The More Cooperation, the More Competition? A Cournot Analysis of the Benefits of Electric Market Coupling

Market coupling in Belgian and Dutch markets would permit more efficient use of intercountry transmission, 1) by counting only net flows against transmission limits, 2) by improving access to the Belgian market, and 3) by eliminating the mismatch in timing between interface auctions and the energy spot market. A Cournot market model that accounts for the region’s transmission pricing rules and limitations is used to simulate market outcomes with and without market coupling. This accounts for 1) and 2). Market coupling improves social surplus in the order of 108 €/year, unless it encourages the largest producer in the region to switch from a price-taking strategy in Belgium to a Cournot strategy due to a perceived diminishment of the threat of regulatory intervention. Benefit to Dutch consumers depends on the behavior of this company. The results illustrate how large-scale oligopoly models can be useful for assessing market integration.Electric power, Electric transmission, Liberalization, Oligopoly, Complementarity models, Computational models, Netherlands, Belgium, France, Germany, Market Coupling

Market integration and structural transformation in a poor rural economy

By developing a simple theoretical model of the impact of market integration on sectoral output and employment in a poor rural setting, this paper demonstrates that trade can induce asymmetric growth. Under certain, plausible, assumptions, the non-farm sector will grow much faster than the agricultural sector when markets become integrated. Promoting market integration may thus be an effective way of encouraging diversification beyond agriculture and catalysing structural change in poor rural economies.Food&Beverage Industry,Economic Theory&Research,Rural Poverty Reduction,Food Security

The More Cooperation, the More Competition? A Cournot Analysis of the Benefits of Electric Market Coupling

Market coupling in Belgian and Dutch markets would permit more efficient use of intercountry transmission, 1) by counting only net flows against transmission limits, 2) by improving access to the Belgian market, and 3) by eliminating the mismatch in timing between interface auctions and the energy spot market. A Cournot market model that accounts for the region’s transmission pricing rules and limitations is used to simulate market outcomes with and without market coupling. This accounts for 1) and 2). Market coupling improves social surplus in the order of 108 €/year, unless it encourages the largest producer in the region to switch from a price-taking strategy in Belgium to a Cournot strategy due to a perceived diminishment of the threat of regulatory intervention. Benefit to Dutch consumers depends on the behavior of this company. The results illustrate how large-scale oligopoly models can be useful for assessing market integration

Health benefits and health claims of probiotics: bridging science and marketing

Health claims for probiotics are evaluated by the Panel on Dietetic Products, Nutrition and Allergies of the European Food Safety Authority. Despite a substantial amount of basic and clinical research on the beneficial effects of probiotics, all of the evaluated claim applications thus far have received a negative opinion. With the restrictions on the use of clinical endpoints, validated biomarkers for gut health and immune health in relation to reduction in disease risk are needed. Clear-cut criteria for design as well as evaluation of future studies are needed. An open dialogue between basic and clinical scientists, regulatory authorities, food and nutrition industry, and consumers could bridge the gap between science and marketing of probiotic

Coping with crises : why and how to protect employment and earnings

Events of the past two years are a reminder that crises are a recurring phenomenon with deep and often protracted impacts on labor markets. This paper examines the challenges inherent in crafting policy responses, with particular attention to developing countries. It focuses on the potential tradeoffs between offsetting adverse short-term impacts and preserving incentives for economic recovery and future growth, and between protecting the most vulnerable and compensating those most immediately impacted. It also highlights how policymakers’ room for maneuver is constrained in crisis times by deteriorating fiscal space, limited institutional capacity, and mounting political pressures. Based on empirical evidence from previous crises, the paper asserts that taking a myopic and reactive approach may be costly and counterproductive. Instead, it advocates a more comprehensive approach, designed to build institutions - such as automatic stabilizers and safety nets - that can deliver a coordinated and coherent policy package. This approach will make crises catalysts for institutional changes and long-run growth.Labor Markets,Labor Policies,Safety Nets and Transfers,Banks&Banking Reform,Population Policies

Nonfarm microenterprise performance and the investment climate : evidence from rural Ethiopia

This paper uses uniquely matched household, enterprise and community survey data from four major regions in rural Ethiopia to characterize the performance, constraints and opportunities of nonfarm enterprises. The nonfarm enterprise sector is sizeable, particularly important for women, and plays an important role during the low season for agriculture, when alternative job opportunities are limited. Returns to nonfarm enterprise employment are low on average and especially so for female-headed enterprises. Women nevertheless have much higher participation rates than men, which attest to their marginalized position in the labor market. Most enterprises are very small and rely almost exclusively on household members to provide the required labor inputs. Few firms add to their capital stock or increase their labor inputs after startup. Local fluctuations in predicted crop performance affect the performance of nonfarm enterprises, becauseof the predominant role played by the agricultural sector. Enterprise performance is also affected by the localized nature of sales and limited market integration for nonfarm enterprises. The policy implications of these and other findings are discussed.Access to Finance,,Microfinance,Economic Theory&Research,Debt Markets

Mind the gap ? a rural-urban comparison of manufacturing firms

This paper compares and contrasts the performance of rural and urban manufacturing firms in Ethiopia to assess the impact of market integration and the investment climate on firm performance. Rural firms are shown to operate in isolated markets, have poor access to infrastructure and a substantial degree of market power, whereas urban firms operate in better integrated and more competitive markets, where they have much better access to inputs. Fragmentation may also help explain why urban firms are much larger, much more capital intensive and why they produce much more output per worker. Capital intensity and labor productivity are strongly correlated with firm size. Manufacturing technology choice does not vary strongly across space and increasing returns to scale are modest at best, suggesting that rural-urban differences in output per worker are predominantly driven by differences in capital intensity and Total Factor Productivity (TFP). The average TFP of firms in rural towns is much higher than that of rural firms in remote areas, but small firms in rural towns are not significantly less productive than small firms in other urban areas. A key finding of the paper is that market fragmentation and investment climate constraints impair the growth of the rural non-farm sector. Whereas urban firms exhibit a healthy dynamism, rural firms are stagnant and lack incentives to invest. Paradoxically, limited local demand due to market fragmentation is the most pressing constraint for rural firms, even though they face more severe supply-side constraints than urban firms. Promoting market towns in Ethiopia might be an effective means of capitalizing on the gains from market integration.Access to Finance,Microfinance,Economic Theory&Research,,Debt Markets

Ladies first ? firm-level evidence on the labor impacts of the East Asian crisis

In a crisis, do employers place the burden of adjustment disproportionately on female employees? Relying on household and labor force data, existing studies of the distributional impact of crises have not been able to address this question. This paper uses Indonesia's census of manufacturing firms to analyze employer responses and to identify mechanisms by which gender differences in impact may arise, notably differential treatment of men and women within firms as well as gender sorting across firms that varied in their exposure to the crisis. On average, women experienced higher job losses than their male colleagues within the same firm. However, the aggregate adverse effect of such differential treatment was more than offset by women being disproportionately employed in firms hit relatively less hard by the crisis. The null hypothesis that there were no gender differences in wage adjustment is not rejected. Analyzing how employer characteristics impact labor market adjustment patterns contributes to the understanding of who is vulnerable in volatile times.Labor Markets,Gender and Development,Labor Policies,Population Policies,Gender and Law

Who benefits from promoting small and medium scale enterprises ? some empirical evidence from Ethiopia

The Addis Ababa Integrated Housing Development Program aims to tackle the housing shortage and unemployment that prevail in Addis Ababa by deploying and supporting small and medium scale enterprises to construct low-cost housing using technologies novel for Ethiopia. The motivation for such support is predicated on the view that small firms create more jobs per unit of investment by virtue of being more labor intensive and that the jobs so created are concentrated among the low-skilled and hence the poor. To assess whether the program has succeeded in biasing technology adoption in favor of labor and thereby contributed to poverty reduction, the impact of the program on technology usage, labor intensity, and earnings is investigated using a unique matched workers-firms dataset, the Addis Ababa Construction Enterprise Survey. The data are representative of all registered construction firms in Addis and were collected specifically for the purpose of analyzing the impact of the program. The authors find that program firms do not adopt different technologies and are not more labor intensive than non-program firms. There is an earnings premium for program participants, who tend to be relatively well-educated, which is heterogeneous and highest for those at the bottom of the earnings distribution.Labor Markets,Access to Finance,Economic Theory&Research,Microfinance,Labor Policies

Avoiding the Eye of the Storm: How to Deal Effectively with Job Crises

Although economic crises are difficult to predict, their recurrence is a salient feature of emerging market economies. Nevertheless, many developing countries continue to lack an effective policy infrastructure that can mitigate the impacts of economic downturns on employment opportunities without affecting long-term growth prospects. This was painfully highlighted by the hasty reactions implemented by many countries in response to the global downturn of 2008–9, and by the ad hoc and reactive nature of many of the policies implemented. The weak ability of governments to systematically foresee, monitor, and offset adverse labor market impacts of economic downturns is of particular concern in developing countries where poverty incidence is high and labor is typically the only asset for the majority of the population (Lustig 2000). The main objectives of this note1 are (i) to highlight the need for policies that limit earnings volatility and (ii) to guide policy makers through the challenges inherent in crafting effective and comprehensive policy packages.financial crisis, jobs, developing countries, growth, employment, unemployment, labor, poverty, labor market, recovery