the role of multilateral institutions in international trade cooperation the world trade organization wfo lacks the power to directly enforce agreements it is therefore important to understand what role the wto can play to facilitate international cooperation and whether a multilateral institution can offer distinct advantages over a web of bilateral agreements this paper examines two potential benefits of a multilateral trade institution first verifying violations of the agreements and informing third parties thus facilitating multilateral reputation mechanisms second promoting multilateral trade negotiations rather than a web of bilateral negotiations the model suggests that a multilateral approach is particularly important when there are strong imbalances in bilateral trading relationships

collusion in multiproduct oligopoly games under a finite horizon applying recent results on finitely repeated games to oligopoly theory the author finds that there exists a class of finite horizon output games in which collusion can be achieved as a subgame perfect equilibrium trigger strategies prevent defection from the cooperative outcome by credibly threatening that the defector will be forced to exit the industry for the case of a multiproduct oligopoly it is shown that collusion in one market can be enforced by the threat of punishment in a second market if someone defects even though the two markets are structurally independent the firms make them strategically interdependent through their strategies copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

how much demand should be fulfilled we study the inventory replenishment of a product whose demand can be manipulated by restricting the supply this research is motivated by a novel marketing tactic employed by manufacturers of fashion and luxury items such a tactic combines innovative marketing with deliberate understocking in an attempt to create shortages i e waitlists that add to the allure and sense of exclusivity of a product and stimulate its demand we model the problem as a finite horizon periodic review system where demand in each period is a decreasing function of the net ending inventory in the previous period although the optimal structure can be complex in general under certain conditions we are able to characterize the optimal policy as a state dependent monotone base stock policy we compare this policy with the optimal policy for the case in which demand is independent of the net inventory we also show that understocking is optimal in various scenarios we then propose a novel strategy called the inventory withholding strategy to further explore the wait list effect by making customers wait even when there is inventory on hand to satisfy them our numerical experiments study the impact of various model parameters in combination with the wait list effect on the optimal policy and the corresponding expected profits

accelerated depreciation and the efficacy of temporary fiscal policy implications for an inflationary economy abstract the effect on investment of temporary tax rate changes depends on the age profile of depreciation deductions if the depreciation allowance schedule is accelerated then temporary cuts in the corporate tax rate could reduce investment inflation causes the age profile of real depreciation deductions to become accelerated and thus could make temporary tax cuts have a contractionary effect on investment two currently proposed reforms are shown to exacerbate this effect under each of these proposals temporary tax cuts are likely to have opposite effects on investment in short lived and long lived capital thereby complicating the conduct of countercyclical fiscal policy

entry exit and performance in airline markets abstract data from the airline industry indicate that 1 entry generally is not induced by price levels substantially above the norm 2 entry reduces fares and increases output and exit increases fares and reduces output and 3 incumbents cut price and maintain output in response to entry and survivors increase both price and output in response to exit these findings cast doubt on the ability of entry to prevent or reverse price increases from anticompetitive mergers

diversification multi market contact and profitability this paper analyses the relationships between diversification multi market contact and industry profitability it focuses on the link between diversification and multi market contact to show that when diversification establishes or increases the extent to which firms meet in more than one market the effect of such multi market contact is to increase the possibility that collusion emerges as an evolutionary stable strategy as a result multi market contact may increase the potential for tacit collusion and so lead to higher profitability the effects of diversification and multi market contact on the price cost margin and the rate of return to capital are estimated using a specially constructed new database for uk manufacturing industry in 1979 this database provides information on the diversification and multi market contact of 418 firms across 134 manufacturing industries thus linking firm and industry level data the results show a clear positive effect of multi market contact on industry profitability

optimal inventory policies when ordering prices are random we consider a single item inventory model with deterministic demands at the beginning of each period a random ordering price is received according to a known distribution function a decision must be made as to how much if any of the item to order in each period so as to minimize total expected costs while satisfying all demands we show that in each period a sequence of critical price levels determines the optimal ordering strategy so that it is optimal to satisfy the demands of the next n periods if and only if the random price falls between the nth and the n 1st levels we derive recursive expressions that describe the critical price numbers and demonstrate the relationship of these expressions to minimal expected cost we study finite horizon as well as infinite horizon models and show that the critical number strategy is also average cost optimal

competitive advantage and collusive optima cost differences may often be important in real oligopolies if side payments are impossible the standard cartel objective total industry profits lacks plausibility when costs differ this essay considers plausible alternatives four different technologies for effecting collusion which are essentially identical when costs are equal define sets of possible profits axiomatic bargaining models are used to select unconstrained optima from among these possibilities simple functional forms are employed low cost firms with large shares in cournot equilibrium may have little to gain from collusion if collusion is effective low cost firms will have relatively low estimated conjectural variations

optimal policies and approximations for a serial multiechelon inventory system with time correlated demand since clark and scarf s pioneering work most advances in multiechelon inventory systems have been based on demand processes that are time independent this paper revisits the serial multiechelon inventory system of clark and scarf and develops three key results first we provide a simple lower bound approximation to the optimal echelon inventory levels and an upper bound to the total system cost for the basic model of clark and scarf second we show that the structure of the optimal stocking policy of clark and scarf holds under time correlated demand processes using a martingale model of forecast evolution third we extend the approximation to the time correlated demand process and study in particular for an autoregressive demand model the impact of lead times and autocorrelation on the performance of the serial inventory system

modelling price competition across many markets an application to the spanish loans market abstract the purpose of this work is the structural modelling of price competition in a product differentiated industry in which many firms of varying size compete across many independent small markets with the target of identifying price behaviour we apply it to model competition among the more than 79 banks that were active in the spanish loans market during the period 1983 1991 using micropanel data a model in which national banks as opposed to regional and local banks fully internalize their cross rate effects in pricing is selected as the model that best fits the data our framework allows us to estimate the dead weight loss due to market power and to decompose it assessing the part attributable to price coordination

vintage production models of u k manufacturing industry vintage production models for the u k are extended to cover hours worked as a separate element of labour input the main purpose of the analysis is then to ascertain whether the output of manufacturing as measured by some index can be satisfactorily explained as a simple stable function of a small number of input aggregates

post keynesian stock flow consistent modelling a survey the aim of the paper is to provide an overview of the current stock ow consistent sfc literature indeed we feel the sfc approach has recently led to a blossoming literature requiring a new summary after the work of dos santos and above all after the publication of the main reference work on the methodology godley and lavoie s monetary economics an integrated approach to credit money income production and wealth the paper is developed along the following lines first a brief historical analysis investigates the roots of this class of models that can be traced as far back as 1949 and the work of copeland second the competing points of view regarding some of its main controversial aspects are underlined and used to classify the different methodological approaches followed in using these models namely we discuss i how the models are solved ii the treatment of time and its implication and ii the need or not for microfoundations these results are then used in the third section of the paper to develop a bifocal perspective which allows us to divide the literature reviewed according to both its subject and the methodology we explore various topics such as financialisation exchange rate modelling policy implication the need for a common framework within the post keynesian literature and the empirical use of sfc models finally the conclusions present some hypotheses and wishes for the possible lines of development of sfc models

the value of early order commitment in a two level supply chain abstract one approach to supply chain coordination is early order commitment whereby a retailer commits to purchase a fixed order quantity at a fixed delivery time before demand uncertainty is resolved in this paper we develop an analytical model to quantify the cost savings of an early order commitment in a two level supply chain where demand is serially correlated a decision rule is derived to determine whether early order commitment will benefit the supply chain and accordingly to determine the optimal timing for early commitment our results indicate that the supply chain would experience greater savings from early order commitment when a the inventory item receives less value added activities at the retailer site b the manufacturing lead time is short c demand correlation over time is positive but weak or d the delivery lead time is long if a condition exists we also propose a rebate scheme for the supply chain partners to share the gains of practicing early order commitment

an empirical oligopoly model of a regulated market abstract we model a three firm oligopoly the spanish fertilizer industry from 1976 to 1988 which was subject to price regulation in the form of price ceilings a theoretical and econometric model is developed in order to identify simultaneously the behaviour of the firms and the degree to which regulation constrained the price the collusive market sharing arrangements involving asymmetric firms and the less collusive outcomes of cournot and stackelberg together with their constrained counterparts are considered as particular behavioural hypotheses the estimation of an aggregated and a disaggregated version of the model by general method of moments techniques leads us to identify the regulation constrained stackelberg equilibrium as the most likely outcome given the observed data

optimal policies for multiechelon inventory problems with markov modulated demand this paper considers a multistage serial inventory system with markov modulated demand random demand arises at stage 1 stage 1 orders from stage 2 etc and stage n orders from an outside supplier with unlimited stock the demand distribution in each period is determined by the current state of an exogenous markov chain excess demand is backlogged linear holding costs are incurred at every stage and linear backorder costs are incurred at stage 1 the ordering costs are also linear the objective is to minimize the long run average costs in the system the paper shows that the optimal policy is an echelon base stock policy with state dependent order up to levels an efficient algorithm is also provided for determining the optimal base stock levels the results can be extended to serial systems in which there is a fixed ordering cost at stage n and to assembly systems with linear ordering costs

trade costs and multimarket collusion contrary to conventional wisdom this article argues that trade liberalization may facilitate collusion and reduce welfare with the help of a duopoly model in which firms interact repeatedly in multiple markets we first show that if trade costs i e tariffs transport costs and discount factors are not too high efficient cartel agreements necessitate the cross hauling of goods as that entails lower deviation incentives in this setting we then demonstrate that reciprocal trade liberalization always raises total output when trade costs are within a range whose lower bound exceeds a threshold level but may reduce total output and thus be pro collusive when trade costs are below that threshold level

centralized ordering and allocation policies in a two echelon system with non identical warehouses we consider a depot warehouse distribution system in which demand occurs at the warehouse level at the beginning of every period the depot places an order from an external supplier which arrives after a fixed lead time the received order is then shipped to the warehouses the depot itself does not hold any inventory there are non zero shipment lead times from the depot to the warehouses linear holding costs are incurred at the warehouses and unsatisfied demands are backlogged at a linear penalty cost our work is a generalization of earlier work by eppen and schrage to allow for non identical warehouses we present a simple and easy to implement allocation policy and derive an explicit expression for the optimal order quantity under the inventory balance allocation assumption used earlier by other researchers a computional study is presented to evaluate the accuracy of the proposed solution

capacitated location model with online demand pooling in a multi channel supply chain abstract this paper presents a location model that assigns online demands to the capacitated regional warehouses currently serving in store demands in a multi channel supply chain the model explicitly considers the trade off between the risk pooling effect and the transportation cost in a two echelon inventory logistics system keeping the delivery network of the in store demands unchanged the model aims to minimize the transportation cost inventory cost and fixed handling cost in the system when assigning the online demands we formulate the assignment problem as a non linear integer programming model lagrangian relaxation based procedures are proposed to solve the model both the general case and an important special case numerical experiments show the efficiency of our algorithms furthermore we find that because of the pooling effect the variance of in store demands currently served by a warehouse is an important parameter of the warehouse when it is considered as a candidate for supplying online demands highly uncertain in store demands as well as low transportation cost per unit can make a warehouse appealing we illustrate with numerical examples the trade off between the pooling effect and the transportation cost in the assignment problem we also evaluate the cost savings between the policy derived from the model which integrates the transportation cost with the pooling effect and the commonly used policy which is based only on the transportation cost results show that the derived policy can reduce 1 5 7 5 cost in average and in many instances the percentage of cost savings is more than 10

cost function for a periodic reorder point system with time dependent replenishment costs abstract a single item inventory model with probabilistic demand is considered in this paper the replenishment of items is cyclical and occurs every n periods the order for replenishment can be placed at the end of any period during the cycle replenishment costs setup and unit costs are stated as a function of time the units ordered are set equal to an order quantity q the general expression of this inventory system is formulated by developing the stationary distribution of the inventory position units ordered and the probability of placing an order during any period the expression is stated in terms of the reorder point s and the order quantity q and can be used to locate the optimal solution

a periodic review model with serially correlated inventory level dependent demand abstract it has been established that the demand rates of many consumer products are serially correlated and are dependent on the amount of inventory displayed to the customer a periodic review model is developed that considers both of these effects an adaptive base stock policy based on the critical fractile is presented and a solution methodology is developed the effect of this demand pattern on the safety stock requirement is investigated

capacity growth in a clay clay vintage model in this paper the growth rates of capacity output and capacity demand for labour are derived for a clay clay vintage model the results are simple and directly applicable in the sense that they only depend on parameters and measurable variables

performance analysis of demand planning approaches for aggregating forecasting and disaggregating interrelated demands a synchronized and responsive flow of materials information funds processes and services is the goal of supply chain planning demand planning which is the very first step of supply chain planning determines the effectiveness of manufacturing and logistic operations in the chain propagation and magnification of the uncertainty of demand signals through the supply chain referred to as the bullwhip effect is the major cause of ineffective operation plans therefore a flexible and robust supply chain forecasting system is necessary for industrial planners to quickly respond to the volatile demand appropriate demand aggregation and statistical forecasting approaches are known to be effective in managing the demand variability this paper uses the bivariate var 1 time series model as a study vehicle to investigate the effects of aggregating forecasting and disaggregating two interrelated demands through theoretical development and systematic analysis guidelines are provided to select proper demand planning approaches a very important finding of this research is that disaggregation of a forecasted aggregated demand should be employed when the aggregated demand is very predictable through its positive autocorrelation moreover the large positive correlation between demands can enhance the predictability and thus result in more accurate forecasts when statistical forecasting methods are used

non stationary demand forecasting by cross sectional aggregation in this paper the relative effectiveness of top down td versus bottom up bu approaches is compared for cross sectionally forecasting aggregate and sub aggregate demand we assume that the sub aggregate demand follows a non stationary integrated moving average ima process of order one and a single exponential smoothing ses procedure is used to extrapolate future requirements such demand processes are often encountered in practice and ses is one of the standard estimators used in industry in addition to being the optimal estimator for an ima process theoretical variances of forecast error are derived for the bu and td approach in order to contrast the relevant forecasting performances the theoretical analysis is supported by an extensive numerical investigation at both the aggregate and sub aggregate level in addition to empirically validating our findings on a real dataset from a european superstore the results demonstrate the increased benefit resulting from cross sectional forecasting in a non stationary environment than in a stationary one valuable insights are offered to demand planners and the paper closes with an agenda for further research in this area

supply chain forecasting when information is not shared the operations management literature is abundant in discussions on the benefits of information sharing in supply chains however there are many supply chains where information may not be shared due to constraints such as compatibility of information systems information quality trust and confidentiality furthermore a steady stream of papers has explored a phenomenon known as downstream demand inference ddi where the upstream member in a supply chain can infer the downstream demand without the need for a formal information sharing mechanism recent research has shown that under more realistic circumstances ddi is not possible with optimal forecasting methods or single exponential smoothing but is possible when supply chains use a simple moving average sma method in this paper we evaluate a simple ddi strategy based on sma for supply chains where information cannot be shared this strategy allows the upstream member in the supply chain to infer the consumer demand mathematically rather than it being shared we compare the ddi strategy with the no information sharing nis strategy and an optimal forecast information sharing fis strategy in the supply chain the comparison is made analytically and by experimentation on real sales data from a major european supermarket located in germany we show that using the ddi strategy improves on nis by reducing the mean square error mse of the forecasts and cutting inventory costs in the supply chain

optimal ordering strategies for announced price increases the familiar model for determining the optimal ordering strategy given an announced price increase assumes that the buyer has an opportunity to place an order at the end of the next economic order quantity cycle before the price increase takes effect this paper extends the price increase model by relaxing the requirement on the timing of the price increase specifically we develop optimal ordering strategies for situations where the price increase becomes effective at any future specified time we also calculate savings for alternate ordering strategies

a note on price discount based on early order commitment in a single manufacturer multiple retailer supply chain abstract early order commitment eoc is a strategy for supply chain coordination wherein the retailer commits to purchasing from a manufacturer a fixed order quantity a few periods in advance of the regular delivery lead time in this paper we formulate and analyze the eoc strategy for a decentralized two level supply chain consisting of a single manufacturer and multiple retailers who face external demands that follow an autocorrelated ar 1 process over time we characterize the special structure of the optimal solutions for the retailers eoc periods to minimize the total supply chain cost and discuss the impact of demand parameters and cost parameters we then develop and compare three solution approaches to solving the optimal solution using this optimal cost as the benchmark we investigate the effectiveness of using the wholesale price discount scheme for the manufacturer to coordinate this decentralized system we give numerical examples to show the benefits of eoc to the whole supply chain examine the efficiency of the discount scheme in general situation and provide the special conditions when the full coordination is achieved

reduction of the value of information sharing as demand becomes strongly auto correlated information sharing has been identified in the academic literature as one of the most important levers to mitigate the bullwhip effect in supply chains a highly cited article on the bullwhip effect has claimed that the percentage inventory reduction resulting from information sharing in a two level supply chain when the downstream demand is autoregressive of order one is an increasing function of the autoregressive parameter of the demand in this paper we show that this is true only for a certain range of the autoregressive parameter and there is a maximum value beyond which the bullwhip ratio at the upstream stage is reduced and the percentage inventory reduction resulting from information sharing decreases towards zero we also show that this maximum value of the autoregressive parameter can be as high as 0 7 which represents a common value that may be encountered in many practical contexts this means that large benefits of information sharing cannot be assumed for those stock keeping units skus with highly positively auto correlated demand instead equally careful analysis is needed for these items as for those skus with less strongly auto correlated demand

ordering policies for the cyclical replenishment problem given leadtime dependent discounts abstract this paper addresses a problem encountered by retailers who experience cyclical replenishment frequently these retailers are provided incentives for placing orders before the end of a cycle and they have to wrestle with the questions of when to order how many times to order and how many units to order the complexity of this problem arises from having to balance the reduction in unit costs with the increases in ordering costs and in some cases deal with storage and shortage costs it is argued that the decrease in unit cost can be directly related to the enhancement of manufacturing efficiency due to longer production leadtimes while the increase in storage and shortage costs is a result of the increase in uncertainty due to a representation and the cost function will be used to derive the parameters i e frequency of orders order level etc that minimize this cost function

design for postponement a comprehensive characterization of its benefits under unknown demand distributions recent papers have developed analytical models to explain and quantify the benefits of delayed differentiation and quick response programs these models assume that while demands in each period are random they are independent across time and their distribution is perfectly known i e sales forecasts do not need to be updated as time progresses in this paper we characterize these benefits in more general settings where parameters of the demand distributions fail to be known with accuracy or where consecutive demands are correlated here it is necessary to revise estimates of the parameters of the demand distributions on the basis of observed demand data we analyze these systems in a bayesian framework assuming that our initial information about the parameters of the demand distributions is characterized via prior distributions we also characterize the structure of close to optimal ordering rules in these systems for a variety of types of order cost functions

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

approximations of dynamic multilocation production and inventory problems consider a central depot or plant which supplies several locations experiencing random demands orders are placed or production is initiated periodically by the depot the order arrives after a fixed lead time and is then allocated among the several locations the depot itself does not hold inventory the allocations are finally received at the demand points after another lag unfilled demand at each location is backordered linear costs are incurred at each location for holding inventory and for backorders also costs are assessed for orders placed by the depot the object is to minimize the expected total cost of the system over a finite number of time periods this system gives rise to a dynamic program with a state space of very large dimension we show that this model can be systematically approximated by a single location inventory problem all the qualitative and quantitative results for such problems can then be applied

trade negotiations domestic policies and the most favored nation clause this paper illustrates how restricting trade instruments to non discrimination links trade agreements to non trade agreements and under certain conditions helps governments further lower tariffs and or domestic standards policies these conditions are i governments objective functions are sufficiently concave with respect to domestic standards policies ii domestic standards are sufficiently valued and iii policies are strategic complements these can then be used as a rationale for restricting safeguard measures to non discrimination ce texte montre comment le fait de restreindre les instruments de politique commerciale a la seule poursuite de liens commerciaux libres de discrimination relie accords commerciaux et non commerciaux et a certaines conditions aide les gouvernements a reduire encore davantage les tarifs douaniers et ou les normes politiques nationales ces conditions sont que i les fonctions objectives soient suffisamment concaves par rapport aux normes politiques nationales ii les normes nationales soient suffisamment valorisees et iii les politiques soient des complements strategiques ces arguments fournissent le rationale pour limiter les mesures de protection a la seule non discrimination

coordinated supply chain management abstract historically the three fundamental stages of the supply chain procurement production and distribution have been managed independently buffered by large inventories increasing competitive pressures and market globalization are forcing firms to develop supply chains that can quickly respond to customer needs to remain competitive these firms must reduce operating costs while continuously improving customer service with recent advances in communications and information technology as well as a rapidly growing array of logistics options firms have an opportunity to reduce operating costs by coordinating the planning of these stages in this paper we review the literature addressing coordinated planning between two or more stages of the supply chain placing particular emphasis on models that would lend themselves to a total supply chain model finally we suggest directions for future research

inventory dynamics in process industries an empirical investigation process industry firms have thrived in recent decades but changes in the markets are currently putting both growth and profitability at risk in this context inventory management is increasingly viewed as an essential lever for creating a sustainable competitive advantage despite this many firms struggle to implement best practices because of industry specific constraints this research explores how seven fundamental characteristics of process industries drive inventory performance we empirically investigate four process industries and four peer industries using financial accounting credit rating stock market and trading data and implement a seemingly unrelated regression sur equations model our results show that capital intensity capital costs transportation costs delivery time price volatility demand uncertainty and gross margin directly affect a company s degree of freedom in terms of inventory management and illustrate that inventory management in process industries follows different dynamics this study enhances the understanding of inventory drivers and gives practitioners a tool to guide future improvement efforts

inventory performance under pack size constraints and spatially correlated demand abstract motivated by a problem facing a large retailer we consider the impact of pack size on the performance of a periodic review inventory system in the presence of spatial i e between retailers correlation of demand which we model using an equicorrelated multivariate poisson distribution employing simulation we utilise a full factorial experiment to provide support for decisions on product and supplier selection and whether or not packs should be split during distribution we consider variables such as pack size correlation and the number of branches and discuss how they and their interactions impact performance metrics such as inventory and shortage levels and the bullwhip effect

a simple way of determining the supply side in macroeconomic models abstract this paper suggests a simple way for determining the supply side in macroeconomic models based on a clay clay type vintage production model shown is how production capacity and utilization rates can be quantified for germany the netherlands the united kingdom and the united states

overcoming incentive constraints by linking decisions consider a bayesian collective decision problem in which the preferences of agents are private information we provide a general demonstration that the utility costs associated with incentive constraints become negligible when the decision problem is linked with a large number of independent copies of itself this is established by defining a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences and then arguing that agents incentives are to satisfy their budget by being as truthful as possible we also show that all equilibria of the linking mechanisms converge to the target utility levels the mechanisms do not require transferable utility or interpersonal comparisons of utility and are immune to manipulations by coalitions

conspiracy at the pump abstract on the basis of evidence of price fixing in may 2006 the canadian competition bureau targeted retail gasoline outlets in some local markets in the province of quebec in june 2008 criminal charges were filed against many individuals and companies operating in those local markets we employ a differences in differences approach to determine whether the public announcement of the antitrust investigation triggered a reaction in one of the targeted markets we find that the price of gasoline in the targeted market fell by 1 75 cents per liter after the public announcement of the investigation we also briefly discuss how well the stiglerian theory of collusion performs in this real world conspiracy

a stock flow consistent macro econometric model of the uk economy part i this paper is the second of a series of two which describe the estimation and simulation of a stock flow consistent macro economic model of the uk economy the first part davis 1987 surveyed the theoretical literature on stock adjustment dynamics criticized existing uk forecasting models for omitting many potential stock flow interactions and gave an outline of the model which is constructed here the estimation and simulation results suggest that variables encapsulating such stock flow effects are frequently significant in the estimation of key equations and that their inclusion may make a sizeable difference to the simulation properties of a model

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

operations research in inventory management a review and critique the objectives of inventory management including the relevant related costs are examined in this paper a brief review of standard problems that have been effectively solved is presented however we point out that a serious gap exists between theory and practice in many organizations suggestions are made for bridging this gap finally a list is provided of a number of research problems whose implementable solution would have a major beneficial impact on the practice of inventory management

regulation and industrial organization this paper examines the effects on firm behavior and industry structure of industry wide price regulation by the state such regulation wherein regulators set prices with regard to an industry wide aggregate performance measure has been and still is widely used and is shown to induce inefficiencies in firm operation in general such regulation can result in setting prices high enough to maintain inefficient firms and it encourages to inefficient firm operation due to incentives to inflate costs and averch johnson effects

coordinating lead times and safety stocks under autocorrelated demand we consider a supply chain in which orders and lead times are linked endogenously as opposed to assuming lead times are exogenous this assumption is relevant when a retailer s orders are produced by a supplier with finite capacity and replenished when the order is completed the retailer faces demands that are correlated over time either positively or negatively which may for example be induced by a pricing or promotion policy the auto correlation in demand affects the order stream placed by the retailer onto the supplier and this in turn influences the resulting lead times seen by the retailer since these lead times also determine the retailer s orders and its safety stocks which the retailer must set to cover lead time demand there is a mutual dependency between orders and lead times the inclusion of endogenous lead times and autocorrelated demand represents a better fit with real life situations however it poses some additional methodological issues compared to assuming exogenous lead times or stationary demand processes that are independent over time by means of a markov chain analysis and matrix analytic methods we develop a procedure to determine the distribution of lead times and inventories that takes into account the correlation between orders and lead times our analysis shows that negative autocorrelation in demand although more erratic improves both lead time and inventory performance relative to iid demand positive correlation makes matters worse than iid demand due to the endogeneity of lead times these effects are much more pronounced and substantial error may be incurred if this endogeneity is ignored

symmetric research joint ventures cooperative substitutes and complements we introduce the concepts of cooperative substitutes and complements and use them to explain when all firms in a research joint venture will choose equal levels of r d we show that the second order conditions for a symmetric optimum take a particularly simple form ruling out both excessive cooperative substitutability and excessive cooperative complementarity and nesting conditions already derived in the literature finally we apply our results to the comparison between cooperative and non cooperative r d and show in an important special case that asymmetric outcomes are only optimal for a very limited range of parameter values

the structure of competition how competition between one s rivals influences imitative market entry this paper investigates how the pattern of encounters between a firm s competitors affects the firm s inclination to follow its competitors into a new market we theorize that direct encounters between a firm s rivals lead to a herding effect making imitative market entry more likely past mutual forbearance between a firm s competitors resulting from asymmetric multimarket competition further strengthens this herding effect by enhancing the firm s expectations of market attractiveness in contrast aggressive past rivalry between the competitors resulting from symmetric multimarket contact dampens these expectations producing a competition effect that makes herding less probable we test our idea in two distinct contexts the chinese pharmaceutical industry and the taiwanese computer hardware industry and find consistent support in both settings we discuss how our analysis of what we call the structure of competition can be extended to research on other forms of firm behavior

the consumption function in macroeconomic models a comparative study 1984 the consumption function in macroeconomic models a comparative study applied economics vol 16 no 6 pp 799 838

commitment in utility regulation a model of reputation and policy applications abstract this paper builds a dynamic model of utility regulation where a government cannot commit to a time inconsistent policy of not expropriating investment by allowing the government s type to change over time i explore how reputation concerns may generate partial commitment restricting attention to equilibria that are strongly renegotiation proof i show that there is a unique perfect bayesian equilibrium this contains episodes of investment and good behaviour followed by periods of expropriation and non investment i then apply the model to consider how the power of the incentive scheme and decentralization may influence the properties of this equilibrium in the case of the power of incentives the model suggests that price caps may worsen commitment in developing countries but not in developed ones similarly the model suggests that decentralisation is likely to have a significant effect on commitment but that this effect will depend on the general ability of the government to commit overall we conclude that the effect of such policies on commitment will be different across countries depending on the institutional environment

a model for analyzing multi channel distribution systems to capture customers in different market segments many firms distribute their products using multiple channels involving in store mail order and electronic mediums nevertheless the business literature is replete with examples where the management of multiple distribution channels becomes unwieldy as a way to evaluate different distribution strategies arising from multiple channels we develop a model of a general multi channel distribution system subject to stochastic demand since the exact analysis of our model is intractable we propose a decomposition scheme that enables us to develop a near optimal distribution policy with minimum total expected distribution cost we utilize our analysis of this multi channel system in two specific applications arising from multi channel distribution the first application deals with a store based retailer expanding into a direct sales channel the retailer can fill the orders generated from this additional sales channel by using the existing stores or the existing depots for this application we evaluate the trade off between these two options the second application intends to find a cost effective way to distribute products by utilizing the combined distribution system of two retailers after a potential merger and acquisition m a for this application we quantify the benefit of an m a in terms of distribution efficiency

a two echelon allocation model and the value of information under correlated forecasts and demands abstract in this article we explore the effects of incorporating forecasts explicitly in a two echelon allocation model which consists of a central depot and several retailers in particular we investigate the possible benefits on the system costs and inventory levels the depot does not hold any inventory and the demand is observed only at the retailers under a general correlated demand forecast structure we obtain the approximate system wide order up to level and the expected system cost in order to assess the value of information provided by keeping track of the forecasts we construct a comparable inventory system operating under a standard demand model we demonstrate that the standard demand model results in higher order up to levels and higher system costs

multiechelon procurement and distribution policies for traded commodities we consider a firm that procures and distributes a commodity from spot and forward markets under randomly fluctuating prices the commodity is distributed downstream to a set of nonhomogeneous retailers to satisfy random demand we formulate a model that allows one to compute approximate but near optimal procurement and distribution policies for this system and we explore the value of the commodity s market in providing managers with a additional flexibility in procurement and b information on price dynamics generated through the trading of futures contracts our results indicate that the presence of the commodity market and the information that it conveys may lead to significant reductions in inventory related costs however to obtain these benefits both the spot procurement flexibility and the term structure of prices generated by the commodity market must be incorporated in the formulation of the operating policy managerial insights on the procurement strategy as a function of variability in prices and demand are also discussed this paper was accepted by john birge focused issue editor

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

multimarket contact economies of scope and firm performance we integrate the efficiency and competitive effects of product market scope choice into a comprehensive model of economic performance and empirically test the model in the context of the u s airli

optimal centralized ordering policies in multi echelon inventory systems with correlated demands this paper treats a depot warehouse system in which demand occurs at the warehouse or retail level this work differs from a number of other studies in that we allow item demands to be correlated both across warehouses and also correlated in time our motivation for this generalization arises from our experience with an actual system of this type used by a major national producer and distributor of consumer products we observed both high correlations between successive monthly demands around 0 7 and correlations between demands for an item at different locations also about 0 7 in a given time period we derive an explicit expression for the optimal safety stock as a function of the level of correlation through time the analysis requires two assumptions 1 the allocation assumption and 2 the equal coefficient of variation assumption similar assumptions have been used by other researchers finally numerical evaluations are included to illustrate the impact of the various magnitudes of correlation

multimarket contact competition and pricing in banking abstract in this paper we assess the impact of multimarket contact of banks on their market power by means of a simultaneous equation model in which the divergence of price from marginal cost is a function of multimarket linkages the model is estimated using aggregate data from the italian regions for the years 1997 2009 our results show that multimarket contact is positively and significantly correlated to the market power index and is also connected to both home and non home market concentration the evidence is robust to changes in model specification and multimarket contact measures and supports the idea that firms which have a greater amount of contact are more likely to collude

effects of correlation on intermittent demand forecasting and stock control abstract this study investigates the effects of three different types of correlation on forecasting and stock control of intermittent demand items applying appropriate forecasting and stock control methods to theoretically generated compound poisson demand data we show that correlation in intermittent demand does play a role in forecast quality and stock control performance negative autocorrelation levels lead to higher service levels than positive values while cost does not significantly change our results also show that high intermittency levels intensify these changes in service level we also show that cross correlation produces results in the opposite direction of autocorrelation in size or intervals that is positive negative cross correlation leads to higher lower service levels

price discrimination or uniform pricing which colludes more abstract conventional wisdom attributes different economic outcomes of uniform pricing and price discrimination to the heterogeneity in market conditions or market participants such as differences in demand elasticity or production costs we offer a new explanation for the observed differences that relates to behavioral aspects rather than demand or supply side effects in particular in a symmetric bertrand duopoly laboratory experiment for which theory predicts no differences between the two pricing regimes we find that tacit price collusion is systematically higher under price discrimination than under uniform pricing

inventory performance under staggered deliveries and autocorrelated demand production plans often span a whole week or month even when independent production lots are completed every day and service performance is tallied daily such policies are said to use staggered deliveries meaning that the production rate for multiple days are determined at a single point in time assuming autocorrelated demand and linear inventory holding and backlog costs we identify the optimal replenishment policy for order cycles of length p with the addition of a once per cycle audit cost we optimize the order cycle length p via an inverse function approach in addition we characterize periodic inventory costs availability and fill rate as a consequence of staggering deliveries the inventory level becomes cyclically heteroskedastic this manifests itself as ripples in the expected cost and service levels nevertheless the cost optimal replenishment policy achieves a constant availability by using time varying safety stocks this is not the case with suboptimal constant safety stock policies where the availability fluctuates over the cycle

bullwhip effect measurement and its implications the bullwhip effect or demand information distortion has been a subject of both theoretical and empirical studies in the operations management literature in this paper we develop a simple set of formulas that describe the traditional bullwhip measure as a combined outcome of several important drivers such as finite capacity batch ordering and seasonality our modeling framework is descriptive in nature as it features certain plausible approximations that are commonly employed in practical inventory systems the results are nonetheless compelling and can be used to explain various conflicting observations in previous empirical studies building on the theoretical framework we discuss the managerial implications of the bullwhip measurement we show that the measurement can be completely noninformative about the underlying supply chain cost performance if it is not linked to the operational details such as decision intervals and leadtimes specifically we show that an aggregated measurement over relatively long time periods can mask the operational level bullwhip in addition we show that masking also exists under product or location aggregation in some illustrative cases

stock flow consistent macroeconomic models a survey the stock flow consistent sfc modelling approach grounded in the pioneering work of wynne godley and james tobin in the 1970s has been adopted by a growing number of researchers in macroeconomics especially after the publication of monetary economics by godley and lavoie which provided a general framework for the analysis of whole economic systems and the recognition that macroeconomic models integrating real markets with flow of funds analysis had been particularly successful in predicting the great recession of 2007 2009 we introduce the general features of the sfc approach for a closed economy showing how the core model has been extended to address issues such as financialization and income distribution we next discuss the implications of the approach for models of open economies and compare the methodologies adopted in developing sfc empirical models for whole countries we review the contributions where the sfc approach is being adopted as the macroeconomic closure of microeconomic agent based models and how the sfc approach is at the core of new research in ecological macroeconomics finally we discuss the appropriateness of the name sfc for the class of models we survey

collusion at the extensive margin abstract we augment the multi market collusion model of bernheim and whinston 1990 by allowing for firm entry into and exit from individual markets we show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement collusion at the extensive margin whereby firms collude by avoiding entry into each other s markets or territories we characterise parameter values that sustain this type of collusion and identify the assumptions where this collusion is more likely to hold than its intensive margin counterpart specifically it is demonstrated that where duopoly competition is fierce collusion at the extensive margin is always sustainable finally we provide a theoretic foundation for the use of a proportional response enforcement mechanism

adjustment costs and the sequencing of trade liberalisation a common feature of trade agreements between countries is that the integration of markets proceeds in stages this paper examin es conceptually the role played by adjustment costs in determining the best way to structure an agreement between two countries when there are multiple sectors to be liberalised adjustment costs to liberalisatio n of industries might influence the timing of liberalisatio n with the analysis bearing similarity to why tariff reductions tend to be phased in over time when two industries have no spillover eff ects trade agreements with sequential liberalisation will be less costly to sustain however if the liberalisation of one in dustry influences permanently the flow of benefits from liberalising the other industry simultaneous liberalisation may be easier to sustain

a semi parametric approach for estimating critical fractiles under autocorrelated demand abstract forecasting critical fractiles of the lead time demand distribution is an important problem for operations managers making newsvendor type inventory decisions in this paper we propose a semi parametric approach to forecasting the critical fractile when demand is serially correlated starting from a user defined but potentially misspecified forecasting model we use historical demand data to generate empirical forecast errors of this model these errors are then used to 1 parametrically correct for any bias in the point forecast conditional on the recent demand history and 2 non parametrically estimate the critical fractile of the demand distribution without imposing distributional assumptions we present conditions under which this semi parametric approach provides a consistent estimate of the critical fractile and evaluate its finite sample properties using simulation and real data for retail inventory planning

balancing retailer inventories this paper examines the optimality of inventory balancing in a one warehouse n retailer distribution system facing stochastic demand for a single product over t successive time intervals in particular we consider the division of predetermined quantities of warehouse stock among retailers in each interval balancing attempts to bring the retailer inventories to the same normalized with respect to first interval demand net inventory level when the demand distribution over the t periods is symmetric with respect to all pairs of retailers and retailer cost over the t intervals is a convex function of the t shipments we show that balancing divisions are optimal the required convexity condition is shown to be satisfied for some familiar cost functions when shortages are backordered and lost however for other cost functions the convexity condition is satisfied under backordering but not under lost sales we also consider the nonidentical retailer demands are not symmetric case and provide examples