UMD Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/3
New submissions to the thesis/dissertation collections are added automatically as they are received from the Graduate School. Currently, the Graduate School deposits all theses and dissertations from a given semester after the official graduation date. This means that there may be up to a 4 month delay in the appearance of a given thesis/dissertation in DRUM.
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Item Electricity Markets Price Risk, Pollution, and Policies(2015) Werner, Daniel Patrick; Houde, Sebastien; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The electricity sector is a significant contributor to the economic and environmental health of the United States, with annual revenues well over \$300 billion and responsibility for approximately one third of all carbon emissions. The last several decades have brought significant changes to economic and environmental policies applicable to the electricity sector, including market restructuring and a variety of air quality improvement policies. This thesis builds on previous research of these issues through three related essays on energy economics and policy. The first essay examines the local environmental impacts that can be attributed to renewable portfolio standards. Renewable portfolio standards (RPS) have been adopted by the majority of states in the U.S. to encourage electricity from renewable sources. Previous studies omit an analysis of local and regional pollutants, so this paper provides an empirical investigation into pollutant reductions from RPS while accounting for policy heterogeneity across states. Using a nation-wide panel of pollution monitoring stations in conjunction with local and national economic data, I find that adopting RPS results in significant sulfur dioxide reductions and modest nitrogen oxide reductions. I find no evidence of particulate matter reductions. Lastly, the analysis shows that pollution reductions are driven by groups of states whose neighbors also adopt RPS, which is likely because of pollution spillover effects. The second essay examines the importance of ramping cost to electricity price volatility. High price volatility has plagued electricity market participants for decades and is increasingly important in the context of growing intermittent renewables. Although electricity market price behavior generally has been well studied in the last decade, the literature is sparse when discussing the importance of generator ramping costs to price volatility. This paper contributes to the literature by first formalizing the intuitive link between ramping costs and price volatility in a multi-period competitive equilibrium. The fundamental result of the model shows how price volatility rises with ramping costs. This notion is tested empirically using a pooled event study regression, a two-stage least squares (2SLS) specification, and a generalized autoregressive conditional heteroskedasticity (GARCH) model. The econometric results all confirm that price volatility is significantly decreased by additional natural gas capacity, which has comparatively low ramping costs. This marks the first rigorous study to quantify the pecuniary externalities within the New England market's generating profile. A simulation also explores how annualized volatility changes over time during a shifting generation profile, noting that natural gas generators can offset the volatility increases from increasing wind generation. Lastly, there is no evidence that natural gas capacity additions reduce the forward premium. The third essay examines price convergence in the wholesale electricity markets in the context of transaction costs on virtual bids. Virtual bidding has been introduced in most restructured electricity markets in the United States with the intent to manage price risk, increase financial liquidity, and minimize deviations between forward prices and spot prices. Previous literature argues that even without virtual bids, generators can attempt to exploit the forward premium through altering bids related to physical scheduling, which is a costly way to induce price convergence. While previous literature has shown that the introduction of virtual bids does lead towards price convergence, it is also a relatively large market shock that potentially introduces new market participants with different risk preferences. This paper is the first to explicitly test the effect of increasing virtual bid transaction costs on forward price premiums using a natural experiment in a market where virtual bidding is already established. Using high-frequency price data with an event study approach, I find that increasing transaction costs on virtual bids leads to significant increases in forward premiums and significant decreases in the total number of cleared virtual bids. Additionally, my analysis supports recent literature arguing that the day-ahead prices have converged to become an unbiased predictor of real-time prices, which is an important condition for efficient markets. Lastly, I find no evidence that increasing transaction costs on virtual bids translates to increases in intra-day price volatility.Item Essays on high-status fallacies(2012) Malter, Daniel; Goldfarb, Brent; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation comprises three essays. Each essay challenges some of the commonly held beliefs about and provides novel insights into the role of status in markets. In essay 1, I study the causal effect of producer status on the price premiums producers are able to charge for their products, the underlying cause for this premium, and producers' incentives to invest in quality under a fixed status hierarchy. In essays 2 and 3, I investigate on the organizational and individual level, respectively, how high-status affiliations affect an audience's evaluation of a social actor's identity. The contribution of these papers lies in highlighting reasons for, mechanisms through, and conditions under which high-status affiliations become a liability. Essay 1 addresses the recent debate about the causality, cause, and consequence of returns to status on the organizational level. I exploit the \textit{grand cru} classification of chateaux of the M\'{e}doc created in 1855 as an unambiguous and exogenous status signal. I study its effect on wine prices and the incentive to invest in quality over a period of time during which information about producer and product quality has become increasingly munificent. As for the causality of status effects, I find evidence for causal returns to organizational status, but these returns are substantially overestimated if quality and reputation are not accurately controlled on the product level. As for the cause of status effects, I find that uncertainty is not a necessary condition and the taste for high-status products is a sufficient condition for returns to organizational status. As for the consequence of status effects, I find that higher-status producers' greater incentives to invest in quality are insufficient to enforce a separating equilibrium in producers' quality choices. The study cautions that causality claims in the status literature hinge upon proper identification, that returns to status can have alternative root causes, and that status hierarchies need not enshrine the quality hierarchy among producers. In essay 2, I propose that an organization's growth potential may suffer if its identity is confounded with or eclipsed by the high-status organizations with which it collaborates and competes. I devise two network measures to capture the degree to which identities are confounded or eclipsed. The theory is then tested with data on U.S. venture capital firm syndication between 1995 and 2009. The more a VC firm's identity is confounded with the identities of co-syndicating high-status firms, the smaller is the likelihood that it is able to raise a new fund. Further, the likelihood that an eclipsed identity hurts a VC firm's chances to raise a new fund increases in the firm's status. These findings suggest that in status-based market competition an organization needs to justify its identity claim by distinguishing itself from the established elite. Essay 3 picks up on anecdotal evidence that some audiences discount actors with strong high-status affiliations. This contradicts the extant literature, which in its overwhelming majority finds that an actor's chance to find audience approval for his identity increases in the strength of his high-status affiliations. In this article, I develop a unifying theoretical framework that is able to reconcile such seemingly contradictory effects. I propose that the optimal strength of high-status affiliations depends on an audience's taste for uniqueness/conformity in identity and the audience's uncertainty about the actor. An experiment shows that taste and uncertainty have interdependent effects, suggests that the extant status literature rests on implicit assumptions about audience taste, and highlights two conditions under which strong high-status affiliations are detrimental. Studies of rank mobility in academia and in a fraternity provide corroborating evidence for one of these conditions. Conformity-seeking audiences penalize too strong high-status affiliations if their uncertainty about the actor is high. The implications for identity design and social structure are discussed.