the allocation of inventory risk in a supply chain push pull and advance purchase discount contracts while every firm in a supply chain bears supply risk the cost of insufficient supply some firms may even with wholesale price contracts completely avoid inventory risk the cost of unsold inventory with a push contract there is a single wholesale price and the retailer by ordering his entire supply before the selling season bears all of the supply chain s inventory risk a pull contract also has a single wholesale price but the supplier bears the supply chain s inventory risk because only the supplier holds inventory while the retailer replenishes as needed during the season examples include vendor managed inventory with consignment and drop shipping an advance purchase discount has two wholesale prices a discounted price for inventory purchased before the season and a regular price for replenishments during the selling season advance purchase discounts allow for intermediate allocations of inventory risk the retailer bears the risk on inventory ordered before the season while the supplier bears the risk on any production in excess of that amount this research studies how the allocation of inventory risk via these three types of wholesale price contracts impacts supply chain efficiency the ratio of the supply chain s profit to its maximum profit it is found that the efficiency of a single wholesale price contract is considerably higher than previously thought as long as firms consider both push and pull contracts in other words the literature has exaggerated the value of implementing coordinating contracts i e contracts that achieve 100 efficiency such as buy backs or revenue sharing because coordinating contracts are compared against an inappropriate benchmark often just a push contract furthermore if firms also consider advance purchase discounts which are also simple to administer then the coordination of the supply chain and the arbitrary allocation of its profit is possible several limitations of advance purchase discounts are discussed

optimal flexibility configurations in newsvendor networks going beyond chaining and pairing we study the classical problem of capacity and flexible technology selection with a newsvendor network model of resource portfolio investment the resources differ by their level of flexibility where level k flexibility refers to the ability to process k different product types we present an exact set theoretic methodology to analyze newsvendor networks with multiple products and parallel resources this simple approach is sufficiently powerful to prove that i flexibility exhibits decreasing returns and ii the optimal portfolio will invest in at most two adjacent levels of flexibility in symmetric systems and to characterize iii the optimal flexibility configuration for asymmetric systems as well the optimal flexibility configuration can serve as a theoretical performance benchmark for other configurations suggested in the literature for example although chaining is not optimal in our setting the gap is small and the inclusion of scale economies quickly favors chaining over pairing we also demonstrate how this methodology can be applied to other settings such as product substitution and queuing systems with parameter uncertainty

a new decision rule for lateral transshipments in inventory systems this paper deals with a single echelon inventory system consisting of a number of parallel local warehouses facing compound poisson demand there are standard holding and backorder costs as well as ordering costs at all warehouses normally the warehouses replenish from an outside supplier however lateral transshipments between the warehouses are also possible such transshipments take no time but incur additional costs when a demand occurs at a warehouse the question is whether the whole demand or part of it should be covered by a lateral transshipment from another warehouse given a set of alternative decisions our decision rule minimizes the expected costs under the assumption that no further transshipments will take place this rule is then used repeatedly as a heuristic a simulation study illustrates how the suggested technique performs under different conditions

conditions that cause risk pooling to increase inventory abstract we say product a is a partial substitute for product b if a fraction of the customers who prefer b are willing to accept a when b is out of stock when demand is uncertain it is intuitive and true that a larger willing to substitute fraction implies larger expected profits a higher willing to substitute fraction allows one to pool the risk of individual products it may also be intuitive that a larger willing to substitute fraction might result in lower optimal total inventory for the full substitution structure several researchers have shown that for certain distributions such as the exponential this latter intuition is not true we show that this full substitution anomaly can occur with any right skewed demand distribution we assume i i d demand distributions unless we indicate otherwise we also show that the anomaly can occur for a number of realistic situations of partial substitution with commonly used demand distributions such as normal exponential poisson and uniform we also demonstrate the anomaly for more than one period with backlogging lost sales more than two products and with setup costs

stability and endogenous formation of inventory transshipment networks this paper studies a cooperative game of inventory transshipment among multiple firms in this game firms first make their inventory decisions independently and then decide collectively how to transship excess inventories to satisfy unmet demands in modeling transshipment we use networks of firms as the primitive which offer a richer representation of relationships among firms by taking the coalitions used in all previous studies as special cases for any given cooperative network we construct a dual price allocation under which the network is stable for any residual demands and supplies in the sense that no firms find it more profitable to form subnetworks under the allocation based on the marginal contribution of each firm to its network called the mjw value we show that various network structures such as complete hub spoke and chain networks are stable only under certain conditions on residual amounts moreover these conditions differ across network structures implying that a network structure plays an important role in establishing the stability of a decentralized transshipment system finally we consider the case when firms establish networks endogenously and show that pairwise nash stable networks underperform the corresponding networks in centralized systems

the effects of welfare and tax reform the material well being of single mothers in the 1980s and 1990s abstract the tax and welfare programs that provide income and in kind benefits to single mothers have changed dramatically in recent years these changes began as far back as the mid 1980s and culminated with the 1996 welfare law that ended welfare as we knew it these tax and welfare changes have sharply increased the employment of single mothers and cut welfare rolls however little is know about the effects of these policy changes on the material well being of single mothers and their children studies of those leaving welfare have found that a substantial percentage have problems paying rent purchasing enough food and paying utility bills other studies found a decline in income among the worst off single mothers after 1994 or 1995 the goal of this paper is to examine the material well being of single mothers and their families before and after recent welfare and tax reforms using data from two nationally representative household surveys we examine the consumption patterns of single mothers and their families from 1984 2000 we find that the material conditions of single mothers did not decline in recent years either in absolute terms or relative to single childless women or married mothers this pattern holds for the average single mother as well as for low educated single mothers at both the 15th and 25th percentiles of the consumption distribution in most cases our evidence suggests that the material conditions of single mothers have improved slightly

enhanced lateral transshipments in a multi location inventory system in managing an inventory network two approaches to the pooling of stock have been proposed reactive transshipments respond to shortages at a location by moving inventory from elsewhere within the network while proactive stock redistribution seeks to minimize the chance of future stockouts this paper is the first to propose an enhanced reactive approach in which individual transshipments are viewed as an opportunity for proactive stock redistribution we adopt a quasi myopic approach to the development of a strongly performing enhanced reactive transshipment policy in comparison to a purely reactive approach to transshipment service levels are improved while a reduction in safety stock levels is achieved the aggregate costs incurred in managing the system are significantly reduced especially so for large networks moreover an optimal policy is determined for small networks and it is shown that the enhanced reactive policy substantially closes the gap to optimality

vertical control of price and inventory this paper offers a simple approach to the theory of decentralizing inventory and pricing decisions along a supply chain we consider an upstream manufacturer selling to two outlets which compete as differentiated duopolists and face uncertain demand demand spillovers between the outlets arise in the event of stockouts the price mechanism in which each outlet pays a two part price and chooses price and inventory virtually never coordinates incentives efficiently contracts that can elicit first best decisions include resale price floors or buy back policies retailer held options to sell inventory back to the manufacturers

production and welfare progress in economic measurement while the gdp was intended by its originators as a measure of production the absence of a measure of welfare in the national accounts has led to widespread misuse of the gdp to proxy welfare measures of welfare are needed to appraise the outcomes of changes in economic policies and evaluate the results concepts that describe the income distribution such as poverty and inequality fall within the scope of welfare rather than production this paper reviews recent advances in the measurement of production and welfare within the national accounts primarily in the united states and the international organizations expanding the framework beyond the national accounts has led to important innovations in the measurement of both production and welfare

the demand for education with power equalizing aid abstract state grants in aid modify the full fiscal income and tax price for education services faced by voters in local school districts if aid is non linear in the local property tax rate as occurs with district power equalization coupled with an aid floor then individual budget constraints are non linear and least squares estimation is inappropriate we develop and estimate a model that incorporates these effects derive and extensively illustrate the comparative statics present global and local elasticities and simulate the impact of parameter changes on the variance of spending and the cost of the program

indexing government programs for changes in the cost of living this article presents social cost of living indexes constructed from an econometric model of aggregate consumer behavior the econometric price index has the same average inflation rate as a tornqvist price index over the period 1947 1995 but rises less rapidly after 1973 group cost of living indexes are presented for white and nonwhite male and female headed and elderly and nonelderly households elderly households have experienced a slightly higher rate of inflation than the nonelderly since 1980 we recommend indexing government programs such as social security by social and group cost of living indexes rather that the consumer price index

the more things change the more they stay the same the safety net and poverty in the great recession much attention has been given to the large increases in safety net spending during the great recession we examine the relationship between poverty the safety net and business cycles historically and test whether there has been a significant change in this relationship we find that post welfare reform temporary assistance for needy families did not respond during the great recession and extreme poverty is more cyclical than in prior recessions food stamps and unemployment insurance are providing more protection or no less protection in the great recession and there is some evidence of less cyclicality for 100 poverty

chronic poverty in the united states this paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound additively decomposable index of aggregate poverty our approach is contrasted with alternative methods of measuring poverty persistence we use our method to measure chronic and transitory poverty in the united states during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought between the late 1970s and mid 1980s poverty not only increased it became more chronic and less transitory in nature this is true for the population as a whole and for some but not all of the subpopulations we considered the latter were defined according to race type of social unit and educational qualifications of the head of the social unit all empirical analyses are based on data from the panel study of income dynamics

why are households that report the lowest incomes so well off we document that households in the uk with extremely low measured income tend to spend much more than those with merely moderately low income this phenomenon is evident throughout three decades worth of microdata and across different employment states levels of education and marital statuses of the likely explanations we provide several arguments that discount over reporting of expenditure and argue that under reporting of income plays the major role in particular by using a dynamic model of consumption and saving and paying special attention to poverty dynamics we show that consumption smoothing cannot explain all the apparent dissaving

on the effect of demand randomness on inventories and costs we explore analytically cardinal effects of the extent of demand randomness on optimal inventory levels and the associated expected costs to model changes in demand randomness we make extensive use of a mean preserving transformation commonly used in probabilistic microeconomics as well as the notion of risk pooling aggregating independent demands for the single period news vendor model the order quantity and associated costs are shown to depend on the randomness parameter in a simple and highly interpretable manner we show by a simple example that in some situations risk pooling might neither reduce inventories nor move them closer to the mean or median demand the managerial relevance of such analyses is discussed

changes in the consumption income and well being of single mother headed families there is a long standing debate over how the material well being of the disadvantaged has changed over time in the united states this debate has intensified in light of notable increases in income inequality in the 1970s and 1980s and during the 1990s dramatic changes in welfare and tax policies that target poor families including expansions in the earned income tax credit eitc welfare waivers and the passage of the personal responsibility and work opportunity reconciliation act prwora while some championed these changes as catalysts for self sufficiency others predicted that these reforms would lead to severe deprivation 1 a large body of research has shown that these changes were associated with a dramatic fall in welfare receipt and increases in work and earnings 2 there is little consensus however on how material well being has changed during this period particularly for the most disadvantaged families such as those at the bottom of the income or consumption distribution in this paper we analyze changes in material well being between 1993 and 2003 for single mother headed families a group that has been the target of these recent changes in tax and wel fare policy for these families we analyze changes in income and total consumption as well as changes in disaggregated consumption time use and health insurance coverage we describe the underlying trends in well being for disadvantaged families during this dynamic period rather than identifying the causal effects of individual policies or macroeconomic conditions we begin by briefly documenting the recent trends in income and consumption for single mother headed families for income the trends differ sharply for different deciles of single moth ers for example between 1993 1995 and 1997 2000 reported income in the bottom decile falls by about 16 percent while reported income rises by more than 17 percent in the third fourth and fifth deciles the trends for reported consumption on the other hand tell a very different story these data show neither the sharp decline at low percentiles nor the large increases at the remaining percentiles in the bottom half of the distribution of single mothers rather we find a modest about 7 to 12 percent rise in consumption throughout the entire distribution while we do not examine the reasons for the sharp differences in income and consumption changes in this paper we do argue that consumption is a better measure of material well being for those at the bottom of the distribution

a computable general equilibrium model of intergovernmental aid abstract this paper introduces a theoretical and a calibrated computable general equilibrium model of intergovernmental relations in which heterogeneous agents i are endowed with income and houses ii are fully mobile between multiple jurisdictions and iii vote in both local and state elections to determine local property and state income tax rates three different types of intergovernmental programs are analyzed i redistributive revenue sharing ii district power equalization and iii deductibility of local taxes the approach facilitates a heretofore difficult comparative analysis in that it provides for integrated investigation of these programs in a single general equilibrium model

on measuring child costs with applications to poor countries the theoretical basis for measuring child costs is discussed and detailed consideration is given to two straightforward procedures for calculation engel s food share method and rothbarth s adult good method each of these methods embodies different definitions of child costs so that the same empirical evidence can generate quite different estimates depending on the method used it is shown that true costs are generally overstated by engel s method and understated by rothbarth s procedure although the latter unlike the former can provide a sensible starting point for cost measurement our estimates from sri lankan and indonesian data suggest that children cost their parents about 30 40 percent of what they spend on themselves

measuring pro poor growth when relative prices shift abstract the theoretical literature on pro poor growth as well as its application has not paid sufficient attention to the issue of varying inflation rates across the income distribution ignoring inflation inequality in pro poor growth measurements can however severely bias assessments of pro poor growth hence we suggest simple methods which are able to redress such biases as an empirical illustration we use the case of burkina faso and the growth incidence curve and poverty change decompositions as pro poor growth measurements

identifying the disadvantaged official poverty consumption poverty and the new supplemental poverty measure few economic indicators are more closely watched or more important for ew economic indicators are more closely watched or more important for policy than the offi cial poverty rate it is used to gauge the extent of deprivapolicy than the offi cial poverty rate it is used to gauge the extent of deprivation in the united states and to determine how economic well being has tion in the united states and to determine how economic well being has changed over time the poverty rate is often cited by policymakers researchers changed over time the poverty rate is often cited by policymakers researchers and advocates who are evaluating social programs that account for more than half and advocates who are evaluating social programs that account for more than half a trillion dollars in government spending eligibility for some means tested transfer a trillion dollars in government spending eligibility for some means tested transfer programs is determined based on the poverty thresholds and local poverty rates programs is determined based on the poverty thresholds and local poverty rates affect the allocation of billions of dollars in federal funds affect the allocation of billions of dollars in federal funds the methods for calculating the current poverty measure largely unchanged the methods for calculating the current poverty measure largely unchanged since the 1960s have been criticized by many researchers in response the census since the 1960s have been criticized by many researchers in response the census bureau has led a two decade process of research and discussion of poverty measurebureau has led a two decade process of research and discussion of poverty measurement with an eye to revising the offi cial measure the process has involved hundreds ment with an eye to revising the offi cial measure the process has involved hundreds of papers dozens of offi cial census bureau publications u s census 2010 of papers dozens of offi cial census bureau publications u s census 2010 and two national academy of sciences reports citro and michael 1995 iceland and two national academy of sciences reports citro and michael 1995 iceland 2005 we will not summarize this vast literature here rather we will examine 2005 we will not summarize this vast literature here rather we will examine the properties of three measures of poverty the offi cial u s poverty rate the new the properties of three measures of poverty the offi cial u s poverty rate the new supplemental poverty measure fi rst released by the u s census bureau in fall 2011 supplemental poverty measure fi rst released by the u s census bureau in fall 2011 and a consumption based measure of poverty we will focus on two fundamental and a consumption based measure of poverty we will focus on two fundamental goals of these measures to identify the most disadvantaged and to assess changes goals of these measures to identify the most disadvantaged and to assess changes

viewpoint further results on measuring the well being of the poor using income and consumption we evaluate the relative merits of income and consumption based measures of well being our results provide evidence that consumption better captures well being for those with few resources the bottom deciles of expenditures exceed those of income suggesting under reporting of income the under reporting rate for government transfers is high and rising overall non response is more severe in u s income data than in expenditure data furthermore a consumption data set requires fewer observations than an income data set to obtain the same level of precision for typical estimates finally very low consumption is more strongly related to other bad outcomes than very low income on evalue les merites relatifs des mesures de bien etre fondees sur le revenu et la consommation les resultats montrent que la consommation mesure mieux le bien etre de ceux qui ont peu de ressources les deciles au bas de la distribution des depenses depassent les deciles de la distribution des revenus ce qui suggere qu il y aurait des revenus non rapportes le taux de sous declaration des transferts gouvernementaux est eleve et croissant le taux global de non reponses est plus important aux etats unis pour les revenus que pour les depenses de plus les bases de donnees sur la consommation requierent moins d observations que celles sur le revenu pour obtenir le meme degre de precision des evaluations typiques finalement une tres basse consommation est plus fortement co reliee a d autres mauvaises conditions qu un tres bas niveau de revenu

resource flexibility with responsive pricing this article studies two types of flexibility used by firms to better respond to uncertain market conditions resource flexibility and responsive pricing we consider a situation in which a single flexible resource can be used to satisfy two distinct demand classes while the resource capacity must be decided based on uncertain demand functions the resource allocation as well as the pricing decision are made based on the realized demand functions we characterize the effects of two key drivers of flexibility demand variability and demand correlation assuming normally distributed demand curve intercepts demand variability creates opportunity costs and with fixed prices decreases the firm s profit we show that with the additional flexibility gained from responsive pricing the firm can maximize the benefits of favorable demand conditions and mitigate the effects of poor demand conditions ultimately profiting from variability positive demand correlation on the other hand remains undesirable under responsive pricing the optimal capacity of the flexible resource is always increasing in both demand variability and demand correlation this contrasts with the scenarios based on fixed prices highlighting the crucial difference that responsive pricing makes in the management of flexible resources we further quantify the value of flexibility for the firm and its customers by considering as a benchmark a firm relying on two dedicated resources the value of flexibility is most significant if the demand levels are highly variable and negatively correlated in such cases the firm benefits from demand variability due to responsive pricing while facing limited demand risk due to resource flexibility finally we endogenize the input price of the flexible resource by considering the pricing decision of the resource supplier

is the median voter decisive evidence from referenda voting patterns abstract this paper examines whether the voter with the median income is decisive in local spending decisions previous tests have relied on cross sectional data while we make use of a pair of california referenda to estimate a first difference specification the referenda proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 and 67 to 55 respectively we find that voters rationally consider future public service decisions when deciding how to vote on voting rules however the empirical evidence strongly suggests that an income percentile below the median is decisive for majority voting rules especially in communities that have a large share of high income voters with attributes that suggest low demand for public services based on a model that explicitly recognizes that each community contains voters with both high and low demand for public school spending we also find that an increase in the share of low demand voters is associated with a lower decisive voter income percentile for the high demand group this two type model implies that our low demand types individuals over age 45 with no children have demands that are 45 lower than other voters collectively these findings are consistent with high income voters with weak preferences for public educational services voting with the poor against increases in public spending on education

decentralization and efficiency of subsidy targeting evidence from chiefs in rural malawi abstract lower income countries spend vast sums on subsidies beneficiaries are typically selected via either a proxy means test pmt or through a decentralized identification process led by local leaders a decentralized allocation may offer informational advantages but may be prone to elite capture we study this trade off in the context of two large scale subsidy programs in malawi for agricultural inputs and food decentralized to traditional leaders chiefs who are asked to target the needy using household panel data we find that nepotism exists but has only limited mistargeting consequences importantly we find that chiefs target households with higher returns to farm inputs generating an allocation that is more productively efficient than what could be achieved through strict poverty targeting this could be welfare improving since within village redistribution is common productive efficiency targeting is concentrated in villages with above median levels of redistribution

call center outsourcing contract analysis and choice this paper considers a call center outsourcing contract analysis and choice problem faced by a contractor and a service provider the service provider receives an uncertain call volume over multiple periods and is considering outsourcing all or part of these calls to a contractor each call brings in a fixed revenue to the service provider answering calls requires having service capacity thus implicit in the outsourcing decision is a capacity decision insufficient capacity implies that calls cannot be answered which in turn means there will be a revenue loss faced with a choice between a volume based and a capacity based contract offered by a contractor that has pricing power the service provider determines optimal capacity levels the optimal price and capacity of the contractor together with the optimal capacity of the service provider determine optimal profits of each party under the two contracts being considered this paper characterizes optimal capacity levels and partially characterizes optimal pricing decisions under each contract the impact of demand variability and the economic parameters on contract choice are explored through numerical examples it is shown that no contract type is universally preferred and that operating environments as well as cost revenue structures have an important effect

measuring poverty in a growing world or measuring growth in a poor world the extent to which growth reduces global poverty has been disputed for 30 years although there are better data than ever before controversies are not resolved a major problem is that consumption measured from household surveys which is used to measure poverty grows less rapidly than consumption measured in national accounts in the world as a whole and in large countries particularly india china and the united states in consequence measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries one plausible cause is that richer households are less likely to participate in surveys but growth in the national accounts is also upward biased and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys so it is possible for consumption of the poor to grow less rapidly than national consumption without any increase in measured inequality current statistical procedures in poor

can permanent income theory explain cross sectional consumption patterns the prediction that consumption income ratios should decline as income rises in cross sectional data is a feature of friedman s 1957 permanent income hypothesis and other consumption smoothing models the theory thus provides a link between longitudinal income data and cross sectional expenditure data given measured income variability and a functional relationship between consumption and permanent income we predict cross sectional expenditure patterns and compare those predictions to actual values our approach cannot explain the actual skewness in consumption income ratios under even the strictest consumption smoothing model which implies that income measurement error or other anomalies are affecting the data

imputing rent in consumption measures with an application to consumption poverty in canada 1997 2009 we consider two econometric problems in the measurement of poverty both relating to rent imputation first we account for quality differences correlated with selection into owner occupied versus rental tenure this correction increases estimated household consumption by 5 over uncorrected estimates and decreases estimated poverty rates quite dramatically second we propose that measurement error induced by the imputation be corrected by imputing a consumption distribution rather than a consumption level for each household this correction increases estimated poverty rates slightly we use our methods to measure consumption poverty in canada and find that the imputation strategy used influences the patterns observed for example measured poverty among the elderly barely declines when one uses our methods in contrast to the almost 6 percentage point reduction we find using traditional methods in our assessment of the over time evolution of consumption poverty we find that substantial progress has been made on overall poverty and on child poverty but that poverty among the elderly hardly changed imputer le loyer dans les mesures de consommation une application a la pauvrete de consommation au canada 1997 2009 les auteurs considerent deux problemes econometriques dans la mesure de la pauvrete tous deux relies a l imputation du loyer d abord on prend en compte les differences de qualite liees au choix entre logement occupe par son proprietaire et logement locatif la correction accroit le niveau de consommation des menages de 5 par rapport aux estimations non corrigees et diminue les taux de pauvrete estimes de maniere dramatique ensuite on suggere que l erreur de mesure introduite par l imputation soit corrigee en derivant une distribution de consommation plutot qu un niveau de consommation pour chaque menage cette correction augmente la pauvrete estimee un peu les auteurs utilisent leurs methodes pour mesurer la pauvrete de consommation au canada et decouvrent que la strategie d imputation utilisee influence les patterns observes par exemple la pauvrete mesuree chez les aines diminue a peine quand on utilise leurs methodes contrairement a la diminution de presque 6 que proposent les methodes traditionnelles dans leur evaluation de l evolution de la pauvrete de consommation dans le temps ils decouvrent qu on a fait des progres substantiels pour ce qui est de la pauvrete en general et de la pauvrete des enfants mais que la pauvrete chez les aines n a a peu pres pas change

poverty and inequality under income and price dispersions many policies simultaneously affect the distribution of prices and incomes in the economy moreover a bias may occur when there is a stochastic relationship between prices and incomes and this relationship is being ignored it is therefore important to dispose of an analytical framework for welfare analysis that could account for changes in this joint distribution how can the joint influences of price and income distributions on poverty and inequality indicators be analysed we offer a method to deal with this problem by using parametric formulae of poverty and inequality measures we propose statistical indicators for the levels variabilities and a statistical link of price indices and nominal living standards these indicators are consistent with an approximation of the problem based on a bivariate lognormal distribution of price indices and nominal living standards our analysis provides hints about the social welfare impact of economic shocks or policies affecting levels variabilities and correlation of prices and incomes intuitive insights are obtained while using arithmetic means and variances instead does not lead to illuminating results the role of price and income variabilities for poverty and inequality is more complex than generally expected with the possibility of several variation regimes empirical investigation of these statistics would guide social policies

transshipment of inventories among retailers myopic vs farsighted stability the author considers a model of a decentralized distribution system consisting of n retailers selling an identical product retailers face a stochastic demand and must order their initial inventory before this demand is realized after demand realization retailers decide how much of their unsold inventory or unsatisfied demand they want to share with other retailers this is followed by a transshipment of leftover inventories and distribution of the additional profit generated through inventory sharing the author addresses the following issue suppose that the retailers distribute the profit from inventory sharing according to an allocation rule that induces retailers to share their residuals in a way that maximizes the additional profit such as the shapley value but may not belong to the core is it likely that in this framework all retailers will jointly share their residuals and not form subcoalitions previous research has looked at this problem from a myopic viewpoint and concluded that the grand coalition is not stable unlike the prior work the author looks at stability in a farsighted sense that is retailers do not consider only their immediate payoffs but are also concerned with reactions of other retailers to their actions in a symmetric setting with identical additional unit revenues from transshipments generated by all retailers farsighted retailers always maximize their allocations by not defecting from the grand coalition the author also provides conditions when the same is true for nonidentical additional unit revenues

economic incentives and political institutions spending and voting in school budget referenda abstract allocation of resources in the local public sector involves economic and political forces in many u s states the bulk of spending on public education is subject to referendum we link spending proposals to referendum outcomes our model makes use of voting data to shed light on the extent to which referenda constrain spending we use data from school budget referenda in 544 new york school districts for the 1975 1976 school year our econometric results and simulations based on them reveal considerable sensitivity of spending to the form of the state grants in aid structure as well as to the referendum requirement in addition large school districts appear to behave more like budget maximizers than do small districts where proposals appear more in line with median voter demands

repeated newsvendor game with transshipments under dual allocations abstract we study a repeated newsvendor game with transshipments in every period n retailers face a stochastic demand for an identical product and independently place their inventory orders before demand realization after observing the actual demand each retailer decides how much of her leftover inventory or unsatisfied demand she wants to share with the other retailers residual inventories are then transshipped in order to meet residual demands and dual allocations are used to distribute residual profit unsold inventories are salvaged at the end of the period while in a single shot game retailers in an equilibrium withhold their residuals we show that it is a subgame perfect nash equilibrium for the retailers to share all of the residuals when the discount factor is large enough and the game is repeated infinitely many times we also study asymptotic behavior of the retailers order quantities and discount factors when n is large finally we provide conditions under which a system optimal solution can be achieved in a game with n retailers and develop a contract for achieving a system optimal outcome when these conditions are not satisfied

a three stage model for a decentralized distribution system of retailers we present and study a three stage model of a decentralized distribution system consisting ofn retailers each of whom faces a stochastic demand for an identical product in the first stage before the demand is realized each retailer independently orders her initial inventory in the second stage after the demand is realized each retailer decides how much of her residual supply demand she wants to share with the other retailers in the third stage residual inventories are transshipped to meet residual demands and an additional profit is allocated our model is an extension of the two stage model of anupindi et al abz 2001 which implicitly assumes that all residuals enter the transshipment stage we show however that allocation rules in the third stage based on dual solutions which were used in the abz model may induce the retailers to hold back some of their residual supply demand in general we study the effect of implementing various allocations rules in the third stage on the values of the residual supply demand the retailers are willing to share with others in the second stage and the trade off involved in achieving an optimal solution for the corresponding centralized system

consumption and income inequality and the great recession abstract we examine changes in consumption and income inequality between 2000 and 2011 during the most recent recession unemployment rose and asset values declined sharply we investigate how the recession affected inequality while addressing concerns about underreporting in consumption data income inequality rose throughout the period from 2000 to 2011 the 90 10 ratio was 19 percent higher at the end of this period than at the beginning in contrast consumption inequality rose during the first half of this period but then fell after 2005 by 2011 the 90 10 ratio for consumption was slightly lower than it was in 2000

who benefits from transshipment exogenous vs endogenous wholesale prices this paper studies how transshipments affect manufacturers and retailers considering both exogenous and endogenous wholesale prices for a distribution system where a single manufacturer sells to multiple identical cost retailers we consider both the manufacturer being a price taker and the manufacturer being a price setter in a single period setup under multivariate normal demand distribution in the case of the manufacturer being a price taker we provide several analytical results regarding the effects of key parameters on order quantities and profits in the case of the manufacturer being a price setter we characterize the stackelberg game that arises and provide several insights into how the game dynamics are affected by transshipments specifically we find that risk pooling makes retailers order quantities less sensitive to the wholesale price set by the manufacturer hence in general the manufacturer benefits from retailers transshipments by charging a higher wholesale price while retailers are often worse off the paper captures the effect of demand correlation and the effect of the number of retailers throughout and it illustrates the findings by a numerical example we also provide an interactive web page for numerical experiments

consumption needs and inequality most empirical studies demonstrating a u turn in inequality in the united states are based on the distribution of income however utility is derived from the consumption of goods and services and there are many reasons to expect the distribution of expenditure to be different from the distribution of income the author demonstrates that consumption based inequality indexes actually decrease over the postwar era this conclusion differs from the stylized facts because of differences in the income and expenditure distributions differences also arise from the inclusion of equivalence scales to account for the different needs of heterogeneous households copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

an endogenous model of public school expenditures and private school enrollment abstract this paper examines the link between private school enrollment rates and public school expenditures using a panel of new york state school districts models are estimated in which public school spending and private school enrollment rates are endogenously determined the results indicate the presence of endogeneity increases in private school enrollment are not shown to cause decreases in public school per pupil expenditure private school enrollment rates are found to respond to changes in public school expenditure and are sensitive to changes in tuition

consumption versus expenditure previous authors have documented a dramatic decline in food expenditures at the time of retirement we show that this is matched by an equally dramatic rise in time spent shopping for and preparing meals using a novel data set that collects detailed food diaries for a large cross section of u s households we show that neither the quality nor the quantity of food intake deteriorates with retirement status we also show that unemployed households experience a decline in food expenditure and food consumption commensurate with the impact of job displacement on permanent income these results highlight how direct measures of consumption distinguish between anticipated and unanticipated shocks to income whereas measures of expenditures obscure the distinction

estimating the value of an in kind transfer the case of food stamps the value of one in kind transfer food stamps is estimated by evaluating the experience of an actual conversion from stamps to cash in puerto rico in 1982 the evidence indicates that the cashout of the stamps had no detectable influence on food expenditures the explanation partly lies in the distribution of expenditures for the stamps were inframarginal for most recipients however some evidence indicates that trafficking in stamps was widespread as well including indirect evidence from estimation of the piecewise linear constraint model copyright 1989 by the econometric society

has poverty gotten worse iven the major changes now being implemented in programs aimed atalleviating poverty in the united states it is important to have a goodunderstanding of how the extent of poverty has evolved over the lastcouple of decades has poverty gotten worse or have we been gradually winningthe war on poverty there is unanimous agreement that there was a steady and dramatic decreasein the percentage of the u s population in poverty during the 1960s the of cialu s census bureau gures show the poverty rate dropping from 22 4 percent ofthe population in 1959 to 12 6 percent in 1970 with a further decrease to11 1 percent in 1973 the trend since 1973 is not as clear the of cial poverty raterose somewhat during the latter part of the 1970s and then sharply increased dur ing the recession of the early 1980s reaching 15 2 percent in 1983 it then graduallydeclined hitting 12 8 percent in 1989 increased to 15 1 percent in 1993 and thendropped to 13 8 percent in 1995 according to the of cial rate even at the peakof the economic expansion of the late 1980s there was a higher percentage of thepopulation with income below the poverty line than there was 20 years earlier poverty does seem to have gotten worse this conclusion is controversial however because the way in which poverty isbest measured is controversial the of cial poverty scale has been criticized alonga number of dimensions one point of contention is whether people should bede ned as being poor when they are part of a family with

the econometrics of piecewise linear budget constraints a survey and exposition of the maximum likelihood method in this article maximum likelihood techniques for estimating consumer demand functions when budget constraints are piecewise linear are exposited and surveyed consumer demand functions are formally derived under such constraints and it is shown that the functions are themselves nonlinear as a result the econometric problems in estimating such functions are exposited and the importance of the stochastic specification is stressed in particular the specification of both unobserved heterogeneity of preferences and measurement error econometric issues in estimation and testing are discussed and the results of the studies that have been conducted to date are surveyed

measuring the well being of the poor using income and consumption we examine the relative merits of consumption and income as measures of the material well being of the poor consumption offers several advantages over income because consumption is a more direct measure of well being than income and is less subject to underreporting bias measurement problems with income are problematic for analyses of changes in well being of the poor because the biases appear to have changed over time and are correlated with government policies on the other hand income is often easier to report and is available for much larger samples providing greater power to test hypotheses we begin by considering the conceptual and pragmatic reasons why consumption might be better or worse than income then we employ several empirical strategies to examine the quality of income and consumption data first we compare income and consumption reports for those with few resources as well as their assets and liabilities to examine measurement errors and under reporting second we examine other evidence on the internal consistency of reports of low income or consumption third we compare how well micro data in standard datasets weight up to match aggregates for classes of income and consumption that are especially important for low resource families fourth we validate income and consumption measures by comparing them to other measures of hardship or material well being although the evidence tends to favor consumption measures our analyses suggest that both measures should be used to assess the material well being of the poor

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

entry timing in a secondary market when to trade abstract in volatile long lead time and short selling season markets a secondary market enables buyers to update their inventory during the selling season the decision of when to update involves complicated trade offs between forecast accuracy expected lost sales and average purchasing cost we use a two stage inventory replenishment model to identify the optimal trading time across different scenarios across most scenarios the optimal trading time is around the midpoint of the season and is sensitive to the expected profit margin and demand forecast errors we discuss the impacts of the timing decision on upstream suppliers sales and channel performance in terms of sales revenue and supply demand mismatch costs specifically secondary market trading always reduces upstream suppliers sales no matter when trading occurs but trading at an optimal time can maximize a secondary market s profit gain over the no trade scenario through reducing supply demand mismatch

diverging identification of the poor a non random process chile 1992 2017 abstract this paper investigates the degree of association in the identification of the poor between the standard monetary fgt poverty measure and the alkire foster multidimensional poverty index for this purpose we use a measure of redundancy in the identification of the poor between the two poverty measures r0 in chile over the past 25 years r0 has declined at a rate of 1 5 per year the decline is unimportant during the 1990s a decade of rapid economic growth while it is notable thereafter in a period characterized by modest economic growth and the progressive introduction and deepening of social policies the conditional correlation between socio economic and demographic characteristics with r0 is examined at the province and household levels after controlling for the household non eligibility across some of the indicators of the multidimensional poverty index we find that the divergence in the identification of the poor seems to be a real process which is not randomly distributed across the population it is correlated with education improvements increasing urbanization and reduction in household size on the basis of our results we argue that this divergence may be a more general phenomenon that tends to occur in countries undergoing demographic transition urbanization and progress in education if so and given the fact that poverty alleviation strategies are adopted partly on the basis of poverty statistics the diverging identification of the poor might have distributive consequences for the poor

transfer of newsvendor inventory and supply risks to sub industry and the public by financial instruments abstract we consider a two stage newsvendor model of a sub industry in which suppliers have short lead time capacity to produce goods for retailers that are selling non identical products we argue that the inventory and supply risks of the newsvendors due to demand uncertainty can be pooled and shared among different supply chains by treating reserved capacity as commodities and trading them as futures and options on futures to hedge the risks the risks will be further shared with and transferred to the public if speculators are allowed to play the game we show that this new mechanism of combining operational and financial risk hedging strategies offers industries a new way to more efficiently meet demand and improve profit

the impact of the changing us family structure on child poverty and income inequality this paper analyses links between rising income inequality child poverty and one parent families in the united states from 1971 to 1989 one test reallocated weights so that 1989 proportions of children by mothers marital status resembled the 1971 distribution a second method used 1 simulated marriages among unmarried men and unmarried mothers in 1989 to reproduce 1971 marital patterns and 2 earnings responses induced by the simulated marriages the results indicate that the trend away from marriage accounted for almost half the increase in child income inequality and more than the entire rise in child poverty rates excerpt

pro poor economic growth inequality and fiscal policy the case of spanish regions ayala l and jurado a pro poor economic growth inequality and fiscal policy the case of spanish regions regional studies this paper aims to discuss whether substantive differences exist in terms of the distribution of economic growth by income groups in spanish regions in order to do so data from the spanish family budget surveys for various years are used to estimate growth incidence curves decomposition models of poverty changes and isopoverty curves the results show that while economic growth in the long term has meant an improvement of the lower income percentiles in spain this improvement is not uniform in the different regions limited possibilities for poverty reduction in the lower income regions are also found ayala l et jurado a pour la croissance economique faible l inegalite et la politique fiscale l etude de cas des regions d espagne regional studies cet article cherche a discuter si oui ou non il existe d importants ecarts de la distribution de la croissance economique pa

using scheduled ordering to improve the performance of distribution supply chains we study a supply chain with one supplier and many retailers that face exogenous end customer demands the supplier and the retailers all try to minimize their own inventory related costs in contrast to the retailers newsvendor type ordering behavior under which retailers may place orders freely in every period we propose two scheduled ordering policies the scheduled balanced ordering policy sbop and the scheduled synchronized ordering policy ssop under both the sbop and ssop retailers are allowed to order freely only in one period of an ordering cycle and receive fixed shipments in other periods retailers take turns to order freely under the sbop while under the ssop all retailers order freely in the same period with the average supply chain cost per period as the performance measure we identify mathematical conditions under which scheduled ordering policies outperform the newsvendor type ordering through a large scale numerical study we find that scheduled ordering policies are most effective when i the supplier s holding and expediting costs are high and the retailer s backorder cost is small ii the end customer demand variance and correlation are high and iii the supplier s capacity is high in addition we observe that the behavior of the ssop often complements that of the sbop whereas the sbop is better than ssop when the supplier s capacity is low and when the end customer demand correlation level is high the ssop is better when the opposite conditions prevail

transshipment and its impact on supply chain members performance this note extends some of the key results of dong and rudi 2004 to general demand distributions this generalization is achieved in two steps first we build on the analysis of dong and rudi to demonstrate that an inventory problem with transshipment is equivalent to a newsvendor problem with an adjusted demand then we study the impact of transshipment by comparing the adjusted demand with the original demand in addition to extending the results in the existing literature this note presents a novel approach for analyzing the impact of risk pooling

do snap participants expand non food spending when they receive more snap benefits evidence from the 2009 snap benefits increase this study examines the expenditure response to the largest increase in supplemental nutrition assistance program benefits instituted in april 2009 investigating the effects in both food and non food spending categories i find that the rise in snap benefits increased not only food at home expenditures but also housing transportation and education expenditures of snap households relative to those of non snap households specifically the snap benefit increase leads to the reduced out of pocket spending on food for infra marginal snap recipients and the freed up resources allowed households with bounded budgets to fund other essential needs such as paying mortgage rent utility fee transportation expenses as well as tuition examining non food expenditures provides a more complete picture of the impact of the snap benefit increase by shedding light on the spillover effect of the policy change the result also derives policy implication on ongoing debate about snap allotment generosity

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

changes in the distribution of children s family income over the 1990 s while the 1990 s were a good decade for many u s families there has been an ongoing debate about how children particularly poor children have been faring child poverty rates did not fall substantially in the economic expansion of the 1980 s and rose to the very high rate of 23 percent in 1993 furthermore substantial changes in public assistance programs were implemented over this decade major legislative reform in 1996 increased work mandates on welfare recipient families and gave states much greater discretion to enforce these mandates and actually terminate assistance these changes could make at least some poor families worse off if they lost public assistance and were unable to find steady employment we propose to investigate changes in the entire distribution of children s family income over the 1990 s which allows us to observe the relative changes in income experienced among children in higherand lower income families we are particularly interested in two questions i how has the economic status of children changed at different points in the income distribution ii is there any evidence that welfare reform contributed to the observed changes some evidence on changes in child wellbeing over the 1990 s suggests good news child poverty rates fell to 16 percent by 2001 and poverty rates among black children hit a historical low of 30 percent in that year blank 2002 and jeffrey grogger et al 2002 provide a complete set of citations to the growing literature that looks at changes in income and consumption over the past decade at least some of this research indicates that not all low income families experienced economic gains in this paper we use data on children s household income from the march current population survey cps and average together information from 1992 1995 and 1997 2000 by averaging four years of data we have an adequate number of observations to observe income reliably at each centile 1 100 in the distribution we focus on these comparison years because they both bracket the economic expansion of the 1990 s and they bracket the 1996 legislative changes in welfare programs to account for differences in family size across families our focus is on the income to needs ratio defined as the income level of the child s family divided by the official poverty line for that family rather than on actual income levels we compare data from two samples one that includes all children and another that includes only children in families without both parents present this latter sample is largely composed of children in single parent families but also includes children who live with neither parent about 3 percent of all children in the mid 1990 s

pricing and operational recourse in coproduction systems coproduction systems in which multiple products are produced simultaneously in a single production run are prevalent in many industries such systems typically produce a random quantity of vertically differentiated products this product hierarchy enables the firm to fill demand for a lower quality product by converting a higher quality product in addition to the challenges presented by random yields and multiple products coproduction systems often serve multiple customer classes that differ in their product valuations furthermore the sizes of these classes are uncertain employing a utility maximizing customer model we investigate the production pricing downconversion and allocation decisions in a two class stochastic demand stochastic yield coproduction system for the single class case we establish that downconversion will not occur if prices are set optimally in contrast we show that downconversion can be optimal in the two class case even if prices are set optimally we consider the benefit of postponing certain operational decisions e g the pricing or allocation rule decisions until after uncertainties are resolved we use the term recourse to denote actions taken after uncertainties have been resolved we find that recourse pricing benefits the firm much more than either downconversion or recourse allocation do implying that recourse demand management is more valuable than recourse supply management special cases of our model include the single class and two class random yield newsvendor models

economic well being and poverty among the elderly an analysis based on a collective consumption model we apply the collective consumption model of browning chiappori and lewbel 2006 to analyse economic well being and poverty among the elderly the model focuses on individual preferences a consumption technology that captures the economies of scale of living in a couple and a sharing rule that governs the intra household allocation of resources the model is applied to a time series of dutch consumption expenditure surveys our empirical results indicate substantial economies of scale and a wife s share that is increasing in total expenditures we further calculated poverty rates by means of the collective consumption model collective poverty rates of widows and widowers turn out to be slightly lower than traditional ones based on a standard equivalence scale poverty among women men in elderly couples however seems to be heavily underestimated overestimated by the traditional approach finally we analysed the impact of becoming a widow er based on cross sectional evidence we nd that the drop increase in material well being following the husband s death is substantial for women in high low expenditure couples for men the picture is reversed

learning the preferences of governments and voters from proposed spending and aggregated votes abstract remarkably little is known about how to analyze the proposals and voting results from spending referenda when the votes are aggregated by jurisdiction and the proposals are different across jurisdictions this paper presents a framework in which we can derive the voting equation comparative statics and links between reduced form and structural parameters that are implied by different models of the proposal maker it is then possible to use interjurisdictional proposal and voting information to test hypotheses about the proposal maker and the voters our empirical work finds support for a modified budget maximization model over simpler maximization models and various non maximization models

legal constraints and the choice of educational grant structures recent empirical work suggests that legalconstraints are significant in choosingstate educational grant structures unfortunately the literature has not takensuch constraints into account thus callinginto question particular grant structurerecommendations this paper studies theconditions under which a legislature underorder to reform its educational grantstructure prefers foundation grants overdistrict power equalization grants atheoretical model is presented in which thechoice is shown to depend on the legalbasis of the court s decision and theempirical validity of this conclusion isdemonstrated using connecticut data and aseparate model of school districtexpenditure choice

multi location transshipment problem with capacitated production abstract we consider coordination among stocking locations through replenishment strategies that explicitly take into account lateral transshipments i e transfer of a product among locations at the same echelon level our basic contribution is the incorporation of supply capacity into the traditional transshipment model our goal is to analyze the impact on system behavior and on stocking locations performance of the fact that the supplier may fail to fulfill all the replenishment orders we therefore formulate the capacitated supply scenario as a network flow problem embedded in a stochastic optimization problem which is solved through a sample average approximation method we find that depending on the production capacity system behavior can vary drastically moreover in a production inventory system we find evidence that either capacity flexibility i e extra production or transshipment flexibility i e pooling is required to maintain a desired level of service

process innovation product differentiation and channel structure strategic incentives in a duopoly in this paper we analyze the joint implications of two effects a inserting independent profit maximizing retailers into thechannel system provides buffering to the manufacturers from price competition when their products are highly substitutable and intrachannel contracts are observable as shown by mcguire and staelin 1983 under the assumption of constant marginal production costs and b lack of channel coordination results in a reduction in manufacturer s incentives to invest in efforts to reduce production costs as shown by jeuland and shugan 1983 for the case of bilateral monopoly we show that both these results are robust in the sense that the first holds even in the presence of the vertical externality of manufacturer s effort reduction in a noncoordinated channel and the second holds regardless of the degree of substitutability between the competing channel s products specifically we analyze a four stage game with two manufacturers and two retailers where the intrachannel contracts are linear and observable and manufacturers make investments in process improvements to reduce their production costs we find that the optimal channel structure decision depends on interactions between two parameters the degree of substitutability between products and the level of investments required to achieve production cost reduction these parameters represent what have been widely interpreted in the management literature as the two primary generic strategies that most organizations follow in order to gain competitive advantage cost leadership and product differentiation porter 1980 thus our analysis brings out the strategic and interdisciplinary nature of the channel structure decision that can significantly affect firm profitability our main results are as follows first we find that decentralized noncoordinated channels appear as more profitable equilibrium than integration or perfectly coordinated channels at high product substitutability even when process innovation dimension is accounted for in agreement with the literature however the range of substitutability over which decentralization is an equilibrium strategy is smaller the easier it is to reduce production costs intuitively the easier the cost reduction the larger the cost penalty that the channel incurs as a result of not coordinating investment and pricing decisions between channel members and thus smaller the range over which decentralization is an equilibrium this implies that there is an explicit tradeoff between efficiency and strategic incentives in distribution channel design second we show that decentralized manufacturers invest less in process innovation than integrated manufacturers do regardless of the structure of the competing channel and the degree of substitutability between products consequently a decentralized channel has higher costs charges higher prices and produces lower quantities than an integrated channel does moreover these differences get larger the easier the cost reduction the effect on manufacturer profits however is not that clear manufacturers make higher profits by decentralizing if products are highly substitutable inagreement with mcguire and staelin 1983 and coughlan and wernerfelt 1989 however we also find that the relative profitability of decentralization at high substitutability and of integration at low substitutability increases the easier the cost reduction moreover the range of substitutability over which decentralization is more profitable than integration is itself larger the easier the cost reduction though decentralization is an equilibrium strategy over a smallerrange thus process innovation accentuates the profit difference between integrated and decentralized channels andmakes the prisoner s dilemma situation worse in the choice of distribution channel structure finally we analyze two examples of coordinated decision making in a channel a divisional integrated system and franchising in the first case we find that decentralization can emerge as a unique and more profitable equilibrium at high product substitutability in contrast to mcguire and staelin 1983 in the second case we find that decentralization is not always a unique equilibrium and it is not always more profitable than integration in sharp contrast to the results by coughlan and wernerfelt 1989 thus franchising does not provide a sure way of achieving channel coordination when marginal production costs are not constant in sum this paper highlights the importance of simultaneously considering both the horizontal and the vertical dimensions of interorganizational relations on one hand and on the other paying attention to cross functional interactions across marketing and operational decisions to better understand the underlying incentives that shape firm and market structures conventional focus of marketing on demand side effects and of operations on cost side effects can lead to suboptimal decisions

target market selection and marketing effort under uncertainty the selective newsvendor abstract we consider a firm that markets procures and delivers a good with a single selling season in a number of different markets the price for the good is market dependent and each market has an associated demand distribution with parameters that depend on the amount of marketing effort applied given long procurement lead times the firm must decide which markets it will serve prior to procuring the good we develop a profit maximizing model to address the firm s integrated market selection marketing effort and procurement decisions the model implicitly accounts for inventory pooling across markets which reduces safety stock costs but increases model complexity the resulting model is a nonlinear integer optimization problem for which we develop specialized solution methods for the case in which budget constraints exist we provide a novel solution approach that uses a tailored branch and bound algorithm our approach solves a broad range of 3000 test instances in an average of less than 2 seconds significantly outperforming a leading commercial global optimization solver

the effects of grants in aid on state and local expenditures abstract this paper develops econometric methods to estimate the effect of the piecewise linear budget constraints created by grant formulas in which the subsidy rate is not constant over expenditures e g closed end grants the methods are applied to the afdc program the results show that because of the kinked nature of the grant formula 1 the present federal formula actually increases cross state inequality in afdc benefits 2 several subsidy rates in the formula actually reduce benefits and 3 the so called flypaper effect disappears

from earnings inequality to consumption inequality this paper studies the paths from inequality in earnings to inequality in household consumption we show that careful study of the evolution of the variances and covariances of earnings and consumption within cohorts across time can identify permanent and transitory shocks we present an application to the evolution of inequality in the united kingdom we extend previous results to recognise separate earnings of partners in couples

optimal and approximate policies in multiperiod multilocation inventory models with transshipments this paper examines the effects on the optimal ordering policy and its cost of allowing for interactions among retail outlets specifically transshipments are allowed as recourse actions occurring after demands are realized but before they must be satisfied the resultant savings in holding and shortage costs are balanced against the costs of transshipment a base stock ordering policy is optimal for this model if the final period base stock order up to point is nonnegative then it will be the base stock order up to point for all periods unfortunately it can be found analytically only for two special cases where either the cost parameters are equal at every outlet or there are only two outlets these two special cases are used to validate a heuristic solution technique employing monte carlo integration which is then compared to an easily calculated base policy in order to gauge the contribution of this model the additional savings from using this heuristic policy are significant particularly for problems with many retail outlets and low transshipment costs

gaining ground poverty in the postwar united states official measures of poverty in the united states are compiled by the bureau of the census by comparing a household s income level to a prespecified threshold from a theoretical perspective it is more appropriate to evaluate the level of poverty using a consumption based measure of household welfare in this paper i evaluate the level of poverty using expenditure data from the consumer expenditure survey i find that consumption based poverty rates are much lower than those based on income the trend in the poverty rate in the united states is sensitive to the price index and equivalence scales used to adjust the poverty thresholds

flexible service capacity optimal investment and the impact of demand correlation we consider a firm that provides multiple services using both specialized and flexible capacity the problem is formulated as a two stage single period stochastic program the firm invests in capacity before the actual demand is known and optimally assigns capacity to customers when demand is realized sample applications include a car rental company s use of mid sized cars to satisfy unexpectedly high demand for compact cars and an airline s use of business class seats to satisfy economy class demand we obtain an analytical solution for a particular case when services may be upgraded by one class the simple form of the solution allows us to compare the optimal capacities explicitly with a solution that does not anticipate flexibility given that demand follows a multivariate normal distribution we analytically characterize the effects of increasing demand correlation on the optimal solution for the case with two customer classes the effects of demand correlation are intuitive increasing correlation induces a shift from flexible to dedicated capacity when there are three or more classes there are also adjustments to the resources not directly affected by the correlation change as correlation rises these changes follow an alternating pattern for example if the optimal capacity of one resource rises then the optimal capacity of the adjacent resource falls these results make precise conjectures based on numerical experiments that have existed in the literature for some time

supply chain choice on the internet internet companies extensively use the practice of drop shipping where the wholesaler stocks and owns the inventory and ships products directly to customers at retailers request under the drop shipping arrangement the supply chain benefits from risk pooling because the inventory for multiple retailers is stocked at the same location the wholesalers another more traditional channel alternative on the internet is one in which retailers stock and own the inventory these two supply chain structures which predominate on the internet result in different inventory risk allocation stocking decisions and profits for channel members moreover the two channel alternatives can be combined into a dual strategy whereby the retailer uses local inventory as a primary source and relies on drop shipping as a backup we model the dual strategy as a noncooperative game among the retailers and the wholesaler analyze it and obtain insights into the structural properties of the equilibrium solution to facilitate development of recommendations for practicing managers finally we characterize situations in which each of three channels is preferable by specifying appropriate ranges of critical parameters including demand variability the number of retailers in the channel wholesale prices and transportation costs

risk pooling through physical probabilistic selling abstract this paper investigates the impacts of a new type of probabilistic selling p s where the retailer orders specific products and package some as a discounted physical probabilistic product ppp rather than merely a virtual choice we call this p s strategy as physical probabilistic selling p p s the price gap between the specific products and the probabilistic product results in demand reshape i e some customers who originally buy specific products will switch to buying the probabilistic product which decreases aggregate demand uncertainty however the price discount decreases the profit margin considering this trade off we develop a three product newsvendor model to address the question of how to set the price for the ppp and make inventory allocation decisions we prove that there are two effects under p p s namely the risk pooling effect due to demand reshape and the risk diversification effect due to inventory flexibility with demand uncertainty p p s can improve the retailer s profit at lower inventory levels with proper demand reshape induced by the optimal price discount p p s is more profitable with smaller product differentiation higher customer price sensitivity higher demand uncertainty and lower package cost with supply uncertainty we demonstrate through numerical studies that p p s is a viable strategy to combat asymmetrical supply risk that yields higher profits and service levels

inventory pooling with environmental constraints using copulas abstract pooling is a best practice in inventory management for economic objectives in this paper we investigate whether pooling stays advantageous if environmental sustainability is considered in addition to the economic performance i e we analyze whether pooling could have a negative impact on the environment and evaluate the resulting trade off between economic and environmental performance within the newsvendor framework we consider three pooling models pooling via centralized ordering physical centralization including inventory allocation to the retailers with priority allocation and transshipments in addition we include environmental constraints based on carbon emissions covering all manufacturing and logistics operations of the product we characterize the optimal policy of the pooling models with emission constraints make a detailed comparison between the models and compare them to the decentralized i e no pooling case using copulas to model the joint distribution of dependent demands we prove that the profit decreases with increasing demand dependence further if the environmental constraint is binding optimal inventory level and emissions decrease with increasing demand dependence and pooling harms the environment compared to the case of no pooling additionally we numerically evaluate the impact of copulas and characterize when the economic and environmental performance of pooling can be balanced

unemployment insurance benefit levels and consumption changes abstract we use a canadian survey of the unemployed to examine how household expenditures after a job loss respond to the level of income replacement provided by ui we isolate a liquidity constraint or transitory income effect from the permanent income shock of job loss and from the costs of working we find significant effects of varying the replacement ratio among the third of the sample who did not have assets at the job loss we conclude that the consumption smoothing benefit of ui is concentrated wholly on a sub group of the unemployed

consumption and poverty how effective are in kind transfers the ability of in kind transfers to alleviate poverty depends on accurate targeting as well as recipients valuations of the benefits using data from the consumer expenditure surveys the efficiency of in kind transfers is examined in a microsimulation framework in which recipients are identified as those who have the lowest consumption in this framework in kind transfers of food capital services which includes housing and consumer services are an effective means of providing support to the poor even at high levels of subsidization the multiple good transfers that are considered are essentially equivalent to cash grants copyright 1996 by royal economic society

viewpoint measuring the well being of the poor with income or consumption a canadian perspective there is a long tradition of using consumption measures derived from statistics canada s household expenditures surveys to study material well being inequality and poverty we offer an introduction to this research income and consumption measures give different pictures of the patterns of material well being in canada but the differences are not as large as in the us we also provide a comparison to meyer and sullivan s results on data quality canadian expenditure surveys are of high quality unique aspects of these surveys variation in quality control measures over time and the possibility of comparing to income tax data provide important insights into the quality of survey data on income and consumption il existe une longue tradition d utilisation de mesures de consommation derivees de l enquete des depenses des menages de statistiques canada pour mesurer le bien etre materiel l inegalite et la pauvrete les auteurs presentent ces recherches les mesures de revenus et de consommation donnent des portraits differents des patterns de bien etre materiel au canada mais les differences ne sont pas aussi importantes qu aux etats unis on presente une comparaison avec les resultats de meyer et sullivan sur la qualite des donnees les enquetes sur les depenses sont de haute qualite au canada certains aspects uniques de ces enquetes variation dans les mesures de controle de qualite dans le temps et possibilite de comparer les donnees derivees des rapports d impot sur le revenu fournissent des apercus importants sur la qualite des donnees d enquetes sur le revenu et la consommation canadian economics association

inequality in the joint distribution of consumption and time use abstract this paper examines inequality in both leisure and consumption over the past four decades using time use surveys stretching from 1975 to 2016 we estimate the distribution of leisure time conditional on hours worked and other individual level and family level characteristics we show that these characteristics especially when including work hours explain most of the long run variation in leisure we then use these estimates to predict the distribution of leisure using work hours and other characteristics in the consumer expenditure survey a survey that also provides detailed information on consumption the advantage of this approach is that it gives us measures of consumption and leisure at the family level within a single data source combining consumption and leisure allows us to characterize more accurately changes in the distribution of well being we find that leisure time is highest for families at the bottom of the consumption distribution and typically declines monotonically as consumption rises however the consumption leisure gradient is small we find noticeable differences across family types with the gradient being largest for single parent families and single individuals and smallest for families with a head age 65 or older the negative relationship between consumption and leisure appears strongest during the period around the great recession we find that including both leisure and consumption as opposed to just consumption in a measure of economic well being results in less inequality the negative association between leisure and consumption is a sufficient condition for this result however the degree to which leisure inequality offsets consumption inequality depends on the valuation of leisure

estimation with response error and nonresponse error in survey data originates from failure to contact the sample and from false answers to verifiable questions these errors may be systematic and associated with uncooperative or unreliable respondents zabel modeled attrition in the survey of income and program participation and found systematic demographic and design effects bollinger and david modeled response error and identified correlations to income per capita in this analysis we link missing interviews in a panel and response error through a trivariate probit analysis robustness of the correlation between attrition and response error is examined by comparing variants of the model the joint model of response error and attrition becomes the first stage of a pseudolikelihood estimate of a model of food stamp participation the model is significantly different from naive probit on the survey data

when do women use aid to families with dependent children and food stamps the dynamics of eligibility versus participation this paper investigates dynamic patterns in the relationship between eligibility and participation in the aid to families with dependent children afdc and food stamp programs using monthly longitudinal data from the survey of income and program participation the results indicate that there are many relatively short eligibility spells that do not result in program participation and end with increases in income participation is most likely to occur among women with lower current and future earnings opportunities and is affected by locational and policy parameters those who elect to participate in these programs tend to start receiving benefits almost immediately upon becoming eligible a substantial number of women exit these programs before their eligibility ends among at least some of these women it is likely that unreported changes in income are occurring in 1989 if all eligible single parent families had participated in afdc and food stamps benefit payments in these programs would have been 13 5 billion higher

defining poverty lines as a fraction of central tendency we show under lognormality that when the gini coefficient is stable over time defining the poverty line as a fraction of a central tendency of the living standard distribution restricts the evolution of the poverty measures to be stable that is poverty does not change if the gini coefficient does not change moreover when the gini coefficient slightly changes most of the poverty change can be considered a change in inequality then the consequences of using different poverty lines are analysed thus important features in studies of poverty change based on these lines may result from methodological choices rather than from economic mechanisms