THE LAW OF ONE PRICE IN A NETWORK: ARBITRAGE AND PRICE DYNAMICS IN NATURAL GAS CITY GATE MARKETS*

ABSTRACT. In this paper we develop a model of the law of one price in a network where many markets are linked with a structure of paths. We show that arbitrage-free prices depend on the structure of the network and so do price dynamics. Our estimates indicate that local bypass and open access pipeline transportation were instrumental in opening arbitrage paths to natural gas city markets and causing their prices to converge. Spot markets in the city gates, pipeline hubs, and production fields, that are scattered over distant points in the vast pipeline network in the United States, now form a single market.     

THE EXCHANGEABILITY OF HEDONIC PROPERTY PRICE STUDIES*

ABSTRACT. Observations drawn from multiple markets are essential to the construction of indices of housing costs and to measures of demand for housing attributes. It is not evident when multiple markets exist or whether such markets exist for some attributes but not for others. We test for multiple markets by using Bayesian methods to assess the transferability (random exchangeability) of entire hedonic price expressions from one site and time to another, the transferability of hedonic price functions for particular attributes, and the degrees of similarity that hedonic price functions must have in order to be transferable. In our illustrations, price functions for structural housing attributes are generally transferable; prices for neighborhood attributes are not. Therefore, in our illustrations, the desired price indices and demand functions should be estimable for neighborhood attributes, but not for structural ones.     

日美欧电力市场化改革的经验及借鉴

本文从电力市场化改革的目标、途径、市场建设、电价、监管、立法、操作过程等几个方面,归纳总结了日美欧各国电力市场化改革的共性和经验,并且指出了存在的问题,最后在借鉴的基础上,提出了深化我国电力市场化改革的政策建议。     

AN EMPIRICAL ANALYSIS OF INTERREGIONAL PRICE LINKAGES*

ABSTRACT Vector autoregression models are used to analyze the relationships between Texas and Illinois corn prices, and the New Orleans export price. Decomposition of error variances suggests an increasing exogeneity in the recent years between the export market and the two U.S. markets. Impulse response functions indicate that the export price influences both the Illinois and Texas prices.     

SEQUENTIAL SALES OF SIMILAR ASSETS: THE LAW OF ONE PRICE AND REAL ESTATE

ABSTRACT The housing literature largely overlooks the price evolution of similar assets sold sequentially, even though such sales often occur with new residential developments. The law of one price implies no persistent price pattern for identical assets sold sequentially. Nonetheless, the auction and nonauction literatures reveal conditions leading to sales sequence effects on prices. This paper examines price evolution in the condominium market where similar units are sold sequentially in a setting with minimal consumption risk. The results indicate no pervasive sequence–price relationship for sequential sales of similar property units.     

GENERAL EQUILIBRIUM OF SPATIAL PRODUCT AND LABOR MARKETS*

ABSTRACT A simple general equilibrium model relates spatial product markets and spatial labor markets. The firm is treated as being a spatial monopolist or as a Löschian competitor in the output market and as a spatial monopsonist in the labor market. Derived free spatial demand and free regional labor supply are defined, and their properties examined. The model provides the framework for analyzing the impact of a technological improvement in labor productivity on the structure of the spatial markets. The impact of entry on spatial labor supply is an important determinant of whether or not entry lowers wages and raises output prices. Unlike the spaceless competitive paradigm, zero-profit long-run equilibrium can occur in a space economy under conditions of increasing returns to scale.     

ZONE PRICING*

ABSTRACT. Our purpose is to study a spatial price policy often encountered in the real world, known as zone pricing. This price policy consists in determining simultaneously several delivered prices together with the geographical zones in which they apply. It is shown that zone pricing approximates perfect spatial price discrimination and that the firm's profit increases with the number of zones. Furthermore, the number of markets supplied by the firm rises with the number of zones. Finally, zone pricing is compared to other standard spatial price policies and possible extensions are discussed.     

Financialization and Global Commodity Chains: Distributional Implications for Cotton in Sub‐Saharan Africa

Restructuring of global and local markets has led to an increased influence of commodity derivatives markets on commodity price setting. This has critical implications for price risks experienced by actors along commodity chains. Commodity derivatives markets have undergone significant changes that have been referred to as the ‘financialization of commodities’, which we define as an increase in trading activity by financial investors and the reorientation of business strategies by commodity trading houses towards risk management and financial activities. This article assesses how these global financialization processes affect commodity producers in low‐income countries via the operational dynamics of global commodity chains and national market structures. It investigates how prices are set and transmitted and how risks are distributed and managed in the cotton sectors in Burkina Faso, Mozambique and Tanzania. It concludes that uneven exposure to price instability and access to price risk management have important distributional implications. Whilst international traders have the capacity to deal with price risks through hedging, in addition to expanding their profit possibilities through financial activities on derivatives markets, local actors in producing countries face the challenge of increased short‐termism — albeit to different extents depending on national market structures — with limited access to risk management.     

Duopoly prices under congested access*

Abstract. Consider two firms, at different locations, supplying a homogenous good at constant marginal production cost. Consumers incur travel costs to the firm for each unit purchased, and the travel costs increase with the amount of travel to each firm (congestion). When all traffic and all congestion are generated by travel to a duopolist, both the Nash–Bertrand equilibrium prices and the Nash–Cournot equilibrium prices exceed the sum of the marginal production cost and the marginal external travel cost. However, when the road is shared by travelers to the duopolists' facilities and travelers in competitive markets, the Nash–Bertrand duopoly price equals the competitive price and the Nash–Cournot price contains a markup.     

ECONOMETRIC ANALYSIS OF HOUSING TRAIT PRICES IN A THIRD WORLD CITY*

ABSTRACT. A first step in the process of economic analysis of housing markets in Third World cities is the econometric analysis of housing trait prices. The information on market price of housing is basic to the derivation/estimation of other market parameters such as housing demand and supply elasticities. In addition, housing trait prices constitute invaluable inputs into the analysis of effects of government housing programs. This paper presents estimates of housing trait prices in a Third World city housing market, the city of Jos in Nigeria. Nonlinear stochastic specification of a policy constrained hedonic price function is presented as an unbiased estimator of housing trait prices. The Box-Cox statistical procedure was employed in the paper to obtain hedonic regression coefficients which are the parameters needed to compute the average prices evaluated both at the mean of each trait and at their margins. The potential uses of housing trait prices for policy analysis are discussed briefly.     

Did the Nationalist Government Manipulate the Chinese Bond Market? A Quantitative Perspective on Short-Term Price Fluctuations of Domestic Government Bonds, 1932–1934

Based on a newly constructed set of data, this paper offers a quantitative perspective on the Nationalist Government’s relations with China’s domestic bond markets during the period 1932–34. For all the recent revisionist scholarship on the achievements of Nationalist state-building, the perception of the Nationalist elite as corrupt is still widely accepted. In order to demonstrate the empirical potential of quantitative financial history, this paper tests one particular assertion: that members of the Nationalist elite manipulated the issue price of domestic government bonds in order to enrich themselves and their associates. We test this by calculating two price data correlations: that of a first sample of government bonds, all of them issued before 1932, and that of a second sample of government bonds, which includes bonds issued during the period under review. The price fluctuations of the first sample are correlated with each other to a much higher degree than those of the second sample. This indicates that the prices of bonds in the first sample were reacting similarly to the same range of influences, while the bonds issued during the period under review and included in the second sample were displaying individual price fluctuations. One possible explanation for this is that members of the Nationalist elite enriched themselves or their associates by issuing domestic government bonds at artificially low prices. In sum, the article illustrates both the potential and the limitations of quantitative history: it allows us to test and dismiss a precisely formulated hypothesis about Nationalist corruption, but it is only one possible way in which statistical analysis can be applied and does not cover the whole realm of state practices.     

Policy Impact and House Price Development at the Neighbourhood-level—a Comparison of Four Urban Regeneration Areas using the Concept of “Artificial” Value Creation

Urban planning measures and restructuring policies tend to cause unintended increases in house prices. The study compares urban renewal areas with respect to such policy impact on housing and neighbourhood quality and house prices in two city-contexts: Amsterdam and Budapest. It shows how four neighbourhoods that have been subject to various forms of urban regeneration differ in their trajectories of house price development. The results tie with well-documented, mostly Anglo-American experiences of related phenomena such as New Urbanism, Neo-traditional communities and gentrification. Furthermore, the study merges two research objectives that often are seen as incompatible: housing markets and urban regeneration.     

Fish Markets of Belize: Problems of Fish Consumption

The coastal waters of Belize, in Central America, are well stocked with fish, but since early colonial limes the commercial development of marine resources, beginning with the exploitation of turtles in the 17th century, has depended more on foreign markets than domestic markets for fish. Today the bulk of the most popular fish (spiny lobster, conch and snappers) is collected by five fisherman cooperative societies for export to the United States, leaving some preferred specimens in short supply in the domestic market. Where marine resources are utilized for domestic consumption, the demand for fish is highly selective. Most species have a low consumer demand. This imbalance in the demand for fish is exacerbated by government supported price controls on different species that favor the purchase of the most popular fish. The degree to which fish are consumed in the Belizean households is culturally determined. Based on a survey, Black Caribs have the highest consumption of fish followed by Creoles and Spanish-speaking mestizos. Basic research on fish consumption habits is an important fisst step in developing marketing strategies to encourage people to eat more fish and to accept those species that are currently rejected.     

SPATIAL DISEQUILIBRIUM

ABSTRACT. The well-known extremal principle for the solution of spatial equilibrium for a single commodity [Samuelson (1952)] is extended to deal with the case of disequilibrium caused by rigid prices and/or price controls. Both disequilibrium in consumer markets and in factor markets is covered.
The study of disequilibrium is well known in general interdependent economic systems (the so-called fixed-price model of interdependent systems). The present work extends this approach to the spatial dimension, and shows how it is possible to represent and solve disequilibrium models by mathematical programming rather than by fixed-point techniques.     

Discovering Price in All the Wrong Places: The Work of Commodity Definition and Price under Neoliberal Environmental Policy

Abstract: Price plays a unique role in neoliberal economic theory, quantifying value and providing markets with the information needed to produce equilibrium conditions and optimal social welfare. While the role of price is clear, the mechanisms by which prices are discovered, and by which the commodities they value are defined, are left obscure in neoliberal theory. Automatic price discovery, and self‐evident commodity identities, are assumed. Observation of newly created markets in ecosystem services suggests that this is a moment of significant tension within neoliberal practice, as potential market participants seek guidance from the state on appropriate commodity measures and pricing practices. Bureaucrats and economists, following the neoliberal preference for governance over government, turn the task back onto civil society. The invocation of abstract rules, instead of the formulation of practical guidance, by policymakers means that the neoliberal marketization of non‐market public goods is a contingent and sometimes rudderless task for those who must make markets work on the ground. This presents many opportunities for constructive engagement on the part of geographers and other critics of neoliberal strategy.     

National Factor Markets and the Macroeconomic Context for Environmental Destruction in the Brazilian Amazon

This paper discusses Amazonian agricultural development with emphasis on the interrelations between regional conditions and the economic context represented by the national economy. The extreme abundance of land relative to complementary factors, together with the position of the region as a price taker in both factor and output markets, create the conditions for environmentally destructive expansion of cultivation at the extensive margin. It is argued that policies to promote a more ecologically sensitive pattern of development must take into account these links with the larger Brazilian economy and society as well as conditions within the region itself.     

The Social Regulation of Markets: Why Microcredit Fails to Promote Jobs in Rural South India

There is growing evidence that microcredit does little to support self‐employment. Two main explanations are typically emphasized: from a microeconomic perspective, the poor have been argued to lack the skills, resources and motivation to start their own businesses; from a macroeconomic perspective, local markets are often saturated. This article uses first‐hand data from rural South India to explore a third explanation which focuses on the social regulation of markets. Drawing on a household survey, the authors show that self‐employment and microcredit are uncorrelated, and that women and lower castes have a significantly lower chance of starting up a business. The businesses they do start tend to be smaller, less profitable and based in very specific sectors. Qualitative insights into the workings of local economies show that caste and gender‐based social regulations influence local markets determining who can produce or sell what, to whom, and at what price. The authors observe that real markets are affected by power relations and structured through social institutions rather than being the sum of interactions between free and competitive individuals. These findings show the importance of integrating self‐employment programmes into broader policies for transforming the social regulation of markets and for eradicating discrimination against women and lower castes.     

PRICE AND LOCATION CONJECTURES IN MEDIUM- AND LONG-RUN SPATIAL COMPETITION MODELS*

ABSTRACT. This paper examines medium-run and long-run equilibria in unbounded (circular) and bounded (linear) one-dimensional multifirm markets. A price-location adjustment model is outlined that dows simulation of the spatial equilibrium when these firms anticipate reactions from their nearest spatial rivals. Thus, the market equilibrium is derived from the interdependent but atomistic decisions of the competing firms and is not imposed by some outside observer or agency. Ail conjectures are exogenous; the three well-known price conjectures (Greenhut-Ohta, Hotelling-Smithies, and Losch) are highlighted; and the relevant comparative statics are provided.     

Between Desire and Routine: Assembling Environment and Finance in Carbon Markets

Abstract: This article contributes to emerging research on the social construction of carbon markets by focusing on the mobilisation of desire amongst carbon market actors, and on the routinisation of financial practices within such markets. We examine specifically the markets that have emerged around the Clean Development Mechanism. First, we look at the stories market actors tell each other in advertising and at Carbon Expo. Second, we look at the routinisation of carbon finance through the borrowing of ideas and tools from traditional financial markets. We suggest that the former animates the markets while the latter enables the markets to become “normalised” for financiers. We also suggest that the two aspects however also work in tension with each other, and that the character of this tension is one way of understanding the distinctiveness of carbon markets.     

A Review of Volume 5 of the Handbook of Regional and Urban Economics,Parts III and IV

This paper reviews parts III and IV of the recent Handbook of Regional and Urban Economics. Many of the surveys within the Handbook relate to two phenomena of interest: the recent boom and bust cycle in U.S. housing markets, and the striking growth of home prices in a few global “Superstar Cities.” Real Estate and Urban economists have made progress in modeling these phenomena. There is considerable room for future research, however. There is no coherent story explaining U.S. home price movements in the 2000s that does not run afoul of important stylized facts. We also have not yet identified the relative importance of supply constraints and demand growth in the rise of Superstar City prices.