The Impact of the Financial Crisis on the Global Seaborne Hard Coal Market: Are there Implications for the Future?

The global financial crisis in 2008 sent commodity markets spinning which caused demand to erode, price levels to quickly plummet and project financing costs to rise. In this paper, the authors examine the impacts the economic slowdown has had on the global seaborne hard coal market looking at the impacts for both coking (metallurgical) and thermal (steam) coals including pricing, supply availability, demand and aggregated mine level production costs. The hard coal market experienced a significant slow down; the commodity has bounced back strongly in 2010 driven by strong Asian demand at growth rates above historic levels and strong projections for the future.     

Strategic Trade Policy Under Incomplete Information

This paper examines equilibrium trade policies when firms have better information than governments about the profitability of the industry. Contrary to the intuition that the policymakers' lack of information should reduce their incentives to engage in strategic trade intervention, the analysis suggests that information asymmetries may increase trade policy distortions in equilibrium and ultimately worsen the "prisoner's dilemma" between governments.     

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.     

Ensuring trust in one time exchanges: solving the QoS problem

We describe a pricing structure for the provision of IT services that ensures trust without requiring repeated interactions between service providers and users. It does so by offering a pricing structure that elicits truthful reporting of QoS by providers while making them profitable. This mechanism also induces truth-telling on the part of users reserving the service.     

Scheduling independent jobs on nonuniform, unequal processors

The problem of scheduling n independent jobs on a single processor to minimize the total tardiness of the assignment has attracted much attention. Solution algorithms, both exact and approximate, have been reported, but no polynomial time exact algorithm has yet been found, nor has the problem been proven NP-complete.In this paper we consider the more general case of scheduling n independent jobs on m unequal processors to minimize total tardiness. Since this problem is more complex than the corresponding single-processor problem, no polynomial-time algorithm is in sight. For problems of this nature, approximate algorithms may be more valuable than exact algorithms in terms of applications. A heuristic algorithm is developed to solve the multiple-processor problem. Computational experiments show that the heuristic algorithm is efficient, fast, and easy to implement.     

Development and perspectives on supply and demand in the global hard coal market

The year 2007 was filled with record high prices and extreme volatility levels for many commodities and the global coal and freight markets were no exception. Naturally this opens up a discussion of what may be the root causes for the extreme price developments, and whether they can be attributed, wholly or partly to a change in supply and demand within the seaborne hard coal market, a lack of investment or a changing market structure. This paper takes a closer look at these topics building upon the earlier analytical methods and previous work of H. Gruss (1989–2003) and C. Kopal (2006–2007) published in the Zeitschrift für Energiewirtschaft.     

On the Evolution of Overconfidence and Entrepreneurs

This paper explains why seemingly irrational overconfident behavior can persist. Information aggregation is poor in groups in which most individuals herd. By ignoring the herd, the actions of overconfident individuals ("entrepreneurs") convey their private information. However, entrepreneurs make mistakes and thus die more frequently. The socially optimal proportion of entrepreneurs trades off the positive information externality against high attrition rates of entrepreneurs, and depends on the size of the group, on the degree of overconfidence, and on the accuracy of individuals' private information. The stationary distribution trades off the fitness of the group against the fitness of overconfident individuals.     

Bringing Ecosystem Services into the Real World: An Operational Framework for Assessing the Economic Consequences of Losing Wild Nature

Policy action to halt the global loss of biodiversity and ecosystems is hindered by the perception that it would be so costly as to compromise economic development, yet this assumption needs testing. Inspired by the recent Stern Review on the Economics of Climate Change, the leaders of the G8+5 nations commissioned a similar assessment of the economics of losing biodiversity, under the Potsdam Initiative on Biodiversity. Here, we propose a conceptual framework for such a global assessment which emphasizes several critical insights from the environmental economics and valuation literature: contrasting counterfactual scenarios which differ solely in whether they include specific conservation policies; identifying non-overlapping benefits; modeling the production, flow, use and value of benefits in a spatially-explicit way; and incorporating the likely costs as well as possible benefits of policy interventions. Tackling these challenges, we argue, will significantly enhance our ability to quantify how the loss of benefits derived from ecosystems and biodiversity compares with the costs incurred in retaining them. We also summarise a review of the current state of knowledge, in order to assess how quickly this framework could be operationalized for some key ecosystem services.     

The macrodynamics of financial fragility within a hard peg arrangement

The paper presents an open-economy macrodynamical growth model with the aim of giving an endogenous characterisation to the process that leads a small country with a currency-board arrangement to accumulate dangerously high levels of external debt and become vulnerable to macroeconomic instability. The macrodynamics of the model results from the combination of the commitment to maintain the peg - that makes liquidity closely dependent on the dynamics of foreign reserves - and the non-linear real and financial interactions that drives the pro-cyclical behaviour of the economy. Within this context, the external financing ease during an economic upswing leads to debt-supported growth and financial fragility; the consequent deterioration of profitability expectations brings about a capital reversal that, in the absence of monetary stabilisation tools, makes the currency arrangement unsustainable. A financial crisis may thus turn into a currency crisis.We run a continuous-time estimation of a non-linear differential equations system for Argentina during the years of the currency-board arrangement. We find that two steady-state solutions exist. The local stability and sensitivity analysis show that both equilibria are unstable and that the qualitative nature of the equilibria depends in particular on lenders' responsiveness to the degree of leverage. We also show that relaxing the assumption on the currency arrangement and allowing for an autonomous monetary policy makes both equilibria stable.     

From Government to Regulatory Governance: Privatization and the Residual Role of the State

This article reviews the state of thinking on the governancerole of public ownership and control. Optimal governance systemsdepend on the path of institutional development. Nevertheless,the transfer of operational control over productive assets tothe private sector often yields a desirable governance system,because it may be more difficult for citizens to constrain politicalabuse than for governments to regulate private activity. Inweak institutional environments, however, the process needsto be structured to avoid capture of the regulatory process.The speed of transfer should be matched to progress in developinga strong regulatory governance system, to which certain residualrights of intervention must be vested. After all, "institutions"are simply governance mechanisms with some degree of autonomyfrom both political and private interests. The gradual creationof institutions partially shielded from political power mustbecome central to the development of an optimal mode of regulatorygovernance. The article presents suggestions for establishingaccountability in regulatory governance, in particular by creatingan internal control system based on a rotating board with representativesof users, producers, and civil society, in a process involvingfrequent reporting and disclosure. JEL codes: G38, L33, L51