Raymond S. Hartman

Product Emulation Strategies in The Presence of Reputation Effects And Network Externalities: Some Evidence From The Minicomputer Industry

A model of firm performance in the minicomputer industry is developed and estimated. We use an hedonic price formulation to analyze product design and pricing issues and a market share model to assess the demand effects of price-performance characteristics, installed base advantages and manufacturer reputation. The results, which are based on 1976–1983 data, demonstrate the importance of network externalities, price-performance competition and reputation. We utilize the estimated models to quantify the implications of several emulation strategies and several defensive strategies of incumbent manufacturers.

The Economic Impacts of Environmental Regulations on the U.S. Copper Industry

This paper reports the simulated impacts on the U.S. copper industry of pollution abatement regulations promulgated by the Environmental Protection Agency (EPA). The impacts are simulated by using an econometric model developed for the EPA. The model takes explicit account of the imperfectly competitive pricing and production decisions of the major group of domestic primary copper producers. Furthermore, the model explicitly incorporates the effects of pollution abatement regulations upon the costs (fixed and variable) of copper production and upon capacity expansion and replacement. Environmental regulations relevant to the U.S. copper industry are identified and discussed. The economic impacts of compliance with the regulations are then simulated and discussed.

Short-Run Residential Demand for Fuels: A Disaggregated Approach

Short-run household electricity demand has been estimated with conditional demand models by a variety of authors using both aggregate data and disaggregate data. Disaggregate data are most desirable for estimating these models. However, in many cases, ...

Energy conservation programmes: the analysis and measurement of their effects

Abstract Over the past decade, energy conservation programmes have been used extensively by US utilities. However, during much of this period, their popularity has been uncritical — insufficient programme evaluation was available to indicate whether the programmes were economically reasonable or not. In the past three years, however, a substantial array of evaluation results have become available. Much of this evaluation has been stimulated by the Electric Power Research Institute (EPRI). EPRIs initial contribution to the process was a watershed workshop in 1982 on the effects of utility residential conservation programmes. Since then, EPRI and a variety of utilities, public agencies and private consulting groups have continued to refine and extend the evaluation process. This paper reviews the programme evaluation process begun with the 1982 EPRI workshop and discusses the extent and validity of its methods and findings.

Taking the con out of conservation program evaluation

A crucial step in determining the cost-effectiveness of a utility conservation program is to measure the energy savings that can be directly attributed to the program. A number of alternative methods have been proposed to measure this energy savings. The alternative methods differ in terms of their complexity, implementation cost and their ability to address important methodological issues arising during program evaluation. The important methodological issues include the need to control for factors influencing energy conservation other than program participation and the need to test for self-selection bias, a problem inherent in the evaluation of most voluntary programs. This paper focuses on three methods: (1) the simple comparison of the average conservation levels of program participants and non-participants; (2) more advanced regression techniques that differentiate between participants and non-participants through the use of dummy variables; and (3) the most advanced techniques, self-selection models, which explicitly analyze the interrelated decisions to participate in a program and to consequently reduce energy consumption. These three methods are described and critiqued at the theoretical level. In order to assess their empirical implications, the methods are then applied to the residential-conservation programs offered by a particular utility, Portland General Electric Company.

A note on externalities and the placement of property rights: An alternative formulation to the standard pigouvian results

Given the usual assumptions, the traditional Pigouvian results are unassailable. Applied to externalities, the result is that a tax upon the generator of the externality alone is all that is required for obtaining optimal resource allocation.l This obtains whether participants operate independently or merge. 2 Buchanan 3 and Davis and Whinston 4 question this assertion in situations of monopoly and oligopoly; however, for the case of a large number of participants (consumers and producers) the Pigouvian results hold. As is well understood, however, the usual Pigouvian model does not explicitly analyze behavior beyond the imposition of the tax nor does it incorporate the reciprocal nature of externalities) Therefore, the unassailability of the results rests upo n a set of restrictive, neoclassical assumptions. As developed below the important assumptions include the following: first, that the externality is unidirectional; and second, that there exists a static set of production options. Furthermore, even if the Pigouvian tradition implicitly accepts the existence of new production options, it must assume that all possible abatement production options be separable, in order that the single tax upon the generator be optimal. I argue in this note that if these assumptions do not obtain, an alternative formulation exists which dominates the traditional Pigouvian solution. The argument proceeds as follows. Section I reiterates the simple model of the Pigouvian prescriptions developed by Baumol. 6 Taking the major insight of Coases: discussion to be that every externality is essentially reciprocal in nature, I assume in Section II that the elimination of that externality (when it is bad) should also be reciprocal in nature. This reciprocity is made explicit by introducing a social abatement function into Baumols Pigouvian model. Using this extended welfare model, I demonstrate that joint, interrelated responses (abatement costs) by pollutor and pollutee will be optimal and would require an alternative Pigouvian tax be imposed upon both parties rather than the generator of the externality alone. I indicate that this alternative will be Pareto superior to the standard Pigouvian

An empirical model of product design and pricing strategy

Abstract Using the ‘hedonic’ approach as a point of departure, this paper develops an empirical model for analyzing product design and pricing strategies. The model focuses on a multi-product firm in a differentiated product market. It identifies criteria for optimal design and pricing for the firms several products, given the firms production costs, the prices and designs of competing products and given consumer tastes. The model is demonstrated with a real world application to the microcomputer industry.

The Appropriateness of Conditional Logit for the Modeling of Residential Fuel Choice

The author develops a likelihood test to see if conditional logit in aggregate energy-choice models is appropriate for predicting the probability that alternative residential fuels will be purchased. Among the array of probability models available, the conditional logit model is the least valid because it is rejected by the data. Generalized logit models are more useful because they consider price, availability, and other factors. 27 references, 1 table.