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.

Application description and policy model in collaborative environment for sharing of information on epidemiological and clinical research data sets.

BACKGROUND: Sharing of epidemiological and clinical data sets among researchers is poor at best, in detriment of science and community at large. The purpose of this paper is therefore to (1) describe a novel Web application designed to share information on study data sets focusing on epidemiological clinical research in a collaborative environment and (2) create a policy model placing this collaborative environment into the current scientific social context. METHODOLOGY: The Database of Databases application was developed based on feedback from epidemiologists and clinical researchers requiring a Web-based platform that would allow for sharing of information about epidemiological and clinical study data sets in a collaborative environment. This platform should ensure that researchers can modify the information. A Model-based predictions of number of publications and funding resulting from combinations of different policy implementation strategies (for metadata and data sharing) were generated using System Dynamics modeling. PRINCIPAL FINDINGS: The application allows researchers to easily upload information about clinical study data sets, which is searchable and modifiable by other users in a wiki environment. All modifications are filtered by the database principal investigator in order to maintain quality control. The application has been extensively tested and currently contains 130 clinical study data sets from the United States, Australia, China and Singapore. Model results indicated that any policy implementation would be better than the current strategy, that metadata sharing is better than data-sharing, and that combined policies achieve the best results in terms of publications. CONCLUSIONS: Based on our empirical observations and resulting model, the social network environment surrounding the application can assist epidemiologists and clinical researchers contribute and search for metadata in a collaborative environment, thus potentially facilitating collaboration efforts among research communities distributed around the globe.

Peer rejection and social information-processing factors in the development of aggressive behavior problems in children.

The relation between social rejection and growth in antisocial behavior was investigated. In Study 1,259 boys and girls (34% African American) were followed from Grades 1 to 3 (ages 6-8 years) to Grades 5 to 7 (ages 10-12 years). Early peer rejection predicted growth in aggression. In Study 2,585 boys and girls (16% African American) were followed from kindergarten to Grade 3 (ages 5-8 years), and findings were replicated. Furthermore, early aggression moderated the effect of rejection, such that rejection exacerbated antisocial development only among children initially disposed toward aggression. In Study 3, social information-processing patterns measured in Study 1 were found to mediate partially the effect of early rejection on later aggression. In Study 4, processing patterns measured in Study 2 replicated the mediation effect. Findings are integrated into a recursive model of antisocial development.

Can information alone change behavior? Response to arsenic contamination of groundwater in Bangladesh

We study how effectively information induces Bangladeshi households to avoid a health risk. The response to information is large and rapid; knowing that the household's well water has an unsafe concentration of arsenic raises the probability that the household changes to another well within one year by 0.37. Households who change wells increase the time spent obtaining water fifteen-fold. We identify a causal effect of information, since incidence of arsenic is uncorrelated with household characteristics. Our door-to-door information campaign provides well-specific arsenic levels without which behavior does not change. Media communicate general information about arsenic less expensively and no less effectively. © 2006 Elsevier B.V. All rights reserved.

Equity trading volume and volatility: Latent information arrivals and common long-run dependencies

This article examines the behavior of equity trading volume and volatility for the individual firms composing the Standard & Poor's 100 composite index. Using multivariate spectral methods, we find that fractionally integrated processes best describe the long-run temporal dependencies in both series. Consistent with a stylized mixture-of-distributions hypothesis model in which the aggregate "news"-arrival process possesses long-memory characteristics, the long-run hyperbolic decay rates appear to be common across each volume-volatility pair.

Developmental cascades of peer rejection, social information processing biases, and aggression during middle childhood.

This study tested a developmental cascade model of peer rejection, social information processing (SIP), and aggression using data from 585 children assessed at 12 time points from kindergarten through Grade 3. Peer rejection had direct effects on subsequent SIP problems and aggression. SIP had direct effects on subsequent peer rejection and aggression. Aggression had direct effects on subsequent peer rejection. Each construct also had indirect effects on each of the other constructs. These findings advance the literature beyond a simple mediation approach by demonstrating how each construct effects changes in the others in a snowballing cycle over time. The progressions of SIP problems and aggression cascaded through lower liking, and both better SIP skills and lower aggression facilitated the progress of social preference. Findings are discussed in terms of the dynamic, developmental relations among social environments, cognitions, and behavioral adjustment.

Response decision processes and externalizing behavior problems in adolescents.

Externalizing behavior problems of 124 adolescents were assessed across Grades 7-11. In Grade 9, participants were also assessed across social-cognitive domains after imagining themselves as the object of provocations portrayed in six videotaped vignettes. Participants responded to vignette-based questions representing multiple processes of the response decision step of social information processing. Phase 1 of our investigation supported a two-factor model of the response evaluation process of response decision (response valuation and outcome expectancy). Phase 2 showed significant relations between the set of these response decision processes, as well as response selection, measured in Grade 9 and (a) externalizing behavior in Grade 9 and (b) externalizing behavior in Grades 10-11, even after controlling externalizing behavior in Grades 7-8. These findings suggest that on-line behavioral judgments about aggression play a crucial role in the maintenance and growth of aggressive response tendencies in adolescence.

Man's search for meaning: The case of Legos

We investigate how perceived meaning influences labor supply. In a laboratory setting, we manipulate the perceived meaning of simple, repetitive tasks and find a strong influence on subjects' labor supply. Despite the fact that the wage and the task are identical across the conditions in each experiment, subjects in the less meaningful conditions exhibit reservation wages that are consistently much higher than the subjects in the more meaningful conditions. The result replicates across different types of tasks. Moreover, in the more meaningful conditions, subjects' productivity influences labor supply more strongly. © 2008 Elsevier B.V. All rights reserved.

Real-Time Decision Making and Aggressive Behavior in Youth: A Heuristic Model of Response Evaluation and Decision (RED).

Considerable scientific and intervention attention has been paid to judgment and decision-making systems associated with aggressive behavior in youth. However, most empirical studies have investigated social-cognitive correlates of stable child and adolescent aggressiveness, and less is known about real-time decision making to engage in aggressive behavior. A model of real-time decision making must incorporate both impulsive actions and rational thought. The present paper advances a process model (response evaluation and decision; RED) of real-time behavioral judgments and decision making in aggressive youths with mathematic representations that may be used to quantify response strength. These components are a heuristic to describe decision making, though it is doubtful that individuals always mentally complete these steps. RED represents an organization of social-cognitive operations believed to be active during the response decision step of social information processing. The model posits that RED processes can be circumvented through impulsive responding. This article provides a description and integration of thoughtful, rational decision making and nonrational impulsivity in aggressive behavioral interactions.

Sensory information and associative cues used in food detection by wild vervet monkeys.

Understanding animals' spatial perception is a critical step toward discerning their cognitive processes. The spatial sense is multimodal and based on both the external world and mental representations of that world. Navigation in each species depends upon its evolutionary history, physiology, and ecological niche. We carried out foraging experiments on wild vervet monkeys (Chlorocebus pygerythrus) at Lake Nabugabo, Uganda, to determine the types of cues used to detect food and whether associative cues could be used to find hidden food. Our first and second set of experiments differentiated between vervets' use of global spatial cues (including the arrangement of feeding platforms within the surrounding vegetation) and/or local layout cues (the position of platforms relative to one another), relative to the use of goal-object cues on each platform. Our third experiment provided an associative cue to the presence of food with global spatial, local layout, and goal-object cues disguised. Vervets located food above chance levels when goal-object cues and associative cues were present, and visual signals were the predominant goal-object cues that they attended to. With similar sample sizes and methods as previous studies on New World monkeys, vervets were not able to locate food using only global spatial cues and local layout cues, unlike all five species of platyrrhines thus far tested. Relative to these platyrrhines, the spatial location of food may need to stay the same for a longer time period before vervets encode this information, and goal-object cues may be more salient for them in small-scale space.

Advances in understanding mechanisms of thalamic relays in cognition and behavior.

The main impetus for a mini-symposium on corticothalamic interrelationships was the recent number of studies highlighting the role of the thalamus in aspects of cognition beyond sensory processing. The thalamus contributes to a range of basic cognitive behaviors that include learning and memory, inhibitory control, decision-making, and the control of visual orienting responses. Its functions are deeply intertwined with those of the better studied cortex, although the principles governing its coordination with the cortex remain opaque, particularly in higher-level aspects of cognition. How should the thalamus be viewed in the context of the rest of the brain? Although its role extends well beyond relaying of sensory information from the periphery, the main function of many of its subdivisions does appear to be that of a relay station, transmitting neural signals primarily to the cerebral cortex from a number of brain areas. In cognition, its main contribution may thus be to coordinate signals between diverse regions of the telencephalon, including the neocortex, hippocampus, amygdala, and striatum. This central coordination is further subject to considerable extrinsic control, for example, inhibition from the basal ganglia, zona incerta, and pretectal regions, and chemical modulation from ascending neurotransmitter systems. What follows is a brief review on the role of the thalamus in aspects of cognition and behavior, focusing on a summary of the topics covered in a mini-symposium held at the Society for Neuroscience meeting, 2014.

Considering the role of social dynamics and positional behavior in gestural communication research.

While the hominin fossil record cannot inform us on either the presence or extent of social and cognitive abilities that may have paved the way for the emergence of language, studying non-vocal communication among our closest living relatives, the African apes, may provide valuable information about how language originated. Although much has been learned from gestural signaling in non-human primates, we have not yet established how and why gestural repertoires vary across species, what factors influence this variation, and how knowledge of these differences can contribute to an understanding of gestural signaling's contribution to language evolution. In this paper, we review arguments surrounding the theory that language evolved from gestural signaling and suggest some important factors to consider when conducting comparative studies of gestural communication among African apes. Specifically, we propose that social dynamics and positional behavior are critical components that shape the frequency and nature of gestural signaling across species and we argue that an understanding of these factors could shed light on how gestural communication may have been the basis of human language. We outline predictions for the influence of these factors on the frequencies and types of gestures used across the African apes and highlight the importance of including these factors in future gestural communication research with primates.

VizMaps: A Bayesian Topic Modeling Based PubMed Search Interface

A common challenge that users of academic databases face is making sense of their query outputs for knowledge discovery. This is exacerbated by the size and growth of modern databases. PubMed, a central index of biomedical literature, contains over 25 million citations, and can output search results containing hundreds of thousands of citations. Under these conditions, efficient knowledge discovery requires a different data structure than a chronological list of articles. It requires a method of conveying what the important ideas are, where they are located, and how they are connected; a method of allowing users to see the underlying topical structure of their search. This paper presents VizMaps, a PubMed search interface that addresses some of these problems. Given search terms, our main backend pipeline extracts relevant words from the title and abstract, and clusters them into discovered topics using Bayesian topic models, in particular the Latent Dirichlet Allocation (LDA). It then outputs a visual, navigable map of the query results.