product and price competition in a duopoly this paper examines the role of consumer preferences costs and price competition in determining the competitive product strategy of a firm in the model studied here there are two identical firms competing on product quality and price they face consumers who prefer a higher quality product to a lower quality product but differ in how much they are willing to pay for quality the consumers can also choose a substitute if they don t like the product price offerings of the two firms for the firms a higher quality product costs more to produce than a lower quality product the paper shows that the equilibrium strategy for each firm should be to differentiate its product from its competitor with the firm choosing the higher quality choosing the higher margin as well this differentiation however is not efficient that is it is possible to choose two other products and offer them at prices that cover their marginal cost and still satisfy consumers needs better in the aggregate a monopolist by contrast would differentiate his product line efficiently this suggests that cannibalization has different effects on product strategy than competition the paper also shows that if one firm enters the market first then it can defend itself from later entrants and gain a first mover advantage by preempting the most desirable product position

quality based competition profitability and variable costs we consider the impact of variable production costs on competitive behavior in a duopoly where manufacturers compete on quality and price in a two stage game in the pricing stage we make no assumptions regarding these costs other than that they are positive and increasing in quality and no assumptions about whether or not the market is covered in the quality stage we investigate a broad family of variable cost functions and show how the shape of these functions impacts equilibrium product positions profits and market coverage we find that seemingly slight changes to the cost function s curvature can produce dramatically different equilibrium outcomes including the degree of quality differentiation which competitor is more profitable the one offering higher or lower quality and the nature of the market itself covered or uncovered our model helps to predict and explain the diversity of outcomes we see in practice something the previous literature has been unable to do

optimal pricing and return policies for perishable commodities this paper considers the pricing decision faced by a producer of a commodity with a short shelf or demand life a hierarchical model is developed and the results of the single period inventory model are used to examine possible pricing and return policies the paper shows that several such policies currently in effect are suboptimal these include those where the manufacturer offers retailers full credit for all unsold goods or where no returns of unsold goods are permitted the paper also demonstrates that a policy whereby a manufacturer offers retailers full credit for a partial return of goods may achieve channel coordination but that the optimal return allowance will be a function of retailer demand therefore such a policy cannot be optimal in a multi retailer environment it is proven however that a pricing and return policy in which a manufacturer offers retailers a partial credit for all unsold goods can achieve channel coordination in a multi retailer environment this article was originally published in marketing science volume 4 issue 2 pages 166 176 in 1985

optimization of manufacturing systems under environmental considerations for a greenness dependent demand abstract in this work we show that the optimization models for manufacturing systems should evolve to consider the environmental impacts of manufacturing activities and to integrate the environmental performance of finished products in particular the selection of manufacturing processes technologies and input items components should be revised with environmental consideration with this scope in mind we develop two optimization models where we consider the selection of production processes and the choice of input products in the first model a single product is offered by the firm and the demand of this product depends on its greenness in the second model the market is segmented between ordinary and green customers and the firm offers a different variety of the output product to each segment in this case both the demand and the price depend on the product greenness in both models the greenness of the output product is a decision variable that is simultaneously determined along with the other decisions in addition the models integrate environmental legislations we conduct numerical experiments on a case study from the textile sector in order to show how the integration of the product greenness impacts on the system profit and decisions

determining the optimal carbon tax rate based on data envelopment analysis carbon tax policy is widely used to control greenhouse gases and how to determine a suitable carbon tax rate is very important for policy makers considering the trade off between environmental protection and economic development in an industry regulated by carbon tax policy we consider two competing firms who sell ordinary products and green products respectively in order to promote the firm who sells ordinary product to reduce carbon emissions the government of china imposes carbon tax on the ordinary products for the government three objectives are considered when it makes carbon tax policy they are increasing the government revenue reducing the government expenditure and decreasing the carbon emissions for the firms it is important to explore their pricing strategies taken into account of the government tax policy to find an optimal carbon tax rate and to achieve the three objectives simultaneously we consider this as a multiple criteria decision making problem hence we propose to use a centralized data envelopment analysis dea approach to solve it we find that when one firm produces ordinary products and the other produces green products the government may set a high tax rate while when both firms sell ordinary products the optimal tax policy for each firm is different and the government may impose a higher tax rate for one firm and a lower tax rate for the other firm

reverse channel design the case of competing retailers the economical and environmental benefits of product remanufacturing have been widely recognized in the literature and in practice in this paper we focus on the interaction between a manufacturers reverse channel choice to collect postconsumer goods and the strategic product pricing decisions in the forward channel when retailing is competitive to this end we model a direct product collection system in which the manufacturer collects used products directly from the consumers e g print and copy cartridges and an indirect product collection system in which the retailers act as product return points e g single use cameras cellular phones we first examine how the allocation of product collection to retailers impacts their strategic behavior in the product market and we discuss the economic trade offs the manufacturer faces while choosing an optimal reverse channel structure when a direct collection system is used channel profits are driven by the impact of scale of returns on collection effort whereas in the indirect reverse channel supply chain profits are driven by the competitive interaction between the retailers subsequently we show that the buy back payments transfered to the retailers for postconsumer goods provide a wholesale pricing flexibility that can be used to price discriminate between retailers of different profitability

contract designs for energy saving product development in a monopoly abstract we discuss two types of contracts for energy saving products in a monopoly with the government s budget constraint these contracts specify the subsidy either a fixed amount referred to as f type contracts or a discount referred to as d type contracts and the threshold of the energy consumption level of products below which the products are labeled as certified products and qualified for the subsidy we model a three stage game and give optimal design of the contracts under two different objectives of the government minimizing the total energy consumption and minimizing the average energy consumption our results show that 1 the optimal contract designs are the same under the two objectives 2 if the subsidy budget is relatively low the f type contract is more preferable than the d type contract and vice versa 3 the contracts function of certification enables the government to take the advantage of the consumer environmental awareness to improve the environmental performance even when the government s subsidy budget is zero 4 both contracts benefit the environment under the f type contract only the government pays for the environmental improvement in contrast under the d type contract both the government and consumers pay

proposing a new approach to discussing economic effects of design quality abstract as the concept of six sigma has been the dominant theme in the recent wave of quality initiatives a body of related theoretical work slowly starts to evolve some contributions discuss the economic implications of better production quality and therewith provide the rationale for companies to strive for six sigma defect levels opposed to this the complementary concept of design quality has received little recent attention previous contributions in the economics operations or marketing literatures equate design quality to product differentiation and analyse economic implications of different product categories however this discussion is not providing insights into the economic effects of deviating from design optimality in the choice of a product s design such analysis would have great relevance for companies as they aim at addressing customer needs in the most precise way possible to avoid failure in the market in this paper we therefore discuss the economic effects of design quality using a novel focus on deviations from optimum designs we find that deviations from both optimal feature composition and optimal production technology likely result in losses similar to those commonly attributed to poor production quality one important implication of our approach is that higher design quality must not as commonly assumed be connected to higher production costs but might in fact reduce the cost level with our contribution we aim at providing a rationale for investments in design quality improvement a complement to the economic analysis of production quality and an inspiration for future empirical studies

quality and competition in recent years the practitioner literature in operations management has seen a dramatic surge in articles on quality management it reflects the increased emphasis on quality by u s firms which has been attributed largely to increased competition faced by them the question of how quality is influenced by competitive intensity however has not received much attention either in the practitioner or the academic research literatures the notion of competitive intensity itself has not been defined precisely in this paper we develop formal models of oligopolistic competition to investigate whether equilibrium levels of quality increase as competition intensifies we consider three different competitive settings i asymmetric duopolistic competition where the dominant firm s intrinsic demand potential decreases ii a symmetric duopoly where the firms are precluded from cooperating in setting quality levels and iii symmetric oligopolistic competition where the number of firms increases we find that the relation between equilibrium quality and competitive intensity depends on what is understood by increased competition and in addition the relation is contingent on the values of parameters describing the cost and demand structure for the industry

research advances in environmentally and socially sustainable operations abstract consumers and governments are pressuring firms to strike a balance between profitability and sustainability however this balance can only be maintained in the long run if the firm can take a holistic approach to sustain the financial flow profit resource flow planet and development flow people for the entire ecosystem comprising poor producers in emerging developing markets global supply chain partners consumers in developed countries and the planet by considering the flows associated with different entities within the ecosystem we classify and summarize recent operations research management science or ms research developments also we identify several gaps for future research in this important area

design for the environment a quality based model for green product development green product development which addresses environmental issues through product design and innovation as opposed to the traditional end of pipe control approach is receiving significant attention from customers industries and governments around the world in this paper we develop a quality based model for analyzing the strategic and policy issues concerning the development of products with conflicting traditional and environmental attributes on the demand side of the problem we use the framework of conjoint analysis to structure the preferences of the ordinary and green customers on the supply side we apply the theories in optimal product design and market segmentation to analyze the producer s strategic decisions regarding the number of products introduced and their prices and qualities on the policy side we evaluate the effects of environmental standards on the economic and environmental consequences of green product development by jointly considering the interactions among the customers preferences the producer s product strategies and the environmental standards imposed by governments we present some interesting findings that can be used to manage and regulate the development of green products two major findings show that green product development and stricter environmental standards might not necessarily benefit the environment

remanufacturing as a marketing strategy the profitability of remanufacturing systems for different cost technology and logistics structures has been extensively investigated in the literature we provide an alternative and somewhat complementary approach that considers demand related issues such as the existence of green segments original equipment manufacturer competition and product life cycle effects the profitability of a remanufacturing system strongly depends on these issues as well as on their interactions for a monopolist we show that there exist thresholds on the remanufacturing cost savings the green segment size market growth rate and consumer valuations for the remanufactured products above which remanufacturing is profitable more important we show that under competition remanufacturing can become an effective marketing strategy which allows the manufacturer to defend its market share via price discrimination

pricing and green level decisions of a green supply chain with governmental interventions under fuzzy uncertainties abstract environmental issues make green manufacturing become inevitable and fuzzy uncertainty prevails in supply chain management in order to further promote the development of green supply chain according to channel leadership scenario we develop three game models of a green supply chain with governmental interventions under fuzzy uncertainties of both manufacturing cost and consumer demand we study how prices green levels and expected profits are influenced by channel leadership and governmental interventions green level sensitivity and fuzzy degree of parameters are considered analytical results indicate that manufacturer stackelberg scenario is the inferior structure than other scenarios and retailer stackelberg scenario is superior to other scenarios for all players under the strong governmental interventions then when governmental interventions increase the green level will increase but the tendency of retail price depends on channel leadership governmental interventions are not always beneficial to the green supply chain and the manufacturer further although the government s subsidy is offered to the manufacturer the retailer benefits from it ultimately and further becomes the main puller of the development of green products in addition a relatively high green level floor for subsidy results in the manufacturer s first mover disadvantage

pricing market coverage and capacity can green and brown products co exist abstract environmental strains are causing consumers to trade up to greener alternatives and many brown products are losing market coverage to premium priced green rivals in order to tackle this threat many companies currently offering only brown products are contemplating the launch of a green product to complement their product portfolio this paper provides strategic insights into and tactical ramifications of expanding a brown product line with a new green product our analysis explicitly incorporates a segmented consumer market where individual consumers may value the same product differently the economies of scale and the learning effects associated with new green products and capacity constraints for the current production system it is shown that a single pricing scheme for the new green product limits a firm s ability to appropriate the value different customers will relinquish in a segmented market and or to avoid cannibalization a two level pricing structure can diminish and even completely avoid the salience of cannibalization however when resources are scarce a firm can never protect his products from the threat of cannibalization by just revising the pricing structure which can spell the end of his brown product s presence in the market or preclude the firm from launching the green product at this point the degree of cannibalization is higher for the brown product when the green product offers a sufficiently differentiated proposition to green segment consumers

optimizing an emission trading scheme for local governments a stackelberg game model and hybrid algorithm this study investigates a policy making problem for a local government to implement an emission trading scheme by considering the interactive production decisions of firms in its administrative region the market based allowance trading price formed freely among the firms in the region is investigated by taking into account regional environmental bearing capacities under the scheme the government sets the emission reduction target of the region and allocates tradable initial allowances to firms and firms plan their production according to their allowances on hand a stackelberg game model is formulated to analyze the decisions of the government and firms aiming to maximize the social welfare of the region and maximize the profit of each firm in view of the non concavity and discreteness of the decision model for the government we propose a hybrid algorithm to solve the game model efficiently this algorithm consists of a polynomial time dynamic programming binary search and genetic algorithm results reveal that i the stackelberg game model greatly supports local governments policy making on the market driven emission allowance trading scheme and that ii the social welfare is a great metric for policy making decisions on environmental regulations the market driven emission trading scheme is an effective mechanism for local governments to induce emission reduction through green technology adoption by firms however governments should set their emission reduction targets appropriately because a tight or easy regulation policy significantly affects the environmental and economic benefits as well as the social welfare

an oligopoly model to analyze the market and social welfare for green manufacturing industry abstract as public concerns on sustainable economic development increase an increasing number of manufactured products have found their environmentally preferable alternatives in this study we propose an oligopoly game theoretical model to analyze the competition between the green and ordinary manufacturing sectors we identify cost efficiency and innovative design as key elements to the survival of green products we also find that the effectiveness of pigouvian tax and subsidy policies depend on product characteristics market structures as well as targeted results our small empirical examples on corolla vs prius and incandescent lamp vs compact fluorescent lamp cfl show that our modeling results are more optimistic than real market statistics we identify pre equilibrium market dynamics consumer bias towards green products and modeling limitations as the main reasons for such differences we also investigate the market competition and total societal welfare in the presence of tax and subsidy policy intervention the study results not only provide guidelines and managerial insights for green producers to understand the underlying factors that determine the competitiveness of green products in the market but also benefit policy makers by quantitatively showing the effectiveness of tax and subsidy policies in promoting green products

comparisons of initial carbon allowance allocation rules in an o2o retail supply chain with the cap and trade regulation abstract this paper focuses on an o2o retail supply chain in the context of low carbon environment the decision models are constructed under three cases without cap and trade regulation cap and trade regulation based on grandfathering mechanism and cap and trade regulation based on benchmarking mechanism the emission reduction strategies of the supply chain members in the three cases are then discussed the paper compares the effects of the grandfathering and benchmarking mechanisms on the firm s decisions profits and social welfare firstly the results show that the unit carbon quota plays a decisive role in firm s decisions compared with the grandfathering methodology the benchmarking one can more effectively push manufacturers to produce low carbon products and motivate retailers to promote low carbon products secondly it is profitable for the retailer to cooperate with a manufacturer who has lower emission reduction cost simultaneously the retailer will prefer the benchmarking mechanism to the grandfathering mechanism thirdly for the government it is beneficial to use grandfathering mechanism for low carbon emission firms and use benchmarking mechanism for high carbon emission firms also the paper provides government and firms with conditions where the benchmarking allocation method is more suitable for sustainable development the government s decision on benchmarks is a critical factor in maximizing the social welfare

impact of efficiency investment and competition on low carbon manufacturing abstract low carbon economy has become a top agenda for many countries following the agreement in the paris meeting on climate change in this article we take price and emission sensitive demand into account and incorporate competition between the two rival manufacturers in the demand function this research takes more proactive actions incorporating carbon emissions in the strategic and operational decisions which complements the existing literature on low carbon manufacturing in which the carbon emissions attribute is often used as a constraint or only the single manufacturer s demand is considered based on game theory the pricing and carbon emissions reduction decisions are investigated our study contributes to the existing literature on low carbon manufacturing by specifically examining the impact of production efficiency carbon emissions reduction efficiency and market power structure on achieving low carbon manufacturing through the systematic analysis of optimal pricing and green technology investment decisions to improve the economic and environmental performance under different market power structures our findings provide valuable managerial implications which will help many manufacturing firms to make important strategic and operational decisions regarding low carbon manufacturing

managing channel profits a channel of distribution consists of different channel members each having his own decision variables however each channel member s decisions do affect the other channel members profits and as a consequence actions a lack of coordination of these decisions can lead to undesirable consequences for example in the simple manufacturer retailer consumer channel uncoordinated and independent channel members decisions over margins result in a higher price paid by the consumer than if those decisions were coordinated in addition the ensuing suboptimal volume leads to lower profits for both the manufacturer and the retailer this paper explores the problems inherent in channel coordination we address the following questions what is the effect of channel coordination what causes a lack of coordination in the channel how difficult is it to achieve channel coordination what mechanisms exist which can achieve channel coordination what are the strengths and weaknesses of these mechanism what is the role of nonprice variables e g manufacturer advertising retailer shelf space in coordination does the lack of coordination affect normative implications from in store experimentation can quantity discounts be a coordination mechanism are some marketing practices actually disguised quantity discounts we review the literature and present a simple formulation illustrating the roots of the coordination problem we then derive the form of the quantity discount schedule that results in optimum channel profits this article was originally published in marketing science volume 2 issue 3 pages 239 272 in 1983

green hypocrisy environmental attitudes and residential space heating expenditure popular media make claims of a green hypocrisy groups which have the strongest attitude towards the environment also have the highest emissions this study examines whether environmental behaviours beliefs and attitudes are associated with space heating energy use in the uk in order to test for evidence of a green hypocrisy in the uk the largest proportion of household energy use is for space heating we find that environmental behaviours are negatively correlated with heating expenditures while environmentally friendly attitudes and perceptions are not associated with lower heating expenditure further the effect of these attitudes and behaviours does not change as income increase there seems to be little evidence of a green hypocrisy amongst the uk public with respect to space heating

on sales effort and pricing decisions under alternative risk criteria abstract in the literature different risk criteria are proposed for risk averse decision making but it is often unclear which risk criteria should be used and what their differences may be this study investigates this problem when a risk averse make to order firm decides its pricing and sales effort two factors affecting demand we consider alternative risk criteria commonly used in the literature namely expected utility theory eut mean variance mv mean semideviation ms value at risk var conditional value at risk cvar and loss aversion la we find that all of these criteria lead to similar qualitative behaviors regarding how risk loss averse decisions deviate from risk neutral ones a particularly interesting result is that the form of demand randomness i e additive or multiplicative can completely reverse the effect of risk loss aversion in certain cases we also find that the risk aversion models i e eut mv ms var and cvar are essentially equivalent in inducing the same set of optimal solutions under adverse market states however loss aversion is a mild version of risk aversion in that the la model can only lead to a subset of the solutions generated by other models these results may not be valid for other applications such as the newsvendor pricing problem so we can conclude that the relationship between alternative risk criteria is case sensitive and should be evaluated more carefully

optimal strategies for capital constrained low carbon supply chains under yield uncertainty abstract we investigate the optimal strategies for a capital constrained low carbon supply chain with uncertain yield with the features of green finance and carbon cap and trade scheme the results indicate that the green finance subsidy and the low carbon subsidy have positive impacts on the carbon emission reduction but the yield uncertainty has negative impacts for manufacturers with low initial emission level the green finance subsidy is more efficient than the low carbon subsidy however for manufacturers with high initial emission level the low carbon subsidy is more effective than the green finance subsidy further analysis indicates that green finance can increase the positive effects of the carbon cap and trade scheme on manufacturers with medium or low emission levels but the yield uncertainty can decrease the positive effects for high emission manufacturers with green finance the cap and trade can have more negative effects on the investment in carbon emission reduction and with the yield uncertainty the cap and trade can have less negative effects on the manufacturers carbon emission reduction

money demand and disinflation in selected ceecs during the accession to the eu a panel data set for six countries czech republic hungary poland romania slovakia and slovenia is used to estimate money demand with panel cointegration methods over the recent disinflation period the basic money demand model is able to convincingly explain the long run dynamics of m2 in the selected countries however money demand is found to have been significantly determined by the euro area interest rates and the exchange rate against the euro which indicates possible instability of money demand functions in the central and eastern european countries therefore direct inflation targeting is an appropriate monetary regime before the eventual adoption of the euro

customer satisfaction productivity and profitability differences between goods and services there is widespread belief that firms should pursue superiority in both customer satisfaction and productivity however there is reason to believe these two goals are not always compatible if a firm improves productivity by downsizing it may achieve an increase in productivity in the short term but future profitability may be threatened if customer satisfaction is highly dependent on the efforts of personnel if so there are potential tradeoffs between customer satisfaction and productivity for industries as diverse as airlines banking education hotels and restaurants managers in these types of service industries as well as goods industries in which the service component is increasing need to understand whether or not this is the case for example if efforts to improve productivity can actually harm customer satisfaction and vice versa the downsizing of u s and european companies should be viewed with concern it follows that developing a better understanding of how customer satisfaction and productivity relate to one another is of substantial and growing importance especially in light of expected continued growth in services throughout the world economy the objective of this paper is to investigate whether there are conditions under which there are tradeoffs between customer satisfaction and productivity a review of the literature reveals two conflicting viewpoints one school of thought argues that customer satisfaction and productivity are compatible as improvements in customer satisfaction can decrease the time andeffort devoted to handling returns rework warranties and complaint management while at the same time lowering the cost of making future transactions the second argues that increasing customer satisfaction should increase costs as doing so often requires efforts to improve product attributes or overall product design a conceptual framework useful in resolving these contradictory viewpoints is developed the framework serves in turn as a basis for developing a theoretical model relating customer satisfaction and productivity the model predicts that customer satisfaction and productivity are less likely to be compatible when 1 customer satisfaction is relatively more dependent on customization the degree to which the firm s offering is customized to meet heterogeneous customers needs as opposed to standardization the degree to which the firm s offering is reliable standardized and free from deficiencies and 2 when it is difficult costly to provide high levels of both customization and standardization simultaneously to move forward from the model s propositions to the development of testable hypotheses we argue that services are more likely than goods to have the preceding characteristics hence tradeoffs between customer satisfaction and productivity should be more prevalent for services than for goods although this classification is not precise many services are standardizable and many goods have a service component it has the advantage of allowing an initial test of the propositions the empirical work employs a database matching customer based measures of firm performance with traditional measures of business performance such as productivity and return on investment roi the central feature of this database is the set of customer satisfaction indices provided by the swedish customer satisfaction barometer scsb the scsb provides a uniform set of comparable customer based firm performance measures and offers a unique opportunity to test the study s hypotheses the findings indicate that the association between changes in customer satisfaction and changes in productivity is positive for goods but negative for services in addition while both customer satisfaction and productivity are positively associated with roi for goods and services the interaction between the two is positive for goods but significantly less so for services taken together the findings suggest support for the contention that tradeoffs are more likely for services hence simultaneous attempts to increase both customer satisfaction and productivity are likely to be more challenging in such industries of course this does not imply that such firms should not seek improvements in both productivity and customer satisfaction for example appropriate applications of information technology may improve both customer satisfaction and productivity simultaneously the findings should provide motivation for future research concerning the nature of customer satisfaction and productivity as well as appropriate strategy and tactics for each one it is worth emphasizing that this is an issue that is not only important today but certainly will become even more important in the future as the growth of services continues and world markets become increasingly competitive the importance of customer satisfaction will also increase to compete in such a world firms must strike the right balance between their efforts to compete efficiently and their efforts to compete effectively

total quality environmental management and total cost assessment an exploratory study abstract this study addresses one of the major perceived barriers to total quality environmental management tqem total cost assessment tca managers have difficulty assessing the impact of tqem programs because of the lack of appropriate measures in order for tqem investments to be given serious consideration a process is required for measuring monitoring and evaluating tqem by appropriately including all the environmental costs and savings for each investment option after reviewing the background of tqem and frameworks for capturing environmental costs an opportunity emerges for research involving the use of tqem and tca this research presented in this study develops a framework for identifying and formulating a set of cost measures associated with tqem investments the framework serves as a basis for comparing environmental cost measures used among several large us companies two major outputs yielded by this research are 1 a catalog of the various cost measures and procedures used to implement and carryout a tqem tca and 2 the tqem tca framework itself the catalog and framework will be important for later empirical assessment and modeling of tqem

the role of co opetition in low carbon manufacturing abstract low carbon manufacturing has become a strategic objective for many developed and developing economies this study examines the role of co opetition in achieving this objective we investigate the pricing and emissions reduction policies for two rival manufacturers with different emission reduction efficiencies under the cap and trade policy we assume that the product demand is price and emission sensitive based on non cooperative and cooperative games the optimal solutions for the two manufacturers are derived in the purely competitive and co opetitive market environments respectively through the discussion and numerical analysis we uncovered that in both pure competition and co opetition models the two manufacturers optimal prices depend on the unit price of carbon emission trading in addition higher emission reduction efficiency leads to lower optimal unit carbon emissions and higher profit in both the pure competition and co petition models interestingly compared to pure competition co opetition will lead to more profit and less total carbon emissions however the improvement in economic and environmental performance is based on higher product prices and unit carbon emissions

the role of revenue sharing and first mover advantage in emission abatement with carbon tax and consumer environmental awareness abstract in this study we explore the role of revenue sharing and first mover advantage in manufacturer s carbon emission abatement effort and the firms profitability in a linear demand setting where the government might impose some carbon emission charges and consumers may have environmental awareness we consider a supply chain system consisting of a manufacturer and a retailer either of them can move first to offer the other firm a wholesale price contract wp or a revenue sharing contract rs which is termed as abatement level promise strategy pr and abatement level requirement strategy rq respectively our analysis shows that under both pr and rq there exists a unique abatement level maximizing the manufacturer s profit in wp and rs respectively moreover both firms incentives for abatement are perfectly aligned under pr but are misaligned under rq when the marginal abatement cost is large contrary to conventional wisdom rs does not necessarily dull the manufacturer s effort in abatement it depends on whether she possesses first mover advantage and whether consumers have environmental awareness further with consumer environmental awareness numerically or without both firms always prefer to possess first mover advantage but the system s profit under rq is smaller than that under pr numerically surprisingly whether a greater share of revenue benefits a firm depending on whether the firm possesses first mover advantage numerically finally under both rq numerically and pr rs fails to coordinate the system

equity and bond flows to latin america and asia the role of global and country factors abstract this paper investigates the factors motivating the large capital flows to a number of developing countries in recent years we use monthly us capital flows to nine latin american and nine asian countries to analyze the behavior of bond and equity flows employing a panel data approach we find that although global factors the drop in us interest rates and the slowdown in us industrial production are important in explaining capital inflows country specific developments are at least as important especially for asia we also find that equity flows are more sensitive than bond flows to global factors but that bond flows are generally more sensitive to a country s credit rating and secondary market debt price

strategic choice of quality when quality is costly the persistence of the high quality advantage in a two firm two stage model of vertical product differentiation i show that for every convex fixed cost function of quality the firm that chooses the higher quality at the first stage earns the higher profits the result holds for the pure strategy equilibrium in the simultaneous quality game and it holds as well if firms choose their qualities in sequential order

how stable is the demand for money in emerging economies one of the key elements of implementing the monetary policy is stability of the demand for money the literature includes a large number of studies that have tested the stability of the money demand in developed as well as less developed countries but not in emerging economies of eastern europe as market based data becomes available from these countries there is an urgency to test old theories for these modern market oriented economies in this article we consider the experiences of armenia bulgaria the czech republic hungary poland russia and the slovak republic using the bounds testing approach to error correction modelling and cointegration we show that money demand is stable in these countries

the carbon constrained eoq model with carbon emission dependent demand abstract currently companies are looking for solutions to reduce carbon emissions associated with their operations operational adjustments such as modifications in batch sizes or order quantities have proven to be an effective way to decrease emissions in this paper a novel model is proposed that takes into account the link between an inventory policy eoq total carbon emissions and both price and environmental dependent demands in the case of an exogenous price two optimal quantities are determined which maximize a retailer s profit and which minimize carbon emissions conditions that allow a company to maximize profit while minimizing emissions and mechanisms that allow a firm to maximize its profit and to decrease its carbon emissions are determined in the case of an endogenous price some empirical results are also discussed when a firm optimizes its profit through both its selling price and its order quantity some experiments match empirical observations on the one hand an environmental strategy is more significant for cheaper and green labeled products on the other hand a public mechanism such as a carbon tax will decrease total and marginal emissions

market segmentation self selection and product line design the purpose of this paper is to develop a theory of market segmentation based on consumer self selection the extant theory is based on the third degree price discrimination model of pigou central assumptions of which are that the firm can directly address individual segments and isolate them by using consumer self selection i am relaxing these assumptions in the context of a monopolist designing a product line i show that this relaxation has significant implications for how the products and prices are chosen and what they look like in particular segments may be aggregated even though there are no economies of scale furthermore consumer self selection enables us to model cannibalization and competition among firms

economic policies and demand for money evidence from canada this study identifies canadian fiscal and monetary policy regime changes that could influence the services of money it is argued that if these policy regime changes were not incorporated in the estimation of demand for real balances the resulting estimate would be biased and unstable using canadian monthly data for the january 1975 to june 2001 period the paper estimates a standard demand for money m1 function with and without these policy regime changes it was found the demand for money in canada is stable over the short and long run periods when these policy regime changes are incorporated and the estimated coefficients have correct signs

the transactions demand for money in the presence of currency substitution evidence from vietnam currency substitution the use of foreign money to finance transactions between domestic residents is widespread in low income and transition economies traditionally however empirical models of the demand for money tend to concentrate on the portfolio motive for holding foreign currency while maintaining the assumption that the income elasticity of demand for domestic money is invariant to the degree of currency substitution a simple re specification of the demand for money is offered which more accurately reflects the process of currency substitution by allowing for a variable income elasticity of demand for domestic money this specification is estimated for vietnam in the 1990s using a standard cointegration framework evidence is found for currency substitution only in the long run but well defined wealth effects operating in the short run

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

effects of the preference for environmental quality on the export competition between china and oecd countries this study examines how importers preferences for environmentally friendly products influence the effect of china s export growth on the exports of oecd countries to third markets the effect of china s export growth is systematically investigated using the theoretical gravity model which assumes that importers environmental preferences are heterogeneous among countries a new measure is also proposed to represent importers revealed preferences for environmental quality across countries panel data consisting of observations for 30 oecd exporting countries and 60 importing countries over the 2000 10 period confirm that the crowding out effect of china s export growth on the exports of oecd countries observed in markets for consumption goods and the dampening effect observed in markets for intermediate goods are becoming weaker as the importer preference for environmental quality becomes stronger

performance evaluation and a flow allocation decision model for a sustainable supply chain of an apparel industry abstract there is a growing concern that business enterprises and their supply chains focus primarily on economic activities and ignore their impact on the environment and society this paper aims to help decision makers managers and practitioners to achieve economic growth societal development and environmental protection by developing sustainable supply chain performance measures and proposes a partner selection and flow allocation decision making model survey data from 278 business organizations from the indian apparel industry supply chain network were used and an integrated method of structural equation modeling fuzzy analytical hierarchy process and fuzzy multi objective linear programming was applied to the proposed model the results of the structural equation modeling analysis indicate that the survey respondents considered sustainable production performance to be of prime importance which thus indicates its significance in developing a sustainable supply chain for the apparel industry to illustrate the use of the proposed model for partner selection and flow allocation decision making real time data from an apparel manufacturer are presented optimal results were obtained for two strategies sustainability and cost saving to show a cost benefit trade off when developing a sustainable supply chain using comparative performance a decision maker can choose an appropriate strategy based on cost benefit analysis of the presented trade offs

an integrated revenue management framework for a firm s greening pricing and inventory decisions abstract there is a growing interest on developing efficient ways of incorporating environmental considerations into business practices in order to meet both consumers demand for green products services and the firms sustainable profitability the main contribution of this article is in developing an integrated revenue management framework to address a firm s greening investment effort pricing and inventory decisions it is assumed that the firm inaugurates a green product along with its existing product even though the firm offers both the green and regular product at differentiated prices the market segmentation as a result of this price differentiation is regarded as imperfect this imperfect market segmentation causes a demand leakage mainly due to the heterogeneity among the customers willingness to pay these effects are included in our proposed model and simplified analytical solutions are developed to solve the same additional scenarios where a firm experiences a price dependent stochastic demand with an unknown distribution is also modeled this scenario is addressed using a distribution free approach based on scarf s rule the performance of the proposed methods and the significance of the modeling framework are finally corroborated through several simulations this analysis provides a sustainable environment production and retailing framework while still augmenting profitability using fundamental tools from revenue management

effects of carbon reduction labels evidence from scanner data we investigate the effects of carbon reduction labels using a detailed scanner data set using a difference in differences estimation strategy we find that having a carbon label has no impact on detergent prices or demand we also investigate possible heterogeneous effects of carbon labels using the synthetic control method we find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon labeled detergents we investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success jel d12 d83 l15 q54

channel coordination when retailers compete this paper explores channel coordination by a manufacturer that sells through competing retailers and that treats these retailers equally as required by the robinson patman act the authors show that in general there exists no single two part tariff with a constant per unit charge that will duplicate the behavioral results i e prices quantities and channel profits that are obtained by a vertically integrated system that is the channel cannot be coordinated except in the trivial cases of identical or noncompeting retailers however an appropriately specified quantity discount schedule will enable the channel to earn the same profits generated by a vertically integrated system conditions are derived under which a manufacturer will prefer to offer various two part tariffs with constant per unit charges instead of the channel coordinating quantity discount schedule the authors also establish the existence of a menu of two part tariffs that mimics all results of a vertically integrated system however only under stringent conditions will retailers select the appropriate tariff from the menu when these conditions are not satisfied the channel is worse off than in the case of a single second best tariff it is also demonstrated that under a wide range of parametric values the manufacturer will prefer to offer the second best two part tariff rather than a menu of two part tariffs that could maximize channel profits

an industry equilibrium analysis of downstream vertical integration this paper investigates the effect of product substitutability on nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer which may be either a franchised outlet or a factory store static linear demand and cost functions are assumed and a number of rules about players expectations of competitors behavior are examined it is found that for most specifications product substitutability does influence the equilibrium distribution structure for low degrees of substitutability each manufacturer will distribute its product through a company store for more highly competitive goods manufacturers will be more likely to use a decentralized distribution system this article was originally published in marketing science volume 2 issue 2 pages 161 191 in 1983

environmental safety stock the impacts of regulatory and voluntary control policies on production planning inventory control and environmental performance abstract this paper analyzes the impacts of different pollution control policies on a firm s decisions of production planning and inventory control based on a stochastic model with both demand and environmental uncertainties we derive the optimal policies of production planning and inventory control under both regulatory and voluntary pollution control approaches and investigate their operational and environmental effects we establish that the conventional wisdom which suggests that reduction of environmental waste at the end of a production process also decreases the stock and throughput levels of a production system is not necessarily true rather a regulatory environmental standard that limits the total amount of waste may induce the firm to raise its planned stock level which would lead to a higher expected amount of environmental wastes before the standard is enforced as well as environmental risks at other stages of the production process the additional planned stock level which is termed environmental safety stock can be reversed by using the voluntary control approach that provides the firm with the flexibility to occasionally exceed the environmental standard we also conduct numerical experiments to analyze the effects of different values of model parameters under different control approaches the analytical results provide new insights to the impacts of a firm s production and inventory decisions on the natural environment as well as to the choices of pollution control approaches by decision makers in both the private and public sectors

vertical product differentiation with entry abstract this paper examines the non cooperative behaviour of established firms that compete in product quality and prices while foreseeing the effects of their rivalry on the decisions made by the later entrants we prove an existence and uniqueness of the equilibrium and show that the dominant firms engage in maximal product differentiation i e select the highest and lowest technologically feasible qualities later entrant however always selects an intermediate quality moreover we show that the equilibrium configuration is identical to that generated by perfect foresight equilibrium in a model of sequential entry furthermore the profits earned by each firm are ranked in the same order as the qualities implifying that the later entrant despite being the last mover ends up with higher profits and larger market share than one of the incumbents

the pecking order of cross border investment abstract is there a pecking order of cross border investment in that countries become financially integrated through some types of investment rather than others using a novel database of bilateral capital stocks for all types of investment fdi portfolio equity securities debt securities as well as loans for a broad set of 77 countries we show that such a pecking order indeed exists the paper focuses on two key determinants of this pecking order information frictions and the quality of host country institutions overall we find that in particular fdi and to some extent also loans are substantially more sensitive to information frictions than investment in portfolio equity and debt securities we also show that the share as well as the size of fdi that a country receive are largely insensitive to institutional factors in host countries while portfolio investment is by far the most sensitive to the quality of institutions this provides new evidence in favor of some hypotheses but contradicts others put forward in the literature on trade in financial assets

self fulfilling risk panics abstract recent crises have seen large spikes in asset price risk we propose an explanation for such panics based on self fulfilling shifts in beliefs about risk a negative link between the curre

revisiting the us money demand function an application of the lagrange multiplier structural break unit root test and the bounds test for a long run relationship in this article we examine the issue of a levels relationship and stability of the us money demand function over the period 1959 01 to 2004 02 we use the lagrange multiplier structural break unit root test and the bounds testing approach to a long run relationship in levels of the variables namely real money demand nominal interest rate and real income we find greater evidence for a long run relationship in levels and stability of the us money demand function when we use m2 as a proxy for money demand however we find little evidence for a long run relationship between m1 and m2 with their determinants for the recent period spanning the last decade or so

the impact of environmental management on firm performance environmental management has the potential to play a pivotal role in the financial performance of the firm many individuals suggest that profitability is hurt by the higher production costs of environmental management initiatives while others cite anecdotal evidence of increased profitability a theoretical model is proposed that links strong environmental management to improved perceived future financial performance as measured by stock market performance the linkage to firm performance is tested empirically using financial event methodology and archival data of firm level environmental and financial performance significant positive returns were measured for strong environmental management as indicated by environmental performance awards and significant negative returns were measured for weak environmental management as indicated by environmental crises the implicit financial market valuation of these events also was estimated cross sectional analysis of the environmental award events revealed differences for first time awards and between industries first time award announcements were associated with greater increases in market valuation although smaller increases were observed for firms in environmentally dirty industries possibly indicative of market skepticism this linkage between environmental management and financial performance can be used by both researchers and practitioners as one measure of the benefits experienced by industry leaders and as one criterion against which to measure investment alternatives

product innovation in response to environmental standards and competitive advantage a hedonic analysis of refrigerators in the japanese retail market abstract the purpose of this study is to determine whether environmentally friendly attributes that are innovated in response to environmental standards contribute to creating a competitive advantage because manufacturers of products with only commoditized value cannot achieve a competitive advantage they need to add differentiated value including environmentally friendly attributes through product innovation in this situation environmental standards have a potential to encourage them to undertake product innovation thus this study analyzes not only whether a product with environmentally friendly attributes that reflect environmental standards receives a price premium but also whether product commoditization that is associated with drastic price declines has occurred for the product the methodology for these analyses is a hedonic price regression using data for refrigerators sold in the japanese retail market during 1998 2012 the main findings are as follows first the fundamental value of refrigerating has been drastically commoditized in the last 15 years second products that are chlorofluorocarbon free and energy consumption efficient reflecting environmental standards have a price premium third the price premium for each attribute has specific trends during the period these findings support the view that a product s environmentally friendly attributes that reflect environmental standards more or less compensate for the commoditized value through the price premium therefore product innovation in response to environmental standards helps create a competitive advantage especially where product commoditization has occurred

shared savings contracts for indirect materials in supply chains channel profits and environmental impacts there are many materials for which the quantity needed by a firm is at best indirectly related to the quantity of final product produced by that firm such as solvents in manufacturing processes or office supplies for any such indirect materials an inescapable incentive conflict exists the buyer wishes to minimize consumption of these indirect materials while the supplier s profits depend on increasing volume both buyer and supplier can exert effort to reduce consumption hence making the overall supply chain more efficient however no supplier will voluntarily participate unless contract terms are fundamentally revised this can be done through a variety of shared savings contracts where both parties profit from a consumption reduction this paper analyzes several such contracts currently in use for chemicals purchasing we show that such contracts can always increase supply chain profits but need not lead to reduced consumption we analyze equilibrium effort levels consumption and total profits and show how these change with the contract parameters we find that the goals of maximizing joint profits and minimizing consumption are generally not aligned also surprisingly a decrease in a cost parameter can lead to a decrease in profits it may be necessary but is always possible to renegotiate the shared savings contract to reap the benefits of a cost decrease

consumer heterogeneity and strategic quality decisions though recent studies show that quality differentiation is an equilibrium outcome products of similar qualities frequently are observed in the marketplace this inconsistency may be explained by incorporating consumer heterogeneity along unobservable attributes into a model of competition in this paper consumers not only take into account the quality and price of a product but also their heterogeneous tastes along other attributes which are unobservable to firms we investigate the effect of heterogeneity along the unobservable attributes on both quality and price equilibrium in a two stage game framework we show that when consumers are sufficiently heterogeneous along the unobservable attributes the firms offer products of identical qualities in equilibrium under low levels of heterogeneity along the unobservable attributes however our results are consistent with past research which argues for quality differentiation

vertical strategic interaction implications for channel pricing strategy this paper examines two strategic pricing decisions within channels using foresight i e price leadership and considering category implications i e product line pricing are price leadership and product line pricing always the best pricing strategies for a channel member if not when does this occur and why by investigating these questions we address some major concerns of both marketing practitioners and scholars interested in channel management issues in addition this study provides an indepth discussion on why previous analytic studies produced answers to these questions that depend upon the choice of the form of demand functions as such this study should significantly resolve the debate among analytic marketing modelers about the right demand specification at the core of our discussion lies the concept of vertical strategic interaction which is defined in terms of the direction of a channel member s reaction to the actions of its channel partner within a given demand structure specifically if a channel member s best reaction is to reduce its margin when its channel partner increases its margin the type of vertical strategic interaction is referred to as vertical strategic substitutability vss if the best reaction is to increase the margin the environment is referred to as vertical strategic complementarity vsc if the best reaction is no margin change it is referred to as vertical strategic independence vsi using a game theoretic approach we demonstrate that these three types of vertical strategic interactions represent a key driving force for optimal decisions on channel price leadership and product line pricing our investigation involves mathematical analyses of an industry model composed of two manufacturers selling competing products both carried by two competing retailers as such the model allows for retailer product line pricing as well as manufacturer and retailer level competition in addition this general model can be used to analyze three more restrictive industry settings often found in the channels literature i e a bilateral monopoly jeuland and shugan jeuland abel steven m shugan 1983 managing channel profits marketing sci 2summer 239 72 two competing manufacturers selling through competing franchised retailers mcguire and staelin mcguire timothy w richard staelin 1983 an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 92 and two competing manufacturers selling through one common retailer using product line pricing choi choi s chan 1991 price competition in a channel structure with a common retailer marketing sci 10fall 271 96 unlike many other channel studies most of our analyses are performed without assuming particular functional forms of demand curves thus this paper provides greater assurance that the insights from this stream of research are broadly applicable not only across industry structures but also across demand conditions the paper starts out by defining three different rules for how prices are set the manufacturer uses foresight the retailer uses foresight and neither channel member uses foresight we then show a one to one mapping between the type of vertical strategic interaction and the optimality of channel price leadership specifically a channel member finds it profitable to be a price leader for vss but prefers to be a follower for vsc for vsi channel members are indifferent to the channel price leadership issue as it has no effect on channel member profits we also show that there exist conditions under which a retailer might see a reduction in profits when it changes its policy from non product line pricing to product line pricing such conditions arise when the retailer is not a price leader and the environment is characterized by vss or vsc at a more general level this study suggests not only the value but also the cost to a firm for using superior knowledge i e foresight and or product line pricing in making strategic marketing decisions in this way ignorance can be bliss we also explore the link between demand characteristics and the three types of vertical strategic interaction we show that the type of vertical strategic interaction present in a given environment is closely related with the convexity of the demand curve and the level of demand for a given price interestingly we find that linearity of demand is not a necessary condition for any of the three types of vertical strategic demand function consequently in evaluating the robustness of analytic analyses it may be more important to determine the type of vertical strategic interaction assumed instead of whether the demand is linear or nonlinear finally our results are limited to situations where the channels are not coordinated and the retailer s precommitment to particular pricing policy and decision is credible although such situations still capture a significant portion of reality we acknowledge that the insights from this study might not be applicable in all situations

a game theoretic approach for green and non green product pricing in chain to chain competitive sustainable and regular dual channel supply chains abstract nowadays sustainable supply chain has become an exciting concept during the academic societies this paper considers environmental and economic aspect of sustainability due to environmental concerns the entry of green products into today s markets is on the rise how to compete for the production of green products with non green products is essential in these markets therefore this research focuses on the pricing and determination of the degree of greenness of a product in competition with a non green product this study for the first time investigates the pricing of two substitute products a green product produced by one manufacturer and a non green product produced by a second manufacturer under two dual channel supply chains including retail and internet channels the decision variables for one manufacturer are the price and degrees of eco friendliness of the green product for the other the decision variable is the price of the non green product this problem is solved under two different scenarios centralized and decentralized in the decentralized scenario a stackelberg competition is considered between the retailer level and the manufacturer level of the total supply chains in which the manufacturers are assumed to be the leader and the retailers are the followers in the centralized scenario players in each of their related supply chain are integrated the problem is solved and compared under two scenarios finally both parametric and numerical analyses are presented and some managerial insights are provided and some of which are as follows the centralized scenario cause to achieve high the green degree comparing with the decentralized scenario

cooperative strategies for sustainability in a decentralized supply chain with competing suppliers abstract in today s global market organizations increasingly recognize that they must address the issue of sustainability in their operations in addition the decision making processes surrounding sustainable supply chain management are raising a wide range of theories and claims about how best to address the issue in this study mathematical modeling is used to analyze managerial decision making in terms of improving sustainability in a decentralized supply chain with two competing suppliers firstly the concept of managerial decision making for competing suppliers is introduced next the mechanism used in the selection of cooperative strategies is described and the decisions related to demand energy efficiency and profits are analyzed in different scenarios of cooperative strategy combinations also lump sum transfer contracts are designed for supply chain coordination an experimental test of an automobile supply chain in china illustrates the impacts of competition intensity on profits the energy efficiency of environmentally friendly products and consumer surplus the analysis indicates that the sustainability of the supply chain can be efficiently enhanced through cooperative strategies and parameter adjustments while tradeoffs should be made by the policy maker before any cooperative strategy combination is advocated this study extends and complements existing literature with regard to how it is possible to improve sustainability in a competitive environment through cooperative supply chain strategies and parameter adjustments i e enhancing the price of environmentally friendly products lowering the supplier s share of instinct demand potential and lowering the manufacturer s fixed cost related to energy efficiency

contagion and trade why are currency crises regional abstract currency crises tend to be regional they affect countries in geographic proximity this suggests that patterns of international trade are important in understanding how currency crises spread above and beyond any macroeconomic phenomena we provide empirical support for this hypothesis using data for five different currency crises in 1971 1973 1992 1994 and 1997 we show that currency crises affect clusters of countries tied together by international trade by way of contrast macroeconomic and financial influences are not closely associated with the cross country incidence of speculative attacks

comment managing channel profits comment in a recent paper in this journal jeuland and shugan jeuland a s shugan 1983 managing channel profits marketing sci 2 summer 239 272 proposed a quantity discount schedule as a way of coordinating a channel as they put it on p 253 of their paper a quantity discount schedule which would fix the retailer s and hence the manufacturer s profits to some fixed linear function of total channel profits would lead the channel to maximize profits the purpose of this note is to show that a quantity discount schedule is not necessary for channel coordination

the great retrenchment international capital flows during the global financial crisis the current crisis saw an unprecedented collapse in international capital flows after years of rising financial globalization we identify the stylized facts and main drivers of this development the retrenchment in international capital flows is a highly heterogeneous phenomenon first across time being especially dramatic in the wake of the lehman brothers failure secondly across types of flows with banking flows being the hardest hit due to their sensitivity of risk perception and thirdly across regions with emerging economies experiencing a shorter lived retrenchment than developed economies our econometric analysis shows that the magnitude of the retrenchment in capital flows across countries is linked to the extent of international financial integration its specific nature with countries relying on bank flows being the hardest hit as well as domestic macroeconomic conditions and their connection to world trade flows gian maria milesi ferretti and cedric tille

when in peril retrench testing the portfolio channel of contagion abstract the impact of past gains and losses on international investors risk aversion is an important factor in the propagation of financial shocks across countries we first present a stylized model illustrating how changes in investors risk aversion affect portfolio decisions and stock prices we then examine empirically the behavior of international mutual funds when funds returns are below average they reduce their exposure to countries in which they were overweight and vice versa an index of financial interdependence that reflects the extent to which countries share overexposed funds helps explain the pattern of stock market comovement across countries and the pattern of contagion during crises

economic perspectives on the development of complex products for increasingly demanding customers rival firms produce products with a variety of characteristics it is typically assumed that consumers purchase those products that most closely match their ideal set of characteristics orthodox production theory economics offers no analysis of how to divide limited product development budgets between different characteristics furthermore orthodox consumer economics assumes buyers make compensatory trade offs between different product characteristics this approach ignores problems caused by bounded rationality that in complex choice environments leads buyers to formulate simplifying heuristics such as hierarchical non compensatory preferences over characteristics an integrative analytical framework is developed drawing upon orthodox economics behavioural economics and evolutionary economics implications for the relationship between incremental product development and the firm s evolving capabilities are emphasized

competing for low end markets recent business research points to the fortune awaiting to be tapped in low end markets in this paper we investigate how the size of the low end market influences a firm s profits and the pioneering firm s quality choice as low valuation consumers increase in a market on average consumers willingness to pay decreases this may lead us to expect firms profits to decrease as the size of the low end market increases our analysis shows that if the size of the low end market is below a threshold an increase in the size of the low end market may actually dampen price competition and improve profits as firms can then strategically choose their quality levels such that their products are more differentiated conventional wisdom also suggests that the pioneering firm will offer a higher quality product and earn more profits compared with the later entrant in contrast to this notion of quality advantage our analysis identifies circumstances in which a pioneer can offer a lower quality product and yet earn more profits an experimental test lends support for some of our model s predictions we further extend the model to consider markets with multiple firms firms with multiple products and consumers with limited purchasing power

product development decisions a review of the literature this paper is a review of research in product development which we define as the transformation of a market opportunity into a product available for sale our review is broad encompassing work in the academic fields of marketing operations management and engineering design the value of this breadth is in conveying the shape of the entire research landscape we focus on product development projects within a single firm we also devote our attention to the development of physical goods although much of the work we describe applies to products of all kinds we look inside the black box of product development at the fundamentaldecisions that are made by intention or default in doing so we adopt the perspective of product development as a deliberate business process involving hundreds of decisions many of which can be usefully supported by knowledge and tools we contrast this approach to prior reviews of the literature which tend to examine the importance of environmental and contextual variables such as market growth rate the competitive environment or the level of top management support

fdi debt and capital controls abstract we examine the link between financial sector fdi flows banking debt flows and capital controls in emerging market economies during episodes of large gross capital inflows surges we find that fdi surges in the financial sector behave remarkably similar to surges in banking debt flows they are associated with boom bust cycles in gdp and expansions of credit in foreign currency unlike surges in fdi in the non financial sectors moreover global and contagion factors have a strong explanatory power in explaining surges in financial fdi and banking debt flows compared to surges in non financial sectors but capital controls have the opposite effect on the two types of flows restrictions on short term debt flows tend to decrease the likelihood of surges in banking debt flows but increase the likelihood of surges in financial sector fdi

money demand in hungary and poland this paper analyses the determinants and the stability of money demand functions in hungary and poland using an error correction framework the null of stable cointegration relationships cannot be rejected in some specifications the results suggest that long run parameters are in line with economic theory while judging the appropriateness of different strategies of monetary policy on the basis of these findings alone would be premature the paper suggests that money demand functions can serve as a useful reference for monetary authorities

a comparative analysis of greening policies across supply chain structures abstract in this paper we examine an apparel serial supply chain whose players initiate product greening we consider situations in which the players cooperate or act individually our problem is motivated by recent developments in the supply chains of global apparel players we build game theoretic models and show how greening levels prices and profits are influenced by channel structures we also study the impact of greening costs and consumer sensitivity towards green apparels we propose a two part tariff contract to coordinate the green channel our key contribution lies in the model of decision making of various supply chain structures and analyzing its impact on the players and supply chain the problem throws interesting insights into the strategies of apparel players and their key decisions

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

modelling money demand for a panel of eight transitional economies in this article we estimate money demand functions for a panel of eight transitional economies using quarterly data for the period 1995 01 1995 to 2005 03 we find that real m1 and real m2 and their determinants namely real income and short term domestic interest rate are cointegrated both for individual countries as well as for the panel long run elasticities suggest that consistent with theory real income positively and nominal interest rate negatively impact real money demand our test for panel granger causality suggests short run bidirectional causality between m1 and m2 and their determinants finally our tests for stability of the money demand functions reveal more cases of unstable money demand functions when m2 is used as a proxy for money demand

green product design in supply chains under competition abstract in this paper we investigate the green product design issues in supply chains under competition our research questions address how supply chains decisions on the greenness of products are affected by factors such as supply chain structures centralized and decentralized the green product types development intensive product or marginal cost intensive product and the types of competition price competition and greenness competition with a game theoretic approach our model starts with a simple supply chain with one manufacturer and one retailer then the model is expanded to include a horizontal retailer competition case and six cases of competing supply chains our results indicate that 1 the distortion from a non coordinated supply chain the double marginalization effect has counter intuitive impact on the degree of product greenness 2 supply chain price competition at the retailer level may positively influence the equilibrium greenness while the product greenness competition reduces the equilibrium greenness and the joint impact from price and greenness competition on equilibrium greenness depends on the relative strength of the two types of competition

pricing and quality decisions and financial incentives for sustainable product design with recycled material content under price leadership abstract design for recycling has been promoted by companies and governments around the world as one of the most important practices for achieving sustainability the success or failure of such a practice however depends heavily on the financial incentives for firms to design products with more recycled or recyclable material contents an interesting phenomenon that can be observed in many markets with products made predominately from either virgin or recycled materials is the existence of price leadership in this paper we utilize an interdisciplinary approach with both theoretical and empirical analyses to study the pricing and design decisions for products with virgin and recycled material contents in a duopoly market consisting of both the environmentally conscious green and non environmentally conscious brown consumers under price leadership our analytical results show that the brown segment s efficient quality provides an anchor product position for the price leader regardless of whether the price leader is a brown or green firm the price follower s financial incentive for becoming a green or brown firm will then lead to different cases of price leadership with very different environmental consequences specifically the arrangement where the brown and green firms are the price leader and follower respectively leads to more environmentally friendly design decisions than those under the other arrangement where the duopolists switch their pricing roles in addition we conduct an empirical analysis to explore the specific types of price leadership in the markets of aluminum cardboards and pet based on the equilibrium pricing and quality decisions we analyze the financial incentives for the more environmentally friendly case of price leadership to be realized and derive important insights to formulating strategies and policies to implement the practice of design for recycling from the interdisciplinary perspective

designing a family of development intensive products faced with fragmented markets saturated and demanding customers and global competition firms increasingly must design and offer a line of innovative quality differentiated products to target customers with differing willingness to pay wtp in this context designing a special class of products that we term development intensive products dips for which the fixed costs of development far outweigh the unit variable costspresents some unique managerial challenges examples of such development intensive offerings abound in a number of industries including the pharmaceutical information and entertainment sectors of the economy our contributions in this paper are threefold a to show that managerial insights from the traditional approach to product line design developed for unit variable cost intensive products do not carry over to dips b to present new mechanisms and managerial guidelines for designing a family of products for which development costs cannot be ignored and c to illustrate the insights with an extended industry example we find that the design approach based on degrading or subtracting value from a high end product to obtain a subsumed low end edition shown in the literature to be an effective approach for designing unit cost intensive products can be inappropriate for dips this limitation of value subtraction has implications for the number of variants and the sequence in which they are developed as an alternative to a subsumed product design strategy we propose and examine the overlapped product design approach in which a low end product is not completely subsumed within its high end counterpart but differentiated on additional vertical quality dimensions our results both explain the recent challenges of firms with subsumed low end products and guide them in designing a product line to successfully address emerging low end market segments

an institutional theory perspective on sustainable practices across the dairy supply chain the need for sustainable practices in the food supply chain particularly in the area of energy reduction is becoming acute the food industry currently has to contend with multiple competing pressures alongside the new challenges of sustainable production we applied institutional theory to explore the role of supermarkets in the development of legitimate sustainable practices across the dairy supply chains the paper focuses on dairy supply chain organizations and their consumption of energy we conducted 70 semi structured telephone interviews with various stakeholders across the supply chain findings revealed that the majority of actors in the supply chain identified supermarkets as the dominant player and that the supermarkets exert pressure on other smaller organizations across the supply chain although some organizations wished to pursue a sustainable agenda through integrating new rules and legitimate practices within their own organization the dominant logic appeared to be one of cost reduction and profit maximization there was also evidence that supermarkets and other large organizations attempt to replicate publicly available information on green successes for image purposes we conclude that the dominant logic of cost reduction is so well established that challenging the dominant logic may prove difficult the challenge is therefore to complement the dominant logic with sustainable practices across the whole supply chain a role government needs to play this will require a broader more systemic approach to encouraging sustainable practices including investment and financing practices so that all members of the dairy supply chain can co operate and contribute to energy reduction

the quantity flexibility contract and supplier customer incentives consider a supply chain consisting of two independent agents a supplier e g a manufacturer and its customer e g a retailer the latter in turn serving an uncertain market demand to reconcile manufacturing procurement time lags with a need for timely response to the market such supply chains often must commit resources to production quantities based on forecasted rather than realized demand the customer typically provides a planning forecast of its intended purchase which does not entail commitment benefiting from overproduction while not bearing the immediate costs the customer has incentive to initially overforecast before eventually purchasing a lesser quantity the supplier must in turn anticipate such behavior in its production quantity decision this individually rational behavior results in an inefficient supply chain this paper models the incentives of the two parties identifying causes of inefficiency and suggesting remedies particular attention is given to the quantity flexibility qf contract which couples the customer s commitment to purchase no less than a certain percentage below the forecast with the supplier s guarantee to deliver up to a certain percentage above under certain conditions this method can allocate the costs of market demand uncertainty so as to lead the individually motivated supplier and customer to the systemwide optimal outcome we characterize the implications of qf contracts for the behavior and performance of both parties and the supply chain as a whole

a joint approach for setting unit price and the length of the credit period for a seller when end demand is price sensitive this paper considers the seller buyer channel in which the end demand is price sensitive and the seller may offer trade credit to the buyer the unit price seller charged by the seller and the length of the credit period offered by the seller to the buyer both influence the final demand for the product hence we consider both to be policy variables for the seller we use the case of no credit as a benchmark in our analysis the paper provides procedures for determiningthe seller s and the buyer s policies under non cooperative as well as cooperative relationships in the non cooperative case we determine for the seller the optimal unit price and the length of the credit period for the cooperative structure we provide a procedure for characterizingpareto efficient solutions r 2002 elsevier science b v all rights reserved

optimal quality and quantity provisions for centralized vs decentralized distribution market size uncertainty effects abstract we provide insights on how market size uncertainty affects the optimal quality quantity provision in distribution channels when consumers are heterogeneous in their willingness to pay for product quality in this context we denote the difference between the manufacturer s optimal quality quantity provision for a centralized channel and its optimal analog for a decentralized channel as the quality quantity differential we find that market size uncertainty creates or increases the quantity differential but it does not affect the differential s polarity in contrast market size uncertainty decreases the quality differential and it does so to the extent that depending on the level of consumer heterogeneity it reverses the differential s polarity moreover we find that the higher the inherent uncertainty level the more pronounced are the effects we likewise find that the effects of market size uncertainty are amplified if the notion of consumer heterogeneity is replaced with retail level competition