Browsing by Subject "Nash Equilibrium"
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Item Demand Effects in Productivity and Efficiency Analysis(2012-07-16) Lee, Chia-YenDemand fluctuations will bias the measurement of productivity and efficiency. This dissertation described three ways to characterize the effect of demand fluctuations. First, a two-dimensional efficiency decomposition (2DED) of profitability is proposed for manufacturing, service, or hybrid production systems to account for the demand effect. The first dimension identifies four components of efficiency: capacity design, demand generation, operations, and demand consumption, using Network Data Envelopment Analysis (Network DEA). The second dimension decomposes the efficiency measures and integrates them into a profitability efficiency framework. Thus, each component's profitability change can be analyzed based on technical efficiency change, scale efficiency change and allocative efficiency change. Second, this study proposes a proactive DEA model to account for demand fluctuations and proposes input or output adjustments to maximize effective production. Demand fluctuations lead to variations in the output levels affecting measures of technical efficiency. In the short-run, firms can adjust their variable resources to address the demand fluctuates and perform more efficiently. Proactive DEA is a short-run capacity planning method, proposed to provide decision support to a firm interested in improving the effectiveness of a production system under demand uncertainty using a stochastic programming DEA (SPDEA) approach. This method improves the decision making related to short-run capacity expansion and estimates the expected value of effectiveness given demand. In the third part of the dissertation, a Nash-Cournot equilibrium is identified for an oligopolistic market. The standard assumption in the efficiency literature that firms desire to produce on the production frontier may not hold in an oligopolistic market where the production decisions of all firms will determine the market price, i.e. an increase in a firm's output level leads to a lower market clearing price and potentially-lower profits. Models for both the production possibility set and the inverse demand function are used to identify a Nash-Cournot equilibrium and improvement targets which may not be on the strongly efficient production frontier. This behavior is referred to as rational inefficiency because the firm reduces its productivity levels in order to increase profits.Item Machinery sharing by agribusiness firms: methodology, application, and simulation(2009-05-15) Wolfley, Jared LynnMachinery investments represent a substantial portion of agribusiness firms? costs. Because of high machinery costs, variable profit margins, and increasing competition, agribusiness managers continually seek methods to maintain profitability and manage risk. One relatively new method is jointly owning and sharing machinery. Contract design issues to enhance horizontal linkages between firms through machinery sharing are addressed. Specifically, costs and depreciation sharing between two firms entering into a joint machinery ownership contract are examined. Two, two-player models, a Nash equilibrium game theoretical model and an applied two-farm simulation model are used to determine impacts of machinery sharing on firms engaged in machinery sharing. The Nash equilibrium model determines theoretical optimal sharing rules for two generic firms. Using the Nash equilibrium model as the basis, the two-farm simulation model provides more specific insights into joint harvest machinery sharing. Both models include contractual components that are uniquely associated with machinery sharing. Contractual components include penalty payment structure for untimely machinery delivery and the percentages of shared costs paid and depreciation claimed paid by each firm. Harvesting windows for each farm and yield reductions associated with untimely machinery delivery are accounted for within the models. Machinery sharing can increase the NPV of after tax cash flows and potentially reduce risk. Sharing will, however, not occur if own marginal transaction costs and/or marginal penalty costs associated with untimely machinery delivery are too large. Further, if the marginal costs of sharing are small relative to own marginal net benefits, sharing will not occur. There are potential tradeoffs between the percentage of shared costs paid and the percentage of shared depreciation claimed depending on each farms? specific tax deductions. Harvesting window overlaps help determine the viability of machinery sharing. Farms may be better off sharing larger, more efficient machinery than using smaller machinery even when harvest must be delayed. Percentages of shared costs, depreciation, and tax deductions have important tax implications that impact the after tax cash flows and should be considered when negotiating machinery sharing contracts.Item Risk Measures Constituting Risk Metrics for Decision Making in the Chemical Process Industry(2012-02-14) Prem, KatherineThe occurrence of catastrophic incidents in the process industry leave a marked legacy of resulting in staggering economic and societal losses incurred by the company, the government and the society. The work described herein is a novel approach proposed to help predict and mitigate potential catastrophes from occurring and for understanding the stakes at risk for better risk informed decision making. The methodology includes societal impact as risk measures along with tangible asset damage monetization. Predicting incidents as leading metrics is pivotal to improving plant processes and, for individual and societal safety in the vicinity of the plant (portfolio). From this study it can be concluded that the comprehensive judgments of all the risks and losses should entail the analysis of the overall results of all possible incident scenarios. Value-at-Risk (VaR) is most suitable as an overall measure for many scenarios and for large number of portfolio assets. FN-curves and F$-curves can be correlated and this is very beneficial for understanding the trends of historical incidents in the U.S. chemical process industry. Analyzing historical databases can provide valuable information on the incident occurrences and their consequences as lagging metrics (or lagging indicators) for the mitigation of the portfolio risks. From this study it can be concluded that there is a strong statistical relationship between the different consequence tiers of the safety pyramid and Heinrich?s safety pyramid is comparable to data mined from the HSEES database. Furthermore, any chemical plant operation is robust only when a strategic balance is struck between optimal plant operations and, maintaining health, safety and sustaining environment. The balance emerges from choosing the best option amidst several conflicting parameters. Strategies for normative decision making should be utilized for making choices under uncertainty. Hence, decision theory is utilized here for laying the framework for choice making of optimum portfolio option among several competing portfolios. For understanding the strategic interactions of the different contributing representative sets that play a key role in determining the most preferred action for optimum production and safety, the concepts of game theory are utilized and framework has been provided as novel application to chemical process industry.Item Strategic behavior analysis in electricity markets(2003-05) Son, You Seok; Baldick, RossStrategic behaviors in electricity markets are analyzed. Three related topics are investigated. The first topic is a research about the NE search algorithm for complex non-cooperative games in electricity markets with transmission constraints. Hybrid co-evolutionary programming is suggested and simulated for complex examples. The second topic is an analysis about the competing pricing mechanisms of uniform and pay-as-bid pricing in an electricity market. We prove that for a two-player static game the Nash Equilibrium under pay-as-bid pricing will yield less total revenue in expectation than under uniform pricing when demand is inelastic. The third topic is to address a market power mitigation issue of the current Texas electricity market by limiting Transmission Congestion Right (TCR) ownership. The strategic coordination of inter zonal scheduling and balancing market manipulation is analyzed. A market power measurement algorithm useful to determine the proper level of TCR ownership limitation is suggested.