efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

inventory competition for newsvendors under the objective of profit satisficing abstract inventory competition for newsvendors nvs has been studied extensively under the objective of expected profit maximization which is based on risk neutrality in this paper we study this classic problem under the objective of profit satisficing which is based on downside risk aversion consistent with prior literature we consider two possible scenarios in the first scenario each nv s demand depends on the stocking levels of all nvs other than herself in this scenario we show that there is a unique nash equilibrium where all nvs optimally order as if they were independent in the second scenario each nv s demand depends on the stocking levels of all nvs including herself we prove the existence of nash equilibrium for both additive and multiplicative forms of demands as a special case we also study symmetrical nvs under the proportional allocation model we show that at equilibrium if the number of nvs exceeds a threshold the market becomes highly competitive

extent and types of small scale wind policies in the u s states adoption and effectiveness abstract renewable energy sources including wind are increasingly promoted by u s state governments using state level data and survey responses from energy officials in 44 states this study catalogs the extent and types of small wind policies adopted by states it examines the factors correlated with policy adoption and perceptions about which policy tools are most effective results indicate that 84 of the states participating in the survey have adopted at least one policy to promote small wind technologies and most have adopted several policies the most frequent policy is net metering and this policy tool was also perceived to be one of the most effective at encouraging businesses and consumers to install small wind technologies however several other policy tools perceived to be most effective at promoting small wind installations have been adopted by relatively few states this identified gap suggests opportunities for improving policy effectiveness in explaining factors associated with adoption of policy tools we find support for variables comprising both the policy diffusion and internal determinants models of policy adoption including state commitment to environmental protection and policy innovations citizen ideology per capita wealth energy policy network communications and desire to be viewed as an environmental leader

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

environmental constituent interest green electricity policies and legislative voting abstract research in political economy has traditionally sought to disentangle the effects of legislative ideology and constituent interest in explaining policy decisions frequently proxy variables are used to measure constituent interest however these measures do not adequately reflect true constituent interest which is based upon the costs and benefits of the policies under consideration incorporating the scope of the policies using haiku a detailed model of the us electricity sector and taf an integrated assessment model of pollution pathways and valuation i construct economic measures of constituent interest at the state level as well as for federal policy i then use these measures to analyze state adoption of more stringent green electricity policies and congressional roll call voting on federal environmental policy previous studies that use proxy measures of constituent interest typically find that the legislator ideology matters more while my study shows that both ideology and constituent interest are significant factors

dynamic pricing of inventory capacity with infrequent price changes we consider a problem of dynamically pricing a single product sold by a monopolist over a short time period if demand characteristics change throughout the period it becomes attractive for the company to adjust price continuously to respond to such changes i e price discriminate intertemporally however in practice there is typically a limit on the number of times the price can be adjusted due to the high costs associated with frequent price changes if that is the case instead of a continuous pricing rule the company might want to establish a piece wise constant pricing policy in order to limit the number of price adjustments such a pricing policy which involves optimal choice of prices and timing of price changes is the focus of this paper we analyze the pricing problem with a limited number of price changes in a dynamic deterministic environment in which demand depends on the current price and time and there is a capacity inventory constraint that may be set optimally ahead of the selling season the arrival rate can evolve in time arbitrarily allowing us to model situations in which prices decrease increase or neither we consider several plausible scenarios where pricing and or timing of price changes are endogenized various notions of complementarity single crossing property supermodularity and total positivity are explored to derive structural results conditions sufficient for the uniqueness of the solution and the monotonicity of prices throughout the sales period furthermore we characterize the impact of the capacity constraint on the optimal prices and the timing of price changes and provide several other comparative statics results additional insights are obtained directly from the solutions of various special cases

pricing and rebate policies in the two echelon supply chain with asymmetric information under price dependent stochastic demand abstract this paper analyzes the manufacturers strategy of optimizing the direct rebate to the final customer and the wholesale price to a profit maximizing retailer with a price dependent stochastic demand the manufacturer possesses full information about the cost and the functional relationship among demand price and rebate but may or may not know about the nature of the underlying demand uncertainty faced by the retailer the conditions under which a retailer benefits from passing on such information are identified the main features of the model are illustrated analytically and numerically using linear or iso elastic demand functions with additive or multiplicative error structures several important implications have been derived especially those dealing with price and rebate pass throughs and with the cost to the manufacturer of asymmetric information

truthful approximation mechanisms for restricted combinatorial auctions when attempting to design a truthful mechanism for a computationally hard problem such as combinatorial auctions one is faced with the problem that most efficiently computable heuristics can not be embedded in any truthful mechanism e g vcg like payment rules will not ensure truthfulness we develop a set of techniques that allow constructing efficiently computable truthful mechanisms for combinatorial auctions in the special case where each bidder desires a specific known subset of items and only the valuation is unknown by the mechanism the single parameter case for this case we extend the work of lehmann o callaghan and shoham who presented greedy heuristics we show how to use if then else constructs perform a partial search and use the lp relaxation we apply these techniques for several canonical types of combinatorial auctions obtaining truthful mechanisms with provable approximation ratios

market based pricing in grids on strategic manipulation and computational cost grid technologies and the related concepts of utility computing and cloud computing enable the dynamic sourcing of computer resources and services thus allowing enterprises to cut down on hardware and software expenses and to focus on key competencies and processes resources are shared across administrative boundaries e g between enterprises and or business units in this dynamic and inter organizational setting scheduling and pricing become key challenges market mechanisms show promise for enhancing resource allocation and pricing in grids current mechanisms however are not adequately able to handle large scale settings with strategic users and providers who try to benefit from manipulating the mechanism in this paper a market based heuristic for clearing large scale grid settings is developed the proposed heuristic and pricing schemes find an interesting match between scalability and strategic behavior

strategic decentralization in channels the purpose of this paper is to understand the effect of strategic interaction on a manufacturer s channel structure decision in the model i analyze if there were no strategic interaction then the manufacturer would prefer vertical integration to decentralization with strategic interaction however decentralization can be a nash equilibrium strategy as mcguire and staein mcguire timothy richard staelin 1983a an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 192 showed so the question arises what is it about strategic interaction that makes decentralization a nash equilibrium strategy the answer i give is that strategic interaction makes it possible for a manufacturer s retail demand curve to rise when he decentralizes i show that this raising of the demand curve on decentralization can happen only if one of the following mutually exclusive conditions is satisfied 1 the manufacturers products are demand substitutes at the retail level and strategic complements at the manufacturer or retailer levels 2 the manufacturer s products are demand complements at the retail level and strategic substitutes at the manufacturer or retailer levels strategic complementarity at the retailer manufacturer level means that if one retailer manufacturer raises his price then the other retailer manufacturer would raise his price as well strategic substitutability is just the opposite these results show that what is important for decentralization to occur is not how demand substitutable the two manufacturers products are as one might have thought from earlier works in the literature but rather the nature of coupling between demand dependence and strategic dependence

price competition for retailers with profit and revenue targets abstract price competition for retailers has been extensively studied in the literature assuming the objective of expected profit maximization in this paper we make a major contribution by studying price competition for retailers with both profit and revenue targets consequently each retailer maximizes her profit and revenue probability namely the probability of achieving the profit and revenue targets simultaneously more specifically we analyze a scenario where two competing retailers purchase a perishable product from a common supplier and sell to a common market employing the isoelastic demand model we derive the closed form solutions of the optimal order quantity the optimal selling price and the maximal profit and revenue probability for each retailer it is shown that when revenue is a relevant performance measure positive and non positive salvage values lead to different optima for competing retailers moreover as price elasticity and or price competition intensity becomes higher the optimal retail price decreases and the optimal order quantity increases for each retailer

game theoretical perspectives on dual channel supply chain competition with price discounts and pricing schemes abstract this paper evaluates the impact of price discount contracts and pricing schemes on the dual channel supply chain competition channel conflict occurs when the supplier enters the online direct channel traditional contracts normally require tedious administrational participation full information of the cost structures and other factors the introduction of simple price discount contracts aims at providing easy implementation and effective coordination results from supplier stackelberg retailer stackelberg and nash game theoretic perspectives we show that the scenarios with price discount contracts can outperform the non contract scenarios in addition we show consistent pricing scheme can reduce the channel conflict by inducing more profit to the retailer the leader in the games might but is not guaranteed to have advantages

note note on optimal ordering quantity to realize a pre determined level of profit in this note we consider the one period inventory model in which it is required to determine the order quantity which maximizes the probability of realizing a predetermined level of profit r we give a condition for determining the optimal order quantity and provide explicit expressions for the optimal order quantity in three special cases

the price elasticity of selective demand a meta analysis of econometric models of sales the author describes a meta analysis of econometric studies that estimated the elasticity of selective sales or market share to price the literature review yielded 367 suitable price elasticities

coordination and profit sharing between a manufacturer and a buyer with target profit under credit option several studies have focused on buyer vendor coordination through quantity discount credit option mechanism but few quantitative models and investigations are available that have explored the mechanism for transfer of surplus generated due to coordination in this paper we develop a coordination mechanism through credit option such that both the parties can divide the surplus equitably after satisfying their own profit targets two situations are explored here in the first situation both the parties have no individual profit target from the business whereas in the second situation there are individual profit target for both the parties the proposed mechanism for division of surplus is studied through a numerical study and the impact of different parameter values on the results are examined

is the choice of renewable portfolio standards random this study investigated factors influencing the adoption or intention to adopt renewable portfolio standards rps by individual states in the united states u s theory of adoption of innovation was applied as a conceptual framework a logistic model was used to achieve the task gross state product gsp growth rate of population grp political party dominancy education level natural resources expenditure and share of coal in electricity generation were used as explanatory variables results indicated that the model predicts the dependent variable state s choice of adopting or not adopting rps 82 times correctly out of 100 results also suggested that education followed by political party dominancy gsp and grp are shown to have large impacts on the probability of rps adoption

investigating household purchase timing decisions a conditional hazard function approach the purchase timing decision is an important component of the dynamics of a household s purchase behavior this decision is influenced by marketing and other variables and the modeling of this dependence has recently received attention in the literature in this paper we build on previous studies and develop a comprehensive stochastic model that incorporates the major factors influencing interpurchase times specifically we use a generalized version of cox s proportional hazard model to test among competing probability distributions for the interpurchase times while incorporating effects due to marketing variables observed household characteristics and unobserved heterogeneity across households the empirical finding from analyzing the iri coffee data suggests that the interpurchase times cannot be adequately described by probability distributions such as exponential erlang 2 or weibull the effects of unobserved heterogeneity are significant and they impact the estimates of the effects of the covariates we also find that a nonparametric procedure for estimating the effects of unobserved heterogeneity provides the best overall fit to the data and yields covariate estimates that are more consistent with prior expectations our model is validated by replicating the substantive empirical findings on an additional product category

risk preferences of a newsvendor with service and loss constraints abstract using the newsvendor framework we present an approach to determine an order quantity which is relevant for the observed ordering behavior of an inventory manager whereas in literature just one constraint has been used we suggest two conflicting constraints the service constraint specified by a target value for the cycle service level is fulfilled by high order quantities the loss constraint is characterized by a target resulting in losses is met by low order quantities choosing as objective function a mean deviation rule where risk attitudes are measured by the conditional value at risk the optimal order quantity is determined depending on the risk parameters if the newsvendor is not able to specify the risk preferences we use the constraints to describe the risk attitudes of the decision maker in dependence of the profitability of the product and its demand distribution including those products where no admissible order quantity exists if there are admissible solutions we identify conditions such that the service constraint is dominating i e the prescribed service level is high and necessarily risk taking behavior is implied contrary if the loss constraint dominates i e the probability of loss is low the decision maker in any case is a risk averter but if both the service target and the loss target are not too challenging then for products with high profitability all risk preferences are possible

adoption of green electricity policies investigating the role of environmental attitudes via big data driven search queries despite the rising influence of public opinion on government energy policy formulation and implementation the roles of pro and or anti environmental attitudes among residents have not been empirically examined to quantify time varying environmental attitudes among local residents we exploit geo specific google search query data derived from internet based big data and verify through ordinary least squares regression outcomes regarding environmental behavior for the purpose of drawing policy implications we revisit decisions by state governments of the united states to adopt three well known green electricity policies renewable energy portfolio net metering rules and public benefit funds as some states have not yet adopted some or any of these policies unlike previous studies we handle the issue by examining right censored data and applying a duration based econometric method called the accelerated failure time model we found state residents environmental attitudes to have statistically significant roles after controlling for other traditional time varying policy adoption factors interestingly the extent to which anti environmental attitudes affect a state s policy adoption differs across green energy policies and knowing this can help a local government formulate better tailored environmental policy in particular researchers can use our method of incorporating citizens environmental attitudes to discuss relevant issues in the field of energy policy

the setting of profit targets for target oriented divisions abstract setting profit targets and striving to achieve them is fundamental to business survival and success however there has been little research on modeling profit target setting in this paper we study analytic target setting under a common business scenario where a firm is in control of multiple divisions both the firm and the divisions maximize the profit probability i e the probability of achieving some given profit target the firm sets a profit target for each division which then acts as a price setting newsvendor we first obtain the optimal order quantity the optimal retail price and the maximal profit probability of a single division given its assigned target we then derive the firm s profit probability and focus on two specific cases to gain more managerial insights in the first case of fair target setting we show that when each division s demand distribution has an increasing failure rate if a division has a relatively high low production cost its assigned profit target decreases increases with regard to its price elasticity in the second case if the firm is in control of two identical divisions each division s optimal profit target is just half of the firm s profit target when the price elasticity is two or more regardless of production cost and demand distribution

a general equilibrium model for industries with price and service competition this paper develops a stochastic general equilibrium inventory model for an oligopoly in which all inventory constraint parameters are endogenously determined we propose several systems of demand processes whose distributions are functions of all retailers prices and all retailers service levels we proceed with the investigation of the equilibrium behavior of infinite horizon models for industries facing this type of generalized competition under demand uncertainty we systematically consider the following three competition scenarios 1 price competition only here we assume that the firms service levels are exogenously chosen but characterize how the price and inventory strategy equilibrium vary with the chosen service levels 2 simultaneous price and service level competition here each of the firms simultaneously chooses a service level and a combined price and inventory strategy 3 two stage competition the firms make their competitive choices sequentially in a first stage all firms simultaneously choose a service level in a second stage the firms simultaneously choose a combined pricing and inventory strategy with full knowledge of the service levels selected by all competitors we show that in all of the above settings a nash equilibrium of infinite horizon stationary strategies exists and that it is of a simple structure provided a nash equilibrium exists in a so called reduced game we pay particular attention to the question of whether a firm can choose its service level on the basis of its own input characteristics i e its cost parameters and demand function only we also investigate under which of the demand models a firm under simultaneous competition responds to a change in the exogenously specified characteristics of the various competitors by either i adjusting its service level and price in the same direction thereby compensating for price increases decreases by offering improved inferior service or ii adjusting them in opposite directions thereby simultaneously offering better or worse prices and service

an empirical investigation of the dynamic mcfadden model of purchase timing and brand choice implications for market structure purchase timing and brand choice decisions of households are jointly investigated using the dynamic mcfadden model of heckman and singer the hazard of brand purchase is decomposed into the category purchase hazard and the probability of brand choice conditional on category purchase the former is modeled using the hazard function approach and the latter using a logit model unobserved heterogeneity in brand preferences marketing effects and baseline hazard parameters is accounted for in the empirical analysis the distribution of preference heterogeneity identifies the locations of brands in multiattribute perceptual space and the distribution of attribute importance weights across households

effects of a demand curve s shape on the optimal solutions of a multi echelon inventory pricing model abstract when a price demand relationship is needed in inventory pricing models very often a convenient typically linear function is arbitrarily chosen the common wisdom implication is that any downward sloping demand curve would lead to similar conclusions this paper applies different demand curve functions to a simple inventory pricing model and shows that while the common wisdom implication is valid for a single echelon system assuming different demand curve functions can lead to very different results in a multi echelon system in some situations a very small change in the demand curve appearance leads to very large changes in the model s optimal solutions other significant but counter intuitive effects of the demand curve form are also revealed this paper does not completely resolve the difficulties revealed by the counter intuitive effects reported here but establishing the existence of these effects represents a first step towards developing procedures to handle such effects these procedures will be necessary to ensure the reliability of many multi echelon models for products having price sensitive demands

trendy solutions why do states adopt sustainable energy portfolio standards abstract thirty four states had adopted sustainable energy portfolio standards seps or similar goals by the end of 2008 with 14 adoptions since 2006 there appears to be something trendy about seps and states may adopt seps when internal variables would indicate otherwise this analysis extends the current discussion of seps adoption beyond internal variables relying on innovation and diffusion theory logistic regression with seps adoption as the dependent variable is used to test internal determinants and diffusion measures for the years 1997 2008 of the internal determinants variables affluence and government ideology were found to be positive and significant the results show that regional and neighbor diffusion variables are significant in seps adoption decisions even when accounting for ideological distance from previous adopters

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

a stackelberg model of pricing of complementary goods under information asymmetry abstract we consider a duopoly market where two separate firms offer complementary goods in a leader follower type move each firm has private forecast information about the uncertain market demand and decides whether to share it with the other firm we show that information sharing would benefit the leader firm but hurt the follower firm as well as the total system if the follower firm shares information unconditionally we then devise a simple to implement information sharing scheme under which both firms and the total system are better off we also provide several interesting managerial insights and establish the robustness of the model in managing a supply chain through our analytical and simulation results

optimal order quantity and pricing decisions in single period inventory systems abstract in this paper we consider simultaneous pricing and procurement decisions associated with a one period pure inventory model under deterministic or probabilistic demand we investigate the necessary and sufficient conditions for an type policy to be optimal for the determination of the procurement quantity we also show how the corresponding optimal price can be obtained