Research has suggested that firms may benefit from price uncertainty - about input commodities - because it creates an "option value". We use a stylized mathematical model to explore and generalize this claim and to specify its implications for firms' investment decisions under various setups....

This paper investigates the existence of correlated equilibria of a shareholder voting game. It is shown that there exists a correlated equilibrium component where a minimum winning coalition (MWC) of the supporters of status quo and a dominant shareholder vote with strictly positive...

We highlight the impact of capital quality, i.e., the depreciation rate of capital assets, on firms' investment behavior, endogenous output price dynamics, and industry equilibrium outcomes. To rigorously examine this question, a continuous-time model of dynamic capacity investment under...

We show that including Google Search Volume (GSV) for bus and train, as proxies for the willingness of the consumers to use public transportation services, significantly improves the explanatory and predictive power of the estimated demand for the United States retail gasoline. We find that...

The income elasticity of consumption depends not only on the demand function but also on the characteristics of the supply function. If the supply of the underlying good (e.g., gasoline, natural gas, or housing) is not completely elastic, the income elasticity of equilibrium consumption will be...

This paper examines the effect of technological uncertainty on the optimal pricing and investment decisions in a two-sided market. A platform offers a basic good and a developer offers a complementary good. The performance of the complementary good is stochastic and is endogenously determined by...

Renewable Identification Number (RIN) is a floor-and-trade mechanism to enforce renewable energy standards in the US transportation fuels market. Motivated by several real-world cases of gasoline producers' bankruptcy or financial stress caused by volatile RINs prices, we offer a dynamic...

The income elasticity of consumption depends not only on the demand function but also on the characteristics of the supply function. If supply is not completely elastic, the income elasticity of consumption will be less than the income elasticity of demand, with the difference depending on the...

Machine Learning (ML) is generating new opportunities for innovative research in energy economics and finance. We critically review the burgeoning literature dedicated to Energy Economics/Finance applications of ML. Our review identifies applications in areas such as predicting energy prices...

The value of a representative ethanol producer that benefits from both low and high gasoline prices is modeled. Ethanol producers make a modest competitive profit in the mandate-induced region of production. A low price of gasoline increases the demand for blend ethanol and consequently...