cost efficiency and electricity market structure a case study of oecd countries the oecd electricity sector has witnessed significant institutional restructuring over the past three decades as a consequence many power generation utilities now act as unregulated companies that technically compete to sell power on an open market this paper analyses the performance in term of cost efficiency for electricity generation in oecd power sector while accounting for the impact of electricity market structures we employ the short run cost function in which capital stock is treated as a quasi fixed factor input empirical models are developed for the cost function as a translog form and analysed using panel data of 25 countries during the period 1980 to 2009 we show that it is necessary to model latent country specific heterogeneity in addition to time varying inefficiency the estimated economies of scale are adjusted to take account of the importance of the quasi fixed capital input in determining cost behaviour and long run constant returns to scale are verified for the oecd generation sector the research findings suggest there is a significant impact of electricity market regulatory indicators on cost in particular public ownership and vertical integration are found to have significant and sizable increasing impacts on cost thereby indicating policy lessons on the desirable ways to implement structural electricity generation reforms

dynamic interaction between markets for leasing and selling automobiles we develop a model of dynamic interactions between price variations in leasing and selling markets for automobiles our framework assumes a differential game between multiple bertrand type competing firms which offer differentiated products to forward looking agents empirical analysis of our model using monthly us data from 2002 to 2011 shows that variations in selling cash market prices lead rapidly dissipating changes of leasing market prices in the opposite direction we discuss the practical implications of these results by augmenting a standard leasing valuation formula the additional terms represent the leased asset value changes that can be expected on the basis of past variations in automobile selling market prices

measuring the efficiency of energy intensive industries across european countries abstract this study evaluates the energy efficiency trends of five energy intensive industries in 23 european union eu countries over the period 2000 2009 in particular the performance of the construction electricity manufacturing mining and quarrying and transport sectors is examined the analysis is based on data envelopment analysis dea combined with the malmquist productivity index mpi which allows for distinctions between efficiency and technology changes over time at the second stage of the analysis cross classified multilevel modelling is applied to analyse the main drivers behind efficiency performance using a number of sector and country characteristics based on dea results an overall improvement in efficiency is observed in all sectors over the period the decomposition of the mpi indicates that technology change is primarily responsible for the improvements achieved in most sectors the results obtained by the cross classified model show among other things that the high electricity prices energy taxes and market share of the largest generator in the electricity market have a negative effect on industrial energy efficiency

sales and collusion in a market with storage sales are a widespread and well known phenomenon documented in several product markets this paper presents a novel rationale for sales that does not rely on consumer heterogeneity or on any form of randomness to explain such periodic price fluctuations the analysis is carried out in the context of a simple repeated price competition model and establishes that firms must periodically reduce prices in order to sustain collusion when goods are storable and the market is large the largest equilibrium profits are characterized at any market size a trade off between the size of the industry and its profits arises sales foster collusion by magnifying the inter temporal links in consumers decisions

comparison among u s industrial sectors by dea environmental assessment equipped with analytical capability to handle zero or negative in production factors abstract a green image is recently an important component of corporate sustainability in modern business by extending the two previous works i e wang et al 2014 sueyoshi and wang 2014a this study discusses a new use of data envelopment analysis dea for environmental assessment by incorporating an analytical capability to handle zero and or negative in a data set the proposed approach provides us with not only new quantitative assessment on unified operational and environmental performance of firms but also information regarding how to invest for eco technology innovation for abating an amount of their industrial pollutions according to the previous studies the energy industry is an attractive investment target if desirable outputs are measured by return on assets roa as a short term concern and an amount of co 2 emission reduction the selection on a desirable output combination is important in understanding the corporate sustainability of the energy industry because it is the largest emitter among seven industry sectors examined in the previous studies however if the roa is replaced by a corporate value measured by tobin s q ratio as a long term concern the energy industry is not so attractive because it uses a very large production process so that green investment does not immediately increase the corporate value an empirical problem of these previous studies is that they have investigated only successful companies with positive roa or tobin s q ratios the analytical feature clearly indicates a methodological drawback of their studies in contrast this study pays attention to both successful companies with positive net incomes and unsuccessful companies with negative net incomes so being able to measure all aspects of their performance in a short term concern this study finds that the energy industry exhibits a high level of potential on green investment however the energy industry may be not attractive even in the short term concern i e net income partly because governmental regulations on their operation and pollution prevention efforts are stricter than the other industrial sectors this result may be seemingly inconsistent with wang et al 2014 rather the result indicates that successful energy firms can attain the corporate sustainability by investing eco technology innovation but unsuccessful ones cannot attain the sustainability even in the short term concern because they do not have large capital accumulation for eco technology investment whose importance has been first discussed by sueyoshi and goto 2010a in other words the eco technology investment for enhancing a high level of corporate sustainability depends upon an amount of net income generated by each energy firm

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

trade ins and introductory offers in a monopoly we model the commonly used marketing practices of offering discounts to either repeat buyers trade ins or new buyers introductory offers of a quasi durable good we analyze these practices in terms of their potential for intertemporal and third degree price discrimination in our two period model the monopolist sets a first period price that segments the second period market optimally into holders and nonholders of the good in the second period different prices are quoted to the two market segments we present three versions of the model with varying assumptions on consumers rationality

price discrimination through offers to match price in this paper a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop if the list price elsewhere is lower the firm will be successful in discrimination the list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers furthermore if sellers coordinate they discriminate more efficaciously and increase their profits by increa sing their total sales copyright 1987 by the university of chicago

sales quantity surcharge and consumer inattention quantity surcharges occur when retailers carry a product in two sizes and offer a promotion on the small size the large size then costs more per unit than the small one when quantity surcharges occur sales of the large size decline only slightly even though the same quantity can be purchased for less we document this behavior in two data sets and four product categories it is consistent with the notion of passive shoppers found in the industrial organization literature and the notion of rational inattention in macroeconomics we discuss implications for consumer decision making demand estimation and firm pricing

environmental efficiency of investments in renewable energy comparative analysis at macroeconomic level abstract this paper aims to bring into attention the concept of renewable energy investments efficiency and to study one of the three concepts related to it namely environmental efficiency of investments in renewable energy the analysis is undertaken at macroeconomic level for several countries in europe some of them are member states of european union and were observed over the period between 1990 and 2008 the method assumes the study of the econometric models based on kaya identity an equation widely used in studies regarding emissions trends and future emissions scenarios working with time series and cross sectional data a panel data approach is needed indicators like energy intensity co 2 intensity and gross domestic product per capita and per unit of investment are used as they establish a connection between effects and efforts a prerequisite for studying the efficiency a novelty of this research lies in the calculation of environmental efficiency index after an original method proposed by authors the findings of this analysis reveal that there are both countries with high and low environmental efficiency of investments in renewable energy

origins and development of the eu ets the successful creation of the european union emissions trading scheme eu ets was not inevitable countries such as canada and japan which might be thought to have a less complex and more cohesive cultural and institutional context failed to do so europe succeeded for a number of reasons with a single market for the economy the logic of a single market for environment is inexorable the european commission which had failed in its earlier efforts to introduce a carbon energy tax made the case for trading with great skill and persistence on the basis of qualified majority voting which meant no country had a veto the uk and denmark initiated their own national schemes and there was a serious risk of balkanising the market with up to 27 different schemes with the losses of scale and scope this would entail meeting the union s kyoto commitments required a substantive pan european response and eu ets was the most credible and effective way of doing so the european parliament and environmental non governmental organisations played a constructive role pushing for more auctioning of allowances and less of them allocated centrally free allocation managed by member states ms was a necessary condition to achieve the support needed so they failed to achieve these objectives in the initial phase but they characterize the commission s proposals post 2012

examining the cost efficiency of chinese hydroelectric companies using a finite mixture model this paper evaluates the operational activities of chinese hydroelectric power companies over the period 2000 2010 using a finite mixture model that controls for unobserved heterogeneity in so doing a stochastic frontier latent class model which allows for the existence of different technologies is adopted to estimate cost frontiers this procedure not only enables us to identify different groups among the hydro power companies analysed but also permits the analysis of their cost efficiency the main result is that three groups are identified in the sample each equipped with different technologies suggesting that distinct business strategies need to be adapted to the characteristics of china s hydro power companies some managerial implications are developed

why do manufacturers issue coupons an empirical analysis of breakfast cereals we explore the relationship between shelf prices and manufacturers coupons for 25 readyto eat breakfast cereals we find that shelf prices are lower during periods when coupons are available this result is inconsistent with static monopoly price discrimination under a broad range of assumptions we present evidence that is inconsistent with both dynamic theories of price discrimination and explanations of couponing based on the vertical relationship between manufacturers and retailers we find support for models of price discrimination in oligopoly settings as well as suggestions that firmwide incentives may induce managers to use coupons and price cuts simultaneously finally lagged coupons have a positive effect on current sales suggesting that coupons are used to induce repurchase

endogenous quality differentiation in congested markets firms selling a product with congestion externalities to a heterogeneous population of customers have an incentive to offer differentiated levels of quality in a price competitive market differentiation arises endogenously through the prices chosen by firms in equilibrium firms offer a range of prices which induce an efficiency improving range of quality levels and allow customers to self select their preferred price quality combinations additional results suggest that with many firms in the market the choice of prices dominates the choice of service capacities in determining congestion levels copyright 1991 by blackwell publishing ltd

mfn tariff rates and carbon emission evidence from lower middle income countries the paper empirically investigates whether developing countries may use trade policy as an alternative to environmental policies in order to control carbon emission it measures the effectiveness of the existing most favored nations mfn tariff rates applicable to lower middle income countries and for countries sorted on the basis of manufacturing to trade shares in lowering carbon emission by applying a fixed effects panel regression method over 16 years it is found that the mfn tariff rate helps these economies to reduce carbon emission substantially in addition the role of foreign direct investment as purveyor of clean products is explored at the cross country level the results at least on the ground of better environmental standards indicate the need to re evaluate the choice for protection under the domain of multilateral trade negotiations

patterns of retail price variation we examine retail price variation across a range of goods and regions of the united states we find that the typical grocery product has a regular price and stays at that price at least 50 of the time and that most deviations from that regular price are downward temporary discounts or sales while infrequent account for 20 to 50 of the annual variation in retail prices for most product categories although existing models of retail sales yield predictions consistent with some aspects of the retail pricing distributions all of these models fail to explain other important aspects of retail pricing identified here

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

inter temporal price discrimination and satiety driven repeat purchases abstract we discuss customers inter temporal repeat purchasing behavior when their valuations for a product are subject to transitory satiety the satiety can be increased by purchases and gradually decays in between repeat purchasing customers optimize their inter temporal purchasing schedules including the purchasing time and the purchasing quantity to maximize their time average payoffs and the monopoly seller chooses the optimal cyclic pricing policy to maximize its time average profit we derive the conditions under which firms earn the same profit under the cyclic pricing policy as under the fixed price pricing policy when the inter temporal price discrimination is more profitable we show that the optimal pricing policy depends on the relation between customer valuation and customer satiety our results imply that overlooking the effect of transitory satiety tends to cause firms to underprice we also consider extensions in which there exists a fixed purchasing cost or in which purchasing and consumption decisions are separate

simulation study of the price differentiation effect in a stochastic deteriorating inventory with heterogeneous consumers freshness sensitivity a fixed price policy regardless of expiration date may result in unsold inventory and sales loss price reduction over time as the expiration date approaches motivates customers to purchase all items including the ones that are left with only a short interval until their expiration we conduct a discrete event simulation that captures the main characteristics of this phenomenon results show that a moderate differentiation of price increases profits by 6 a larger differentiation reduces profits profits are the highest for freshness oriented customers a fixed price policy is preferred in an environment of large variance and expected near term expirations

optimal path for controlling co2 emissions in china a perspective of efficiency analysis this paper examines the optimal control of co2 emissions from a perspective of efficiency analysis several centralized data envelopment analysis dea models are introduced to study the optimal allocation of co2 emissions under spatial temporal and spatial temporal allocation strategies respectively the models have been used to determine the optimal paths for controlling co2 emissions at provincial and regional levels in china a sensitivity analysis of the optimal path on the emission control coefficient under spatial temporal allocation strategy is further carried out our empirical results show that more developed regions should take emission reduction responsibility earlier than less developed regions in china of the three allocation strategies spatial temporal allocation strategy seems to be a better choice for achieving the optimal control of co2 emissions at country level since it is more encompassing by allowing both timing and spatial substitutions it is also found that there exists an inverted u shape relationship between the aggregate optimal gdp and the emission control coefficient which shows that modest emission reduction policy might be more appropriate for china in order to achieve the joint goals of economic development and co2 emission reduction

cyclic pricing by a durable goods monopolist in the model of this paper a monopoly seller of a durable good holds periodic sales as a means of price discrimination a new cohort of consumers enters the market in each period interested in purchasing the good either immediately or after a delay within each cohort consumers vary in their tastes for the good under broad conditions the seller will vary the price over time in most periods he will charge a price just low enough to sell immediately to consumers with a high willingness to pay periodically however he will drop the price far enough to sell to an accumulated group of consumers with a low willingness to pay

asymmetric price competition with price inertia in this article i analyze price competition under price inertia after setting prices sellers are unable to change them for a period of predetermined length but may delay price commitments indefinitely although most consumers consider the firms products to be perfect substitutes an arbitrarily small number of captive consumers display brand loyalty to a particular firm even when the competing brand is cheaper in this article i show that a firm with even slightly fewer captive consumers than its competitor achieves monopoly power over all remaining consumers

a literature study for dea applied to energy and environment abstract this study systematically summarizes previous research efforts on data envelopment analysis dea applied to energy and environment in the past four decades including concepts and methodologies on dea environmental assessment industrial developments are very important for all nations in terms of their economic prosperities a problem is that the development produces various pollutions on air water and other types of contaminations all of which are usually associated with our health problems and climate changes thus it is necessary for us to consider how to make a balance between economic success and pollution mitigation to maintain a high level of social sustainability in the world it is widely considered that dea is one of the methodologies to examine the level of sustainability this study examines a recent research trend on dea applications from 1980s to 2010s nowadays many researchers have paid serious attention on how to combat various difficulties in the areas of energy and environment as a result the number of articles on dea applications on energy and environment has dramatically increased particularly after 2000s however it is true that dea has strengths and drawbacks in the applications therefore it is very important for us to carefully use dea for guiding large policy issues and business strategies such as the global warming and climate change an underlying premise of this study is that technology innovation in engineering and natural science may solve various problems by linking it with political and managerial efforts the use of dea provides a methodological linkage among them so enhancing the practicality in mitigating problems due to climate change and environmental pollutions this literature study along with a summary on conceptual and methodological developments provides us with guidelines for our future research works on dea on energy and environment issues

environmental policy incentives to adopt advanced abatement technology abstract we investigate incentives through environmental policy instruments to adopt advanced abatement technology first we study the case where the regulator makes long term commitments to policy levels and does not anticipate arrival of new technology we show that taxes provide stronger incentives than permits auctioned and free permits offer identical incentives and standards may give stronger incentives than permits second we investigate scenarios where the regulator anticipates new technologies we show that with taxes and permits the regulator can induce first best outcomes if he moves after firms have invested whereas this does not always hold if he moves first

a deterministic single item inventory model with seller holding cost and buyer holding and shortage costs this paper considers the optimal deterministic inventory policy for a monopolist the novel element concerns the consumers each has a time at which he would most prefer to obtain the good he incurs a shortage cost if he buys it after that time and a holding cost if he obtains it before the firm must consider that any change in its policy will affect the quantity of goods it can sell and the maximum price it can charge we find that the seller s optimal policy can take only one of three possible forms sell the goods throughout each cycle sell the goods continuously during an interval that is shorter than an inventory cycle or sell the goods only at the instant each cycle begins

the morphology of price dispersion this paper is a study of the shape and structure of the distribution of prices at which an identical good is sold in a given market and time period we find that the typical price distribution is symmetric and leptokurtic with a standard deviation between 19 and 36 only 10 of the variance of prices is due to variation in the expensiveness of the stores at which a good is sold while the remaining 90 is due in approximately equal parts to differences in the average price of a good across equally expensive stores and to differences in the price of a good across transactions at the same store we show that the distribution of prices that households pay for the same bundle of goods is approximately normal with a standard deviation between 9 and 14 half of this dispersion is due to differences in the expensiveness of the stores where households shop while the other half is mostly due to differences in households choices of which goods to purchase at which stores we find that households with fewer employed members pay lower prices and do so by visiting a larger number of stores rather than by shopping more frequently

an equilibrium search model of synchronized sales we demonstrate the existence of periodic nonstationary equilibria with self generating cycles in a simple model of random search our results provide a theory of synchronized sales based on product market search by heterogeneous consumers that is our model explains how it can be optimal for all sellers to follow a repeated pattern of posting a high price for several periods and then posting a low price for one period

salience and consumer choice we present a theory of context dependent choice in which a consumer s attention is drawn to salient attributes of goods such as quality or price an attribute is salient for a good when it stands out among the good s attributes relative to that attribute s average level in the choice set or more broadly the choice context consumers attach disproportionately high weight to salient attributes and their choices are tilted toward goods with higher quality price ratios the model accounts for a variety of disparate evidence including decoy effects and context dependent willingness to pay it also suggests a novel theory of misleading sales

price promotions limiting competitive encroachment in this paper we explore equilibrium pricing strategies in an infinite horizon repeated game for an oligopoly we model the interactions between three firms in a market of switchers and loyals our analysis shows that if there are sufficiently large number of switchers in the market the demand parameter is within an acceptable range and the firms have a sufficiently low discount rate alternating promotions between national firms can be an outcome of a perfect nash equilibrium between competing firms this equilibrium results in an implicit collusion between national firms and therefore suggests that price promotions can be interpreted as a long run strategy pursued by national firms to defend their market shares from possible encroachments of a third firm in this way we attempt to provide an explanation for the patterns of promotion observed in some industries and in particular the beverage industry

optimal cartel trigger price strategies abstract a dynamical model of industry equilibrium is described in which a cartel deters deviations from collusive output levels by threatening to produce at cournot quantities for a period of fixed duration whenever the market price falls below some trigger price in this model firms can observe only their own production level and a common market price the market demand curve is assumed to have a stochastic component so that an unexpectedly low price may signal either deviations from collusive output levels or a downward demand shock

sales and monetary policy this paper analyses the efiect of monetary policy in a model where sales occur in equilibrium some consumers are loyal to a particular brand of a good others are bargain hunters as a result producers flnd it optimal to sell their goods at a normal price through some retailers and at a sale price through others the margin of adjusting the amount sold on sale is potentially very important if producers can adjust the fraction sold on sale with sticky prices and wages money is approximately neutral if we ignore the reasons behind sales but that result changes dramatically when we consider that producers optimally choose to sell some of their goods on sale owing to strategic substitutabilities in the sales decision money has strong procyclical efiects

peak load pricing in competitive markets the paper offers an explanation for temporal price dispersion temporal price dispersion in the model is due neither to exogenous shifts in demand nor to price discrimination motives as shown in other papers in this paper the explanation relies on peak load pricing in the model presented consumers decide to purchase a given product in a certain time period according to the satisfaction they derive from the product at that time and to the prices and number of customers they expect at each firm and period the demand in each period is controlled by sellers through prices by offering different prices in different periods sellers motivate consumers to spread themselves across periods in a profitable way therefore the demand and price in each time period is determined endogeneously

corporate failure prediction in the european energy sector a multicriteria approach and the effect of country characteristics this study examines the development of corporate failure prediction models for european firms in the energy sector using a large dataset from 18 countries the construction of the models is based on a multiple criteria decision aid mcda approach taking into account both ordinal criteria and nominal country sector effects the analysis is based on different modeling specifications first traditional financial variables are examined which are then extended with additional country level data related to the economic and business environment as well as data about the energy efficiency policies of the countries and the characteristics of their energy markets and networks the results indicate that energy related attributes have high discriminating power and add valuable information compared to the other attributes

the temporal and spatial dimensions of price search insights from matching household survey and purchase data abstract price promotions are pervasive in grocery markets a household can respond to price promotions by effectively cherry picking through 1 spatial price search across stores and 2 temporal price search across time however extant research has analyzed these two dimensions of price search only separately and therefore underestimates both the consumer response to price promotions and the impact of promotions on retail profit in this article the authors introduce an integrated analysis of spatial and temporal price search they seek answers to three questions first what are the predictors of household decisions to perform either spatial or temporal price search second how effective are the temporal spatial and spatiotemporal price search strategies in obtaining lower prices and third what is the impact of alternative price search strategies on retailer profit the authors use a unique data collection approach that combines household surveys with observed purchase data to address these que

an economic theory of planned obsolescence planned obsolescence is the production of goods with uneconomically short useful lives so that customers will have to make repeat purchases however rational customers will pay for only the present value of the future services of a product therefore profit maximization seemingly implies producing any given flow of services as cheaply as possible with production involving efficient useful lives this paper shows why this analysis is incomplete and therefore incorrect monopolists are shown to desire uneconomically short useful lives for their goods oligopolists have the monopolist s incentive for short lives as well as a second incentive that may either increase or decrease their chosen durability however oligopolists can generally gain by colluding to reduce durability and increase rentals relative to sales some evidence is presented that appears to be generally consistent with the predictions of the theory

upstream market power and wasteful retailers we provide a novel explanation for the wasteful product disposal by retailers in our model after purchasing a quantity of a product from the manufacturer the retailer exerts a costly effort to sell the product to the final users the manufacturer s production cost and the outside opportunity associated with it is private information we show that when the manufacturer has the upstream market power the retailer sells all units purchased from the manufacturer however when the retailer has the market power it might deliberately purchase more than it sells to the final users thus wasting the unsold amount

price dispersion and learning in a dynamic differentiated goods duopoly we study the evolution of prices set by duopolists who are uncertain about the perceived degree of product differentiation customers sometimes view the products as close substitutes sometimes as highly differentiated as the informativeness of the quantities sold increases with the price differential there is scope for active learning by firms when information has low value to the firms they charge the same price as would be set by myopic players and there is no price dispersion when firms value information more highly on the other hand they actively learn by creating price dispersion such price dispersion arises in a cyclical fashion and is most likely to be observed when the firms environment changes sufficiently often but not too frequently firms payoffs are higher when they use correlated pricing strategies contrary to what one might expect such coordination need not hurt consumers provided they are sufficiently impatient

the effect of regulatory governance on efficiency of thermal power generation in india a stochastic frontier analysis abstract this paper investigates the impact of institutional quality typified as regulatory governance on the performance of thermal power plants in india the indian power sector was reformed in the early 1990s however reforms are effective only as much as the regulators are committed in ensuring that they are implemented we hypothesize that higher the quality of regulation in a federal indian state higher is the efficiency of electric generation utilities a translog stochastic frontier model is estimated using index of state level independent regulation as one of the determinants of inefficiency the dataset comprises a panel of 77 coal based thermal power plants during the reform period covering over 70 of installed electricity generation capacity the mean technical efficiency of 76 7 indicates there is wide scope for efficiency improvement in the sector results are robust to various model specifications and show that state level regulators have positively impacted plant performance technical efficiency is sensitive to both unbundling of state utilities and regulatory experience the policy implication is that further reforms which empower independent regulators will have far reaching impacts on power sector performance

a theory of clearance sales clearance sales are widely used by firms as an intertemporal selling policy in particular in markets where firms face demand uncertainty and need to choose capacity in advance clearance sales consist in charging a high price initially but then lowering the price in the sales period high valuation consumers purchase the good at the high initial price so as to avoid rationing at the low price while low valuation consumers wait for the price to drop we develop a simple model of intertemporal monopoly pricing under demand uncertainty and show that clearance sales may be the optimal intertemporal selling policy

pass through in retail and wholesale this paper studies how prices comove across products firms and locations to gauge the relative importance of retailer versus manufacturer level shocks in determining prices i make use of a large panel data set on prices for a cross section of retailers in the u s i analyze prices at the barcode or universal product code upc level for individual stores i find that only 16 of the variation in prices is common across stores selling an identical product 65 of the price variation is common to stores within a particular retail chain but not across retail chains while 17 is completely idiosyncratic to the store and product product categories with frequent temporary sales exhibit a disproportionate amount of completely idiosyncratic price variation my results suggest that most of the observed price variation arises from retail level rather than manufacturer level demand and supply shocks however the behavior of prices is difficult to relate to observed variation in costs and demand at the retail level this suggests that retail prices may vary largely as a consequence of dynamic pricing strategies on the part of retailers or manufacturers rather than static demand and supply shocks this abstract was borrowed from another version of this item

the profitability of electricity generating firms and policies promoting renewable energy using a cross country firm level dataset this study empirically analyses how the implemented renewable electricity promotion systems tradable green certificates vs feed in tariffs affected the pro

abatement and allocation in the pilot phase of the eu ets we use historical industrial emissions data to assess the level of abatement and over allocation that took place across european countries during the pilot phase 2005 2007 of the european union emission trading scheme using a dynamic panel data model we estimate the counter factual business as usual emissions scenario for eu member states comparing this baseline to allocated and verified emissions we find that both over allocation and abatement occurred along with under allocation and emissions inflation over the three trading years of the pilot phase we find over allocation of approximately 280 million euas and total abatement of 247 mt co2 however we calculate that emissions inflation of approximately 73 mt co2 also occurred possibly due to uncertainty about future policy design features

five facts about prices a reevaluation of menu cost models are price decreases 3 the frequency of price increases covaries strongly with inflation whereas the frequency of price decreases and the size of price increases and price decreases do not 4 the frequency of price change is highly seasonal it is highest in the first quarter and then declines 5 we find no evidence of upwardsloping hazard functions of price changes for individual products we show that the first second and third facts are consistent with a benchmark menu cost model whereas the fourth and fifth facts are not

environmental policy design innovation and efficiency gains in electricity generation this paper explores the relationship between environmental regulation innovation and competitiveness drawing upon a unique dataset on environmental regulations directed at combustion plants a global dataset of power plants and a global dataset of environmental patents the analysis is conducted in two stages first a nonparametric frontier analysis is implemented to estimate efficiency scores including a measure of technological innovation based on patent stocks second econometric methods are applied to analyse the role of policy stringency and policy design on efficiency our estimation sample covers thermal power plant sectors in 20 countries from 1990 to 2009 the results show that the stringency of environmental regulations is a significant determinant of productive efficiency with respect to pollutant emissions as well as fuel use however these effects turn negative once the level of stringency leaps over a certain threshold in addition the paper concludes that the positive effect of regulatory stringency can be diminished by a negative effect of regulatory differentiation with measures which are differentiated across plant size and age having negative consequences and these effects are increasing over time this finding is important given the prevalence of size and vintage differentiated policies in many countries finally it is found that integrated approaches to environmental innovation are more likely to bring about efficiency improvements than end of pipe technologies

prices are sticky after all abstract economists have interpreted the evidence that prices change every four months as implying that sticky prices cannot be important for monetary transmission theory implies that this interpretation is correct if most price changes are regular but not if a large fraction are temporary as in the data since regular prices are much stickier than temporary ones our models predict that the stickiness of the aggregate price level matches that in a standard calvo model or a standard menu cost model in which micro level prices change about once a year in this sense prices are sticky after all

total factor productivity growth in agriculture a malmquist index analysis of 93 countries 1980 2000 in this paper we examine levels and trends in agricultural output and productivity in 93 developed and developing countries that account for a major portion of the world population and agricultural output we make use of data drawn from the food and agriculture organization of the united nations and our study covers the period 1980 2000 due to the non availability of reliable input price data the study uses data envelopment analysis dea to derive malmquist productivity indexes the study examines trends in agricultural productivity over the period issues of catch up and convergence or in some cases possible divergence in productivity in agriculture are examined within a global framework the paper also derives the shadow prices and value shares that are implicit in the dea based malmquist productivity indices and examines the plausibility of their levels and trends over the study period

efficiency productivity and environmental policy a case study of power generation in the eu this study uses the eu public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the european union s co2 emissions trading scheme eu ets in its first phase using data envelopment analysis methods we measure the environmental efficiency and the productivity growth registered in public power generation across the eu over the 1996 2007 period in the second stage of our analysis we attempt to explain changes in productivity and efficiency over time using econometric techniques our analysis suggests two conclusions carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier and the overly generous allocation of emission permits had a negative impact on both measures these results are shown to be robust to changes in controls and specifications

word of mouth model of sales in this paper i develop a model of the dynamic pricing of a monopolist while information about its product is diffusing through word of mouth individuals who purchase the product engage in word of mouth with their friends the main result establishes that prices optimally fluctuate over time a monopolist sets prices over time to balance extracting profits in the short term with increasing information diffusion through word of mouth and thereby the population of potential consumers in the future the key state variable for determining this tradeoff is the distribution of valuations of the individuals on the edge of the diffusion this distribution of valuations is determined by the history of prices and changes over time our analysis reveals that prices must move up and down infinitely often

competitive promotional strategies this article analyzes the equilibrium pricing strategies of brands engaged in a pricing game each brand has a monopoly market loyal consumers and competes with others in a common market called brand switchers in the case of a duopoly it is shown that the behavior of the brand switchers characterizes the equilibrium behavior of the duopolists this article focuses on two key comparative statics namely the depth of discounts away from a regular high price and the probability of giving a deal or the frequency of deals how these properties vary with the size of the loyal markets and the behavior of the brand switching population is discussed copyright 1988 by the university of chicago

collusion with intertemporal price dispersion we develop a theory of optimal collusive intertemporal price dispersion dispersion clouds consumer price awareness encouraging firms to coordinate on dispersed prices our theory generates a collusive rationale for price cycles and sales patient firms can support optimal collusion at the monopoly price for less patient firms monopoly prices must be punctuated with fleeting sales the most robust structure involves price cycles that resemble edgeworth cycles low consumer attentiveness enhances the effectiveness of price dispersion by reducing the payoff to deviations involving price reductions however for sufficiently low attentiveness price rises are also a concern

price discrimination on booking time abstract even if consumers are forward looking and free to choose when to purchase a firm can price discriminate on booking time if consumers learn their valuations at different times and consumers who learn later have higher valuations the model is related to our work on optimal screening with returns contracts akan ata and dana 1 but here we consider a simpler binary valuation distribution and consider more realistic consumer learning assumptions the main contribution is to show that the profitability of screening on time is robust to relaxing the assumption that consumers learn instantaneously in addition to analyzing a bad news model in which information arrives gradually we characterize a general bound on consumer optimism that guarantees that the instantaneous learning results are robust

intertemporal substitution and storable products storable products allow consumers to time their purchases to exploit price fluctuations it has been documented that during promotions consumers buy more the additional purchases are potentially intended not only for current use but to be stockpiled for future consumption this paper discusses the predictions of a consumer inventory model and reviews the available evidence we then discuss the implications for demand estimation and present estimates of jel lo l4 dl d4 the economic magnitude of the dynamic effect of storability jel lo l4 dl d4 jel lo l4 dl d4

the dynamics of markups and inventories in retailing firms this paper is concerned with the interaction between price and inventory decisions in retailing firms and its implications for the dynamics of markups and the existence of sales pro motions we consider a model where a monopolistically competitive retailer decides price and inventories and assumes lump sum costs when placing orders or changing nominal prices tn this model the existence of stockout probabilities and fixed ordering costs generate a cyclical price behaviour characterized by long periods without nominal price changes and short periods with very low prices i e sales promotions we estimate this model using a unique longitudinal dataset with information about retail and wholesale prices inventories orders and sales for several brands in a supermarket chain based on the estimated model we perform several counterfactual experi ments that show the important role that inventories and fixed ordering costs play in the dynamics of retail prices and the frequency of sales promotions in this dataset

retail gasoline price cycles across spatially dispersed gasoline stations abstract studies of volatility in retail gasoline prices have used either weekly averages of the prices at a small subset of stations in a city or daily observations on prices at a small number of stations this paper uses daily observations on station specific prices within a large canadian metropolitan area to address whether weekly average prices or prices for a small number of stations provide an accurate description of pricing in a market with volatility this paper considers whether researchers using restricted data can draw meaningful conclusions about the appropriate theoretical model and the policy response to allegations of anticompetitive behavior

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

heterogeneous impacts of regulatory policy stringency on the eu electricity industry a bayesian shrinkage dynamic analysis abstract environmental and technical efficiency in the electricity sector is a major focus of regulatory policies aimed at hastening greenhouse gas reduction and lowering energy prices for final consumers understanding the impact of market and environmental regulations on efficiency is crucial for the design and choice of policy packages at the national level the productivity response to regulations depends on unobserved country specific factors that current empirical analyses have not modelled in this framework we analyse the regulation effects on efficiency in the electricity sector for a panel of european union countries we explicitly consider the effects of the environmental regulation along with the market regulation our estimation strategy uses the bayesian shrinkage estimator which can deal with the bias aggregation problem and cross country heterogeneity it allows us to identify the different transmission channels through which regulatory policy is implemented the results highlight divergent behaviours at the country level the direct impacts of the market and environmental regulatory policies on productivity are negative around 2 7 and 2 3 respectively but the countries vary in the degree to which they are able to compensate these negative effects

the timing of sales this paper presents a model of intertemporal price discrimination a fixed number of sellers produce a homogeneous good consumers with different preferences enter the market in each period and leave when they make a purchase the sellers typically vary their prices over time charging a high price in most periods but occasionally cutting the price to sell to a large group of customers with a low reservation price in some equilibria all stores lower their price at the same time and to the same level

the impact of reference price effects on the profitability of price promotions this paper investigates the impact of reference price effects on retailer price promotions and describes why these effects can make promoting profitable first we analyze the profit impact of reference price effects generated by a single period of promotion the promotion can increase profit if the gain that these effects create in the promotion period outweighs the loss they create in future periods we then describe how retailers can estimate the optimal strategy of recurring promotions that maximizes profits from reference price effects over a time horizon examples of such strategies are presented for a retailer selling a national brand of peanut butter we obtain insights into how promotion prices timing and profits are affected by changes in costs interest rates consumers reactions to reference price effects and error in estimates used in the model the retailer s optimal reaction to a trade deal is also examined this strategy involves a phase of increased promotion activity sandwiched between phases of decreased activity we explain these results using the effects described in the single period model

loss leader pricing and rain check policy loss leader pricing and rain check policies are common in retail markets yet research on these topics is surprisingly scarce in this paper we study the effects of leader pricing and rain check policy on stores profits and market outcomes suppose stores can accurately predict demand might they still run out of stock we investigate whether such a result is plausible when stores can offer rain checks the paper also helps resolve an issue that has recently attracted much attention should the ftc repeal its rule prohibiting stock outs of advertised sale items

intertemporal price discrimination and sales strategy under incomplete information this article examines intertemporal price variations to provide a theoretical explanation for them when firms have only incomplete information about consumers reservation prices for the commodity we contend that some intertemporal price variations can result from attempts by firms to discriminate among consumers we demonstrate that such price discrimination is the optimal policy for a seller if consumers have a higher time discount rate than producers

intertemporal price discrimination uncertainty and introductory offers recent analyses of market equilibria have shown that it is possible for price dispersion to exist even in competitive markets for homogeneous goods the usual departure from the perfectly competitive extreme that leads to the possibility of price dispersed equilibria is the introduction of some form of imperfect information salop and stiglitz 1977 1982 braverman 1980 and sadanand and wilde 1982 have all shown that a competitive market may display more than one price in equilibrium in general these models feature equilibria exhibiting price dispersion because of the assumption that consumers find it costly to obtain full information on prices and or quality although the above models provide better characterisations of actual market structures they still exhibit a weakness and this has been highlighted by varian 1980 he argues that because they model spatial price dispersion it allows some stores to sell their product persistently at a lower price than available elsewhere this he argues ignores the possibility of consumers learning from experience as an alternative he proposed a model of temporal price dispersion in his model stores randomly select their price over time so that they can discriminate between the informed and uninformed sectors of the market at any one moment in time there can exist a price distribution he argues that the model could be viewed as an explanation of sales however it is typically the case that sales are predictable regular and well advertised rather than random and most stores seem to hold sales simultaneously in a recent paper sobel 1984 presents a model where stores periodically hold sales his model displays an equilibrium where stores adopt a cyclical pricing policy occurring because of known consumer heterogeneity this heterogeneity enables stores to price discriminate over time by occasionally holding sales in an attempt to capture all of the consumers with a low reservation price hence he argues that consumer heterogeneity may result in price dispersed equilibria over time in the model considered here there are similarities to those discussed above we present an intertemporal model where stores hold sales and these sales take the form of introductory offers the theme is about consumers who enter a market and choose to purchase a perishable commodity however each individual consumer is uncertain about the quality of a match at any store not previously sampled that is consumers cannot determine the quality of

durable goods monopoly with entry of new consumers this paper analyzes a model of a dynamic monopolist who produces at constant unit cost each period a new cohort of consumers enters the market each entering cohort is identical consumers within a cohort have different tastes for the good my main results are if players are sufficiently patient any positive average profit less than the maximum feasible level can be attained in a subgame perfect equilibrium in the subset of subgame perfect equilibria in which players use stationary strategies the seller cannot make sales at prices significantly greater than the lowest willingness to pay when period length goes to zero and the seller attains the maximum profit when commitment is feasible by charging the same static monopoly price in every period this paper analyzes a model of a dynamic monopolist who operates in a market in which there is a regular flow of new consumers the seller produces a durable good at constant unit cost each period a new cohort of consumers enters the market consumers wish to buy exactly one unit of the item but are willing to wait resales are not allowed each entering cohort is identical

fossil fuel flexibility in west european power generation and the impact of system load factors this paper analyzes short run interfuel substitution in west european power generation and the impact of system load factors on fossil fuel choice the problems are studied within a restricted translog cost share model the paper concludes that interfuel substitution in existing power plants is substantial especially that between oil and gas this is consistent with the notion that short run fuel substitution takes place in dual or multi fired plants by switching load between different single fired plants and by some conversions of power plants to be able to burn alternate fuels the empirical investigation also indicates that the system load factor is a notable determinant of fossil fuel choices in west europe and the paper ends with an assessment of the fuel consequences of some load management schemes in the region

sales and consumer inventory temporary price reductions sales are common for many goods and naturally result in a large increase in the quantity sold we explore whether the data support the hypothesis that these increases are at least partly due to demand anticipation at low prices consumers store for future consumption this effect if present has broad economic implications we test the predictions of an inventory model using scanner data with two years of household purchases the results are consistent with an inventory model and suggest that static demand estimates may overestimate price sensitivity

economic instruments for environmental regulation our knowledge about economic incentive approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with emissions trading in the u s and emission charges in europe as the world community becomes increasingly conscious of both the need to tighten environmental controls and the local economic perils associated with tighter controls in a highly competitive global marketplace it seems a propitious time to stand back and to organize what we have learned about this practical and promising approach to pollution control that may be especially relevant to current circumstances this paper draws upon economic theory empirical studies and actual experience with implementation to provide a brief overview of some of the major lessons we have learned about two economic incentive approaches emissions tradi copyright 1990 by oxford university press

revenue management without commitment dynamic pricing and periodic flash sales a seller has a fixed number of goods to sell by a deadline at each time he posts a regular price and decides whether to hold a flash sale over time buyers privately enter the market and strategically time their purchases if a buyer does not purchase when she arrives she can pay an attention cost to recheck the regular price afterwards or she can wait for future flash sales where she may obtain a good at a discounted price in the unique markov perfect equilibrium the seller sporadically holds flash sales to lower the stock of goods a flash sale increases the willingness to pay of future buyers but decreases the willingness to pay of buyers who arrive early in the game when it is very likely that a buyer will obtain a good in a flash sale the seller holds a big initial flash sale for all but one unit of the good

total factor carbon emission performance of fossil fuel power plants in china a metafrontier non radial malmquist index analysis article i nfo this paper proposes the metafrontier non radial malmquist co2 emission performance index mnmcpi for measuring dynamic changes in total factor co2 emission performance over time the mnmcpi method allows for the incorporation of group heterogeneity and non radial slack into the previously introduced malmquist co2 emission performance index mcpi we derive the mnmcpi by solving several non radial data envelop ment analysis dea models we decompose the mnmcpi into an efficiency change ec index a best practice gap change bpc index and a technology gap change tgc index and based on the proposed indices we examine the dynamic changes in co2 emission performance and its decomposition of fossil fuel power plants in china for the 2005 2010 period the empirical results show a 0 38 increase in total factor co2 emission performance as a whole and a u shaped mnmcpi curve for the sample period because companies owned by the central government lack innovation and technological leadership the results suggest a missing link in the role of the central government in promoting co2 emission performance

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

a structural approach to identifying the sources of local currency price stability the inertia of the local currency prices of traded goods in the face of exchange rate changes is a well documented phenomenon in international economics this paper develops a structural model to identify the sources of this local currency price stability and applies it to micro data from the beer market the empirical procedure exploits manufacturers and retailers first order conditions in conjunction with detailed information on the frequency of price adjustments following exchange rate changes to quantify the relative importance of local non traded cost components markup adjustment by manufacturers and retailers and nominal price rigidities in the incomplete transmission of such changes to prices we find that on average approximately 60 of the incomplete exchange rate pass through is due to local non traded costs 8 to markup adjustment 30 to the existence of own brand price adjustment costs and 1 to the indirect strategic effect of such costs though these results vary considerably across individual brands according to their market shares

a dynamic oligopoly game with lags in demand more on the monotonicity of price in the number of sellers this paper explores a game theoretic model of oligopoly the game is played by sellers of a single product in each discrete time period each seller sets a single price for his output and satisfies all demand at that price his costs are assumed to be zero each seller s demand is the sum of two parts a monopolistic part that is unaffected by other sellers prices and a competitive part that is positive only for the low price setter so far the model is just a repeated version of the game in rosenthal 1980 the added feature of this paper is that competitive demand at any time depends not only on this period s low price but also on last period s low price this feature introduces a dynamic aspect to the situation monopolistic demand on the other hand is assumed to be the same function at every time for every seller although the buyers are not modeled as players in the game the kind of competitive demand behavior mentioned above might result for example from a stationary overlapping generations model in which consumers live for two periods and can purchase their second period consumption in either period if on the basis of currently available information a lower price could be forecast for the next period some delay in the purchase decisions of the young and hence a functional form of the type specified might be expected it turns out that if competitive demand is monotone nondecreasing in previous period price then the process of low prices produced by the equilibrium of primary interest in this paper is a stationary ergodic markov process that has the property that the conditional expectation of low price at time t given low price at t 1 is a nonincreasing function of low price at t1 hence a decision to delay increasing quantities of purchases the higher the price in the current period can be justified on average by correspondingly lower prices in the succeeding period the economic environment is assumed to be deterministic and known with certainty by the sellers the only sources of randomness are then the decisions of the sellers notice that if there were no monopoly demand competition bertrand among the sellers would drive the price in every period to zero the presence of monopoly demand as in the static model in rosenthal 1980 leads to randomized decisions at least at the principal equilibrium here and therefore

theory of tax smoothing in the small open economy abstract we derive necessary and sufficient conditions for the martingale like behavior of tax rates the world real interest rate is exogenous to the small domestic economy consumers are risk averse and markets are incomplete the government s loss function is not ad hoc

an activity analysis model of the environmental performance of firms application to fossil fuel fired electric utilities the productivity of firms when some outputs pollution are undesirable has been studied in the literature for some time in this paper we introduce an environmental performance indicator based on the decomposition of overall factor productivity into a pollution index and an input output efficiency index this indicator is compared to the more conventional jaggi and freedman 1992 model results are given for illustrative purposes using data from u s fossil fuel fired electric utilities the rankings of the utilities obtained with the two models show significant divergence which is due to the different ways in which the undesirable outputs are dealt with as well as due to the different possible tradeoffs between the pollutants released into the atmosphere and the resources used as inputs

environmental investment and firm performance a network approach abstract this study examines the role of investment in environmental production practices for both environmental performance and energy efficiency over time we employ a network dea approach that links successive production technologies through intertemporal investment decisions with a period by period estimation this allows us to estimate energy efficiency and environmental performance separately as well as productivity change and its associated decompositions into efficiency change and technology change incorporating a network model also allows us to account for both short term environmental management practices and long term environmental investments in each of our productivity measures we apply this framework to a panel of detailed plant level production data for swedish manufacturing firms covering the years 2002 2008

eco efficiency analysis of power plants an extension of data envelopment analysis abstract in public discussion on environmental policy the notion of eco efficiency is often used the joint production of goods and undesirable outputs such as pollutants which may not be freely disposable without costs causes difficulties to measure the overall performance of the firm because of the absence of market prices for the undesirable outputs we are not able to estimate the environmental costs some of the measurement and evaluation difficulties can be overcome by employing data envelopment analysis dea as the efficiency measurement vehicle we propose the use of two different approaches in the first approach we start by decomposing the problem into two parts 1 the problem of measuring technical efficiency as the relation of the desirable outputs to the inputs and 2 the problem of measuring so called ecological efficiency as the relation of the desirable outputs to the undesirable outputs separately those two efficiency indicators are then combined in the second approach we treat pollutants as the inputs in the sense that we wish to increase desirable outputs and decrease pollutants and inputs the approaches are applied to the problem of measuring the efficiency of 24 power plants in a european country

storable good monopoly the role of commitment we study dynamic monopoly pricing of storable goods in an environment where demand changes over time the literature on durables has focused on incentives to delay purchases our analysis focuses on a different intertemporal demand incentive for consumers the key force on the consumer side is advance purchases or stockpiling this stockpiling motive can be present in the case of standard durables as well in environments unmodeled in the prior literature we show that if the monopolist cannot commit then prices are higher in all periods and social welfare is lower than in the case in which the monopolist can commit this is in contrast with the durable goods analysis in the literature on the coase conjecture

adverse selection and employment cycles this article examines a dynamic adverse selection model that generates equilibrium employment cycles in the model firms hire workers from unemployment observe workers productivity through time and following the profit maximizing rule eventually fire unproductive workers if hiring costs are low the dynamical system converges to a steady state in which the unemployment pool contains mostly low ability workers however if hiring costs are sufficiently large this lemons effect would make firms unwilling to hire workers in this case the system converges to a cyclical equilibrium in which firms alternate between hiring and not hiring