Mark Lijesen

Bio: Mark Lijesen is an academic researcher from VU University Amsterdam. The author has contributed to research in topics: Competition (economics) & Product differentiation. The author has an hindex of 14, co-authored 52 publications receiving 1062 citations. Previous affiliations of Mark Lijesen include Economic Policy Institute & University of British Columbia.

The real-time price elasticity of electricity

Abstract: The real-time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices. Despite the importance, empirical estimates of the real-time elasticity are hardly available. This paper provides a quantification of the real-time relationship between total peak demand and spot market prices. We find a low value for the real-time price elasticity, which may partly be explained from the fact that not all users observe the spot market price. If we correct for this phenomenon, we find the elasticity to be fairly low for consumers currently active in the spot market. If this conclusion applies to all users, this would imply a limited scope for government intervention in supply security issues.

An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers

Abstract: In this paper, the authors analyze how the pricing behavior of unregulated airports might affect the downstream airline competition, particularly when competing airlines such as full service airlines (FSAs) and low cost carriers (LCCs) offer differentiated services in the market place. The authors use a duoply model to show that the level of competition in downstream airline markets is reduced when an airport increases its airside service charges, such as aircraft landing fees, by the same amount to all airlines. This is because an increase such as this would reduce equilibrium outputs and profits of LCCs proportionally more than those of FSAs. Numerical simulations and sensitivity tests confirm these effects.

Adjusting the Herfindahl index for close substitutes: an application to pricing in civil aviation

Abstract: The Herfindahl–Hirschman index (HHI) is a well known concentration measure, which is both widely used and widely criticized. The main shortcoming of the HHI is its sensitivity for the relevant market definition, in terms of both geographical boundaries and in terms of product homogeneity. In this paper we develop an adjusted version of the HHI that accounts for close substitutes. We test the adjusted HHI empirically for civil aviation, using airfare data. Our results suggest that the adjusted index generates better results than the traditional indicator.

Measuring competition in civil aviation

Abstract: Markets in civil aviation are characterized by large differences in the level of competition, both between time periods as between regions. To measure competition, several indicators are available, such as the number of competitors, the C4-index and the Herfindahl index. We use these measures in simulations of events that influence the level of competition, such as growing market shares, entry and merger. We find that there are events where different measures lead to different outcomes, not only in magnitude but also in sign. Competition indicators should be used with caution and attention should be devoted to the definition of the market and the importance of imperfect substitutes. The simultaneous use of several indicators, along with economic intuition and common sense reduces the risks involved.

A summary of demand response in electricity markets

Abstract: This paper presents a summary of Demand Response (DR) in deregulated electricity markets. The definition and the classification of DR as well as potential benefits and associated cost components are presented. In addition, the most common indices used for DR measurement and evaluation are highlighted, and some utilities’ experiences with different demand response programs are discussed. Finally, the effect of demand response in electricity prices is highlighted using a simulated case study.

Energy efficiency: economics and policy

Abstract: Energy efficiency and conservation are major factors in the reduction of the environmental impact of the energy sector, particularly with regard to climate change. Energy efficiency also contributes to reducing external dependence and vulnerabilities in the energy domain. In this paper, we discuss the factors that influence energy efficiency and conservation decisions, and the most appropriate policies for their promotion. Although not all public policies seem justified, we argue that specific policies for promoting energy conservation may be required, preferably based on economic instruments or on the provision of information to consumers.

Demand response experience in Europe: Policies, programmes and implementation

Abstract: Over the last few years, load growth, increases in intermittent generation, declining technology costs and increasing recognition of the importance of customer behaviour in energy markets have brought about a change in the focus of Demand Response (DR) in Europe. The long standing programmes involving large industries, through interruptible tariffs and time of day pricing, have been increasingly complemented by programmes aimed at commercial and residential customer groups. Developments in DR vary substantially across Europe reflecting national conditions and triggered by different sets of policies, programmes and implementation schemes. This paper examines experiences within European countries as well as at European Union (EU) level, with the aim of understanding which factors have facilitated or impeded advances in DR. It describes initiatives, studies and policies of various European countries, with in-depth case studies of the UK, Italy and Spain. It is concluded that while business programmes, technical and economic potentials vary across Europe, there are common reasons as to why coordinated DR policies have been slow to emerge. This is because of the limited knowledge on DR energy saving capacities; high cost estimates for DR technologies and infrastructures; and policies focused on creating the conditions for liberalising the EU energy markets.

Information strategies and energy conservation behavior: A meta-analysis of experimental studies from 1975 to 2012

Abstract: Strategies that provide information about the environmental impact of activities are increasingly seen as effective to encourage conservation behavior. This article offers the most comprehensive meta-analysis of information based energy conservation experiments conducted to date. Based on evidence from 156 published field trials and 525,479 study subjects from 1975 to 2012, we quantify the energy savings from information based strategies. On average, individuals in the experiments reduced their electricity consumption by 7.4%. Our results also show that strategies providing individualized audits and consulting are comparatively more effective for conservation behavior than strategies that provide historical, peer comparison energy feedback. Interestingly, we find that pecuniary feedback and incentives lead to a relative increase in energy usage rather than induce conservation. We also find that the conservation effect diminishes with the rigor of the study, indicating potential methodological issues in the current literature.