Specific Market Structure Research Articles

MILK CHAIN IN ROMANIA AT THE START OF ROMANIA'S INTEGRATION INTO THE EUROPEAN UNION Author

In the perspective of accession to the EU, the Romanian dairy sector will have to comply with the EU norms and standards. Institutional capacity building, the creation and operation of certain specific market structures, sector revamping until the accession moment represent a priority objective of the domestic agricultural policy. The calculations regarding the EU direct support reveal that Romania will need additional funding sources in order to cover the needs in relation to the allocated milk quota.

Is Best Really Better? Internalization in Xetra BEST

Xetra BEST allows participating brokers to internalize retail customer orders. The system is operated by Deutsche Borse AG as part of the electronic open limit order book Xetra. Internalized or- ders receive a mandatory price improvement. We provide an empirical assessment of Xetra BEST. We develop a structural model of its specific dual market structure that builds on the trade indicator model of Glosten and Harris (1988). Internalizing orders in Xetra BEST is profitable, as is evidenced by high realized spreads. The adverse selection costs in Xetra BEST are significantly lower than those of regu- lar order book trades. We find that the mandatory price improvement does not fully compensate for the difference in adverse selection costs. Our results imply that measures aimed at increasing competition among internalizers may yield improved execution quality for internalized orders.

Developing countries - restructuring with benefits from competition (or not)

Many developing countries in Asia, Africa, Eastern Europe and South America are freeing up their electric energy industries in search of benefits from competition. These countries are on a fast-paced plan to implement restructuring despite the fact that the benefits from restructuring are yet to prove themselves in the more developed countries such as the US, Western Europe and Australia. The challenge is to develop a balance between introduction of competition, regulation and command and control. These countries need to conduct a comprehensive analysis and address a number of key considerations before proceeding with the decision to restructure their electric energy industries. They must also evaluate a number of considerations before selecting a specific market structure and proceeding with development of market design, rules and protocols. It is recommended that developing countries carefully study these considerations to ensure that the expected benefits from restructuring and privatizations are commensurate with its risks and costs. Finally, it is important to note that market rules and protocols cannot be developed in a vacuum and the market rules and protocols of the neighboring countries must be taken into account. This is especially important if the country under consideration requires energy through imports.

Marketplace Mythology and Discourses of Power

While drawing from general cultural myths, marketplace mythologies are tailored to the competitive characteristics and exigencies of specific market structures, providing meanings and metaphors that serve multiple ideological agendas. I illustrate this conceptualization by analyzing mythic narratives that circulate in the natural health marketplace. I propose that a nexus of institutional, competitive, and sociocultural conditions that engender different ideological uses of this marketplace mythology by two types of stakeholders: advertisers of herbal remedies and consumers seeking alternatives to their medical identities. I discuss the implications of this theorization for future analyses of consumer mythologies and for theoretical debates over whether consumers can become emancipated from the ideological influences exerted by the capitalist marketplace.

Economic aspects of amino acids production.

Amino acids represent basic elements of proteins, which as a main source of nutrition themselves serve as a major reserve for maintaining essential functions of humans as well as animals. Taking the recent state of scientific knowledge into account, the industrial sector of amino acids is a priori "suitable" to a specific kind of an ecologically sound way of production, which is based on biotechnology. The following article may point out characteristics of this particular industrial sector and illustrates the applicability of the latest economic methods, founded on development of the discipline of bionics in order to describe economic aspects of amino acids markets. The several biochemical and technological fields of application of amino acids lead to specific market structures in high developed and permanently evolving systems. The Harvard tradition of industrial economics explains how market structures mould the behaviour of the participants and influences market results beyond that. A global increase in intensity of competition confirms the notion that the supply-side is characterised by asymmetric information in contrast to Kantzenbachs concept of "narrow oligopoly" with symmetrical shared knowledge about market information. Departing from this point, certain strategies of companies in this market form shall be derived. The importance of Research and Development increases rapidly and leads to innovative manufacturing methods which replace more polluting manufacturing processes like acid hydrolysis. In addition to these modifications within the production processes the article deals furthermore with the pricing based on product life cycle concept and introduces specific applications of tools like activity based costing and target costing to the field of amino acid production. The authors come to the conclusion that based on a good transferability of latest findings in bionics and ecological compatibility competitors in amino acids manufacturing are well advised to exercise concepts of the management of complex systems in order to choose the right strategy towards gaining market leadership.

Individual psychology, market scaffolding, and behavioral tests

Hertwig and Ortmann (H&O) rightly criticize the usage of deception. However, stationary replication may often have no ecological validity. Many economic experiments are not interactive; when they are, there is not much specifically validating H&O's psychological views on script enactment. Incentives in specific market structures may scaffold even zero rational decision-making, but this says very little about individual psychology.

Effective competition in European telecommunications: an analysis of recent regulatory developments

Shows that some national governments’ policy to promote specific market structures have either proved ineffective (France) or increased entry barriers, likely to raise industry cost (Spain). Argues high‐speed cable modems are the way forward for the future. Concludes, in order to achieve long‐term efficiency, the regulator should promote a mix of infrastructure and service competition to enable viability in the long term.

Effective competition in European telecommunications: an analysis of recent regulatory developments

Shows that some national governments’ policy to promote specific market structures have either proved ineffective (France) or increased entry barriers, likely to raise industry cost (Spain). Argues high‐speed cable modems are the way forward for the future. Concludes, in order to achieve long‐term efficiency, the regulator should promote a mix of infrastructure and service competition to enable viability in the long term.

Providing for transmission in times of scarcity: an ISO cannot do it all

The main purpose of this paper is to point out issues critical for establishing a good transmission strategy in an energy market. First, it is suggested that a transmission strategy must be discussed in the context of a specific market structure. Responsibilities of a transmission system provider differ fundamentally, depending on the type of energy market it is supposed to serve. To show this, a summary of information assumed to be known to an Independent System Operator (ISO) in three energy market structures is given, i.e., (1) a mandatory ISO, (2) an entirely multilateral market and (3) a voluntary ISO. Next, it is suggested which of the transmission strategies proposed may be most suitable for each of these three markets. In particular, we argue that the proposal by Hogan (Hogan WW. Contract networks for electric power transmission, J Regulatory Economics, 1992; 4: 211–242) naturally lends itself only to a market structure that is a mandatory pool in which all energy price bids are assumed to be known to the ISO. In contrast to this, the proposal by Wu and Varaiya (Wu FF, Varaiya P. Coordinated multilateral trades for electric power networks: theory and implementation, POWER Report PWR-031, University of California Energy Institute, June 1995) is well suited for a bilateral energy market, in which an ISO imposes no requirements on market participants regarding prices of specific energy transactions. Finally, the proposal by Ilić et al. (Ilić M, Graves F, Fink L, DiCaprio A. A framework for operations in a competitive open access environment, Electricity J, March 1996; Ilić M. A possible framework for implementing energy transactions into real-time system operation and pricing for system services. Proceedings of the EPRI Conference on Innovative Approaches to Electricity Pricing: Managing the Transition to Market-Based Pricing, La Jolla, CA, March 1996; Ilić M, Hyman L, Allen EH, Cordero R, Yu C-H, Interconnected system operations and expansion planning in a changing industry: coordination vs. competition. In: Topics in regulatory economics on policy series. Dordrecht: Kluwer Academic, 1997. pp. 307–332) lends itself to a voluntary ISO structure, in which some energy providers are scheduled on a price bid basis by an ISO and some are multilateral. The differences between these three proposals concerning an ISO's responsibility for achieving systemwide efficiency and fair charges for transmission service, particularly at times of scarcity, are analyzed. It is shown that an ISO equipped with the present types of optimization tools for both reliability and efficiency is generally `blind' to questions of fairness with respect to the individual market participants when providing transmission system support. In order to get around this problem, much more work will have to be done by the technical and regulatory communities. The only tools at an ISO's disposal at present are used for systemwide objectives, such as systemwide reliability. While some of this work is under way, it will take some time to develop the actual ISO tools necessary for implementing the fairness criterion metrics (`standards'), whichever ones the community arrives at. (Developing metrics of fair reliability contributions for the individual market participants is a nonunique process, and it may be very difficult to actually agree upon). Meanwhile, in order to have an ISO actively help energy markets in a fair and efficient way in realistic markets, which are likely to be voluntary ISOs, a system user must become an active part of decision making, indicating how much it wishes to use the system at times of scarcity and at which price. One possible way for doing this, based on the Ilić proposal, is described here.