How unnecessarily high abatement costs and unresolved distributional issues undermine nutrient reductions to the Baltic Sea

This paper systematically reviews the literature on how to reduce nutrient emissions to the Baltic Sea cost-effectively and considerations for allocating these costs fairly among countries. The literature shows conclusively that the reduction targets of the Baltic Sea Action Plan (BSAP) could be achieved at considerably lower cost, if countries would cooperate to implement the least costly abatement plan. Focusing on phosphorus abatement could be prudent as the often recommended measures—wastewater treatment and wetlands—abate nitrogen too. An implication of our review is that the potential for restoring the Baltic Sea to good health is undermined by an abatement strategy that is more costly than necessary and likely to be perceived as unfair by several countries. Neither the BSAP nor the cost-effective solution meet the surveyed criteria for fairness, implying a need for side-payments.

A Comparative Study of Pricing Mechanisms to Reduce Side-Payments in the Electricity Market: A Case Study for South Korea

Under marginal-cost pricing, some generators cannot recover their production costs at the market price due to non-convexities in the electricity market. For this reason, most electricity markets pay side-payments to generators whose costs are not sufficiently recovered, but side-payments present the problem of deteriorating transparency in the market. Recently, convex hull pricing and extended locational marginal pricing have been reviewed or gradually introduced to reduce side-payments. Another method is to include non-convex costs in the market price, which is applied in the Korean electricity market. Although it is not generally considered in the electricity market, the Vickrey auction method is also one of the pricing mechanisms that can reduce side-payments. The main purpose of this study is to analyze the financial impact of these alternative pricing mechanisms on market participants through rigorous simulation. We applied the alternative pricing schemes to the Korean electricity market, and the impacts are analyzed by comparing the cost aspect of an electricity sales company and the profit aspect of generation companies. As a result of the simulation study, each pricing mechanism not only differed in the degree to which side-payments are reduced but also has different effects on the type of generators.

To the individual stability of Pareto equilibrium of objections and counterobjections in a coalition differential positional 3-person game without side payments

The notion <<individual stability>> of Pareto equilibrium of objections and counter objections in one differential linear-quadratic 3-person game without side payments is used. The explicit form corresponding equilibrium is found.

Experimenting in Equilibrium

Classical approaches to experimental design assume that intervening on one unit does not affect other units. There are many important settings, however, where this noninterference assumption does not hold, as when running experiments on supply-side incentives on a ride-sharing platform or subsidies in an energy marketplace. In this paper, we introduce a new approach to experimental design in large-scale stochastic systems with considerable cross-unit interference, under an assumption that the interference is structured enough that it can be captured via mean-field modeling. Our approach enables us to accurately estimate the effect of small changes to system parameters by combining unobtrusive randomization with lightweight modeling, all while remaining in equilibrium. We can then use these estimates to optimize the system by gradient descent. Concretely, we focus on the problem of a platform that seeks to optimize supply-side payments [Formula: see text] in a centralized marketplace where different suppliers interact via their effects on the overall supply-demand equilibrium, and we show that our approach enables the platform to optimize [Formula: see text] in large systems using vanishingly small perturbations. This paper was accepted by Hamid Nazerzadeh, big data analytics.

The core and superdifferential of a fuzzy TU-cooperative game

In the paper, we consider conditions providing coincidence of the cores and superdifferentials of fuzzy cooperative games with side payments. It turned out that one of the most simple sufficient conditions consists of weak homogeneity. Moreover, by applying so-called S*-representation of a fuzzy game introduced by the author, we show that for any vwith nonempty core C(v) there exists some game u such that C(v) coincides with the superdifferential of u. By applying subdifferential calculus we describe a structure of the core forboth classic fuzzy extensions of the ordinary cooperative game (e.g., Aubin and Owen extensions) and for some new continuations, like Harsanyi extensions and generalized Airport game.