Spatial price competition in retail gasoline markets: evidence from Austria

This paper investigates the influence of unbranded stations on the prices charged by branded stations in the retail gasoline sector, using data on 400 stations in Lower Austria. As the market is characterized by spatial competition, a spatial lag model is used to avoid misspecification. The results show that independent retailers generally heighten price competition, as they charge significantly lower prices. At the same time, as consumers might consider gasoline sold at unbranded stations to be inferior, they also reduce price competition for branded stations. Independents therefore ultimately have only a small influence on the prices charged by branded stations.     

Customer response to day-ahead market hourly pricing: Choices and performance

Real-time pricing (RTP) has been advocated to address extreme price volatility and market power in electricity markets. This study of Niagara Mohawk Power Corporation's largest customers analyzes their choices and performance in response to day-ahead, default-service RTP. Overall price response is modest: 119 customers are estimated to reduce their peak demand by about 10% at high prices. Manufacturing customers are most responsive with a price elasticity of 0.16, followed by government/education customers (0.11), while commercial/retail, healthcare and public works customers are, at present, relatively unresponsive. Within market segments, individual customer response varies significantly.     

Spatial spillovers in US wholesale gasoline markets

This paper analyses how oil industry‐related activities in neighbouring gasoline markets affect local markets. Our contribution consists of applying spatial econometric models to better understand pricing behaviour in US gasoline markets and the spatial phenomena unique to this particular industry. We find that neighbouring state‐level gasoline price variation explains a large portion of the variation of in‐state (or local) gasoline prices. Consistent with intuition, the empirical results imply that wholesale gasoline prices are positively affected by state and federal‐level gasoline content regulations. Further, our results suggest that changes in state‐level wholesale gasoline prices respond to both in‐state and neighbouring‐state inventory levels.     

Using the market at a cost: How the introduction of green certificates in Sweden led to market inefficiencies

The paper examines the transactions costs in the Swedish electricity retail market arising as a result of the implementation of a green certificate system. Since transaction costs cannot be measured directly, we analyze the margin between what the retailers pay for the certificates and what they charge the end-users for the certificate service. Our results highlight some costs of implementing new policy and the necessity of a careful regulatory design. We propose that the price transparency should be strengthened by, for example, shifting the quota obligation to the retailers and/or by including the pricing of the certificate-service in the end-user price of electricity. Furthermore, we restate the obvious fact that the number of policy instruments implemented in a particular market matters insofar that each and every policy will create transaction costs.     

The impact of property price on construction output

The interaction between the construction market and the overall economy has attracted much attention, but few studies have investigated the influence of the property market on the construction market in terms of property price. The disaggregated data of Hong Kong’s housing and retail construction sectors are collected to investigate the impact of property price on construction output. The newly developed autoregressive distributed lag (ARDL) bounds testing approach and the error correction (EC)-based Granger causality test are employed. The bounds testing results suggest that there exist stable long-run relationships between construction output and property price for both housing and retail construction sectors. Specifically, a 1.00% increase in the housing price and retail price lead to a 0.55% and 0.42% increase in construction outputs for the two sectors respectively. In addition, the Granger causality tests confirm a distinct long-run causal flow from property price to construction output. Furthermore, the proposed ARDL approach provides an effective method for forecasting construction output.     

Restructuring retail property markets in Central Europe: impacts on urban space

This paper discusses the changing retail property structures in Central Europe in the aftermath of the integration of these countries in the global economy. In general, within the property market, retail real estate is the market sector that is most affected by internationalization. Therefore, this sector is relatively transparent compared to the office and residential markets. The macro-economic transitions in Central Europe and the integration of these countries in the world economy opened these markets to international retailers. As a result, the retail scene in these countries, combined with the structure of the retail property stock, has changed dramatically. In the late 1990s, Central Europe experienced a retail development boom driven by international hypermarket operators and speculative developers. Shopping centers and hypermarkets became important elements in the urban landscape. However, lack of planning and vision led to chaotic development, and oversupply was the outcome. In the future, public and private actors will need a vision of how the city should develop before embarking on flagship urban projects.

Does size matter? The dynamics of housing sizes and prices in Hong Kong

Conventional analyses on real estate pricing strategy concentrate on the impact brought about by the existence of various physical and environmental attributes such as location, view and amenity effects. For each of these variables, the extent of impact across different property types seems to be rather constant. This, however, may not hold when it comes to a specific variable—size, especially in terms of per-square-foot price of the subject property. While it is a general perception that larger real estate should command a higher total price because of the simple logic of aggregating the unit price from a larger floor area, in some sub-sectors of the property market such as the retail property sector, it is not uncommon to find that larger shops tend to have relatively smaller unit price/rent compared to smaller shops, other things being equal. In this paper, the authors would like to show that in the residential sector in Hong Kong, this common market practice is being reverted when we find that larger residential flats command relatively higher per-unit price (and hence also the overall price of the subject property), making larger residential flat proportionately more expensive.     

Long-term contracting in hydro-thermal electricity generation: Welfare and environmental impact

We consider electricity generation industries where thermal operators imperfectly compete with hydro operators that manage a (scarce) water stock stored in reservoirs over a natural cycle. We explore how the exercise of intertemporal market power affects social welfare and environmental quality. We show that, as compared to the outcome of spot markets, long-term contracting either exacerbates or alleviates price distortions, depending upon the consumption pattern over the water cycle. Moreover, it induces a second-order environmental effect that, in the presence of a thermal competitive fringe, is critically related to the thermal market shares in the different periods of the cycle. We conclude by providing policy insights.     

Price variation in spatial markets: the case of perfectly inelastic demand

This paper analyzes short-run price variation in one-dimensional (i.e., circular, linear) spatial markets where both producers and consumers are numerous. Price reaction functions are established for firms under symmetrical price conjectures. For perfectly inelastic consumer demand each firm's equilibrium price is shown to depend upon distance-decay effects in both firms' locations and marginal costs. The rate of distance decay in these effects is inversely related to the degree of price conjectural variation in the market. Boundary effects in spatial markets are also shown to influence these distance-decay rates and, thus, patterns of firms' equilibrium prices.An earlier version of this paper was presented at the IGU Mathematical Models Working Group in Canberra, Australia during August 1988. The authors gratefully acknowledge the comments of two referees     

Spatial competition and regulatory change in the grain handling and transportation system in western Canada

The grain handling and transportation system (GHTS) has been a defining component of the western Canadian economy since the early part of the last century. Only two major railways serve the grain handling industry, so the potential for the exercise of market power in transportation appears to be significant. In fact, spatially oriented regulations applicable to railways exist in Canada to mitigate this, but to date they have not often been used by shippers. While the reasons for this are not completely clear, we suggest that the regulations are now inadequate for the current state of the GHTS. Using a unique data set from the year 2000, we assess the effect on the grain handling industry of modifications to these regulations, and find that significant gains for shippers from these modifications are possible. These gains are computed to be on the order of C$10–15 million per year for grain shippers alone. We would like to thank conference and presentation participants (Transportation Research Board, Canadian Agricultural Economics Society, University of British Columbia, University of Leeds and California State University, Long Beach) as well as the anonymous reviewers who commented on the earlier versions of this paper. We would also like to acknowledge support from the Saskatchewan Department of Highways.     

城市天然气价格及价格机制的探讨

介绍了日本和韩国的燃气价格及价格机制,针对陕京天然气实施两部制价格的情况,提出对城市天然气价格制定的建议:调整目前价格水平,形成合理补偿原则的价格结构;建立价格机制,形成上下游价格联动机制,适应当前市场形势;充分利用价格杠杆作用,追求合理的用气结构,为市场竞争形成价格做准备。     

浅谈工程量清单计价方式

通过在实际工作中对工程量清单计价的具体操作和应用，从满足竞争需要、提供平等的竞争条件等方面，总结了工程量清单计价的特点，并指出其为市场价格的形成提供了一种新的计价模式。     

Differences in spatial pricing in the United States: A statistical analysis and case studies

This paper focuses attention on spatial pricing patterns of American firms. It identifies price strategies by statistical comparison of firms in Colorado with those located elsewhere in the United States. Competitive factors are found generally to dominate the pricing schedules of firms in other states, while the pricing schedules of Colorado firms are found to be influenced chiefly by demand patterns. Multi-product case examples are presented which spotlight pricing differences between firms located in a distributional-center type of state, such as Colorado, and those in other states. The cases also help explain why certain variables were uniquely important in Colorado.This paper is based on research funded by the National Science Foundation. We would like to thank A. Loviscek and J. Evans for computer-related assistance.     

Consumer preferences and electricity pricing reform in Western Australia

Australia's electricity prices are high, driven by rising peak demand that is forcing significant levels of infrastructure investment. Compounding these factors is the lack of transparent price signals for consumers, with uniform pricing structures providing no incentive to change consumption behaviours.This research surveyed residential electricity consumers in Western Australia about their perceptions of solar, consumption behaviour, and electricity pricing structures.The results suggest that customers in Western Australia may be willing to change behaviour, reduce electricity usage, and be rewarded for use of renewable technologies, highlighting an opportunity for policies such as retail tariff reform to be further explored.     

Simple monopoly price theory in a spatial market

One of main conclusions drawn by prior studies is that in a spatial market, the shape of the demand function can fully determine whether one simple pricing policy is superior to another either on the basis of the firm’s preference or social desirability while there is one assumption that is generally stipulated, namely, that the fixed market area assumption under which the market area is exogenously determined and remains the same under alternative pricing policies. In order to fully understand the impact of a demand function, this paper attempts to reexamine the relative economic advantages between two simple spatial pricing policies in a world with variable market area, that is, the market area is endogenously determined the price charged. We show that the fixed market area assumption is valid only where demand is linear, but no longer holds where demand is nonlinear. Moreover, and more importantly, we show that in a world with variable market area, some conclusions drawn by prior studies on the relative economic benefits of two pricing policies cannot remain valid. The main conclusion of this paper is that even the relative economic benefits of two simple spatial pricing policies is concerned, the impact of economic space is significant.

Regulatory and market disharmony in the Turkish electricity industry

We examine the regulatory and market disharmony in the Turkish electricity industry revealed in the course of introducing competition in retail supply. We specifically show that the design of the support mechanism for renewable energy resources and the level of regulated retail tariffs have left little room for the viability of retail competition in the electricity sector. While the cost of the support mechanism has increased the cost for retail suppliers, the regulated tariffs prevent them from reflecting this cost increase in their prices and from providing commercial offers. This induces customers to switch back to their default regulated tariffs.     

A shortage pricing mechanism for capacity remuneration with simulation for the Greek electricity balancing market

In a shortage pricing (or else scarcity pricing) model, the goal is to create extra revenues whenever the electric system approaches a shortage situation and send market signals that will drive capacity investments. Shortage pricing aims at producing a substantial increase in prices under shortage conditions, thus providing better incentives for new flexibility capacity investment and operation while keeping the security of supply within strict acceptable levels. The shortage price is based on the Loss of Load Probability and the Value of Lost Load. The purpose of this study is to simulate the hypothetical implementation of a shortage pricing mechanism in the Greek balancing market in order to discover cases of reserve capacity scarcity and provide indications for further considerations toward capacity remuneration mechanisms for this system. A real dataset from the Greek TSO data portfolio was used for this purpose. We examine two case studies showcasing that the proposed shortage pricing function can considerably increase the shortage prices exactly when needed by the electric system. Finally, policy implications are provided regarding the future use of the shortage pricing in Greece and its integration in the EU balancing market platforms currently under development.     

Effects of the tax on retail sales of some fuels on a regional economy: a computable general equilibrium approach

This study simulates the effects on the economy of Extremadura that are produced by a new tax on retail sales of some fuels. A computable general equilibrium model involving various labour market scenarios is employed as a modelling framework. Model parameters are obtained by calibration, using a social accounting matrix for Extremadura updated to the year 2000. Further, we also include an additional simulation in which a hypothetical regional tax rate, to finance environmental policies, is considered. This second simulation assumes constant fiscal revenues. The results of the first simulation show that the effects of this tax are modest. The simulation shows household welfare losses, decreasing activity levels and generalised price reductions, except in production sectors more directly linked to the oil products sector. In addition, we also observe that this hypothetical additional regional fuel tax rate would reinforce the effects produced by the national tax rate. This work has been supported by the Spanish Institute for Fiscal Studies. The first author also acknowledges the financial support by Spanish Ministry of Science and Technology (SEC2003-06080) and by the Generalitat de Catalunya (2004XT00095). The second author thanks SEC2003-05112 from Spanish Ministry of Science and Technology and XT0095-2004 from Generalitat de Catalunya. Finally, we also thank Antonio Manresa, Ferran Sancho and two anonymous referees their useful comments. All errors are our responsibility.     

Spatial duopoly under uniform delivered pricing when firms avoid turning customers away

This paper studies a spatial duopoly under uniform delivered pricing when firms do not ration the supply of the good, thus extending to a spatial context the analysis of oligopolistic markets with no rationing. The paper shows the existence of the equilibrium in prices under different tie-breaking rules (TBR) and compare the features of the equilibria found under these rules, thereby allowing to highlight the importance of the choice of the TBR in studying these models. When consumers buy from the nearest firm in case of equal prices (efficient TBR), any symmetric price pair within a given range is a Nash equilibrium, with each firm serving exactly half of the market line. If demand in each local market is equally split between the firms charging the same price (random TBR), the only equilibrium price is the one that gives zero profits to each firm. The degree of competitiveness of the market crucially depends on the TBR. Under the efficient TBR, all (but one) price equilibria deliver positive profits to both firms. Under the random TBR, the market outcome is very competitive in that firms make zero profits. None of the equilibria found under any tie-breaking rule are allocatively efficient.This paper is based on my DPhil thesis at the University of York. I would like to thank Gianni De Fraja, Keith Hartley, Peter Simmons, Catherine Waddams, Xavier Wauthy and participants to the 1998 EARIE and ERSA conferences for helpful comments and discussion. The paper has also been improved by the very useful comments of two referees of this journal. The usual disclaimer applies.Received: January 2001 / Accepted: January 2003     

Transmission pricing and investment incentives

The allocation of limited transmission resources has considerable impact on investment incentives in electricity markets. We study the long–term effects of two common network congestion management regimes on investment in production and transmission facilities. We compare locational marginal pricing, where transmission constraints are directly taken into account by spot–market prices, with a regime of uniform prices, where transmission constraints are taken into account by subsequent congestion measures. We propose an analytically tractable framework to show that, as compared to locational marginal pricing, uniform pricing can lead to overinvestment in transmission facilities and total production capacities.