Derivatives and Default Risk

Upstream producers that possess market power, sell forwards with a lengthy duration to regional electricity companies (REC). As part of the liberalization of the electricity market, RECs have been privatized and exposed to a possible bankruptcy threat if spot prices have fallen below their expected value. The downstream firms’ expected profit is larger, when it is less likely to be bailed out, the effect on upstream profits is ambiguous while consumers loose. Options are less welfare increasing than forwards, but the difference is minimal. In the presence of bankruptcy, options are the preferred welfare maximizing market instrument

Derivatives and Default Risk

Upstream producers that possess market power, sell forwards with a lengthy duration to regional electricity companies (REC). As part of the liberalization of the electricity market, RECs have been privatized and exposed to a possible bankruptcy threat if spot prices have fallen below their expected value. The downstream firms’ expected profit is larger, when it is less likely to be bailed out, the effect on upstream profits is ambiguous while consumers loose. Options are less welfare increasing than forwards, but the difference is minimal. In the presence of bankruptcy, options are the preferred welfare maximizing market instrument.Forwards; Options; Default Risk; Market Efficiency

Optimal Fertility Decisions in a Life Cycle Model

This model is the first to solve for the optimal timing of childbirth and number of children in a continuous time framework simultaneously. The model depicts how changes in wage at different stages of an individual’s life influence the timing decision of childbirth and the optimal number of children. When a woman wants to have more children, she decides to have them at a younger age. Medical research that extends the fecund life span induces women to have fewer children. A reduction of the parental leave due to daycare centers or a reduction in the costs of leave due to child benefits increase the number of children. Women value labour more, when they face the risk of an unknown divorce. This paper also shows that divorce does not change the timing of childbirth directly, it influences the number of children negatively and the reduced number of children delays the timing. The model can be used to predict upper bound fertility rates, when the expected divorce rate continues to increase

Learning and Technology Adoptions

This essay studies the optimal timing for a firm to adopt a new process innovation in the presence of learning. A policy that has been implemented by governments throughout the world to reduce the cost level of infant industries with positive externalities, is to either subsidize the research of these technologies or their distribution. This model demonstrates how government interventions can affect the optimal timing for adoption of a new technology. Furthermore this essay makes predictions on how the effects change, when the total quantity that can be produced is fixed; the installations of wind powered energy plants exemplify this point. Depending on whether producer rents, consumer rents or early implementation are more important to the government, the model offers the appropriate tools to attain its objective.Learning; Process Innovation; Optimal Control; Infant industry

Sr-isotope analysis of speleothems by LA-MC-ICP-MS: High temporal resolution and fast data acquisition

Speleothems are well established climate archives. A wide array of geochemical proxies, including stable isotopes and trace elements are present within speleothems to reconstruct past climate variability. However, each proxy is influenced by multiple factors, often hampering robust interpretation. Sr isotope ratios (87Sr/86Sr) can provide useful information about water residence time and water mixing in the host rock, as they are not fractionated during calcite precipitation. Laser ablation multi-collector-inductively coupled plasma mass spectrometry (LA-MC-ICP-MS) has rarely been used for determination of Sr isotope signatures in speleothems, as speleothems often do not possess appropriately high concentrations of Sr to facilitate this analysis. Yet the advantages of this approach include rapid data acquisition, higher spatial resolution, larger sample throughput and the absence of chemical treatment prior to analysis. We present LA-MC-ICP-MS Sr isotope data from two speleothems from Morocco (Grotte de Piste) and India (Mawmluh Cave), and we compare linescan and spot analysis ablation techniques along speleothem growth axes. The analytical uncertainty of our LA-MC-ICP-MS Sr data is comparable to studies conducted on other carbonate materials. The results of both ablation techniques are reproducible within analytical error, implying that this technique yields robust results when applied to speleothems. In addition, several comparative measurements of different carbonate reference materials (i.e. MACS-3, JCt-1, JCp-1), including tests with standard bracketing and comparison of the 87Sr/86Sr ratios with a nanosecond laser ablation system and a state-of-the-art femtosecond laser ablation system, highlight the robustness of the method