strategic capacity rationing to induce early purchases dynamic pricing offers the potential to increase revenues at the same time it creates an incentive for customers to strategize over the timing of their purchases a firm should ideally account for this behavior when making its pricing and stocking decisions in particular we investigate whether it is optimal for a firm to create rationing risk by deliberately understocking products then the resulting threat of shortages creates an incentive for customers to purchase early at higher prices but when does such a strategy make sense if it is profitable to create shortages what is the optimal amount of rationing risk to create we develop a stylized model to study this problem in our model customers have heterogeneous valuations for the firm s product and face declining prices over two periods customers are assumed to have identical risk preferences and know the price path and fill rate in each period via its capacity choice the firm is able to control the fill rate and hence the rationing risk faced by customers customers behave strategically and weigh the payoff of immediate purchases against the expected payoff of delaying their purchases we analyze the capacity choice that maximizes the firm s profits first we consider a monopoly market and characterize conditions under which rationing is optimal we examine how the optimal amount of rationing is affected by the magnitude of price changes over time and the degree of risk aversion among customers we then analyze an oligopoly version of the model and show that competition reduces the firms ability to profit from rationing indeed there exists a critical number of firms beyond which a rationing equilibrium cannot be supported

the value of fast fashion quick response enhanced design and strategic consumer behavior a fast fashion system combines quick response production capabilities with enhanced product design capabilities to both design hot products that capture the latest consumer trends and exploit minimal production lead times to match supply with uncertain demand we develop a model of such a system and compare its performance to three alternative systems quick response only systems enhanced design only systems and traditional systems which lack both enhanced design and quick response capabilities in particular we focus on the impact of each of the four systems on strategic or forward looking consumer purchasing behavior i e the intentional delay in purchasing an item at the full price to obtain it during an end of season clearance we find that enhanced design helps to mitigate strategic behavior by offering consumers a product they value more making them less willing to risk waiting for a clearance sale and possibly experiencing a stockout quick response mitigates strategic behavior through a different mechanism by better matching supply to demand it reduces the chance of a clearance sale most importantly we find that although it is possible for quick response and enhanced design to be either complements or substitutes the complementarity effect tends to dominate hence when both quick response and enhanced design are combined in a fast fashion system the firm typically enjoys a greater incremental increase in profit than the sum of the increases resulting from employing either system in isolation furthermore complementarity is strongest when customers are very strategic we conclude that fast fashion systems can be of significant value particularly when consumers exhibit strategic behavior this paper was accepted by yossi aviv operations management

the hidden information content of price movements dynamic patterns of prices in different markets may motivate strategic consumers who could be monitoring price movements over time to game vendors do past price movements carry information about the probability and magnitude of future price drops conducting empirical work in the airline industry on near 1000 us domestic routes we find that some price metrics carry information about future price swings these variables can assist in predicting the likelihood and magnitude of price drops these price metrics yield significantly different signals which also vary as the prediction horizon changes

measuring the forest and income impacts of forest user group participation under malawi s forest co management program abstract we evaluate the impacts of forest user group participation under malawi s forest co management program on forest clearing and household income we use panel data collected in 2002 and 2009 in two districts of malawi we employ a two step regression strategy to control for endogenous selection into the program using propensity score weighting and propensity score analysis with non parametric regression we find that the program lowered the rate and extent of forest clearing we also find that the program had no discernible impact on household forest incomes suggesting that the program helped achieve environmental goals without compromising household livelihoods

retail pricing and clearance sales sellers of new products are faced with having to guess demand conditions to set price appropriately but sellers are able to adjustprice over time and to learn from past mistakes additionally it is not necessary that all goods be sold with certainty it is sometimes better to set a high price and to risk no sale this process is modeledto explain retail pricing behavior and the time distribution of transactions prices start high and fall as a function of time on theshelf the initial price and rate of decline can be predicted and depends on thinness of the market the proportion of customers who are window shoppers and other observable characteristics copyright 1986 by american economic association

the timing and magnitude of retail store markdowns evidence from weekends and holidays we examine daily prices of eight goods at seventeen retail stores collected in ann arbor michigan over a four month period from november 1 to february 28 we focus on weekly and seasonal price patterns and on the frequency of price markdowns or sales there were frequent markdowns in the intensive shopping period prior to christmas and a tendency for such sales to occur on weekends we interpret these findings as evidence that a significant number of markdowns are timed to occur when shopping intensity is exogenously high we complement the imperfect information based motives for sales in the literature by contributing an additional element based on the role of bulk shopping and increasing returns in the shopping technology

impacts of access and benefit sharing on livelihoods and forest case of participatory forest management in ethiopia the introduction of participatory forest management pfm may involve the exclusion of previous forest users from accessing forest resources this is the case for pfm in the two ethiopian pioneer sites dodola and chilimo that represent two distinct pfm approaches in ethiopia this paper analyses how pfm after controlling pre pfm differences affects members of forest user groups fugs and non members total annual incomes forest incomes expenditures and livestock asset holdings income and asset data were collected from 635 randomly selected households data were analysed using propensity score matching models results show that in dodola where commercial timber harvest is allowed the introduction of pfm means that fugs have higher livestock assets and forest income than non members the average total income and the expenditure for members and nonmembers however were not significantly different in chilimo site the result is the opposite the introduction of pfm means that fug members have lower total incomes and assets than non members based on our findings we recommend that the pfm scaling up approaches in ethiopia which currently allow fugs only subsistence use from forest resources need to be revised

government transaction policy and gresham s law abstract a search theoretic model is used to study how legal restrictions may account for the fact that gresham s law sometimes holds but other times fails legal restrictions is modeled here as policies that government adopts in the transactions with private agents such as at what prices it accepts a currency in exchange for goods and at what ratios it conducts currency exchange a government policy sufficiently favorable to light coins can induce the existence of an equilibrium where both coins circulate and light coins are even accepted at a premium a policy favorable to heavy coins may increase their value to such an extent that they are hoarded from circulation when this equilibrium did not exist without interventions

reducing the cost of demand uncertainty through accurate response to early sales traditionally fashion products have incurred high losses due to stockouts and inventory obsolence because long lead times coupled with a concentrated selling season force all or at least most production to be committed before demand information is available under a quick response system lead times are shortened sufficiently to allow a greater portion of production to be scheduled in response to initial demand we model and analyze the decisions required under quick response and give a method for estimating the demand probability distributions needed in our model we applied these procedures with a major fashion skiwear firm and found that cost relative to the current informal response system was reduced by enough to increase profits by 60 relative to the cost that would have been incurred if no response were used optimized response reduces cost by enough to roughly quadruple profits

note the newsvendor model with endogenous demand this paper considers a firm s price and inventory policy when it faces uncertain demand that depends on both price and inventory level the authors extend the classic newsvendor model by assuming that expected utility maximizing consumers choose between visiting the firm and consuming an exogenous outside option the outside option represents the utility the consumer forgoes when she chooses to visit the firm before knowing whether or not the product will be available the authors investigate both the case in which the firm s price is exogenous and the case in which price is chosen optimally the paper makes two contributions first the authors show that the firm holds more inventories provides a higher fill rate attracts more customers and earns higher profits when it internalizes the effect of its inventory on demand second the authors show that in the endogenous price case the firm s two dimensional decision problem can be reduced to two sequential single variable optimizations as a result the endogenous price case is as easy to solve as the exogenous price case

pricing substitutable products under consumer regrets abstract since many firms provide consumers with substitutable products which may be launched sequentially over several periods strategic consumers need to make their purchase or wait decisions at the beginning of the first period however they may face second period valuation uncertainty when such decisions are made and decisions made under uncertainty may lead to regrets ex post lots of empirical studies show that consumers anticipate these regrets and take anticipated regrets into consideration this paper studies the impact of valuation uncertainty and consumer anticipated regrets on consumer purchasing behavior firm s prices and pricing strategy we consider a firm selling two substitutable products over two periods one product for one period in a selling season the firm announces all its prices at the beginning of the selling season price commitment or announces each price at the beginning of each period dynamic pricing besides a consumer may experience purchase regret from missing a better choice if she chooses to buy in the first period and otherwise wait regret if she chooses to wait consumers make decisions based on the firm s prices and strategies and the anticipated regrets we find that a firm may need to set a lower price in the first period even when the average valuation in this period is higher second with price commitment the impact of each type of regret on the optimal second period price can be opposite and depends on the value of the uncertainty and regret parameters finally we show that price commitment dominates dynamic pricing and the value of price commitment depends on the uncertainty and anticipated regret

recentralizing while decentralizing how national governments reappropriate forest resources summary decentralization initiatives have been launched in the majority of developing countries but these rarely lay the foundations necessary to reach decentralization s purported efficiency and equity benefits this paper uses a comparative empirical approach to show how central governments in six countries senegal uganda nepal indonesia bolivia and nicaragua use a variety of strategies to obstruct the democratic decentralization of resource management and hence retain central control effective decentralization requires the construction of accountable institutions at all levels of government and a secure domain of autonomous decision making at the local level

sugarcane outgrowers in ethiopia forced to remain poor contract farming is often seen as a panacea to many of the challenges faced by agricultural production in developing countries given the large heterogeneity of contract farming arrangements it is debatable whether all kinds of contract farming arrangements offer benefits to participating smallholders we apply matching methods to analyze the effects of a public sugarcane outgrower scheme in ethiopia participation in the outgrower scheme significantly reduces the income and asset stocks of outgrowers who contributed irrigated land to the outgrower scheme while the effect was insignificant for outgrowers who contributed rain fed land we provide several explanations and discuss policy implications

dynamic pricing when consumers are strategic analysis of posted and contingent pricing schemes abstract we study dynamic pricing policies for a monopolist selling perishable products over a finite time horizon to strategic buyers buyers are strategic in the sense that they anticipate the firm s price policies it is expensive and administratively difficult for most brick and mortar retailers to change prices placing limits on the number of price changes and the types of pricing policies they can adopt the simplest policy is to commit to a set of price changes a more complex alternative is to let the price depend on sales history we investigate two pricing schemes that we call posted and contingent pricing using the posted pricing scheme the firm announces a set of prices at the beginning of the horizon in the contingent pricing scheme price evolution depends upon demand realization our focus is on the posted pricing scheme because of its ease of implementation counter to intuition we find that neither a posted pricing scheme nor a contingent pricing scheme is dominant and the difference in expected revenues of these two schemes is small limiting the number of price changes will result in a decrease in expected revenues we show that a multi unit auction with a reservation price provides an upper bound for expected revenues for both pricing schemes numerical examples suggest that a posted pricing scheme with two or three price changes is enough to achieve revenues that are close to the upper bound dynamic pricing is only useful when strategic buyers perceive scarcity we study the impact of scarcity and derive the optimal stocking levels for large markets finally we investigate whether or not it is optimal for the seller to conceal inventory or sales information from buyers a firm benefits if it does not reveal the number of units it has available for sale at the beginning of the season or subsequently withholds information about the number of units sold

an evaluation of the swedish system of active labour market programmes in the 1990s we investigate the presence of short and long term effects from joining a swedish labor market program vis a vis more intense job search in open unemployment overall the impact of the program system is found to have been mixed joining a program has increased employment rates among participants a result robust to a misclassification problem in the data on the other hand it has also allowed participants to remain significantly longer on unemployment benefits and more generally in the unemployment system this being particularly the case for those entitled individuals entering a program around the time of their unemployment benefits exhaustion

gresham s law or gresham s fallacy gresham s law often takes two forms the rule that bad money drives out good money and a qualified version of that rule that requires a fixed exchange rate between the two monies yet history contr

strategic waiting for consumer generated quality information dynamic pricing of new experience goods in this paper we study the impact of consumer generated quality information e g consumer reviews on a firm s dynamic pricing strategy in the presence of strategic consumers such information is useful not only to the consumers that have not yet purchased the product but also to the firm the informativeness of the consumer generated quality information depends however on the volume of consumers who share their opinions and thus depends on the initial sales volume hence via its initial price the firm not only influences its revenue but also controls the quality information flow over time the firm may either enhance or dampen the quality information flow via increasing or decreasing initial sales the corresponding pricing strategy to steer the quality information flow is not always intuitive compared to the case without consumer generated quality information the firm may reduce the initial sales and lower the initial price interestingly the firm may get strictly worse off due to the consu

do the poor benefit from devolution policies evidence from malawi s forest co management program do local people especially vulnerable households benefit from devolution of forest management the authors apply the propensity score matching and decomposition techniques on household data from chimaliro and liwonde forest reserves under the pilot forest co management program in malawi after controlling for selection bias they find that while the program raises forest income for participants in chimaliro it reduces revenue for participants in liwonde interestingly results indicate that the program raises forest income for female and low income participants although male and richer participants capture more benefits due to discrimination and endowment differences accounting for 100 and 60 of the inter group income disparity respectively

gresham s law in nineteenth century america this paper examines several nineteenth century american tests of gresham s law these tests include both the conflict between the u s silver dollar and foreign silver dollars in the early national period and the conflict between the greenback dollar and the gold dollar during the civil war and its aftermath the authors find that gresham s law worked well and that a rival view which considers the natural outcome of such conflicts to be the concurrent circulation of cheap money at face value and dear money at a varying premium did not copyright 1995 by ohio state university press

managing product variety with advance selling and capacity restrictions abstract in this research we analyze the impact of advance selling with price discount on a firms ability to maximize the expected profit the production environment of the firm is characterized by short selling cycle multiple products demand variability and capacity restrictions the advance orders are randomly distributed with the parameters dependent on the discount levels under advance selling the advance orders are used to update the demand forecast of selling season and are delivered at the start of the selling season the problem is modeled as a three stage stochastic non linear programming problem we derive the concavity of the problem under customers willingness to buy in advance our solution methodology comprises the variance reduction technique of antithetic variates that gives credible value of price discount levels for different sets of demand values we also provide sensitivity analysis of the problem parameters to derive insights into the behavior of the expected profit and the benefits due to advance selling under capacity restrictions

newsvendor with multiple options of expediting we consider a manufacturer facing single period inventory planning problem with uncertain demand and multiple options of expediting the demand comes at a certain time in the future the manufacturer may order the product in advance with a relatively low cost she can order additional amount by expediting after the demand is realized there are a number of expediting options each of which corresponds to a certain delivery lead time and a unit procurement price the unit procurement price is decreasing over delivery lead time the selling price is also decreasing over time in this paper we assume that the manufacturer must deliver all products to the customer in a single shipment the problem can be formulated as a profit maximization problem we develop structural properties and show how the optimal solution can be identified efficiently in addition we compare our model with the classical newsvendor model and obtain a number of managerial insights

property rights regimes and natural resources a conceptual analysis the term common property resource is an example of a term repeatedly used to refer to property owned by a government or by no one it is also used for property owned by a community of resource users such usage leads to confusion in scientific study and policy analysis in this paper we develop a conceptual schema for arraying property rights regimes that distinguishes among diverse bundles of rights ranging from authorized user to claimant to proprietor and to owner we apply this conceptual schema to analyze findings from a variety of empirical settings including the maine lobster industry

does it pay to participate in decision making survey evidence on land co management in jiangsu province china member participation in decision making is a critical part of resource co management however little is known about the welfare consequences of participation this paper analyzes the impact of cooperative member participation in decision making on their incomes using data from 364 members of china s land cooperative program we distinguish two levels of participation in decision making voting and obtaining financial information and use a bivariate probit model and propensity score matching to estimate their impact the results indicate that household head s age gender and education and family size wealth and political affiliation determine participation in decision making participation in either voting or obtaining financial information has a positive impact on cooperative members land income there is also a strong joint effect of voting and obtaining information with an increase in land income of 16 we conclude that broad participation can ensure more equitable access to land income for members

a note on probability distributions with increasing generalized failure rates distributions with an increasing generalized failure rate igfr have useful applications in pricing and supply chain contracting problems we provide alternative characterizations of the igfr property that lead to simplify verifying whether the igfr condition holds we also relate the limit of the generalized failure rate and the moments of a distribution

optimal price skimming by a monopolist facing rational consumers this paper considers the intertemporal pricing problem for a monopolist marketing a new product the key feature differentiating this paper from the extant management science literature on intertemporal pricing is the assumption that consumers are intertemporal utility maximizers a subgame perfect nash equilibrium pricing policy is characterized and shown to involve intertemporal price discrimination we compare this policy to the optimal policy for a monopolist facing myopic consumers and find that for any given state prices are always lower with rational consumers than with myopic consumers for plausible parameter values the assumption of consumer rationality can be shown to lead to large differences in optimal prices moreover if a monopolist facing rational consumers implements the optimal myopic consumer pricing policy profits can be significantly less than if the monopolist follows the equilibrium pricing policy for rational consumers

decentralization and participation the governance of common pool resources in nepal s terai summary decentralization has emerged as an important instrument of environmental and development policy in the last two decades presumed benefits of environmental policy decentralization depend in significant measure on broad participation in the programs that governments create to decentralize decision making related to resource management this paper uses data from protected areas in nepal s terai to examine who participates in environmental decentralization programs on the basis of our statistical analysis we highlight the fact that the likelihood of participation in community level user groups is greater for those who are economically and socially better off we also find that individuals who have greater access to and who visit government offices related to decentralization policies more often are also more likely to participate in user groups created by state officials finally we find a negative correlation between education and levels of participation our study and analysis support the argument that for decentralization policies to be successful on equity issues it is important to build institutional mechanisms that encourage poorer and more marginal households to access government officials improve access to educational opportunities and create incentives to promote more interactions between less powerful rural residents and government officials 2005 elsevier ltd all rights reserved

markdown or everyday low price the role of behavioral motives we study a seller s optimal pricing and inventory strategies when behavioral nonpecuniary motives affect consumers purchase decisions in particular the seller chooses between two pricing strategies markdown or everyday low price and determines the optimal prices and inventory level two salient behavioral motives that impact consumers purchase decisions and the seller s optimal strategies are anticipated regret and misperception of product availability regret arises when a consumer initially chooses to wait but encounters stockout later or when the consumer buys the product at the high price but realizes that the product is still available at the markdown price in addition consumers often perceive the product s future availability to be different than its actual availability we determine and quantify that both regret and availability misperception have significant operational and profit implications for the seller for example ignoring these behavioral factors can result in up to 10 profit

research note the role of production lead time and demand uncertainty in marketing durable goods firms often have to make their production decisions under conditions of demand uncertainty this is especially true for product categories such as automobiles and technology goods where the lead time needed for manufacturing forces firms to make production decisions well in advance of the selling season once the firm has produced the goods the available production volume affects the firm s subsequent marketing decisions in this paper we study the relationship between the firm s production and marketing decisions for a durable goods manufacturer we develop a dynamic model of a durable product market in which the demand functions are developed from a micromodeling of consumer utility functions and an equilibrium analysis of consumer strategies after taking into account the demand uncertainty as well as the potential for cannibalization of future sales the manufacturer makes its production and sales decisions we find that the firm s optimal inventory level is u shaped in the durability of the product and that the firm suffers a larger loss due to uncertainty when it is leases rather than sells its products furthermore unlike the case for nondurables for durable goods we find that the effect of uncertainty persists even after the uncertainty has been resolved

purchasing pricing and quick response in the presence of strategic consumers we consider a retailer that sells a product with uncertain demand over a finite selling season the retailer sets an initial stocking quantity and at some predetermined point in the season optimally marks down remaining inventory we modify this classic setting by introducing three types of consumers myopic consumers who always purchase at the initial full price bargain hunting consumers who purchase only if the discounted price is sufficiently low and strategic consumers who strategically choose when to make their purchase a strategic consumer chooses between a purchase at the initial full price and a later purchase at an uncertain markdown price in equilibrium strategic consumers and the retailer make optimal decisions given their rational expectations regarding future prices availability of inventory and the behavior of other consumers we find that the retailer stocks less takes smaller price discounts and earns lower profit if strategic consumers are present than if there are no strategic consumers we find that a retailer should generally avoid committing to a price path over the season assuming such commitment is feasible committing to a markdown price or to not mark down at all is often too costly inventory may remain unsold even in the presence of strategic consumers the better approach is to be cautious with the initial quantity and then mark down optimally furthermore we discuss the value of quick response the ability to procure additional inventory after obtaining updated demand information albeit at a higher unit cost than the initial order we find that the value of quick response to a retailer is generally much greater in the presence of strategic consumers than without them on average 67 more valuable and as much as 558 more valuable in our sample in other words although it is well established in the literature that quick response provides value by allowing better matching of supply with demand it provides more value often substantially more value by allowing a retailer to control the negative consequences of strategic consumer behavior