Market Supply Curves Research Articles

Shift or Pivot? Market Entry and Exit With Linear Supply and Demand Curves

Textbooks commonly misrepresent the effects of market entry and exit by consumers and producers as parallel shifts of linear market demand and supply curves. Such portrayals are inconsistent with the underlying premise that a market-level curve is the horizontal summation of individual-level curves. A more accurate depiction is a pivot: entry flattens (and exit steepens) a market-level curve. Reconceiving the effects of entry and exit as pivoting, rather than shifting, the curve has important implications for own-price elasticities, consumer surplus, producer surplus, the incidence of taxation, and the competitive market adjustment to a long run equilibrium. JEL codes: A22, B40, D01

МАРКЕТИНГОВІ ДОСЛІДЖЕННЯ НА ПРОМИСЛОВИХ ПІДПРИЄМСТВАХ

Marketing is the most difficult to manage sphere of activity of the enterprise. Due to various contacts with the market (one way or another), there are numerous touch points and, as a result, as many control requirements. It is advisable that marketing activities are not limited to solving current problems, but will include, for example, projective analysis of information about customers. Therefore, in order to meet the set requirements, management systems must be flexible and multifaceted. Here the problem appears quite clearly: the management system that meets the requirements of the organization can be quite cumbersome and complex. Economic evaluations of the effectiveness of the marketing activity of an industrial enterprise must be carried out on the basis of general methodological approaches to the evaluation of production and a generally accepted system of indicators. In addition, the differences may lie only in the standards of comparison used, without changing the methodology itself and the system of evaluation indicators. The purpose of the article is to determine the current methods of marketing research in industrial markets. Industrial marketing research is a broad field of activity related to the systematic collection, processing and analysis of data in the field of marketing competence of industrial companies. Their goal is not only to identify problems, but also to identify market opportunities related to achieving the desired competitive position in a specific market. Industrial marketing research includes analysis of sales volumes and marketing opportunities, sales forecasting, and determination of market supply and demand curves. Data obtained during market research are used to perform basic management functions, such as planning and controlling the activities of the entire industrial enterprise. Industrial marketing research often involves the search for primary data when definitive research is needed or when supporting data is limited for decision making.

Transitioning from illegal rooftop dwellings to solar PV: Market-based incentive design and techno-economic analysis

Renewable energy plays a crucial role in achieving net-zero emissions. As an island with a high population density, Taiwan has increasingly favored rooftop solar photovoltaic (PV) systems over ground-mounted installations due to land-use competition. However, illegal rooftop dwellings in urban areas pose significant obstacles to renewable energy deployment. This study proposes a market-based incentive scheme for rooftop solar adoption to encourage property owners to shift away from illegal rooftop dwellings. We construct market supply curves for illegal rooftop rental housing based on real-world rental data and conduct a techno-economic analysis to examine the required government subsidy. The results provide empirical evidence for an important nonlinearity in the supply curves, implying that linearity-based policy frameworks may not be effective in achieving optimal results. We also identify that opportunity costs linked to rental loss constitute a substantial portion of total costs, deterring the owners from adopting the shift. The findings indicate that the existing feed-in-tariff policy is inadequate to incentivize property owners to deploy rooftop solar panels. The proposed scheme embraces the three dimensions of sustainable development—economic, social, and environmental, which could benefit cities worldwide with illegal rooftop structures.

Climate change, extreme winter weather and electricity production costs

We analyze the characteristics of the Northeast US’s PJM wholesale electricity market production cost and supply curve during the most extreme winter weather event in modern meteorological history within the PJM territory. It is seemingly ironic that the cause of such extremely cold weather events is global warming. The experience from this event demonstrates that the annual-summer-peak-centric nature of the PJM capacity planning process does not address the adequacy of supply during the winter. The PJM production cost curve is estimated and compared across recent winter season peak months to understand how large the price responsiveness to load changes can be during extreme winter weather events and how winter weather events can reduce system reliability for a summer-capacity-planning-centric power market. Therefore, PJM and other power pools (such as ERCOT in Texas) have not considered secondary peak seasons in capacity planning.

EFECTOS A CORTO PLAZO DEL CIERRE DE LAS CENTRALES TÉRMICAS DE CARBÓN EN EL MERCADO ELÉCTRICO ESPAÑOL

ABSTRACT: This article analyses the effect of the closure of the Spanish coal-fired power stations on the price and quantity of energy sold in the daily electricity market. The comparative statics analysis is based on the hourly data of energy offer and demand bids published by the OMIE (Operator of the Iberian Energy Market) and made by the participants in the daily electricity market during the year 2018. Our analysis does not require any simulation of the market supply and demand curves, since they are obtained by aggregation using real data from the wholesale market. The main conclusion of our analysis is that, after the closure of the coal-fired stations, the hourly price of energy would increase 12,06% on average while the average amount of energy would decrease 2,57%. Keywords: Price of electricity; coal plants; ecological transition; supply and demand surpluses; renewable energy.

The Impact of SNCF Strike on Ridesharing: A Novel Approach of Consumer Surplus Estimation Using BlaBlaCar.com Data

We estimate the impact of the strike of the French railway monopoly (SNCF) on ridesharing usage and user welfare. From April to June 2018, railway workers went on strike every two out of five days. We collect daily trip level data from the public API of BlaBlaCar, the largest inter-city ridesharing platform in France. Our data covers the entire strike period and one month afterwards of 78 representative routes in France. Our results show that on an average strike day, demand increases by 29 percent while supply increases by 7 percent. We then use a novel method to estimate the price elasticity of the demand and consumer surplus of each route per day. Different from traditional methods that rely on equilibrium analysis, we exploit the transaction-level data to construct the market supply curve and the observed transaction curve, from which a true market demand curve and a consumer surplus are conservatively estimated. We further use propensity score matching to impute the consumer surplus estimate of an additional 318 routes that have not been included in the initial data collection to give a more comprehensive evaluation for the whole of France. On an average non-strike day, BlaBlaCar generates 79,413€ of consumer surplus, while an average strike day generates 97,166€, an increase of 17,753€. Our work suggests that inter-city ridesharing contributes substantially to the social welfare, serves as a flexible substitute for the railway service and ridesharing should be integrated into the design and management of the transportation network.

Market Model with Positive Demand Curve Overthrows Marxist and Keynesian Model

In this paper is analyzed the demand and supply side from the perspective of Marxist theory. The supply and demand side is both analyzed with their respective characteristics in capitalism, socialism and in a mixed economy. The possibilities of a macroeconomic equilibrium by considering the following concepts such as commodity, value, price, profit are analyzed. The aim of this paper is: to develop through a non-exhaustive analysis, the common features and differences between macroeconomic models of the aggregate market in the two systems, to build the aggregate market of a macroeconomic model by taking into account these characteristics and to emphasize its importance for the economy. In conclusion, differences between concepts related to macroeconomic equilibrium were identified. A new equilibrium model for the socialist and capitalist model was built. In centralized economies, demand and supply curve lies in a parallel curve with the X-axis, were domestic product is placed. In the market economy model, the demand and supply curve has a positive slope and stretch simultaneously over the market price line. They do not intersect with each other as in the Classical and Keynesian model. This market model applies to the economy. It allows governments, central banks, research institutions, universities, various researchers, etc. to analyze macroeconomic indicators. In this paper, the model is applied to the Albanian economy. In this paper, we used the methods of analysis and synthesis, comparison and description, the method of creating virtual market models, etc.

Can electricity market prices control power-to-heat production for peak shaving of renewable power generation? The case of Sweden

100% renewable energy systems require high penetration of variable renewable electricity (VRE) generation. This causes the net load in the system to be more variable and could cause operational problems in local power grids. Demand side management (DSM), such as fuel or energy carrier switching in response to a price signal, can provide flexibility to meet the increased variability. This study investigates the impact of VRE production on electricity prices and their potential to act as an incentive to control district heating power-to-heat (P2H) production in order to shave VRE production peaks. Also, the potential to increase P2H production flexibility with additional heat storages is studied. Electricity prices are simulated by modification of historical electricity market supply curves. A heat storage component is implemented in an existing model for district heat production. The results show that P2H production is significantly increased (up to 98%) when electricity prices are influenced by VRE production. Thermal storages further increase the P2H production by up to 46%. The increased P2H production, however, does not necessarily coincide with the peaks of VRE. Thus, in conclusion, the pricing mechanism on the Nord pool electricity market is insufficient to control P2H production for shaving VRE production peaks.

Market Design for CO<sub>2</sub> Abatement in Coal-fired Power Industry Based on Combinatorial Auction

Market design is the core issue for reducing CO2 emissions from coal-fired power industry, however the current carbon market has some deficiencies in this area. Utilizing the combinatorial auction way, this article proposed an enhanced carbon market special for power industry by complementing current cap-and-trade system. Concretely, the enhanced market design is improved by lower- and upper-bound price, combinatorial auction for carbon allowances initial allocation, carbon submarket trade, and electricity-environment coordinated regulation. In the enhanced market, generator competes for initial carbon allowances as a form of delivering a demand function to market organizer, which can be depicted as and settled by a stochastic linear programming model. Given the carbon allowances market supply curve (i.e., total initial allowances issued), environment regulator matches the market demand curve (i.e., through adding up those individual bid demand curves together) in a uniform market clearing price (MCP) way; by this means, initial carbon market equilibrium is reached. Under this enhanced mechanism, price of bidders is ordered according to their operational advantage, moreover, respective quantity of bid allowances is also sequenced in the same way. Comparing with current cap-and-trade system, the enhanced market design can efficiently motivate generator to reduce CO2 emissions through controlling CO2 intensity per sold MWh. Numerical simulation further verified the efficiency of this enhanced carbon market design.

Alternative representation of the deadweight loss triangle in oligopoly

PurposeThe purpose of this paper is to provide an alternative way of calculating the deadweight loss triangle in oligopolistic markets which takes inefficient use of inputs into account. The author shows that the result of the approach coincides with the one that exists in the economics literature. However, the author explicitly accounts for the inefficient use of inputs.Design/methodology/approachThe market supply curve that is extensively used for competitive markets has been reconsidered for the imperfectly competitive markets. The necessary condition for the efficient use of resources is investigated and a price level is derived at which the market output of oligopoly is produced efficiently. The degree of inefficient use of inputs is reported via the definitions of Input Inefficiency Measure (IIM) and the Ratio of Inefficient usage of Inputs to Total Deadweight Loss (RITD).FindingsThe author discovers that the area under the supply curve of the competitive market corresponds precisely to the minimum total costs of producing any given market output. To make this important finding operational in imperfectly competitive markets, the IIM reports the degree of distorted input allocation among firms with differentiated cost structures in producing a given equilibrium imperfectly competitive market output. In measuring the monopoly power, it is known that CRn or HHI market concentration indexes, which are calculated based on the market shares of firms regarding the demand side of the market, are widely used. The measures, which take into account of the distortions in input usage, and hence, the supply side may be considered as an additional index. For example, if the market demand were shared equally by two firms (no dominant firm with respect to the demand side), it is known that the leadership would still arise when the costs of firms differed as in the dominant firm model in favor of the lower cost producing firm.Research limitations/implicationsThe author recommends some more theoretical research extensions of the approach suggested here to other oligopolistic markets like the Cournot-Nash, the Stackelberg and other models. In all cases, there is a need for additional work to find some measurable variables in practice in order to estimate the input inefficiency given by the two measures and differentiate it from the inefficiency of units of outputs that are not produced.Practical implicationsIt may be interesting to decompose the various estimates of welfare losses due to monopoly power as a percentage of GNP that were discussed in the literature into two inefficiency components: units of outputs that are not produced and units of inputs that are misallocated among firms.Social implicationsThe government officials might be interested in assessing the degree of loss of input usage by firms in addition to output loss in oligopolistic markets summarized by the two inefficiency indexes. Law economists may be inspired in discussing the issue of input inefficiency in the context of on antitrust policy.Originality/valueThe author emphasized that the area under the market supply curve minimized the aggregate cost of producing a given total market output in competitive markets. Having recognized the importance of this finding, the author tried to apply it to imperfectly competitive markets and especially to the calculation of deadweight loss in such markets. The author showed that the total social cost could be calculated by including the input inefficiency which can be defined as the extra cost to society arising from not using the most appropriate economic resource allocation among firms in addition to the usual deadweight loss triangle. Moreover, the author had to introduce some more new terms like the market supply curve allocation, the adjusted competitive price, efficiency gain and so on, as they were necessary along the course of the analysis.

Estimating Strawberry Attributes’ Market Equilibrium Values

We conducted choice experiments with both strawberry producers and consumers. Consumer and producer willingness to pay (WTP) for the fruit attributes were estimated using mixed logit models. Through simulation using the mixed logit model results, we derived the market equilibrium prices, supply and demand curve, as well as quantities demanded and supplied for every fruit attribute. We found the highest equilibrium price was for strawberry internal color followed by flavor. Strawberry breeders can use the information when setting breeding targets, allocating resources appropriately during their breeding process and focusing on the improvement of attributes that produce the highest social surplus and total revenue.

Heterogeneity of Trading Information and the Price-Volume Relationship: Theory and Evidence

The purpose of this paper is to propose a new theory regarding the heterogeneity of trading information and price-volume relationship. Basically, the heterogeneity of trading information influences the market demand and supply curves of a stock (or equity index), which in turn affects the price–volume relationship for that stock (or index). This theoretical framework helps resolve existing issues regarding price–volume relationships for equities. For example, empirical experience demonstrates that stock price reversals from tops or rebounds from bottoms are often accompanied with extremely large trading volume; however, an abnormal large volume is not always, but more likely, to lead a price reversal (or rebound). This is due to the greatest extent of heterogeneity of trading information among traders at the time of price reversals (or rebounds). Empirically, this investigation focuses on the price–volume relationship surrounding stock price reversals (or rebounds), which clarify the role of information. The results strongly support the proposed framework.

Competitive Equilibrium in the Italian Wholesale Electricity Market

The market power analysis in electricity market is relevant for understanding the competitive development of the industry’s restructuring and the liberalization process. The paper analyzes the market power exercised by power generators in the Italian wholesale electricity market. Following the approach of Wolak (2003, 2009), the extent of market power is measured using the Lerner index computed as the inverse of arc elasticity of the residual demand faced by each Cournot competitors. Then, the market supply curves have been adjusted to entail market power effects and the new market resolutions were derived. The new equilibrium prices are the competitive ones and represent the market clearing price that would have been if the electricity market was competitive and the effects of unilateral market power were removed.

Seeking an Alternative Modality to the Management of Nigeria's Fertilizer Subsidy Scheme-An Empirical Approach to the Case Study of Ondo State (1976-1996)

Problem statement: The objective of Nigeria's fertilizer subsidy schem e was to make inorganic fertilizers readily available to farmers at affordable prices in order to boost food product ion in the country. Shortly into the scheme, farmers co mplained that fertilizers were not received at the time of need and in sufficient quantities. Approach: Using Ondo State, Nigeria as a case study, to determine; inter alia, if the farmers' complaints w ere founded and if so, to design alternative ways o f administering the scheme such that the lofty goals for which it was established could be realized. Methodology: Primary data were collected from 596 farmers randomly selected from the state. Secondary data were collected from purposively sele cted NAFCON, AISC, ADP, FPDD (now FFD) and a published book source. The primary data were analyzed with the use of descriptive statistics suc h as percentages and means. The secondary data were analyzed with the use of OLS and TLS regression methods. Results: The descriptive analyses showed that farmers in On do State did not receive their fertilizer supplies in sufficient quantities and at the time of need, despite the fact that supply sur passed adoption (demand) for most years of the study perio d. The inferential analyses showed that a subsidy introduced into NAFCON and other producing firms' production processes would engender increased output and induce fertilizer prices to fall in Ondo State. Conclusion: These results showed that farmers in Ondo State did not receive their fertilizer supp lies at the time of need and in sufficient quantiti es due to leakages and diversion of the substance from the vast bureaucratic distribution channels. As an alternative, if subsidy was administered through th e producing firms' production processes, output of fertilizers would have increased making the market supply curve of fertilizers to shift to the right. This would have also caused the price of fertilizer to f all in the state.

The Limitations of Experimental Design: A Case Study Involving Monetary Incentive Effects in Laboratory Markets

We replicate an influential study of monetary incentive effects by Jamal and Sunder (1991) to illustrate the difficulties of drawing causal inferences from a treatment manipulation when other features of the experimental design vary simultaneously. We first show that the Jamal and Sunder (1991) conclusions hinge on one of their laboratory market sessions, conducted only within their fixed-pay condition, that is characterized by a thin market and asymmetric supply and demand curves. When we replicate this structure multiple times under both fixed pay and pay tied to performance, our findings do not support Jamal and Sunder’s (1991) conclusion about the incremental effects of performance-based compensation, suggesting that other features varied in that study likely account for their observed difference. Our ceteris paribus replication leaves us unable to offer any generalized conclusions about the effects of monetary incentives in other market structures, but the broader point is to illustrate that experimental designs that attempt to generalize effects by varying multiple features simultaneously can jeopardize the ability to draw causal inferences about the primary treatment manipulation.

Order Flow and the Formation of Dealer Bids: An Analysis of Information and Strategic Behavior in the Government of Canada Securities Auctions

Using data on Government of Canada securities auctions, this paper shows that in countries where direct access to primary issuance is restricted to government securities dealers, Order-flow information is a key source of private information for these security dealers. Order-flow information is revealed to a security dealer through his interactions with customers, who can place bids in the auctions only through the security dealer. Since each dealer interacts with a different set of customers, they, in effect, see different portions of the market demand and supply curves, leading to differing private inferences of where the equilibrium price might.

The Limitations of Experimental Design: A Case Study Involving Monetary Incentive Effects in Laboratory Markets

We replicate an influential study of monetary incentive effects by Jamal and Sunder (1991) to illustrate the difficulties of drawing causal inferences from a treatment manipulation when other features of the experimental design vary simultaneously. We first show that the Jamal and Sunder (1991) conclusions hinge on one of their laboratory market sessions, conducted only within their fixed-pay condition, that is characterized by a thin market and asymmetric supply and demand curves. When we replicate this structure multiple times under both fixed pay and pay tied to performance, our findings do not support Jamal and Sunder's (1991) conclusion about the incremental effects of performance-based compensation, suggesting that other features varied in that study likely account for their observed difference. Our ceteris paribus replication leaves us unable to offer any generalized conclusions about the effects of monetary incentives in other market structures, but the broader point is to illustrate that experimental designs that attempt to generalize effects by varying multiple features simultaneously can jeopardize the ability to draw causal inferences about the primary treatment manipulation.

Deregulation in the Electric Utility Industry: Excess Capacity and the Transition to a Long‐Run Competitive Market

ABSTRACT Existing analyses of electricity deregulation have focused on situations where horizontal market power is present. This paper instead evaluates a market where a competitive outcome is more likely. Competitive market supply and demand curves for electricity have been simulated for a twenty‐state region. These simulated supply and demand curves are used to predict short‐run and long‐run prices for electric power. Many consumers will see a drop in the portion of their electric bills accounted for by the current economic costs of supplying them with electricity. Adjustments to consumers’ bills for stranded cost recovery will be determined by legislators and regulators on a state‐by‐state and utility‐by‐utility basis. Because of excess capacity that currently exists in the industry, the decline in prices will be greater in the short run than in the long run.

Sufficient Condition for the Backward Bending Supply Curve

In several cases where self-consumption of the production by the proucer-cum-consumer is important, public policy debates often consider inter alia the issue of backward bending supply curve of the product. In the present paper, the sufficient condition for obtaining an individual’s backward bending supply curve is examined. It is argued that although theoretically the possibility of an individual’s supply curve bending backward cannot be ruled out, in practice, it is extremely difficult to find such cases. The market supply curve is even less likely to be backward bending. The policy makers, therefore, need not get concerned about such hypothetical possibilities.

Measuring research benefits in an imperfect market: reply to Holloway

Voon's original claim (Voon, 1994) was that the benefits of generating through research a parallel shift in a monopolist's marginal cost curve exceeded the benefits from generating the same shift if the curve represented the market supply curve for a competitive industry. As we noted in a subsequent comment, this result was wrong, with Voon's error being due to the use of incmrect normalization procedures in his simu­ lation analysis. We further articulated the general principle that welfare from an innovation in a mono­ poly industry would be greater than in a structurally­ equivalent competitive industry if and only if the deadweight loss due to monopoly decreased as a consequence of that innovation. Finally, we opined that this condition will normally not be met in mono­ poly or other imperfectly competitive structures because, in seeking to capture benefits from the inno­ vation, a monopoly or oligopoly industry will generate less output expansion than would occur under perfect competition, thereby causing the deadweight loss to increase.