Thesis (Ph.D.)--University of Wyoming, 2008. / Title from PDF title page (viewed on Feb. 26, 2010). Includes bibliographical references (p. 182-187).

This dissertation examines game-theoretic equilibrium analysis applications to deregulated electricity markets. In particular, three specific applications are discussed: analyzing the competitive effects of ownership of financial transmission rights, developing a dynamic game model considering the ramp rate constraints of generators, and analyzing strategic behavior in electricity capacity markets. In the financial transmission right application, an investigation is made of how generators’ ownership of financial transmission rights may influence the effects of the transmission lines on competition. In the second application, the ramp rate constraints of generators are explicitly modeled using a dynamic game framework, and the equilibrium is characterized as the Markov perfect equilibrium. Finally, the strategic behavior of market participants in electricity capacity markets is analyzed and it is shown that the market participants may exaggerate their available capacity in a Nash equilibrium. It is also shown that the more conservative the independent system operator’s capacity procurement, the higher the risk of exaggerated capacity offers. / text

In consumption goods markets, we observe both bargaining and searching. However, in this literature, very little work has been done to incorporate both features into one model. This study addresses this problem. In my first chapter, I add a bargaining parameter to a traditional sequential search model and solve for the new equilibrium in this set-up. Then, I do some comparative statics, changing the distribution of the bargaining parameter to see what happens to the equilibrium. Finally, I use the model to explain two seemingly contradicting empirical works in the literature of discrimination in the auto market. Ayres and Siegelman (1995), using data they collected from a controlled experiment, found that the initial offers for the minorities are higher. Yet Goldberg (1996), using consumer expenditure survey data (CES), reported that there is no significant difference between the final prices for minorities and non-minorities. My model reconciles these two results and shows that if minorities have a more dispersed bargaining parameter distribution and if the final transaction prices are the same at the mean level, then the initial offer distribution for the minorities first-order stochastically dominates that for the non-minorities. In my second chapter, I investigate how the bargaining process affects firms’ offer distribution and thus the final price distribution. Based on Varian (1980), I add a bargaining parameter into the model, and solve for the new equilibrium in this set up. Then, I do some comparative statics, changing the distribution of the bargaining parameter to see what would happen to the equilibrium. This model yields the same results as the first chapter. In the third chapter, I applied my theoretical model to the automobile market, and empirically test the model. I used CES data, and my findings support the theoretical model. The minority dummies are not significant in determining the mean level of consumers’ bargaining ability distribution, but are significantly positive in determining the variance of the distribution. / text

This dissertation includes four independent essays. Essay one (chapter two) considers a two-echelon, two-supply chain (SC) system in which manufacturers supply a generic product to their exclusive retailers, who then use service level and retail price to compete for heterogeneous consumers. We question: how do varied consumer preferences get reflected not only in differentiated products/services, but through them to the choice of SC structure that delivers them? We find that SCs can strategically manipulate the product/service strategy and SC structure to hedge themselves from horizontal competition. The key finding is that in a market where consumers have stronger diminishing marginal utility on service, then less differentiated products/services will be observed, and only decentralized supply chains can be the market equilibrium. This is in contrast to the well-known result in marketing that choosing vertical integration is always a Nash equilibrium, and that choosing decentralization can only be a Nash equilibrium when product substitutability is high. Essay two (chapter three) explores the classical revenue management problem in a competitive context, with both price and seat inventory competition. The main question is how should management make strategic marketing (pricing) and operational (seat allocation) decisions in such a competitive market? Do the conventional approaches (models and algorithms based on a monopoly market) give us the appropriate strategies? We find that in a market where price competition dominates, managers should set a lower price and safety protection level for full fare customers than in a monopoly or alliance market. In a market where seat inventory competition dominates, managers should set a higher price and safety protection level than a monopoly or alliance would. Interestingly, in a market where the two levels of competition are more evenly matched, managers should set a lower price and a higher safety protection level than a monopoly. We also explore the effect of the degree of competition and the market structure on the strategic decisions, and whether there is a first adopter advantage or second adopter disadvantage with revenue management. Essay three aims to extend the understanding of the Newsvendor model to a competitive framework. In a market with both price and inventory competition, newsvendors can gain customers with price and secure the sales with availability. We find that the newsvendors should adjust their inventory (safety stock or total inventory) and pricing strategies responsively to the nature of the competitive market. The profits of the newsvendors and their suppliers are also different under different competitive contexts. Both the Nash equilibrium strategy and the players' profits are influenced by the demand correlation and variability, but in different ways under different competitive scenarios. These observations provide some theoretical basis for the strategic selection made by newsvendors operating in certain competitive markets. Essay four (chapter five) explores the issue of competitors cooperating. It is a commonplace observation that even the most competitive firms often find it in their best interests to cooperate. An example of cooperation in operations management is when two supply chains agree in advance to transship or 'pool' surplus product for use by another. The alternative is to let their customers switch unsatisfied demand to a competitor. Which is preferable, and how does such a preference depend on the many parameters, prices, the nature of competition, the degree of competition, wholesale prices etc? To get answers, we study a stylized model under three market environments: a market with an exogenous retail price, an endogenous retail price, and with price competition. The summary answer is that strong price competition between substitutable goods should lead to caution in signing transshipment contracts. But with little price competition and particularly where retailers are free to set the transshipment price, then transshipment is probably the way to go. We also address the issue of an optimal transshipment price in each scenario, and compare the Nash equilibrium strategies between competing and transshipping.

Computable General Equilibrium (CGE) models are among the most influential tools in applied economics. In the past few years, however, some serious questions have been raised about the validity of these models. The core of the critique is that the parameter selection criteria and the functional forms used are at odds with contemporary standards of practice in econometrics. After surveying the relevant literature, which I refer to as the 'econometric critique', a formal summary of the case against standard CGE modeling is presented, as is an alternative econometric-based modeling strategy which answers the critique. I then work through a comparative CGE modeling experiment designed to assess the contrasting methods. It is found that the parameter selection rule influences model predictions in individual sectors, but industry- and economy-wide aggregates do not appear to be much affected by reparameterizing a CGE model according to econometric criteria. By contrast, the choice of functional forms affects not only industry-specific results, but aggregate results as well, even for small policy shocks. However flexible functional forms are difficult to implement in CGE models because global monotonicity must be maintained. In the second and third chapters, I adapt one of the models to analyze the effects of carbon taxes in Canada. I review an approach called 'double dividend' taxation, in which the revenues from carbon taxes are used to reduce the rates of other distortionary taxes, so an overall efficiency gain can potentially be realized whether or not the reduction in pollution improves welfare. This eliminates the need to measure benefits, and in an international context, would obviate the free-rider problem. I demonstrate the existence of a double dividend strategy for carbon taxation in Canada in the short run. In chapter three, however, a long run extension of the model shows that the double dividend does not persist over time. Nevertheless, choosing an efficient revenue-recycling option can significantly reduce the implementation cost of the carbon tax.

Since the early 1970s, exchange rate fluctuations have characterised the behaviour of the external value of many currencies in both high- and low-income countries. Up-and-down movements in real exchange rates have been observed under fixed as we:ll as flexible arrangements. This is in spite of the fact that many less developing countries (until the 1980s), unlike the major industrialised countries, opted to retain relatively rigid exchange rate systems after the collapse of the Bretton Woods system. Exchange rate volatility has been a subject of much concern in government, business and academic circles because it has been associated with negative effects on the performance of developing economies. Consequences of these large swings in exchange rates have included uncertainty and delays in business decisions, resource misallocation, interest rate volatility and real exchange rate misalignments. For the period, froln1970 to 1996, this study investigates the phenomenon of real exchange rate disequilibrium in developing countries, with an empirical and econometric examination of South African data. Using the ordinary least squares and the EngleGranger cointegration techniques, this investigation found that government consumption of nontradables, the price of gold in rand, the overall terms of trade and the rate of depreciation are important determinants of the short-run behaviour ofthe real effective exchange rate in South Africa. With regard to the long-run the permanent componen1ts ofthe fundamentals - namely, technological or productivity improvement, trade policy, governm1ent consumption of nontradables, disposable income, capital flows, the terms of trade excluding gold and the rand price of gold -, were found to be significantly related to the equilibrium conduct of the real effective exchange rate. Instances of real exchange rate misalignment were found in both periods of fixed and flexible exchange rate management. / Thesis (M.Soc.Sci.)-University of Natal, Pietermaritzburg, 1999.

Bibliography: p. 648-661. / 2 v. (xviii, 661 p. : ill.([1] col.) ; 30 cm. / Title page, contents and abstract only. The complete thesis in print form is available from the University Library. / Thesis (Ph.D.)--University of Adelaide, School of Economics, 2001

Thesis (M.Sc. (Mathematics)) - Rhodes University, 2008. / A thesis submitted in partial fulfilment of the requirements for the degree of Master of Science in Mathematics.

Thesis (Ph.D.)--University of Western Australia, 2007.

Thesis (Ph. D.)--University of California, San Diego, 1999. / Vita. Includes bibliographical references.