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Unilateral vs. Bilateral Incentives: Evidence from the U.S. Pork Industry AgEcon
Jang, Jongick; Miller, Douglas J.; Sykuta, Michael E.; Won, Seoung Joun.
The idea that individuals adapt their behaviors in response to changes in incentive systems is fundamental to most economic analysis. This paper incorporates the concept of price discovery costs into the incentive theory to offer a theoretical model and empirical evidence on the differential incentive effects of long-term contracts and spot markets. Using the US pork industry case where procuring intertemporally consistent weights of hogs have been critical to pork processors, we show why the effectiveness of unilaterally determined and posted incentive price for the hog quality by the pork packers on the intertemporal consistency erodes and why a bilateral incentive structure built through long-term hog procurement contracts is demanded, in the presence...
Tipo: Conference Paper or Presentation Palavras-chave: Long-term contracts; Incentive effects; Price discovery costs; MGARCH model; Livestock Production/Industries.
Ano: 2009 URL: http://purl.umn.edu/49521
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The Impact of Long-Term Generation Contracts on Valuation of Electricity Generating Assets under the Regional Greenhouse Gas Initiative AgEcon
Wilson, Nathan E.; Palmer, Karen L.; Burtraw, Dallas.
The Regional Greenhouse Gas Initiative is an effort by nine states to constrain carbon dioxide emissions from the electric power sector using a cap-and-trade program. This paper assesses the importance of long-term electricity contracts under the program. We find that 12.2% of generation will be accounted for by long-term contracts in 2010, affecting select nuclear, hydroelectric, and cogeneration units. The contracts will have a negligible effect on the wholesale marginal cost of electricity and a small effect on retail price. States may want to consider contracts on a case-by-case basis when making decisions about the initial distribution of emission allowances, but they should account for effects on the portfolio of plants owned at the firm level, not...
Tipo: Working or Discussion Paper Palavras-chave: Climate; State policy; Regional Greenhouse Gas Initiative; Long-term contracts; Electricity; Environmental Economics and Policy; Q54; Q58; L14; L94.
Ano: 2005 URL: http://purl.umn.edu/10556
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