price discrimination in broadway theater a common thread in the theory literature on price discrimination has been the ambiguous welfare effects for consumers and the rise in profit for firms relative to uniform pricing in this study i resolve the ambiguity for consumers and quantify the benefit for a firm i describe a model of price discrimination that includes both second degree and third degree price discrimination using data from a broadway play i estimate the structural model and conduct various experiments to investigate the implications of alternative pricing policies the observed price discrimination may improve the firm s profit by approximately 5 relative to uniform pricing while the difference for aggregate consumer welfare is negligible also i show that the gain from changing prices in the face of fluctuating demand is small under the observed price discrimination

are health insurance markets competitive to gauge the competitiveness of the group health insurance industry i investigate whether health insurers charge higher premiums ceteris paribus to more profitable firms such direct price discrimination is feasible only in imperfectly competitive settings using a proprietary national database of health plans offered by a sample of large multisite firms from 1998 2005 i find firms with positive profit shocks subsequently face higher premium growth even for the same health plans moreover within a given firm those sites located in concentrated insurance markets experience the greatest premium increases the findings suggest health care insurers are exercising market power in an increasing number of geographic markets

a market discovery algorithm to estimate a general class of nonparametric choice models we propose an approach for estimating customer preferences for a set of substitutable products using only sales transactions and product availability data the underlying demand framework combines a general nonparametric discrete choice model with a bernoulli process of arrivals over time the choice model is defined by a discrete probability mass function pmf on a set of possible preference rankings of alternatives and it is compatible with any random utility model an arriving customer is assumed to purchase the available option that ranks highest in her preference list the problem we address is how to jointly estimate the arrival rate and the pmf of the rank based choice model under a maximum likelihood criterion since the potential number of customer types is factorial we propose a market discovery algorithm that starts with a parsimonious set of types and enlarge it by automatically generating new types that increase the likelihood value numerical experiments confirm the potential of our proposal for a realistic data set in the hospitality industry our approach improves the root mean square errors between predicted and observed purchases computed under independent demand model estimates by 67 to 93 this paper was accepted by serguei netessine operations management

cash transfer programs with income multipliers procampo in mexico abstract cash transfer programs create multiplier effects when recipients put the money they receive to work to generate further incomes when this is the case the ultimate income effects are multiples of the amounts transferred we analyze the procampo program in mexico that was introduced to compensate farmers for the anticipated negative effect of nafta on the prices of basic crops the transfer rules and the timing of the panel data collected allow unique control of biases in this impact analysis we find that the multiplier among ejido sector recipients is in the range 1 5 2 6 multipliers are higher for households with medium and large farms low numbers of adults in the household nonindigenous backgrounds and located in the center and gulf regions high multipliers reflect income opportunities that had remained unrealized due to liquidity constraints that are relaxed by the transfers opportunities come from the asset endowments that these households received through the land reform particularly irrigated land and they are enhanced by access to technical assistance

price discrimination copyright law and technological innovation evidence from the introduction of dvds u s copyright law effectively prevents direct price discrimination for copyright holders that sell to different markets in response these firms can engage in indirect price discrimination i derive theoretical predictions about the use of indirect price discrimination and i analyze how optimal pricing strategies differ for different products using data on vhs and dvd movie distribution i find that firms pricing choices are consistent with the predictions of theory and that firms use of indirect price discrimination benefits consumers but harms ancillary retailers finally i examine what optimal pricing strategies might look like in a legal environment that permits direct price discrimination

agricultural dis incentives and food security is there a link using the world bank database distortions to agricultural incentives this paper analyzes the impact that agricultural dis incentives have on food security for a wide sample of countries over the 1990 2010 period we adopt a continuous treatment approach applying generalized propensity score matching to reduce potential biases stemming from differences in observed country characteristics the results provide strong evidence of self selection and heterogeneous food security impacts at different levels of policy intensity estimates of the dose response functions show that both discrimination against agriculture and large support for it lead to poor performance in the availability access and utilization dimensions of food security

impact of income on nutrient intakes implications for undernourishment and obesity the relationship between income and nutrient intake is explored nonparametric panel and quantile regressions are used engle curves for calories fat and protein are approximately linear in logs with carbohydrate intakes exhibiting diminishing elasticities as incomes increase elasticities range from 0 10 to 0 25 with fat having the highest elasticities countries in higher quantiles have lower elasticities than those in lower quantiles results predict significant cumulative increases in calorie consumption which are increasingly composed of fats though policies aimed at poverty alleviation and economic growth may assuage hunger and malnutrition they may also exacerbate problems associated with obesity

can fao s measure of chronic undernourishment be strengthened abstract in its sixth world food survey released at the 1996 world food summit the food and agriculture organization of the united nations fao reported that 841 million people in developing countries are chronically undernourished this number and its country and regional level disaggregations have proved tremendously useful to countless development aid agencies and researchers in the context of a recent wave of new nationally representative household food consumption and expenditure surveys this paper examines the estimation methodology underlying the food insecurity measure which relies on national aggregate measures of food availability and distribution the paper finds that the measure largely reflects national food availabilities and does not adequately capture people s ability to gain access to food the ultimate key to food security the implications for the indicator s use by policy makers in geographical targeting and tracking changes in food insecurity over time are drawn out the paper concludes by arguing that the time has come to review the potential for employing the new household survey data along with new methods to strengthen the empirical foundations of fao s measure

raising primary school enrolment in developing countries the relative importance of supply and demand abstract few policies are as universally accepted as raising primary school enrolment in developing countries but the policy levers for achieving this goal are not straightforward this paper merges household survey data with detailed school supply characteristics from official sources in order to estimate the relative impact of demand and supply side determinants of rural primary school enrolment in mozambique policy simulations based on a set of plausible interventions show that in rural mozambique building more schools or raising adult literacy will have a larger impact on primary school enrolment rates than interventions that raise household income when relative costs are considered adult literacy campaigns are nearly 10 times more cost effective than the income intervention and 1 5 to 2 5 times better than building more schools

weighing what s practical proxy means tests for targeting food subsidies in egypt abstract despite achieving a significant cost reduction over the past two decades the absolute cost of food subsidies in egypt is still high relative to the benefits received by the poor there is scope for better targeting these food subsidies in particular for targeting cooking oil and sugar ration cards both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policy for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits targeting the high subsidy green ration cards to the poor and the low subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households an international food policy research institute research team in egypt in collaboration with the egyptian ministry of trade and supply developed a proxy means test for targeting ration cards the paper describes the process of moving from the optimal income predicting model to the final model that was both administratively and politically feasible an ex ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households an effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system and at the same time the total budgetary costs of rationed food subsidies would decline moreover the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in egypt

using price distributions to estimate search costs we show how the equilibrium restrictions implied by standard search models can be used to estimate search cost distributions using price data alone we consider both sequential and nonsequential search strategies and develop estimation methodologies that exploit equilibrium restrictions to recover estimates of search cost heterogeneity that are theoretically consistent with the search models we illustrate the method using online prices for several economics and statistics textbooks

the geography and causes of food insecurity in developing countries abstract at the 1996 world food summit 186 countries made a commitment to reduce the number of chronically undernourished people by half by 2015 in order to formulate effective policies for reaching this goal a thorough understanding of the location and causes of food insecurity is needed this paper provides a broad overview of the current character of food insecurity in developing countries focusing on two questions 1 why are they food insecure and 2 why are the food insecure to answer the latter question data from 58 developing countries with high prevalences of food insecurity are employed to examine the relative importance of two of food insecurity s most basic causes national food availability and the inability of people to access food due to poverty using child malnutrition as a proxy along with descriptive controls for non food determinants of malnutrition the paper finds little correlation between national food availabilities and food insecurity the group of countries that exhibit the highest severity of food insecurity are those with high poverty and food dietary energy surpluses consistent with the view that poverty is the most widespread cause of food insecurity in the 1990s the paper concludes by considering the implications of the analysis for appropriate geographical and policy targeting to improve food security for the greatest numbers of people at the fastest pace now and into the 21st century

reducing child malnutrition how far does income growth take us how rapidly will child malnutrition respond to income growth this article explores that question using household survey data from 12 countries as well as data on malnutrition rates in a cross section of countries since the 1970s both forms of analysis yield similar results increases in income at the household and national levels imply similar rates of reduction in malnutrition using these estimates and better than historical income growth rates the article finds that the millennium development goal of halving the prevalence of underweight children by 2015 is unlikely to be met through income growth alone what is needed to accelerate reductions in malnutrition is a balanced strategy of income growth and investment in more direct interventions

the welfare effects of third degree price discrimination in the author examines third degree price discrimination by an upstream monopolist in an intermediate good market discrimination is motivated by the fact that downstream firms differ in their abilities to integrate backward into supply of the input the author shows that under reasonable specifications of equilibrium price discrimination leads to all buyers facing higher input prices in other cases discrimination raises some prices and lowers others the author derives conditions under which discrimination lowers welfare by reducing total output and shows that in some markets discrimination will raise welfare by preventing socially inefficient backward integration copyright 1987 by american economic association

a nonparametric approach to modeling choice with limited data choice models today are ubiquitous across a range of applications in operations and marketing real world implementations of many of these models face the formidable stumbling block of simply identifying the right model of choice to use because models of choice are inherently high dimensional objects the typical approach to dealing with this problem is positing a priori a parametric model that one believes adequately captures choice behavior this approach can be substantially suboptimal in scenarios where one cares about using the choice model learned to make fine grained predictions one must contend with the risks of mis specification and overfitting underfitting thus motivated we visit the following problem for a generic model of consumer choice namely distributions over preference lists and a limited amount of data on how consumers actually make decisions such as marginal information about these distributions how may one predict revenues from offering a particular assortment of choices an outcome of our investigation is a nonparametric approach in which the data automatically select the right choice model for revenue predictions the approach is practical using a data set consisting of automobile sales transaction data from a major u s automaker our method demonstrates a 20 improvement in prediction accuracy over state of the art benchmark models this improvement can translate into a 10 increase in revenues from optimizing the offer set we also address a number of theoretical issues among them a qualitative examination of the choice models implicitly learned by the approach we believe that this paper takes a step toward automating the crucial task of choice model selection this paper was accepted by yossi aviv operations management

control and ownership of assets within rural ethiopian households this article investigates how the control and devolution of productive assets are allocated among husband and wife theory predicts that bargaining power within marriage depends on the division of assets upon divorce and on control over assets during marriage using detailed household data from rural ethiopia we show that assets brought to marriage ownership of assets control within marriage and disposition upon death or divorce are only partly related productive resources are controlled by the household head disposition upon death or divorce only loosely depends on individual ownership during marriage but control is associated with larger claims upon divorce assets brought into marriage have little impact on disposition upon death but matter in case of divorce

sufficient nourishment worldwide via transfer payments abstract the paper illustrates an unconventional approach to providing adequate nourishment worldwide regions with an insufficient calorie supply receive transfer payments in order to increase their food budgets the transfer payments are financed by a flat income tax in oecd countries a general equilibrium model which contains this transfer payment mechanism as well as information about nutrition is applied for the analysis the resulting tax rate is 0 55 of oecd countries income or a required total transfer of 112 billion usd with the money allocated the receiver regions boost their domestic production as well as increasing their food imports this in turn affects agriculture in oecd countries by promoting production

search with learning for differentiated products evidence from e commerce this article provides a method to estimate search costs in a differentiated product environment in which consumers are uncertain about the utility distribution consumers learn about the utility distribution by bayesian updating their dirichlet process prior beliefs the model provides expressions for bounds on the search costs that can rationalize observed search and purchasing behavior using individual specific data on web browsing and purchasing behavior for mp3 players sold online we show how to use these bounds to estimate search costs as well as the parameters of the utility distribution our estimates indicate that search costs are sizable we show that ignoring consumer learning while searching can lead to severely biased search cost and elasticity estimates

optimal dynamic pricing for expanding networks this paper analyzes the dynamic pricing decision of a monopolist marketing a new product or service whose consumption value increases with the expansion of the network of adopters we characterize an optimal pricing strategy which maximizes the present value of the monopolist s profits subject to the dynamics of the demand for network access these dynamics depend among other factors on the current price and consumer anticipations about future network growth we examine the effects of changes in the growth anticipations and the discount rate on the optimal equilibrium access price and network size it is shown that higher growth anticipations and a lower discount rate result in a lower equilibrium price and a larger network

profit maximizing perceptual positions an integrated theory for the selection of product features and price an important component of marketing strategy is to position a product in perceptual space but to realize a perceptual position we must model the link from physical characteristics to perceptual dimensions and we must use this model to maximize profit this paper integrates psychological theories on how consumers process information with economic models and psychometric measurement and it develops a theory for selecting physical features and price to achieve a profit maximizing perceptual position the theory begins with a lancaster like transformation from goods space to characteristics space and investigates the implications of a mapping to a third space perceptual space we show that all products efficient in perceptual space must be efficient in characteristics space but not conversely but consumers vary in their preference and the way they perceive products thus we introduce distributional components to the theory and derive both geometric and analytic methods to incorporate this consumer heterogeneity next we investigate costs and derive a perceptual expansion path along which a profit maximizing position must exist conjoint analysis and quantal choice models provide the measurements to implement the theory the theory is illustrated with a hypothetical example from the analgesics market and some of the potential psychometric measurements are illustrated with an empirical application in the communications market

competitive price discrimination we model firms as supplying utility directly to consumers the equilibrium outcome of competition in utility space depends on the relationship u between profit and average utility per consumer public policy constraints on the deals firms may offer affect equilibrium outcomes via their effect on u f rom this perspective we examine the profit utility and welfare implications of price discrimination policies in an oligopolistic framework we also show that an equilibrium outcome of competitive nonlinear pricing when consumers have private information about their tastes is for firms to offer efficient two part tariffs

social capital and coping with economic shocks an analysis of stunting of south african children abstract south african households live in an environment characterized by risks and many face a significant probability of experiencing economic losses that threaten their daily subsistence using household panel data that include directly solicited information on economic shocks and employing household fixed effects estimation we explore how well households cope with shocks by examining the effects of shocks on child nutritional status unlike in the idealized village community some households appear unable to insure against risk particularly when others in their communities simultaneously suffer large losses households in communities with more social capital however seem better able to weather shocks

blind network revenue management we consider a general class of network revenue management problems where mean demand at each point in time is determined by a vector of prices and the objective is to dynamically adjust these prices so as to maximize expected revenues over a finite sales horizon a salient feature of our problem is that the decision maker can only observe realized demand over time but does not know the underlying demand function that maps prices into instantaneous demand rate we introduce a family of blind pricing policies that are designed to balance trade offs between exploration demand learning and exploitation pricing to optimize revenues we derive bounds on the revenue loss incurred by said policies in comparison to the optimal dynamic pricing policy that knows the demand function a priori and we prove that asymptotically as the volume of sales increases this gap shrinks to zero

dynamic price competition in auto insurance brokerage we analyze brazilian data on auto insurance and document that a about 20 of policies are sold without brokerage commission b over 40 are sold at the highest fee allowed and c the remaining contracts are associated with a spread out distribution of fees static models cannot rationalize these findings we develop a dynamic model of price competition with search and switching costs that reproduces them we use the equilibrium structure to estimate the model parameters and infer the brokers expected earnings the frequency that insurees switch brokers and the counterfactual effects of a price ceiling policy

analytical solutions to the dynamic pricing problem for time normalized revenue abstract in this work we consider dynamic pricing for the case of continuous replenishment an essential ingredient in such a formulation is the use of time normalized revenue or profit function in other words revenue or profit per unit time this provides the incentive to sell many items in the shortest time and of course at a high price moreover for most firms what matters most is how much revenue or profit is achieved in a certain time frame for example per year this changes the problem qualitatively and methodologically we develop a new dynamic pricing model for this formulation we derive an analytical solution to the pricing problem in the form of a simple to solve ordinary differential equation ode equation the trajectory of this ode gives the optimal pricing curve unlike many of the models existing in the literature that rely on computationally demanding dynamic programming type solutions our model is relatively simple to solve also we apply the derived equation to two commonly used price demand functions the exponential and the power functions and derive closed form pricing curves for these functions

haddad lawrence john hoddinott and harold alderman eds intrahousehold resource allocation in developing countries models methods and policy baltimore md johns hopkins university press 1997 384 pp 55 00 in this volume economists demographers sociologists and anthropologists collaborate in the study of how resources are allocated within households in developing countries and why it matters from a policy perspective surveying a broad range of theory and evidence the contributors examine the many social and cultural factors that influence decisions about the family and household level about the allocation of time income assets and other resources ths contributors show that a more complete understanding of intrahousehold behaviour can increase the likelihood that policies will reach the people they are intended to affect

the impact of war on calorie food demand in bangladesh daily per capita calorie intake in bangladesh averaged almost 2 100 kilo calories in the 1960s but fell to 1 840 in 1972 following the war of independence in 1971 and only by 1987 did it reach 2 000 again this article examines the long run relationship between per capita income food prices and per capita calorie intake using aggregate data for bangladesh for 1962 97 and the recent cointegration procedure of johansen et al which permits structural breaks results show that a long run relationship exists and that the war reduced average calorie intake permanently by 10 per cent impulse responses show that income granger causes calorie intake but not vice versa

measuring food insecurity the frequency and severity of coping strategies abstract defining and interpreting food security and measuring it in reliable valid and cost effective ways have proven to be stubborn problems facing researchers and programs intended to monitor food security risks this paper briefly reviews the conceptual and methodological literature on food insecurity measurment describes a particular method for distinguishing and measuring short term food insecurity at the household level and discusses ways of generalizing the method the method developed enumerates the frequency and severity of strategies relied on by urban households when faced with a short term insufficiency of food this method goes beyond more commonly used measures of caloric consumption to incorporate vulnerability elements of food insecurity as well as the deliberate actions of household decision makers when faced with food insufficiency

price dispersion in mortgage markets using transaction level data on canadian mortgage contracts we document an increase in the average discount negotiated off the posted price and in rate dispersion our aim is to identify the beneficiaries of discounting and to test whether dispersion is caused by price discrimination the standard explanation for dispersion in credit markets is risk based pricing our contracts are guaranteed by government backed insurance so risk cannot be the main factor we find that lenders set prices that reflect consumer bargaining leverage not just costs the presence of dispersion implies a lack of competition but our results show this to be consumer specific

price discrimination and social welfare studies the effect of price discrimination on social welfare using methods from duality theory features of the reservation model presented quasi linear utility and consumers surplus upper and lower bounds on welfare change bounds on welfare change with optimal price discrimination from ebsco

revenue management with limited demand information in this paper we consider the classical multifare single resource leg problem in revenue management for the case where demand information is limited our approach employs a competitive analysis which guarantees a certain performance level under all possible demand scenarios the only information required about the demand for each fare class is lower and upper bounds we consider both competitive ratio and absolute regret performance criteria for both performance criteria we derive the best possible static policies which employ booking limits that remain constant throughout the booking horizon the optimal policies have the form of nested booking limits dynamic policies which employ booking limits that may be adjusted at any time based on the history of bookings are also obtained we provide extensive computational experiments and compare our methods to existing ones the results of the experiments demonstrate the effectiveness of these new robust methods

are women overrepresented among the poor an analysis of poverty in 10 developing countries abstract this paper presents new evidence on the proportion of women in poverty in 10 developing countries it compares poverty measures for males and females and for male and female headed households and investigates the sensitivity of these measures to the use of per capita and per adult equivalent units and different definitions of the poverty line while poverty measures are higher for female headed households and for females the differences are significant in only a fifth to a third of the datasets the contribution of female headed households to aggregate poverty is less than that of females due to the low population share of the former stochastic dominance analysis reveals that differences between male and female headed households and between males and females are often insignificant except for ghana and bangladesh where females are consistently worse off these results suggest that cultural and institutional factors may be responsible for higher poverty among women in these countries our results point to the need to analyze determinants of household income and consumption using multivariate methods and to give greater attention to the processes underlying female headship

targeting the poor in mexico an evaluation of the selection of households into progresa abstract in this paper we conduct an evaluation of the targeting method used by health education and nutrition program progresa of mexico to identify beneficiary households we address two key questions a how well does progresa s targeting perform and b how does the program perform in terms of its impact on poverty alleviation relative to other feasible methods and transfer schemes the first question is accomplished by comparing progresa s method to an alternative selection method based on household consumption which is our preferred measure of welfare we employ the concepts of undercoverage and leakage and find that progresa selection method is more effective in identifying the extremely poor localities or households but less so when it comes to distinguishing among localities or households in the middle of the scale to address the second question we compare the potential impact of progresa on poverty alleviation against uniform transfers that involve no targeting at all targeting based on consumption and geographic targeting i e targeting at the locality level rather than at the household level we find that progresa s method of targeting households outperforms uniform coverage and targeting at the locality level in terms of reducing the poverty gap and severity of poverty indices even after taking into account the economic costs of targeting but the closeness of progresa s performance to what could be achieved by geographic targeting alone raises some serious questions about the costs and benefits associated with the practice of household targeting within poor localities

dealer price discrimination in new car purchases evidence from the consumer expenditure survey this paper documents the variation in dealer discounts for new cars using transactions price data from the consumer expenditure survey consumer specific characteristics fail to explain dealer discounts whereas model market specific and purchase transaction variables e g first time purchase trade in and financing through dealer do explain them the results contradict earlier findings of race and gender discrimination based on a controlled experiment this contradiction is reconciled by examining the higher moments of the empirical discount distribution while mean and median markups do not vary by race and gender minority purchases are characterized by higher dispersion this may rationalize the disparate treatment of minorities by dealers documented in the controlled experiment

price discrimination and bargaining empirical evidence from medical devices many important issues in business to business markets involve price discrimination and negotiated prices situations where theoretical predictions are ambiguous this paper uses new panel data on buyer supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market while many phenomena that restrict price discrimination are suggested as ways to decrease hospital costs e g mergers group purchasing organizations and transparency i find that 1 non discriminatory pricing actually works against hospitals because competition is more intense under price discrimination and 2 results depend ultimately on a previously unexplored bargaining effect

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

oligopolistic pricing with sequential consumer search n identical stores compete by choosing prices for a homogeneous good with constant marginal costs consumers search sequentially with perfect recall for the lowest price one class of consumers called shoppers have zero search costs while all other consumers have a positive search cost c there is a unique symmetric nash equilibrium price distribution with the property that it changes smoothly from marginal cost pricing when all consumers are shoppers and or c 0 and monopoly pricing when no consumers are shoppers remarkably as the number of stores increases the nash equilibrium becomes more monopolistic copyright 1989 by american economic association

search frictions and market power in negotiated price markets we provide a framework for empirical analysis of negotiated price markets using mortgage market data and a search and negotiation model we characterize the welfare impact of search frictions and

a model of search with price discrimination abstract we introduce observable heterogeneity across buyers into a model of simultaneous search buyers differences are informative about their willingness to search giving rise to price discrimination even if they all have the same willingness to pay we analyze and compare equilibrium outcomes when price discrimination is allowed and when it is not we find that the price comparison across consumers as well as the effects of banning price discrimination critically depend on the elasticity of the search cost distribution interestingly for normally distributed search costs there is an inverted u shape relationship between prices and buyers size similarly a ban on price discrimination hurts small and large buyers to the benefit of the medium size ones

are the welfare losses from imperfect targeting important we quantify and compare the size of the welfare losses arising from the use of alternative imperfect welfare indicators as substitutes for the conventionally preferred consumption indicator we find that the size of the welfare losses associated with different indicators varies considerably an asset based index and the share of food as targeting indicators were found to have the highest welfare losses relative to all other targeting indicators examined our preferred welfare index implies that the losses from the two best targeting indicators i e reported expenditures and reported income are statistically significant but very low less than 5

heuristics for pricing and positioning a product line using conjoint and cost data designing and pricing a product line is the very essence of every business in recent years quantitative methods to assist managers in this task have been gaining in popularity conjoint analysis is already widely used to measure preferences for different product profiles and build market simulation models in the last few years several papers have been published that suggest how to optimally choose a product line based on such data we formalize this problem as a mathematical program where the objective of the firm is either profit or total welfare unlike alternative published approaches we introduce fixed and variable costs for each product profile the number of products to be introduced is endogenously determined on the basis of their desirability fixed and variable costs and in the case of profits their cannibalization effect on other products while the problem is difficult np complete we show that the maximum welfare problem is equivalent to the uncapacitated plant location problem which can be solved very efficiently using the greedy interchange heuristic based on past published experience with this problem and on simulations we perform we show that optimal or near optimal solutions are obtained in seconds for large problems we develop a new greedy heuristic for the profit problem and its application to simulated problems shows that it too runs quickly and with better performance than various alternatives and previously published heuristics we also show how the methodology can be applied taking existing products of both the firm and the competition into account

an analytical framework for making long term projections of undernourishment a case study for agriculture in mali abstract a framework is developed for projecting the effects of policy technological and environmental change on the prevalence of undernourishment in a country this is done by integrating the food and agriculture organization fao methodology for estimating the proportion of undernourished population in a country into a stochastic economic agricultural sector modeling framework the resultant framework considers the implications of climatic fluctuations resource limitations and degradation demographic pressure market dynamics adoption of improved cultivars and cropland expansion such a unified framework provides a rich accounting of the factors surrounding macro level food supply and undernourishment as well as results on the regional distribution of undernourishment in face of climatic risk and regional characteristics the framework is applied to mali evaluating a number of alternative options for reducing undernourishment we find that the malian agriculture does have a significant potential for reducing undernourishment by 2015

multi product pricing for electric power abstract this paper describes methods for determining the prices for a discrete set of interrelated products offered by a single supplier each product has a fixed marginal rate per unit the demand for each product depends upon the price levels of all the products and the supplier s cost function depends upon the demands for all the products for specific demand function forms methods are described for determining the prices that maximize a weighted sum of net revenue and consumer surplus

third degree price discrimination in oligopoly all out competition and strategic commitment price discrimination by imperfectly competitive firms may intensify competition leading to lower prices for all consumers the tradeoff of consumer groups welfare that is characteristic of monopolistic discrimination need not arise this escalation of competition may make firms worse off and as a result firms may wish to avoid the discriminatory outcome under conditions similar to those in which unambiguous price and welfare effects may arise unilateral commitments not to price discriminate including the adoption of everyday low pricing or no haggle policies may raise firm profits by softening price competition

equilibrium price dispersion in retail markets for prescription drugs this study seeks to establish the empirical importance of price dispersion due to costly consumer search by examining retail prices for prescription drugs posted prices in two geographically distinct markets are shown to vary considerably across pharmacies within the same market even after one controls for variation due to pharmacy differences pharmacy heterogeneity accounts for at most one third of the observed price dispersion the empirical analysis hinges on the observation that consumers incentives to price shop depend on characteristics of the drug therapy cross sectional patterns in price distributions across drugs are consistent with the predictions of a search model prices for repeatedly purchased prescriptions for which the expected benefits of search are highest exhibit significant reductions in both dispersion and price cost margins

does food security matter for transition in arab countries abstract expectations are high that transition in tunisia egypt libya and yemen will bring about more freedom justice and economic opportunities however experiences from other world regions show that countries in transition are at high risk of entering conflicts which often come at large economic social and political costs in order to identify options on how conflict may be prevented in arab transition countries this paper assesses the key global drivers of conflicts based on a dataset from 1960 to 2010 and improved cross country regression techniques results show that unlike in other studies where per capita incomes inequality and poor governance among other factors emerge as the major determinants of conflict food security at macro and household levels emerges as the main cause of conflicts in the arab world the high exposure of arab countries to global food price variations proves to be an important source of vulnerability for a peaceful arab transition if history is also a guide to the future improving food security is not only important for improving the lives of rural and urban people it is also likely to be the key for a peaceful transition the paper concludes with a set of policy options on how to improve food security at macro and household levels including safeguard mechanisms against excessive price volatility export led and pro poor growth the creation expansion of social safety nets and targeted nutrition programs

a taxonomy and research overview of perishable asset revenue management yield management overbooking and pricing this paper proposes the term perishable asset revenue management to denote the field that combines the areas of yield management overbooking and pricing for perishable assets after summarizing the characteristics common to problems in this field the paper discusses the objectives and constraints faced by decision makers then it offers a comprehensive taxonomy with 14 different elements and reviews the research that has been done related to each element finally it suggests some important areas of future research that can help bridge the gap between theory and application

what can new survey data tell us about recent changes in distribution and poverty it has been claimed that in recent times the poor have lost ground both relatively and absolutely even when average levels of living have risen this article tests that claim using household surveys for 67 developing and transitional economies over 1981 94 it finds that changes in inequality and polarization were uncorrelated with changes in average living standards distribution improved as often as it worsened in growing economies and negative growth was often more detrimental to distribution than positive growth overall there was a small decrease in absolute poverty although with diverse experiences across regions and countries almost always poverty fell with growth in average living standards and rose with contraction

the effects of third degree price discrimination in oligopoly retail firms and restaurants commonly offer senior citizen discounts i suspect this practice is not motivated by altruism rather the behavior can be better explained as profit maximizing price discrimination these firms are setting a low price in a market which probably has high elasticity of demand but why should the demand of senior citizens be more elastic than average one possibility is that elderly people have below average income and they would not eat out if restaurant prices were high perhaps a more plausible explanation is that retired people simply have more time on their hands to spend commuting across town to take advantage of discounts the purpose of these discounts may then be to lure senior citizens away from other restaurants rather than to get them out of the house the analysis of third degree price discrimination has a long history a c pigou 1920 joan robinson 1933 and two articles on the subject have recently appeared in this review richard schmalensee 1981 hal varian 1985 the industry structure in these analyses is monopoly but an explicit model of some form of competition is obviously needed to study discriminatory discounts meant to attract customers from rival firms and even discounts meant to get people out of the house may have an oligopoly analysis which is qualitatively different from their monopoly anlysis in this paper i present a simple duopoly model of a differentiated products industry i show that a firm s price elasticity of demand in a market can be expressed as the sum of two parts the industry demand elasticity and the cross price elasticity the first measures the tendency of consumers in a market to stay home when the price goes up the second the tendency to switch suppliers in the monopoly case in which the crossprice elasticity is zero and the collusive case in which the cross price elasticity is irrelevant discrimination between markets is due to differences in industry demand elasticity in the noncooperative oligopoly case equilibrium price differentials can be accounted for both by differences in cross price elasticity as well as differences in industry demand elasticity total industry output when the firms can discriminate between two markets is compared to what it would be if discrimination were impossible which regime has larger output depends on the sum of the adjustedconcavity condition and the elasticity ratio condition the first predominates when the rival products are poor substitutes and the firms have approximate monopoly power while the second predominates at the other extreme where the products are close substitutes and the firms have almost no market power the adjusted concavity condition compares the relative curvature of demands in the two markets and was originally discovered by robinson 1933 in her analysis of monopoly price discrimination the elasticity ratio condition compares the relative difference in industry demand elasticity between the two markets with the relative difference in cross price elasticity according to the elasticity ratio condition a discriminatory discount due to high industry elasticity of demand would be more likely to increase total output than one due to high cross price elasticity the effect of discrimination on profit is also discussed the distinction made here department of economics university of wisconsin madison madison wi 53706 this paper is a revision of part of my doctoral dissertation i am grateful to steve matthews ken judd and john panzar for guidance in this research i also thank seminar participants at wisconsin the justice department and the 1986 econometric society meetings in new orleans and the discussant martin perry the excellent comments of the referees improved the exposition of the paper

are experience and schooling complementary evidence from migrants assimilation in the bangkok labor market abstract this paper models the assimilation process of migrants and shows evidence of the complementarity between their destination experience and upon arrival human capital bayesian learning is assessed using panel data of wages from bangkok thailand it is found that i schooling returns are lower for migrants than for natives ii the accumulation of destination experience raises wages for migrants iii the experience effect is greater for more educated agents and iv the complementarity increases as destination experience accumulates the results imply that more educated migrants have higher learning efficiency and can perform tasks of greater complexity ultimately yielding higher wage growth in the destination market

product differentiation search costs and competition in the mutual fund industry a case study of s p 500 index funds we investigate the role that non portfolio fund differentiation and information search frictions play in creating two salient features of the mutual fund industry the large number of funds and the sizeable dispersion in fund fees in a case study we find that despite the financial homogeneity of s p 500 index funds this sector exhibits the fund proliferation and fee dispersion observed in the broader industry we show how extra portfolio mechanisms explain these features these mechanisms also suggest an explanation for the puzzling late 1990s shift in sector assets to more expensive and often newly entered funds an influx of highinformation cost novice investors

new product pricing in quality sensitive markets this paper considers the problem of pricing a new product in a market having competing products of different qualities and market penetration levels as measured by the cumulative number of units sold each customer type selects his optimal product based on maximizing consumer surplus pricing policies for a new product are determined for the seller based on cumulative profit maximization without discounting an example is solved in detail for two demand function forms

a nonparametric approach to multiproduct pricing developed by general motors gm the auto choice advisor website http www autochoiceadvisor com recommends vehicles to consumers based on their requirements and budget constraints through the website gm has access to large quantities of data that reflect consumer preferences motivated by the availability of such data we formulate a nonparametric approach to multiproduct pricing we consider a class of models of consumer purchasing behavior each of which relates observed data on a consumers requirements and budget constraint to subsequent purchasing tendencies to price products we aim at optimizing prices with respect to a sample of consumer data we offer a bound on the sample size required for the resulting prices to be near optimal with respect to the true distribution of consumers the bound exhibits a dependence of o n log n on the number n of products being priced showing thatin terms of sample complexitythe approach is scalable to large numbers of products with regards to computational complexity we establish that computing optimal prices with respect to a sample of consumer data is np complete in the strong sense however when prices are constrained by a price ladderan ordering of prices defined prior to price determinationthe problem becomes one of maximizing a supermodular function with real valued variables it is not yet known whether this problem is np hard we provide a heuristic for our price ladder constrained problem together with encouraging computational results finally we apply our approach to a data set from the auto choice advisor website our analysis provides insights into the current pricing policy at gm and suggests enhancements that may lead to a more effective pricing strategy

trust membership in groups and household welfare evidence from kwazulu natal south africa unfortunately these two literatures have remained largely unconnected the group and network literature concludes that participation has important economic benefits even when the stated function of the group is noneconomic in most cases however the mechanisms by which groups and networks achieve this are unclear the determinants of trust and participation in groups literature highlights the importance of income and social homogeneity what remains less understood is whether and how trust can be generated for example via participation in groups this article links the empirical literatures referenced above by exploring the relationship between membership in groups and trust specifically using longitudinal data from kwazulu natal province south africa we examine 1 the importance of trust in the decision to join groups 2 the subsequent ability of groups to generate trust and 3 the effect of group membership and trust on a measure of well being per capita household income in addition we disaggregate groups into financial and nonfinancial and we categorize trust in people by agent or actor therefore we can explore whether trust in different kinds of actors is important for participation in different kinds of groups and whether participation in different kinds of groups is important for generating trust in different kinds of actors excerpt

an empirical investigation of the welfare effects of banning wholesale price discrimination rand 054 rand2007 cls 1994 07 13 v1 2u standard latex document class rand rand 054 dispatch 12 7 2008 ce n a journal msp no no of pages 26 pe sharon rand journal of economics vol 40 no 1 spring 2009 pp 20 45 an empirical investigation of the welfare effects of banning wholesale price discrimination sofia berto villas boas economic theory does not provide sharp predictions on the welfare effects of banning wholesale price discrimination if downstream cost differences exist then discrimination shifts production inefficiently toward high cost retailers so a ban increases welfare if differences in price elasticity of demand across retailers exist discrimination may increase welfare if quantity sold increases so a ban reduces welfare using retail prices and quantities of coffee brands sold by german retailers i estimate a model of demand and supply and separate cost and demand differences simulating a ban on wholesale price discrimination has positive welfare effects in this market and less if downstream cost differences shrink or with less competition introduction wholesale price discrimination means that an upstream firm sets different prices for the same product for various downstream retailers wholesale price discrimination is commonly practiced in many markets examples include markets such as petroleum distribution steel heavy trucking tobacco and pharmaceuticals in several countries milk and other dairy products are sold using government administered or sanctioned discriminatory pricing schemes wholesale price discrimination practices are also used for services such as loans insurance and advertising 1 competition authorities have been concerned with wholesale price discrimination the european union treaty s article 82 c prohibits practices where a dominant firm would place trading partners at a competitive disadvantage the u s robinson patman act forbids discriminat ing in price between different purchasers where the effect may be to lessen competition unless the university of california berkeley sberto are berkeley edu i thank the editor igal hendel and two anonymous referees for many helpful comments and max auffhammer cyndi berck peter berck gal hochman silke januszewski forbes george judge kai uwe k uhn diana lazo mark muendler aviv nevo ariel pakes jeff perloff andrew sweeting miguel villas boas and participants at uc san diego university of michigan the inra idei conference in toulouse and the university of british columbia summer conference in industrial organization for their suggestions i thank daniel klapper for letting me have access to the data support from the giannini foundation and from an aes grant are gratefully appreciated see for gasoline markets texaco v hasbrouck 496 us 543 no 87 2048 1990 and the new york state motor fuel marketing practices act for steel chan hall and rust 2003 for heavy trucking volvo trucks north america inc v reeder simco gmc inc docket no 04 905 for tobacco brooke group ltd v brown and williamson tobacco corp 509 us 209 no 92 466 1993 for wholesale pharmaceuticals see http www datcp state wi us trade business unfair comp drug price jsp for dairy markets see for example gardner 1984 and for services see givens 1983 c 2009 rand copyright

third degree price discrimination in input markets output and welfare if price discrimination is realized the economy shifts from one equilibrium to another it clearly involves welfare effects the price discriminator clearly gains some consumers may also gain from the price cut but others may lose faced with higher prices etc traditionally the change in social welfare is known to be closely related to the change in total output in the case of third degree price discrimination it is well known that an increase in total output is a necessary condition for welfare improvement richard schmalensee 1981 proves this fact in a model in which the monopolist with constant marginal cost can perfectly separate markets further hal r varian 1985 extends this result to the case of interdependent markets permnitting increasing marginal cost of the monopolist and finally the assumption of nondecreasing marginal cost is eliminated by marius schwartz 1990 roughly speaking this proposition says that if there is a welfare gain from price discrimination there has to be some gain to offset the distortion involved on the other hand the vast majority of legal and other policy disputes over the price discrimination concern input markets not final good markets thus it seems important to investigate the situation in which a discriminating monopolist is not a final good supplier but an input supplier and the buyers of the input are downstream producers of a final good as is assumed in this paper if the downstream firms have different technologies their input demand functions will be different and thus the monopolist has an incentive to price discriminate in this scenario michael l katz 1987 and patrick degraba 1990 study the effect of inputmarket price discrimination and show that price discrimination always lowers welfare because it involves the distortion that a lower cost downstream firm is assigned a higher price unfortunately in their simple settings on the technology of downstream industry price discrimination can never change total output of the input or of the final good 1 thus we must say that welfare effect of input market price discrimination remains open to question if it has some effect on total output in particular we are curious as to whether we can obtain some close relationship between the changes in welfare and total output as we have obtained in the final good market settings with this motivation we will construct a model which involves change in total output of the final good in the next section the model and assumptions are provided in section ii after we extend the result of katz 1987 and degraba 1990 we find a relationship between the changes in welfare and total output strikingly it states that an increase in the total output of the final good is a sufficient condition for welfare deterioration this result contrasts with that obtained by schmalensee 1981 varian 1985 and schwartz 1990 from usual models of price discrimination in a final good market section iii concludes the analysis

when the data source writes the conclusion evaluating agricultural policies statistics describe realities but they also shape them since they are used to design or support policies as such accurate statistics are important using the agricultural sector in rwanda as a case study we demonstrate that dubious statistics can spread quickly according to data from the food and agricultural organization fao yields have increased by 60 per cent since the implementation of large scale agricultural reforms while other datasets point towards more modest gains yet estimates in line with those of the fao dominate the official discourse we suggest that the discrepancies between datasets may be explained by the difficulties of collecting accurate agricultural statistics combined with an incentive to overestimate yields to show that the reforms have worked

does cash crop adoption detract from child care provision evidence from rural nepal this document addresses the issues of agricultural commercialization using data from fieldwork conducted in nepal it aimed to examine the impact of a project designed to commercialize vegetables and fruit the vegetable and fruit cash crop program vcf on male and female time allocation the goal of vfc program was to increase the commercial production of vegetables and fruits in farm households that were heavily dependent on the production of cereal and livestock for home consumption findings from multivariate analysis suggest that for households with one preschooler vfc participation results in more time to agricultural production of the cash crop for both men and women but also a decrease in care time to preschoolers from both men and women meanwhile for households with more than one preschooler this trade off is not so apparent the analysis also suggests that behavior change initiatives to protect time to child care might be feasible in that vfc participation does not decrease the overall nonwork time of men or women with preschool children in residence

the robustness of poverty profiles reconsidered poverty measures and profiles are used increasingly to guide antipoverty policies in low income countries an essential element in these analyses is the specification of a poverty line however there are many different methods for setting poverty lines and different methods can yield strikingly different results with correspondingly different policy implications using recent household survey data from mozambique this paper explores the differences that occur using the most common poverty line methodologies the food energy intake fei and the cost of basic needs cbn methods over different levels of geographic specificity we find that regional and provincial rankings of foster greer and thorbecke poverty indices are not robust to the method of poverty line determination but that the characteristics of the poor are reasonably similar under all methods the fei poverty lines often yield counterintuitive results whereas the family of cbn poverty lines was more robust food consumption patterns of the poor show a high degree of substitution among basic staples from one region to another which is consistent with observed differences in relative food prices indicating that cbn poverty lines that allow for regional variation in the food consumption bundle may be most appropriate in these settings

monopolist pricing with dynamic demand and production cost this paper deals with pricing of a new product over time by a monopolist who maximizes the discounted profit stream the interdependency of cost and demand on cumulative production makes the problem inherently dynamic cost is assumed to be declining with cumulative production learning curve effect while demand is a function of price and cumulative sales representing word of mouth and saturation effects the paper addresses this problem in a general framework that includes several previous results as special cases and provides new insights in other situations while the learning curve and word of mouth effect cause prices to be lower than the price that maximizes immediate revenues the saturation factor has the opposite effect the price path over time is affected by these factors and the interest rate we characterize the price path under several different situations and interpret the results for policy guidelines