Optimal Price Regulation for Natural and Legal Monopolies

Optimal price regulation for natural and legal monopolies is an impossible task. The still difficult .task of good price regulation can be systematized by considering separately price level and price structure of the regulated firm. Various methods of price level and price structure regulation are evaluated and then considered for the regulation of electricity transmission, both in the context of an independent transmission company and of vertical integration between transmission and most of the generation capacity. The regulatory approach suggested uses price caps defined on two-part tariffs. This way, flexibility for short-term capacity utilization can be combined with incentives for investments in new transmission capacity.

Transforming Energy Networks via Peer to Peer Energy Trading: Potential of Game Theoretic Approaches

Peer-to-peer (P2P) energy trading has emerged as a next-generation energy management mechanism for the smart grid that enables each prosumer of the network to participate in energy trading with one another and the grid. This poses a significant challenge in terms of modeling the decision-making process of each participant with conflicting interest and motivating prosumers to participate in energy trading and to cooperate, if necessary, for achieving different energy management goals. Therefore, such decision-making process needs to be built on solid mathematical and signal processing tools that can ensure an efficient operation of the smart grid. This paper provides an overview of the use of game theoretic approaches for P2P energy trading as a feasible and effective means of energy management. As such, we discuss various games and auction theoretic approaches by following a systematic classification to provide information on the importance of game theory for smart energy research. Then, the paper focuses on the P2P energy trading describing its key features and giving an introduction to an existing P2P testbed. Further, the paper zooms into the detail of some specific game and auction theoretic models that have recently been used in P2P energy trading and discusses some important finding of these schemes.Comment: 38 pages, single column, double spac

Financial instruments for human development

Economics often provides the wrong incentives to those who control the assets, such as people in developing countries where most forests are located and who could potentially benefit most from conservation . There is increasing unease about this situation, and an emerging view is that standard economic concepts and prescriptions fail to properly account for the value of environmental assets . Economic values seem to be out of step with social values ; it is clear that the economic science of the future should bridge this gap. This paper develops practical ways and new economic thinking to redress this discrepancy: it creates and develops structures and institutions through which the value embodied in environmental assets can be translated into economic return which encourages the conservation of the asset, and induce more equitable and effective use of resources . I will introduce a range of different financial instruments, some of which are connected to global environmental assets such as the planet's atmosphere, and others to local or regional assets, such as watersheds . The financial instruments proposed here all share an unusual feature : they provide economic incentives towards environmental conservation. They do so by altering the economic valuation of these assets in a way that is more aligned with their real values to human societies . By doing so, these mechanisms produce incentives towards more efficient use of resources globally, whether for local resources such as water or for global resources such as a stable atmosphere . The ultimate role of these instruments is to offer a way to fund sustainable human development at a global scale, systematically and reliably. The main message of this article is that we must rethink the foundations of international development to achieve equitable and sustainable economic progress . The Bretton Woods Institutions (World Bank, IMF, GATT) were based on a post World War II model . They encouraged one form of development : resource based industrialization . These organizations are built upon a model funded by voluntary national donations based on taxes, a model that no longer works well . At the same time the globalization of the world economy brings new demands on the international system, requiring more infrastructure for trading and communication, and the need to develop new standards of human development and environmental protection . The current criticism of the Bretton Woods institutions, and of the United Nations within the US and other industrial nations, comes at a time when international organizations may be more needed than ever .developing countries; social values; economic values; sustainable development; environmental assets; economic valuation; international organizations; environmental protection; environmental conservation

The Limits of Trust in Economic Transactions - Investigations of Perfect Reputation Systems

nonetrust, reputation systems, eBay

Other-Regarding Preferences and Performance Pay - An Experiment on Incentives and Sorting

Variable pay not only creates a link between pay and performance but may also help firms in attracting the more productive employees (Lazear 1986, 2000). However, due to lack of natural data, empirical analyses of the relative importance of the selection and incentive effects of pay schemes are so far thin on the ground. In addition, these effects may be influenced by the nature of the relationship between the firm and its employees. This paper reports results of a laboratory experiment that analyzes the influence of other-regarding preferences on sorting and incentives. Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay. Other-regarding preferences influence both the provision of incentives and their sorting effect.experiment; incentives; performance pay; selection

Cloud provider capacity augmentation through automated resource bartering

© 2017 Elsevier B.V. Growing interest in Cloud Computing places a heavy workload on cloud providers which is becoming increasingly difficult for them to manage with their primary data centre infrastructures. Resource scarcity can make providers vulnerable to significant reputational damage and it often forces customers to select services from the larger, more established companies, sometimes at a higher price. Funding limitations, however, commonly prevent emerging and even established providers from making a continual investment in hardware speculatively assuming a certain level of growth in demand. As an alternative, they may opt to use the current inter-cloud resource sharing systems which mainly rely on monetary payments and thus put pressure on already stretched cash flows. To address such issues, a new multi-agent based Cloud Resource Bartering System (CRBS) is implemented in this work that fosters the management and bartering of pooled resources without requiring costly financial transactions between IAAS cloud providers. Agents in CRBS collaborate to facilitate bartering among providers which not only strengthens their trading relationships but also enables them to handle surges in demand with their primary setup. Unlike existing systems, CRBS assigns resources by considering resource urgency which comparatively improves customers’ satisfaction and the resource utilization rate by more than 50%. The evaluation results verify that our system assists providers to timely acquire the additional resources and to maintain sustainable service delivery. We conclude that the existence of such a system is economically beneficial for cloud providers and enables them to adapt to fluctuating workloads

Performance Pay, Sorting and Social Motivation

Variable pay creates a link between pay and performance but may also help firms in attracting more productive employees. Our experiment investigates the impact of performance pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that (i) the opportunity to switch from a fixed wage to variable pay scheme increases the average effort level and its variance; (ii) high skill employees concentrate under the variable pay scheme; (iii) however, in repeated interactions, efficiency wages reduce the attraction of performance pay. Social motivation and reputation influence both the provision of incentives and their sorting effect.Performance pay; incentives; sorting; social motivation; experiment