Market Power Research Articles

Fostering firm value: Unpacking the effect of circular economy disclosure via social media

AbstractGrowing environmental concerns and the need to address global challenges such as climate change and resource exploitation have highlighted the relevance of the circular economy (CE) and the importance for companies to communicate circular practices externally. While academic literature has examined the dissemination of CE information, the effects of CE disclosure (CED) remain underexplored. This study aims to fill this gap by exploring, through signaling theory, the influence of CED via social media on firm value. The econometric analysis, based on 366 observations (an unbalanced panel of 133 internationally listed companies for the period 2019–2021), demonstrates that CED via Twitter serves as a powerful market signal, positively influencing investor perception and increasing firm value. This study enlarges the literature relating to the association between non‐financial disclosure and firm value, and the effects of CED. Furthermore, it extends the debate on the use of social media as disclosure tools and broadens the scope of signaling theory.

Optimal regulation strategy of energy storage combined with new energy stations participating in power market

Abstract Energy storage systems can efficiently address the challenges of inadequate power grid regulation capabilities and the escalating complexity of maintaining frequency stability due to a significant integration of renewable energy sources. Under the background of power marketization reform, it is highly important to establish a perfect power market mechanism and incorporate energy storage into it to stimulate energy storage advancements. Consequently, this paper proposes an optimization model for energy storage in conjunction with new energy stations participating in the power market, following the introduction of new energy storage technologies. It effectively verifies the optimization energy storage charge and discharge duration with examples. It achieves the realignment of output curves for coordinating the operation of new energy stations and energy storage facilities, enabling peak shaving and load shifting to minimize the peak-to-valley differential in the system load. It makes the overall output more ‘stable’ and improves the efficiency of the comprehensive operation of wind, solar, and energy storage. In the future, the engagement of energy storage will be essential in the market, and it is crucial to propose practical suggestions to enhance its participation.

Diversified Production and Market Power: Theory and Evidence from Renewables

Diversified Production and Market Power: Theory and Evidence from Renewables

Quantities and Covered-Interest Parity

Studies of intermediated arbitrage argue that bank balance sheets are an important consideration, yet little evidence exists on banks’ positioning in this context. Using confidential supervisory data (covering $25 trillion in daily notional exposures) we examine banks’ positions in connection with covered-interest parity (CIP) deviations. Exploiting cross-sectional variation in CIP deviations that have largely challenged existing theories, we document three novel forces that drive bases: 1) foreign safe asset scarcity, 2) market power and segmentation of banks specializing in different markets, and 3) concentration of demand. Our findings shed empirical light on the interplay of frictions influencing banks’ provision of dollar funding.

The political economy of electricity market coupling: Comparing experiences from Europe and the United States

Advancing the integration of neighbouring power markets is widely identified in the literature as a key enabler of power system efficiency, flexibility, and variable renewable energy integration. Nonetheless, the existing economic literature offers only partial explanations of why greater market integration is difficult to achieve in the real world despite its evident advantages in terms of overall welfare, supply security, and competitiveness. It is argued that power market coupling is an inherently political process involving significant institutional contestation and adaptation, and hence requires a more nuanced political analysis to be fully understood. This paper adds to the existing literature by conducting a comparative political economy analysis of electricity market coupling processes in Britain, Italy, and California, spanning from 2013 to 2021. It seeks to unpack how differences in the political economy contexts of these jurisdictions influenced the electricity market coupling process with their respective neighbouring systems. The analysis draws on 86 key policy documents, and 53 in-depth interviews with senior power system stakeholders in the three jurisdictions. Results widely align with claims in the political economy literature that market coupling outcomes do not simply reflect the most efficient solution. While all three jurisdictions have shown a commitment to enhance regional integration of short-term wholesale energy markets, there is considerable variation in policy outcomes, particularly the extent to which different segments of the market have been coupled. These differences can largely be attributed to variations in the political economy contexts of the three jurisdictions, including multi-level governance structures, diplomatic relations with neighbouring countries, and interactions with national political priorities and contexts. The main implications for the governance of electricity market coupling are discussed in the conclusion.

A dispatch model coordinated power and heating system in electricity market considering resource aggregation and decomposition

Abstract With the high proportion of installed capacity of renewable energy, the stability and robustness of the new power system need to be improved. The integration of the power system and heating system is an orientation to promote the ability of wind power accommodation. This thesis first introduces the integrated model considering power and heating systems. However, the integrated model requires the topology in the heat network and the parameters of heat devices, which is difficult to access and complicated to solve. Under this situation, the heat devices are aggregated into an equivalent generation unit in the power network. A coordinated dispatched model based on resource aggregation and decomposition is then proposed. In simulation, the economy, flexibility, and security of a given formulation are investigated through marginal price and units’ behavior.

The Effect of Export Market Access on Labor Market Power: Firm-level Evidence from Vietnam

We examine the impact of an export market expansion created by the US-Vietnam Bilateral Trade Agreement (BTA) on labor market competition among Vietnamese manufacturing firms. We measure distortionary wedges between equilibrium marginal revenue products of labor (MRPL) and wages nonparametrically and find that the median firm pays workers 59% of their MRPL. The BTA permanently decreases labor market distortion in manufacturing by 3.4%, mainly for domestic private firms. The median distortion is 26% higher for women than men, and the decline in distortion for women drives the overall distortion reduction. We shed some light on the mechanisms for these results.

Investigating and predicting the role of photovoltaic, wind, and hydrogen energies in sustainable global energy evolution

The global shift toward next-generation energy systems is propelled by the urgent need to combat climate change and the dwindling supply of fossil fuels. This review explores the intricate challenges and opportunities for transitioning to sustainable renewable energy sources such as solar, wind, and hydrogen. This transition economically challenges traditional energy sectors while fostering new industries, promoting job growth, and sustainable economic development. The transition to renewable energy demands social equity, ensuring universal access to affordable energy, and considering community impact. The environmental benefits include a significant reduction in greenhouse gas emissions and a lesser ecological footprint. This study highlights the rapid growth of the global wind power market, which is projected to increase from $112.23 billion in 2022 to $278.43 billion by 2030, with a compound annual growth rate of 13.67%. In addition, the demand for hydrogen is expected to increase, significantly impacting the market with potential cost reductions and making it a critical renewable energy source owing to its affordability and zero emissions. By 2028, renewables are predicted to account for 42% of global electricity generation, with significant contributions from wind and solar photovoltaic (PV) technology, particularly in China, the European Union, the United States, and India. These developments signify a global commitment to diversifying energy sources, reducing emissions, and moving toward cleaner and more sustainable energy solutions. This review offers stakeholders the insights required to smoothly transition to sustainable energy, setting the stage for a resilient future.

Incumbent Banks Vs New Entrants: The Impact of Peer-To-Peer Lending and Market Power on The Stability of Islamic Commercial Banks

Incumbent Banks Vs New Entrants: The Impact of Peer-To-Peer Lending and Market Power on The Stability of Islamic Commercial Banks

The impact of trade liberalization on firms’ product and labor market power

Abstract This paper examines the impact of trade liberalization on firms’ product and labor market power. We estimate the prevalence and intensity of price-cost markups and either wage markups or wage markdowns, taking the dependence between these model-consistent measures of product and labor market power into account. Exploiting reductions in tariffs upon China’s World Trade Organization accession, we find that trade liberalization has not switched firms away from exercising product and labor market power. Reducing input tariffs has widened price-cost markups, narrowed wage markdowns, and widened wage markups at the firm level. We reveal heterogeneous trade liberalization effects on the intensity of firms’ product and labor market power.

The impact of competition on environmental and social performance in the MENA banking sector

AbstractThe study analyzes the impact of competition on environmental and social performance. Based on data collected from 82 banks in the banking industry across nine emerging Middle Eastern and North African (MENA) countries from 2015 to 2021, the results indicate that heightened competitive pressure compels banks to enhance their efforts in environmental and social initiatives. Additionally, a positive correlation is observed between greater Board gender diversity (BGD) and improved environmental and social performance. Finally, the results indicate that the negative impact of market power on environmental and social performance is less pronounced in banks with higher BGD, those operating in countries with a better institutional environment, and in state‐owned banks. In contrast, the negative impact is more pronounced in Islamic banks. Our research findings provide insights into the current discourse on strategic decision‐making in the context of sustainability, shedding light on the benefits associated with competition and gender diversity.

Impact of International Food Standards on Firms’ Export Behavior: A Case of Indian Marine Industry

Exporters of food products face stringent standards due to the possibility of contaminations and diseases. Standards are complex, varying across countries, time and stage of production. The cost of compliance is, typically, borne by the exporting firm. This paper examines the impact of international food standards on the export behavior of Indian marine firms. Standards negatively affect the value of exports and participation in trade. Further, there is a heterogeneous impact of standards. Relatively larger, profitable and productive firms are able to comply with the standards and gain from them. The long-term implication could be the concentration of market power in this industry.

Gender stereotypes in Lola Shoneyin’s the secret lives of baba Segi’s wives

This research focuses on gender stereotypes in selected African literary text. The way in which some African writers view gender inequalities and stereotypes in their characters is explored. We will also be able to see who is involved and affected by these gender inequalities and how. What determines beliefs about the ability and appropriate role of women? An overwhelming majority of men and women born early in the 20th century thought women should not work; a majority now believes that work is appropriate for both genders. Betty Friedan (1963) postulated that beliefs about gender were formed by consumer goods producers, but a simple model suggests that such firms would only have the incentive to supply error, when mass persuasion is cheap, when their products complement women’s time in the household, and when individual producers have significant market power (1). Such conditions seem unlikely to be universal, or even common, but gender stereotypes have a long history. To explain that history, we turn to a second model where parents perpetuate beliefs out of a desire to encourage the production of grandchildren. Undersupply of female education will encourage daughters’ fertility, directly by reducing the opportunity cost of their time and indirectly by leading daughters to believe that they are less capable. Children will be particularly susceptible to persuasion if they overestimate their parents’ altruism toward themselves. The supply of persuasion will diminish if women work before childbearing, which may explain why gender-related beliefs changed radically among generations born in the 1940s.

Does FinTech credit affect firms’ cost of capital and capital structure?

This paper explores the effect of FinTech credit on firms’ cost of capital and capital structure. Based on a sample of 3,491 non-financial firms operating in 38 OECD countries during the period 2015–2021, we estimate that the economic effect of FinTech credit is approximately 17% on the cost of debt, and 9.5% on the cost of equity. In terms of cost of capital and capital structure, we observe a smaller yet economically significant reduction by around 5.5% and 3%, respectively. We also find that FinTech credit affects especially firms with stakeholders’ oriented corporate governance practices, which operate in countries with higher bank market power and in more innovative industries. Finally, using a Difference-in-Difference model built around the COVID-19 outbreak, our evidence suggests that these effects are robust and hold also in time of crisis when the cost of capital generally increases due to the greater economic uncertainty.

First-Person Experience in Virtual Reality Sport Advertisements: Transportation of Embodied Empathy

Abstract Virtual reality (VR) has emerged as a powerful marketing tool by eliciting novel and enjoyable consumer experiences. To help shape the future of sport advertisements and influence consumers' purchasing decisions, this study aims to investigate the effects of sport advertisements implemented with VR. Drawing on embodiment theory and transportation theory, we (1) conceptualized embodied empathy according to VR context and (2) examined a model involving psychological processes of embodied empathy, a sense of presence, and attitudes. The results showed that the effect of embodied empathy on consumers' attitude toward brand is mediated by a sense of presence and the attitude toward the advertisement, in a causal sequence. This study contributes in several ways to our understanding of VR in sport advertisements and suggests important practical implications.

Renewable-battery hybrid power plants in congested electricity markets: Implications for plant configuration

Examining coupled renewable-battery power plants (“hybrids”) in congested areas provides insights into a future of increased wind and solar penetration. Our study focuses on two types of congested regions, Variable Renewable Energy (VRE)-rich Areas and Load Centers, and explores likely plant configuration choices for developers and transmission network planners. This paper examines how hybrid value, comprising energy and capacity value, varies by plant configuration and congested region type considering factors such as storage duration, battery degradation, and ability to charge from the grid. We select plant locations from across the seven main U.S. independent system operators (ISOs). Hybrid value for each configuration is computed based on profit-maximizing plant operation given perfect foresight, according to observed wholesale power market real time prices from 2018 to 2021. In VRE-rich Areas, the median increase in energy value from extending storage duration from one to 4 h is 29.4 % for solar and 26.8 % for wind, assuming low battery degradation costs and storage sized to 100 % of the plant's nameplate generation capacity. Increasing storage duration beyond 4 h does not substantially increase its value from energy markets, even in VRE-rich Areas. We find that solar hybrids reach a 90 % capacity credit with 4 h of storage, while wind hybrids require 8 h of storage, based on the capacity factor of each hybrid during the top 100 net load hours.

Decoding the Developmental Trajectory of Energy Trading in Power Markets through Bibliometric and Visual Analytics

This research leverages bibliometric methodologies, enhanced by the visual analytics capabilities of CiteSpace, to meticulously examine the evolution and current trends in energy trading within power markets, analyzing 642 scholarly articles from the Web of Science Core Collection spanning from 1996 to 2023. The study aims to illuminate the prevailing research landscape, growth patterns, and future directions in energy trading dynamics. Key findings include: (1) A noticeable escalation in the volume of publications, especially from 2021 to 2023, indicating a burgeoning interest and rapid evolution in this research area; (2) The author and institutional collaboration networks are in a nascent stage, with a predominantly China-centric international collaboration pattern, including significant partnerships with the United States, Australia, and the United Kingdom; (3) The focal points of research are centered around themes such as “energy management”, “demand-side innovation”, “decentralized energy trading”, and “strategic optimization”, covering areas such as intelligent grid technologies, energy market dynamics, and sustainable energy solutions. The study recommends enhancing collaborative networks, fusing technological and strategic dimensions in research, increasing focus and funding for emerging technologies, and promoting wider international and cross-disciplinary collaborations to enrich the understanding of energy trading dynamics in the context of electricity markets.

Understanding the heterogeneity of interest rate adjustments to monetary policy: Evidence for Colombia

A fundamental problem in macroeconomics is understanding how changes made by a country's central bank to its interest rate affect the rates that people and businesses actually experience. In this study, we used Colombian bank-level interest rate data from loans and deposits between 2010 and 2019 to assemble panel data of 35,000 observations to analyze how banks adjust their rates when the central bank changes its rate. We applied a model based on industrial organization theory to estimate each bank's strategic complementarity, a measure of the bank's market power. We found that banks tend to split their rate adjustments into one that directly responds to the central bank's changes and another that responds to how rival banks react. The rates offered by banks for deposits adjust less steeply than those applied to loans. These rates vary heterogeneously depending on the bank's characteristics, with large domestic banks showing the most significant strategic complementarity and small or foreign banks showing the least. Our results showed that bank margins (profits) increase by 0.2% for every 1% increase in the policy rate.

Market Power and Price Informativeness

Abstract We study the distributional effects of asset ownership on price informativeness in a general equilibrium model. The model features investors (oligopolists) with different degrees of price impact and abilities to learn about individual asset payoffs from private and price signals, and a competitive fringe that only learns from asset prices. We show that price informativeness is non-monotonic in the oligopolists’ aggregate size, decreasing in the sector’s concentration and in the size of the passive sector. We further show that the size effect can be decomposed into a learning channel capturing investors’ quality of private signals and an information pass-through channel measuring the sensitivity of investors’ trades to private signals, with the latter one being the primary source of variation in price informativeness relative to the size distribution.

Optimization configuration strategy for regional energy systems based on multiple uncertainties and demand response

With the opening of the power market and the development of the energy Internet, the optimal allocation of regional energy systems has become the key to achieving energy efficiency and economic balance. The article studies how to achieve this balance by optimizing the allocation of regional energy systems under the influence of price fluctuations and load demand uncertainty in the electricity market. This study introduces a real-time electricity price adjustment mechanism to stimulate user participation in energy adjustments and improve energy utilization efficiency. By constructing an optimization model based on multiple uncertainties and comprehensive demand response, uncertainty factors such as energy market price fluctuations and climate change were considered, and user demand response was integrated. The research results indicate that electricity price fluctuations have a significant impact on system operation, while CSP power plant thermal storage fluctuations have a relatively small impact. After the introduction of demand response, the electricity load can be reduced to zero during specific periods, and the adjustment of electricity prices stimulates user participation and improves the consumption rate of renewable energy. The total revenue of the system increased by 54.147 million yuan, demonstrating the potential of optimized configuration in reducing costs and improving efficiency. This study provides important references for building more efficient and sustainable energy systems.