Transition Costs Research Articles

A new process for the evaluation of the net-benefit of flexible ground-floor ceiling in the face of use transition uncertainty

In metropolitan areas, real estate investments, such as buildings, can be highly profitable. The profitability, however, can be uncertain, as adaptations might be required in the long-term to enable the modification of the building to adapt it to new uses. In building adaptation for use transitions, an important aspect is the modification of the ceiling height of the ground floor to meet the floor height requirements of different uses. Designs that include flexible ceilings instead of rigid ceilings have relatively low future adaptation costs, but are relatively expensive. Such designs are, therefore, only beneficial when the use transition costs over the life of the building are higher than the cost difference between the flexible and the rigid design. Because of the difficulties in predicting the number and types of adaptations that will occur over the life of a building, and the fact that flexible designs are more expensive, investors, to their own detriment, often build rigidly for current needs only. In the work presented in this article, a new process was developed and tested that uses Monte Carlo simulations to estimate costs and benefits of alternative ceiling designs, considering uncertainty on use transitions. The process is shown by using it to estimate the net-benefit over 70 years for an investor related to a fictive building in London with flexible ceilings and the same building with rigid ceilings. It was considered that multiple use transitions among five use categories (residential, retail, industrial, office, and other) were possible. It is shown that the process can be used to gain more insight into how buildings should be designed to maximize investor net-benefit, taking into consideration uncertain variables, such as use-change rate, construction costs and durations, discount factors and rents. A discussion of possible improvements to the process is given.

Generating guitar solos by integer programming

In this paper, we present a framework for computer-aided composition (CAC) that uses exact combinatorial optimisation methods to generate guitar solos from a newly proposed data-set of licks over an accompaniment based on the 12-bar blues chord progression. An integer programming formulation, which can be solved to optimality by a branch-and-cut algorithm, was developed for this problem whose objective is to determine an optimal sequence of a set of licks given a matrix of transition costs derived from user preferences. The generated solos are displayed in tablature format. Outputs of the system were evaluated in an empirical experiment with 173 participants. The results show that the solos whose licks were optimally sequenced were significantly more enjoyed than those randomly sequenced. We project that the developed framework could be of potential use to guitarists looking for original material; as an educational tool for future composers; and to support composers in discovering unique and novel compositional ideas.

On the Tax Efficiency of Startup Firms

We examine the choice of organizational structure for VC-backed startup firms. These firms overwhelmingly organize as C-corporations rather than as tax advantaged limited liability companies (LLCs). This results in foregone tax savings of $43.9 billion, or 4.9% of the total equity invested in the sample firms. The decision is puzzling given plausible estimates of the direct costs involved, but appears related to ‘hassle,’ and other transition costs generated by participants implementing a new form. Firms with more employees and investors are likely to choose the C-corporation. VCs appear to prefer the C-corporation form, as receiving VC money is associated with most LLC firms switching to a C-corporation within 30 days. Greater VC preferences for C-corporations are linked to a preference for familiarity, and less attention to taxes.

Macro-environment’s effects on onshore outsourcing: the transition costs approach

Purpose Through the literature, the effect of macro-environment on onshore outsourcing decisions appears rather unexplored, despite empirical evidence. The purpose of this paper is to address this gap through an extension of Transaction Cost Economics (TCE) (the main theory of domestic outsourcing). Design/methodology/approach This paper develops a framework based on a literature review. It applies this body of knowledge on a new question and provides detailed illustrations (with primary and secondary data). Findings This paper builds a theoretical framework, based on the concept of transition costs. This concept, created as a way to make the economizing approach more dynamic, highlights the influences of the macro-environment. This paper presents a clarification of transition costs. It formulates a theoretical proposition: the environment has an effect on outsourcing through the transition costs. Research limitations/implications This framework deserves to be tested through an empirical study. Practical implications This framework enables domestic providers to take the environment and transition costs into account for the design and timing of outsourced service. Social implications This framework enables to consider the importance of social conflicts and political measures on the domestic outsourcing decisions. Originality/value First, this paper addresses an unexplored question (the effect of macro-environment on onshore outsourcing decisions). Second, it refines an undertheorized TCE concept: the transition costs. Third, it proposes a new direction in the current debate of the evanishing explanatory power of the TCE on outsourcing (by extending this theory).

Co-benefit potential of industrial and urban symbiosis using waste heat from industrial park in Ulsan, Korea

Energy depletion and global climate change have stimulated the Korean government to strengthen energy saving and efficiency measures in all sectors. However, in industrial sector where huge energy is consumed, only small portions of the high-grade waste heat from industrial processes have been utilized by another process through industrial symbiosis networks in industrial park and large quantities of low-grade waste heat are mostly discharged into the environment. Through technological assessment of energy balance between waste heat source in industrial park and heat sink in industrial park and urban area, this study systematically develops an industrial-urban symbiosis (I-US) and conducts a co-benefit analysis for 4 scenarios. Based on the investigation on the energy utilization status of Ulsan, the scenarios for potential I-US networks are evaluated. For the supply and demand side, potential energy sources and sinks are estimated at 49,321 and 15,424TJ/yr, respectively, noting that the demand side considered four scenarios based on the local condition analysis. Through these scenarios for the energy symbiosis networks; a reduction of 243,396ton/yr CO2 emission and 48 million US Dollar/yr fuel cost were achieved. Due to a large transition cost for a district heating system, I-US public private partnership business model is highly recommended to attract long-term investment and institutional incentives of carbon credit and energy service companies fund are conducive to put these scenarios into practice.

Revisiting ISEW Valuation Approaches: The Case of Spain Including the Costs of Energy Depletion and of Climate Change

This paper develops an Index of Sustainable Economic Welfare for Spain from 1970 to 2012 and seeks to update valuation approaches to a number of items. Two approaches have proven particularly controversial over recent decades; the costs of energy depletion and of climate change. The valuation implications in measuring present welfare have proven problematic, as both include future sustainability consequences arising from resource depletion and environmental impacts. This study includes a ‘transition cost’ approach to energy depletion, a modified approach to costs of climate change and water pollution, and removes the cost of ozone depletion. The results illustrate that while GDP per capita increased significantly, the ISEW per capita shows a widening gap. Household labour contributes strongly, but income distribution, energy depletion and costs of climate change limit improvement. Sensitivity analysis shows that accumulating climate change costs and escalating energy depletion costs have significant effects. Nevertheless, the new valuation approaches do not alter conclusions that welfare has shown little improvement. The ISEW provides a useful alternative to current indicators such as GDP subject to awareness of limitations. It is a measure of welfare that uses sustainability accounting methods when estimating costs, but is not an indicator of whether welfare is actually sustainable.

Aligning domestic policies with international coordination in a post-Paris global climate regime: A case for China

The Paris COP-21 reached a climate agreement on 2-degree global emissions stabilisation target. However, the likelihood of successfully implementing a legally binding global climate treaty will depend to a large degree on the macroeconomic impacts of different policy options on developing and emerging economies. It is thus crucial to evaluate the transition costs of implementing different climate policy architectures under socioeconomic and technological uncertainties from a multiregional perspective. Here we use a hybrid computable general equilibrium model, in which sub-optimalities, infrastructural inertia and technological uncertainties are explicitly introduced, to quantify the trajectories of variation in transitions costs under a range of climate policy scenarios in both Annex I and developing nations. The policy architectures are based around the implementation of the ‘streamlined Paris Pledges’ (SPP) in developing countries with a particular focus on China and India. Our results indicate that the distributional effects should be taken into account by policymakers through extension of SPP to 2050 as global climate policies may have asymmetrical economic impacts between Annex I and developing countries. A first-best policy of global cap-and-trade scheme alone could be welfare-deteriorating for some parties, reflected by a significant reduction in macroeconomic growth rate over the course of the next decades. Modelling results also suggest that articulating both global and national policies in a multiregional climate deal can provide a palatable solution for countries like China as this would allow for significant reduction in the economic losses associated with a unique-carbon-price global climate policy. This hybrid approach is also aligned with specific development priorities in developing and emerging countries by providing flexibility to their domestic policy framework, which expects to facilitate the transition to low carbon growth trajectory by encouraging intersectoral coordination. Last, procrastination of technical change and delayed structural reform for decarbonising economy would entail significantly higher transition costs for developing countries in case of stringent climate policy due to the economic competitiveness forgone as a result of exorbitant carbon prices in the longer term. Relevant policy options and research perspectives are discussed accordingly.

Enhancing Performance of Face Detection in Visual Sensor Networks with a Dynamic-based Approach

A visual sensor network, as a special kind of wireless sensor network, is comprised of self-organizing sensor nodes, where some or all of them are equipped with a low-power camera. In most of the visual sensor network’s applications, human detection and recognition are one of the first challenges. Many different approaches that have been proposed to solve the object detection problem in visual sensor networks cause high transition cost in the network, and they are suitable for single object detection. Therefore, in this paper, we propose a new dynamic light-weight method to detect the faces of the objects in visual sensor networks. The proposed method employs a background subtraction technique, image reduction method, new low-complexity algorithm for extracting the bounding boxes of multiple objects and an innovative dynamic function that obtained from a probabilistic model for cutting each human face’s pixels. The proposed method is called Dynamic Light-weight Human Faces Detection (DLHFD). Our proposed method removes non-face pixels in camera nodes with a new energy-aware face detection method and sends only the faces’ information to the base station. The results from the implementation show that DLHFD method reduces the complexity of the image processing tasks on each camera node. Accordingly, the visual sensor network will last longer. Furthermore, the results prove that DLHFD method has very low processing and transition delay in comparison with other face detection methods. Hence, it is suitable for different monitoring and surveillance applications in visual sensor networks.

Can the household sector reduce global warming mitigation costs? sensitivity to key parameters in a TIMES techno-economic energy model

The transition to low carbon societies may increase peak electricity demand, which can be costly to supply with renewable energy, whose availability is uncertain. Buildings are often the main cause of peak demand, and they are believed to hold a large unrealised energy-efficiency potential. If realised, this potential could considerably mitigate the transition costs to low carbon societies, reducing average and peak electricity demands.We explore this potential in several cost-optimal global warming (GW) mitigation scenarios using a multi-sector TIMES energy system model of the province of Quebec for the period 2011–2050. Heating and conservation measures in the residential sector are modelled using building simulations and parameters’ values from the literature. The intra-annual availability of renewable energy and electricity imports is derived from time-series analysis. Additionally, the influence of key parameters such as the projections of primary energy demand and emissions from reservoir impoundment is evaluated. Finally, we discuss some of the barriers that could hamper the energy transition and how they can be overcome.Results indicate that peak demand would rise by 30% due to GW mitigation efforts, but it can be effectively reduced by interventions in the residential sector. Heat pumps are the most cost effective heating technology, despite their lower efficiencies in cold climates. Better-insulated building envelopes have an important role in new houses, reducing by 14% the GW mitigation costs and suggesting that building codes should be more ambitious. The scenario considering denser urban developments has much lower GW mitigation costs, underscoring the importance of urban planning and potential changes in demand. The observed uptakes are contingent to the pricing of energy services being based on marginal costs and cost-optimising behaviour, and are less likely to take place with current market barriers. Finally, the emissions from reservoir creation alter the merit-order of electricity supply, favouring run-of-river power plants and suggesting that these emissions should be considered in GW mitigation scenarios.

Capital accumulation and the welfare gains from trade

We compare the welfare gains from a reduction in trade costs implied by a dynamic model with capital accumulation to a standard static trade model. The static and dynamic trade models differ in their welfare implications along four dimensions: transition costs, endogenous capital, composition of expenditure between investment and consumption goods, and computation of the trade elasticity. We provide a theoretical decomposition of these four effects, then quantify them in a parameterized example. Gains from trade differ considerably in the two models, even though they imply the same trade elasticity and import penetration ratio. In our base case, removal of a 100% trade cost increases welfare by 14% in the static model and 20% in the dynamic model. Our decomposition demonstrates that the most important difference between the two models is the endogeneity of capital.

A Decomposition Scheme for Integration of Production Scheduling and Control: Demand Response to Varying Electricity Prices

One views demand response in industrial processes as the management of operating policies to accommodate variations in the availability and pricing of electricity from the grid. To find the optimal operating regimes and to facilitate the transitions in between such regimes in a cost-effective manner, a mixed-integer nonlinear programming problem is often formulated. A full solution to this problem involves not only finding the optimal operating regimes but also determining the optimal control policies to ensure minimal transition costs; such solutions are often mathematically intractable. In this paper, a decomposition strategy is proposed to arrive at a feasible, albeit suboptimal, solution. The scheduling problem is first solved using a prefixed transition time to minimize the total operating cost; only the first scheduled transition of the obtained solution is implemented in the process, and optimization of controller parameters is then carried out to economically shape the transient profiles. When the...

The ABCs of nonfinancial defined contribution (NDC) schemes

AbstractNonfinancial defined contribution (NDC) pension schemes have been successfully implemented since the mid‐1990s in a number of European countries such as Italy, Latvia, Norway, Poland and Sweden. The NDC approach features the lifelong contribution–benefit link of a financial defined contribution (FDC) personal account scheme, but is based on the pay‐as‐you‐go (PAYG) format. At its start out, the PAYG commitments of the preceding defined benefit (DB) system are converted into individual personal accounts, allowing for a smooth transition from the DB to the DC format, while avoiding the very high transition costs inherent in a move from a traditional PAYG DB scheme to a fully funded FDC scheme. The NDC approach implemented by the rule book is able to manage the economic and demographic risks inherent to a pension scheme and, by design, creates financial sustainability. As in any pension scheme, the linchpin between financial stability and adequacy is the retirement age; in the NDC approach the individual retirement age above the minimum age is by design self‐selected and by incentives should increase the effective retirement age in line with population ageing. As a systemic reform approach NDC has become a strong competitor to piecemeal parametric reforms of traditional nonfinancial DB (NDB) schemes. While frequent, these reforms are far from transparent and usually too timid and too late to create financial sustainability while providing adequate pensions for the average contributor. This article offers a largely non‐technical introduction to NDC schemes, their basic elements and advantages over NDB schemes, the key technical frontiers of the approach, and the experiences of NDC countries.

Cost-effectiveness of subdermal implantable buprenorphine versus sublingual buprenorphine to treat opioid use disorder

Aims: Subdermal implantable buprenorphine (BSI) was recently approved to treat opioid use disorder (OUD) in clinically-stable adults. In the pivotal clinical trial, BSI was associated with a higher proportion of completely-abstinent patients (85.7% vs 71.9%; p = .03) vs sublingual buprenorphine (SL-BPN). Elsewhere, relapse to illicit drug use is associated with diminished treatment outcomes and increased costs. This study evaluated the cost-effectiveness of BSI vs SL-BPN from a US societal perspective.Methods: A Markov model simulated BSI and SL-BPN cohorts (clinically-stable adults) transiting through four mutually-exclusive health states for 12 months. Cohorts accumulated direct medical costs from drug acquisition/administration; treatment-diversion/abuse; newly-acquired hepatitis-C; emergency room, hospital, and rehabilitation services; and pediatric poisonings. Non-medical costs of criminality, lost wages/work-productivity, and out-of-pocket expenses were also included. Transition probabilities to a relapsed state were derived from the aforementioned trial. Other transition probabilities, costs, and health-state utilities were derived from observational studies and adjusted for trial characteristics. Outcomes included incremental cost per quality-adjusted-life-year (QALY) gained and incremental net-monetary-benefit (INMB). Uncertainty was assessed by univariate and probabilistic sensitivity analysis (PSA).Results: BSI was associated with lower total costs (−$4,386), more QALYs (+0.031), and favorable INMB at all willingness-to-pay (WTP) thresholds considered. Higher drug acquisition costs for BSI (+$6,492) were outpaced, primarily by reductions in emergency room/hospital utilization (−$8,040) and criminality (−$1,212). BSI was cost-effective in 89% of PSA model replicates, and had a significantly higher NMB at $50,000/QALY ($20,783 vs $15,007; p < .05).Conclusions: BSI was preferred over SL-BPN from a health-economic perspective for treatment of OUD in clinically-stable adults. These findings should be interpreted carefully, due to some relationships having been modeled from inputs derived from multiple sources, and would benefit from comparison with outcomes from studies that employ administrative claims data or a naturalistic comparative design.

Economic Impacts of Renewable Energy Promotion in Germany

ABSTRACT Over the last decade Germany has boosted renewable energy in power production by means of massive subsidies. The flip side are very high electricity prices which raise concerns that the transition cost towards a renewable energy system will be mainly borne by poor households. In this paper, we combine computable general equilibrium and microsimulation analyses to investigate the economic impacts of Germany’s renewable energy promotion. We find that the regressive effects of renewable energy promotion could be attenuated by alternative subsidy financing mechanisms.

Cost‐effectiveness of a new urinary biomarker‐based risk score compared to standard of care in prostate cancer diagnostics – a decision analytical model

To assess the cost-effectiveness of a new urinary biomarker-based risk score (SelectMDx; MDxHealth, Inc., Irvine, CA, USA) to identify patients for transrectal ultrasonography (TRUS)-guided biopsy and to compare this with the current standard of care (SOC), using only prostate-specific antigen (PSA) to select for TRUS-guided biopsy. A decision tree and Markov model were developed to evaluate the cost-effectiveness of SelectMDx as a reflex test vs SOC in men with a PSA level of >3 ng/mL. Transition probabilities, utilities and costs were derived from the literature and expert opinion. Cost-effectiveness was expressed in quality-adjusted life years (QALYs) and healthcare costs of both diagnostic strategies, simulating the course of patients over a time horizon representing 18 years. Deterministic sensitivity analyses were performed to address uncertainty in assumptions. A diagnostic strategy including SelectMDx with a cut-off chosen at a sensitivity of 95.7% for high-grade prostate cancer resulted in savings of €128 and a gain of 0.025 QALY per patient compared to the SOC strategy. The sensitivity analyses showed that the disutility assigned to active surveillance had a high impact on the QALYs gained and the disutility attributed to TRUS-guided biopsy only slightly influenced the outcome of the model. Based on the currently available evidence, the reduction of over diagnosis and overtreatment due to the use of the SelectMDx test in men with PSA levels of >3 ng/mL may lead to a reduction in total costs per patient and a gain in QALYs.

SUSTENTABILIDADE EM SISTEMAS AGROINDUSTRIAIS: UM ESTUDO MULTICASOS DA CARNE BOVINA DE MATO GROSSO DO SUL, BRASIL

This article discusses the theme of sustainability from the point-of-view of Agroindustrial Systems (AGSs). For this, we used an analysis model for sustainable AGSs. The New Institutional Economy, specifically the Transition Costs Economy, is the theoretical framework of the research. Presuppositions and hypothesis are evaluated by means of a multicase study on the sustainability of the transaction between the producer and the industry within the AGS of beef from Mato Grosso do Sul, Brazil. Cases relevant to the theme were chosen: Mato Grosso do Sul Association of the producers of precocious calf, Good agricultural practices program – EMBRAPA cattle, and Brazilian Association of Organic Livestock. In short, the analyses of the cases allowed for the characterization of these AGSs and the identification of risks associated to capturing the value generated by the investment in specific assets dedicated to sustainability. Furthermore, we suggest a set of hypotheses to be tested and validated in future researches regarding the efficiency and stability of sustainable AGSs.

Energy-Aware Radio Chip Management for Wireless Control

This paper addresses energy-aware control in a wireless control system. The goal is to save energy in a smart sensor node by codesigning its use of the radio chip together with the control policy. The focus is on exploiting the fact that in many radio chips used in wireless nodes the depth of sleep can be manipulated dynamically. The choice of the mode involves a tradeoff, since deeper sleep is cheaper to stay in, but leads to higher future transition costs. The opportunities arising from the use of multiple nontransmitting radio modes have not been studied in the systems control literature. This paper presents a first step toward filling this gap. We propose a control scheme that manages the radio modes of a single sensor node with computation capabilities. This smart sensor node is in charge of sensing the system state, computing the control law to be sent to the actuator, and managing its own radio chip. The joint optimization problem of finding the best switching policy for the radio-chip mode and the best feedback control law is obtained off-line using dynamic programming. The optimal policy is formulated over a finite horizon and implemented according to the model predictive control paradigm. Practical stability of the resulting control scheme is assessed, and careful simulation studies document the potential energy savings that can be obtained with this technology.

Customer state estimation with Poisson distribution model

In this paper, a new access log analysis is proposed which estimates both active states and inactive states from observations simultaneously. I improved burst analysis and developed enthusiasm analysis to detect not only active states but also inactive states. Speaking concretely, I constructed a generative model that assumed observations, which meant event occurrence frequency in this paper, were generated under some Poisson distributions. The generative model based on Poisson distributions consists of some distributions including $$\lambda$$?s which are less than average frequency and more than average frequency. A cost function, which consists of log likelihood and state transition cost, is defined and enthusiasm levels are estimated from the observations minimizing the cost function. The proposed method was applied to query occurrence data in access logs and I confirmed the proposed method could find active states and inactive states from submission patterns and the results showed relationship between enthusiasm levels and real events.

The Costs of Occupational Mobility: An Aggregate Analysis

We estimate the costs of occupational mobility using a novel approach that relies on aggregate flows of workers across occupations rather than on wage data. The theoretical underpinnings for this approach are derived from a model of occupation choice that delivers a gravity equation linking worker flows to occupation characteristics and to transition costs, which we proxy using task data from the Dictionary of Occupational Titles (DOT). Occupation flow data are constructed from the matched monthly Current Population Survey (CPS) between 1994 and 2012. We find that transition costs vary widely across occupations, are increasing in task distance (the dissimilarity in the mix of tasks performed in the two occupations) and are higher for transitions across broad task categories. However, most of the transition costs are accounted for by general, task-independent entry costs, specific to each destination occupation.

Using Parameter Constraints to Choose State Structures in Cost-Effectiveness Modelling.

BackgroundThis article addresses the choice of state structure in a cost-effectiveness multi-state model. Key model outputs, such as treatment recommendations and prioritisation of future research, may be sensitive to state structure choice. For example, it may be uncertain whether to consider similar disease severities or similar clinical events as the same state or as separate states. Standard statistical methods for comparing models require a common reference dataset but merging states in a model aggregates the data, rendering these methods invalid.MethodsWe propose a method that involves re-expressing a model with merged states as a model on the larger state space in which particular transition probabilities, costs and utilities are constrained to be equal between states. This produces a model that gives identical estimates of cost effectiveness to the model with merged states, while leaving the data unchanged. The comparison of state structures can be achieved by comparing maximised likelihoods or information criteria between constrained and unconstrained models. We can thus test whether the costs and/or health consequences for a patient in two states are the same, and hence if the states can be merged. We note that different structures can be used for rates, costs and utilities, as appropriate.ApplicationWe illustrate our method with applications to two recent models evaluating the cost effectiveness of prescribing anti-depressant medications by depression severity and the cost effectiveness of diagnostic tests for coronary artery disease.ConclusionsState structures in cost-effectiveness models can be compared using standard methods to compare constrained and unconstrained models.Electronic supplementary materialThe online version of this article (doi:10.1007/s40273-017-0501-9) contains supplementary material, which is available to authorized users.