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In this paper, I analyse optimal access charges for the provision of telecommunication network, mobile commerce, and cloud services. Using theoretical analysis, I investigate when a regulator can set rational access pricing, considering the characteristics of access demand. I demonstrate that optimal access prices depend on whether the final products or services are strategic independence or strategic substitutes. The results have implications for policy makers setting optimal access charges that maximise social welfare.

Минасян Виген Бабкенович, канд. физ.-мат. наук, профессор, заведующий кафедрой корпоративных финансов, инвестиционного проектирования и оценки им. М.А. Лимитовского Высшей школы финансов и менеджмента, Российская академия народного хозяйства и государственной службы при Президенте РФ, г. Москва; minasyanvb@yandex.ru. V.B. Minasyan, minasyanvb@yandex.ru The Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation При составлении контракта для сторон часто невозможно учесть и указать в нем всевозможные непредвиденные обстоятельства. В частности, стороны могут быть не в состоянии описать состояния мира так подробно, чтобы посторонние люди (суды) могли позже проверить, какое состояние имело место, и поэтому контракты по своей природе являются неполными. Стороны могут в некоторой степени восполнить эту неполноту за счет предусмотрения в договоре механизма для пересмотра условий сделки, когда они получат информацию о преимуществах и издержках его исполнения. В работе (Hart O., Moore J. Incomplete contracts and renegotiation. Econometrica, 1988, vol. 56, no. 4) для определенного типа контрактов была заложена логика поведения контрагентов, которая приводит к возникновению равновесных условий исполнения контракта, к которым могут привести своими действиями контрагенты по контракту, с учетом возможного противодействия противоположной стороны. В данной статье, с использованием идей работы (Hart O., Moore J., 1988), исследован оптимальный контракт с возможностью пересмотра условий начального контракта в случае взаимоотношений двух контрагентов: поставщика товара (оборудования), приобретаемого за валюту для покупателя, приобретающего товар за рубли, с учетом валютного риска поставщика и взаимного риска контрагентов. When drafting a contract, it is often impossible for the parties to consider and specify in the contract all kinds of unforeseen circumstances. In particular, the parties may not be able to provide a detailed description of the global situation so that the outsiders (courts) could later verify the conditions at that time, and therefore contracts are naturally incomplete. The parties can fill this incompleteness to some extent by including in the contract a mechanism to review the terms after the information is received on the advantages and expenses upon its execution. In remarkable work (Hart O., Moore J. Incomplete contracts and renegotiation. Econometrica, 1988, vol. 56, no. 4), the logic of the counterparties behavior was built for a certain type of contracts, resulting in the equilibrium conditions for the contract execution, to which contract counterparties can lead due to their actions considering the possible counteraction of the opposite side. Using the ideas of work (Hart O., Moore J., 1988), the work analyzes an optimal variant of a contract with a possibility to review the terms of the initial contract in case of relations between two counterparties: the supplier of goods (equipment) purchased for foreign currency for the buyer who purchases the goods for Russian rubles, considering the currency risk for the supplier and the risk for the both counterparties.

This study considers the role of demand-driven changes arising from population aging and how they affect the pattern of international trade as well as trade and immigration policy. An aging society can see a welfare-reducing reduction in its share of manufacturing output and this reduction is magnified by a decrease in trade costs (an increase in globalization). Immigration can ameliorate this outcome if it is directed toward younger immigrants. A unilateral tariff increase can also reduce firm delocation from an aging country, however, a reciprocated tariff increase will unambiguously harm the country with the older average population.

This paper documents new facts about the joint evolution of firm performance and prices in international markets and proposes a theory of firm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, the paper documents that: (1) within narrow product categories, firms with longer spells of activity in export destinations tend to ship larger quantities at similar prices, thus obtaining larger export revenue; (2) older exporters tend to import more expensive inputs; and (3) revenue growth within destinations (conditional on initial size) tends to decline with market experience. The authors develop a model of endogenous input and output quality choices in a learning environment that is able to quantitatively account for these patterns. Counterfactual simulations reveal that minimum quality standards on exports reduce welfare by lowering entry in export markets and reallocating resources from old and large toward young and small firms.

The work includes quantitative analysis of various types of energy resources used for electricity production in Romania. The goal of the analysis is identification of those categories of energy resources less used, though their increased use would be recommended, as well as pinpointing the categories of over-used energy resources in the production process. In article’s introduction, I present several aspects regarding the methodological framework in the field of general equilibrium theory. Article’s content represents a study case structured as follows: description of the general equilibrium model, model’s equations, input data, results and interpretations. This research can be useful for decision-makers in the national energy sector as it contains recommendations for the increase or decrease of the use of certain energy resource categories, recommendations which resulted from quantitative modeling through general equilibrium techniques.

This paper provides an overview of the impact that onetime changes in commodity and other prices have on household welfare. It begins with a collection of stylized facts related to commodities based on household survey data from Latin America and Africa. The data uncovers strong commodity dependence on both continents: households typically allocate a large fraction of their budget to commodities, and they often also depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity price shocks. The article explores these effects with a review of the relevant literature. The authors study consumption and income responses, labor market responses, and spillovers across sectors. The paper provides evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies.

This paper analyzes the effects of land market restrictions on structural change from agriculture to non-farm in a rural economy. This paper develops a theoretical model that focuses on higher migration costs due to restrictions on alienability, and identifies the possibility of a reverse structural change where the share of nonagricultural employment declines. The reverse structural change can occur under plausible conditions: if demand for the non-agricultural good is income-inelastic (assuming the non-farm good is non-tradable), or non-agriculture is less labor intensive relative to agriculture (assuming the non-farm good is tradable). For identification, this paper exploits a natural experiment in Sri Lanka where historical malaria played a unique role in land policy. The empirical evidence indicates significant adverse effects of land restrictions on manufacturing and services employment, rural wages, and per capita household consumption. The evidence on the disaggregated occupational choices suggests that land restrictions increase wage employment in agriculture, but reduce it in manufacturing and services, with no perceptible effects on self-employment in non-agriculture. The results are consistent with the migration costs model, but contradict two widely discussed alternative mechanisms: collateral effect and property rights insecurity. This paper also provides direct evidence in favor of the migration costs mechanism.

Subsidies and cross-subsidies in the energy sector are common throughout Eastern Europe and Central Asia. In Belarus, revenues from an industrial tariff on electricity are used to cross-subsidize heating for households. Input-output (IO) data and a household consumption survey are used to analyze the distributional impacts of this cross-subsidization. This paper illustrates cost shares and electricity-intensity of different sectors and consumption categories and uses the IO data to obtain first-order estimates of the distributional incidence of policy reform. The paper then analyzes distributional impacts of subsidy reform with a Computable General Equilibrium model. Although poorer households benefit from reduced heating costs, the increase in prices of other consumer goods due to higher electricity prices more than offsets the benefits they receive from the subsidies. The analysis finds that the current cross-subsidies are regressive, and policy reform would be highly progressive.

application/pdf, This research note is to present a math-technical addendum to the article by Wilfried Parys, in which the relative size of price-value ratios of various commodities is shown to be equivalent to that of the price-composition of capital in respective industries after vertical integration. We simply show that his argument is valid in models with joint production and durable capital goods.

It is well-known that a market equilibrium with uniform prices often does not exist in non-convex day-ahead electricity auctions. We consider the case of the non-convex, uniform-price Pan-European day-ahead electricity market "PCR" (Price Coupling of Regions), with non-convexities arising from so-called complex and block orders. Extending previous results, we propose a new primal-dual framework for these auctions, which has applications in both economic analysis and algorithm design. The contribution here is threefold. First, from the algorithmic point of view, we give a non-trivial exact (i.e. not approximate) linearization of a non-convex 'minimum income condition' that must hold for complex orders arising from the Spanish market, avoiding the introduction of any auxiliary variables, and allowing us to solve market clearing instances involving most of the bidding products proposed in PCR using off-the-shelf MIP solvers. Second, from the economic analysis point of view, we give the first MILP formulations of optimization problems such as the maximization of the traded volume, or the minimization of opportunity costs of paradoxically rejected block bids. We first show on a toy example that these two objectives are distinct from maximizing welfare. We also recover directly a previously noted property of an alternative market model. Third, we provide numerical experiments on realistic large-scale instances. They illustrate the efficiency of the approach, as well as the economics trade-offs that may occur in practice.

A new formulation of the optimization problem implementing European market rules for non- convex day-ahead electricity markets is presented, that avoids the use of complementarity constraints to express market equilibrium conditions, and also avoids the introduction of auxiliary binary variables to linearise these constraints. Instead, we rely on strong duality theory for linear or convex quadratic optimization problems to recover equilibrium constraints imposed by most of European power exchanges facing indivisible orders. When only so-called stepwise preference curves are considered to describe continuous bids, the new formulation allows to take full advantage of state-of-the-art solvers, and in most cases, an optimal solution together with market clearing prices can be computed for large-scale instances without any further algorithmic work. The new formulation also suggests a very competitive Benders-like decomposition procedure, which helps to handle the case of interpolated preference curves that yield quadratic primal and dual objective functions, and consequently a dense quadratic constraint. This procedure essentially consists in strengthening classical Benders cuts locally. Computational experiments on real data kindly provided by main European power exchanges (Apx-Endex, Belpex and Epex spot) show that in the linear case, both approaches are very efficient, while for quadratic instances, only the decomposition procedure is tractable and shows very good results. Finally, when most orders are block orders, and instances are combinatorially very hard, the new MILP approach is substantially more efficient.

Market economies and command economies have long been differentiated by the presence of alternative choice in the form of diversity. Yet most mainstream economic theory is premised on the existence of uniformity. This paper develops the implications of this contradiction for the theory of prices, income creation, and the analysis of the recent financial crisis, and provides a critique of traditional theory from an institutionalist perspective developed by J. Fagg Foster.

It is shown that two arbitrary equilibria in the general equilibrium model without sign restrictions on endowments can be joined by a continuous equilibrium path that contains at most two critical equilibria. This property is strengthened by showing that regular equilibria having an index equal to one, a necessary condition for stability, can be joined by a path containing no critical equilibrium. These properties follow from the real-algebraic nature of the set of critical equilibria in any fiber of the equilibrium manifold.

Market economies and command economies have long been differentiated by the presence of alternative choice in the form of diversity. Yet most mainstream economic theory is premised on the existence of uniformity. This paper develops the implications of this contradiction for the theory of prices, income creation, and the analysis of the recent financial crisis, and provides a critique of traditional theory from an institutionalist perspective developed by J. Fagg Foster.

Using recent estimates of industry assistance rates, the effects of trade liberalization in the rest of the world and in Pakistan alone are analyzed using a global and a Pakistan computable general equilibrium (CGE) model under two tax replacement schemes: a direct income tax and an indirect tax replacement. The results indicate that the distributional and poverty effects in Pakistan of a unilateral liberalization of all traded goods are significantly greater than the effects of trade liberalization in the rest of the world. There is relatively higher increase in real income and larger decline in poverty incidence in poor households both in rural and urban areas. The effects of agricultural trade liberalization alone in both the rest of the world and in Pakistan are considerably smaller than those from trade liberalization involving all goods. In both the agricultural and all-goods trade liberalization scenarios involving direct income tax replacement, real household income is raised and the poverty incidence is lowered at varied rates across all household groups except for the urban non-poor. When an indirect tax replacement is used, where the burden of replacing tariff revenue is shared by all household groups depending on their consumption structure, there is reduction in household income for most of the groups and less reduction of poverty.

This paper focuses on how growth theory can guide growth policy design. It first argues that policy matters for growth, in particular when policy variables are interacted with country?specific variables (financial development, institutional environment, technological development, and so forth). Second, it argues that the Schumpeterian paradigm does a better job at delivering policy prescriptions that vary with country characteristics. Third, it discusses the advantages and drawbacks of growth regression analysis. Finally, it briefly describes and then questions the recently proposed 'growth diagnostic' approach.

Wallace's (1962) pioneering study brought to agricultural economics a focus on the role of supply and demand elasticity's in determining the efficiency with which agricultural policy transfers income among interest groups. His discussion provides key insights into what I call the "consequences of policy" side of current models of political economy. Becker's (1983) and Grossman and Helpman's (1994) models, both famously seminal in the political economy literature, have such "consequences" sides, and therefore when agricultural policy is examined in their models' frameworks, market elasticity's play key roles. These two models have also "causes of policy" sides, which describe interest groups' abilities to create political pressure. Wallace aim is to provide a theoretical review and exposition of the effects of elasticity's on redistribution efficiency, and in turn on distortional policies in political economic equilibrium. He demonstrates how models of actual political economies might be built and used to derive theoretical predictions about how market elasticity's affect policy and income transfers. Applying similar models to examine real world political economies can provide testable hypotheses about how market parameters affect distortional policies.

We consider the problem of valuing European options in a complete market but with incomplete data. Typically, when the underlying asset dynamics is not specified, the martingale probability measure is unknown. Given a consensus on the actual distribution of the underlying price at maturity, we derive an upper bound on the call option price by putting two kind of restrictions on the pricing probability measure. First, we put a restriction on the second risk-neutral moment of the underlying asset terminal value. Second, from equilibrium pricing arguments one can put a monotonicity restriction on the Radon-Nikodym density of the pricing probability with respect to the true probability measure. This density is restricted to be a nonincreasing function of the underlying price at maturity. The bound appears then as the solution of a constrained optimization problem and we adopt a duality approach to solve it. We obtain a weak sufficient condition for strong duality and existence for the dual problem to hold, for options defined by general payoff functions. Explicit bounds are provided for the call option. Finally, we provide a numerical example.

In this paper we address the issue of finding efficient partial equilibria in markets with nonconvexities. This is a problem that has intrigued generation of economists. Beside its theoretical importance this issue is fundamental in energy markets which do not give the right price signals and incentives to maintain existing and invest in new generating capacity. By considering a competitive environment in which consumers maximize utility independently of other agents actions while suppliers are profit maximizers given other market agents actions, we are able to find efficient prices in markets with non-convexities. Based on this result we propose a design for an energy-only market able to give investors the correct price signals.

We consider the problem of valuing European options in a complete market but with incomplete data. Typically, when the underlying asset dynamics is not specified, the martingale probability measure is unknown. Given a consensus on the actual distribution of the underlying price at maturity, we derive an upper bound on the call option price by putting two kind of restrictions on the pricing probability measure.First, we put a restriction on the second risk-neutral moment of the underlying asset terminal value. Second, from equilibrium pricing arguments one can put a monotonicity restriction on the Radon-Nikodym density of the pricing probability with respect to the true probability measure. This density is restricted to be a nonincreasing function of the underlying price at maturity. The bound appears then as the solution of a constrained optimization problem and we adopt a duality approach to solve it.We obtain a weak sufficient condition for strong duality and existence for the dual problem to hold, for options defined by general payoff functions. Explicit bounds are provided for the call option. Finally, we provide a numerical example.

The paper analyzes the linkages between the reform strategies in transition countries and economic performance. We focus on agriculture because of the sharpness of the policy changes, fundamental differences among countries, and relative simplicity of agricultural relationships. We document post reform performance in the transition countries of Asia and Europe. We show how: a.) pricing reform and subsidy reductions; b.) land rights reform and policies that affect farm restructuring; and c.) the presence institutions that facilitate exchange (either markets or market substitutes) affect output and productivity. The paper ends with general lessons on reforms and transition.

In this paper, we consider a family of complete or incomplete Financial models such that the price processes of the Financial assets converge in distribution to those in a limit model. Different authors pointed out that we do not have necessarily convergence of the arbitrage pricing intervals in that context. We prove here that we have very good convergence properties for the equilibrium pricing interval as de_ned by Bizid, Jouini and Koehl (1998) in discrete time or Jouini and Napp (1999) in continuous time.

У монографії викладені питання розвитку теорій ціни і ціноутворення, формування і регулювання цін за умов перехідної економіки. Видання призначене для студентів, аспірантів, наукових працівників, які займаються ціновою проблематикою. The book outlines the development of price theories and pricing, and prices forming and regulation under conditions of transitional economy. The publication are intended for students, graduate students, researchers involved in pricing issues.

Department of Economics, University of UmeZ, 90187 UmeZ, Sweden Received 1 April 1987 Keywords: Decision centralization, decentralization, dynamics, economic system, welfare, growth, equilibrium prices, interest, cycles, nonlinearity, Wicksell, Harrod, structural stability, tatannement.

This report shows a solution procedure which can rapidly calculate equilibrium world prices in a large, complex net trade model. The "elasticity solution procedure" works for a model in which price elasticities are fairly stable over time and various prices. The model must accept a world price vector and return a residual world net trade vector. The procedure automatically stays in the region of positive prices and quantities. It builds a complete information set of own- and cross-price elasticities to fit the model's behavior. The procedure runs on the IIASA and GOL world agriculture models with sharp improvements in convergence time over Walrasian tAtonnement and gradient search, and moderate improvements over Newton's method. The procedure can reconcile inconsistent trade estimates made by country analysts.