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.

Reporte financiero Burkenroad / Latinoamérica – Colombia / Cartón de Colombia S.A.

La recomendación de esta valoración es de compra de la acción de Cartón de Colombia S.A., con un precio objetivo de $ 12,723, el cual fue calculado con la metodología de flujos de caja descontados y valoración por múltiplos para hallar el valor fundamental de las filiales -- La recomendación se basa en la buena dinámica que han tenido sus tres líneas de negocio: cartones y papeles, madera y plántulas de vivero y servicios, la cual se espera que continúe en los siguientes años creciendo de forma real -- Adicionalmente, se espera que en el 2016 empiece la construcción de una nueva planta de corrugados en Bogotá que funcionará con tecnología de punta y que servirá para poder satisfacer la demanda futura, ya que la empresa se encuentra operando con toda su capacidad instalada

Effects of plasticizing and crosslinking on the mechanical and barrier properties of coatings based on blends of starch and poly(vinyl alcohol)

In the last decades, intensive research has been carried out in order to replace oil-based polymers with bio-based polymers due to growing environmental concerns. So far, most of the barrier materials used in food packaging are petroleum-based materials. The purpose of the barrier is to protect the packaged food from oxygen, water vapour, water and fat. The mechanical and barrier properties of coatings based on starch-plasticizer and starch-poly(vinyl alcohol) (PVOH)-plasticizer blends have been studied in the work described in this thesis. The plasticizers used were glycerol, polyethylene glycol and citric acid. In a second step, polyethylene coatings were extruded onto paperboard pre-coated with a starch-PVOH-plasticizer blend. The addition of PVOH to the starch increased the flexibility of the film. Curing of the film led to a decrease in flexibility and an increase in tensile strength. The flexibility of the starch-PVOH films was increased more when glycerol or polyethylene glycol was added than citric acid. The storage modulus of the starch-PVOH films containing citric acid increased substantially at high temperature. It was seen that the addition of polyethylene glycol or citric acid to the starch-PVOH blend resulted in an enrichment of PVOH at the surface of the films. Tensile tests on the films indicated that citric acid acted as a compatibilizer and increased the compatibility of the starch and PVOH in the blend. The addition of citric acid to the coating recipe substantially decreased the water vapour transmission rate through the starch-PVOH coated paperboard, which indicated that citric acid acts as a cross-linker for starch and/or PVOH. The starch-PVOH coatings containing citric acid showed oxygen-barrier properties similar to those of pure PVOH or of a starch-PVOH blend without plasticizer when four coating layers were applied on a paperboard. The oxygen-barrier properties of coatings based on a starch-PVOH blend containing citric acid indicated a cross-linking and increase in compatibility of the starch-PVOH blends. Polyethylene extrusion coating on a pre-coated paperboard resulted in a clear reduction in the oxygen transmission rate for all the pre-coating formulations containing plasticizers. The addition of a plasticizer to the pre-coating reduced the adhesion of polyethylene to pre-coated board. Polyethylene extrusion coating gave a board with a lower oxygen transmission rate when the paperboard was pre-coated with a polyethylene-glycol-containing formulation than with a citric-acid-containing formulation. The addition of polyethylene glycol to pre-coatings indicated an increase in wetting of the pre-coated paperboard by the polyethylene melt, and this may have sealed the small defects in the pre-coating leading to low oxygen transmission rate. The increase in brittleness of starch-PVOH films containing citric acid at a high temperature seemed to have a dominating effect on the barrier properties developed by the extrusion coating process.