Price Setting Mechanisms Research Articles

Aligning stars: making LNG imports happen in Australia

We present the inputs and results of a discounted cash flow model which details the requirements for an import terminal to eventualise. The key requirement is high certainty cash flows from foundation users. This can be made possible through capacity booking which can be potentially underwritten by governments to ensure security of supply during peak winter months. The out-chartering of the floating storage and regasification unit (FSRU) to serve as a liquefied natural gas (LNG) carrier during the peak northern winter will provide an additional revenue source. We also analyse the legacy supply decline and various price setting mechanisms for the southern states which will soon turn net importers. We will describe the status of the four projects in the pipeline and identify milestones. We conclude that an import terminal provides an alternative proposition in the southern states considering the highly seasonal demand profile, the decline of Gippsland Basin production, and the relative inflexibility of coal seam gas. Further, FSRUs can be redeployed to other regions, which reduces stranded asset risk from pipeline expansions, given Australia’s net zero targets.

Impact analysis of environmental policies on shipping fleet planning under demand uncertainty

Considerations to decarbonize maritime shipping by implementing the Emissions Trading System (ETS) are underway at the International Maritime Organization (IMO). This study seeks to investigate the impact of ETS on short-term fleet deployment decisions of liner shipping companies. Considering pragmatic scenarios of demand uncertainty and transshipment, we extend state-of-the-art maritime operational planning under climate policies and propose a fleet planning model accounting for carbon emissions to evaluate the decision-making nuances of a liner company. Numerical experiments are conducted to analyze ETS implementations with varying policy design parameters for their efficacy in mitigating emissions and potential impact on stakeholders. The findings indicate that, for liner shipping which is cross-regional by nature, regional ETS implementations are inadequate due to carbon leakage; the efficacy of open ETS policies is limited, particularly when carbon prices are low; strict carbon purchase caps integrated with robust carbon price-setting mechanisms are critical to designing an effective ETS.

The pros and cons of a global carbon tax at a single rate

Abstract During 2021, the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO), though differently, supported the idea that to effectively tackle climate change, it is necessary to introduce a global price on carbon emissions. Generally, a single-rate Global Carbon Tax (GCT) for all carbon emissions would probably be the best mechanism to tax carbon emissions while still favouring trading relationships globally within a WTO-compliant environment. However, implementing a single-rate GCT is extremely complicated. The IMF has proposed the establishment of an International Carbon Price Floor (ICPF), but it has recognized that to work the ICPF needs multiple carbon price minima according to the considered countries’ category of development level. This article, which is divided into seven sections, reflects on the idea of introducing a GCT. Section 1 briefs the introduction. Section 2 explains what the main reason is for putting a price on carbon emissions and clarifies how the two most important price-setting mechanisms, ie an ETS and a carbon tax, work. Section 3 explains how to set the carbon tax rate. Section 4 analyses the IMF’s GCT proposal. Section 5 discusses the benefits of a GCT, especially if based on a single tax rate. Section 6 reviews what, at least in the short term, the three main obstacles to the implementation of a single-rate GCT are. Section 7 concludes.

Comparison of US and EU Prices for Orphan Drugs in the Perspective of the Considered US Orphan Drugs Act Modifications and Discussed Price-Regulation Mechanisms Adjustments in US and European Union.

The 2019 worldwide sales of Orphan Drugs were estimated at $136 billion USD, which constituted 16% of the global pharmaceutical prescription market and is expected to grow by 12% in the next 5 years. A better understanding of Orphan Drug pricing may contribute to on-going discussions on Orphan Drug Act (ODA) corrections in US or modifications of price setting mechanisms in EU. The objective of the study was comparison and analysis of the prices of Orphan Drugs in US and EU. All drugs with Orphan Drug status were compared in the US and EU. For the US prices, the US Department of Veterans Affairs (VA) was sourced. The EU List Prices came from six EU countries: Denmark, France, Germany, Greece, Poland, Spain. We found US prices to be higher than the six selected EU countries. The average Price Ratio was 1.64. The prices across EU countries were more homogeneous, while the number of the reimbursed and therefore available to patient medicines varied and was correlated with GDP per capita r = 0.87. Considered implementation of the External Reference Price system in US may generate significant savings in the US but may result in upward pressure on pricing of Orphan Drugs in EU. Centralization of the Orphan Drugs pricing negotiations in EU may prevent such development and offer a win-win opportunity for all involved parties.

Information quality and IPO underpricing: The role of underwriter pricing and allocation powers

In response to concerns over the use of book-building as the dominant price-setting mechanisms in IPOs, regulatory bodies in the emerging markets have implemented policies to restrict discretion exercised by underwriters. This study examines the regulatory policy effect on IPO underpricing, based on theories which explain information asymmetries among participants in the IPO process as the determinant of underpricing. Using the Korean IPO market with varying underwriter price-setting and allocation powers, I test for changes in the process by which information quality affects the initial return of IPOs when IPO reforms are withdrawn. The results suggest that when regulations limit underwriters' pricing and allocation powers, information is not impounded in the pricing of IPOs efficiently, but the inefficiency disappears when underwriters gain control over pricing and allotment of shares. Specifically, I find that IPOs are underpriced more for firms that produce poor quality accounting information, in accordance with asymmetric information theories, only when allocation powers are in the hands of underwriters. The results offer policy implications on regulating the IPO market in regard to the market price discovery process.

Success Factors for Scaling Up the Adoption of Digital Therapeutics Towards the Realization of P5 Medicine.

IntroductionDigital therapeutics (DTx) can be a valuable contribution to the successful scale up of P5 Medicine (personalized, participatory, predictive, preventive, precision medicine) as they offer powerful means of delivering personalization and active patient participation in disease self-management. We investigated how the approval and adoption of DTx within health systems have been approached in five selected European countries and regions, with a view to proposing success factors scaling up their adoption.MethodologyPreliminary research established best countries or region candidates as being Germany, UK, France, Belgium, and the Spanish Region of Catalonia. The research was informed by a literature review, interviews with public bodies and industry, and a multi-stakeholder workshop to validate the findings and fill in existing gaps.ResultsTo authorize the use of digital technologies, the countries and regions passed legislation and developed policy instruments, appointed bodies to assess and certify the products and formalized mechanisms for permitting reimbursement. While DTx is not a commonly used nomenclature, there are digital health technology types defined that have similar requirements as DTx. Assessment and certification frameworks are usually built around the Medical Device Regulation with additional criteria. Reimbursement considerations often observe reimbursement of therapeutic devices and/or medicines. To be integrated into reimbursement systems, countries require manufacturers to demonstrate clinical value and cost-effectiveness. As there are currently very few DTx approved in practice, there is resistance toward clinical acceptance and organizational change, and change management is highly needed to integrate DTx into healthcare systems. The integration and secondary use of DTx data is not encountered in daily practice. Although some enablers exist, there remain technical and legal barriers.DiscussionDTx strategies should be considered as an integral part of digital health strategies and legislation, and specific DTx pathways with clear and transparent assessment and guidelines that balance regulation and innovation should be defined. To help manufacturers, countries should recommend and list methods that are widely accepted and ensure scientific robustness, aligned to the MDR requirements to support transfer of relevant and comparable data across countries. To facilitate rapid uptake of innovation, countries should add flexibility to the framework by allowing temporary market authorization to enable data collection that can support the clinical and socio-economic evaluation and data gathering phase. Certification should trigger rapid price setting and reimbursement mechanisms, and dynamic ways to adjust price and reimbursement levels in time should be established. Relevant stakeholders should be approached on the potential impacts of DTx through transparent communication and change management strategies should be considered. These findings should be validated with a wider range of stakeholders.

Analysis of selling price setting mechanisms and services in the perspective of Islamic economics (Case study of photocopying and printing Ammey Kel. Dermayu Kab. Seluma Prov. Bengkulu)

The purpose of this study was to find out how the mechanism for setting selling prices and services for Photocopying and Printing Ammey Kel. Dermayu Kab. Selum Prov. Bengkulu and to find out how the Islamic economic review of the mechanism for setting selling prices and services on Ammey's Photocopying and Printing. To reveal this issue in depth and comprehensively, the authors used qualitative methods to collect the information needed during the research period. The data collection for this research was carried out by conducting observations or observations and interviews, with research objects at Ammey Photocopying and Printing. using fairness-based pricing, the pricing at Ammey Photocopying and Printing is in accordance with Islamic economic principles because the prices set do not tyrannize the buyer, namely Ammey Photocopying and Printing take advantage of the interest rate horse. Photocopying and Printing Ammey does not take advantage of the round off price, but the rest of the round off will be collected and diverted to social funds and to the mosque's charity box. and the determination of price rounding is a balance point between the forces of supply and demand which are agreed voluntarily and voluntarily by sellers and buyers.

Sectoral Price Stickiness and Inflation Persistence in Poland: A Two-Sector DSGE Approach

This paper presents a theoretical model that is suitable for the analysis of price-setting hetero-geneity in a small open economy. The model is based on Benigno and Lopez-Salido's (2006) work and is one of many examples of a dynamic stochastic general equilibrium (DSGE) model that utilizes heterogeneous price stickiness (e.g., Aoki, 2001; Bodenstein et al., 2008). The model allows analyses of a small open economy by extending the existing multisector models using the mechanisms described by Gali and Monacelli (2005). As a result, the model enables monetary policy analyses that take into account existing sectoral differences in the price-setting mechanisms found in an open economy. In the empirical part of the paper, the model is estimated on data for Poland using Bayesian techniques. The results show that the period 1999-2017 saw significant differences in price stickiness and inflation persistence in the sectors that produce food and energy compared with sectors that produce other goods and services.

Drug price transparency initiative: A scoping review.

Drug price transparency is defined as readily available information on the price of pharmaceutical drugs to either authorities or consumers. Price transparency, together with other information, helps define the value of drugs and enables informed decision making. It has also been used as a reference in drug price setting mechanisms in some countries' pricing policies. To investigate the evidence available: 1) on government initiatives to mandate transparency in drug pricing worldwide, 2) on the reported effects of drug pricing transparency initiatives on drug price, and 3) on the limitations and barriers of the implementation of drug pricing transparency. Databases such as Medline-Ovid, Cochrane Central Register, PubMed, and Science Direct were used to search for relevant literature from inception to February 2018. A manual search of grey literature such as policy papers, governmental publications, and websites was also performed to obtain the information that was not available in the articles. Using narrative synthesis, the results were critically assessed and summarized according to its context of drug pricing approaches. Of the 4382 relevant articles located, 12 studies met the inclusion criteria for drug price transparency initiatives. Only 3 studies reported the outcomes on the regulation of drug prices. Two studies in South Africa showed that price transparency initiatives did not necessarily reduce drug prices. Another study in the Philippines indicated a reduction in medicines' price based on the effects of government-mediated access prices. The limitations and barriers in price transparency initiatives include fragmentation of the healthcare system and nondisclosure of discounts and rebates by pharmaceutical companies. Drug pricing transparency initiatives have been implemented in many countries and commonly coexist with a country's pricing policies. Nevertheless, due to sparse evidence, the effect of drug price transparency initiatives on price control is still inconclusive.

Price-Setting in Ukraine: Evidence from Online Prices

This study examines price duration and price-setting mechanisms in Ukraine using web-scraped prices. I found that the mean average duration of prices is about 2 months. Average price duration is lower for those products that are more exposed to temporary price changes (sales). Moreover, imported goods have a higher average price duration compared to domestic goods. In terms of the price-setting mechanism, the data supports timedependent price setting behavior over state-dependent. The evidence of time-dependent price setting is 1) the size of price change being positively related to the age of price; 2) many price changes of a size close to zero; and 3) the hazard function being non-increasing for the whole sample and tends to be flatter within relatively homogeneous groups of products.

Conceptualization and parameterization of the market price mechanism in the WORLD6 model for metals, materials, and fossil fuels

A model for market price modeling in an integrated global model for resource supply has been developed and successfully applied in the WORLD6 model. A dynamic market and price model has been developed, based on immediately tradable amounts, affected by supply and demand. Real-world drivers and a systems approach with feedbacks in the price setting and market mechanisms were used in this study, without the model becoming too complex. Observed cause and effects and feedbacks were included, in order to have explanatory power or be truer to economic reality in terms of both structure and parameter settings. The model is adaptive from a fully free dynamic market to a biased or oligarchic market, depending on the condition. The market price model was parameterized for copper, zinc, lead, nickel, iron, aluminum, wolfram, niobium, molybdenum, lithium, vanadium, gold, silver, platinum, palladium, and tin, and for fossil fuels like oil and hard coal. The equation has the shape: price = k × market amount n, where market amount is the instantly tradable amount of metal in the market arena, k is a metal-specific coefficient, and n is an exponent. The derived equations were applied in the WORLD6 model, making simulations of market price set every day endogenously in the model possible. The price mechanism proposed here perform well in tests against observed data when included in the WORLD6 model. The obtained results were compared to a price curve for coffee and a similar pattern was found.

Inflation, output and markup dynamics with purely forward-looking wage and price setters

Medium-scale New Keynesian models are sometimes criticized for their use of backward-looking wage and price setting mechanisms, and for assuming several types of disturbances, including some that would be difficult to interpret economically. We propose a DSGE model with purely forward-looking wage and price setters and parsimoniously chosen disturbances. Our model emphasizes an interplay between production firms networking and working capital. Firms can use working capital to finance all (or a fraction) of their outlays on production factors, and use the output of other firms as an input in a what is often called a “roundabout” production structure. Our model generates a response of inflation which is mute on impact of a monetary policy shock, but highly persistent and very hump-shaped afterwards. It also yields a large contract multiplier for output, two times larger than the one implied by a model relying on indexation only. We also show that the response of the price markup can be positive on impact of an expansionary monetary policy shock, which differs from the standard countercyclical markup channel emphasized in conventional New Keynesian models. In contrast to models relying on indexation to past inflation, our model produces non-inertial responses of inflation to productivity and investment shocks, a finding which is broadly consistent with the existing VAR evidence.

Spanish Real Estate Bubble: A Classroom Experiment

<p>The European Higher Education Area (EHEA) requires development of teaching methodologies that encourage active participation by students in the autonomous learning process, taking the figure of the professor as the mediator. On the other hand, the economy is a fundamental aspect in today’s society insofar that it contributes to explaining the behaviour of individuals. In this sense, the experimental economy applied in lecture rooms is presented as an innovative educational procedure that is perfectly adapted to university teaching, since it facilitates acquisition and consolidation of curricular knowledge and favours the development of capabilities by students, whilst at the same time improving the quality of teaching and has a positive impact on the interest students have in the subject. This paper describes the application of an economic experiment as an active learning method to prove the mechanisms used to set prices. The experience took place at the ESIC Business and Marketing School Valencia university centre, within the subject of “Spanish Economy” in Official Business Management and Administration degrees and in Marketing and Sales Management degrees. The starting point for this experience was the work by Radim Boháček (2002), adding changes aimed at empirically explaining inflation, the real estate bubble and subsequent economic crisis in Spain. The obtained results prove that this educational experience favours learning of the economic concepts students study, and stimulates proactive interest in the subject. From the obtained results a second experiment is proposed in order to consolidate concepts concerning price setting mechanisms in the presence of intervention by the Public Sector (taxes and subsidies) or establishing incentives that model collusive behaviour leading to situations where market offers are concentrated in oligopolies.</p>

Do price premiums for wool characteristics vary for different end products, processing routes and fibre diameter categories?

No Australian wool price hedonic studies have separated auction data into different end product-processing groups (PPR) on the basis of all fibre attributes that affect the suitability of wool sale lots for PPR. This study was conducted to assess: (1) whether including information about PPR groupings is more useful in understanding price than clustering by broad fibre diameter (FD) categories, and (2) if the ‘noise’ of macroeconomic effects on price can be reduced by using a clean price relative to the market indicator (RelPrice) formula or a log RelPrice formula compared with log price or clean price. Hedonic models using data derived from 369 918 Australian auction sale lots in 2010–2011 were estimated for these four dependent price variables. Linear FD models predicted less of price’s variance than quadratic or exponential models. Segmenting wool sale lots into 10 PPR before wool price analyses was found to increase the proportion of price variance explained and thus be worthwhile. The change in price with a change in FD, staple length and staple strength differs significantly between PPR. Calculating RelPrice or log RelPrice appears a better price parameter than clean price or log price. Comparing the RelPrice and clean price models, the mean absolute percentage errors were 6.3% and 16.2%, respectively. The differences in price sensitivity to FD, staple length and staple strength across PPR implies a complex set of price-setting mechanisms for wool as different users place different values on these wool properties. These price-setting mechanisms need to be incorporated in hedonic models for agricultural products that possess this characteristic. The wool price premiums can be used to estimate relative economic values when constructing sheep breeding selection indexes and can help determine the most profitable wool clip preparation strategies.

Capturing the Margins: World Market Prices and Cotton Farmer Incomes in West Africa

Summary World cotton prices soared to record levels in March 2011, reaching $2.20 a pound in contrast to 40–80¢/pound between 2000 and 2010. The price spike serves as a natural experiment that offers insights into the relationship between world cotton prices and producer prices in West Africa. A comparative study of Burkina Faso and Cote d’Ivoire shows that national and regional level processes such as price setting mechanisms, inequalities in knowledge and power, and the oligopsonistic structure of West Africa’s cotton economies exert a strong influence on the share of world market prices that producers ultimately receive.

An Assessment of the Growth Opportunities and Constraints in Zambia's Cotton Industry

The main objective of this study was to assess the major opportunities and constraints in Zambia’s cotton industry. The study found that the cotton sector has considerable potential to contribute to growth and employment in Zambia as it currently accounts for direct and indirect employment of approximately 21% of the population and about 19% of agricultural Gross Domestic Product. The prominence of smallholder farmers in the sector is indicative of the income equity promotion potential of the cotton sector. However, the highly concentrated structure of the sector, with two key players currently accounting for about 80% of the total market share in ginning; the absence of regulatory mechanisms for setting of prices; the openness of the local market to global price fluctuations and the lack of support programmes as compared to competing crops like maize are major impediments to equity promotion in the sector. Overall growth of the cotton sector is also constrained by low productivity arising mostly from poor farming practices. Furthermore, increased production in major world markets due to subsidies and use of bio-technology in cotton production undermine the competitiveness of Zambia’s cotton in international markets. For Zambia to realize the potential of the cotton sector, interventions need to be targeted at raising farm level productivity. The government should also facilitate informed policy debate and development on critical issues such as biotechnology adoption as well as facilitating consensus between cotton buyers and farmers on price setting mechanisms.

Evaluating the applicability of peer-designed agents for mechanism evaluation

In this paper we empirically investigate the feasibility of using peer-designed agents PDAs instead of people for the purpose of mechanism evaluation. This approach has been increasingly advocated in agent research in recent years, mainly due to its many benefits in terms of time and cost. Our experiments compare the behavior of 31 PDAs and 150 people in a legacy eCommerce-based price-exploration setting, using different price-setting mechanisms and diverse performance measures. The results show a varying level of similarity between the aggregate behavior obtained when using people and when using PDAs. In some settings similar results were obtained, in others the use of PDAs rather than people yielded substantial differences. This suggests that the ability to generalize results from one successful implementation of PDA-based systems to another, regarding the use of PDAs as a substitute for people in system evaluations, is quite limited. The decision to prefer PDAs for mechanism evaluation is therefore setting dependent and the applicability of the approach must be re-evaluated when switching to a new setting or using a different measure. Furthermore, we show that even in settings where the aggregate behavior is found to be similar, the individual strategies used by agents in each group highly vary. Finally, we report the results of an extensive comparative analysis of the level of optimality reflected in people's and PDAs' individual decisions in our decision making setting. The results show that the decisions of both groups are far from optimal, however the use of PDAs results in strategies that are more than twice as close to the optimal ones.

Health Care Cost Containment Strategies Used In Four Other High-Income Countries Hold Lessons For The United States

Around the world, rising health care costs are claiming a larger share of national budgets. This article reviews strategies developed to contain costs in health systems in Canada, England, France, and Germany in 2000-10. We used a comprehensive analysis of health systems and reforms in each country, compiled by the European Observatory on Health Systems and Policies. These countries rely on a number of budget and price-setting mechanisms to contain health care costs. Our review revealed trends in all four countries toward more use of technology assessments and payment based on diagnosis-related groups and the value of products or services. These policies may result in a more efficient use of health care resources, but we argue that they need to be combined with volume and price controls--measures unlikely to be adopted in the United States--if they are also to meet cost containment goals.

Structural changes in the German pharmaceutical market: Price setting mechanisms based on the early benefit evaluation

In the past, free price setting mechanisms in Germany led to high prices of patented pharmaceuticals and to increasing expenditures in the pharmaceutical sector. In order to control patented pharmaceutical prices and to curb increasing pharmaceutical spending, the Act for Restructuring the Pharmaceutical Market in Statutory Health Insurance (AMNOG) came into effect on 1st January 2011. In a structured dossier, pharmaceutical manufacturers have to demonstrate the additional therapeutic benefit of the newly approved pharmaceutical compared to its appropriate comparator. According to the level of additional benefit, pharmaceuticals will be subject to price negotiations between the Federal Association of Statutory Health Insurance Funds and the pharmaceutical company concerned (or assigned to a reference price group in case of no additional benefit). Therefore, the health care reform is a first step to decision making based on “value for money”. The process of price setting based on early benefit evaluation has an impact on the German as well as the European pharmaceutical markets. Therefore, these structural changes in Germany are of importance for pricing decisions in many European countries both from a political point of view and for strategic planning for pharmaceutical manufacturers, which may have an effect on insured patients’ access to pharmaceuticals.

How relevant are nominal contracting schemes for monetary policy?

Due to the scarcity of pertinent evidence, there is currently no general agreement on how to introduce nominal rigidities into monetary macroeconomic models. We examine the role of alternative assumptions about the wage and price setting mechanisms for the assessment of the welfare costs of nominal rigidities and the performance of alternative monetary policy rules in an otherwise standard New Keynesian general equilibrium model. We find that the choice of a particular price and wage setting scheme matters quantitatively for the welfare costs of nominal rigidities. However, the ranking of the welfare costs associated with alternative wage and price setting schemes is robust to changes in the monetary policy rule, and the ranking of the welfare costs associated with alternative monetary policy rules is robust to changes in the wage and price setting scheme. The difference between sticky nominal contracts and sticky information matters more than the difference in the age distribution of prices wages and information implied by alternative price and wage setting schemes.