Acquisitions in the Electricity Sector: Active vs. Passive Owners

The starting point of this paper is a mixed oligopoly market consisting of n privately owned profit maximizing firms and 1 state-owned welfare maximizing firm. Motivated by the trend of mergers and acquisitions in the liberalized electricity markets, and by the debate about public or private ownership, the paper looks at two cases. In Case 1, the state-owned company acquires an ownership share in one of the private companies. In Case 2, the state-owned company is partially privatized. The paper focuses on differences in generated quantities and social surplus, depending on whether the investors behind the acquisitions are behaving as active or passive owners. One result shows that in the case of partial privatization, passive ownership provides the highest total industry generation, while active ownership induces maximum social surplus.General; Oligopoly and Other Imperfect Markets; Public Enterprises; Public-Private Enterprises

Estimation of Binary Choice Models with Linear Index and Dummy Endogenous Variables

This paper presents computationally simple estimators for the index coefficients in a binary choice model with a binary endogenous regressor without relying on distributional assumptions or on large support conditions and yields root-n consistent and asymptotically normal estimators. We develop a multi-step method for estimating the parameters in a triangular, linear index, threshold-crossing model with two equations. Such an econometric model might be used in testing for moral hazard while allowing for asymmetric information in insurance markets. In outlining this new estimation method two contributions are made. The first one is proposing a novel ”matching” estimator for the coefficient on the binary endogenous variable in the outcome equation. Second, in order to establish the asymptotic properties of the proposed estimators for the coefficients of the exogenous regressors in the outcome equation, the results of Powell, Stock and Stoker (1989) are extended to cover the case where the average derivative estimation requires a first step semi-parametric procedure.

Orthogonal Polynomials for Seminonparametric Instrumental Variables Model

We develop an approach that resolves a {\it polynomial basis problem} for a class of models with discrete endogenous covariate, and for a class of econometric models considered in the work of Newey and Powell (2003), where the endogenous covariate is continuous. Suppose $X$ is a $d$-dimensional endogenous random variable, $Z_1$ and $Z_2$ are the instrumental variables (vectors), and $Z=\left(\begin{array}{c}Z_1 \\Z_2\end{array}\right)$. Now, assume that the conditional distributions of $X$ given $Z$ satisfy the conditions sufficient for solving the identification problem as in Newey and Powell (2003) or as in Proposition 1.1 of the current paper. That is, for a function $\pi(z)$ in the image space there is a.s. a unique function $g(x,z_1)$ in the domain space such that $$E[g(X,Z_1)~|~Z]=\pi(Z) \qquad Z-a.s.$$ In this paper, for a class of conditional distributions $X|Z$, we produce an orthogonal polynomial basis $Q_j(x,z_1)$ such that for a.e. $Z_1=z_1$, and for all $j \in \mathbb{Z}_+^d$, and a certain $\mu(Z)$, $$P_j(\mu(Z))=E[Q_j(X, Z_1)~|~Z ],$$ where $P_j$ is a polynomial of degree $j$. This is what we call solving the {\it polynomial basis problem}. Assuming the knowledge of $X|Z$ and an inference of $\pi(z)$, our approach provides a natural way of estimating the structural function of interest $g(x,z_1)$. Our polynomial basis approach is naturally extended to Pearson-like and Ord-like families of distributions.Comment: 18 page

Predictability of weather and climate in a coupled ocean-atmosphere model: A dynamical systems approach

A dynamical systems approach is used to quantify the instantaneous and time-averaged predictability of a low-order moist general circulation model. Specifically, the effects on predictability of incorporating an active ocean circulation, implementing annual solar forcing, and asynchronously coupling the ocean and atmosphere are evaluated. The predictability and structure of the model attractors is compared using the Lyapunov exponents, the local divergence rates, and the correlation, fractal, and Lyapunov dimensions. The Lyapunov exponents measure the average rate of growth of small perturbations on an attractor, while the local divergence rates quantify phase-spatial variations of predictability. These local rates are exploited to efficiently identify and distinguish subtle differences in predictability among attractors. In addition, the predictability of monthly averaged and yearly averaged states is investigated by using attractor reconstruction techniques

Individuals' Voting Choice and Cooperation in Repeated Social Dilemma Games

In this paper we explore the relationship between the individual’s preference for cooperation and the establishment of cooperative norms. Our aim is to provide an experimental test of the evolutionary hypothesis (see Carpenter, 2004, Fehr and Gachter 2002; Gintis 2000; Boyd, Bowles, Gintis and Richerson 2003; Bowles and Gintis 2004), according to which individuals are prepared to punish defectors in experimental social dilemma games because they want to enforce a social (“altruistic”) norm which may conduce to increasing their future payoffs, as in the case of sanctions against free riding behaviour. According to this line of research , the high levels of cooperation we observe in our societies can, therefore, be strictly related to the establishment of social norms which are able to enforce and maintain cooperation in the long run. We study the results of two experiments in which the individuals decided both whether to participate in a common project and the institutional rule according to which the profits of the project had to be shared among each of the participants in the group. They could choose between 1) a regime where gains were shared equally, regardless of individuals’ contributions and without sanctions and rewards (System A); 2) a regime where individuals were paid according to their marginal contribution, but the profits of the investments were lower than in the other contexts (System B); finally 3) a regime in which gains were shared equally (as in System A), but individuals were allowed to punish (and\or reward) free riding (cooperative) behaviours as in Sefton, Shupp and Walker (2007). Before the experiments took place, our subjects were required to fill a questionnaire composed of four sections, where their attitude to cooperate and their opinions on civic values and free riding behaviours were thoroughly explored. We then monitored the behaviour of potential free riders and cooperators in the game and their institutional choices. Our results partly contradict the evolutionary hypothesis in as much as System A and B received the largest shares of votes in almost all rounds and they were voted by free riders and cooperators alike. Thus, most individuals do not like sanctions (incentives) against defectors and free riders (cooperators), and their institutional preferences do not seem to be related to their willingness to cooperate. The inspection of individual data, however, reveals some interesting points. In fact, we can assert that System C was mostly chosen by cooperative individuals in response to observed free riding behaviour. Furthermore, when a cooperative individual chose C, she would tend to punish free riders and reward cooperators. Our conclusion is that, as far as the institutional choices are concerned, beside the profit motivations underlined in the evolutionary hypothesis, the ethical and cultural unobserved individual preferences play an important role. There is a number of individuals (limited in our experiments, ranging between 15 and 30 per cent of the entire population) who see cooperation as the “right” thing to do, and therefore are prepared to implement institutional rules that may favour this collective outcome. Most people in our experiments did not share these same values.public good games, experiments, voting choices

Input price risk and optimal timing of energy investment: choice between fossil- and biofuels

We consider energy investment, when a choice has to be made between fossil fuel and biomass fired production technologies. A dynamic model is presented to illustrate the effect of the different degrees of input price uncertainty on the choice of technology and the timing of the investment. It is shown that when the choice of technology is irreversible, it may be optimal to postpone the investment even if it would otherwise be optimal to invest in one or both of the plant types. We provide a numerical example based on cost estimates of two different power plant types.irreversible investment; price uncertainty; biomass; real options

Preference Heterogeneity in Relation to Museum Services

The prevailing trends in the management of European museums underline the importance of additional museum services in fostering and encouraging the optimisation of cultural assets, while facilitating the collection of the necessary resources for conservation. The paper considers the case of the archaeological site of Paestum (Salerno) and presents an analysis of individual preferences in relation to specific policies of cultural heritage management, each characterised by the supply of different museum services. Since the diversity of these services can prompt different individual preferences, the analysis allows for heterogeneity of parameters among individuals.cultural goods; heterogeneous preferences; stated preference data; conjoint analysis; mixed logit;

Identities for the Hankel transform and their applications

In the present paper the authors show that iterations of the Hankel transform with $\mathscr{K}_{\nu}$-transform is a constant multiple of the Widder transform. Using these iteration identities, several Parseval-Goldstein type theorems for these transforms are given. By making use of these results a number of new Goldstein type exchange identities are obtained for these and the Laplace transform. The identities proven in this paper are shown to give rise to useful corollaries for evaluating infinite integrals of special functions. Some examples are also given as illustration of the results presented here.Comment: 16 page