tracking the market dynamic pricing and learning in a changing environment dynamic pricing of commodities without knowing the exact relation between price and demand is a much studied problem most existing studies assume that the parameters describing the market are constant during the selling period this severely reduces their practical applicability since in reality market characteristics may change all the time without the firm always being aware of it in the present paper we study dynamic pricing and learning in a changing market environment we introduce a methodology that enables the price manager to hedge against changes in the market and provide explicit upper bounds on the regret a measure of the performance of the firm s pricing decisions in addition this methodology guides the selection of the optimal way to estimate the market process we provide numerical examples from practically relevant situations to illustrate the methodology

the environment and welfare implications of trade and tax policy developing countries with comparative advantage in dirty industries face the risk of environmental degradation unless appropriate policies are implemented using applied general equilibrium analysis we examine how trade influences the environment and assess the welfare and environmental implications of alternative pollution abatement policies for indonesia our results indicate that unilateral trade liberalization by indonesia would increase the ratio of emission levels to real output for almost all major pollution categories more importantly when tariff removal is combined with a cost effective tax policy the twin objectives of welfare enhancement and environmental quality improvement appear to be feasible this sheds new and positive light on the role of trade in sustainable development

trading for the future signaling in permit markets abstract permit markets are celebrated as a policy instrument since they allow i firms to equalize marginal costs through trade and ii the regulator to distribute the burden in a politically desirable way these two concerns however may conflict in a dynamic setting anticipating the regulator s future desire to give more permits to firms that appear to need them firms purchase permits to signal their need this raises the price above marginal costs and the market becomes inefficient if the social cost of pollution is high and the government intervenes frequently in the market the distortions are greater than the gains from trade and non tradable permits are better the analysis helps to understand permit markets and how they should be designed

close the gaps a learning while doing algorithm for single product revenue management problems we consider a retailer selling a single product with limited on hand inventory over a finite selling season customer demand arrives according to a poisson process the rate of which is influenced by a single action taken by the retailer such as price adjustment sales commission advertisement intensity etc the relationship between the action and the demand rate is not known in advance however the retailer is able to learn the optimal action on the fly as she maximizes her total expected revenue based on the observed demand reactions using the pricing problem as an example we propose a dynamic learning while doing algorithm that only involves function value estimation to achieve a near optimal performance our algorithm employs a series of shrinking price intervals and iteratively tests prices within that interval using a set of carefully chosen parameters we prove that the performance of our algorithm is among the best of all possible algorithms in terms of the asymptotic regret the relative loss compared to the full information optimal solution our result closes the performance gaps between parametric and nonparametric learning and between the post price mechanism and the customer bidding mechanism important managerial insight from this research is that the values of information on both the parametric form of the demand function as well as each customer s exact reservation price are less important than prior literature suggests our results also suggest that firms would be better off to perform dynamic learning and action concurrently rather than sequentially

dynamic pricing with real time demand learning in many service industries the firm adjusts the product price dynamically by taking into account the current product inventory and the future demand distribution because the firm can easily monitor the product inventory the success of dynamic pricing relies on an accurate demand forecast in this paper we consider a situation where the firm does not have an accurate demand forecast but can only roughly estimate the customer arrival rate before the sale begins as the sale moves forward the firm uses real time sales data to fine tune this arrival rate estimation we show how the firm can first use this modified arrival rate estimation to forecast the future demand distribution with better precision and then use the new information to dynamically adjust the product price in order to maximize the expected total revenue numerical study shows that this strategy not only is nearly optimal but also is robust when the true customer arrival rate is much different from the original forecast finally we extend the results to four situations commonly encountered in practice unobservable lost customers time dependent arrival rate batch demand and discrete set of allowable prices

simultaneously learning and optimizing using controlled variance pricing price experimentation is an important tool for firms to find the optimal selling price of their products it should be conducted properly since experimenting with selling prices can be costly a firm therefore needs to find a pricing policy that optimally balances between learning the optimal price and gaining revenue in this paper we propose such a pricing policy called controlled variance pricing cvp the key idea of the policy is to enhance the certainty equivalent pricing policy with a taboo interval around the average of previously chosen prices the width of the taboo interval shrinks at an appropriate rate as the amount of data gathered gets large this guarantees sufficient price dispersion for a large class of demand models we show that this procedure is strongly consistent which means that eventually the value of the optimal price will be learned and derive upper bounds on the regret which is the expected amount of money lost due to not using the optimal price numerical tests indicate that cvp performs well on different demand models and time scales this paper was accepted by assaf zeevi stochastic models and simulation

green taxes can we protect the environment and improve the tax system at the same time on a cursory inspection public economics appears to provide a straightforward and compelling answer of yes to the question posed in the title to this paper as economists have long argued appropriately designed taxes can in principle at least efficiently restrain levels of polluting activities and in addition such taxes will generate revenues so that we can reduce rates on other forms of taxation that distort the functioning of the economy green taxes in short promise a double dividend they can both reduce excessive levels of pollution and increase the efficiency of the overall tax system at least so several economists have argued recently 17 20 but is this really so with the growing recognition of the enormous revenue potential of certain environmental taxes especially carbon taxes to address the problem of global warming public economists have returned to this question with a new round of research efforts directed both to understanding the properties of pollution taxes as revenue sources and to estimating their revenue potential and the magnitude of their effects on the economy and the newly emerging literature is producing some quite astonishing and very troubling findings in this paper i want to review this work and explore its implications when viewed in relation to some other research it appears to suggest that most forms of regulatory activity at least those that increase the costs of the regulated activities may have hitherto unappreciated costs of a stunning magnitude what many of us would have taken to be second order side effects of environmental and other regulatory policies can be of a magnitude that compromises to a significant extent their welfare enhancing properties having reviewed this body of work i wish also to explore some issues in the political economy of green taxes it is helpful to begin by briefly putting the issue in historical perspective

real time dynamic pricing with minimal and flexible price adjustment we study a standard dynamic pricing problem where the seller a monopolist possesses a finite amount of inventories and attempts to sell the products during a finite selling season despite the potential benefits of dynamic pricing many sellers still adopt a static pricing policy because of 1 the complexity of frequent reoptimizations 2 the negative perception of excessive price adjustments and 3 the lack of flexibility caused by existing business constraints in this paper we develop a family of pricing heuristics that can be used to address all these challenges our heuristic is computationally easy to implement it requires only a single optimization at the beginning of the selling season and automatically adjusts the prices over time moreover to guarantee a strong revenue performance the heuristic only needs to adjust the prices of a small number of products and do so infrequently this property helps the seller focus his effort on the prices of the most important products instead of all products in addition in the case where not all products are equally admissible to price adjustment due to existing business constraints such as contractual agreement strategic product positioning etc our heuristic can immediately substitute the price adjustment of the original products with the price adjustment of similar products and maintain an equivalent revenue performance this property provides the seller with extra flexibility in managing his prices

international macroeconomic policy coordination an overview this article which serves as an introduction to the oxford review of economic policy s issue on macroeconomic policy coordination global imbalances and global growth charts the evolution of international macroeconomic policy coordination from the end of the second world war until the present day the arrangements laid out at the bretton woods conference in 1944 provide an intellectual framework with which to assess the evolving need for and feasibility of international coordination across three historical periods the fixed but adjustable exchange rate arrangements of the bretton woods system the subsequent flexible exchanges period of the non system which led into the great moderation and finally the period since the global financial crisis of 2008 increased economic integration particularly through the capital account combined with asymmetries in exchange rate regimes between china and the us have shown that reliance on the automatic adjustment mechanisms of the non system are no longer feasible so that a return to policy cooperation is necessary in order to rebalance the world economy and reduce the adverse spill over impacts that uncoordinated rebalancing would entail the article explores the nature of this coordination and provides a context for other contributions to the issue analysing positive and normative aspects of macroeconomic policy coordination from a global perspective and from the prospective of key global players including china and the european union copyright 2013 oxford university press

game theoretic pricing models in hotel revenue management an equilibrium choice based conjoint analysis approach abstract this paper explores a game theoretically founded approach to conjoint analysis that determines equilibrium room rates under differentiated price competition in an oligopolistic hotel market competition between hotels is specified in terms of market share functions that can be estimated using multinomial logit models of consumer choice the approach is based on choice based conjoint analysis that permits the estimation of attributes weights part worths for an additive utility formulation of the utility function from this room rates that equilibrate the market conditioned on the differences in services and facilities offered by competing hotels can be determined the approach is illustrated by an example

on some effects of international fragmentation of production on comparative advantages trade flows and the income of countries in traditional trade models whether based on technological differences or on relative factor endowments merchandise composition and directions of trade are derived from closed economy conditions but nowadays one of the basic assumptions of traditional trade models i e that production processes are integrated within just one country is being increasingly violated as previously integrated productive activities are segmented and spread over an international network of production sites as a result an increasingly large share of trade flows is made up of intermediate and unfinished goods being transferred from one country to another in order to be processed in this paper we submit that such new configuration of production processes has important effects on at least three dimensions of economic research first we show that international disintegration of production processes leads to a lessening of the power of comparative advantages when it comes to explaining both merchandise composition and directions of trade while it is the concept of absolute advantage to become increasingly relevant second we show that empirical measures of revealed comparative advantages are inherently misleading if they do not account for differences in the stage of processing of traded goods third we estimate a simple model of aggregate demand accounting for international trade in intermediates results of estimation lend support to our prior that participation of a country in the process of international fragmentation of production plays a specific and significant role in determining its year over year change in gdp

price dispersion and incomplete learning in the long run abstract in each period a seller chooses a price and the customer for that period buys either one unit or nothing the relationship between price and purchase probability is one of two linear functions it is shown that the seller behaving optimally does not necessarily learn which function is the actual relationship since there can be a positive probability of sequences of prices converging to the price at which the two functions give the same purchase probability

the feasibility of the double dividend hypothesis in a democratic economy the two dividends in the double dividend hypothesis are assumed to be independent this assumption can be misleading when it comes to formulating policy i construct a model where the pollution tax rate is voted for by heterogeneous people in addition to the revenue recycling effect the equilibrium pollution tax rate depends on two opposite forces the tax cutting effect and the profit effect the two forces show that an instrument that exploits a greater revenue recycling effect can cause a more severe environmental deterioration thereby resulting in the infeasibility of the hypothesis the introduction of the interdependence between the two dividends can also mean that non revenue raising instruments are more efficient than revenue raising instruments

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

a positive theory of environmental quality regulation this paper demonstrates that environmental quality regulation may enhance producer wealth while simultaneously reducing an externality problem by restricting access to common property regulation not only corrects a resource misallocation but it creates a scarcity rent as well in the recent history of environmental quality the common access problem has been addressed by federal and state agencies through a standards based approach rather than through the enforcement of tradable property rights as a consequence rents from the right to use these assets have accrued to producers the data are convincing that there is a strong interplay between producers consumers and the victims of pollution each party has some influence on the outcome and one sided analysis neglects many important aspects of regulation environmental quality regulation is complicated but many of the observed perplexities are consistent with a rent seeking self interest theory of government 46 references 1 figure 7 tables

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

what can we learn from the grand policy experiment lessons from so2 allowance trading stable url http links jstor org sici sici 0895 3309 28199822 2912 3a3 3c69 3awcwlft 3e2 0 co 3b2 tthe journal of economic perspectives is currently published by american economic association your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals aea html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgtue jun 26 16 25 17 2007

intra european imbalances adjustment and growth in the eurozone this paper considers the increase in the euro intra area imbalances since the late 1990s and their role in the current european debt crisis by focusing on the case study of italy and germany we argue that both macroeconomic the functioning of the euro area and microeconomic internationalization of production factors contributed to the creation of such imbalances when sovereign risk and currency risk emerged in the periphery coupled with austerity as a response to these risks both factors made the euro crisis worse the present zero sum game approach is very risky for the stability of the euro area policy coordination of some kind is needed this requires agreeing on well identified economic policy priorities taking full account of the different positions of the members in terms of growth external imbalances and competitiveness new policy priorities are thus required in the euro zone that put more emphasis on cooperative positive sum games in convergence and competitiveness

the role of policy instruments in the innovation and diffusion of environmentally friendlier technologies popular claims versus case study experiences abstract moving towards sustainability will require that new environmentally friendlier technologies are developed and widely adopted policy instruments that promote eco efficiency are therefore necessary some claims frequently made in the literature on the relationship between policy instruments and technological development are examined the claims concern regulations environmental taxation and funding of research and development the claims are explored on the basis of empirical evidence from two sectors the pulp and paper industry and the marine engine industry little support was found for some of the claims in some cases even contradictory findings and for some claims the findings differed between the sectors and even within a sector depending on the issue

the role of public policy in emerging green power markets an analysis of marketer preferences abstract green power marketing has been heralded by some as a means to create a private market for renewable energy that is driven by customer demand for green products this article challenges the premise sometimes proffered in debates over green markets that profitable sizable credible markets for green products will evolve naturally without supportive public policies relying primarily on surveys and interviews of us green power marketers the article examines the role of specific regulatory and legislative policies in enabling the green market and searches for those policies that are believed by marketers to be the most conducive or detrimental to the expansion of the green market we find that marketers 1 believe that profitable green power markets will only develop if a solid foundation of supportive policies exists 2 believe that establishing overall price competition and encouraging customer switching are the top priorities 3 are somewhat leery of government sponsored or mandated public information programs and 4 oppose three specific renewable energy policies that are frequently advocated by renewable energy enthusiasts but that may have negative impacts on the green marketers profitability the stated preferences of green marketers shed light on ways to foster renewables by means of the green market because the interests of marketers do not coincide perfectly with those of society however this study also recognizes other normative perspectives and highlights policy tensions at the heart of current debates related to green markets by examining these conflicts we identify three key policy questions that should direct future research to what extent should price competition and customer switching be encouraged at the expense of cost shifting what requirements should be imposed to ensure credibility in green products and marketing how should the green power market and broader renewable energy policies interact

actively learning about demand and the dynamics of price adjustment by observing the quantity demanded at particular prices a firm may learn about the parameters of its demand curve in such an environment price changes obstruct the learning process by inducing additional noise the authors paper constructs a dynamic model where a price setting firm endogenously controls the speed of learning the model provides a possible explanation for price inertia as a stable pricing policy allows the firm to learn more rapidly which improves future expected profits furthermore even in the long run learning continues to affect the firm s optimal price copyright 1990 by royal economic society

spatial heterogeneity contract design and the efficiency of carbon sequestration policies for agriculture abstract in this paper we develop methods to investigate the efficiency of alternative contracts for carbon c sequestration in cropland soils taking into account the spatial heterogeneity of agricultural production systems and the costs of implementing more efficient contracts we describe contracts being proposed for implementation in the united states and other countries that would pay farmers for adoption of specified practices per hectare contracts we also describe more efficient contracts that would pay farmers per tonne of soil c sequestered and we show how to estimate the costs of implementing these more efficient contracts in a case study of a major agricultural region in the united states we confirm that the relative inefficiency of per hectare contracts varies spatially and increases with the degree of spatial heterogeneity the results also show that per hectare contracts are as much as five times more costly than per tonne contracts a degree of inefficiency similar to that found in assessments of command and control industrial emissions regulations measurement costs to implement the per tonne contracts are found to be positively related to spatial heterogeneity but are estimated to be at least an order of magnitude smaller than the efficiency losses of the per hectare contract for reasonable error levels this finding implies that contracting parties could afford to bear a significant cost to implement per tonne contracts and achieve a lower total cost than would be possible with the less efficient per hectare contracts

hot air in kyoto cold air in the hague the failure of global climate negotiations abstract why did the climate negotiations in the hague fail our contribution is to argue that the conflict between the european union eu and the united states us stems mainly from disagreement on the cost issue we argue that the three main concerns promoted by the eu in the hague first a 50 national emission ceiling the supplementarity principle second the use of carbon sinks and third an international market control system these issues can be solved by removing all restrictions on free greenhouse gas ghg trade and by establishing the world trade organization as an international authority the us will face considerably higher costs than foreseen at the negotiations in kyoto and will have strong incentives to free ride our main hypothesis is that the eu proposal on supplementarity made the us turn to free riding thus to make the us stay in an international ghg emission trading scheme the eu must reconsider and acknowledge us claims for cheaper reduction options and the right to trade hot air this point is important if the us does not participate the increase in emissions will be much higher than the emission reduction following the eu supplementarity proposal

on the surprising sufficiency of linear models for dynamic pricing with demand learning we consider a multiperiod single product pricing problem with an unknown demand curve the seller s objective is to adjust prices in each period so as to maximize cumulative expected revenues over a given finite time horizon in doing so the seller needs to resolve the tension between learning the unknown demand curve and maximizing earned revenues the main question that we investigate is the following how large of a revenue loss is incurred if the seller uses a simple parametric model that differs significantly i e is misspecified relative to the underlying demand curve we measure performance by analyzing the price trajectory induced by this misspecified model and quantifying the magnitude of revenue losses as a function of the time horizon relative to an oracle that knows the true underlying demand curve the price of misspecification is expected to be significant if the parametric model is overly restrictive somewhat surprisingly we show under reasonably general conditions that this need not be the case this paper was accepted by gerard cachon stochastic models and simulation

dynamic pricing and learning with finite inventories we study a dynamic pricing problem with finite inventory and parametric uncertainty on the demand distribution products are sold during selling seasons of finite length and inventory that is unsold at the end of a selling season perishes the goal of the seller is to determine a pricing strategy that maximizes the expected revenue inference on the unknown parameters is made by maximum likelihood estimation we show that this problem satisfies an endogenous learning property which means that the unknown parameters are learned on the fly if the chosen selling prices are sufficiently close to the optimal ones we show that a small modification to the certainty equivalent pricing strategy which always chooses the optimal price w r t current parameter estimates satisfies regrett olog2t where regrett measures the expected cumulative revenue loss w r t a clairvoyant who knows the demand distribution we complement this upper bound by showing an instance for which the regret of any pricing policy satisfies i log t

tracking global carbon revenues a survey of carbon taxes versus cap and trade in the real world abstract we investigate the current use of public revenues which are generated through both carbon taxes and cap and trade systems more than 28 3 billion in government carbon revenues are currently collected each year in 40 countries and another 16 states or provinces around the world of those revenues 27 7 8 billion are used to subsidize green spending in energy efficiency or renewable energy 26 7 4 billion go toward state general funds and 36 10 1 billion are returned to corporate or individual taxpayers through paired tax cuts or direct rebates cap and trade systems 6 57 billion in total public revenue earmark a larger share of revenues for green spending 70 while carbon tax systems 21 7 billion more commonly refund revenues or otherwise direct them towards government general funds 72 of revenues drawing from an empirical dataset we also identify various trends in systems use of carbon revenues in terms of the total revenues collected annually per capita in each jurisdiction and offer commensurate qualitative observations on carbon policy design choices

on the minimax complexity of pricing in a changing environment we consider a pricing problem in an environment where the customers willingness to pay wtp distribution may change at some point over the selling horizon customers arrive sequentially and make purchase decisions based on a quoted price and their private reservation price the seller knows the wtp distribution pre and postchange but does not know the time at which this change occurs the performance of a pricing policy is measured in terms of regret the loss in revenues relative to an oracle that knows the time of change prior to the start of the selling season we derive lower bounds on the worst case regret and develop pricing strategies that achieve the order of these bounds thus establishing the complexity of the pricing problem our results shed light on the role of price experimentation and its necessity for optimal detection of changes in market response wtp our formulation allows for essentially arbitrary consumer wtp distributions and purchase request patterns

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

setting the standard a framework for evaluating the cost effectiveness of building energy standards abstract the adoption rate and stringency of building energy standards in the u s have been increasing since the mid 1990s as a result of the energy policy act mandate of 1992 epact current evidence on the energy savings that accrue from commercial building energy standards is based on engineering simulations which do not account for realized behaviour once a standard is actually adopted this paper uses quasi experimental variation in commercial building energy standard adoptions to estimate their effect on realized electricity consumption and cost effectiveness in states induced by epact to adopt an energy standard where all new nonresidential construction was erected under a commercial standard electricity consumption per service worker is lower by about 12 and total commercial electricity consumption is lower by 10 including early adopters and never adopters to the analysis leads to a downward bias in the treatment effect the realized electricity savings in the epact states represent three quarters of predicted simulated savings and electricity saved in 2010 came at a cost of approximately 7 7 cents per kwh

environmental policy and the international diffusion of cleaner energy technologies technology transfer is an important channel of technological change and sustainable development for countries with less innovative ability than technological leaders this paper studies whether domestic environmental policies affect the inward technology transfer of cleaner innovation from abroad we focus specifically on the power sector for its important role in the decarbonization process by looking at zero carbon renewable and carbon saving efficient fossil technologies for energy production using data on cross country patent applications we provide evidence that environmental policy contributes to attracting foreign cleaner technology options to oecd markets but not to non oecd markets we show that this is due to the nature of the implemented policy instruments market based approaches positively impact technology transfer to both oecd and non oecd economies while non market based approaches have at best only a weak effect in oecd countries domestic environmental policies may provide too weak a signal for foreign innovators in countries off the technological frontier this calls for a strengthening of policy incentives for technology transfer in light of pressing climate change objectives

the advancedness of knowledge in pollution saving technological change with a qualitative application to so2 cap and trade this paper investigates the extent to which advanced knowledge and technology played a role in the so2 compliance process in electric power plants under the us so2 cap and trade program it investigates the hypothesis that advanced knowledge and technology dedicated to pollution abatement played a minor role in that process while relatively unadvanced forms of knowledge and technology played the main role new qualitative evidence in this somewhat well known case is considered interviews with electric power plant r d managers plant level compliance data and the changes undergone by boiler manufacturer coal mining and railroad companies in the supply chain advanced knowledge dedicated to pollution abatement like the type now being emphasised for carbon capture and storage ccs played a minor role while unadvanced knowledge and technology played the main role while there are clearly limits to how far this unadvanced knowledge and technology finding can be generalised to ghg emission control the specific aspects of the so2 case that might be broadly informative of the response to ghg emissions are elaborated in any case the paper shows how innovation in pollution control can be inexpensive and effective without involving very much advanced knowledge and technology for pollution control

technical note dynamic pricing and demand learning with limited price experimentation in a dynamic pricing problem where the demand function is not known a priori price experimentation can be used as a demand learning tool existing literature usually assumes no constraint on price changes but in practice sellers often face business constraints that prevent them from conducting extensive experimentation we consider a dynamic pricing model where the demand function is unknown but belongs to a known finite set the seller is allowed to make at most m price changes during t periods the objective is to minimize the worst case regret i e the expected total revenue loss compared with a clairvoyant who knows the demand distribution in advance we demonstrate a pricing policy that incurs a regret of ologmt or m iterations of the logarithm furthermore we describe an implementation of this pricing policy at groupon a large e commerce marketplace for daily deals the field study shows significant impact on revenue and bookings the e companion is available at https doi org 10 1287 opre 2017 1629

economic incentives for environmental protection integrating theory and practice for decades economists have been extolling the virtues of market based or economic incentive approaches to environmental protection some 70 years ago arthur cecil pigou 1920 suggested corrective taxes to discourage activities that generate externalities a half century later j dales 1968 showed how the introduction of transferable property rights could work to promote environmental protection at lower aggregate cost than conventional standards from these two seminal ideas corrective taxes and transferable property rights a substantial body of research has developed both environmental taxes and marketable permits are coming of age in the policy arena examples include the introduction of marketable permits in the united states to control acid rain the use of changes in europe to limit air and water pollution and the employment of deposit refund schemes for products ranging from beverage containers to batteries the introduction of these tools on a large scale provides a unique opportunity to extend the frontiers of knowledge this essay strives to identify prominent issues that merit investigation 8 refs

u s interest groups prefer emission trading a new perspective if there is to be environmental regulation what kind of regulation would the main interest groups then prefer this political distortion must be taken into account when designing future environmental regulation such as co2 regulation the three main interest groups in the u s private business environmentalist groups and the electricity sector prefer a grandfathered permit market business is attracted by this solution because free initial distribution of permits both favours existing sources financially and furthermore creates a barrier to entry for new firms environmentalist groups have changed attitudes and promote the idea too as a way of negotiating higher target reduction levels with industry to maintain voluntary contributions from their members finally electric utilities prefer a grandfathered permit market and this step towards less planned economy may be explained by the rise of competition in the u s electricity sector therefore it is suggested that a grandfathered permit market is a more effective policy than a tax in relation to organized interests such as industry electric utilities and environmental organizations in perspective the grandfathered permit market may be mixed with the use of taxes in the case of co2 regulation for example taxes may be applied to badly organized polluters such as households and the transport sector because their lobbying power is weak

competition between biomass and food production in the presence of energy policies a partial equilibrium analysis abstract bioenergy has several advantages over fossil fuels for example it delivers energy at low net co 2 emission levels and contributes to sustaining future energy supplies the concern however is that an increase in biomass plantations will reduce the land available for agricultural production the aim of this study is to investigate the effect of taxing conventional electricity production or carbon use in combination with subsidizing biomass or bioelectricity production on the production of biomass and agricultural commodities and on the share of bioelectricity in total electricity production we develop a partial equilibrium model to illustrate some of the potential impacts of these policies on greenhouse gas emissions land reallocation and food and electricity prices as a case study we use data for poland which has a large potential for biomass production results show that combining a conventional electricity tax of 10 with a 25 subsidy on bioelectricity production increases the share of bioelectricity to 7 5 under this policy regime biomass as well as agricultural production increase a carbon tax that gives equal net tax yields has better environmental results however at higher welfare costs and resulting in 1 to 4 reduction of agricultural production

exploring impact of carbon tax on china s co2 reductions and provincial disparities abstract with fast development it is not easy for china to achieve carbon reduction targets only by traditional command and control measures e g the measures for energy efficiency carbon tax is advocated as one effective complementary measure and has high possibility to be implemented for china s future low carbon development under such a circumstance this paper aims at forecasting the possible impact of carbon tax on both carbon reduction and economic loss of 30 chinese provinces a 30 chinese province cge computational general equilibrium model has been developed to conduct the provincial evaluation and seven scenarios including business as usual bau scenario and six carbon tax scenarios with carbon price from 20 usd ton to 120 usd ton up to 2030 are set the results show that china s industrial co2 will be reduced from 12 2 billion tons under bau scenario to 10 4 billion tons 9 3 billion tons 8 5 billion tons 7 9 billion tons 7 4 billion tons and 7 0 billion tons under scenarios of tax20 tax40 tax60 tax80 tax100 and tax120 in 2030 respectively electricity metal and chemicals sectors have high reduction potentials and are priority sectors for carbon tax policy provincial disparity analysis demonstrates that coal production consumption and total energy consumption are key factors to affect carbon tax effect on co2 reduction and inner mongolia shandong shanxi and hebei have the largest industrial co2 reduction potentials after levying carbon tax however the implementation of carbon tax will impede economic development for all provinces therefore the concept of carbon tax efficiency is further proposed in order to evaluate the effectiveness of carbon tax by considering both co2 reduction and gdp loss policy suggestions indicate that provinces of shanxi inner mongolia hebei and anhui should be set priority when implementing carbon tax policy in china and carbon price should be no more than 50 usd ton

optimal pricing of environmental and natural resource use with stock externalities abstract underlying some of the most pressing environmental problems are the interlinked resource and environmental stock externalities with threshold effects using a simple dynamic model it is shown how in the face of such externalities the static market based policy instruments such as pigouvian taxes should be modified it is shown that even if for an initial period there is going to be no pollution stock damage the optimal policy still requires that abatement begins immediately and at increasing rates simulation of the model for the case of fossil fuel burning and the consequent global warming shows that the optimal carbon tax and therefore the optimal control strategy is particularly sensitive to changes in the marginal abatement cost and the level of fossil fuel demand policy simulations contrast the optimal control policy with and estimate the welfare losses from alternative policies deriving from arbitrary tax paths the latter include i a no tax policy ii a constant carbon tax rate iii the european community s proposed carbon tax path and iv a delayed optimal tax path

learning and pricing with models that do not explicitly incorporate competition in revenue management research and practice demand models are used that describe how demand for a seller s products depends on the decisions such as prices of that seller even in settings where the demand for a seller s products also depends on decisions of other sellers the models often do not explicitly account for such decisions it has been conjectured in the revenue management literature that such monopoly models may incorporate the effects of competition because the parameter estimates of the monopoly models are based on data collected in the presence of competition in this paper we take a closer look at such a setting to investigate the behavior of parameter estimates and decisions if monopoly models are used in the presence of competition we consider repeated pricing games in which two competing sellers use mathematical models to choose the prices of their products over the sequence of games each seller attempts to estimate the values of the parameters of a demand model that expresses demand as a function only of its own price using data comprised only of its own past prices and demand realizations we analyze the behavior of the sellers parameter estimates and prices under various assumptions regarding the sellers knowledge and estimation procedures and we identify situations in which a the sellers prices converge to the nash equilibrium associated with knowledge of the correct demand model b the sellers prices converge to the cooperative solution and c the sellers prices have many potential limit points that are neither the nash equilibrium nor the cooperative solution and that depend on the initial conditions we compare the sellers revenues at potential limit prices with their revenues at the nash equilibrium and the cooperative solution and we show that it is possible for sellers to be better off when using a monopoly model than at the nash equilibrium

dynamic pricing with a prior on market response we study a problem of dynamic pricing faced by a vendor with limited inventory uncertain about demand and aiming to maximize expected discounted revenue over an infinite time horizon the vendor learns from purchase data so his strategy must take into account the impact of price on both revenue and future observations we focus on a model in which customers arrive according to a poisson process of uncertain rate each with an independent identically distributed reservation price upon arrival a customer purchases a unit of inventory if and only if his reservation price equals or exceeds the vendor s prevailing price we propose a simple heuristic approach to pricing in this context which we refer to as decay balancing computational results demonstrate that decay balancing offers significant revenue gains over recently studied certainty equivalent and greedy heuristics we also establish that changes in inventory and uncertainty in the arrival rate bear appropriate directional impacts on decay balancing prices in contrast to these alternatives and we derive worst case bounds on performance loss we extend the three aforementioned heuristics to address a model involving multiple customer segments and stores and provide experimental results demonstrating similar relative merits in this context

the political economy of environmental regulation towards a unifying framework there are several theories that attempt to explain various aspects of environmental policy building on insights from this theoretical work and recent advances in our understanding of instrument performance this paper constructs a more complete theory of environmental regulation there are two primary contributions of this research the first is to provide more satisfactory explanations for a number of observed patterns of environmental policy for example there is as yet no satisfactory theory about the emergence of incentive based mechanisms such as marketable permits and effluent fees the second contribution of this paper is to develop a parsimonious framework for understanding many important aspects of environmental policy this framework suggests the outputs of environmental policy emerge from a struggle between key interest groups

bayesian dynamic pricing policies learning and earning under a binary prior distribution motivated by applications in financial services we consider a seller who offers prices sequentially to a stream of potential customers observing either success or failure in each sales attempt the parameters of the underlying demand model are initially unknown so each price decision involves a trade off between learning and earning attention is restricted to the simplest kind of model uncertainty where one of two demand models is known to apply and we focus initially on performance of the myopic bayesian policy mbp variants of which are commonly used in practice because learning is passive under the mbp that is learning only takes place as a by product of actions that have a different purpose it can lead to incomplete learning and poor profit performance however under one additional assumption a constrained variant of the myopic policy is shown to have the following strong theoretical virtue the expected performance gap relative to a clairvoyant who knows the underlying demand model is bounded by a constant as the number of sales attempts becomes large this paper was accepted by gerard p cachon stochastic models and simulation

taxes versus tradable discharge permits a review in the light of the u s and european experience the u s and west european environmental protection programs have incorporated different economic instruments for controlling pollution the u s has made extensive use of tradable permits of several forms but has never used direct pollution taxes the countries of the european community have long used an array of pollution taxes but have never used tradable permits a review and critique of these experiences and an analysis of the attributes of taxes and tradable permits seeks identify the strengths and weaknesses of each instrument and to provide guidelines for the successful implementation of each system

one without the other behavioural and incentive policies for household waste management this paper provides a review of economic studies that analyses the use of multiple policies to cope with waste management problems we discuss the factors that influence selective sorting behaviour and the most appropriate policies for their promotion based on the works analysed our survey shows the original features of waste as an environmental problem requiring regulation the traditional approach in which decisions respond to rational behaviour particularly cost savings has some limits although not all public policies seem justified we argue that there might be a need for specific policies to promote recycling preferably based on the provision of information to consumers or on behavioural instruments indeed personal factors specific to each individual such as emotions and the influence of social interaction should be taken into account in the development of public policies we review the literature related to different rationales and identify some avenues for future research

a general model for co2 regulation the case of denmark abstract for both economic political and administrative reasons a mixed design of permit market bubble and tax may be preferable for co 2 regulation in the case of denmark a co 2 market should be introduced for the private manufacturing sector and an administratively set co 2 bubble should be introduced for the public electricity sector permits should then be devaluated in year 2005 by 20 a co 2 tax should be correctly set at a level of 50 in year 2005 for households the transportation sector and private firms not participating in the co 2 market this model may guide future energy policies in other countries as well

tax versus trading and efficient revenue recycling as issues for greenhouse gas abatement abstract we give empirical welfare results for global greenhouse gas emission abatement using the first multi party model to include both tax versus trading under uncertainties and revenue recycling including multiple independent parties greatly reduces the welfare advantage of an emissions tax over emissions permit trading in handling abatement cost uncertainties from that shown by existing single party literature but a previously ignored and much bigger advantage of a tax from better handling uncertainties in business as usual emissions greatly boosts the overall tax versus trading advantage yet the degree to which each mechanism is used to raise and recycle revenue efficiently by lowering distortionary taxes rather than recycle revenue as lump sums or not raise revenue by giving tax thresholds or free permits may in turn dominate any tax versus trading advantage choosing the best greenhouse abatement mechanism should thus consider the issues of tax versus trading and efficient revenue recycling together

the political economy of pollution markets historical lessons for modern energy and climate planners this article explores some of the central economic and political problems with the use of tradable permits to solve environmental problems drawing from transaction cost economics political economy and market theory it does so by looking at the history of three programs for curbing pollution in the united states the clean air act the leaded gasoline phase out and water permits in wisconsin the article begins by briefly summarizing the history of each of these programs before looking at a host of challenges related to political compromises in program design transaction costs spatial distortions such as geographic sensitivity and wrong way trading of credits temporal distortions such as the episodic nature of pollution and volatility of market prices and market abuses these concerns are raised with an eye for how historical experience may inform the current debate about how to design effective market mechanisms to respond to climate change and other forms of energy related environmental degradation

reoptimization and self adjusting price control for network revenue management we consider a standard dynamic pricing problem with finite inventories finite selling horizon and stochastic demands where the objective of the seller is to maximize total expected revenue we introduce a simple improvement of the popular static price control known in the literature the proposed heuristic only requires a single optimization at the beginning of the selling horizon and does not require any reoptimization at all this provides an advantage over the potentially heavy computational burden of reoptimization especially for very large applications with frequent price adjustments in addition our heuristic can be implemented in combination with a few reoptimizations to achieve a high level revenue performance this hybrid of real time adjustment and reoptimization allows the seller to enjoy the benefit of reoptimization without overdoing it

optimal experimentation in a changing environment this paper studies optimal experimentation by a monopolist who faces an unknown demand curve subject to random changes and who maximizes profits over an infinite horizon in continuous time we show that there are two qualitatively very different regimes determined by the discount rate and the intensities of demand curve switching and the dependence of the optimal policy on these parameters is discontinuous one regime is characterized by extreme experimentation and good tracking of the prevailing demand curve the other by moderate experimentation and poor tracking moreover in the latter regime the agent eventually becomes trapped into taking actions in a strict subset of the feasible set

emission taxes and tradable permits a comparison of views on long run efficiency we compare three different views on the long runefficiencies of emission taxes which includethresholds inframarginalexemptions and of tradeable emission permitswhere some permits areinitially free the differences are caused bydifferent assumptions aboutwhether thresholds and free permits should besubsidies given only to firmsthat produce or full property rights treatingtax thresholds as well asfree permits as property rights would departfrom the conventional view but would allow greater flexibility in makingeconomic instruments bothefficient and acceptable such flexibilitycould be very important inachieving efficient control of greenhouse gasemissions

consumers industrialists and the political economy of green taxation co2 taxation in oecd abstract economists have traditionally suggested that politicians should simply impose a uniform tax on harmful emissions as the first best solution prescribes however a detailed analysis of the actual design of green taxes in the oecd reveals that they are differentiated and far from this first best optimal design public choice theory suggests that an important reason that industry as a group in contrast to households is capable of lobbying against green taxation the paper presents empirical findings on co2 taxation within the oecd countries which confirm this theoretical prediction taxes are not uniform and households pay a tax rate which is six times higher than that paid by the industry on average even when tax revenue is fully refunded to industry the potential losers energy intensive firms will lobby harder against it than the potential winners labor intensive firms due to small group advantages the norwegian case confirms these arguments finally it is suggested that a co2 tax may perhaps successfully be applied to households because they tend to be badly organized as such a mix of green taxes in relation to non organized interests and grandfathered permit markets in relation to organized interests should be considered in the search for cost effective and politically feasible instruments

the efficiency value of effluent tax revenues the concept of the efficiency value of effluent tax revenues is developed it is defined as the reduction in excess burden resulting from the substitution of these revenues for current or future resource distorting tax revenues such as those raised from federal corporate and personal income taxes the annual efficiency value of revenues raised by national effluent taxes on two major air pollutants is estimated to range from 0 63 to 3 05 billion if substituted for federal personal income tax revenue and from 1 to 4 87 billion if substituted for corporate income tax revenue expressed in 1982 dollars thus previous estimates of the efficiency gain from substitution of an effluent tax scheme for current pollution regulation policy have been too low because the efficiency value of the tax revenues has been excluded

dynamic pricing under a general parametric choice model we consider a stylized dynamic pricing model in which a monopolist prices a product to a sequence of t customers who independently make purchasing decisions based on the price offered according to a general parametric choice model the parameters of the model are unknown to the seller whose objective is to determine a pricing policy that minimizes the regret which is the expected difference between the seller s revenue and the revenue of a clairvoyant seller who knows the values of the parameters in advance and always offers the revenue maximizing price we show that the regret of the optimal pricing policy in this model is theta sqrt t by establishing an omega sqrt t lower bound on the worst case regret under an arbitrary policy and presenting a pricing policy based on maximum likelihood estimation whose regret is cal o sqrt t across all problem instances furthermore we show that when the demand curves satisfy a well separated condition the t period regret of the optimal policy is log t numerical experiments show that our policies perform well

buybacks with costly participation abstract posted price offers and first price auctions along with the multi unit discriminatory auction extension are two widely used mechanisms for allocating conservation contracts the choice between the two typically hinges on the trade off between the posted price s simplicity and the potential revenue gains of the auction in this paper we introduce a novel mechanism that attempts to bridge the gap between the performance of posted price offers and auctions a two price and lottery schedule combines the simplicity of the former with some of the flexibility of the latter using a model that incorporates agents cognitive and information costs of bidding we analyze how the ranking of allocative efficiency and cost effectiveness between the mechanisms varies as the wedge of participation costs increases when the number of bidders is endogenously determined by participation costs bid shading associated with a lack of competition in the auction compromises its cost effectiveness vis a vis the posted price and the lottery schedule we use data from three recent buybacks for fishing licenses conducted in maryland to calibrate our model and identify conditions under which the two price schedule outperforms the other mechanisms

policies influencing cleaner production the role of prices and regulation abstract low prices of inputs low costs associated with non product outputs and poor regulatory forcing have often not been conducive to diffusion of cleaner production however developments may be noted in the field of taxation subsidies liability and permits that tend to be more favourable to cleaner production extension thereof may favour cleaner production more in the future cleaner production stands to gain much by slashing subsidies and substantial ecotaxation of inputs and non product outputs similarly the regulatory enforcement of best available technologies liability for waste and tradable permits may help the diffusion of cleaner production

nonparametric advertising budget allocation with inventory constraint abstract in this paper we study the optimization problem of the advertising budget allocation for revenue management faced by a marketer besides the advertising budget the marketer is subject to an inventory constraint during the promotion season the marketer can affect sales by spending on advertising but does not initially know the relationship between the advertising expense and consequent sales we propose a nonparametric learning while doing budget allocation policy for the problem specifically we first conduct a sequence of advertising experiments to learn predict the market sales response through observing realized sales exploration then based on the learned sales function determine the following budget allocation planning exploitation in particular during the exploration and exploitation phases we need to balance the advertising and inventory budgets simultaneously we show that our policy is asymptotically optimal as the size of the market increases by constructing a worst case example we show that our policy achieves near best asymptotic performance we also provide numerical illustrations to show how our policy works and discuss how its performance changes as the system parameters vary we also glen some managerial implications of our model and policy from the numerical results

dynamic pricing with an unknown demand model asymptotically optimal semi myopic policies we consider a monopolist who sells a set of products over a time horizon of t periods the seller initially does not know the parameters of the products linear demand curve but can estimate them based on demand observations we first assume that the seller knows nothing about the parameters of the demand curve and then consider the case where the seller knows the expected demand under an incumbent price it is shown that the smallest achievable revenue loss in t periods relative to a clairvoyant who knows the underlying demand model is of order t in the former case and of order log t in the latter case to derive pricing policies that are practically implementable we take as our point of departure the widely used policy called greedy iterated least squares ils which combines sequential estimation and myopic price optimization it is known that the greedy ils policy itself suffers from incomplete learning but we show that certain variants of greedy ils achieve the minimum asymptotic loss rate to highlight the essential features of well performing pricing policies we derive sufficient conditions for asymptotic optimality

toward a theoretical model of voluntary overcompliance abstract we explain why some firms voluntarily overcomply with environmental regulation in our model all consumers value environmental quality but differ in their willingness to pay which depends on their income levels publicly available information on environmental performance of firms enables consumers to identify clean firms firms participate in a two stage duopoly game where they first choose their levels of cleaning technology and next engage in price competition the market gets segmented by income levels a minimum standard binding on the dirty firm has the effect of improving the performance of the cleaner firm a subsidy obtains the same competitive outcome

substituting pollution taxation for general taxation some implications for efficiency in pollutions taxation abstract earlier papers have recognized that nonenvironmental benefits will be realized if pollution taxes are substituted for other taxes which impose efficiency losses on society the purpose of this paper is to investigate the importance of these nonenvironmental benefits for the design of an efficient pollution tax it is found that the efficient tax may be higher or lower than that conventionally defined as optimal and that the net benefit from unrestrained pollution can have important implications for the size of the tax

the impact of economics on environmental policy abstract environmental economists have seen their ideas translated into the rough and tumble policy world for over two decades they have witnessed the application of economic instruments to several environmental issues including preserving wetlands lowering lead levels and curbing acid rain this essay examines the impact of the rise of economics in the policy world on the making of environmental policy i focus on two related but distinct phenomena the increasing interest in the use of incentive based mechanisms such as tradable permits to achieve environmental goals and the increasing interest in the use of analytical tools such as benefit cost analysis in regulatory decision making i argue that economists and economic instruments have had a modest impact on shaping environmental health and safety regulation but that economists will play an increasingly important role in the future although the role of economics is becoming more prominent it does not follow that environmental policy will become more efficient this apparent inconsistency can be explained by the political economy of environmental policy

transitional politics emerging incentive based instruments in environmental regulation abstract this paper proposes a positive theory of environmental instrument choice we study a democratic society that seeks to lower the level of pollution from industrial sources to a pre specified target the target can be implemented by one of three instruments s uniform emission standards p tradeable permits and t emission taxes the conflict of interest between special interests representing polluters and the electorate is resolved by an elected politician we characterize when each of the three policy instruments is chosen in political equilibrium and show that the transition observed in many countries from s to either p or t can be understood as a natural consequence of increasingly ambitious environmental targets

winners and losers a micro level analysis of international outsourcing and wages our paper investigates the link between international outsourcing and wages utilizing a large household panel and combining it with industry level information on industries outsourcing activities from input output tables this approach avoids prob lems such as aggregation bias potential endogeneity bias and poor skill definitions that commonly hamper industry level studies we find that outsourcing has had a marked impact on wages applying two alternative skill classifications we find evidence that a 1 percentage point increase in outsourcing reduced the wage for workers in the lowest skill categories by up to 1 5 while it increased wages for high skilled workers by up to 2 6 this result is robust to a number of different specifications jel classification f16 j31 gagnants et perdants une analyse micro economique de la sous traitance internationale et des salaires ce memoire etudie le lien entre la sous traitance internationale et les salaires a l aide de donnees d un grand panel de menages qu on combine avec des donnees au niveau des industries sur les activites de sous traitance de celles qui en font obtenues des tableaux interindustriels cette approche evite les problemes qui habituellement polluent les etudes au niveau de l industrie biais d agregation biais d endogeneite potentielle mauvaises definitions des habiletes on decouvre que la sous traitance a un effet sur les salaires a l aide de differentes formes de classification des habiletes il appert qu un point de pourcentage d augmentation dans la sous traitance reduit les salaires des travailleurs dans les categories d habilete les plus basses de 1 5 alors qu il accroit les salaires de travailleurs specialises de 2 6 ce resultat est robuste et avere meme quand on utilise diverses specifications

dynamic pricing in the presence of inventory considerations research overview current practices and future directions the benefits of dynamic pricing methods have long been known in industries such as airlines hotels and electric utilities where the capacity is fixed in the short term and perishable in recent years there has been an increasing adoption of dynamic pricing policies in retail and other industries where the sellers have the ability to store inventory three factors contributed to this phenomenon 1 the increased availability of demand data 2 the ease of changing prices due to new technologies and 3 the availability of decision support tools for analyzing demand data and for dynamic pricing this paper constitutes a review of the literature and current practices in dynamic pricing given its applicability in most markets and its increasing adoption in practice our focus is on dynamic intertemporal pricing in the presence of inventory considerations

a partially observed markov decision process for dynamic pricing in this paper we develop a stylized partially observed markov decision process pomdp framework to study a dynamic pricing problem faced by sellers of fashion like goods we consider a retailer that plans to sell a given stock of items during a finite sales season the objective of the retailer is to dynamically price the product in a way that maximizes expected revenues our model brings together various types of uncertainties about the demand some of which are resolvable through sales observations we develop a rigorous upper bound for the seller s optimal dynamic decision problem and use it to propose an active learning heuristic pricing policy we conduct a numerical study to test the performance of four different heuristic dynamic pricing policies in order to gain insight into several important managerial questions that arise in the context of revenue management