Post-deregulation Era Research Articles

Trends in and determinants of South African maize exports in the post-deregulation era

Orientation: Agricultural plays a key role in South Africa’s economy, but its exports are constrained by inadequate transport infrastructure, logistical bottlenecks and high production costs. Therefore, most agricultural products are transported to ports by road instead of the more economical rail. Product prices fluctuate with erratic domestic and international supply and demand, which affects competitiveness.Research purpose: The study investigates how transport cost and logistical shortcomings have impacted South African maize exports and competitiveness.Motivation for the study: Little prior research focused on the impact of transport and logistics on the competitiveness of agricultural exports in Africa. Maize, one of South Africa’s leading agricultural products with still-to-be-tapped export potential, was used as an example.Research approach/design and method: Trends in global maize exports and logistics performance are described, as well as South Africa’s share and rankings. Domestic trends in rail and road transport are investigated together with historic costs. Regression analysis investigates determinants of South African maize export volumes.Main findings: South Africa’s logistics-related competitiveness is declining. Rising domestic transport cost has a statistically significant negative effect on maize export volumes while international prices show the expected positive effect. Separate equations for exports through harbours and border posts rendered different results.Practical/managerial implications: Valuable insights are provided into the critical role of logistics efficiency in maize export competitiveness.Contribution/value-add: Empirical findings provide a starting point for more in-depth studies in this area and more informed policy discussions on how the competitiveness of South Africa’s agricultural exports can be enhanced.

Exploring Strategic Choices of Airlines: A Study in Turkish Air Transport Industry

Inter-firm competition in the field of aviation, which accelerates through liberalisation and globalisation trends, has been investigated by numerous studies in the post-deregulation era; however, it has not been adequately addressed in Turkish aviation market. The aim of this study is to unveil the business strategies and strategic typologies of Turkish passenger carriers, as well as the degree of involvement of firms in the strategic planning process, the current outlook, and the competitive structure of the Turkish passenger air transport industry. The research is designed in a way to collect data through interviews with senior executives of the airlines. In terms of findings, the study concludes that five scheduled airlines and three charter airlines have attempted to implement more than one generic strategy at the same time as an “integrated cost and differentiation strategy,” with the primary strategy being cost leadership. Moreover, the passenger carriers in question displayed the features of “analysers-defenders” mainly linked to the competitive typology viewpoint. This study is believed to lead to a deeper understanding of potential explanations why companies have made specific strategic choices regarding generic strategies and strategic approaches. Regulators, individual companies operating in the aviation industry and prospective companies, investors, etc. can use the results of the study to regulate the market, better understand their competitors, set their priorities and plans, evaluate, and assess the market.

INVESTIGATING POINTS-OF-GENERATION POWER LOSSES ON THE NIGERIAN NATIONAL GRID FOLLOWING UNBUNDLING OF THE ELECTRIC UTILITY INDUSTRY

Aside from the domino effects of being radial in structure, the Nigerian national electric grid is currently suffering from deteriorated infrastructures and unpredictable fuel supply for power generation. Massive introduction of green energy-based microgrid alternatives has been proposed as a major means of resolving the challenges. Such paradigm shift needs to be substantiated within the context of the present situation of the grid, for the consumption of policy makers and implementers, hence; the performance of the generation sub-system of the grid in the post-deregulation era is evaluated in this study. Two-year numerical data on the operational capacities of the twenty-nine power plants that are currently connected to the grid are employed to profile the behaviours of the plants over the period. Yearly averages of the three operational capacities of each plant are estimated, and by comparing the respective capacities, generation losses are computed for each of the plants. With 5,063.8 MW yearly average generation capacity in the year 2018, a loss of 61.02 % was experienced on the sub-system; while the generation loss was 61.55 % in the year 2019 that has yearly average generation capacity of 5,062.5 MW. For the two years combined, the average generation capacity is 5,063.2 MW at 61.36 % power loss. These estimations reveal that the pre-deregulation loss profile of the generation sub-system has not been curtailed despite the unbundling of the electric power industry. Generation loss has rather persisted and keeps taking a heavy toll on the electric utility market of the country. Significant deployment of renewable electricity microgrid is therefore required to provide enduring solution.

Imprinting Risky Behavior: The Institutional Origins of Bank CEO Risk-Taking

Commercial banks in the United States have taken on more risk since the 1980s, in line with a shift in the dominant business model in the field, from one emphasizing financial stability to one promoting greater risk-taking to maximize shareholder value. But why did certain banks embrace risky strategies more actively than others? Combining insights from the upper echelons perspective and imprinting theory, we argue that bank CEOs who absorbed the principles of shareholder value maximization through MBA education and started their banking career in the post-deregulation era pursued risk-taking more aggressively than other CEOs. We test this argument using data on 194 large commercial banks from 1993 to 2015. Our analysis shows that CEOs with an MBA who entered banking after the mid-1980s were heavier users of brokered deposits—a riskier funding source that contributed to bank instability during the 2007-2009 credit crisis. They also contributed to the use of brokered deposits indirectly by promoting shareholder-value prescriptions known to boost incentives for managerial risk-taking. By highlighting the role that organizational decision-makers—and their institutionally-embedded cognitive orientations—play in driving the uptake of risky strategies, our study contributes to the literatures on corporate risk-taking and institutional change.

How connected are the U.S. regional natural gas markets in the post-deregulation era? Evidence from time-varying connectedness analysis

The level of market integration is a critical indicator of resource allocation efficiency. In this paper, we evaluate the dynamic spatial integration in the U.S. natural gas market since deregulation and the relative importance of each location in the overall price discovery process. Using data from seven natural gas spot markets in the U.S, as well as one Canadian spot market located on the border between U.S. and Canada, we find that the U.S. regional natural gas market is on average well-integrated in both the short- and long-runs. The connectedness price index we constructed ranges between 55% and 85% during the sample period (1994–2016). Though the connectedness of the market has generally improved, a marked decline has occurred over the past few years, coincident with the shale gas boom. This decline may be attributed to pipeline capacity constraints in an increasingly oversupplied market and the relatively small number of market participants voluntarily reporting transaction activities to price indexes. We find that the role of each regional market in the overall price discovery process has undergone several shifts during our sample period, depending on the specific market conditions at both the national and regional level. Of the eight locations, Henry Hub and Oneok appear to be the two most active markets, both transmitting and receiving a substantial amount of information throughout most of the sample period.

How Connected are the U.S. Regional Natural Gas Markets in the Post-Deregulation Era? Evidence from Time-Varying Connectedness Analysis

The level of market integration is a critical indicator of resource allocation efficiency. In this paper, we evaluate the dynamic spatial integration in the U.S. natural gas market since deregulation and the relative importance of each location in the overall price discovery process. Using data from seven natural gas spot markets in the U.S, as well as one Canadian spot market located on the border between U.S. and Canada, we find that the U.S. regional natural gas market is on average well-integrated in both the short- and long-run. The connectedness index we constructed ranges between 55% and 85% during the sample period (1994-2016). Though the connectedness of the market has generally improved, a marked decline has occurred over the past few years, coincident with the shale gas boom. This decline may be attributed to pipeline capacity constraints in an increasingly oversupplied market and the relatively small number of market participants voluntarily reporting transaction activities to price indexes. We find that the role of each regional market in the overall price discovery process has undergone several shifts during our sample period, depending on the specific market conditions at both the national and regional level. Of the eight locations, Henry Hub and Oklahoma appear to be the two most active markets, both transmitting and receiving most information throughout most of the sample period.

Inflation Dynamics in Pre and Post Deregulation Era in Ghana: Do Petroleum Prices Have Any Influence?

The study looks at the impact of price of petroleum prices on inflation in the Ghanaian economy in the pre and post deregulation era and associated direction of causality as well as the extent of pass through of high international petroleum products price to the domestic retail market. An ARDL model was applied on time series monthly data of various petroleum fuel prices as well as exchange rate. A pass-through formula use by Baig et al, (2007) was also applied. The results reveal that changes in LPG, Kerosene and premium prices have marginal impact on inflation. The pass through analysis revealed Ghana has not pass through more than 50% of increase price of international or import petroleum product of gasoline, kerosene and LPG to the ordinary consumers in the period of the study and this was lower in the post deregulation than pre deregulation. The study therefore recommends full deregulation to continue since it favours lower pass through of fuel price increase in the world market to ordinary consumers whiles may consider gasoline and premium price increase at the expense of kerosene and liquefied petroleum gas price if inflation is to be shielded from fuel price increase.

Rescheduling of real power for congestion management with integration of pumped storage hydro unit using firefly algorithm

Post-deregulation era of power system operation produces more pressure on Independent System Operator (ISO) to ensure congestion free transmission network without destroying system security. In order to relieve transmission congestion, ISO initiates correct methods by maintaining system reliability and security. This paper considers a novel efficient technique for congestion management like generator real power rescheduling by integrating a pumped storage hydro unit (PSHU) in the system. This paper presents an optimization model for congestion management by incorporating the calculation of two factors like generator sensitivity factor (GSF) and bus sensitivity factor (BSF). Optimal location of PSHU is identified using the value of BSF’s and the numbers of participated generators for congestion management by rescheduling their outputs are determined using the value of GSF’s. The impact of PSHU has been investigated to manage transmission congestion which further reduces the congestion cost and improves security of the system. The proposed method for congestion management considering PSHU is tested on modified IEEE-39 bus New England test system and the validity is obtained by considering the same problem without the presence of PSHU. The result of proposed work with proper utilization of PSHU illustrates the impact of PSHU towards the congestion management and also exploration of firefly algorithm for minimizing the transmission congestion cost.

A linear programming-based method for the network revenue management problem of air cargo

One critical operational issue of air cargo operation faced by airlines is the control over the sales of their limited cargo space. Since American Airlines’ successful implementation in the post-deregulation era, revenue management (RM) has become a common practice for the airline industry. However, unlike the air passenger operation supported by well-developed RM systems with advanced decision models, the decision process in selling air cargo space to freight forwarders is usually based on experience, without much support from optimization techniques. This study first formulates a multi-dimensional dynamic programming (DP) model to present a network RM problem for air cargo. In order to overcome the computational challenge, this study develops two linear programming (LP) based models to provide the decision support operationally suitable for airlines. In addition, this study further introduces a dynamic adjustment factor to alleviate the inaccuracy problem of the static LP models in estimating resource opportunity cost. Finally, a numerical experiment is performed to validate the applicability of the developed model and solution algorithm to the real-world problems.

A Linear Programming-based Method for the Network Revenue Management Problem of Air Cargo

One critical operational issue of air cargo operation faced by airlines is the control over the sales of their limited cargo space. Since American Airlines’ successful implementation in the post-deregulation era, revenue management (RM) has become a common practice for the airline industry. However, unlike the air passenger operation supported by well-developed RM systems with advanced decision models, the decision process in selling air cargo space to freight forwarders is usually based on experience, without much support from optimization techniques.This study first formulates a multi-dimensional dynamic programming (DP) model to present a network RM problem for air cargo. In order to overcome the computationalchallenge, this study develops two linear programming (LP) based models to provide the decision support operationally suitable for airlines.In addition, this study further introduces a dynamic adjustment factor to alleviate the inaccuracy problem of the static LP modelsin estimating resource opportunity cost.Finally, a numerical experiment is performed to validate the applicability of the developed model and solution algorithm to the real-world problems.

Determinants of risk: electric utilities pre- and post-deregulation era

This article explains how the Energy Policy Act of 1992 had impacted electric utilities in the United States. Three time periods were used reflecting data pre- and post-deregulation to better assess the effects that could have arisen from the Act. The cross-sectional data consists of 34 electric utilities with three dependent variables and five independent variables. Dependent variables include beta, total risk and idiosyncratic risk. Independent variables include SD of operating margin, return on total assets, asset turnover, financial leverage and liquidity ratio. Descriptive statistics indicate more improved electric utilities, vis-a-vis asset basis, in the years between 2009 and 2010. Furthermore, regression analysis indicates that out of all three dependent variables, idiosyncratic risk is the most important type of risk following the Energy Policy Act of 1992.

The evolution of U.S. rail freight pricing in the post-deregulation era: revenues versus marginal costs for five commodity types

There have now been over three decades of experience with rate-making freedom for all modes of intercity freight transport in the United States. Most evidence suggests that regulatory change has been beneficial for the rail industry and its users. Despite evidence of positive impacts of regulatory reform of U.S. freight transport, there is limited evidence related to long-term pricing trends by commodity in the deregulated era. Moreover, U.S. shipper groups have called for increased regulation of U.S. railroads, citing increased rates and profits, and monopoly pricing to “captive shippers.” This study estimates U.S. railroad revenue-marginal cost ratios for seven different commodities between 1986 and 2008. Interestingly, we find no significant increase in revenue-cost margins for commodities thought to be “most captive” (coal and chemicals), while finding large increases for some commodities thought to be “non-captive.” These results may provide insight into the impacts of regulatory reform in other countries, where there are similar concerns of equitable pricing and financial viability. They suggest that a move toward a more market-based pricing system can enhance railroad viability without harming those with fewer transport options.

Analysis of Causality between Monetary Policy and Economic Growth in Pre- and Post- Deregulated Nigeria Economy. (1970-2009)

The research study takes a look at analysis of Causality between Monetary Policy and Economic Growth in Pre- and Post- deregulated Nigeria Economy (1970-2009). Granger causality analysis was used in order to test the hypotheses about the presence of causality between Money supply and Economic Growth. The study, using annual data covering the period between 1970-1985, 1986-2009 and 1970- 2009, showed causality relationship from economic growth (GDP) to money supply (MS) in the pre-deregulation era, which implies that there is causality relationship from economic growth to money supply (MS). In the post-deregulation era there is no casual relationship between economic growth (GDP) and money supply (MS). However, in the whole period 1970-2009 economic growth (GDP) is the cause of money supply (MS) in the pre-deregulation era, which implies that there is causality relationship from economic growth to money supply (MS). In other words, there is a one-way relationship between Money supply (MS) and economic growth (GDP).

Residential Fixed Investment and the Macroeconomy: Has Deregulation Altered Key Relationships?

Financial deregulation in 1980 potentially altered key relationships between residential fixed investment and key macroeconomic variables. This study uses a vector error correction model (VECM) to examine relationships between residential fixed investment, money, interest rates, and output in pre-deregulation and post-deregulation sub-periods. Results indicate short-term interest rate shocks account for much of RFI variability pre-deregulation. After deregulation, long-term FHA interest rate shocks better account for RFI movements. Results also show that, in the post-deregulation era, residential fixed investment shocks have increased predictive power for overall GDP movements. Thus, the study finds altered relationships between residential fixed investment and macroeconomic variables.

The Effects of Market Structure and Technology on Airline Fleet Composition after Deregulation

The present study examines the effects of market structure and technology on airline fleet composition in the deregulated airline industry. To capture the effects of market structure and technology on airline fleet acquisition and use, a profit function which allows airline fleet in its specification is applied to derive the fleet composition function of an airline. The results show a steady pattern in airlines' adoption of two-engine wide-bodied aircraft during the post-deregulation era, providing evidence that the airlines have responded consistently to changes in market structure and technology in acquiring two-engine wide-bodied aircraft after deregulation.

On the Technically Efficient Organization of an Industry: A Study of U.S. Airlines

In nonparametric analysis of production efficiency, the focus of attention is typically on the individual firm. In this article, we evaluate efficiency in resource utilization at the industry level. We propose an integer programming model to measure the extent of input saving possible if the observed output level of the industry is allocated to an optimal number of identical firms. This approach is applied to data for U.S. airlines covering the period 1970–84. Our results confirm that there were too few airlines prior to deregulation and suggest that there were too many firms during the early years of the post-deregulation era.

Airline Deregulation: The Cost Pieces of the Puzzle

This paper analyzes cost changes in the U.S. airline industry in the pre- and postderegulation era using a panel data set of airlines. Specifically, it seeks to disentangle cost changes attributable to technical change, economies of scale and density, and input prices. The authors estimate a purely general index of industry technical change and in turn analyze its determinants. Despite the slowing of productivity growth in the 1980s, deregulation does appear to have stimulated technical change due to more efficient route structures. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.