nep-cmp New Economics Papers
on Computational Economics
Issue of 2011‒03‒12
six papers chosen by
Stan Miles
Thompson Rivers University

  1. Modeling Storage and Demand Management in Electricity Distribution Grids By Andreas Schröder; Jan Siegmeier; Murk Creusen
  2. Climate Engineering: Cost benefit and beyond By Gramstad, Kjetil; Tjøtta, Sigve
  3. Asymmetrien in der Neuen Ökonomischen Geographie : Modelle, Simulationsmethoden und wirtschaftspolitische Diskussion = Asymmetries in new economic geography : models, simulation methods and economic discussion By Sascha Frohwerk
  4. Can endogenous participation explain price volatility? Evidence from an agent-based cobweb model. By Domenico Colucci; Vincenzo Valori
  5. Introducing First and Second Generation Biofuels into GTAP Data Base version 7* By Taheripour, Farzad; Wally Tyner
  6. Tariff regulation and profitability of energy networks By Machiel Mulder

  1. By: Andreas Schröder; Jan Siegmeier; Murk Creusen
    Abstract: Storage devices and demand control may constitute beneficial tools to optimize electricity generation with a large share of intermittent resources through inter-temporal substitution of load. We quantify the related cost reductions in a simulation model of a simplified stylized medium-voltage grid (10kV) under uncertain demand and wind output. Benders Decomposition Method is applied to create a two-stage stochastic program. The model informs an optimal investment sizing decision as regards specific 'smart grid' applications such as storage facilities and meters enabling load control. Model results indicate that central storage facilities are a more promising option for generation cost reductions as compared to demand management. Grid extensions are not appropriate in any of our scenarios. A sensitivity analysis is applied with respect to the market penetration of uncoordinated Plug-In Electric Vehicles which are found to strongly encourage investment into load control equipment for `smart` charging and slightly improve the case for central storage devices.
    Keywords: Storage, demand management, stochastic optimization, Benders Decomposition
    JEL: Q40 Q41
    Date: 2011
  2. By: Gramstad, Kjetil (University of Bergen); Tjøtta, Sigve (University of Bergen)
    Abstract: International efforts on abating climate change, focusing on reductions of greenhouse gas emissions, have thus far proved unsuccessful. This motivates exploration of other strategies such as climate engineering. We modify the Dynamic Integrated model of Climate and the Economy (DICE), and use it in a cost-benefit analysis of climate engineering specifically deposition of sulphur in the stratosphere. The model simulations show that climate engineering passes a cost-benefit test. The cost of postponing climate engineering by 20-30 years is relatively low. Going beyond these standard cost-benefit analyses, climate engineering may still fail. Voters may dislike the idea of climate engineering; they do not like the idea of tampering with nature, and their dislike stands independent of outcomes of cost-benefit analyses.
    Keywords: Climate change; climate engineering; cost-benefit analyses; public choice.
    JEL: Q54 Q58
    Date: 2010–09–01
  3. By: Sascha Frohwerk
    Abstract: The new economic geography explains agglomerations based on a microeconomic general equilibrium model, witch is usually assumed to be symmetric in the sense, that regions are of the same size and transport costs and expenditure shares are the same. As a result, the models can explain why an agglomeration occurs, but not in witch region. This book modifies three of the most influential models of the new economic geography and assumes various asymmetries. It compares the results to the symmetric cases. Not only theoretical aspects but also methods of simulation are discussed in detail. This methods can be applied to a wide variety of models. To show the political implications of the theoretical results, one of the asymmetric models is applied to the economical development in germany after reunification. The model is able to explain the persistent difference in wages between east and west and the simultaneous incomplete agglomeration in the west.
    Keywords: new economic geography, methods of simulation, agglomeration, regional development
    JEL: P25 C63 R13 R23
    Date: 2011–03
  4. By: Domenico Colucci (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze); Vincenzo Valori (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze)
    Abstract: The cobweb model literature has mostly overlooked the issue of firms' financial viability and the related question of market entry and exit. This paper tries to address these problems building an agent-based computational cobweb model with borrowing constraints and endogenous participation of heterogeneous firms. The flow of firms' profit affects their financial wealth and borrowing is possible up to a limit. Past such threshold the firm goes bankrupt and exits. At the same time at each period a pool of potential entrants have a constant positive probability of becoming a startup in the market, provided the incumbent firms have realized non-negative mean profits in recent periods. Bounded dynamics and endogenous volatility are shown to follow without resorting to nonlinearities. Indeed, with respect to the literature assuming nonlinearities and heterogeneous firms switching between different predictors (e.g. Brock and Hommes, 1997) our structure is simpler, given that the model's main message remains valid even with linear demand and supply and firms having heterogeneous-parameters adaptive expectations. Additional insights are provided by the numerical simulations of the model. The saliency of the borrowing constraint has a large impact on profits and ultimately on firms' survival chances, beside an effect on average prices and therefore on consumer surplus. Further, the model confirms that behavioral heterogeneity, even in the mild form assumed here, matters, and is in fact crucial to ensure bounded price dynamics. Finally, the model generates reasonable (given the stylized facts accepted by the empirical literature) patterns of firms survival times.
    Keywords: heterogeneous agents, expectations, price instability, market entry and exit
    Date: 2011–02
  5. By: Taheripour, Farzad; Wally Tyner
    Abstract: The first version of GTAP-BIO Data Base was built based on the GTAP standard data base version 6 which represents the world economy in 2001 (Taheripour et al., 2007). That data base covers global production, consumption, and trade of the first generation of biofuels including ethanol from grains (eth1), ethanol from sugarcane (eth2), and biodiesel (biod) from oilseeds in 2001. Version 7 of GTAP Data Base, which depicts the world economy in 2004, is now published (Narayanan, B.G. and T.L. Walmsley, 2008). However, this standard data base does not include biofuel industries explicitly. The first objective of this research memorandum is to introduce the first generation of biofuels into this new data base. To accomplish this task we will follow Taheripour et al. (2007). The rapid expansion of the first generation of biofuels in the past decades has raised important concerns related to food-fuel competition, land use change, and other economic and environmental issues. These issues have increased interest in the second generation of biofuels which can be produced from cellulosic materials such as dedicated crops, agricultural and forest residues, and waste materials. To examine the economic and environmental consequences of the second generation of biofuels, a CGE model is an appropriate and essential instrument. A data base which presents the first and second generation of biofuels will facilitate research in this field. Hence the second objective of this research memorandum is to expand the space of biofuel alternatives to the second generation. Given that advanced cellulosic biofuels are not yet commercially viable, we used the most up to date information in this area to define the production technologies for these industries.
    Date: 2011
  6. By: Machiel Mulder (Netherlands Competition Authority)
    Abstract: In this paper we analyse the impact of the regulatory framework for the new regulatory period (2011 – 2013) on the long-term profitability of TenneT TSO, the operator of the highvoltage electricity network in the Netherlands. Long-term profitability is a key component of the financeability of a firm. In the long run, the return on capital should be at least equal to the opportunity costs of capital in order to finance investments. As the ultimate indicator for the long-term profitability, we use the net present value of economic profit, which is the difference between total revenues and total costs, including a normal return on capital. In order to simulate the future financial development of the TSO, we developed a model.
    JEL: C60 G18 L51 G32 L97
    Date: 2010–12

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