Over the next two weeks the Econ Department is running two interesting looking seminars:
December 11 (Friday in Room 534 (Commerce Building) beginning at 3:10pm)The perfect way to spend your afternoon.
An Equilibrium Model of the New Zealand Electricity Market
Lew Evans, Victoria University of Wellington
The seminar presents results of a thesis that is complete but has not been submitted. It sets out a general equilibrium model of the New Zealand electricity market. The model includes thermal and hydro generators, stochastic inflows to storage, transmission frictions, and generator decisions that are based upon the proper value of (stored) water. The model is simulated and the results compared to the experience of the New Zealand market and to the approach of the "Wolak Report".
December 16 (Wednesday in Room 534 (Commerce Building) beginning at 3:10pm)
Martin Dufwenberg, University of Arizona
Hold-Up: With a Vengeance
When contracts are incomplete or unenforceable, inefficient levels of investment may occur due to hold-up. If individuals care for negative reciprocity these problems may be reduced, as revenge becomes a credible threat. However, negative reciprocity has this effect only when the investor holds the rights of control of the investment proceeds. We explore this issue analytically, deriving predictions for hold-up games which differ as regards assignment of rights of control. We also test and support these predictions in an experiment.