Stable pricing in monopoly and equilibrium-core of cost games

We prove the existence of subsidy free and sustainable pricing schedule in multiproduct contestable markets. We allow firms to discriminate the local markets that are composed by a set of the products line and a set of agents. Results are obtained under an assumption of fair sharing cost and under boundary condition of demand functions. The pricing problem is modelled in terms of equilibrium-core allocations of parameterized cost games.Cooperative games, contestable markets, sustainability, subsidy free, parameterized cost games.

‘Almost’ subsidy-free spatial pricing in a multi-dimensional setting

Consider a population of citizens uniformly spread over the entire plane, that faces a problem of locating public facilities to be used by its members. The cost of every facility is financed by its users, who also face an idiosyncratic private access cost to the facility. We assume that the facilities cost is independent of location and access costs are linear with respect to the Euclidean distance. We show that an external intervention that covers O.19% of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than its stand alone cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only secession-proof allocation.Secession-proofness, optimal jurisdictions, Rawlsian allocation, hexagonal partition, cross-subsidiziation

“Almost” subsidy-free spatial pricing in a multi-dimensional setting

Consider a population of citizens uniformly spread over the entire plane, that faces a problem of locating public facilities to be used by its members. The cost of every facility is financed by its users, who also face an idiosyncratic private access cost to the facility. We assume that the facilities' cost is independent of location and access costs are linear with respect to the Euclidean distance. We show that an external intervention that covers 0.19% of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than its stand alone cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only secession-proof allocation.secession-proofness, optimal jurisdictions, Rawlsian allocation, hexagonal partition, cross-subsidization

“Almost” Subsidy-free Spatial Pricing in a Multi-dimensional Setting

Consider a population of citizens uniformly spread over the entire plane, that faces a problem of locating public facilities to be used by its members. The cost of every facility is financed by its users, who also face an idiosyncratic private access cost to the facility. We assume that the facilities’ cost is independent of location and access costs are linear with respect to the Euclidean distance. We show that an external intervention that covers 0.19% of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than its stand alone cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only secession-proof allocation.Secession-Proofness, Optimal Jurisdictions, Rawlsian Allocation, Hexagonal Partition, Cross-Subsidization

Renewable energy auction prices: near subsidy-free?

The latest trend of low record bid prices in renewable energy auctions has raised concerns on the effective deployment of the winning projects. A survey of recent auction data from several countries, technologies and remuneration designs is analysed and compared with the corresponding levelised costs of energy (LCOEs) to draw first insights on their viability. A critical assessment of the ability of the LCOE for determining the adequate bid level is then performed and the preliminary unviable results of selected mature technologies are further investigated using improved profitability metrics as the project and equity net present value (NPV) and internal rate of return (IRR). As representative examples, the analysed Danish 2019 onshore wind and photovoltaics (PV) auctions require very specific scenarios to become viable, which cast doubts on their effective implementation. Under the assumptions of a realistic base case, the sensitivity analysis revealed that either 59% of decrease in the weighted average cost of capital (WACC), or 37% of discount on the investment cost or a 3.6% annual increment in the mean market price is needed for achieving the NPV break-even in the onshore wind case. Likewise, the PV case is unprofitable whatever the WACC may be, and either a 60% discount on the investment cost or a 6.8% annual increment in the mean market price is needed for the NPV to break-even. Although some projects could be relying on indirect revenues or additional sources of incomes beyond the auction support, it remains to see if they are finally materialised.Peer ReviewedPostprint (published version

Stable pricing in multiproduct natural monopoly (in French)

We provide some existence results of stable pricings for natural monopoly as defined in the theory of contestable markets. The main addings are based on the assumption of separated markets and the possibilities of entries. We borrow tools from cooperative game theory. Following the work of Bendali et al. (Revista de Matematicas Aplicadas, 2000), we make full use of parameterized cores of games with side payments to characterize subsidy free and sustainable pricings.natural monopoly, contestable markets, multiproduct firms, sustainability, subsidy free prices.

A Study of Zero Bid Wind Farm for Future Scotland’s Energy Demands—A New Approach

Offshore wind is in a rapid transitional phase, pushed worldwide by efforts of those to reduce climate change. Wind power is becoming a commercialised, unsubsidised competitive form of low carbon generation of renewable energy. Marketplaces reflect this growing trend with the first introduction of subsidy free bids in a tender for the Dutch and German governments. The analysis of surrounding literature of subsidy free bids and governmental policies revealed that integration of subsidy free bids have been carried out to various extents. Bids like those seen in the German and Dutch governments have been done in accompaniment with supportive policies and measures. For the UK, a possible subsidy free bid could be developed under the Scottish Sectoral Marine Plan. Owing to that, this paper investigates the feasibility of a subsidy free bid for the Scottish government. Utilising the Department for Business, Energy and Industrial Strategy (BEIS) levelised cost of electricity (LCOE) metric were inserted into a detailed excel spreadsheet. This paper calculates multiple financial scenarios under the LCOE metric to provide an insight into the possible scenarios of which different models of subsidy free bids can be implemented. The main parameters associated with the BEIS metric and calculator design were investigated. These included financial cost predictions, discount rate, generational capacity and net capacity factors. The final conclusion of the generated output data, showed it was indeed possible to adopt a subsidy free bid under the current UK contract for difference (CfD) scheme under strict and favourable conditions

Sustainability in a Multiproduct and Multiple Agent Contestable Market.

We prove that a natural monopoly can set subsidy free pricing and sustainable pricing schedules in general economic environment. The setting is a multiproduct and multiple agent contestable market where demands are elastic and where rivals can enter the sub-markets composed by a set of the products line and a set of agents. Our results suggest that the existence results of the extant literature admit analogues even in an environment where rivals have enlarged possibilities to enter the market and where demands react to prices. The approach makes use of cooperative games to deduce the main results under conditions of fair sharing cost, threshold in the consumption and regularity of the profit function.Subsidy Free Princing; Existence Result; Cooperative game; Sustainability; Natural monopoly;