Market Design Research Articles

Towards effective implementation of the energy efficiency first principle: a theory-based classification and analysis of policy instruments

The energy efficiency first (EE1st) principle, embedded in the European Union's (EU) recast Energy Efficiency Directive, aims to prioritise cost-effective energy efficiency solutions over new energy supply infrastructure. These solutions encompass not only end-use energy efficiency, but also, notably, demand-side flexibility. This research bridges the gap between the theoretical underpinnings of the principle and practical policy implementation. Drawing on market failure theory, it identifies an inherent bias in EU energy markets in favour of energy supply infrastructure. By highlighting the correction of market failures – from externalities to transaction costs – through targeted policy instruments, it presents a theoretical policy intervention logic for EE1st. Based on this, it offers a set of twenty-nine established and emerging policy instruments linked to specific market failures, thus providing a systematic roadmap for EE1st application. The study concludes that levelling the playing field between energy efficiency and energy supply requires a broad policy response. This extends beyond traditional energy efficiency policy of standards and public financing, and includes instruments such as electricity market design, remuneration schemes for network operators, and emissions pricing.

Incentivising peers in local transactive energy markets: A case study for consumers, prosumers and prosumagers

AbstractA decarbonised future grid should couple technological novelty with innovative market models to efficiently capture the value of grid‐edge decarbonised assets. The transactive energy (TE) concept inverts the centralised grid model by leveraging the evolution of consumers to prosumers to prosumagers. The principal TE market design challenge is transactive control—using market and pricing mechanisms to coordinate autonomous peer interactions, to optimally allocate power and incentivise peers. Peer attraction, incentivisation and retention are all critical for practical TE implementation along three adoption stages, starting from independent peer transactions with the centralised market; to decentralised peer coordination; towards distributed peer‐to‐peer trading. Addressing gaps in related scholarship, the authors investigate the economic positions of distinct peer roles in each adoption stage and two local pricing strategies. Using a real market dataset, trading decisions are simulated over a 1‐year horizon at hourly granularity. Coordinated action achieves better transactive control for the community, with economic superiority over centralised and distributed mechanisms. Distinct peer incentives should equitably align with their contribution to market functionality, such as the value ascribed to prosumagers' flexibility in local pricing and the constrained bargaining power of prosumers in distributed bilateral negotiations.

A Brief Analysis of Hong Kong Public Housing Allocation Mechanism: From the Perspective of Market Design

A Brief Analysis of Hong Kong Public Housing Allocation Mechanism: From the Perspective of Market Design

Inequality and Market Design

Policymakers are often concerned about inequalities in the markets they control. In this letter, I argue that mechanism design has not responded sufficiently to the need for a comprehensive theory of inequality-aware market design. I review some of my recent work trying to fill this gap and identify research directions where input from computer scientists would be particularly useful.

Young interior designers’ creative pattern to draw potential consumers’ attention: Expectation, capital, and strategy

One of the initial problems faced by young interior designers is to make a creative pattern to draw potential consumers’ attention. Their belief in the creative pattern should fit consumers’ expectations. This study scrutinized the relationship between young interior designers and potential consumers about both expectation, designers’ capital, and designers’ strategy to cap-ture the pattern in the design market. To this end, young interior designers (n=100) and potential design consumers (n=100) were recruited as respon-dents. Multiple linear regression and ordinal logisic regression were applied. The data analysis result demonstrated young designers’ marketing patterns to draw potential consumers’ attention. A correlation was found between young designers and design consumers. The expectation, capital, and strategy of designers were found to be interrelated by 48.1%, while those of consumers were interrelated by 28.6%. The research variables, which are designer capital, designer strategy and the two respondent groups, were found to have an impact on the expectation by 94.5%. This study concludes that young designers have a marketing pattern to draw poten-tial consumers’ attention. It showed a relationship between designers’ and consumers’ expectations, designers’ capital or information received by consumers, and designers’ strategy. This study may serve as a refer-ence for young designers’ behaviors when entering the market design.

Market Design Job Market Candidate Profiles 2024

Inspired by the SIGecom Exchanges' annual survey of job market candidates, 1 this is the fourth annual collection of profiles of the junior faculty job market candidates of the market design community. The eleven candidates are listed alphabetically. Along with information regarding the candidate's bio, job market paper, other representative papers, and short research summary, each profile also contains links to the candidate's homepage and CV. We dedicate this effort in memory of all the innocents who were murdered or otherwise harmed in the terrorist attack on Israel on Oct 7, and all the innocents who were killed or otherwise harmed in its ongoing aftermath, and with the hope that all those abducted---children, women, and men---will be back home by the end of this job market season.

Infrastructure Bottlenecks as Opportunity for Local Development: The Case of Decentralized Green‐Hydrogen Projects

AbstractEnergy geography has not scrutinized the role of energy infrastructures and market design for decentralized energy production and local development. The paper addresses this research gap by looking at the emerging green‐hydrogen market in Germany. We argue, first, that the capacity and geography of infrastructures and associated bottlenecks determine how supply and demand can be matched at different scales. Second, market design and associated controversies over infrastructure bottlenecks are important for understanding the green‐hydrogen market and its geography and financing. Conceptually, we draw on the geography‐of‐markets literature. Empirically, we show how infrastructure bottlenecks and market design link the green‐hydrogen to the renewable‐electricity market. As long as the market design requires green‐hydrogen production in geographical and temporal correlation with renewable‐electricity generation, the geography of green‐hydrogen production follows the geography of renewable‐electricity generation. Moreover, bottlenecks in transportation infrastructures offer a window of opportunity for decentralized production and local development.

On the Robustness of Second-Price Auctions in Prior-Independent Mechanism Design

Market designers often only have partial information about the environment and prefer simple mechanisms that are robust to the underlying uncertainty. In “On the Robustness of Second-Price Auctions in Prior-Independent Mechanism Design,” Anunrojwong, Balseiro, and Besbes study the fundamental problem of selling an item to n buyers, when only an upper bound on values is known and the seller minimizes worst-case regret. They establish that the same mechanism is robustly optimal across a wide range of environments for distributions of values: i.i.d., mixtures of i.i.d., exchangeable, and affiliated (the last two capturing positive dependence). Moreover, this robust mechanism is a second-price auction with random reserve price depending on n. Without positive dependence, the problem reduces to the one-buyer case. This result supports the wide use of second-price auctions in practice and allows them to quantify the robust value of competition in auctions.

Importing US-produced hydrogen and its derivatives into the EU – examples of unnecessary complications, barriers and distinctions

The European Union, like many other nations and governments, is counting on hydrogen to play a big role in the energy transition. The EU has set ambitious import targets for hydrogen. This article will examine and comment on select parts of the EU framework that impact the EU’s plan for importing 10 million tonnes of hydrogen. This framework could have the effect of frustrating trade with third countries. Using the United States as an example of an importer, this article looks at (i) guarantees of origin, (ii) electricity market design, (iii) state aid, (iv) eligible carbon dioxide rules, and (v) the carbon border adjustment mechanism, with a view to ascertaining their effect on imports into the EU. The article finds that the EU framework causes unnecessary barriers to trade and may need to be tweaked to enable trade to fulfil its legislative targets.

US macroeconomic determinants of Bitcoin

This study aims to determine the impact of macroeconomic variables on bitcoin prices in the United States. Bitcoin is one of the cryptocurrencies that has the highest price and the most users in the United States in recent years. This study uses monthly data on inflation, interest rates, USD/EUR rates, gold prices, and bitcoin prices. To achieve the objectives of this study, Dynamic Conditional Correlation (DCC) and Multivariate Generalized Autoregressive Conditional Heteroscedasticity (MGARCH) were used. The results showed that there is a negative and significant relationship between the variables of inflation, interest rates, and USD/EUR rates affecting the price of Bitcoin in that period. Conversely, there is a positive and significant relationship between the price of gold and the price of Bitcoin in the United States during that period. An in-depth understanding of how macroeconomic factors such as inflation, interest rates and the USD/EUR rates affect Bitcoin price is key to making smart investment decisions in an increasingly complex crypto market. The findings of this analysis confirm that the significant relationship between macroeconomic variables and Bitcoin price provides deeper insights for investors to anticipate market movements and design adaptive investment strategies.

Peer-to-peer multi-period energy market with flexible scheduling on a scalable and cost-effective blockchain

Peer-to-Peer (P2P) electricity trading is an emerging means for allowing communities to share local energy production and demand response through direct trading. It is projected to play an important role in the future energy market by increasing the incentive to own and operate distributed energy resources (DERs) and participate in demand response (DR). A common approach to implementing P2P trading is with blockchain, however, existing solutions feature limitations. Typically, concerns involve either scalability and high transaction costs or projects implementing a permissioned blockchain that does not provide the trust and decentralization desired. In addition, the majority of market designs are simplified and do not capture the distinct complexity of electricity markets. They do not consider the inter-temporal constraints of appliances and DERs that need to run for multiple periods. Complex market designs that address these issues have not been implemented in blockchain based systems due to the computational limitations of such systems. To improve these two aspects, this paper proposes a market formulation that supports products running multiple periods with flexible scheduling, modeled as a mixed integer linear programming problem that optimizes social welfare. The trading platform is then implemented as a side chain of Polkadot, a network of blockchains designed to be secure, scalable, and economically feasible to foster an ecosystem of application-specific sidechains. This design is demonstrated to improve social welfare and achieve scalability by benchmarking the number of transactions that can be included per second, based upon typical assumptions of the market size. The result is a decentralized and performant system that allows for complex market designs to be implemented in a blockchain environment. This approach simplifies the process for participants, allowing them to bid DER or DR devices, directly and easily, even when this requires constraints across periods.

The Pilot Creation of Sustainable Stall Design to Promote Temporary Pottery Market in the Baan Muang Kung Community

Although local intellectual property products have received support from both the government and private sectors, including increasing consumer interest in craft products, the residents of the Muang Kung community, Chiang Mai province, who produce handmade clay pottery with unique and distinctive shaping techniques and intricate patterns, still lack a market space to accommodate their products. Therefore, it is necessary to study the sustainable market format to help promote community products appropriately and stimulate tourism in this area. This research aims to achieve the following objectives (1) Study sustainable market pattern design principles suitable for community markets (2) Explore the potential capabilities and the local community’s requirements in market (3) Propose sustainable market design guideline to promote community products. This research primarily explores the sustainability value of a sustainable market within the field of retail design, employing qualitative research methods such as interviews, observational note-taking, photography, and comparative case study analysis. The on-site survey to determine the project's feasibility involved convening a community meeting with 50 residents to discuss findings. The outcomes of this gathering were then used in designing the temporary market. The findings present design guidelines that illustrate how markets continue to play important socio-economic roles in local communities, serving as key components that can be transformed to promote sustainable development. The proposed design practice guidelines encompass considerations such as site layout, the application of sustainable design principles, including the thoughtful selection of sustainable materials, the incorporation of flexible design, and the creation of participatory area experiences to attract people.

Designing new energy markets to promote renewables

The drive toward decarbonization has spurred the growth of renewable energy sources, reshaping energy production and consumption patterns. As the energy landscape evolves, so must the market design supporting it to steer the integration of renewable energy. Addressing the challenges of promoting distributed renewable energy is paramount for developing a cleaner energy system and meeting decarbonization targets. This study presents a modern market design that efficiently integrates renewable energy sources, long-term contracts, and flexibility technologies into a single evolved market framework. The approach described herein provides proper price signals for diverse assets and decouples renewable energy from fossil fuels, ensuring economic viability and efficient integration. Taking into consideration key barriers and drivers, the findings provide insights for perfecting energy markets, meeting decarbonization targets, and guiding policymaking to boost cleaner energy systems.

Human-Centered Design: an Implementation of Methods In Designing Kendari Fish Market As An Urban Design Object

In line with the regional development references contained in the medium-term regional development plan (RPJMD), Kendari City 2010-2030 has a focused goal to be achieved. Development of the Kota Lama area into an infrastructure area through its regional and cultural potential. Given the fact that there have been no significant changes regarding the development of the Kota Lama area compared to other areas in Kendari City which are more advanced, it is necessary to make efforts to harmonize this by looking at the context of the strategic location of the area and the conditions of the surrounding community. The majority of people whose profession is fishermen have made the Kendari City fish market a vital object that needs further attention for regional development efforts in accordance with the 2010-2030 Kendari City RPJMD. By focusing on humans in terms of activity and behavior patterns, the Human-Centered Design method is the ideal method to be implemented in the design of the Kendari City fish market. This design proposal discusses about implementation of Human-Centered Design method by applying 5 stages of the method with each stage having different techniques but still referring to humans as the main focus. By generating design alternatives at the Human-Centered Design method stage, the determining aspect for the elaboration of the best alternative that will be implemented is the aspect of circulation and community gathering points, in terms of human patterns and behavior at the Kendari City Fish Market site. The application of this method is used so that the design of an urban design object can return to the fundamental realm, namely focusing on humans. This is important to apply, especially to the urban design objects, because cities must be able to fulfill basic human needs so that the expected development can be realized.

Blockchain-enabled solutions for fair and efficient peer-to-peer renewable energy trading: An experimental comparison

Peer-to-peer (P2P) renewable energy trading, facilitated by designing P2P market smart contracts on blockchain servers, is a promising approach to increase investments in cleaner energy generation. To enhance trading efficiency and pricing fairness, as the major challenges of P2P market designs, this study introduces two new market mechanisms, Hybrid Auction Coalition (HAC), and innovative coalition business model (ICBM), respectively. The performance of these market mechanisms is contrasted with existing mechanisms from the literature with respect to electricity bills, market efficiency, fairness, and blockchain feasibility using a comprehensive list of indicators including costs and profits, fairness, market efficiency, and technical viability. Compared to traditional billing, ICBM and HAC increase sellers’ profit by 88% and 66% respectively, while both impose 13% more costs on buyers. ICBM and HAC also set the fairest prices compared to the existing markets. ICBM is shown to improve blockchain feasibility and market efficiency due to lighter on-chain calculations, and absolute clearing mechanisms. The results also demonstrate that HAC outperforms standalone auctions in every aspect which endorses the hybridization benefits.

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

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.

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

PurposeThis 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/approachThe 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.FindingsThe 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/implicationsThis 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 implicationsThe 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/valueThis 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.

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)