On the competitive effects of divisionalization

In this paper, we assume that firms can create independent divisions which compete in quantities in a homogeneous good market. Assuming identical firms and constant returns to scale, we prove that the strategic interaction of firms yields Perfect Competition if the number of firms is beyond some critical level. Assuming a fixed cost per firm and an upper bound on the maximum number of divisions, we show that when this upper bound tends to infinity and the fixed cost tends to zero, market equilibrium may yield either Perfect Competition or a Natural Oligopoly.Publicad

Second Best Trade Policies in Cournot Oligopoly

In this paper we study the optimal import policy in an oligopolistic market with a given number of quantity-setting firms. In the absence of fixed costs, we show that if the policy instrument is an import quota, the optimal policy is either free trade or autarky, while if the instrument is a tariff the optimal policy is neither free trade nor autarky. In the case of fixed costs, we show that contrary to the traditional protectionist argument, a restrictive import policy might increase domestic welfare by increasing domestic consumers’ surplus, instead of increasing domestic profits.Publicad

Statistical Behavior Of Domain Systems

We study the statistical behavior of two out of equilibrium systems. The first one is a quasi one-dimensional gas with two species of particles under the action of an external field which drives each species in opposite directions. The second one is a one-dimensional spin system with nearest neighbor interactions also under the influence of an external driving force. Both systems show a dynamical scaling with domain formation. The statistical behavior of these domains is compared with models based on the coalescing random walk and the interacting random walk. We find that the scaling domain size distribution of the gas and the spin systems is well fitted by the Wigner surmise, which lead us to explore a possible connection between these systems and the circular orthogonal ensemble of random matrices. However, the study of the correlation function of the domain edges, show that the statistical behavior of the domains in both gas and spin systems, is not completely well described by circular orthogonal ensemble, nor it is by other models proposed such as the coalescing random walk and the interacting random walk. Nevertheless, we find that a simple model of independent intervals describe more closely the statistical behavior of the domains formed in these systems.Comment: v2: minor change

Optimal Abandonment of Coal-Fired Stations in the EU

Carbon-fired power plants could face some difficulties in a carbon-constrained world. The traditional advantage of coal as a cheaper fuel may decrease in the future if CO2 allowance prices start to increase. This paper seeks to answer empirically the most drastic question that an operating coal-fired power plant may ask itself: under what conditions would it be optimal to abandon the plant and obtain its salvage value? We try to assess this question from a financial viewpoint following a real option approach at firm level so as to attract the interest of utilities and the broader investment community. We consider the specific case of a coal-fired power plant that operates under restrictions on carbon dioxide emissions in an electricity market where gas-fired plants are considered as marginal units. We also consider three sources of uncertainty or stochastic variables: the coal price, the gas price and the emission allowance price. These parameters are derived from future markets and are used in a three-dimensional binomial lattice to assess the value of the option to abandon. Our results (and sensitivity analysis) show the conditions that have to be met for the abandonment option to be exercised. This option to abandon coalfired plants is, however, hardly likely to be exercised if plants can operate as peaking plants. However, the decision may go differently in different circumstances, such as high CO2 allowance prices, very low volatility of allowance price or a decrease in the price of gas. The decision is also influenced by the remaining lifetime of the plant and its thermal efficiency. In any case the price of CO2 will work to bring forward the decision to abandon in older and less efficient coal-fired plants, which are less likely to be retrofitted in the future.power plants, coal, natural gas, emission allowances, futures markets, stochastic processes, abandonment, real options

Optimal Investment in Energy Efficiency under Uncertainty

This paper deals with the optimal time to invest in an energy efficiency improvement. There is a broad consensus that such investments quickly pay for themselves in lower energy bills and spared emission allowances. However, investments that at first glance seem worthwhile are frequently not undertaken. Our aim is to shed some light on this issue. In particular, we try to assess these projects from a financial point of view so as to attract sufficient interest from the investment community. We consider the specific case of a firm or utility already in place that consumes huge amounts of coal and operates under restrictions on carbon dioxide emissions. In order to reduce both coal and carbon costs the firm may undertake an investment to enhance energy efficiency. We consider three sources of uncertainty: the fuel commodity price, the emission allowance price, and the overall investment cost. The parameters of the coal price process and the carbon price process are estimated from observed futures prices. The numerical parameter values are then used in a three-dimensional binomial lattice to assess the value of the option to invest. As usual, maximising this value involves determining the optimal exercise time. Thus we compute the trigger investment cost, i.e. the threshold level below which immediate investment would be optimal. A sensitivity analysis is also undertaken. Our results go some way towards explaining the so-called energy efficiency paradox.Energy efficiency, Real options

Hypoxic Cell Waves around Necrotic Cores in Glioblastoma: A Biomathematical Model and its Therapeutic Implications

Glioblastoma is a rapidly evolving high-grade astrocytoma that is distinguished pathologically from lower grade gliomas by the presence of necrosis and microvascular hiperplasia. Necrotic areas are typically surrounded by hypercellular regions known as "pseudopalisades" originated by local tumor vessel occlusions that induce collective cellular migration events. This leads to the formation of waves of tumor cells actively migrating away from central hypoxia. We present a mathematical model that incorporates the interplay among two tumor cell phenotypes, a necrotic core and the oxygen distribution. Our simulations reveal the formation of a traveling wave of tumor cells that reproduces the observed histologic patterns of pseudopalisades. Additional simulations of the model equations show that preventing the collapse of tumor microvessels leads to slower glioma invasion, a fact that might be exploited for therapeutic purposes.Comment: 29 pages, 9 figure