This paper studies the effects of the diversification of energy portfolios on the merit order effect in an oligopolistic energy market. The merit order effect describes the negative impact of renewable energy, typically supplied at the low marginal cost, to the electricity market. We show when thermal generators have a diverse energy portfolio, meaning that they also control some or all of the renewable supplies, they offset the price declines due to the merit order effect because they strategically reduce their conventional energy supplies when renewable supply is high. In particular, when all renewable supply generates profits for only thermal power generators this offset is complete -meaning that the merit order effect is totally neutralized. As a consequence, diversified energy portfolios may be welfare reducing. These results are robust to the presence of forward contracts and incomplete information (with or without correlated types). We further use our full model with incomplete information to study the volatility of energy prices in the presence of intermittent and uncertain renewable supplies.

We consider the decentralized bandwidth/rate allocation problem in unicast service provisioning with strategic users. We present a mechanism/game form which possesses the following properties when the users' utilities are concave: (1) It implements in Nash equilibria the solution of the corresponding centralized rate allocation problem in unicast service provisioning. (2) It is individually rational. (3) It is budget-balanced at all Nash equilibria of the game induced by the mechanism/game form as well as off equilibrium. When the users' utilities are quasi-concave the mechanism possesses properties (2) and (3) stated above. Moreover, every Nash equilibrium of the game induced by the proposed mechanism results in a Walrasian equilibrium.

We study the problem of optimal dynamic pricing for a monopolist selling a product to consumers in a social network. The only means of spread of information about the product is via Word of Mouth communication; consumers' knowledge of the product is only through friends who have already made a purchase. By analyzing the structure of the underlying endogenous process, we show that the optimal dynamic pricing policy for durable products drops the price to zero infinitely often, giving away the immediate profit in full to expand the informed network in order to exploit it in future. We provide evidence for this behavior from smartphone applications, where price histories indicate frequent free-offerings for many apps. Moreover, we show that despite infinitely often drops of the price to zero, the optimal price trajectory does not get trapped near zero. When externalities are present, we show that a strong enough network externality can push the price drops to a nonzero level, but similar price fluctuations to this new price floor still remain. When the product is nondurable, we show that the fluctuations disappear after a finite time.

In this paper we study the redundancy of Huffman codes. In particular, we consider sources for which the probability of one of the source symbols is known. We prove a conjecture of Ye and Yeung regarding the upper bound on the redundancy of such Huffman codes, which yields in a tight upper bound. We also derive a tight lower bound for the redundancy under the same assumption. We further apply the method introduced in this paper to other related problems. It is shown that several other previously known bounds with different constraints follow immediately from our results.Comment: 23 pages, 7 figures, accepted for publication in IEEE Transaction on Information Theor

Abstract-We consider the decentralized bandwidth/rate allocation problem in multi-rate multicast service provisioning with strategic users. We demonstrate that such a situation is the combination of a market problem and a public goods problem. We present a mechanism/game form which possesses the following properties when the users' utilities are concave:(1) It implements in Nash equilibria the solution of the corresponding centralized rate allocation problem in multi-rate multicast service provisioning. (2) It is individually rational. (3) It is budget-balanced at all Nash equilibria of the game induced by the mechanism/game form as well as at all off equilibrium messages/strategies that result in feasible allocations.