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Targeted Advertising, Platform Competition And Privacy, Henk L.M. Kox, Bas Straathof, Gijsbert Zwart 2017 KVL Economic Policy Research

Targeted Advertising, Platform Competition And Privacy, Henk L.M. Kox, Bas Straathof, Gijsbert Zwart

Henk LM Kox

Targeted advertising can benefit consumers through lower prices for access to websites. Yet, if consumers dislike that websites collect their personal information, their welfare may go down. We study competition for consumers between websites that can show targeted advertisements. We find that more targeting increases competition and reduces the websites’ profits, but yet in equilibrium websites choose maximum targeting as they cannot credibly commit to low targeting. A privacy protection policy can be beneficial for both consumers and websites. If consumers are heterogeneous in their concerns for privacy, a policy that allows choice between two levels of privacy will be ...


Competing By Restricting Choice: The Case Of Search Platforms, Hanna Halaburda, Mikolaj Jan Piskorski, Pinar Yildirim 2016 Bank of Canada

Competing By Restricting Choice: The Case Of Search Platforms, Hanna Halaburda, Mikolaj Jan Piskorski, Pinar Yildirim

Hanna Halaburda

We show that a two-sided platform can successfully compete by limiting the choice of potential matches it offers to its customers while charging higher prices than platforms with unrestricted choice. Starting from micro-foundations, we derive the strength and direction of network effect, and find that increasing the number of potential matches not only has a positive effect due to larger choice, but also a negative effect due to competition between agents on the same side. Agents with heterogeneous outside options resolve the trade-off between the two effects differently. For agents with a lower outside option, the competitive effect is stronger ...


Chinese Consumer Demand For Animal Products And Implications For U.S. Pork And Poultry Exports, Qingbin Wang, Frank Fuller, Dermot J. Hayes, Catherine Halbrendt 2016 University of Vermont

Chinese Consumer Demand For Animal Products And Implications For U.S. Pork And Poultry Exports, Qingbin Wang, Frank Fuller, Dermot J. Hayes, Catherine Halbrendt

Dermot J. Hayes

This paper examines Chinese consumer preference for major animal products and assesses the potential impacts of a reduction in China’s import tariff on its pork and poultry demand and net import. Our analysis suggests that China’s demand for animal products will continue to grow as income increases. Using a trade model, results of our scenario analysis indicate that a reduction in China’s import tariffs will significantly increase its net pork and poultry imports and the U.S. will capture most of the increases. Nevertheless, the impact on the market price in China and the U.S. is ...


A Nash Approach To Planning Merchant Transmission For Renewable Resource Integration, Qun Zhou, Leigh Tesfatsion, Chen-Ching Liu, Ron F. Chu, Wei Sun 2016 Alstom Grid Inc.

A Nash Approach To Planning Merchant Transmission For Renewable Resource Integration, Qun Zhou, Leigh Tesfatsion, Chen-Ching Liu, Ron F. Chu, Wei Sun

Leigh Tesfatsion

Major transmission projects are needed to integrate and to deliver renewable energy (RE) resources. Cost recovery is a serious impediment to transmission investment. A negotiation methodology is developed in this study to guide transmission investment for RE integration. Built on Nash bargaining theory, the methodology models a negotiation between an RE generation company and a transmission company for the cost sharing and recovery of a new transmission line permitting delivery of RE to the grid. Findings from a six-bus test case demonstrate the Pareto efficiency of the approach as well as its fairness, in that it is consistent with one ...


Agent-Based Modeling And Institutional Design, Leigh Tesfatsion 2016 Iowa State University

Agent-Based Modeling And Institutional Design, Leigh Tesfatsion

Leigh Tesfatsion

The recent economic crisis has led to calls for a comprehensive restructuring of energy, financial, health care, and educational systems. Critics worry that the restructuring of these complex institutional arrangements could produce adverse unintended consequences. Given these concerns, pre-testing of proposed changes is eminently desirable but also exceedingly difficult. This essay focuses on the potential use of agent-based modeling for studying proposed changes in institutional arrangements in advance of actual implementation. Ongoing agent-based research on the restructuring of electric power markets is used for concrete illustration.


Systematic Testing And Comparison Of Deterministic And Stochastic Unit Commitment On An 8-Zone Test Case Based On Iso New England Data, Wanning Li, Dheepak Krishnamurthy, Leigh Tesfatsion 2016 Iowa State University

Systematic Testing And Comparison Of Deterministic And Stochastic Unit Commitment On An 8-Zone Test Case Based On Iso New England Data, Wanning Li, Dheepak Krishnamurthy, Leigh Tesfatsion

Leigh Tesfatsion

The increasing penetration of variable and intermittent generation, especially the wind power, are introducing greater uncertainties to the modern power systems. The operation of power system is thus facing more challenges. Many effective models and algorithms are proposed to mitigate the challenges. Among those, the Stochastic Security-Constrained Unit Commitment (S-SCUC) is one of the most important tools. The S-SCUC has many different features over the traditional deterministic Security-Constrained Unit Commitment (D-SCUC). The propose of this paper is to develop a systematic testing framework to compare the performances of S-SCUC and D-SCUC. To make the results better reflecting the true power ...


Two-Settlement Electric Power Markets With Dynamic-Price Customers, Huan Zhao, Auswin George Thomas, Pedram Jahangiri, Chengrui Cai, Leigh Tesfatsion, Dionysios C. Aliprantis 2016 Iowa State University

Two-Settlement Electric Power Markets With Dynamic-Price Customers, Huan Zhao, Auswin George Thomas, Pedram Jahangiri, Chengrui Cai, Leigh Tesfatsion, Dionysios C. Aliprantis

Leigh Tesfatsion

This study will report both analytical and computational testbed findings regarding the effects of retail dynamic-price contracting on power system operations. The key issue under study is the extent to which the introduction of dynamic price contracts for retail consumers affects the efficiency of both retail and wholesale power market operations through changes in price volatility and load profiles at wholesale, and through re-allocations of risk between load-serving entities and retail consumers.


Scale, Organization, And Profitability Of Ethanol Processing, Paul Gallagher, Hosein Shapouri, Heather Brubaker 2016 Iowa State University

Scale, Organization, And Profitability Of Ethanol Processing, Paul Gallagher, Hosein Shapouri, Heather Brubaker

Paul Gallagher

We analyze the appropriate size and implied profitability of a representative ethanol processing firm. An analysis based on current processing technology and costs with typical conditions in Iowa product and input markets is useful; because unit production costs have declined 30% in current dollars over the last 15 years; and because discovering a suitable size for processing facilities has been an important part of the cost-reducing process. We apply theoretical plant size rules for a conventional processing business, an integrated producer/processor enterprise, and a processing cooperative. We also introduce a spatial dimension for the corn input market, because ethanol ...


An 8-Zone Test System Based On Iso New England Data: Development And Application, Dheepak Krishnamurthy, Wanning Li, Leigh Tesfatsion 2016 Iowa State University

An 8-Zone Test System Based On Iso New England Data: Development And Application, Dheepak Krishnamurthy, Wanning Li, Leigh Tesfatsion

Leigh Tesfatsion

This study develops an open-source 8-zone test system for teaching, training, and research purposes that is based on ISO New England structural attributes and data. The test system models an ISO-managed wholesale power market populated by a mix of generating companies and load-serving entities that operates through time over an 8-zone AC transmission grid. The modular extensible architecture of the test system permits a wide range of sensitivity studies to be conducted. To illustrate the capabilities of the test system, we report energy cost-savings outcomes for a comparative study of stochastic versus deterministic DAM security constrained unit commitment (SCUC) formulations ...


Dynamic Testing Of Wholesale Power Market Designs: An Open-Source Agent-Based Framework, Junjie Sun, Leigh Tesfatsion 2016 United States Treasury

Dynamic Testing Of Wholesale Power Market Designs: An Open-Source Agent-Based Framework, Junjie Sun, Leigh Tesfatsion

Leigh Tesfatsion

In April 2003 the U.S. Federal Energy Regulatory Commission proposed a complicated market design—the Wholesale Power Market Platform (WPMP)—for common adoption by all US wholesale power markets. Versions of the WPMP have been implemented in New England, New York, the mid-Atlantic states, the Midwest, the Southwest, and California. Strong opposition to the WPMP persists among some industry stakeholders, however, due largely to a perceived lack of adequate performance testing. This study reports on the model development and open-source implementation (in Java) of a computational wholesale power market organized in accordance with core WPMP features and operating over ...


Dynamic Testing Of Wholesale Power Market Designs: An Open-Source Agent-Based Framework, Junjie Sun, Leigh Tesfatsion 2016 Iowa State University

Dynamic Testing Of Wholesale Power Market Designs: An Open-Source Agent-Based Framework, Junjie Sun, Leigh Tesfatsion

Leigh Tesfatsion

In April 2003 the U.S. Federal Energy Regulatory Commission proposed a complicated market design – the Wholesale Power Market Platform (WPMP) – for common adoption by all U.S. wholesale power markets. Versions of the WPMP have been implemented in New England, New York, the mid-Atlantic states, the Midwest, the Southwest, and California. Strong opposition to the WPMP persists among some industry stakeholders, however, due largely to a perceived lack of adequate performance testing. This study reports on the model development and open-source implementation (in Java) of a computational wholesale power market organized in accordance with core WPMP features and operating ...


Integrated Retail And Wholesale Power System Operation With Smart-Grid Functionality, Dionysios C. Aliprantis, Scott Penick, Leigh Tesfatsion 2016 Iowa State University

Integrated Retail And Wholesale Power System Operation With Smart-Grid Functionality, Dionysios C. Aliprantis, Scott Penick, Leigh Tesfatsion

Leigh Tesfatsion

Our research team is developing an agent-based test bed for the integrated study of retail and wholesale power markets operating over transmission and distribution networks with smart-grid functionality. This test bed seams together two existing test beds, the AMES Wholesale Power Market Test Bed and the GridLAB-D distribution platform. As a first step, we have designed an integrated retail/wholesale market module specifically based on the ERCOT (Texas) energy region, and we are using simplified versions of this module to study potential retail consumer response to real-time-pricing contracts supported by advanced metering. This study reports on the latter work.


Intelligent Residential Air-Conditioning System With Smart-Grid Functionality, Auswin George Thomas, Pedram Jahangiri, Di Wu, Chengrui Cai, Huan Zhao, Dioysios C. Aliprantis, Leigh Tesfatsion 2016 Iowa State University

Intelligent Residential Air-Conditioning System With Smart-Grid Functionality, Auswin George Thomas, Pedram Jahangiri, Di Wu, Chengrui Cai, Huan Zhao, Dioysios C. Aliprantis, Leigh Tesfatsion

Leigh Tesfatsion

This paper sets forth a novel intelligent residential air-conditioning (A/C) system controller that has smart grid functionality. The qualifier “intelligent” means the A/C system has advanced computational capabilities and uses an array of environmental and occupancy parameters in order to provide optimal intertemporal comfort/cost trade-offs for the resident, conditional on anticipated retail energy prices. The term “smart-grid functionality” means that retail energy prices can depend on wholesale energy prices. Simulation studies are used to demonstrate the capabilities of the proposed A/C system controller.


Development Of Open Source Software For Power Market Research: The Ames Test Bed, Hongyan Li, Leigh Tesfatsion 2016 Iowa State University

Development Of Open Source Software For Power Market Research: The Ames Test Bed, Hongyan Li, Leigh Tesfatsion

Leigh Tesfatsion

Open source software (OSS) expresses the idea that developers should be able to license the publication of their software in a manner permitting anyone to freely use, modify and distribute the software. Today OSS is widely used in the software industry: for example, for language development tools (eg, NetBeans for Java), office document processors (eg, OpenOffice) and operating systems (eg, Linux, OpenSolaris).Yet OSS has been slow to penetrate the power industry; heavy reliance is still placed on closed-source commercial software packages. Open source software tends to be used for specialized purposes (eg, circuit design) rather than for the general-purpose ...


Financial Risk Management In Restructured Wholesale Power Markets: Concepts And Tools, Nanpeng Yu, Abhishek Somani, Leigh Tesfatsion 2016 Iowa State University

Financial Risk Management In Restructured Wholesale Power Markets: Concepts And Tools, Nanpeng Yu, Abhishek Somani, Leigh Tesfatsion

Leigh Tesfatsion

The goal of this tutorial is three-fold: to facilitate cross-disciplinary communication among power engineers and economists by explaining and illustrating basic financial risk management concepts relevant for wholesale power markets (WPMs); to illustrate the complicated and risky strategic decision making required of power traders and risk managers operating in multiple interrelated submarkets comprising modern WPMs; and to briefly discuss the potential of agent-based modeling for the study of this decision making.


Capacity Withholding In Restructured Wholesale Power Markets: An Agent-Based Test Bed Study, Hongyan Li, Leigh Tesfatsion 2016 Iowa State University

Capacity Withholding In Restructured Wholesale Power Markets: An Agent-Based Test Bed Study, Hongyan Li, Leigh Tesfatsion

Leigh Tesfatsion

This study uses a dynamic 5-bus test case implemented via the AMES Wholesale Power Market Test Bed to investigate strategic capacity withholding by generation companies (GenCos) in restructured wholesale power markets under systematically varied demand conditions. The strategic behaviors of the GenCos are simulated by means of a stochastic reinforcement learning algorithm motivated by human-subject laboratory experiments. The learning GenCos attempt to improve their earnings over time by strategic selection of their reported supply offers. This strategic selection can involve both physical capacity withholding (reporting of lower-than-true maximum operating capacity) and economic capacity withholding (reporting of higher-than-true marginal costs). We ...


Derivation Of Locational Marginal Prices For Restructured Wholesale Power Markets, Haifeng Liu, Leigh Tesfatsion, Ali A. Chowdhury 2016 California Independent System Operator Corporation

Derivation Of Locational Marginal Prices For Restructured Wholesale Power Markets, Haifeng Liu, Leigh Tesfatsion, Ali A. Chowdhury

Leigh Tesfatsion

Although locational marginal pricing (LMP) plays an important role in many restructured wholesale power markets, the detailed derivation of LMP as it is actually used in industrial practice is not readily available. This lack of transparency greatly hinders the efforts of researchers to evaluate the performance of these markets. In this paper, different alternating current and direct current optimal power flow models are presented to help us understand the derivation of LMP. As a byproduct of this analysis, we are able to provide a rigorous explanation of the basic LMP and LMP-decomposition formulas (neglecting real power losses) that are presented ...


Concentration, Capacity And Market Power In An Evolutionary Labor Market, Leigh Tesfatsion 2016 Iowa State University

Concentration, Capacity And Market Power In An Evolutionary Labor Market, Leigh Tesfatsion

Leigh Tesfatsion

This paper reports on an experimental study of the relationship between job capacity, job concentration, and market power in the context of an agent-based computational model of a labor market. Job capacity is measured by the ratio of potential job openings to potential work offers, and job concentration is measured by the ratio of work suppliers to employers. For each experimental treatment, work suppliers and employers repeatedly seek preferred work-site partners based on continually updated expected utility, engage in work-site interactions modelled as prisoner's dilemma games, and evolve their work-site behaviors over time. The main finding is that job ...


An Agent-Based Computational Laboratory For Wholesale Power Market Design, Junjie Sun, Leigh Tesfatsion 2016 Iowa State University

An Agent-Based Computational Laboratory For Wholesale Power Market Design, Junjie Sun, Leigh Tesfatsion

Leigh Tesfatsion

This study reports on the model development and open-source implementation (in Java) of an agent-based computational wholesale power market organized in accordance with core FERC-recommended design features and operating over a realistically rendered transmission grid. The traders within this market model are strategic profit-seeking agents whose learning behaviors are based on data from human-subject experiments. Our key experimental focus is the complex interplay among structural conditions, market protocols, and learning behaviors in relation to short-term and longer-term market performance. Findings for a dynamic 5-node transmission grid test case are presented for concrete illustration.


An Agent-Based Test Bed Study Of Wholesale Power Market Performance Measures, Abhishek Somani, Leigh Tesfatsion 2016 Iowa State University

An Agent-Based Test Bed Study Of Wholesale Power Market Performance Measures, Abhishek Somani, Leigh Tesfatsion

Leigh Tesfatsion

Wholesale power markets operating over transmission grids subject to congestion have distinctive features that complicate the detection of market power and operational inefficiency. This study uses a "wholesale power market test bed "with strategically learning traders to experimentally test the extent to "which market performance measures commonly used for other industries are informative for the dynamic operation of restructured "wholesale power markets. Examined measures include the Herfindahl-Hirschman index (HHI), the Lerner index (LI), the residual supply index (RSI), the relative market advantage index (RMAI), and the operational efficiency index (OEI).


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