Competition and price asymmetries in the Greek oil sector: an empirical analysis on gasoline market

This article attempts to investigate the issue of asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail price of gasoline respectively. For this purpose, we utilise the error-correction methodology in the Greek gasoline market. The sample consists of monthly data covering the period of January 1988 to June 2006. We also try to analyse by using impulse response functions the effect of competition on the dynamic adjustment of gasoline price to which has been paid scant attention in the past. The results favour the common perception that retail gasoline prices respond asymmetrically to cost increases and decreases both in the long and the short-run. At the wholesale segment, there is a symmetric response of the spot prices of gasoline towards the adjustment to the short-run responses of the exchange rate. Lastly, after the deregulation, wholesale prices of gasoline tend to gradually restore equilibrium triggered by a price shock compared to the regulated period.     

Downstream gas pricing in an era of upstream deregulation

State public service commission regulation of gas utility pricing is examined during the period of wellhead price deregulation. A model which incorporates asymmetry in price setting during a period of changing input costs is estimated. Statistical analyses suggest public service commission regulation slowed the increase in gas utility prices during periods of rising costs. Gas utility pricing was not monitored as closely when purchased gas prices fell, thereby altering the rate structure in favor of industrial customers. Federal Energy Regulatory Commission policies designed to promote competition by restructuring the transmission sector of the gas industry after 1985 appear to have suppressed retail prices in industrial markets.     

Economic determinants of deregulation in the gas distribution market

Many state public commissions have deregulated their utility markets. However, evidence of welfare or efficiency improvements under deregulation is ambiguous. It is also unclear why different states adopt consumer choice, price caps, sliding-scale plans, or retain rate-of-return regulation. This study evaluates several economic factors behind deregulation in gas distribution markets using a survey of state commissions. Logistic and hazard models show that utilities’ prices and capacity, and states’ stock of own gas wells, prices of competing fuels and the regulatory climate, help explain the pattern of deregulation. Demonstration effects from surrounding markets also contribute. These factors make the propensity to use price caps versus restructuring vary regionally.     

The impact of restructuring and deregulation on gas rates

This article evaluates the impact of consumer choice programs, price caps, and sliding scale plans on consumer prices of gas using a custom survey of public service commissions and data from the Department of Energy. A seemingly unrelated regressions model estimates residential, commercial and industrial prices jointly, controlling for potentially endogenous demand. Consumer choice programs are estimated to lower residential and commercial prices significantly, by bringing competition to markets with smaller consumers. Prices fall even before deregulation as utilities build consumer loyalty and fight competition. Sliding scale plans are estimated to lower prices of small consumers while raising industrial prices. Price caps lead to overall higher prices, with unclear ranking across consumer classes.      

Cogeneration and electric power industry restructuring

In 1978, Congress passed the Public Utilities Regulatory Policies Act (PURPA) in response to the energy crisis of the early 1970s. One of the unintended results of PURPA has been to show that electric generation was not a natural monopoly and could be opened to competition. Both the theoretical and empirical determinants of cogeneration and how they may be affected by future electric power industry restructuring are important for future industrial generation decisions. This paper explores these determinants and identifies differences between industrial cogenerators which sell power back into the electricity grid (commercial generators) and those which keep all of their electricity generation for internal purposes (self generators). The empirical results indicate that increases in industrial firm technical capabilities tends to increase their probabilities of both commercial and self generating. In addition, the models indicate that increases in retail electricity prices and industrial output increases industrial generation probabilities. The ability to switch fuels enhances industrial generation probabilities, as does a decrease in the price of natural gas. The results also imply that under electric restructuring a number of industrial generators may find that they face a stranded cost problem much like the one faced by their electric utility counterparts.     

THE INCOME DISTRIBUTION EFFECTS OF A NATURAL GAS PRICE INCREASE

Deregulation of wellhead natural gas prices will affect individuals as consumers and resource owners. It is shown that higher natural gas prices will be roughly progressive with respect to household and general consumers. The effects on the distribution of resource earnings will be ambiguous because although the oil and gas industry is highly capital intensive, natural gas price deregulation will likely cause reduced spending on other capital-intensive activities, including deep drilling for high cost gas, gas utility distribution, and exports. Overall, no clear case can be made that gas wellhead price deregulation will be regressive     

Dynamics of money, output and price interaction — some Indian evidence

The present study is an attempt to model the dynamic interactions between money, output and prices in a structural vector autoregression framework. The primary concern of the paper is to examine the sources of variations and response of one variable to changes in others in a system of economic variables in the Indian context. Using quarterly data from 1970Q1 to 1990Q4, we find that structural factors, in addition to monetary factors, play an important role in generating and sustaining the process of inflation and fluctuations in economic activity. An increase in money/credit supply is found to increase output and prices in the short-run and prices in the long-run, while a non-accommodating monetary policy is ineffective in controlling inflation even at the cost of substantial output losses, thereby indicating relative rigidities in price movements. Another interesting finding is that the monetary authority responds differently to different price shocks, exercising its leverage in altering the quantity as well as the composition of aggregate money supply. Our findings also indicate that the economy is characterized by relatively large and infrequent shocks to ‘price/cost’-related factors. Finally, our analysis suggests that a simple monetary targeting without adequate ‘supply side’ measures may not be able to serve the objective of maintaining growth with price stability.     

The new long-term trend in the price of natural gas

A significant negative trend in the long-term price of natural gas at the wellhead is revealed from simulations with a partial equilibrium model of the industry in the United States. The model framework consists of a simultaneous equations system for production from reserves and for demands for production in the residential, commercial and industrial sectors. We utilize a wide range of historical data to calibrate the model and then develop two sets of scenarios for future prices, one based on further industry development under current regulation, and the other based on deregulation and development of an open market for gas services. The key variables — price of natural gas, level of production and inground gas reserves — for the next 10 years improve for the consumer whether or not there is deregulation but the second scenario leaves the consumer better off sooner.     

Residential water demand responds asymmetrically to rising and falling prices

This paper econometrically estimates residential water consumption in Germany between 2007 and 2013 based on a panel of almost 3000 supply areas. In particular, the analysis distinguishes periods of rising and falling water and sewage water prices. The short-run (long-run) price elasticity is estimated at around 4.2% (13%), but water demand appears to respond asymmetrically to rising and falling prices. When prices are rising, the short-run (long-run) price elasticity is around 6.5% (17%). When prices are falling, the short-run price elasticity is not statistically different from zero, and the long-run price elasticity is estimated at around 12%. Additional results illustrate that employing average prices instead of marginal prices results in substantially overestimating the price elasticity. These findings are particularly relevant for utilities and regulators planning to alter the tariff structure towards a higher fixed fee and a lower volumetric fee.     

Attendance and pricing at sporting events: empirical results from Granger Causality Tests for the Melbourne Cup

This study applies Granger causality tests to examine the relationship between attendance, admission prices and real income at the Melbourne Cup, which is Australia’s premier horseracing event and one of the world’s leading handicap races. The motivation for the paper is that while market demand suggests that causation should run from admission price to attendance, it is equally plausible that sporting authorities could alter admission prices in response to a change in demand reflected in attendance. The main findings are that in the short-run there is unidirectional Granger causality running from income to attendance, attendance to admission price and income to admission price, while in the long run both admission price and income Granger cause attendance.     

Supply response of farm program in rice-growing states

This study aims to develop an acreage response model for rice-growing states using a policy-inducing variable. The single equation regression model for each rice-producing state is estimated by using the ordinary least square multiple regression procedure after log transformation. Data for the period 1959 to 1988 for acreage plantation, market price, target price, loan rate, and acreage reduction rate are used in designing the policy-inducing price. The estimated parameter shows a significant inverse relationship between the rice acreage planted and policy-inducing prices in all of the rice-growing states, with the exception of Louisiana. The estimated short-run elasticities for Arkansas, California, Louisiana, Mississippi, and Texas are -0.36, -0.68, 0.30, -0.37, and -0.59, respectively. The heterogeneity in the magnitude of the elasticities suggests the need for redesigning the rice programs to generate desirable acreage responses from all of the rice-growing states.     

The “price puzzle” in the monetary transmission VARs with long-run restrictions

This study addresses the “price puzzle” — a positive response of prices to monetary tightening in VAR models. By using long-run instead of the usual short-run restrictions on the US data including output, prices and interest rate, we find that monetary tightening had a negative effect on prices.     

Deregulation,news releases,and price discovery

We hypothesize that the firm’s regulatory environment influences the sensitivity of its equity value to information. Using intraday stock price data of utilities operating in differing regulatory environments we test for systematic differences between the responsiveness of stock prices of utility firms operating in deregulated and regulated environments to a common information set. Our findings reveal sharp differences in responses, with those of utilities operating in deregulated environments the strongest, and the responses of utilities in highly regulated environments the weakest. While the evidence supports our hypothesis, in a broader sense, the evidence suggests that deregulation aids in the process of price discovery. We also find evidence that suggests that deregulation, per se, does not lead to higher stock price volatility.      

A Sequential Rationality Test of USDA Preliminary Price Estimates for Selected Program Crops: Rice, Soybeans, and Wheat

Despite recurrent evaluations on USDA price forecasts, the performance of USDA price estimates has not previously been examined in publication. To fill the void in research to this important public information, a sequential forecast evaluation procedure is applied to selected USDA price estimates: Rice, soybeans, and wheat. The evaluation procedure reveals that the USDA price estimates are short-run unbiased; however, they are not long-run rational. In addition, short-run optimality and efficiency tests suggest that USDA price estimates need to be properly scaled and fully reflect information embodied in past prices and their estimates — a possible venue to improve the predictability of USDA price estimates for the crops.     

Optimal privatization of vertical public utilities

Abstract We examine restructuring, divestiture, and deregulation of a vertically integrated public utility, (e.g., electricity), from a public finance perspective. How an optimal restructuring plan for the utility depends on the cost of public funds and on the X‐efficiency gains from privatization, how the optimal degree of competition in the upstream and downstream segments are connected, and implications of privatization for consumer prices are examined. The higher the cost of public funds, the more likely the post‐privatization price will exceed the regulated public utility price. The greater the X‐efficiency gains from privatization, the more likely the post‐privatization price will fall.     

Market efficiency in the Spanish derivatives markets: An empirical analysis

This paper analyzes Granger caUSAlity between daily prices of the Spanish stock index (Ibex 35) and its futures contract using Johansen cointegration methodology. The study differentiates between short-run and long-run caUSAlity. The empirical results prove that, in the short run, the futures price causes the spot price. However, the opposite is not true. On the other hand, long-run caUSAlity is embodied in the response of futures prices after deviations from the long-run equilibrium. These results say that during the period of study, the Spanish futures market behaved as an efficient market.     

The effect of entry restrictions on price: evidence from the retail gasoline market

I exploit a change in Spanish regulations to test the effect of the relaxation of entry restrictions on the equilibrium retail price of diesel. In February 2013, a Central Government reform permitted gasoline stations to operate in industrial and commercial areas. Over the following 2-year period, this deregulation led to a high number of new market entrants in these newly designated free entry areas. By isolating markets exposed to entry and markets unaffected by new entrants, and adopting a difference-in-difference approach, results show that gasoline stations exposed to a new market entrant within a one-mile radius lower their prices by an average 1.04%. This result is significant, representing almost one fifth of the average retail margin. Additionally, the results show that the reduction in the equilibrium price is caused by the first market entrant and that the effect decreases over time.     

Incentive Regulation and Competition in Public Utility Markets: A 20-Year Perspective

Over the last 20 years, incentives in general and price caps in particular have breathed new life into public utility regulation. Price caps successfully combine incentives for cost reduction with incentives for more efficient pricing. These properties also facilitate opening public utility sectors to competition. Relatively tight price caps likely imply the right amount of competition, when the underlying natural market structure is unknown. While price caps make a regulated incumbent competitively more aggressive, this aggression is likely to improve on the unregulated outcome. Potentially anticompetitive behavior by the incumbent has led to regulation of essential inputs on the basis of benchmarked costs. Benchmarked costs should evolve into price caps for essential inputs and eventually lead to partial deregulation of end-user prices.     

Implications of CO<Subscript>2</Subscript> emissions trading for short-run electricity market outcomes in northwest Europe

We examine the short-run implications of CO₂ trading for power production, prices, emissions, and generator profits in northwest Europe in 2005. Simulation results from a transmission-constrained oligopoly model are compared with theoretical analyses to quantify price increases and windfall profits earned by generators. The analyses indicate that the rates at which CO₂ costs are passed through to wholesale prices are affected by market competitiveness, merit order changes, and elasticities of demand and supply. Emissions trading results in large windfall profits, much but not all of which is due to free allocation of allowances. Profits also increase for some generators because their generation mix has low emissions, and so they benefit from electricity price increases. Most emission reductions appear to be due to demand response not generation redispatch.      

财政分权、政府竞争与土地价格结构性偏离

财政分权背景下地方政府的财政约束和政府竞争是导致土地价格结构性偏离的根本原因。地方政府存在拉升商业用地和居住用地出让价格的倾向,金融宽松环境和投机行为盛行会使这两种土地出让价格存在正向偏离其理论地价的可能;而地方政府对流动性税基的争夺过程会导致工业用地出让价格低于其理论价格。工业用地价格与商业和居住用地价格正是在政府这两种反作用力量的作用下出现结构性偏离。