This dissertation studies how to characterize strategic behaviors in electricity markets from a transmission-constrained residual demand perspective. This dissertation generalizes the residual demand concept, widely used by economists in general markets, to electricity markets, which are constrained by transmission networks. The transmission-constrained residual demand is characterized by a sensitivity analysis of the optimal power flow program, which is the electricity market clearing engine. Methods are proposed to optimize a generator or generation firm's profit utilizing the residual demand sensitivity information, which has several advantages over existing methods. The transmission-constrained residual demand concept and the methods are helpful for market participants to develop bidding strategies and for market monitors to analyze market power in electricity markets. / text

The first essay compares six common models, linear, quadratic, Cobb-Douglas, translog, logarithmic, and transcendental, to estimate wheat yield and area functions for Saudi Arabia. Data cover 1990-2016 for all the variables that affect wheat supply. After testing the models using Box-Cox, multicollinearity, and autocorrelation tests, we decide that the Cobb-Douglas models provide the best fit for both yield and area. We find the price elasticity of wheat is inelastic. Yield price elasticities are more inelastic than area elasticities. The impact of government policy number 335 has a larger effect on area than yield. The cultivated area of wheat, the one-year lag of yield, and the number of machines per hectare are the most influential factors affecting wheat yield. The primary factors influencing the area models are a one-year lag of both cultivated area and yield, as well as the number of machines per hectare. The second essay estimates the residual demand elasticity that rice exporters face in Saudi Arabia. The inverse residual demand methods, as proposed by Reed and Saghaian 2004, are used for rice exporters to Saudi Arabia during the period 1993-2014. Estimation results of the elasticities of the residual demand indicate that Australia, India, and Pakistan enjoy market power, while Egypt faces a perfectly elastic demand curve. We find Thailand and the US had positive inverse residual demand which means they also have no market power. The last essay is about the virtual water trade in Saudi Arabia. Using the concept of virtual water introduced by Allan 1994 and developed by Hoekstra and Hung (2002), we estimate virtual water trade for 20 crops of Saudi Arabia during 2000-2016. Our result shows the average virtual water trade was 12.5 billion m3/year. Saudi has net virtual water imports, with the most significant virtual water imports coming from cereals & alfalfa and vegetables; and there is net virtual water export of fruit. Saudi virtual water trade reduces pressure on water resources by 52%. Distance plays a role in Saudi virtual water export; we found that more than 90% of exports go to neighboring countries, including 45% to GCC countries. More than 30% of virtual water imports come from Europe. A Gravity model is used to investigate whether water scarcity variables influence trade. We compare the OLS, Fixed effects, Random effects, and PPML estimators to get the best model. The AIC, and tests for multicollinearity, and heteroskedasticity assist in determining estimation procedures and the final models. We cluster the errors by distance to improve the specific country effect variables such as economic mass variables. For the cereals and alfalfa group, we find that water-related variables influence virtual water imports of cereals, millet, sorghum, corn, barley, and sesame. Therefore, we suggest that a basic gravity model be applied to the other crops. In the vegetable group, we find that related water variables impact virtual water trade for all crops except marrow. Dates are the only fruit crop that are not influenced by the water-related variables.

<p>This thesis consists of three self-contained essays. The first two essays address the consumption of culture and are closely related in terms of the theoretical framework used. The third essay is a separate analysis of international trade and competition.</p><p>The studies of culture are motivated by the special treatment of culture consumption in most modern societies: there are usually large, government-provided subsidies, the aim of which is to stimulate both the production and the consumption of culture. The purpose of the present work is to explore reasons for this special treatment. Using a stylized theoretical framework, the essays contrast culture with another, generic, good or activity. Culture is thus regarded as an "experience good": previous consumption of the good enhances the current appreciation of the good. The generic good is one where experience is assumed not to be at all relevant for the appreciation of the good. For experience goods, decisions made today will influence future utility and future choices. This makes the intertemporal preferences essential. If, in particular, consumers have time-inconsistent preferences of the type that can be characterized as a present-bias---modeled with "multiple selves" using quasi-geometric discounting---as opposed to standard, time-consistent preferences, there will be a case for government subsidies. The first essay explores this possibility in detail in a framework where experience is mainly of importance in the short run. The second essay then studies cases where experience is more potent and can cause persistent diversity in culture consumption across individuals.</p><p>"Culture and Control: Should There Be Large Subsidies to Culture?" studies the circumstances under which public support for culture is warranted. A policy example is designed to illustrate important aspects of public support systems currently in place, and is calibrated to Swedish data. The essay concludes that, given present-biased agents with self-control problems, public support of culture can work as a commitment device and improve long-run welfare. Furthermore, it is demonstrated that welfare-maximizing subsidies to culture can be substantial if the present-bias is profound and the taste-cultivation property of culture consumption is pronounced.</p><p>"Origins of the Diversity of Culture Consumption" analyzes the diversity of culture consumption among individuals. If the culture good and the generic good are sufficiently close substitutes in a static sense, very large and persistent differences in the consumption of highbrow culture across consumers can be explained by differences in initial experience levels alone. Moreover, slight differences in preferences and time endowments can cause significant diversity between individuals, both in the long- and short-run levels of culture consumption. In addition, if consumers have time-inconsistent preferences, further diversity can be rationalized. If there is a present-bias, there may also be Pareto-ranked multiple equilibria with "optimism" and "pessimism": high (low) culture consumption of the current self is rationalized, based on the belief that future culture consumption will be high (low).</p><p>"Has international competition increased? Estimates of residual demand elasticities in export markets" studies the impact of the last decades of intense economic integration on the competitive conduct of Swedish export industries. The functional relationship between the inverted residual demand elasticity and the Lerner index is used to estimate markups in eight industries. The econometric evidence suggests a deviation from competitive behavior in all industries. Moreover, the results demonstrate a trend of decreasing market power.</p>

This thesis consists of three self-contained essays. The first two essays address the consumption of culture and are closely related in terms of the theoretical framework used. The third essay is a separate analysis of international trade and competition. The studies of culture are motivated by the special treatment of culture consumption in most modern societies: there are usually large, government-provided subsidies, the aim of which is to stimulate both the production and the consumption of culture. The purpose of the present work is to explore reasons for this special treatment. Using a stylized theoretical framework, the essays contrast culture with another, generic, good or activity. Culture is thus regarded as an "experience good": previous consumption of the good enhances the current appreciation of the good. The generic good is one where experience is assumed not to be at all relevant for the appreciation of the good. For experience goods, decisions made today will influence future utility and future choices. This makes the intertemporal preferences essential. If, in particular, consumers have time-inconsistent preferences of the type that can be characterized as a present-bias---modeled with "multiple selves" using quasi-geometric discounting---as opposed to standard, time-consistent preferences, there will be a case for government subsidies. The first essay explores this possibility in detail in a framework where experience is mainly of importance in the short run. The second essay then studies cases where experience is more potent and can cause persistent diversity in culture consumption across individuals. "Culture and Control: Should There Be Large Subsidies to Culture?" studies the circumstances under which public support for culture is warranted. A policy example is designed to illustrate important aspects of public support systems currently in place, and is calibrated to Swedish data. The essay concludes that, given present-biased agents with self-control problems, public support of culture can work as a commitment device and improve long-run welfare. Furthermore, it is demonstrated that welfare-maximizing subsidies to culture can be substantial if the present-bias is profound and the taste-cultivation property of culture consumption is pronounced. "Origins of the Diversity of Culture Consumption" analyzes the diversity of culture consumption among individuals. If the culture good and the generic good are sufficiently close substitutes in a static sense, very large and persistent differences in the consumption of highbrow culture across consumers can be explained by differences in initial experience levels alone. Moreover, slight differences in preferences and time endowments can cause significant diversity between individuals, both in the long- and short-run levels of culture consumption. In addition, if consumers have time-inconsistent preferences, further diversity can be rationalized. If there is a present-bias, there may also be Pareto-ranked multiple equilibria with "optimism" and "pessimism": high (low) culture consumption of the current self is rationalized, based on the belief that future culture consumption will be high (low). "Has international competition increased? Estimates of residual demand elasticities in export markets" studies the impact of the last decades of intense economic integration on the competitive conduct of Swedish export industries. The functional relationship between the inverted residual demand elasticity and the Lerner index is used to estimate markups in eight industries. The econometric evidence suggests a deviation from competitive behavior in all industries. Moreover, the results demonstrate a trend of decreasing market power.

Made available in DSpace on 2010-04-20T20:54:44Z (GMT). No. of bitstreams: 3 RaphaelAlmeidaVideira2005.pdf.jpg: 14673 bytes, checksum: 6bb82016c88319ba325f1405c78187a1 (MD5) RaphaelAlmeidaVideira2005.pdf.txt: 115776 bytes, checksum: bf2ac1c722c9f885c08ea24a71569ba6 (MD5) RaphaelAlmeidaVideira2005.pdf: 192934 bytes, checksum: 3b05da2be234891400d65dc59ceae526 (MD5) Previous issue date: 2005-12-15T00:00:00Z / This paper studies the brazilian pulp industry and tries to answer two main questions. The first is about the definition of geographic relevant market. The second one intends to verify the existance of market power in this industry. The product relevant market, bleached eucalyptus pulp, was defined by qualitative aspects. The first question used a methodology proposed by Forni (2004), who used unit root tests (ADF and KPSS) to define the geographic relevant market. The results of these tests indicated an international geographic relevant market which was corroborated analysing the functioning of this market. After these tests, a market power test was done, because in this market, the world leader is a brazilian company, Aracruz. This test was proposed by Mayo, Kaserman e Kahai (1996) and they used a demand residual model. The estimation of this test was proposed by Motta (2004). The results indicated that Aracruz does not have market power in this sector. / Este trabalho analisa o setor brasileiro de celulose e tenta responder a duas questões principais: a abrangência do mercado relevante e a existência de poder de mercado das empresas que atuam neste setor. A dimensão produto do mercado relevante foi definida a partir de dados qualitativos. Devido à indisponibilidade de dados para uma análise qualitativa mais apurada, a opção foi pela celulose de fibra curta de eucalipto, produto mais importante do setor, tanto pela posição brasileira em tecnologia como pela pauta de exportações. Já quanto à dimensão geográfica, o procedimento realizado baseou-se em Forni (2004) que utiliza testes de raiz unitária para a definição do mercado. Concluiu-se que, com os dados disponíveis, o mercado deste produto pode ser considerado como internacional, não somente pelo resultado do teste como também pelo modo de funcionamento deste mercado. Definido o mercado de produto e geográfico, realizou-se um teste de poder de mercado, pois neste nicho, a Aracruz é líder mundial. Tal teste foi realizado com base na demanda residual descrita por Mayo, Kaserman e Kahai (1996) e estimado segundo Motta (2004). Concluiu-se que, apesar de a Aracruz possuir um elevado market share no setor, ela não possui poder de mercado.

Doctor of Philosophy / Department of Agricultural Economics / Tian Xia / This dissertation presents the development of a new approach to include the interaction of vertically differentiated products, a subject that has been largely ignored in previous studies, to analyze the market power of exporters and importers in the world markets of agricultural commodities. Three theoretical models, a residual demand elasticity (RDE) model, a residual supply elasticity (RSE) model, and a two-country partial equilibrium trade model, are developed, and the corresponding empirical models are specified for U.S.-Japan soybean trade. Genetically modified (GM) and non-genetically modified (non-GM) soybeans are vertically differentiated products in the sense that GM soybeans are largely defined as an inferior substitute to non-GM soybeans. I compare two versions of these models: a new approach in which the interaction between non-GM and GM soybeans is taken into account and the traditional approach in which the interaction is ignored. In each of the three models (the RDE model, the RSE model, and the partial equilibrium trade model), the traditional approach overestimates the market margin of U.S. non-GM soybean exporters and that of Japanese non-GM soybean importers. By considering the interaction between non-GM and GM soybeans, the new approach greatly reduces the estimates of the corresponding market margins of U.S. exporters and Japanese importers to improve the accuracy of such estimates. The statistical significance of the coefficient estimate of the interaction term, the U.S. GM soybean price or the Japanese GM soybean price, in all three models suggests that the new approach, which includes the interaction between non-GM and GM soybeans, is necessary and preferred. The partial equilibrium trade model includes both an RDE equation and an RSE equation in a system to address the possible contemporaneous cross-equation correlation. Thus, the estimation results of the partial equilibrium trade model are further improved, compared to those of the RDE model and the RSE model. Using the traditional approach to estimate the partial equilibrium trade model, I find that the U.S. non-GM soybean exporters’ market margin is 56.5% and the Japanese non-GM soybean importers’ market margin is 16.1%. However, the results obtained by using the new approach show that the market margins of U.S. exporters and Japanese importers are 33.2% and 6%, respectively. By taking into account the interaction between non-GM and GM soybeans, the new approach improves the accuracy of the estimates of market margins of soybean exporters and importers. U.S. non-GM soybean exporters do have a significant market margin in international markets, but it is not as large as the one suggested by the traditional approach. Although Japanese non-GM soybean importers enjoy some market margin, it is relatively small. The theoretical and empirical models and results in this dissertation provide new and more accurate estimates of residual demand and supply elasticities and market power and improve the understanding on world soybean markets. These results can be useful for industry participants in international soybean markets, academic researchers, and policy makers.

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