marginal costs
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2022 ◽  
Author(s):  
Leonardo Delarmelina Secchin ◽  
Guilherme Matiussi Ramalho ◽  
Claudia Sagastizábal ◽  
Paulo Silva ◽  
Kenny Vinente

The day-ahead problem of finding optimal dispatch and prices for the Brazilian power system is modeled as a mixed-integer problem, with nonconvexities related to fixed costs and minimal generation requirements for some thermal power plants. The computational tool DESSEM is currently run by the independent system operator, to define the dispatch for the next day in the whole country. DESSEM also computes marginal costs of operation that CCEE, the trading chamber, uses to determine the hourly prices for energy commercialization. The respective models sometimes produce an infeasible output. This work analyzes theoretically those infeasibilities, and proposes a prioritization to progressively resolve the constraint violation, in a manner that is sound from the practical point of view. Pros and cons of different mathematical formulations are analyzed. Special attention is put on robustness of the model, when the optimality requirements for the unit-commitment problem vary.


2021 ◽  
Author(s):  
Frank Felder ◽  
Marie Petitet

The choice to use electricity markets to transition to an ultra-high renewable electricity sector depends on whether a high level of reliability and efficiency can be achieved. This study presents a reliability, resiliency and adaptability policy framework for a liberalized power system with a high share of renewables. This framework provides policy insights regarding electricity market reliability and the implications of remuneration mechanisms for renewables. Our analysis shows that it is necessary to reconsider adequacy assessments of liberalized power systems, to enhance the definition of the loss of load probability, and to explicitly consider the probability that the market clears. Under these conditions, electricity markets can theoretically achieve reliability and efficiency with large percentages of variable and intermittent renewable resources with zero or near-zero marginal costs, and market and technical challenges can be addressed.


2021 ◽  
Vol 0 (0) ◽  
pp. 1-25
Author(s):  
Junlong Chen ◽  
Jiayan Shi ◽  
Jiali Liu

This paper develops a duopoly model to analyse capacity sharing strategy and the optimal revenue-sharing contract under a two-part tariff and examines the effects of capacity sharing, cost, and sharing charges in three scenarios. The paper uses the two-part tariff method and adds a more realistic assumption of incremental marginal costs to improve the research on capacity sharing strategies. The results show that capacity constraints affect the sustainable development of firms. A sustainable revenue-sharing contract can create a win-win situation for both firms and promote capacity sharing. Capacity sharing, cost, and the revenue-sharing rate have different impacts in different scenarios; the optimal revenue-sharing rate and fixed fee can be determined to maximise the profits of firms that share capacity. However, capacity sharing may not improve social welfare.


2021 ◽  
Vol 20 (12) ◽  
pp. 2233-2247
Author(s):  
Vladislav V. KLOCHKOV ◽  
Svetlana V. RATNER ◽  
Ekaterina V. VARYUKHINA

Subject. The article discusses the introduction of a Pigouvian tax on greenhouse gas emissions. Objectives. The objective of the study is to develop methods for setting the target level of CO2 emissions by Russian aircraft, based on Russia's national interests (both economic and environmental). Methods. The emission target was set on the basis of the classical approach of determining the economically optimal level of pollution at the intersection of the curves of marginal damage from pollution and marginal costs of eliminating pollution. The assessment of marginal costs of reducing CO2 emissions was based on the learning curves in the field of research and development aimed at reducing emissions. Results. We developed a method to set up the target level of CO2 emissions by Russian aircraft based on Russia's national interests (economic and environmental), rather than on external requirements dictated by competitor nations. Conclusions. According to the calculations on the basis of realistic estimates of fixed costs for reducing the carbon dioxide emissions, the utility is maximized with a reduction of CO2 emissions by 10% (for this method of assessing the damage to the State and with the realistic estimates of fixed cost of reducing carbon dioxide emissions).


Energies ◽  
2021 ◽  
Vol 15 (1) ◽  
pp. 39
Author(s):  
Bruno Colonetti ◽  
Erlon Finardi ◽  
Lucas Borges Picarelli

As we move towards electrical networks with a growing presence of renewable generation, the representation of the electrical components becomes more important. In hydro-dominated power systems, modelling the forbidden zones of hydro plants becomes increasingly challenging as the number of plants increases. Such zones are ranges of generation that either should be avoided or are altogether unreachable. However, because representing the forbidden zones introduces a substantial computational burden, hydrothermal unit-commitment problems (HTUC) for large systems are usually formulated ignoring the forbidden zones. Nonetheless, this simplification may demand adjustments to the solution of the HTUC, because the generation of the hydro stations may fall in forbidden zones. In practice, the adjustments are usually performed based on the experience of system operators and, then, can be far from an optimal correction. In this paper, we study the impact of explicitly representing the hydro-generation forbidden zones in a large-scale system with more than 7000 buses, 10,000 lines, and 700 hydro units. Our findings show that the simplified model that is current used can deviate significantly from the model with forbidden zones, both in terms of the generation of hydro plants, as well as the generation of thermal plants and the system marginal costs.


2021 ◽  
pp. 088740342110603
Author(s):  
Stuart John Wilson ◽  
Jocelyne Lemoine

Criminal justice reforms and corrections cost forecasts require appropriate estimates of the marginal costs of incarceration to adequately assess cost savings and projections. Average costs are simple to calculate while marginal cost calculations require much more detailed data and advanced methods. We undertook a scoping review to identify, report, and summarize the existing academic and gray literature covering the different estimation methods of calculating the marginal costs of incarceration, following the Arksey and O’Malley framework. Eighteen publications met criteria for inclusion in this review, with only one from the peer-reviewed literature. The three main approaches in the literature and their use are reviewed and illustrated. We conclude that there is a lack of, and need for, peer-reviewed literature on methods for calculating the marginal cost of incarceration, and marginal cost estimates of incarceration, to assist program evaluation, policy, and cost forecasting in the field of corrections.


2021 ◽  
pp. 1-26
Author(s):  
Edward Oczkowski

Abstract A vast body of literature exists on estimating hedonic price functions, which relate the price of wine to its attributes. Some existing literature has employed producer-specific variables such as quantity sold and producer reputation in hedonic functions to potentially capture supply influences on prices. This practice is inconsistent with the original Rosen (1974) hedonic theoretic foundation. To overcome this deficiency, we extend the literature by using the Rosen two-stage approach, employing data from multi-markets for similar wines to estimate inverse supply functions. The application to Australian produced wines sold in different countries demonstrates the importance of a wine's quality and age as attributes in inverse supply functions. Results imply the additional costs of producing better quality and older wines are increased as both quality and age are increased. Estimates also suggest that lower marginal costs for attributes are associated with a smaller producer size and older more established producers. (JEL Classifications: C21, Q11)


2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Carey W. King

AbstractThis paper explains how the Human and Resources with MONEY (HARMONEY) economic growth model exhibits realistic dynamic interdependencies relating resources consumption, growth, and structural change. We explore dynamics of three major structural metrics of an economy. First, we show that an economic transition to relative decoupling of gross domestic product (GDP) from resource consumption is an expected pattern that occurs because of physical limits to growth, not a response to avoid physical limits. While increasing operational resource efficiency does increase the level of relative decoupling, so does a change in pricing from one based on full costs to one based only on marginal costs that neglect depreciation and interest payments. Marginal cost pricing leads to higher debt ratios and a perception of higher levels of relative resource decoupling. Second, if assuming full labor bargaining power for wages, when a previously-growing economy reaches peak resource extraction and GDP, wages remain high but profits and debt decline to zero. By removing bargaining power, profits can remain positive at the expense of declining wages. Third, the internal structure of HARMONEY evolves in the same way the post-World War II U.S. economy. This is measured as the distribution of intermediate transactions within the input-output tables of both the model and U.S. economy.


2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Howard Cuckle ◽  
Seppo Heinonen ◽  
Anna-Kaisa Anttonen ◽  
Vedran Stefanovic

Abstract Introduction A financial analysis is carried out to assess costs and benefits of providing cell-free DNA screening in Finland, using different strategies. Materials and methods Three cell-free DNA screening strategies are considered: Primary, all women; Secondary, those with positive Combined test; and Contingent, the 10–30% with the highest Combined test risks. Three costs are estimated: additional cost for 10,000 pregnancies compared with the Combined test; ‘marginal’ cost of avoiding a Down syndrome birth which occurs in a pregnancy that would have been false-negative using the Combined test; and marginal cost of preventing the iatrogenic loss of a non-Down syndrome birth which occurs in a pregnancy that would have been false-positive. Results Primary cell-free DNA will require additional funds of €250,000. The marginal cost per Down syndrome birth avoided is considerably less than the lifetime medical and indirect cost; the marginal cost per unaffected iatrogenic fetal loss prevented is higher than one benefit measure but lower than another. If the ultrasound component of the Combined test is retained, as would be in Finland, the additional funds required rise to €992,000. Secondary cell-free DNA is cost-saving as is a Contingent strategy with 10% selected but whilst when 20–30% costs rise they are much less than for the Primary strategy and are cost-beneficial. Conclusions When considering the place of cell-free DNA screening it is important to make explicit the additional and marginal costs of different screening strategies and the associated benefits. Under most assumptions the balance is favorable for Contingent screening.


2021 ◽  
Author(s):  
Carlos D Santos ◽  
Luís F Costa ◽  
Paulo B Brito

Abstract Markup cyclicality has been central for debating policy effectiveness and understanding business-cycle fluctuations. However, measuring the cyclicality of markups is as important as understanding the microeconomic mechanisms underlying that cyclicality. The latter requires measurement of firm-level markups and separating supply from demand shocks. We construct a novel dataset with detailed (multi-)product-level prices for individual firms. By estimating a structural model of supply and demand, we evaluate how companies adjust prices and marginal costs as a response to shocks. We find that price markups respond positively to supply shocks and negatively to demand shocks. The mechanism explaining the observed markup behaviour is the same for both shocks: incomplete pass-through of changes along the marginal-cost curve to price adjustments. These observed price and output responses are consistent with dynamic demand considerations. Finally, we use our estimated shocks to show how aggregate markup fluctuations in the sample period are mostly explained by aggregate demand shocks.


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