POWER SUPPLY EXPANSION AND THE NUCLEAR OPTION IN POLAND

This paper describes the construction of a data set of the Polish power sector for use with the Elfin capacity expansion planning model. Using Elfin, the paper derives four scenarios and some sensitivities for new generating capacity construction plans. These scenarios simulate choices among several generic generating technologies made to achieve the lowest overall net present cost of operating the power system through 2015. Key results include: (i) single-cycle natural gas-fired combustion turbines prove highly attractive for Poland because of its urgent need for peaking capacity, (ii) nuclear power cannot be excluded from consideration for Poland on economic grounds alone, (iii) the effectiveness of conservation to reduce airborne emissions is limited under scenarios in which nuclear generation is adopted, and (iv) the attractiveness of nuclear is shown to be highly sensitive to assumptions on some uncertain inputs, suggesting the need for a more detailed analysis before policy implications can be drawn.     

Asymmetric Information,Bank Lending,and Implicit Contracts: A Stylized Model of Customer Relationships

Customer relationships arise between banks and firms because, in the process of lending, a bank learns more than others about its own customers. This information asymmetry allows lenders to capture some of the rents generated by their older customers; competition thus drives banks to lend to new firms at interest rates which initially generate expected losses. As a result, the allocation of capital is shifted toward lower quality and inexperienced firms. This inefficiency is eliminated if complete contingent contracts are written or, when this is costly, if banks can make nonbinding commitments that, in equilibrium, are backed by reputation.     

Option Prices as Predictors of Equilibrium Stock Prices

The Black-Scholes option pricing model, modified for dividend payments, is used to calculate jointly implied stock prices and implied standard deviations. A comparison of the implied stock prices with observed stock prices reveals that the implied prices contain information regarding equilibrium stock prices that is not fully reflected in observed stock prices. The implications of this finding are discussed.     

Local Consumer Information Systems for Services: A Test

This paper reports on a survey of consumers' experiences with local services firms that was conducted by the Montgomery County, Maryland Office of Consumer Affairs and supported by an FTC grant. Over 1,200 individuals evaluated auto repair, heating and air conditioning, home remodeling, roofing, and insulation contracting firms on three dimensions: satisfaction with work performed, price in relation to quality, and strength of recommendation. Results for the heating and air conditioning category were published and widely disseminated.