Pricing and capacity provision in electricity markets: an experimental study

The creation of adequate investment incentives has been of great concern in the restructuring of the electricity sector. However, to achieve this, regulators have applied different market designs across countries and regions. In this paper we employ laboratory methods to explore the relationship between market design, capacity provision and pricing in electricity markets. Subjects act as firms, choosing their generation capacity and competing in uniform price auction markets. We compare three regulatory designs: (1) a baseline price cap system that restricts scarcity rents, (2) a price spike regime that effectively lifts these restrictions, and (3) a capacity market that directly rewards the provision of capacity. Restricting price spikes leads to underinvestment. In line with the regulatory intention both alternative designs lead to sufficient investment albeit at the cost of higher energy prices during peak periods and substantial capacity payments in the capacity market regime. To some extent these results confirm theoretical expectations. However, we also find lower than predicted spot market prices as sellers compete relatively intensely in capacities and prices, and the capacity markets are less competitive than predicted.     

Buyer Subsidies in an Equilibrium Model of Price Dispersion

Abstract. We present a model of equilibrium price dispersion in which a per-unit subsidy to buyers can reduce average prices. The reason is that subsidies have two effects on average prices that work in opposite directions. First, subsidies raise buyers' willingness-to-pay, and by itself this causes firms to charge higher prices. However, since a higher willingness-to-pay lowers the relative cost of search, subsidies also induce more search. This creates a second effect that puts pressure on firms to reduce prices. We show that the second effect can dominate, thus causing an overall reduction in average price.     

On the Causal Links Between FDI and Growth in Developing Countries

We analyse the Granger causal relationships between foreign direct investment (FDI) and GDP in a sample of 31 developing countries covering 31 years. Using estimators for heterogeneous panel data we find bi‐directional causality between the FDI‐to‐GDP ratio and the level of GDP. FDI has a lasting impact on GDP, while GDP has no long‐run impact on the FDI‐to‐GDP ratio. In that sense FDI causes growth. Furthermore, in a model for GDP and FDI as a fraction of gross capital formation (GCF) we also find long‐run effects from FDI to GDP. This finding may be interpreted as evidence in favour of the hypotheses that FDI has an impact on GDP via knowledge transfers and adoption of new technology.     

Public health insurance and optimal income taxation

If individuals differ not only in their inherent capacity to earn income, but also in the probability that they will fall ill, can subsidized public health insurance be justified on the grounds that it serves as an efficient tool to redistribute welfare? This question is analyzed in a model where the social welfare function is a weighted average of individual expected utilities, and where taxation is by a linear income tax. The answer is ‘yes’, except in certain special cases.     

Differences in managerial behavior between small international and non-international firms

The main question raised in this article is whether there are any differences between the work activities of managers in small firms primarily operating on an international market and those managing firms doing business on a domestic market. If so, what are these differences, and what do they tell us about the internationalization of small firms? The comparative method used here is based on multiple approaches including interviews, diary studies, and direct observations. The conclusions indicate that managers in small international firms are more proactive in their networking behavior, delegate operative activities, and devote more time to planned strategic activities connected with their international expansion than managers in other small firms.     

Urban bicycle tourism: path dependencies and innovation in Greater Copenhagen

Abstract

During the latest decade, a renaissance of bicycling in urban transportation has occurred in many Western European cities. This opens up for a development of bicycle tourism as a form of urban sustainable tourism, taking advantage of improved infrastructure and facilities for cycling tourists. The aim of this study is to conceptualise the dynamics behind the development of urban bicycle tourism. This development may be viewed as an innovative process based on incremental changes in local socio-technological mobility systems. An analytical framework is proposed, based on the following categories: urban planning, bicycle tourism services, communication, and place making. In the analysis, evidence from the Greater Copenhagen region is used to contextualise particularly these perspectives of the development of urban bicycle tourism. In each of the four categories, evidence of innovative services or procedures supporting bicycle tourism was found. However, the most important source of incremental innovation is likely to be found on a systemic level, between the actors in the destination. It is also argued that the development of urban bicycle tourism is highly path dependent, related to the local bicycle culture. Bicycle tourism should not be viewed as isolated from the locals’ everyday cycling.     

What motivates professional service firm employees to nurture client dialogues?

Dialogues between professionals and their clients are at the core of relationship marketing of professional service firms. To nurture dialogues, professionals need to extend the scope of the dialogue to new issues that impact the client organization's performance. We develop and examine (N?=?431) a model grounded in the theory of planned behavior to highlight factors that impact the willingness of professionals to initiate the extension of client dialogues. Three main results are found. First, affective and instrumental attitudes are distinct and different motivational antecedents that simultaneously impact willingness. Second, affective and instrumental attitude are intermediate psychological considerations shaped by extrinsic rewards, reciprocal relationships, and client relationship quality. Third, organizational pressure operates indirectly by instilling a personal professional norm to extend client dialogues.     

Risk communication and citizen engagement: what to expect from dialogue

Despite the last few decades’ devotion to deliberative methods in risk communication, many studies point to how important challenges arise when citizens are engaged in public dialogue. Since the era of enlightenment public dialogue has occupied a position as a normative ideal for political governance. But ideals are social constructions that have a tendency to direct attention away from underlying conflicts. The concept of dialogue is no exception, and exemplified by the Danish solution to dealing with public scepticism in relation to technological controversies, the internationally acclaimed ‘consensus conference’, the paper seeks to offer a better understanding of the contemporary use of the concept of dialogue as well as its ancient roots. The paper argues that behind the aspirations for deliberation lie two opposing models of dialogue. When these two models encounter in deliberative processes, their different presumptions about the role of communication symmetry are likely to appear. This points to how the models hold very different expectations as to the dialogical outcome, thus imposing some fundamental conflicts regarding the political efficacy of citizen engagement as a strategy for bridging the gap between expert and lay attitudes to societal risks.     

Stylised facts of financial time series and hidden Markov models in continuous time

Hidden Markov models are often applied in quantitative finance to capture the stylised facts of financial returns. They are usually discrete-time models and the number of states rarely exceeds two because of the quadratic increase in the number of parameters with the number of states. This paper presents an extension to continuous time where it is possible to increase the number of states with a linear rather than quadratic growth in the number of parameters. The possibility of increasing the number of states leads to a better fit to both the distributional and temporal properties of daily returns.