MON 2:00 PM Parallel - Microeconomics: Price Dynamics

Full Report:
Logical vs. Historical Time in a Price Adjustment Mechanism, by Kaoru Yamaguchi


Kaoru first explained three theories: Neoclassical, Marxist and Keynesian economics. He emphasized that neoclassical economics makes models more dynamic. Kaoru has built a system dynamics model. He found that price behavior and neoclassical assumption of market economies are inconsistent. In his presentation, he also compared two price adjustments. One of them ran on logical time, and the other ran on historical time. The results have shown that the equilibrium state is possible to attain even under off-equilibrium processes of transaction on historical time, if interplay of price, inventory, and their interdependent feedback relations are well modeled using system dynamics.

Platinum Supply and the Growth of Fuel Cell Vehicles, by Khalid Saeed

The researchers examined six different scenarios from generic best and worst case scenarios to specific circumstances and events. Investigating these scenarios can help determine the maximum and minimum price range that can be expected.
In the worst case scenario, by 2038 (thirty years), with the price of $78,724 per kg of platinum and a loading of one-hundred grams, the cost of platinum for a fuel cell vehicle (FCV) would be $7,872. The worst case scenario is infeasible because the cost of platinum is too high and there is a large decrease in platinum reserves. The middle ground scenario is feasible only if the other components of an FCV have dramatic reductions in price.

For the best case scenario, the price of platinum is only about $42,000 per kg by 2038.
Using the twenty gram loading, the cost of platinum per FCV is only $840. The best case is feasible under these circumstances. Khalid also examined some other scenarios. In short, the results show that the development of fuel cell vehicles in the United States depends on factors such as platinum loading, FCV life expectancy, recycling efficiency, and how quickly FCVs are introduced to the market.

Estimating Impacts of Water Scarcity Pricing, by Jason Hansen

First, Jason raised the problem that water scarcity has increased and there is argument regarding the price of water and optimal water extraction. Jason then explained the diminishing return of water, theory models, variables, benefits, and costs. He then used dynamic simulation to evaluate the impacts of controlled groundwater pumping.

The simulation suggests that Status Quo Management (SQM) impacts customer behavior and can reduce aquifer height decline, illustrating the SQM as a second-best alternative.

The optimal pricing program, which measures scarcity value by marginal user cost, preserves at least 21.6 feet of aquifer height more than a status-quo management program.

To the extent the simulated utility is similar to other water utilities, this result suggests that, without optimal water pricing, utilities may not be able to generate enough revenue to invest in capital improvements projects like water infrastructure replacement.

Phuong Linh Nguyen