Strong Price Research Articles

A Harmonized Approach Towards Capacity Adequacy in the EU Internal Electricity Market: Policy Options to Reconcile Unilateral Capacity Mechanisms.

This master thesis aims at identifying policy options, which facilitate a more harmonized approach towards capacity adequacy in the EU internal market. Although there is no evidence for any acute EU-wide generation capacity shortage, European electricity markets are increasingly under stress: Major EU utilities announced to mothball or decommission their CCGT, CHP and other gas-fired peak units, since these generation units struggle to recover their costs at power exchanges. But these dispatchable peak-load plants are highly needed in European electricity markets with rising shares of intermittent renewable supply.In the absence of a supranational capacity adequacy policy, several EU member states have implemented or consider introducing capacity mechanisms on a pure unilateral basis in order to remedy the missing-money-problem of their utilities’ conventional power plants. As these unilateral capacity adequacy regimes have diverging regulatory rationales and try to solve very different domestic capacity adequacy issues, it becomes challenging to reconcile them within the EU internal market. Given that the needs to invest in new conventional generation capacities and cost recovery prospects of certain power plant technologies highly diverge between the member states, a EU standard capacity adequacy regime would be too premature. However, these unilateral capacity mechanisms harm the functioning of the internal market and undermine its central features of market coupling and physical integration, which significantly contribute to domestic supply security. Both price-coupling of regional power markets and enhanced grid interconnectors optimize cross-border electricity flows and ensure efficient investment allocation of generation and transmission capacities in the long-run. But non-harmonized unilateral capacity mechanisms are likely to cause inefficient overcapacities and lead to adverse long-term structural changes in generation investments across the internal market.The thesis finds that the legal and regulatory framework of the EU to harmonize these unilateral capacity adequacy regimes is rather weak and leaves many loopholes to the member states. The EU could persuade national regulators and TSOs to evaluate a common approach towards capacity adequacy assessments and forecasting methodologies. Moreover, the EU could ensure that national regulators and TSOs consider regulatory alternatives to demonstrate the necessity and appropriateness of complex capacity adequacy regimes as well as to facilitate explicit cross-border participation of foreign generators, although many technical and regulatory challenges remain unsolved.In view of the limited scope of action for the EU, there are five policy options, which could facilitate a more harmonized approach towards capacity adequacy in the EU internal market: First, national regulators and TSOs should conceive and mutually agree on EU-wide adequacy assessments and forecasting methodologies, which would represent a powerful instrument to bring transparency into the regulatory debate on the necessity of purely unilateral capacity mechanisms and objectify investment needs in new generation capacity across member states’ markets. Second, member states and the EU should focus on a predictable EU-wide regulatory environment with coherent carbon, market design, and renewable support policies and avoid any overlapping regulatory objectives between these policies. Third, national regulators and TSOs should ensure a more stringent implementation of cross-border transmission grid plans to alleviate local load and grid congestions, which have forced some member states to implement capacity mechanisms and directly remunerate generation units in congested regions. Fourth, instead of introducing complex capacity mechanisms, national regulators and TSOs should allow for greater competition among generators to offer short-term ancillary services on existing real-time balancing markets, because they would provide a stronger price signal to invest in flexible generation capacity. Finally, the EU should require national regulators and TSOs to facilitate explicit cross-border participation of foreign generators in unilaterally designed capacity mechanisms to minimize the adverse cross-border market impacts.

Hedging Policy Consistency Theory vs. Practice: The Role of Management's Expectations in the Implementation of Hedging Policy

This paper addresses the contradiction between the financial theory of hedging and management practice. The theory has identified a series of legitimate reasons for companies to hedge and create shareholder value. When these conditions are present, companies are supposed to implement a consistent level of hedging over a period of time. This paper examines how consistent hedging policy is incompatible with management’s competencies and role in the company, requiring management to form strong future price expectations. We outline key differences between an insurance decision model and a hedging decision model. Based on these differences, we describe a process that management actually follows when making decisions about hedging and stress the role of the expectations discrepancy in this process. We call this decision process management expectations-based hedging.

Do Capacity Constraints Constrain Coalitions?

We study strong equilibria in symmetric capacitated cost-sharing games. In these games, a graph with designated source s and sink t is given, and each edge is associated with some cost. Each agent chooses strategically an s-t path, knowing that the cost of each edge is shared equally between all agents using it. Two variants of cost-sharing games have been previously studied: (i) games where coalitions can form, and (ii) games where edges are associated with capacities; both variants are inspired by real-life scenarios. In this work we combine these variants and analyze strong equilibria (profiles where no coalition can deviate) in capacitated games. This combination gives rise to new phenomena that do not occur in the previous variants. Our contribution is two-fold. First, we provide a topological characterization of networks that always admit a strong equilibrium. Second, we establish tight bounds on the efficiency loss that may be incurred due to strategic behavior, as quantified by the strong price of anarchy (and stability) measures. Interestingly, our results are qualitatively different than those obtained in the analysis of each variant alone, and the combination of coalitions and capacities entails the introduction of more refined topology classes than previously studied.

A note on the lower bound for the Price of Anarchy of scheduling games on unrelated machines

This note presents a lower bound for the Strong Price of Anarchy (SPoA) of coordination mechanisms for unrelated parallel machine scheduling games with social cost of minimizing the makespan. The SPoA of any set of non-preemptive strongly local policies satisfying the IIA property is at least m, the number of machines. Combining with the upper bound of the worst-case ratio of Shortest First algorithm for unrelated parallel machine scheduling problem with objective of minimizing the makespan (Ibarra and Kim, 1977), the SPoA of SPT policy, as well as the worst-case ratio of Shortest First algorithm, is exactly m.

Price Fluctuations, Linkages and Causality in the Nigerian Beef Market

Since beef accounts for 71% of meat consumption in Nigeria, efficient functioning of the beef market network is very important in Nigeria’s development. This study tested for the degree of integration in the beef market using secondary data from twelve states of Nigeria. The analytical techniques used included descriptive statistics, Augmented Dickey Fuller (ADF), Johansen Co-integration and Granger Causality models. Empirical results showed that retail price growth rates were highest in 2002. Growth was highest in Benue Market in 2002 (99.7%), Sokoto Market in 2009 (95.4%) and Imo Market in 2002 (54.9%). Growth rates were generally stable in 2001 except in Kwara Market. The lowest growth rates were recorded in Benue Market (-35.1%) and Imo Market (-14.5%) in 2003. Average growth rates were highest in Borno Market (17.4%), Sokoto Market (16.0%) and Bauchi Market (15.6%) while it was least in Lagos Market (11.3%). Generally, growth rate was higher in the producing areas (15.3%) than in the consuming areas (13.6%). The markets with the highest monthly retail prices were Imo, Rivers, Lagos and Enugu and were all located in southern Nigeria, a sink region for cattle. The ADF test showed all price series were non-stationary at their levels but stationary after first-differencing. Pair-wise market integration model indicated that prices were co-integrated in 72.7% of beef market locations indicating a high degree of marketing efficiency in the beef market. Prices were tied together in the long run in seven out of every 10 market locations in spite of short run divergences. The result of pair-wise Granger causality showed that 80 market pairs had evidence of price causation. Sixty two (62) market links of the 80 exhibited bi-directional Granger causality while 18 market pairs showed uni-directional Granger causality. The results of Granger causality test did not reveal that there are no clear price leaders in the beef market network. Despite the fairly high level of beef market linkage, there is need for all stakeholders to continue to effectively perform their roles so that there can be perfect linkage that will allow economic benefits derivable from this scenario of strong pricing contacts to be fully realized and sustained.

Price convergence after the Eastern enlargement of the EU: evidence from retail food prices

Using detailed micro data on European retail food prices for EU15 and all eight Central and Eastern European accession countries, we analyse price convergence within the European Union after the enlargement shock in 2004. Testing for σ-convergence, we find a strong price convergence within EU23, which is mainly explained by convergence between and not within the two subgroups of the old and the new member states.

The Strong Price of Anarchy of Linear Bottleneck Congestion Games

We study the inefficiency of equilibrium outcomes in Bottleneck Congestion games. These games model situations in which strategic players compete for a limited number of facilities. Each player allocates his weight to a (feasible) subset of the facilities with the goal to minimize the maximum (weight-dependent) latency that he experiences on any of these facilities. We analyze the (strong) Price of Anarchy of these games for a natural load balancing social cost objective, i.e., minimize the maximum latency of a facility. In our studies, we focus on Bottleneck Congestion games with linear latency functions. These games still constitute a rich class of games and generalize, for example, Load Balancing games with identical or uniformly related machines (with or without restricted assignments). We derive upper and (asymptotically) matching lower bounds on the (strong) Price of Anarchy of these games. We also derive more refined bounds for several special cases of these games, including the cases of identical player weights, identical latency functions and symmetric strategy sets. Further, we provide lower bounds on the Price of Anarchy for k-strong equilibria.

A cross-country analysis of residential electricity demand in 11 OECD-countries

We provide consistent, cross-country estimates of price and income elasticity for households in 11 OECD countries. Using survey data from 2011 on annual consumption of electricity and sample-derived average electricity price, we provide country-specific price elasticity estimates and average income elasticity estimates. For most countries in our sample, we find strong price responsiveness, with elasticities varying (in absolute value) between 0.27 for South Korea and 1.4 for Australia, and higher than 0.5 for most countries. Exploiting the presence of many attitudinal indicators in the dataset, we provide evidence that non-price related factors to affect energy demand; in particular, households' self-reported energy savings behaviour reduces demand between 2 and 4%. In contrast, we find very weak income responsiveness, with income elasticities varying from 0.07 to 0.16 and no evidence for heterogeneity across the countries in our sample. Our results regarding price elasticity are in contrast with those of many existing studies which find low-to-moderate price responsiveness, and adds to a few recent studies indicating more policy space for demand reduction than previously thought.

A study of the relationships between the time charter and spot freight rates

A time charter contract is a shipping contract that allows for freight rate risk avoidance and hedging. Defining the relationship between time charter and spot freight rates will illuminate the fluctuation mechanism of the spot freight market. In this article, three types of dry bulk ships – Capsize, Panamax and Supramax – are chosen to investigate the relationship between time charter and spot freight rates and to analyse the price discovery function of time charter contracts. A vector error correction model is developed, and an impulse response function is used to analyse the influence of time charter rates on spot freight rates. Empirical studies indicate that there are two-way lead–lag relationships between the time charter and spot freight rates and that a time charter contract has a price discovery function. Smaller ship sizes and longer durations lead to a stronger price discovery function.

Parametric Packing of Selfish Items and the Subset Sum Algorithm

The subset sum algorithm is a natural heuristic for the classical Bin Packing problem: In each iteration, the algorithm finds among the unpacked items, a maximum size set of items that fits into a new bin. More than 35 years after its first mention in the literature, establishing the worst-case performance of this heuristic remains, surprisingly, an open problem. Due to their simplicity and intuitive appeal, greedy algorithms are the heuristics of choice of many practitioners. Therefore, better understanding simple greedy heuristics is, in general, an interesting topic in its own right. Very recently, Epstein and Kleiman (Proc. ESA 2008, pp. 368–380) provided another incentive to study the subset sum algorithm by showing that the Strong Price of Anarchy of the game theoretic version of the Bin Packing problem is precisely the approximation ratio of this heuristic. In this paper we establish the exact approximation ratio of the subset sum algorithm, thus settling a long standing open problem. We generalize this result to the parametric variant of the Bin Packing problem where item sizes lie on the interval \((0, \alpha ]\) for some \(\alpha \le 1\), yielding tight bounds for the Strong Price of Anarchy for all \(\alpha \le 1\). Finally, we study the pure Price of Anarchy of the parametric Bin Packing game for which we show nearly tight upper and lower bounds for all \(\alpha \le 1\).

Development of Automatic Corner Stone Trimming Working Machine for Boundary Stones

Stones are major materials for various civil engineering works and architectural construction areas and various kinds of stones are being used in construction sites and those areas are also very diverse. Even though the size of domestic stone market size is currently increasing, production volume cannot meet the demand because the production method is still highly dependent on manual work. In addition, as China is rising as the center of world stone market which emphasized the strong price competitiveness, imports from China are currently increasing because China is gradually securing the quality competitiveness as well. This seems because the quality of Chinese stones does not fall behind than the quality of domestic stones and in order to recover this situation, it is considered important to maximize the productivity of domestic stone working companies through the automation of production environment and to secure the price competitiveness through quality equalization to deal with low labor costs which China is emphasizing as their strength. Based on these reasons, this development was conducted and tried to secure the competitiveness of stone working by developing automatic control technology and stone working technology using air pressure and PLC, preventing risk factors and environmental problems caused by manual work in stone working site, removing working risk factors through automation and reducing dust and noise. And accordingly, automatic corner stone trimming working machine for boundary stones was developed, and production environments were improved and productivity could be maximized through the automation of manpower dependent works.

EURO-USD PREDICTION APPLICATION USING WEIGHTED MOVING AVERAGE ON MOBILE DEVICE

Investments in foreign exchange (forex) promise lucrative profits, thus inviting a lot of attention fo r researcher sand traders to create a system or indicator in tra ding. All indicators or system is reliable and has proven hat can bring profit for traders. Basically all indicator a re reliable and tested which able to bring some pro fit to traders. Ironically there are many trader fail to gain the p rofit and became bankrupt. It because they has no well money management and good mentality in trading. Therefore in this study is focused on technical analysis by using weighted moving average which will be implemented on the mobile device so that it can give predictions on the price of the EURO-USD currency pair. The results is the weighted moving average was not quite accurate in determining the price of a currency esp ecially during sideways price but it so accurate wh en they have strong price trend or large-scale. weighted mo ving average becomes really easy to apply when usin g 2 or more weighted moving average and able to give facility in analyzing movement of currency with the counterpart of EURO-USD by means of mobile medium.

Reforming Vehicle Taxes on New Car Purchases Can Reduce Road Transport Emissions -- Ex Post Evidence.

Australia is falling behind the international trend towards low carbon transport to reduce greenhouse gas (GHG) emissions. For instance, in 2012 the Australian Government forecasts that road transport emissions will continue to increase to 2020 and then slow to 2030 because of higher oil prices and the introduction of mandatory CO2 emissions standards. The forecast assumes vehicle efficiencies of petrol and diesel engines will improve, and there will be a gradual shift to alternative technologies. However, in 2007 the European Union found that while advances in vehicle technology had delivered most of the carbon reductions, these advances were offset by new cars that had become significantly more powerful, larger, and heavier. This is the case in Australia. The paper shows how Australia can accelerate the uptake of low carbon technology through reforming existing vehicle taxes into an environmental related tax. The reform will require basing the tax on CO2 emissions from previously being based on the vehicles technical characteristics such as cylinder capacity, engine size and fuel type. The literature supports the reform of vehicle taxes into an environmental tax, which was found to be a powerful instrument in influencing the purchase decisions of consumers. Specifically, the paper examines the literature and reviews the ex post evidence on the successful reform of vehicles taxes. In the case study of Ireland, it was found that the reformed vehicle taxes based on CO2 emissions provided a strong price signal, and consumer response was greater than anticipated. As a result, Irelands ambitious targets in reducing its GHG emissions were met. The paper provides evidence to Australia’s policy makers, consultants and car manufacturers that reforming existing vehicle taxes into an environmental related tax is an effective measure in transitioning Australia into a low carbon transport and reducing road transport emissions.

Modelli di sviluppo per il miglioramento della competitività economico-commerciale della filiera orto-frutticola italiana sui mercati nazionali ed internazionali: il caso del comparto pataticolo in Emilia-Romagna

The Italian fruit and vegetable supply chain has been in a critical situation for several years. In recent times this situation has been getting even worse, mainly on account of the general economic crisis, which has triggered strong price competition among the great retail chains, resulting in a fall in prices at farm level. In this situation, the potato supply chain has become one of the weakest among the fruit and vegetables sectors in Italy. Both at farm and processing-industry level Italy has several characteristics that make it virtually impossible to compete with large producers in central and northern Europe. Consequently, the potato supply chain has been continually forced to innovate and make sustained efforts to valorise and differentiate its product from the largely mass produced one that is offered in Europe. This paper focuses on a locality in the province of Bologna that is one of the most important in the potato sector in Italy. Its aim is to analyse the supply chain and identify ways to turn round the present situation, which has very narrow margins and is unsustainable in the long term. More particularly, the study shows empirically that an increase in the level of integration between the actors in the supply chain is absolutely essential. This includes both horizontal integration, by concentrating supply among the producer organizations, and vertical integration, by extending the contractual arrangements between producers and traders right up to the final link in the chain, the mass distribution retailers. Another type of horizontal integration the study suggests is so-called organized direct showing how this emerging form of selling can be more suitable for a vegetable such as the potato, than other forms of direct selling (farm selling, farmers’ markets, etc.).

A Cross-Country Analysis of Residential Electricity Demand In 11 OECD-Countries

We provide consistent, cross-country estimates of price and income elasticity for the residential sector of 11 OECD countries. Using survey data from 2011 on annual consumption of electricity and sample-derived average electricity price, we provide country-specific price elasticity estimates and average income elasticity estimates. For most countries in our sample, we find strong price responsiveness, with elasticities varying between -0:27 for South Korea and -1:4 for Australia, with most countries elasticity being above (in absolute value) -0:5. Exploiting the presence of many attitudinal indicators, we find evidence for non-price related factors, in particular households’ self-reported energy saving behavior, to reduce energy demand between 2 and 4%. In contrast, we find very weak income response, with income elasticities varying from 0:07 to 0:14 and no evidence for heterogeneity across the countries in our sample. Our results regarding price elasticity are in contrast with many existing studies which find low-to-moderate price responsiveness, and adds to a few recent studies indicating more policy space for demand reduction than previously thought.

Key drivers of services website loyalty

The ease of website comparison and strong price competition encourage users to constantly switch tourism service providers. The present work analyses how satisfaction, trust, and commitment can help to strengthen loyalty towards websites selling accommodation services. Moreover, special attention is paid here to evaluate the moderating effects of gender on the relationships between these variables. Structural equation models were used to test the hypotheses on a sample of 230 Mexican Internet users, online purchasers of tourist accommodation services. The results show significant differences between men and women's post-purchase behaviour with a higher influence in women of trust on commitment and of commitment on loyalty towards accommodation services websites. Managerial implications for accommodation websites are provided.

The market for vineyard planting rights in the Veneto Region

The paper represents a pioneering study of market for vineyard planting rights. Based on two ad hoc surveys, it is aimed at identifying the characteristics of demand, supply and prices for planting rights in Veneto Region since first transactions (1995) to 2007. Results give a picture of a highly heterogeneous market, showing significant changes not only in prices. The use of cluster analysis have made possible to find out the presence of local market segmentation. Thanks to a demand, which grew faster than local supply, prices increased sharply until 2004; then a quick downturn followed. A wide gap exists between maximum and minimum price in the same zone combined with strong spatial price variability among and within provinces.

Price Variability, Co-integration and Exogeniety in the Market for Locally Produced Rice: A Case Study of Southwest Zone of Nigeria

Most studies on local rice in Nigeria were centred on increasing production, consumption or competitiveness with very few addressing the issue of marketing efficiency. Filling this gap requires a study on extent of pricing contacts in the market for local rice. In this study, secondary data consisting of urban monthly retail price series in the six southwest states of Nigeria were collected and analyzed. Analytical techniques used included Augmented Dickey Fuller (ADF), Johansen Co-integration and Granger Causality models. Empirical results indicated that growth in retail prices was highest in 2004 in Ogun Market (48.7%) and Ondo Market (45.4%) implying that local rice was more costly in these states. Retail prices were more volatile in Lagos Market (37.3%) and least volatile in Ogun Market (30.4%). The ADF test showed all price series were non-stationary at their levels but were stationary after first-difference. Pair-wise market integration model indicated that prices were co-integrated connoting high degree of marketing efficiency. The Multiple Co-integration model also indicated five co-integrating equations in six, validating the result of pair-wise market integration test. Granger causality model revealed that the supply-deficient markets in Lagos and Osun States were driving prices elsewhere. These results may have arisen from the storability of rice and closeness of the market locations examined. Despite high level of linkage, there is need for all stakeholders in the market to continue to effectively perform their roles so that economic benefits derivable from this scenario of strong pricing contacts can be fully realized and sustained.

A High Frequency Assessment of the ECB Securities Markets Programme

Policy impact studies often suffer from endogeneity problems. Consider the case of the ECB Securities Markets Programme: If Eurosystem interventions were triggered by sudden and strong price deteriorations, looking at daily price changes may bias downwards the correlation between yields and the amounts of bonds purchased. Simple regression of daily changes in yields on quantities often give insignificant or even positive coefficients and therefore suggest that SMP interventions have been ineffective, or worse counterproductive. We use high frequency data on purchases of the ECB Securities Markets Programme and sovereign bond quotes to address the endogeneity issues. We propose an econometric model that considers, simultaneously, first and second conditional moments of market price returns at daily and intradaily frequency. We find that SMP interventions succeeded in reducing yields and volatility of government bond segments of the countries under the programme. Finally, the new econometric model is broadly applicable to market intervention studies.

Comments: 2014 Outlook

Editor's column Signs point to sustained strong oil prices this year, levels that will continue to support upstream unconventional projects in North America and elsewhere. North Sea Brent and West Texas Intermediate (WTI) crude oil, the world’s two key benchmark prices, averaged around USD 108/bbl and USD 97/bbl, respectively, in 2013. And most price forecasts for 2014, which began emerging from analysts and investment houses in the fourth quarter, predict similar price levels in the new year. The wild card in that scenario, however, is the growth of non-OPEC supply and production levels from Libya and Iraq, which are difficult to anticipate. North American supply is expected to continue its upward swing, and significant increases in Kazakhstan are also forecast. Commercial production at Kashagan, Kazakhstan’s giant Caspian Sea oil field, is expected to begin in the first half of the year. The field was discovered in 2000, one of the largest finds in decades, but development has faced rising costs and numerous delays. US crude oil production is expected to rise again this year. The US Energy Information Administration (EIA) says US crude output averaged 7.5 million BOPD in 2013 and will average 8.5 million BOPD in 2014. When US production hit 8 million BOPD in November, it was the highest monthly output level since 1988. The EIA believes that growth shows no signs of stopping, with US crude production forecast to come to a high of 9.6 million BOPD in 2016, a level not seen since 1970. The EIA sees non-OPEC production growing from 54.2 million BOPD in 2013 to 55.9 million BOPD this year. Most of the non-OPEC production growth will be from US onshore tight oil formations and Canadian oil sands, with smaller increases from Africa, South America, and Asia. That will continue to put pressure on OPEC, which has watched its market share erode recently. OPEC countries are expected to produce 29.4 million BOPD this year, compared with an average of 30.3 million BOPD in 2013. Oil prices are notoriously hard to predict. Some of the same analysts who forecasts strong prices this year predicted a sharp drop in oil prices in 2013, something that never happened. Nevertheless, there seems to be a consensus that Brent and WTI will remain near their current levels in the new year. A survey of price forecasters published by Petroleum Intelligence Weekly in December showed most analysts seeing Brent in a USD 100-110/bbl range for the near year, and WTI at around USD 90-100/bbl. The survey of 10 analysts at consulting groups and investment banks shows Brent crude averaging USD 106/bbl for 2014, while the average for WTI is USD 97/bbl. Forecasters were optimistic that Libyan output would recover after months of disruption, and that a strengthening global economy would help absorb oil supply growth. JPT