Essays on Energy Economics and Industrial Organization

The dissertation consists of three chapters related to the low-price guarantee marketing strategy and energy efficiency analysis. The low-price guarantee is a marketing strategy in which firms promise to charge consumers the lowest price among their competitors. Chapter 1 addresses the research question "Does a Low-Price Guarantee Induce Lower Prices'' by looking into the retail gasoline industry in Quebec where there was a major branded firm which started a low-price guarantee back in 1996. Chapter 2 does a consumer welfare analysis of low-price guarantees to drive police indications and offers a new explanation of the firms' incentives to adopt a low-price guarantee. Chapter 3 develops the energy performance indicators (EPIs) to measure energy efficiency of the manufacturing plants in pulp, paper and paperboard industry.

Chapter 1 revisits the traditional view that a low-price guarantee results in higher prices by facilitating collusion. Using accurate market definitions and station-level data from the retail gasoline industry in Quebec, I conducted a descriptive analysis based on stations and price zones to compare the price and sales movement before and after the guarantee was adopted. I find that, contrary to the traditional view, the stores that offered the guarantee significantly decreased their prices and increased their sales. I also build a difference-in-difference model to quantify the decrease in posted price of the stores that offered the guarantee to be 0.7 cents per liter. While this change is significant, I do not find the response in comeptitors' prices to be significant. The sales of the stores that offered the guarantee increased significantly while the competitors' sales decreased significantly. However, the significance vanishes if I use the station clustered standard errors. Comparing my observations and the predictions of different theories of modeling low-price guarantees, I conclude the empirical evidence here supports that the low-price guarantee is a simple commitment device and induces lower prices.

Chapter 2 conducts a consumer welfare analysis of low-price guarantees to address the antitrust concerns and potential regulations from the government; explains the firms' potential incentives to adopt a low-price guarantee. Using station-level data from the retail gasoline industry in Quebec, I estimated consumers' demand of gasoline by a structural model with spatial competition incorporating the low-price guarantee as a commitment device, which allows firms to pre-commit to charge the lowest price among their competitors. The counterfactual analysis under the Bertrand competition setting shows that the stores that offered the guarantee attracted a lot more consumers and decreased their posted price by 0.6 cents per liter. Although the matching stores suffered a decrease in profits from gasoline sales, they are incentivized to adopt the low-price guarantee to attract more consumers to visit the store likely increasing profits at attached convenience stores. Firms have strong incentives to adopt a low-price guarantee on the product that their consumers are most price-sensitive about, while earning a profit from the products that are not covered in the guarantee. I estimate that consumers earn about 0.3% more surplus when the low-price guarantee is in place, which suggests that the authorities should not be concerned and regulate low-price guarantees. In Appendix B, I also propose an empirical model to look into how low-price guarantees would change consumer search behavior and whether consumer search plays an important role in estimating consumer surplus accurately.

Chapter 3, joint with Gale Boyd, describes work with the pulp, paper, and paperboard (PP&PB) industry to provide a plant-level indicator of energy efficiency for facilities that produce various types of paper products in the United States. Organizations that implement strategic energy management programs undertake a set of activities that, if carried out properly, have the potential to deliver sustained energy savings. Energy performance benchmarking is a key activity of strategic energy management and one way to enable companies to set energy efficiency targets for manufacturing facilities. The opportunity to assess plant energy performance through a comparison with similar plants in its industry is a highly desirable and strategic method of benchmarking for industrial energy managers. However, access to energy performance data for conducting industry benchmarking is usually unavailable to most industrial energy managers. The U.S. Environmental Protection Agency (EPA), through its ENERGY STAR program, seeks to overcome this barrier through the development of manufacturing sector-based plant energy performance indicators (EPIs) that encourage U.S. industries to use energy more efficiently. In the development of the energy performance indicator tools, consideration is given to the role that performance-based indicators play in motivating change; the steps necessary for indicator development, from interacting with an industry in securing adequate data for the indicator; and actual application and use of an indicator when complete. How indicators are employed in EPA’s efforts to encourage industries to voluntarily improve their use of energy is discussed as well. The chapter describes the data and statistical methods used to construct the EPI for plants within selected segments of the pulp, paper, and paperboard industry: specifically pulp mills and integrated paper & paperboard mills. The individual equations are presented, as are the instructions for using those equations as implemented in an associated Microsoft Excel-based spreadsheet tool.

Comparative performance of multiview stereoscopic and mammographic display modalities for breast lesion detection.

PURPOSE: Mammography is known to be one of the most difficult radiographic exams to interpret. Mammography has important limitations, including the superposition of normal tissue that can obscure a mass, chance alignment of normal tissue to mimic a true lesion and the inability to derive volumetric information. It has been shown that stereomammography can overcome these deficiencies by showing that layers of normal tissue lay at different depths. If standard stereomammography (i.e., a single stereoscopic pair consisting of two projection images) can significantly improve lesion detection, how will multiview stereoscopy (MVS), where many projection images are used, compare to mammography? The aim of this study was to assess the relative performance of MVS compared to mammography for breast mass detection. METHODS: The MVS image sets consisted of the 25 raw projection images acquired over an arc of approximately 45 degrees using a Siemens prototype breast tomosynthesis system. The mammograms were acquired using a commercial Siemens FFDM system. The raw data were taken from both of these systems for 27 cases and realistic simulated mass lesions were added to duplicates of the 27 images at the same local contrast. The images with lesions (27 mammography and 27 MVS) and the images without lesions (27 mammography and 27 MVS) were then postprocessed to provide comparable and representative image appearance across the two modalities. All 108 image sets were shown to five full-time breast imaging radiologists in random order on a state-of-the-art stereoscopic display. The observers were asked to give a confidence rating for each image (0 for lesion definitely not present, 100 for lesion definitely present). The ratings were then compiled and processed using ROC and variance analysis. RESULTS: The mean AUC for the five observers was 0.614 +/- 0.055 for mammography and 0.778 +/- 0.052 for multiview stereoscopy. The difference of 0.164 +/- 0.065 was statistically significant with a p-value of 0.0148. CONCLUSIONS: The differences in the AUCs and the p-value suggest that multiview stereoscopy has a statistically significant advantage over mammography in the detection of simulated breast masses. This highlights the dominance of anatomical noise compared to quantum noise for breast mass detection. It also shows that significant lesion detection can be achieved with MVS without any of the artifacts associated with tomosynthesis.

Improving the lens design and performance of a contemporary electromagnetic shock wave lithotripter.

The efficiency of shock wave lithotripsy (SWL), a noninvasive first-line therapy for millions of nephrolithiasis patients, has not improved substantially in the past two decades, especially in regard to stone clearance. Here, we report a new acoustic lens design for a contemporary electromagnetic (EM) shock wave lithotripter, based on recently acquired knowledge of the key lithotripter field characteristics that correlate with efficient and safe SWL. The new lens design addresses concomitantly three fundamental drawbacks in EM lithotripters, namely, narrow focal width, nonidealized pulse profile, and significant misalignment in acoustic focus and cavitation activities with the target stone at high output settings. Key design features and performance of the new lens were evaluated using model calculations and experimental measurements against the original lens under comparable acoustic pulse energy (E+) of 40 mJ. The -6-dB focal width of the new lens was enhanced from 7.4 to 11 mm at this energy level, and peak pressure (41 MPa) and maximum cavitation activity were both realigned to be within 5 mm of the lithotripter focus. Stone comminution produced by the new lens was either statistically improved or similar to that of the original lens under various in vitro test conditions and was significantly improved in vivo in a swine model (89% vs. 54%, P = 0.01), and tissue injury was minimal using a clinical treatment protocol. The general principle and associated techniques described in this work can be applied to design improvement of all EM lithotripters.