensions of competence and warmth in the stereotype content model. Findings The results show a relationship between the purchase intention and the perception of the country of origin of the wine. Furthermore, the perceived image of the country of origin impacts the brand image of the wine and the quality of wine from its country of origin. Research limitations/implications This study’s questionnaire was distributed online. Future research would benefit from in-depth qualitative investigation and a wider range of sample sizes across countries. Practical implications The results of this study guide imported wine companies in product marketing design and advertising. By promoting the countries of origin of premium wines to target consumers, trust in the quality of imported wine can be improved, thereby increasing consumers’ purchase intention. Originality/value This study contributes to the understanding of consumer perception of the country of origin in the context of wine marketing. It provides valuable implications for wine companies’ marketing positioning and strategy, benefiting wine marketers, distributors and importers.

Siting and operating incentives in electrical networks: A study of mispricing in zonal markets

The incentives electricity generators face in investment and output decisions hinge on market design. Under some zonal market designs, where profit-maximizing participants face a uniform regional price, achieving lowest-cost system-wide production can be impossible. Further, zonal designs can incentivize siting of intermittent renewables in inefficient locations behind network constraints, of concern for jurisdictions undergoing a clean energy transition. We develop measures of mispricing that compare the zonal prices generators receive to locational marginal prices that value congestion externalities from generator output. We apply these measures to show wind and solar generators are increasingly siting in constrained areas of the Australian network, and highlight sources of potential efficiency gains from adopting a nodal market design with locational marginal pricing.

Life cycle assessment and life cycle costing approach for building decarbonization by design choices: A case study

AbstractDecarbonizing the urban environment has two significant challenges: Increasing electricity demand due to the electrification of space heating and increased renewables share in the electricity supply. The European Commission defines a new grid support mechanism for peak‐shaving products in renewed Electricity Market Design. This aims to enable a new market tool to stabilize electric supply and demand. This study examines a grid‐integrated thermal storage device's technical feasibility and economic performance to meet net zero building (nZEB) definitions. Alternative scenarios considering current national nZEB targets, present energy market options, and regulations are compared using the life cycle cost and the global warming potentials over the building lifetime. The results show that better building performance is possible even with a low investment increase of 6.7% compared to minimum building standards based on regulations. This enables older building cases to perform similarly with new building targets for Turkish National nZEB. Building electrification using heat pumps and thermal storage systems gives similar economic performances in the long term when a dynamic electricity tariff is available. Adapting the life cycle approach to decision‐making in construction contracts can lead to a 50% decrease in building emissions while staying within the same construction budget.

Redesigning the US Army’s Branching Process: A Case Study in Minimalist Market Design

We present a proof-of-concept for minimalist market design (Sönmez 2023) as an effective methodology to enhance an institution based on stakeholders’ desiderata with minimal interference. Four objectives— respecting merit, increasing retention, aligning talent, and enhancing trust—guided reforms to the US Army’s centralized branching process of cadets to military specialties since 2006. USMA’s mechanism for the class of 2020 exacerbated challenges in implementing these objectives. Formulating the Army’s desiderata as rigorous axioms, we analyze their implications. Under our minimalist approach to institution redesign, the Army’s objectives uniquely identify a branching mechanism. Our design is now adopted at USMA and ROTC. (JEL D47, H56, J45)

Regulation of Organ Transplantation and Procurement: A Market Design Lab Experiment

Regulation of Organ Transplantation and Procurement: A Market Design Lab Experiment

Design principles for artificial intelligence-augmented decision making: An action design research study

ABSTRACT Artificial intelligence (AI) applications have proliferated, garnering significant interest among information systems (IS) scholars. AI-powered analytics, promising effective and low-cost decision augmentation, has become a ubiquitous aspect of contemporary organisations. Unlike traditional decision support systems (DSS) designed to support decisionmakers with fixed decision rules and models that often generate stable outcomes and rely on human agentic primacy, AI systems learn, adapt, and act autonomously, demanding recognition of IS agency within AI-augmented decision making (AIADM) systems. Given this fundamental shift in DSS; its influence on autonomy, responsibility, and accountability in decision making within organisations; the increasing regulatory and ethical concerns about AI use; and the corresponding risks of stochastic outputs, the extrapolation of prescriptive design knowledge from conventional DSS to AIADM is problematic. Hence, novel design principles incorporating contextual idiosyncrasies and practice-based domain knowledge are needed to overcome unprecedented challenges when adopting AIADM. To this end, we conduct an action design research (ADR) study within an e-commerce company specialising in producing and selling clothing. We develop an AIADM system to support marketing, consumer engagement, and product design decisions. Our work contributes to theory and practice with a set of actionable design principles to guide AIADM system design and deployment.

On the efficiency of energy markets with non-merchant storage

AbstractEnergy market designs with non-merchant storage have been proposed in recent years, with the aim of achieving optimal market integration of storage. In order to handle the time-linking constraints that are introduced in such markets, existing works commonly make simplifying assumptions about the end-of-horizon storage level, e.g., by imposing an exogenous level for the amount of energy to be left for the next time horizon. This work analyzes market properties under such assumptions, as well as in their absence. We find that, although they ensure cost recovery for all market participants, these assumptions generally lead to market inefficiencies. Therefore we consider the design of markets with non-merchant storage without such simplifying assumptions. Using illustrative examples, as well as detailed proofs, we provide conditions under which market prices in subsequent market horizons fail to reflect the value of stored energy. We show that this problem is essential to address in order to preserve market efficiency and cost recovery. Finally, we propose a method for restoring these market properties in a perfect-foresight setting.

Local electricity market designs for interconnected nanogrids: Impact on rural electrification in Madagascar

Sustainable, reliable, and affordable energy access is a major challenge in many parts of the world. The paper addresses this challenge by proposing a local electricity market (LEM) design for nanogrids deployed in Madagascar. Each nanogrid shares a solar PV and battery system, and it meets demand locally before trading surplus energy with other nanogrids on a microgrid bus, facilitated through the creation of a LEM. Two distinct market approaches are investigated and compared: central clearing and bilateral trading. Bilateral trading generates trading prices through direct interaction between consumers and producers, whereas central clearing sets a single trading price based on the cost-ordered supply curve. Our study shows that central clearing generates more consumer-friendly prices and facilitates the trading of all technically feasible energy, while bilateral trading may results in unmatched trading capacity. We find an average price for central trading of 0.49€/kWh compared to 1.24€/kWh with a bilateral trading mechanism. To promote the low market prices, a bottom-up retail tariff structure is proposed. The aim of this simplified tariff is to promote initial electrification by minimizing entry prices for end-users’ first electricity access to 0.89€/kWh compared to the current average of 2.11€/kWh. The discussed results were evaluated in consultation with the local company in Madagascar to ensure practical suitability and to achieve maximum significance.

PASAR SAYUR DI KAMPUNG SAYUR LANDASAN ULIN UTARA BANJARBARU

This journal discusses the planning and design of the North Ulin Platform Vegetable Market with a Sustainable Architecture approach. The vegetable market is an important space for social interaction on an urban scale. The market acts as a means of distribution of agricultural goods and has a strategic role in the food security of a region.
 Kampung Sayur LAURA in Banjarbaru City, South Kalimantan, is a government effort to increase agricultural productivity and the local economy. This area is planned as a center for the production of quality agricultural products. The Municipal Government of Banjarbaru plans to establish a Vegetable Market in Kampung Sayur LAURA to facilitate the buying and selling of agricultural commodities. However, the existing vegetable market is still not optimal in trading farmer's commodities. In addition, vegetables are often delivered through collectors, which causes price increases. Therefore, proper planning and design is needed to build the LAURA Kampung Sayur Vegetable Market.
 Vegetable Market Kampung Sayur LAURA must be designed with characteristics that suit the needs of the vegetable market. In addition, infrastructure that supports the growth of the agricultural sector needs to be accommodated to meet the quality standards set by the Indonesian Ministry of Agriculture.
 Sustainable Architecture was chosen as the design approach for LAURA's Kampung Sayur Vegetable Market. This approach includes three pillars of design strategy, namely economic, social and environmental balance. By adopting this concept, it is hoped that the vegetable market can contribute in economic, ecological and social aspects.

Resource allocation, computational complexity, and market design

With three experiments, we study the design of financial markets to help spread knowledge about solutions to the 0-1 Knapsack Problem (KP), a combinatorial resource allocation problem. To solve the KP, substantial cognitive effort is required; random sampling is ineffective and humans rarely resort to it. The theory of computational complexity motivates our experiment designs. Complete markets generate noisy prices and knowledge spreads poorly. Instead, one carefully chosen security per problem instance causes accurate pricing and effective knowledge dissemination. This contrasts with information aggregation experiments. There, values depend on solutions to probabilistic problems, which can be solved by random drawing.

Emotion Detection from Photos Using MobleNet-based Deep Learning

In the era of twenty-first century, an era characterized by the proliferation of digital technology, big data and so on, the ability to identify human emotions through visual content from images has gained much importance and its popularity is increasing worldwide. This project deals with the task of detecting emotions from images using deep learning techniques with a specific emphasis on Mobile Net-based architectures. We start the project by preparing the dataset of various images showing diverse emotions. The Mobile Net architecture, a powerful convolutional neural network is fine-tuned with a custom dense layer to classify emotions into seven distinct categories. Data argumentation techniques such as zooming, shearing and horizontal flipping are incorporated to enhance robustness and prevent overfitting. The training dataset is preprocessed and normalized while a segregated validation dataset ensures stringent evaluation. During training we implemented early stopping and model checkpoint mechanisms to get optimal performance while avoiding overfitting. After training the analysis of accuracy and loss metrics provides an insight into the model’s trajectory. In practical applicability we use the trained model to predict emotion from single images, showcasing its potential in various domains, including digital marketing, healthcare, and user experience design. In today’s digital landscape the project findings hold relevance for a wide spectrum of applications, promising advancements in human computer interactions and emotion aware systems.

Long-term issues with the Energy-Only Market design in the context of deep decarbonization

There has been fierce controversy in the literature over the long-run efficiency of the energy-only market (EOM) design ever since its inception. In this paper, we provide novel insights to illuminate this historical controversy, and we revisit it with a focus on contemporary issues and the profound changes brought about by the energy transition. Specifically, we develop an analytical and modeling framework to quantitatively investigate how EOM outcomes hinge on the underlying behavioral, informational and structural assumptions. We apply our framework to a case study calibrated on Californian fundamentals that captures the key features of energy systems under deep decarbonization. We characterize how EOM outcomes can substantially deviate from the long-run optimum as soon as one assumption is relaxed compared to theoretical requirements. This leads to pathways with higher electricity prices, lower security of supply and delayed decarbonization. In particular, we highlight how market price signals alone are prone to a dynamic entry-exit coordination problem between investment in low-carbon assets and the phaseout of fossil-fired assets. This calls for a market design reform to complement price signals that accounts for realistic assumptions.

A Linked Swing Contract Market Design With High Renewable Penetration and Battery Firming

As renewable generation and energy storage systems become increasingly cost-effective, modern power systems are increasingly reliant on variable energy resources (VERs) to meet demand. However, the variability and uncertainty of VERs' generation require additional flexibility to mitigate their impacts. Unfortunately, the current power market designs rigidly define different power and reserve products, making it difficult to fully recognize and compensate for this flexibility. Furthermore, since the marginal operating costs of the system quickly approach zero, current marginal cost-based market mechanisms struggle to provide price signals that allow independent power producers to make informed decisions about constructing, operating, and retiring plants. To address these issues, this paper proposes a new linked electricity market design based on swing contracts for operating power systems with high penetration of VERs and energy storage resources. The feasibility of the proposed approach is demonstrated through study results on the modified IEEE 118-bus test system.

Economic Incentives for Pollution Control in China Through the Lens of the Carbon Trading Market and Its Effectiveness and Challenges

This paper explores the pivotal role of economic incentives in pollution control within the People’s Republic of China, centering specifically on the intricacies and operational dynamics of the carbon trading market. As an integral component of China’s environmental policy and broader economic strategy, the carbon trading market is posited as a critical mechanism for catalyzing reduction in greenhouse gas emissions across various industrial sectors. Through a detailed examination, this study assesses the efficacy of the market in achieving its intended environmental outcomes, alongside a thorough investigation of the challenges and obstacles that impede its operation. At the heart of this analysis is a comprehensive review of how the carbon market has been implemented in China, including the regulatory frameworks, market design, and participation criteria that underpin its functionality. The paper delves into the market’s direct impacts on industries, especially those traditionally associated with high levels of carbon emissions, assessing how economic incentives have spurred or, in some instances, failed to spur significant environmental improvements. Further, the study broadens its scope to consider the carbon trading market’s implications for sustainable development in China. It explores the balance between economic growth and environmental sustainability, investigating how the carbon market aligns with China’s long-term goals for green development. This includes an analysis of the market’s role in promoting technological innovation and investment in renewable energy sources, as well as its influence on corporate behavior and environmental governance. The paper also addresses the multifaceted challenges that confront the carbon trading market in China. These include issues related to market liquidity, price volatility, the accuracy of emissions data, and the enforcement of regulatory measures. Moreover, the study considers the global context, comparing China’s carbon market with international counterparts to identify unique challenges and opportunities. In synthesizing the findings, this paper aims to provide a nuanced understanding of the carbon trading market’s function as an economic incentive for pollution control in China. It highlights the critical importance of continuous refinement and adaptation of the market mechanisms to enhance their effectiveness in reducing emissions. Ultimately, this study contributes to the broader discourse on the role of economic incentives in achieving sustainable development, offering insights into the complexities of integrating environmental policies within the framework of China’s rapidly evolving economy.

Adverse selection and search congestion in over-the-counter markets

Asymmetric information about both private valuations of assets and their quality gives rise to uncertainty over sellers’ motives of trade, allowing high-valuation holders of low-quality assets to engage in speculative trades that involve no allocative gains. When sellers compete to find buyers, such speculative behaviour not only dilutes the average quality of assets but also creates a welfare-detrimental congestion externality that lengthens the time on market for each individual seller. A market designer can mitigate the inefficiencies by imposing a transaction tax and, in the case of severe adverse selection, limiting market participation.

Comprehensive-Contribution-Based Primary Frequency Regulation Market Design for the Converter-Integrated Power System

Comprehensive-Contribution-Based Primary Frequency Regulation Market Design for the Converter-Integrated Power System

The Real Effects of Shadow Banking: Evidence from China

We provide firm-level evidence on the real effects of shadow banking in terms of technological innovation. Firm-to-firm entrusted loans, the largest part of the shadow banking sector in China, enhance the borrowers’ innovation output. The effects are more prominent when the borrowers are subject to severer financial constraints, information asymmetry, and takeover exposures. A plausible underlying channel is capital reallocations from less productive but easily financed lender firms to more innovative but financially less privileged borrower firms. Our paper suggests that shadow banking helps correct bank credit misallocations and thus, serves as a second-best market design in financing the real economy. This paper was accepted by Kay Giesecke, finance. Funding: X. Tian and Y. Wang acknowledge financial support from the National Natural Science Foundation of China [Grant 71825002] and the Beijing Outstanding Young Scientist Program [Grant BJJWZYJH012019100003014]. G. Tu acknowledges financial support from the National Natural Science Foundation of China [Grant 72010107001]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.00953 .

A dataset for multi-faceted analysis of electric vehicle charging transactions

This study discloses a dataset of electric vehicles’ (EVs’) charging transactions at a scale for multi-faceted analysis from both EV charger and user perspectives. The data comprises whole sessions that occurred during a charging operation company’s annual commercial operation period, specifically including identifiers and charger location categories. For data acquisition, machine-to-machine wireless communication system with proper retransmission for interruption is utilised. The entire dataset is newly collected and is available with 72,856 sessions from 2,337 EV users and 2,119 chargers. The dataset can be used in a variety of ways for the functioning of power systems and markets, including EV charging service businesses, charger installation siting, demand transaction market design, and long-term investment planning of EV-related infrastructure.

Landscape Design Study of Ancient Stagecoach Road Cultural Bazaar in Qiangang Village, Conghua, China

Qiangang Village in Conghua, Guangzhou, which is rich in humanistic and historical values, as well as rural life style, has in recent years The proposed ancient stagecoach towns have always had an integral part in the development circle of the total construction of the multi-faceted cultural revitalization. However, the regulations in the village the problems of insufficient development experience and single style brought about by insufficient planning are also obvious. The problem of insufficient development experience and single style is also obvious, mainly through the unused land in rural areas. to carry out targeted design and renovation to improve the local living atmosphere through excavation, construction and maintenance of the existing local resources and landscape. The purpose is to increase the popularity of Qiangang's tourism and culture. At the same time, with the ancient stagecoach town through the design of the countryside market, to achieve the promotion of the countryside. the purpose of tourism and economic development, to promote the development of Qiangang Village corresponds to the planning of "cultural trails + ancient village culture style tour". Integration of development.