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.

Expert assessments of retrofitting coal-fired power plants with carbon dioxide capture technologies

A set of 13 US based experts in post-combustion and oxy-fuel combustion CO2 capture systems responded to an extensive questionnaire asking their views on the present status and future expected performance and costs for amine-based, chilled ammonia, and oxy-combustion retrofits of coal-fired power plants. This paper presents the experts' responses for technology maturity, ideal plant characteristics for early adopters, and the extent to which R&D and deployment incentives will impact costs. It also presents the best estimates and 95% confidence limits of the energy penalties associated with amine-based systems. The results show a general consensus that amine-based systems are closer to commercial application, but potential for improving performance and lowering costs is limited; chilled ammonia and oxy-combustion offer greater potential for cost reductions, but not without greater uncertainty regarding scale and technical feasibility. © 2011 Elsevier Ltd.

Information processing without brains--the power of intercellular regulators in plants.

Plants exhibit different developmental strategies than animals; these are characterized by a tight linkage between environmental conditions and development. As plants have neither specialized sensory organs nor a nervous system, intercellular regulators are essential for their development. Recently, major advances have been made in understanding how intercellular regulation is achieved in plants on a molecular level. Plants use a variety of molecules for intercellular regulation: hormones are used as systemic signals that are interpreted at the individual-cell level; receptor peptide-ligand systems regulate local homeostasis; moving transcriptional regulators act in a switch-like manner over small and large distances. Together, these mechanisms coherently coordinate developmental decisions with resource allocation and growth.

Biogeographic analysis of the woody plants of the Southern Appalachians: Implications for the origins of a regional flora.

PREMISE OF THE STUDY: We investigated the origins of 252 Southern Appalachian woody species representing 158 clades to analyze larger patterns of biogeographic connectivity around the northern hemisphere. We tested biogeographic hypotheses regarding the timing of species disjunctions to eastern Asia and among areas of North America. METHODS: We delimited species into biogeographically informative clades, compiled sister-area data, and generated graphic representations of area connections across clades. We calculated taxon diversity within clades and plotted divergence times. KEY RESULTS: Of the total taxon diversity, 45% were distributed among 25 North American endemic clades. Sister taxa within eastern North America and eastern Asia were proportionally equal in frequency, accounting for over 50% of the sister-area connections. At increasing phylogenetic depth, connections to the Old World dominated. Divergence times for 65 clades with intercontinental disjunctions were continuous, whereas 11 intracontinental disjunctions to western North America and nine to eastern Mexico were temporally congruent. CONCLUSIONS: Over one third of the clades have likely undergone speciation within the region of eastern North America. The biogeographic pattern for the region is asymmetric, consisting of mostly mixed-aged, low-diversity clades connecting to the Old World, and a minority of New World clades. Divergence time data suggest that climate change in the Late Miocene to Early Pliocene generated disjunct patterns within North America. Continuous splitting times during the last 45 million years support the hypothesis that widespread distributions formed repeatedly during favorable periods, with serial cooling trends producing pseudocongruent area disjunctions between eastern North America and eastern Asia.

Phytochrome diversity in green plants and the origin of canonical plant phytochromes.

Phytochromes are red/far-red photoreceptors that play essential roles in diverse plant morphogenetic and physiological responses to light. Despite their functional significance, phytochrome diversity and evolution across photosynthetic eukaryotes remain poorly understood. Using newly available transcriptomic and genomic data we show that canonical plant phytochromes originated in a common ancestor of streptophytes (charophyte algae and land plants). Phytochromes in charophyte algae are structurally diverse, including canonical and non-canonical forms, whereas in land plants, phytochrome structure is highly conserved. Liverworts, hornworts and Selaginella apparently possess a single phytochrome, whereas independent gene duplications occurred within mosses, lycopods, ferns and seed plants, leading to diverse phytochrome families in these clades. Surprisingly, the phytochrome portions of algal and land plant neochromes, a chimera of phytochrome and phototropin, appear to share a common origin. Our results reveal novel phytochrome clades and establish the basis for understanding phytochrome functional evolution in land plants and their algal relatives.

NAFTA and the apparel commodity chain: Corporate strategies, interfirm networks, and industrial upgrading

The apparel industry is one of the oldest and largest export industries in the world, with global trade and production networks that connect firms and workers in countries at all levels of economic development. This chapter examines the impact of the North American Free Trade Agreement (NAFTA) as one of the most recent and significant developments to affect patterns of international trade and production in the apparel and textile industries. Tr ade policies are changing the institutional environment in which firms in this industry operate, and companies are responding to these changes with new strategies designed to increase their profitability and strengthen their control over the apparel commodity chain. Our hypothesis is that lead firms are establishing qualitatively different kinds of regional production networks in North America from those that existed prior to NAFTA, and that these networks have important consequences for industrial upgrading in the Mexican textile and apparel industries. Post-NAFTA crossborder production arrangements include full-package networks that link lead firms in the United States with apparel and textile manufacturers, contractors, and suppliers in Mexico. Full-package production is increasing the local value added provided by the apparel commodity chain in Mexico and creating new opportunities for Mexican firms and workers. The chapter is divided into four main sections. The first section uses trade and production data to analyze shifts in global apparel flows, highlighting the emergence and consolidation of a regional trade bloc in North America. The second section discusses the process of industrial upgrading in the apparel industry and introduces a distinction between assembly and full-package production networks. The third section includes case studies based on published industry sources and strategic interviews with several lead companies whose strategies are largely responsible for the shifting trade patterns and NAFTA-inspired cross-border production networks discussed in the previous section. The fourth section considers the implications of these changes for employment in the North American apparel industry. © 2009 by Temple University Press. All rights reserved.

Economic and Social Upgrading in Global Value Chains and Industrial Clusters: Why Governance Matters

© 2014, Springer Science+Business Media Dordrecht.The burgeoning literature on global value chains (GVCs) has recast our understanding of how industrial clusters are shaped by their ties to the international economy, but within this context, the role played by corporate social responsibility (CSR) continues to evolve. New research in the past decade allows us to better understand how CSR is linked to industrial clusters and GVCs. With geographic production and trade patterns in many industries becoming concentrated in the global South, lead firms in GVCs have been under growing pressure to link economic and social upgrading in more integrated forms of CSR. This is leading to a confluence of “private governance” (corporate codes of conduct and monitoring), “social governance” (civil society pressure on business from labor organizations and non-governmental organizations), and “public governance” (government policies to support gains by labor groups and environmental activists). This new form of “synergistic governance” is illustrated with evidence from recent studies of GVCs and industrial clusters, as well as advances in theorizing about new patterns of governance in GVCs and clusters.