Supply Curve Research Articles

Study on integrated energy microgrid energy purchase strategy with demand-side response in market environment

Integrated energy microgrids (IEM) have emerged as an effective way to improve energy efficiency and promote distributed energy utilization. IEM systems acquire electricity and gas from external markets and supply electricity/heat/cold to users. In this paper, we study the optimal energy purchase strategy for IEM, considering the impact of demand response incentives. Firstly, considering the uncertainties, we construct an IEM medium- and long-term market multi-energy purchase model based on conditional value-at-risk, optimizing the portfolio of electricity and gas purchases, as well as their proportion in total energy amount. Subsequently, based on medium- and long-term daily energy supply curves and day-ahead load forecast results, a spot market energy purchase model is established to optimize the spot purchase of electricity and gas, maintaining the supply-demand balance while minimizing operating costs. Furthermore, we design demand response incentives and develop a master-slave game model between IEM and users to guide the formulation of the energy purchase strategy by incorporating corrected load data as feedback. The energy purchase strategies are resolved by the GUROBI solver, while the optimization of demand response incentives is carried out through the PSO algorithm, all based on the MATLAB platform. The adaptability of the proposed model and strategy is verified.

Emission reduction effect of low-carbon power generation and heating systems in industrial areas based on collaborative benefit evaluation

To predict the future emission trends of various pollutants, a greenhouse gas calculation system is studied and the emissions of various pollutants are calculated. Then, an energy-saving supply curve is used to evaluate the economic feasibility of a certain technology. In addition, this study also utilises a synergistic effect analysis strategy and designs emission reduction target scenarios for 2030 based on spatial regression. These scenarios include energy structure adjustment, energy efficiency improvement, waste heat recovery, and end-of-life governance. The results showed that in the next decade, the emissions of CO2, NOx, CO, SO2, PM10, PM2.5, VOCs, and NH3 in industrial parks would continue to increase. The emission of CO2 was expected to reach 289,866,000 tons. Under the four emission reduction goals, the ‘energy efficiency improvement’ scenario had the most significant reduction effect on greenhouse gases and atmospheric pollutants, with CO2 emissions reduced by 103,251,000 tons and atmospheric pollutants reduced by 16,900 tons. This study suggests that industrial parks choose the most suitable emission reduction strategy based on the advantages of each emission reduction target scenario, in order to achieve better environmental effects.

Houston, you have a problem: How large cities accommodate more housing

AbstractWe document how a select set of large and growing metropolitan areas have accommodated growth in their housing supply over 40 years. In particular, we examine how housing provision has evolved for the largest four metropolitan statistical areas (MSAs) in California and Texas. Despite differences in their topographies and regulatory environments, we find several common dynamics. As these MSAs grow, we see that fewer new net units are built at the periphery and a smaller share of the new units are built as single‐family detached houses. As a greater share of new net units are built in infill locations, more units are built using higher‐density—and more costly—multifamily housing construction techniques. Interestingly, we see these housing supply patterns in both “pro‐growth” MSAs and “highly regulated” MSAs. Among all of our sample MSAs, we also find a declining share of Census tracts that participate in accommodating growth. Our results are consistent with the existence of a convex housing supply curve. We believe that this secular trend will pose genuine challenges to many urban housing policies aimed at improving affordability.

Transactive control of community batteries for voltage regulation in distribution systems

With the proliferation of renewable energy sources in distribution systems, the grid operators are posed with the challenge of voltage regulation. Community batteries have significant capabilities in regulating network voltage but such potentials are rarely studied. The literature also lacks insights into how voltage regulation markets should co-exist with other grid service markets, such as battery energy arbitrage service and frequency control ancillary service (FCAS) markets. Therefore, this paper addresses these gaps by proposing a transactive platform for community batteries to trade voltage regulation services with the grid operator while providing other services. First, voltage sensitivity analysis is conducted to construct a voltage regulation demand curve based on the regulation needs of the system. Next, different operating conditions of battery inverters are investigated to model the cost of supplying voltage regulation. Various market-clearing rules are then established to determine the quantity and price of the voltage regulation service traded using the demand and supply curves. Technical analyses indicate that the proposed transactive platform is able to (1) price the voltage regulation service depending on the severity of voltage issues, (2) set a positive/negative regulation price when the system undergoes overvoltage/undervoltage conditions, (3) help battery owners gain considerable extra regulation revenue with proper incentivisation. This research provides guidance to incorporate voltage regulation service with the presence of other grid services and to implement voltage regulation markets to engage community batteries.

Effects of time-of-use pricing for residential customers and wholesale market consequences in South Korea

Using a large-scale pilot test on time-of-use (TOU) pricing for residential customers, this study analyzes the effects of TOU pricing on the load patterns of residential customers and on producer surplus in South Korea. We estimate the difference in the electricity demand functions of residential customers across peak, intermediate, and off-peak periods before and after TOU pricing. In addition, we assess the supply curve in the wholesale electricity market and calculate the changes in electricity purchase costs by integrating the supply curve over the range of consumption changes across the periods. This study simulates the effects of TOU pricing on producer surplus that would be obtained if all residential customers in South Korea switch from increasing block pricing to TOU pricing. Our results show that TOU pricing can be an effective measure for load transfer and simultaneously increase producer surplus. We find that although the revenue of electric utility generally decreases, the cost savings are greater and thus producer surplus increases. The results can be a valuable reference for the South Korean government regarding the nationwide expansion of TOU for residential electricity in the future.

Policy Formulation for an Optimal Level of Savings in a Dynamic Setting

Objective: Previous literature on optimal savings relies on specific utility and production technology functional forms which might not be able to produce robust results as different utility / production functions may lead to dramatically different or opposing results. This paper derives an optimal savings policy based on parameters (such as slopes of demand and supply curves) which can be empirically estimated and provides a unique and robust result irrespective of shape and form of individual utilities / production functions. Furthermore, existing literature does not consider welfare loss when savings market is adjusting to final equilibrium after a shock while deriving an optimal savings policy. In addition to that, number of savers (all public and private saving entities, including households, firms, etc.) and saving rate are vital parameters for savings in an economy, and while deriving an optimal savings policy, it is necessary to take into consideration these parameters to ensure that quantum of savings due to interest rate movement gets adjusted in target time duration, without which there may be additional efficiency loss than that envisioned while deriving an optimal savings policy for an economy. Methods: This research project designs a dynamical model for savings market and extends that to a three-dimensional savings system in an economy by taking into consideration number of savers, saving rate, and interest rate; and based on that derives an optimal comprehensive savings policy while accounting for efficiency losses when savings market, saving rate, and number of savers are adjusting to final equilibrium, in addition to the welfare loss on account of equilibrium shift. Results: Without consideration of welfare loss / gain while savings market is adjusting after implementation of a savings policy, welfare picture remains incomplete, and the optimal savings policy based on partial welfare cannot be considered as optimal in true sense. Traditionally, welfare of only producer and consumer is taken into consideration without accounting for welfare of production factors. An expression of efficiency loss / gain as a result of savings policy based on welfare including those of production factors has been presented and optimal savings policies have been derived by minimizing efficiency losses and presented as a final result in the form of mathematical expressions. This paper demonstrates that both supply and demand shocks operate through a common channel, i.e., inventory of funds in savings market as both kinds of shock affect inventory of funds and hence can be categorized just as an inventory shock. Conclusion: For optimal welfare gains, practitioners / policy makers must estimate theoretically derived optimal savings policies based on the dynamic model developed in this paper and presented in the form of mathematical expressions from real world relevant data for implementation.

Downward aggregate supply curve in inflation crisis

Downward aggregate supply curve in inflation crisis

Global Residual Demand Analysis in a Deep Variable Renewable Energy Penetration Scenario for Replacing Coal: A Study of 42 Countries

This study analyzes the residual demand curves of 42 countries under five scenarios with varying variable renewable energy (VRE) levels to observe how replacing coal with VRE can alter the demand curve. Using 2018 demand data, the residual demand was calculated and analyzed by subtracting the VRE supply curve from the demand curve. The operational requirements for low-carbon load-following sources amid high VRE penetration are examined. Key findings indicate that substantial peak residual demand persists even with 70% energy from VREs, emphasizing the need for significant load-following resources. Transitioning to a 70% VRE scenario could reduce CO2 emissions by approximately 16.799 billion tons, advancing towards carbon neutrality. However, this benefit depends on maintaining grid stability, highlighting the importance of adequate load-following plants to manage VRE intermittency. Countries like Malaysia, South Korea, Tunisia, the UK, Japan, Indonesia, Thailand, and Libya face higher load-following demands due to specific renewable energy contexts. This study reveals varying renewable energy environments across countries, suggesting that a universal strategy for carbon neutrality and replacing coal may not be feasible. Each nation must develop its own approach to emission reduction, considering its unique conditions. This research emphasizes the urgent need for developing cost-effective, flexible, low-carbon load-following sources to enhance decarbonization potential globally.

Local electricity market designs for interconnected nanogrids: Impact on rural electrification in Madagascar

Sustainable, reliable, and affordable energy access is a major challenge in many parts of the world. The paper addresses this challenge by proposing a local electricity market (LEM) design for nanogrids deployed in Madagascar. Each nanogrid shares a solar PV and battery system, and it meets demand locally before trading surplus energy with other nanogrids on a microgrid bus, facilitated through the creation of a LEM. Two distinct market approaches are investigated and compared: central clearing and bilateral trading. Bilateral trading generates trading prices through direct interaction between consumers and producers, whereas central clearing sets a single trading price based on the cost-ordered supply curve. Our study shows that central clearing generates more consumer-friendly prices and facilitates the trading of all technically feasible energy, while bilateral trading may results in unmatched trading capacity. We find an average price for central trading of 0.49€/kWh compared to 1.24€/kWh with a bilateral trading mechanism. To promote the low market prices, a bottom-up retail tariff structure is proposed. The aim of this simplified tariff is to promote initial electrification by minimizing entry prices for end-users’ first electricity access to 0.89€/kWh compared to the current average of 2.11€/kWh. The discussed results were evaluated in consultation with the local company in Madagascar to ensure practical suitability and to achieve maximum significance.

Reservation Raises: The Aggregate Labour Supply Curve at the Extensive Margin

Abstract We measure desired labour supply at the extensive (employment) margin in two representative surveys of the U.S. and German populations. We elicit reservation raises: the percent wage change that renders a given individual indifferent between employment and nonemployment. It is equal to her reservation wage divided by her actual, or potential, wage. The reservation raise distribution is the nonparametric aggregate labour supply curve. Locally, the curve exhibits large short-run elasticities above 3, consistent with business cycle evidence. For larger upward shifts, arc elasticities shrink towards 0.5, consistent with quasi-experimental evidence from tax holidays. Existing models fail to match this nonconstant, asymmetric curve.

Why is economics the only discipline with so many curves going up and down? There is an alternative

Even the most rudimentary training from Economics 101 starts with demand curves going down and supply curves going up. They are so ‘natural’ that they sound even more obvious than the Euclidian postulates in mathematics. But are they? What do they actually mean? Start with “demand curves”. Are they hypothetical ‘psychological constructs’ on individual preferences? Propositions on aggregation over them? Reduced forms of actual dynamic proposition of time profiles of prices and demanded quantities? Similar considerations apply to “supply curves” The point here, drawing upon the chapter by Kirman and Dosi, in Dosi (Dosi, Foundations of Complex Evolving Economies Innovation, Organization and Industrial Dynamics, Oxford University Press, 2023), is that the forest of demand and supply curves is basically there to populate the analysis with double axiomatic notions of equilibria, both ‘in the head’ of individual agents, and in environments in which they operate. Supply and demand “curves”, I am arguing, are one of the three major methodological stumbling blocks on the way of progress in economics, the other related ones being ‘utility functions’ and ‘production functions’. There is an alternative: represent markets and industries how they actually works, and model them both via fully fledged Agent Based Models and via lower dimensional dynamical systems.

Supply responsiveness of potatoes under risk in Jambi Province

The supply responsiveness of potatoes under risk in Jambi province is evaluated by applying an analysis of the lagged acreage function. The characteristics of crop production can explain sustainable decision-making allocations between realized inputs and outputs, taking time lags into account. The objective of the study is to analyze the supply responsiveness of potatoes under risk. Firstly, a production function in lag is estimated from empirically expected variables. Evaluating parameters found that risky variables explained the crucial role of farmers' strategies in decision-making. The findings explain that potato farmers appear to be risk-averse. Hence, the point of government policies has to take a look at risk management, and also the dynamic point of view. In the end, to test the effectual or not of government policy such as the potato farming program, risky variables are going to explain the effect and also impact the latter result. For example, minimizing the effect of the risk variable will increase the acreage, which implies a shift in the supply curve.

Analysis of the Economic Impact of Research and Agricultural Extension of Sesame in Burkina Faso

This study aims to assess the economic impact of research and extension as for improved sesame varieties in Burkina Faso. Indeed, the effectiveness of the use of financial resources allocated to research and extension is a concern for donors and governments of different countries. The economic surplus model was used as an analytical tool for this study. Thus, data were collected from research, extension and statistical data production structures. This method evaluates the impacts in terms of shift of the supply curves. The results of the model show that it is benefitting to invest in cowpea research. In fact, in this study, the internal return rate is about 69% for the period ranging from 2006 to 2018, with a net added value nearly 372 billion FCFA. Such high rates could only be achieved through the relevance of the research results and their dissemination / adoption. Therefore, for a development of the sesame sector and an improvement of producers ‘income, the investment in the research is essential.

The transmission of monetary policy shocks through the markets for reserves and money

This paper identifies supply and demand curves for bank reserves and a Divisia aggregate of monetary services within a structural vector autoregressive time-series model. Estimated over four sample periods spanning 1967 through 2020, the model illustrates how monetary policy actions can be interpreted with reference to their initial impact on bank reserves and the federal funds rate and their subsequent effects on Divisia money, nominal consumption spending, the aggregate nominal price level, and the unemployment rate. Model estimates attribute strong inflationary effects to monetary policy in the late 1960s and 1970s and also show that changes in the supply of reserves associated with the Fed's large-scale asset purchases since 2008 worked, as intended, to offset deflationary pressures and reduce unemployment. The model describes a much richer monetary policy process than one focused on interest rates alone.

Mortgage interest deductions? Not a bad idea after all

Mortgage interest deductions and other homeownership subsidies are widely believed to be harmful because they redistribute resources from lower-income renters to higher-income homeowners. We argue that renters actually benefit from these policies in general equilibrium for two reasons. First, the rental supply curve is relatively inelastic, which means that rents fall when these policies reduce rental demand. Second, many renters spend most of their income on housing, and these renters gain substantially from rent decreases. We calibrate a quantitative model to match empirical evidence on these factors and show they are strong enough that subsidizing homeownership actually increases welfare.

Research on the coal saving and emission reduction potential of advanced technologies in China's iron and steel industry

The coal-based energy consumption structure has led to high coal consumption and carbon emissions in China's iron and steel industry, and the task of coal saving and carbon reduction in the steel industry is difficult and urgent. The economic viability of various coal-saving and emission-reduction technologies, the extent of their coal-saving and emission-reduction potential, and the guidance on the adoption of advanced technologies are crucial issues that need to be addressed in the Chinese steel industry. This article employs the Energy-Production (E-P) analysis method and the Conservation Supply Curve (CSC) model incorporating coal consumption ratio coefficients to systematically analyze coal consumption and carbon dioxide emissions in the overall iron and steel industry and its sub-processes under different scenarios. It calculates the coal-saving emission reduction costs of 32 technologies, evaluates them comprehensively based on their coal-saving and emission-reduction potentials and cost-effectiveness, and categorizes them accordingly. According to the cost of coal saving and emission reduction as the demarcation point, a total of 19 technologies are cost-effective; according to the coal-saving emission reduction potential and cost division, 32 technologies are divided into 6 categories, among which 6 technologies such as sintering waste heat recovery technology can be used as key technologies for popularization and application. Seven technologies, such as efficient preheating technology of ladle, have high cost and low potential, which can be gradually eliminated or improved and upgraded. After the comprehensive promotion of the 32 technologies, the maximum coal saving potential is about 3.453 billion GJ, the CO2 emission reduction potential is 395 million tons, the total coal consumption of the steel industry can be reduced to about 13.904 billion GJ, and the carbon dioxide emissions can be reduced to 1.179 billion tons.

The simple economics of an external shock to a bug bounty platform

Abstract We first provide background on the “nuts and bolts” of a bug bounty platform: a two-sided marketplace that connects firms and individual security researchers (“ethical” hackers) to facilitate the discovery of software vulnerabilities. Researchers get acknowledged for valid submissions, but only the first submission of a distinct vulnerability is rewarded money in this tournament-like setting. We then empirically examine the effect of an exogenous external shock (COVID-19) on Bugcrowd, one of the leading platforms. The shock presumably reduced the opportunity set for many security researchers who might have lost their jobs or been placed on a leave of absence. We show that the exogenous shock led to a huge rightward shift in the supply curve and increased the number of submissions and new researchers on the platform. During the COVID period, there was a significant growth in duplicate (already known) valid submissions, leading to a lower probability of winning a monetary reward. The supply increase resulted in a significant decline in the equilibrium price of valid submissions, mostly due to this duplicate submission supply-side effect. The results suggest that had there been a larger increase in the number of firms and bug bounty programs on the platform, many more unique software vulnerabilities could have been discovered.

The Impact of Feedback under Information Asymmetry on Market Dynamics: Results from a Classroom Experiment

This paper focuses on the problem of so-called "lemon markets", first described by George Akerlof, where information asymmetry about product quality leads to dysfunctional outcomes such as poor average product quality and relatively low levels of trade, resulting in a loss of collective wellbeing. In the age of online commerce, the problem is especially relevant, given that consumers buy many more products without relying on personal experience than at any time in the past. Possible solutions to the problem suggested in the literature are reputation building on the part of producers and improving the information available to consumers, e.g., by way of publicly accessible consumer reviews (even though these can be gamed or faked by sellers). The paper presents the results from a classroom experiment that simulated a "lemon market". The advantage of using a classroom experiment is that while the market is recreated along a small number of rules and incentives, in line with neat economic models, the participants are real, living decisionmakers, displaying the deviations of actual human behaviour from that of a hypothetical "rational actor". In all, 294 students majoring in business information technology participated, making up 11 simulated markets. The results presented focus mainly on the supply side, namely, the quantities and prices of goods offered, and nine supply curves are estimated (for three quality grades of goods in three phases of the game). The research concludes that under perfect information, the market performs efficiently. In the condition where only sellers but not buyers have information about product quality, the volume of trade declines, although not as drastically as previous findings have suggested, and the market shows signs of recovery, albeit at a suboptimal equilibrium. After the option of consumer feedback is introduced, the market shows further convergence toward the socially optimal state. The results reaffirm that consumer feedback plays an important role in filling the information gap when product quality is uncertain; however, it is not sufficient in itself to overcome the "lemon market" problem. Other important influences on consumer behaviour under uncertainty are suggested, such as risk-taking, changing attitudes towards the act of (online) purchases, and cultural factors.

Использование водных ресурсов в бассейне реки Барада

The purpose of the research is to study the current problems of water use for the Barada River basin (Syria) based on the analysis of the hydrological characteristics of natural water resources and making forecasts of the use of water resources for the future. To achieve this goal, methods are used to construct a theoretical supply curve based on average long-term data on the flow of the Barada River in Syria, as well as a predictive method based on retrospective data and a balance method for assessing the water management situation and the limiting period for the water content of the river during the year. The assessment of water use conditions and water availability periods was carried out for years of 90% availability of river flow for agriculture based on irrigation and for years of 75% availability of river flow for other industrial water users. The assessment of water resources and the analysis of the peculiarities of the use of the waters of the Barada River, taking into account local conditions, were carried out. Diffuse flows from territories are taken into account in water management balances. The pollution of river runoff by water quality class was also assessed. Recommendations are given for restoring the water quality in the river for different years in terms of water content. The recommendations take into account the use of sorbent meliorants for cleaning diffuse and drainage runoff with an efficiency of up to 90%.

Capturing Electricity Market Dynamics in Strategic Market Participation Using Neural Network Constrained Optimization

In competitive electricity markets, the optimal bid or offer problem of a strategic agent is commonly formulated as a bi-level program and solved as a mathematical program with equilibrium constraints (MPEC). If the lower-level part of the problem can be well approximated as a convex problem, this approach leads to a global optimum. However, electricity markets are governed by non-convex (partially known) constraints and reward functions of the participating agents. In this paper, an alternative data-driven paradigm, labeled as a mathematical program with neural network constraint (MPNNC), is developed. The method uses a neural network to represent the mapping between the upper-level (agent) decisions and the lower-level (market) outcomes, i.e., it replaces the lower-level problem with a surrogate model. In the presented case studies, the proposed model is used to find the optimal load shedding strategy of a strategic load-serving entity. First, the MPNNC performance is compared to the MPEC approach, both in convex and non-convex environments, showing that the proposed MPNNC achieves similar performance to an ideal MPEC that has perfect knowledge of the simulated market environment. Then, aggregated supply curves from the Belgian spot exchange are used to assess the potential gains of using the developed model in real-life applications.