Prices need no preferences: social trends determine decisions in experimental markets for pain relief.

OBJECTIVE: A standard view in health economics is that, although there is no market that determines the "prices" for health states, people can nonetheless associate health states with monetary values (or other scales, such as quality adjusted life year [QALYs] and disability adjusted life year [DALYs]). Such valuations can be used to shape health policy, and a major research challenge is to elicit such values from people; creating experimental "markets" for health states is a theoretically attractive way to address this. We explore the possibility that this framework may be fundamentally flawed-because there may not be any stable values to be revealed. Instead, perhaps people construct ad hoc values, influenced by contextual factors, such as the observed decisions of others. METHOD: The participants bid to buy relief from equally painful electrical shocks to the leg and arm in an experimental health market based on an interactive second-price auction. Thirty subjects were randomly assigned to two experimental conditions where the bids by "others" were manipulated to follow increasing or decreasing price trends for one, but not the other, pain. After the auction, a preference test asked the participants to choose which pain they prefer to experience for a longer duration. RESULTS: Players remained indifferent between the two pain-types throughout the auction. However, their bids were differentially attracted toward what others bid for each pain, with overbidding during decreasing prices and underbidding during increasing prices. CONCLUSION: Health preferences are dissociated from market prices, which are strongly referenced to others' choices. This suggests that the price of health care in a free-market has the capacity to become critically detached from people's underlying preferences.

Benzene electro-oxidation in a PEMFC for phenol and electricity cogeneration

In the present investigation, the electrochemically-assisted oxidation of benzene in a H-2-O-2 proton exchange membrane fuel cell (PEMFC) for electricity and phenol cogeneration is studied. Experiments were carried out in a PEMFC electrochemical reactor using Pd black as cathode electrocatalyst at 60 and 80 degrees C, respectively and 1 atm back pressure. Indeed, it was found that the only product detected under the examined experimental conditions was phenol. The online GC product analysis revealed that it is impossible to produce phenol when the fuel cell circuit is open (I = 0) under all the examined experimental conditions. When the fuel cell circuit was closed, however, the phenol yield was found to follow a volcano-type dependence on the cur-rent of the external circuit. It was found that the maximum phenol yield was 0.35% at 100 mA/cm(2) at 80 degrees C. At the same time, the PEMFC performance was also investigated during the phenol generation process. Furthermore, experiments with the rotating ring disc electrode (RRDE) technique showed that the intermediate oxidation product, i.e. H2O2 existed during the oxygen electro-reduction process. The cyclic voltammograms showed that benzene was strongly adsorbed on the Pd surface, leading to a degradation of the PEMFC performance. (c) 2005 Elsevier B.V. All rights reserved.

Remote electricity actuation and monitoring mote

This work presents the design and evaluation of the REAM (Remote Electricity Actuation and Monitoring) node based around the modular Tyndall Mote platform. The REAM node enables the user to remotely actuate power to a mains power extension board while sampling the current, voltage, power and power factor of the attached load. The node contains a current transformer interfaced to an Energy Metering IC which continuously samples current and voltage. These values are periodically read from the part by a PIC24 microcontroller, which calculates the RMS current and voltage, power factor and overall power. The resultant values can then be queried wirelessly employing the Tyndall 802.15.4 compliant wireless module.

Quantifying the value of improved wind energy forecasts in a pool-based electricity market

This work illustrates the influence of wind forecast errors on system costs, wind curtailment and generator dispatch in a system with high wind penetration. Realistic wind forecasts of different specified accuracy levels are created using an auto-regressive moving average model and these are then used in the creation of day-ahead unit commitment schedules. The schedules are generated for a model of the 2020 Irish electricity system with 33% wind penetration using both stochastic and deterministic approaches. Improvements in wind forecast accuracy are demonstrated to deliver: (i) clear savings in total system costs for deterministic and, to a lesser extent, stochastic scheduling; (ii) a decrease in the level of wind curtailment, with close agreement between stochastic and deterministic scheduling; and (iii) a decrease in the dispatch of open cycle gas turbine generation, evident with deterministic, and to a lesser extent, with stochastic scheduling.

"Call for prices": Strategic implications of raising consumers' costs

Many consumer durable retailers often do not advertise their prices and instead ask consumers to call them for prices. It is easy to see that this practice increases the consumers' cost of learning the prices of products they are considering, yet firms commonly use such practices. Not advertising prices may reduce the firm's advertising costs, but the strategic effects of doing so are not clear. Our objective is to examine the strategic effects of this practice. In particular, how does making price discovery more difficult for consumers affect competing retailers' price, service decisions, and profits? We develop a model in which a manufacturer sells its product through a high-service retailer and a low-service retailer. Consumers can purchase the retail service at the high-end retailer and purchase the product at the competing low-end retailer. Therefore, the high-end retailer faces a free-riding problem. A retailer first chooses its optimal service levels. Then, it chooses its optimal price levels. Finally, a retailer decides whether to advertise its prices. The model results in four structures: (1) both retailers advertise prices, (2) only the low-service retailer advertises price, (3) only the high-service retailer advertises price, and (4) neither retailer advertises price. We find that when a retailer does not advertise its price and makes price discovery more difficult for consumers, the competition between the retailers is less intense. However, the retailer is forced to charge a lower price. In addition, if the competing retailer does advertise its prices, then the competing retailer enjoys higher profit margins. We identify conditions under which each of the above four structures is an equilibrium and show that a low-service retailer not advertising its price is a more likely outcome than a high-service retailer doing so. We then solve the manufacturer's problem and find that there are several instances when a retailer's advertising decisions are different from what the manufacturer would want. We describe the nature of this channel coordination problem and identify some solutions. © 2010 INFORMS.

Can exchange rates forecast commodity prices?

We show that "commodity currency" exchange rates have surprisingly robust power in predicting global commodity prices, both in-sample and out-of-sample, and against a variety of alternative benchmarks. This result is of particular interest to policy makers, given the lack of deep forward markets in many individual commodities, and broad aggregate commodity indices in particular. We also explore the reverse relationship (commodity prices forecasting exchange rates) but find it to be notably less robust. We offer a theoretical resolution, based on the fact that exchange rates are strongly forward-looking, whereas commodity price fluctuations are typically more sensitive to short-term demand imbalances. © 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Gold mining in the Peruvian Amazon: global prices, deforestation, and mercury imports.

Many factors such as poverty, ineffective institutions and environmental regulations may prevent developing countries from managing how natural resources are extracted to meet a strong market demand. Extraction for some resources has reached such proportions that evidence is measurable from space. We present recent evidence of the global demand for a single commodity and the ecosystem destruction resulting from commodity extraction, recorded by satellites for one of the most biodiverse areas of the world. We find that since 2003, recent mining deforestation in Madre de Dios, Peru is increasing nonlinearly alongside a constant annual rate of increase in international gold price (∼18%/yr). We detect that the new pattern of mining deforestation (1915 ha/year, 2006-2009) is outpacing that of nearby settlement deforestation. We show that gold price is linked with exponential increases in Peruvian national mercury imports over time (R(2) = 0.93, p = 0.04, 2003-2009). Given the past rates of increase we predict that mercury imports may more than double for 2011 (∼500 t/year). Virtually all of Peru's mercury imports are used in artisanal gold mining. Much of the mining increase is unregulated/artisanal in nature, lacking environmental impact analysis or miner education. As a result, large quantities of mercury are being released into the atmosphere, sediments and waterways. Other developing countries endowed with gold deposits are likely experiencing similar environmental destruction in response to recent record high gold prices. The increasing availability of satellite imagery ought to evoke further studies linking economic variables with land use and cover changes on the ground.

Implications of shale gas development for climate change.

Advances in technologies for extracting oil and gas from shale formations have dramatically increased U.S. production of natural gas. As production expands domestically and abroad, natural gas prices will be lower than without shale gas. Lower prices have two main effects: increasing overall energy consumption, and encouraging substitution away from sources such as coal, nuclear, renewables, and electricity. We examine the evidence and analyze modeling projections to understand how these two dynamics affect greenhouse gas emissions. Most evidence indicates that natural gas as a substitute for coal in electricity production, gasoline in transport, and electricity in buildings decreases greenhouse gases, although as an electricity substitute this depends on the electricity mix displaced. Modeling suggests that absent substantial policy changes, increased natural gas production slightly increases overall energy use, more substantially encourages fuel-switching, and that the combined effect slightly alters economy wide GHG emissions; whether the net effect is a slight decrease or increase depends on modeling assumptions including upstream methane emissions. Our main conclusions are that natural gas can help reduce GHG emissions, but in the absence of targeted climate policy measures, it will not substantially change the course of global GHG concentrations. Abundant natural gas can, however, help reduce the costs of achieving GHG reduction goals.

Prices versus quantities versus bankable quantities

Quantity-based regulation with banking allows regulated firms to shift obligations across time in response to periods of unexpectedly high or low marginal costs. Despite its wide prevalence in existing and proposed emission trading programs, banking has received limited attention in past welfare analyses of policy choice under uncertainty. We address this gap with a model of banking behavior that captures two key constraints: uncertainty about the future from the firm's perspective and a limit on negative bank values (e.g. borrowing). We show conditions where banking provisions reduce price volatility and lower expected costs compared to quantity policies without banking. For plausible parameter values related to U.S. climate change policy, we find that bankable quantities produce behavior quite similar to price policies for about two decades and, during this period, improve welfare by about a $1 billion per year over fixed quantities. © 2012 Elsevier B.V.

Global experience with electricity liberalisation

This paper examines global experiences with electricity liberalisation relevant to the new legislation on electricity passed by the Indonesian parliament in September 2009. It covers experiences in the UK, EU, USA and ten major developing economies. Finally, the paper comments on a number of the issues emerging from this survey, in particular the reliance on public finance for extensions to electricity networks, the advantages of public finance for cheaper capital and for developing renewables, and the comparative evidence on efficiency.