James Eaves

Managing economic risk caused by insects: bug options

The market for insuring insect damage is far from complete. This study introduces a new type of derivative instrument‐insect derivatives‐that provide growers a market‐based means of transferring insect risk to speculators or others who may profit from higher insect populations. A risk‐neutral valuation model is developed and applied to Bemisia tabaci population data. Economic simulation models show how insect derivatives can improve risk‐return results for a representative cotton farm in the Imperial Valley of California. The results suggest that insect derivatives may become important risk management tools for a wide range of growers.

Are Intraday Volume and Volatility U-Shaped After Accounting for Public Information?

No matter how pronounced intraday patterns may appear, it is difficult to account for cross-correlations among related assets when those assets trade continuously and simultaneously. Futures contracts are auctioned periodically and sequentially on the Tokyo Grain Exchange (TGE). Even though intraday TGE volume is U-shaped, intraday volatility is closer to L-shaped. After accounting for the public information in immediately preceding auctions for the same commodity, for earlier trading in other commodities, and for trading on overseas markets open overnight in Tokyo, the intraday patterns are effectively flat. Thus, the timing of privately informed traders cannot be the source of intraday patterns.

Increases in Fuel Efficiency or Ethanol: Which Has More Efficiently Reduced Fossil Fuel Consumption?

One of the goals of the U.S. ethanol mandate is to reduce fossil fuel use in the transportation sector. But some critics of the mandate argue that a more efficient way of reducing fuel consumption would be to focus on improvements in fuel efficiency of motor vehicles. We consider the time span between 2005 and 2015 and ask how much the mandated increases in ethanol use reduced fossil fuel consumption relative to increases in light-duty vehicle fuel efficiency, and how cost-effective each trend was for consumers. We show that, over this time period, changes in vehicle fuel efficiency reduced fossil fuel energy consumption by 0.90%, while increases in ethanol consumption decreased it by 1.21%. Accordingly, fuel savings caused by increases in fuel efficiency saved drivers

The Effect of Brokers on the Dynamics of a Walrasian Auction

40.9B, while the ethanol mandate penalized drivers with

A Comparison of the Economic and Energy-Security Benefits of Natural Gas and Electrified Vehicles

91.5B in additional fuelling costs.

Renewable Corn-Ethanol and Energy Security

We study the effect of the presence of brokers in an experimental exchange market using the Walrasian tâtonnement mechanism. We find that brokers tend to act as liquidity providers, submitting orders likely to equilibrate supply and demand given the orders they receive from other participants. As a result, average excess demand and prices are less volatile, and markets reach equilibrium more often, when brokers are present compared with the case without brokers. Brokers’ liquidity-providing behavior is more pronounced when their compensation includes, in addition to their trading profit, a component related to trading volume when equilibrium is reached. Under-revelation, a strategic behavior inherent to Walrasian auctions, is about the same with and without brokers when markets clear, yielding similar levels of market efficiency, measured as total surplus divided by potential surplus.

Walrasian Tâtonnement Auctions on the Tokyo Grain Exchange

We compare the financial benefits of displacing oil using three alternative-vehicle technologies: natural gas (NGVs), battery-electric (BEVs), and plug-in hybrid electric vehicles (PHEVs). On a cost-per-barrel basis, NGVs would be the least expensive way to displace oil, while PHEVs would be the most expensive. BEVs would displace the most oil. Furthermore, though the BEV case has the highest upfront cost, its payback rate is almost two-times faster than the NGV case. At current energy prices and without considering environmental costs, none of these technologies make financial sense. However, given historical relationships between oil, natural gas and electricity prices, each alternative would make financial sense if oil prices increased to at least

Effect of market access on sharing practices within two Huaorani communities

150 per barrel, and BEVs would offer the fastest payback. Finally, though electricity prices are the most volatile, the financial cost of fuel-price uncertainty is lowest for the BEV case. Moreover, the cost of uncertainty is unimportant for all cases, including gasoline-powered vehicles, and should not be an important part of this debate.