Regulation and the Option to Delay

This paper examines a simple two-period model of an investment decision in a network industry characterized by demand uncertainty, economies of scale and sunk costs. In the absence of regulation we identify the minimum price that an unregulated monopolist demands to bear the demand uncertainty and invest early, that is, the price that incorporates the value of the option to delay. In a regulated environment, we show that in the absence of downstream competition and when the regulator cannot commit to ex-post demand contingent prices, a regulated price that incorporates the option to delay is the minimum price that ensures early investment. Furthermore, when the regulator has a preference for early investment, the option to delay price generates higher welfare than other forms of price regulation. We also show that when the vertically integrated network provider is required to provide access to downstream competitors, and the potential entrant is less efficient than the incumbent, an access price that incorporates the option to delay generates the same investment level output as and higher overall welfare than an unregulated industry that is not required to provide access. By contrast, under the same market conditions an ECPR-based access price generates the same overall welfare than an unregulated industry. Moreover, when the potential entrant is more efficient than the incumbent, an Option to Delay Pricing Rule generates the same investment level output as and (weakly) higher overall welfare than the Efficient Component Pricing Rule (ECPR). In addition, the option-to-delay-based access price is (weakly) lower than the ECPR-based access price.

Price Regulation and the Cost of Capital

This paper investigates how price regulation under moral hazard can affect a regulated firm’s cost of capital. We consider stylised versions of the two most typical regulatory frameworks that have been applied over the last decades by regulators: Price Cap and Cost of Service. We show that there is a trade-off between lower operational costs and a higher cost of capital under Price Cap regulation and higher operational costs and lower cost of capital under Cost of Service regulation. As a result, when the extent of moral hazard is not significant, Price Cap regulation generates lower welfare than the Cost of Service regulation.

Price Regulation and Investment: A Real Options Approach

This paper examines a three-period model of an investment decision in a network industry characterized by demand uncertainty, economies of scale and sunk costs. In the absence of regulation we identify the market conditions under which a monopolist decides to invest early as well as the underlying overall welfare output. In a regulated environment, we first consider a monopolist facing no downstream competition but subject to a price cap on the downstream retail (final good) market. We identify the welfare-maximising regulated prices using the unregulated market output as a benchmark. In particular, we show that the optimal regulation depends on market conditions (that is, the nature of demand) and there are three possible outcomes: (i) price regulation does not improve welfare; (ii) regulated prices include an option to delay value and provide a positive payoff to the firm; and (iii) regulated prices yield a zero payoff to the firm. Second, we consider a vertically integrated network provider that is required to provide access to downstream competitors. We show that when the regulator has only one instrument, namely the access price, an option-to-delay pricing rule generates (weakly) higher welfare than the Efficient Component Pricing Rule (ECPR), except under very specific conditions.

The Effect of Recency to Human Mobility

In recent years, we have seen scientists attempt to model and explain human dynamics and, in particular, human movement. Many aspects of our complex life are affected by human movements such as disease spread and epidemics modeling, city planning, wireless network development, and disaster relief, to name a few. Given the myriad of applications it is clear that a complete understanding of how people move in space can lead to huge benefits to our society. In most of the recent works, scientists have focused on the idea that people movements are biased towards frequently-visited locations. According to them, human movement is based on an exploration/exploitation dichotomy in which individuals choose new locations (exploration) or return to frequently-visited locations (exploitation). In this work, we focus on the concept of recency. We propose a model in which exploitation in human movement also considers recently-visited locations and not solely frequently-visited locations. We test our hypothesis against different empirical data of human mobility and show that our proposed model is able to better explain the human trajectories in these datasets

A categorical framework for concurrent, anticipatory systems

A categorical semantic domain is constructed for Petri nets which satisfies the diagonal compositionality requirement with respect to anticipations, i.e., Petri nets are equipped with a compositional anticipation mechanism (vertical compositionality) that distributes through net combinators (horizontal compositionality). The anticipation mechanism is based on graph transformations (single pushout approach). A finitely bicomplete category of partial Petri nets and partial morphisms is introduced. Classes of transformations stand for anticipations. The composition of anticipations (i.e., composition of pushouts) is defined, leading to a category of nets and anticipations which is also complete and cocomplete. Since the anticipation operation composes, the vertical compositionality requirement of Petri nets is achieved. Then, it is proven that the anticipation also satisfies the horizontal compositionality requirement. A specification grammar stands for a system specification and the corresponding induced subcategory of nets and anticipation's stands for ali possible dynamic anticipation's ofthe system (objects) and their relationship (morphims)

Marked petri nets within a categorial framework

Well know categories of Petri nets lack coproducts and some re strictioné on nets, morphisms or initial markings are required in or der to guarantee the existence of colimits. Categories of Petri nets equipped with a set of initial markings (instead of a single initial marking) are introduced. It is shown that the proposed categories of nets are complete and cocomplete. Moreover,interpretations of limits and colimits are adequate for expressing semantics of concurrent sys tems. Examples ofstructuring and modeling of behavior of nets using categoria! constructions based on limits and colimits are provided

Intraoperative rupture in the aneurysmal neck: suggestion for surgical management

The per operative rupture of the aneurysm during dissection impairs the delicate microsurgical procedure and increases the risk of a bad evolution for the patient. During operation the aneurysm generally ruptures in its belly but it could happen just in its colon, between the main vessel and the sac. This brings a serious problem to the neurosurgeon once the placement of a clip at this place will increase the bleeding. Our technical suggestion is to perform the clipage over a small piece of temporal muscle gently placed over the hole of bleeding after temporary clipage. This is a very simple procedure but very useful that must be reminded in such cases. We did not found a similar description in the main books and articles related with intraoperative aneurysm rupture.A ruptura aneurismática intraoperatória de um aneurisma intracraniano pode comprometer dramaticamente um procedimento neurocirúrgico delicado, diminuindo as chances de uma evolução favorável do paciente. A ruptura ordinariamente se dá junto ao domus do aneurisma, causando icto.Com menor frequência, a ruptura pode se processar junto ao colo, em um ponto entre o vaso principal e o saco aneurismático. Isso causa um grande problema ao neurocirurgião; a colocação de um clipe de aneurisma neste local só irá aumentar a hemorragia. Nossa sugestão técnica resume-se à clipagem do aneurisma sobre um pequeno fragmento de músculo temporal colocado no local da ruptura. É bastante simples mas bastante útil, devendo ser lembrada no momento da ruptura. Não encontramos descrição semelhante nos principais livros e artigos que se referem à ruptura aneurismática durante a cirurgia.Universidade Federal de São Paulo (UNIFESP) Escola Paulista de Medicina Departamento de Neurologia e NeurocirurgiaUNIFESP, EPM, Depto. de Neurologia e NeurocirurgiaSciEL

Mechanisms of species coexistence and functional diversity of ant assemblages in forest and pasture habitats in southwestern Brazilian Amazon

In this study, we investigated the mechanisms behind species coexistence and the relationships between functional diversity and species richness in ant assemblages in both forest and pasture habitats in the southwestern Brazilian Amazon. We addressed the specific question: What is the primary mechanism for species coexistence in forest and pasture habitats? According to the identified mechanism in each habitat, we had the following alternative expectations: (i) niche partitioning – we expected to observe a linear positive relationship between functional diversity and species richness, indicating a complementary relationship; or (ii) niche filtering – a positive constant asymptotic relation between functional diversity and species richness, indicating a functional redundancy relationship. In total, we sampled 91 ant species, 82 species in a forest habitat and 16, in a pasture habitat. In the forest habitat we identified niche filtering as the structuring mechanism of the ant assemblage, but we were unable to identify a clear mechanism in the pasture habitat. Although the relationship between functional diversity and species richness was positive in both habitats, the relationship was weaker in the forest habitat, indicating a greater functional redundancy among the ant species in this habitat. Our results reinforce the divergence of species coexistence mechanisms and ant assemblage structures in both natural and human-modified habitats in the Southwestern Brazilian Amazon