This paper investigates pricing and productivity differences across a sample of rural electric di... more This paper investigates pricing and productivity differences across a sample of rural electric distribution cooperatives in the United States. State-level statutes governing operation as a cooperative corporation differ somewhat across states, but common across all statutes are explicit price constraints on financial capital supplied by investors (non-members), prohibition of control rights tied to directly to the provision of financial capital, and requirements obligating each entity to assign board membership to patron members using a democratic procedure. Further, subgroups of distribution cooperatives, which across all groups constitute a majority share of total power distribution, themselves own and operate (via agency through a board of directors, and subject to long-term full-requirement contracts) upstream generation and transmission cooperatives (G&T's) that provide members a significant fraction of total power needs. We develop and estimate a cost-minimization model for distribution cooperatives in this context, and use panel data for the period 2006-2011 to estimate pricing and productivity differences across distribution cooperatives. Results reveal a statistically and economically important difference between cooperatives that purchase all power on open markets, and those that source from a G&T, with member cooperatives operating at high productivity and lower marginal cost.
This study examines performances of cooperatives relative to investor-owned firms in the US elect... more This study examines performances of cooperatives relative to investor-owned firms in the US electric power industry. Using a panel data of firms from 2001 to 2014, the results show that cooperatives operate under conditions of more difficult capital constraints associated with the higher cost of debt and limited access to external equity capital. While investor-owned utilities, especially the large utilities that are less capital constrained, take benefits from substantial scale economies existing in the industry, the marginal cost of operation substantially increases with output for cooperatives. I do not find differences in profitability between the two ownership structures, measured by return on assets and return on equity. Plant capacity utilization, which is a measure of plant efficiency conditional on the operation, is also not statistically different between the two groups.
Employing the patent data over 1977-2011, this study explores the factors determining innovative ... more Employing the patent data over 1977-2011, this study explores the factors determining innovative activities in the US ethanol industry. We take into account both demand-side and supply-side factors, the latter of which is represented by constructed knowledge stocks, to quantify the effects of price- and policy-induced innovations. We quantify the citation generation process using patent citations and construct the simple and weighted stocks of knowledge with weights of patent productivity. We confirm that both the supply-the demand-side factors, such as knowledge stock, crude oil price and government R&D expenditure, have positive and statistically significant effects on the technological innovations of biofuels in the United States.
The Conservation Reserve Program (CRP), which provides financial incentives for landowners to idl... more The Conservation Reserve Program (CRP), which provides financial incentives for landowners to idle erodible and marginal farmland, has contributed to a number of environmental benefits that otherwise would have not been achieved. However in the last few years CRP faced a number of new challenges as record-high crop prices significantly affected landowners' interests to participate in the program. Despite an extensive literature on CRP, we lack evidence on how landowners react to changes in agricultural market conditions and CRP payment rates and hence how it affects the program enrollment and cost. In this paper, we attempt to investigate landowners' incentives for CRP participation focusing on the linkage between farmers' CRP payment bids and unobserved agricultural productivity. We develop and estimate an empirical structural model to examine the manner in which agricultural productivity, market conditions, and CRP payment affect landowners' land use decisions. A n...
Texas has experienced a rapid development of wind power over the last 20 years. Since wind power ... more Texas has experienced a rapid development of wind power over the last 20 years. Since wind power was developed mostly in desolate areas that are remote from urban centers due to its nature conditions, Texas implemented the Competitive Renewable Energy Zones (CREZ) project, the goal of which is to integrate the wind supply regions with the large demand centers. The objectives of this paper are two-fold. The first is to investigate the impact of the CREZ project on market price convergence. Specifically, this paper analyzes the extent that the transmission project affected wholesale price level, variance, and difference between the regions. The second is to measure environmental benefits obtained from displacement of fossil fuel generators by wind power. The results provide a strong evidence for price convergence across the ERCOT market following the completion of the CREZ project. As well as price convergence, wholesale price level and variance are also reduced significantly. Specifi...
Using patent counts and citation data from 1977 to 2011, we explore the determining factors of in... more Using patent counts and citation data from 1977 to 2011, we explore the determining factors of innovative activities of the U.S. biofuel industry.We take into account both demand-side factors— such as crude-oil price, government R&D expenditure on biofuel, and federal-level support policies—and supply-side factors, represented by constructed knowledge stocks, to quantify the effects on biofuel-related innovations. The citation generation process is quantified using patent citation records and the estimates are used to construct the simple and weighted stocks of knowledge with weights of patent productivity. We confirm that both the demand and supply factors have positive and statistically significant effects on technological biofuel innovations in the United States.
This paper uses a standard non-cooperative sequential game with two homogeneous players to analyz... more This paper uses a standard non-cooperative sequential game with two homogeneous players to analyze investment options of groundwater development project in South Korea’s Jeju island. The model is constructed as an option game taking the uncertainty of water price and the irreversibility of investment into account. The results show that the threshold water price of follower increases with the investment scale of both the leader and the follower while the threshold water price for the leader decreases as the investment scale of the leader increases. This makes the leader choose strategies to maximize the amount of groundwater extraction regardless of the follower’s strategy. Based on the results, it is recommended for policymakers to manage sustainable use of groundwater based on the policy measures such as the groundwater extraction quota system.
This paper uses a standard non-cooperative sequential game with two homogeneous players to analyz... more This paper uses a standard non-cooperative sequential game with two homogeneous players to analyze investment options of groundwater development project in South Korea’s Jeju island. The model is constructed as an option game taking the uncertainty of water price and the irreversibility of investment into account. The results show that the threshold water price of follower increases with the investment scale of both the leader and the follower while the threshold water price for the leader decreases as the investment scale of the leader increases. This makes the leader choose strategies to maximize the amount of groundwater extraction regardless of the follower’s strategy. Based on the results, it is recommended for policymakers to manage sustainable use of groundwater based on the policy measures such as the groundwater extraction quota system.
This paper investigates pricing and productivity differences across a sample of rural electric di... more This paper investigates pricing and productivity differences across a sample of rural electric distribution cooperatives in the United States. State-level statutes governing operation as a cooperative corporation differ somewhat across states, but common across all statutes are explicit price constraints on financial capital supplied by investors (non-members), prohibition of control rights tied to directly to the provision of financial capital, and requirements obligating each entity to assign board membership to patron members using a democratic procedure. Further, subgroups of distribution cooperatives, which across all groups constitute a majority share of total power distribution, themselves own and operate (via agency through a board of directors, and subject to long-term full-requirement contracts) upstream generation and transmission cooperatives (G&T's) that provide members a significant fraction of total power needs. We develop and estimate a cost-minimization model for distribution cooperatives in this context, and use panel data for the period 2006-2011 to estimate pricing and productivity differences across distribution cooperatives. Results reveal a statistically and economically important difference between cooperatives that purchase all power on open markets, and those that source from a G&T, with member cooperatives operating at high productivity and lower marginal cost.
This study examines performances of cooperatives relative to investor-owned firms in the US elect... more This study examines performances of cooperatives relative to investor-owned firms in the US electric power industry. Using a panel data of firms from 2001 to 2014, the results show that cooperatives operate under conditions of more difficult capital constraints associated with the higher cost of debt and limited access to external equity capital. While investor-owned utilities, especially the large utilities that are less capital constrained, take benefits from substantial scale economies existing in the industry, the marginal cost of operation substantially increases with output for cooperatives. I do not find differences in profitability between the two ownership structures, measured by return on assets and return on equity. Plant capacity utilization, which is a measure of plant efficiency conditional on the operation, is also not statistically different between the two groups.
Employing the patent data over 1977-2011, this study explores the factors determining innovative ... more Employing the patent data over 1977-2011, this study explores the factors determining innovative activities in the US ethanol industry. We take into account both demand-side and supply-side factors, the latter of which is represented by constructed knowledge stocks, to quantify the effects of price- and policy-induced innovations. We quantify the citation generation process using patent citations and construct the simple and weighted stocks of knowledge with weights of patent productivity. We confirm that both the supply-the demand-side factors, such as knowledge stock, crude oil price and government R&D expenditure, have positive and statistically significant effects on the technological innovations of biofuels in the United States.
The Conservation Reserve Program (CRP), which provides financial incentives for landowners to idl... more The Conservation Reserve Program (CRP), which provides financial incentives for landowners to idle erodible and marginal farmland, has contributed to a number of environmental benefits that otherwise would have not been achieved. However in the last few years CRP faced a number of new challenges as record-high crop prices significantly affected landowners' interests to participate in the program. Despite an extensive literature on CRP, we lack evidence on how landowners react to changes in agricultural market conditions and CRP payment rates and hence how it affects the program enrollment and cost. In this paper, we attempt to investigate landowners' incentives for CRP participation focusing on the linkage between farmers' CRP payment bids and unobserved agricultural productivity. We develop and estimate an empirical structural model to examine the manner in which agricultural productivity, market conditions, and CRP payment affect landowners' land use decisions. A n...
Texas has experienced a rapid development of wind power over the last 20 years. Since wind power ... more Texas has experienced a rapid development of wind power over the last 20 years. Since wind power was developed mostly in desolate areas that are remote from urban centers due to its nature conditions, Texas implemented the Competitive Renewable Energy Zones (CREZ) project, the goal of which is to integrate the wind supply regions with the large demand centers. The objectives of this paper are two-fold. The first is to investigate the impact of the CREZ project on market price convergence. Specifically, this paper analyzes the extent that the transmission project affected wholesale price level, variance, and difference between the regions. The second is to measure environmental benefits obtained from displacement of fossil fuel generators by wind power. The results provide a strong evidence for price convergence across the ERCOT market following the completion of the CREZ project. As well as price convergence, wholesale price level and variance are also reduced significantly. Specifi...
Using patent counts and citation data from 1977 to 2011, we explore the determining factors of in... more Using patent counts and citation data from 1977 to 2011, we explore the determining factors of innovative activities of the U.S. biofuel industry.We take into account both demand-side factors— such as crude-oil price, government R&D expenditure on biofuel, and federal-level support policies—and supply-side factors, represented by constructed knowledge stocks, to quantify the effects on biofuel-related innovations. The citation generation process is quantified using patent citation records and the estimates are used to construct the simple and weighted stocks of knowledge with weights of patent productivity. We confirm that both the demand and supply factors have positive and statistically significant effects on technological biofuel innovations in the United States.
This paper uses a standard non-cooperative sequential game with two homogeneous players to analyz... more This paper uses a standard non-cooperative sequential game with two homogeneous players to analyze investment options of groundwater development project in South Korea’s Jeju island. The model is constructed as an option game taking the uncertainty of water price and the irreversibility of investment into account. The results show that the threshold water price of follower increases with the investment scale of both the leader and the follower while the threshold water price for the leader decreases as the investment scale of the leader increases. This makes the leader choose strategies to maximize the amount of groundwater extraction regardless of the follower’s strategy. Based on the results, it is recommended for policymakers to manage sustainable use of groundwater based on the policy measures such as the groundwater extraction quota system.
This paper uses a standard non-cooperative sequential game with two homogeneous players to analyz... more This paper uses a standard non-cooperative sequential game with two homogeneous players to analyze investment options of groundwater development project in South Korea’s Jeju island. The model is constructed as an option game taking the uncertainty of water price and the irreversibility of investment into account. The results show that the threshold water price of follower increases with the investment scale of both the leader and the follower while the threshold water price for the leader decreases as the investment scale of the leader increases. This makes the leader choose strategies to maximize the amount of groundwater extraction regardless of the follower’s strategy. Based on the results, it is recommended for policymakers to manage sustainable use of groundwater based on the policy measures such as the groundwater extraction quota system.
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