New Economics Papers
on Computational Economics
Issue of 2008‒10‒21
nine papers chosen by

  1. An Intelligent Knowledge Management System from a Semantic Perspective By Mazilescu, Vasile
  2. An Agent-based Model of Retail Location with Complementary Goods By Arthur Huang; David Levinson
  3. Estimating a Model of Strategic Store Network Choice with Policy Simulation By Mitsukuni Nishida; ;
  4. Simulating a market for milk quota under policy reforms: an Irish study By Hennessy, Thia; Shrestha, Shailesh
  5. Climate Policy and the Problem of Competitiveness: Border Tax Adjustments or Integrated Emission Trading? By Alexeeva-Talebi, Victoria; Löschel, Andreas; Mennel, Tim
  6. Optimization Heuristics for Determining Internal Rating Grading Scales By Marianna Lyra; Johannes Paha; Sandra Paterlini; Peter Winker
  7. Modelling Integrated Dairy Systems In The UK: Towards Economic and Environmental Sustainability By Butler, Allan J.; Turner, Martin M.
  8. Agricultural growth and investment options for poverty reduction in Zambia: By Benin, Samuel; Thurlow, James; Diao, Xinshen; Kalinda, Henrietta; Kalinda, Thomson
  9. Globalisation of natural gas markets – effects on prices and trade patterns By Finn Roar Aune, Knut Einar Rosendahl and Eirik Lund Sagen

  1. By: Mazilescu, Vasile
    Abstract: Abstract. Knowledge Management Systems (KMS) are important tools by which organizations can better use information and, more importantly, manage knowledge. Unlike other strategies, knowledge management (KM) is difficult to define because it encompasses a range of concepts, management tasks, technologies, and organizational practices, all of which come under the umbrella of the information management. Semantic approaches allow easier and more efficient training, maintenance, and support knowledge. Current ICT markets are dominated by relational databases and document-centric information technologies, procedural algorithmic programming paradigms, and stack architecture. A key driver of global economic expansion in the coming decade is the build-out of broadband telecommunications and the deployment of intelligent services bundling. This paper introduces the main characteristics of an Intelligent Knowledge Management System as a multiagent system used in a Learning Control Problem (IKMSLCP), from a semantic perspective. We describe an intelligent KM framework, allowing the observer (a human agent) to learn from experience. This framework makes the system dynamic (flexible and adaptable) so it evolves, guaranteeing high levels of stability when performing his domain problem P. To capture by the agent who learn the control knowledge for solving a task-allocation problem, the control expert system uses at any time, an internal fuzzy knowledge model of the (business) process based on the last knowledge model.
    Keywords: knowledge management; fuzzy control; semantic technologies; computational intelligence
    JEL: D81
    Date: 2008–10–14
  2. By: Arthur Huang; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: This paper examines the emergence of retail clusters on a supply chain network comprised of suppliers, retailers, and consumers. An agent-based model is proposed to investigate retail location distribution in a market of two complementary goods. The methodology controls for supplier locales and unit sales prices of retailers and suppliers; a consumer's willingness to patronize a retailer depends on the total travel distance of buying both goods. On a circle comprised of discrete locations, retailers play a non-cooperative game of location choice to maximize individual proÞts. Our Þndings suggest that the number of clusters in equilibrium follow a power-law distribution and that hierarchical distribution patterns are much more likely to occur than the spread-out ones. In addition, retailers of complementary goods tend to co-locate at supplier locales. Sensitivity tests on the number of retailers and retailers' sequence of moving are also performed.
    Keywords: clustering, agent-based model, location choice, power-law distribution pattern, retailing
    JEL: R30 L22
    Date: 2008
  3. By: Mitsukuni Nishida (Department of Economics, University of Chicago); ;
    Abstract: Competition among multi-store chains is common in the retail industry. This paper proposes a general model of strategic store network choices by two chains. Unlike previous work on store network choice, it allows chains to choose not only which markets to open its stores but also how many stores to open in a market, internalizing the effects among their own stores on profits. To deal with the huge number of possible combinations of strategy profiles in their network choices, I exploit the lattice structure of the game. I show that a chain's trade-off between costs and benefits from clustering their stores in a market (within-market effect) can be either positive or negative to ensure existence of an equilibrium, thereby providing a way to freely estimate the effect from data. I apply the technique to market-level data from the convenience store industry in Okinawa, Japan. Integrating the model with revenue allows welfare interpretation of results. I find that the within-market effect is negative and as large as the business stealing effect, reduction in revenues due to presence of a rival chain store. The estimated structural model allows us to perform policy analysis. In particular, this paper considers how significantly the zoning regulation introduced in Japan in 1968 affects chains' store network choices. A counterfactual experiment of eliminating the current zoning regulation shows that in the new equilibrium chains would increase the number of their stores. Total surplus is also expected to increase, due to increase in aggregate sales and aggregate profits. The impacts of a hypothetical horizontal merger among two chains on product variety measured by the number of stores and economic welfare are also evaluated.
    Keywords: entry; retail location; supermodular game; zoning regulation; merger
    JEL: L13 L81 R52
    Date: 2008–10
  4. By: Hennessy, Thia; Shrestha, Shailesh
    Abstract: In the wake of policy reforms such as the MTR of the CAP and WTO arrangements, many policy analysts are questioning the value of retaining the EU milk quota system in its current form and one policy reform option that has been discussed in advance of the 2008 “Health Check” of the CAP is the international transfer of quota rights between member states. A methodology for simulating a “free market” for milk quota is outlined in this paper with a view to extending the work to other member states to determine which member states would supply and demand milk quota if an international market for quotas was established. The analysis, conducted for Ireland, uses National Farm Survey data from 491 dairy farms to estimate the aggregate demand for and supply of milk quota. A profit maximization model is used to simulate the production decisions of farmers and aggregation techniques are applied to arrive at national and regional demand and supply curves. Two policy scenarios are analysed; one assumes that there is no WTO reform and that the policies agreed under the MTR of the CAP in 2003 continue indefinitely, the second scenario assumes that a WTO agreement is reached and that export subsidies are phased out. The analysis also considers the effect of the Single Farm Payment on the market for milk quota and a sensitivity analysis is conducted on the lifespan of the milk quota. The methodologies developed in this paper, offer policy makers in Ireland a useful tool to analyse the effect of imposing different constraints on the milk quota market, be they regional, volume based or some other measures. The analysis also offer some insight into the capitalisation of policy measures into asset values; this is evident from the substantially lower market equilibrium price for quotas in a scenario where there is no export subsidies relative to a continuation of these policies and also from the effect of re-investment of the Single Farm Payment on quota values. The approach adopted is sufficiently general to be applied to FADN data for the major dairy producing countries in Europe to determine where milk production may move to if there was an international free market for quota rights.
    Keywords: Marketing,
    Date: 2008–01–14
  5. By: Alexeeva-Talebi, Victoria; Löschel, Andreas; Mennel, Tim
    Abstract: In the absence of an international agreement on climate policy, unilateral carbon abatement creates two problems: It tends to have a detrimental effect on domestic competitiveness, and it leads to an increase in carbon emissions abroad (leakage). This paper analyses two policies that have recently been proposed to mitigate these problems: Border tax adjustments (BTA) and integrated emission trading (IET). The former policy levies a quantity-based, the latter an emission based duty on imports from non-abating countries. In a stylised two-country model we demonstrate that the policies address both problems. However, BTA protects domestic competitiveness more effectively, while IET achieves a greater reduction in foreign emissions. A computational general equilibrium analysis of the unilateral abatement policy adopted by the European Union confirms our theoretical insights for the sectors covered by the offsetting measures. However, the implications for the competitiveness of noncovered sectors are negative. These two effects constitute the central trade-off in the implementation of both policies.
    Keywords: Border Tax Adjustments, Climate Policy, Competitiveness, Emission Trading
    JEL: D58 F18 H23 Q48
    Date: 2008
  6. By: Marianna Lyra; Johannes Paha; Sandra Paterlini; Peter Winker
    Abstract: Basel II imposes regulatory capital on banks related to the default risk of their credit portfolio. Banks using an internal rating approach compute the regulatory capital from pooled probabilities of default. These pooled probabilities can be calculated by clustering credit borrowers into different buckets and computing the mean PD for each bucket. The clustering problem can become very complex when Basel II regulations and real-world constraints are taken into account. Search heuristics have already proven remarkable performance in tackling this problem as complex as it is. A Threshold Accepting algorithm is proposed, which exploits the inherent discrete nature of the clustering problem. This algorithm is found to outperform alternative methodologies already proposed in the literature, such as standard k-means and Differential Evolution. Besides considering several clustering objectives for a given number of buckets, we extend the analysis further by introducing new methods to determine the optimal number of buckets in which to cluster banks' clients.
    Keywords: credit risk, probability of default, clustering, Threshold Accepting, Differential Evolution
    Date: 2008–09
  7. By: Butler, Allan J.; Turner, Martin M.
    Abstract: This paper draws on the results of a multi-disciplinary research project funded by Defra1 which has focussed on identifying and developing practical approaches by which the dairy sector can reduce inputs and diffuse pollution, whilst maintaining biodiversity, product quality, high animal health and welfare standards and market competitiveness. The pressures on UK dairying for change towards greater economic and environmental sustainability derive from the need to remain profitable in the face of low farm-gate prices, competition from the global market in the context of a wide range of environmental and animal welfare constraints that have increased considerably in number and stringency during recent years. The challenge is to identify and develop practices that, through the use of integrated systems, incorporate environmental objectives into profitable, modern farming. The research has explored the complex interaction ‘surfaces’ of multiple sustainability criteria in systems simulations using an interactive framework of modelling (N, P, methane and production economics) and objective scoring matrices (biodiversity, landscape features, product quality and animal health). As part of the SIMSDAIRY model2, the EDMM (Economic Dairy Management Model) is an empirically-based model which simulates the revenue and costs attributed to dairy farming in the UK. At its core are a series of econometric relationships that replicate the underlying production and cost structures of dairy farm management. The results are presented and discussed in the context of recent market and policy developments in the milk supply sector.
    Keywords: Environmental Economics and Policy, Livestock Production/Industries,
    Date: 2008–01–14
  8. By: Benin, Samuel; Thurlow, James; Diao, Xinshen; Kalinda, Henrietta; Kalinda, Thomson
    Abstract: "Zambia has experienced strong economic performance since 1999. However, agriculture has not performed as well as the rest of the economy, and although the incidence of poverty has declined, it still remains high. The Zambian government, within the framework of the Fifth National Development Plan (FNDP), is in the process of implementing the Comprehensive Africa Agriculture Development Programme (CAADP), which provides an integrated framework of development priorities aimed at restoring agricultural growth, rural development and food security. This paper analyzes the agricultural growth and investment options that can support the development of a comprehensive rural development component under Zambia's FNDP, in alignment with the principles and objectives of the CAADP, which include the achievement of six percent agricultural growth and allocation of at least ten percent of budgetary resources to the sector. Computable general equilibrium (CGE) model results indicate that it is possible for Zambia to reach the CAADP target of six percent agricultural growth, but this will require additional growth in all crops and sub-sectors. Zambia cannot rely on only maize or higher-value export crops to achieve this growth target; broader-based agricultural growth, including increases in fisheries and livestock, will be important. So, too, is meeting the Maputo declaration of spending at least ten percent of the government's total budget on agriculture. In order to meet the CAADP target, the Government of Zambia must increase its spending on agriculture in real value terms by about 17–27 percent per year between 2006 and 2015, and spend about 8–18 percent of its total expenditure on the sector by 2015. Although agriculture has strong linkages to the rest of the economy and its growth will result in substantial overall growth in the economy and the household incomes of rural and urban populations, achieving the CAADP target of six percent agricultural growth will not be sufficient to meet the first Millennium Development Goal (MDG1) of halving poverty by 2015. To achieve this more ambitious target, both agricultural and non-agricultural sectors would need an average annual growth rate of around ten percent per year. These growth requirements are substantial, as are the associated resource requirements. Thus, while the MDG1 target appears to be beyond reach for Zambia, achieving the CAADP target should remain a priority, as its more reasonable growth and expenditure scenarios will still substantially reduce the number of poor people living below the poverty line by 2015, and significantly improve the well-being of both rural and urban households." from authors' abstract
    Keywords: Agriculture, Poverty, Public investment, GDP, Millennium Development Goals,
    Date: 2008
  9. By: Finn Roar Aune, Knut Einar Rosendahl and Eirik Lund Sagen (Statistics Norway)
    Abstract: The regional natural gas markets are expected to gradually become more integrated. The major driving forces are lower LNG costs, more spot trade, and increased need for imports into the US and other key markets. In this paper we examine various scenarios for a future global gas market, particularly focusing on natural gas prices and trade patterns. We use a numerical model of the international energy markets, with detailed modelling of regional gas production and international gas transport. Scenarios with different assumptions about future demand and supply conditions are simulated. Our results suggest that trade between continents will grow considerably over the next couple of decades, and that prices in the main import regions will remain around current levels. However, significant constraints on exports from the Middle East may alter this picture.
    Keywords: Natural gas trade; gas prices; numerical model
    JEL: C61 F17 L95 Q31
    Date: 2008–10

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