A Well-Based Cost Function and the Economics of Exhaustible Resources: The Case of Natural Gas

Chermak, Janie; Patrick, Robert H.

doi:10.1006/jeem.1995.1012

Cited by 36 publications

(27 citation statements)

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“…Specifically; (1) t < T, (2) S(q) < 0, and (3) the user cost value of the production effects on the stock outweigh the discounted scale economies. These results are contrary to popular thought, Chermak and Patrick (1995) provide a general proof of this for the qualitative characteristics of this empirical cost function.…”

Section: Theoretical Implicationscontrasting

confidence: 55%

The economic possibilities of natural gas conservation: Antithetical results of prorationing regulation

Chermak

1996

J Regul Econ

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State prorationing regulations for natural gas production are intended to conserve resources, prevent waste, and, if necessary, protect the rights of property owners. This paper examines the effects of conservation regulations on the stock of the resource and on production costs. Results indicate rules that do not consider the nature of the physical stock and how it is recovered, as well as the heterogeneous nature of the reservoir, may result in sub-optimal production paths for individual wells. Such inefficiencies increase production costs and may in some cases, reduce the recoverable stock; results antithetical to the intended goals of the regulation.

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Section: Theoretical Implicationscontrasting

confidence: 55%

The economic possibilities of natural gas conservation: Antithetical results of prorationing regulation

Chermak

1996

J Regul Econ

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“…However, Bushnell et al (2008) find that, after accounting for vertical arrangements and contracting, Cournot behaviour approximates very well actual prices in the California, New England and PJM electricity markets. 11 Allaz and Vila (1993) study a duopoly model with risk-neutral firms; here we consider an n-firm version with risk-averse firms that maximise their CARA utility functions. Allaz (1992) uses a mean-variance utility function instead.…”

Section: Observable Forward Contracts (Allaz and Vila (1993))mentioning

confidence: 99%

“…Pipelines also allow for line-pack, that is, for the increase in the amount of gas the system can carry by temporarily raising its pressure. Concerning the costs of producers, Chermak and Patrick (1995) estimate that marginal costs of natural gas production are decreasing.…”

Section: Forward Market Stagementioning

confidence: 99%

Do Firms Sell Forward for Strategic Reasons? An Application to the Wholesale Market for Natural Gas

Eijkel

Moraga-González

2010

SSRN Journal

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Cournot models of oligopolistic interaction in forward and spot markets have shown that firms may sell forward for strategic as well as for risk-hedging reasons. Using data from the Dutch wholesale market for natural gas where we observe the number of players, spot and forward sales, churn rates and prices, this paper presents evidence that strategic reasons play an important role at explaining the observed firms' hedging activity. Our test for strategic behaviour is based on the theoretical relationship between the number of sellers and the incentives to sell forward: if risk-hedging is the only motive behind firms' decision to sell forward, then hedging activity ought to decrease in the number of firms; otherwise, if strategic reasons are relevant, then firms incentives to sell forward must increase in the number of competitors.

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“…They analyzed an oligopoly model of exhaustible resource extraction and proposed several predictions about producers' relative extraction patterns. Additionally, Chermak et al [11] found natural gas also had this nature when focusing on the cost function and the economics of exhaustible resources. With the deepening of research, entropy theory has been widely used in the research methods of system complexity, and many valuable results have been obtained.…”

Section: Introductionmentioning

confidence: 99%

Research Entropy Complexity about the Nonlinear Dynamic Delay Game Model

Zhan

Ren

2017

Entropy

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Based on the research of domestic and foreign scholars, this paper has improved and established a double oligopoly market model of renewable energy, and analyzed the complex dynamic characteristics of a system based on entropy theory and chaos theory, such as equilibrium point, stability, Hopf bifurcation conditions, etc. This paper also studied and simulated the effects of the natural growth rate of energy and the single delay decision on the renewable energy system by minimizing the entropy of the system and reducing the system instability to a minimum, so that the degree of disorder within the system was reduced. The results show that with the increase of the natural growth rate of energy, the stability of the system is not affected, but the market demand of the oligopoly 1 is gradually reducing and the market demand of the oligopoly 2 is gradually increasing. At the same time, a single oligopoly making the time delay decision will affect the stability of the two oligopolies. With the increase of delay, the time required to reach the stable state will grow, and the system will eventually enter the Hopf bifurcation, thus the system will have its entropy increased and fall into an unstable state. Therefore, in the actual market of renewable energy, oligopolies should pay attention to the natural growth rate of energy and time delay, ensuring the stability of the game process and the orderliness of the system.

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A Well-Based Cost Function and the Economics of Exhaustible Resources: The Case of Natural Gas

Cited by 36 publications

References 0 publications

The economic possibilities of natural gas conservation: Antithetical results of prorationing regulation

The economic possibilities of natural gas conservation: Antithetical results of prorationing regulation

Do Firms Sell Forward for Strategic Reasons? An Application to the Wholesale Market for Natural Gas

Research Entropy Complexity about the Nonlinear Dynamic Delay Game Model

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