competitive coupon targeting with the advent of panel data on household purchase behavior and the development of statistical procedures to utilize this data firms can now target coupons to selected households with considerable accuracy and cost effectiveness in this article we develop an analytical framework to examine the effect of such targeting on firm profits prices and coupon face values we also derive comparative statics on firms optimal mix of offensive and defensive couponing the number of coupons distributed redemption rates face values and incremental sales per redemption among our findings when rival firms can target their coupon promotions at brand switchers the outcome will be a prisoner s dilemma in which the net effect of targeting is simply the cost of distribution plus the discount given to redeemers

frictionless commerce a comparison of internet and conventional retailers there have been many claims that the internet represents a new nearly frictionless market our research empirically analyzes the characteristics of the internet as a channel for two categories of homogeneous products books and cds using a data set of over 8 500 price observations collected over a period of 15 months we compare pricing behavior at 41 internet and conventional retail outlets we find that prices on the internet are 9 16 lower than prices in conventional outlets depending on whether taxes shipping and shopping costs are included in the price additionally we find that internet retailers price adjustments over time are up to 100 times smaller than conventional retailers price adjustments presumably reflecting lower menu costs in internet channels we also find that levels of price dispersion depend importantly on the measures employed when we compare the prices posted by different internet retailers we find substantial dispersion internet retailer prices differ by an average of 33 for books and 25 for cds however when we weight these prices by proxies for market share we find dispersion is lower in internet channels than in conventional channels reflecting the dominance of certain heavily branded retailers we conclude that while there is lower friction in many dimensions of internet competition branding awareness and trust remain important sources of heterogeneity among internet retailers

elasticity of demand and behaviour based price discrimination behaviour based price discrimination bbpd is typically analysed in a framework characterised by perfectly inelastic demand this paper provides a first assessment of the role of demand elasticity on the profit consumer and welfare effects of bbpd we show that the demand expansion effect that is obviously overlooked by the standard framework with unit demand plays a relevant role in comparison to uniform pricing we show that firms are worse off under bbpd however as demand elasticity increases the negative impact of bbpd on profits gets smaller despite a possible slight increase in the average prices charged over the two periods in comparison to uniform pricing we show that bbpd boosts consumer surplus and that this benefit is independent of elasticity in contrast to the welfare results derived under the unit demand assumption where bbpd is always bad for welfare the paper shows that bbpd can be welfare enhancing if demand elasticity is sufficiently high

do switching costs make markets less competitive abstract the conventional wisdom in economic theory holds that switching costs make markets less competitive this article challenges this claim the authors formulate an empirically realistic model of dynamic price competition that allows for differentiated products and imperfect lock in they calibrate this model with data from frequently purchased packaged goods markets these data are ideal in the sense that they have the necessary variation to identify switching costs separately from consumer heterogeneity equally important consumers exhibit inertia in their brand choices a form of psychological switching cost this makes the results applicable to the broad range of products that are distinctly identified i e branded rather than just to products for which there is a product adoption cost or explicit switching fee in the simulations prices are as much as 18 lower with than without switching costs more important equilibrium prices do not increase even in the presence of switching costs that

when do switching costs make markets more or less competitive abstract in a two period duopoly setting in which switching costs are the only reason why products may be perceived as differentiated we provide necessary and sufficient conditions for switching costs to lead to higher prices in the first period as well as to higher overall profitability we show that this happens if and only if switching costs are not too large we present the only treatment up to date of how switching costs and only switching costs affect competition based on the assumption that switching costs differ across consumers which allows us to illustrate the undesired byproduct of assuming that products exhibit substantial horizontal differentiation not only do we draw implications for the classical literature on competition with switching costs but also for the more recent one that rests upon such an assumption too

a macroeconomic evaluation of a carbon tax in overseas territories a cge model for reunion island reunion island similar to most insular regions is ruled by a carbon based economy that is heavily dependent on fossil fuels in recent years the energy transition towards a low carbon economy has become the watchword of this french overseas region with the objective of a 100 renewable energy mix by 2030 reducing fossil fuel use while maintaining economic growth is an important issue for all countries but is even more important for island territories with structural and geographical handicaps energy transition and drastic greenhouse gas emission reductions represent costs and opportunities that need to be quantified this research paper assesses the environmental and macroeconomic effects of the carbon price policy introduced in france to meet the target of the paris agreement the acceptability of the tax significantly depends on the possibility of recycling tax revenues different schemes for recycling tax revenues are considered in simulations the methodology used is a computable general equilibrium cge model for reunion island getrun nrj that takes into account all island specificities the results show that the carbon tax enables substitutions between fossil and renewable energy production and reduces co 2 emissions however the tax has negative effects on the aggregate economy the implemented tax revenue recycling compensation mechanisms mitigate the negative impacts but the results differ significantly as the recycling schemes do not support the same economic actors

sector style region explaining stock allocation performance the importance of asset allocation policy in stock bond portfolios is widely recognized drawing a parallel for equity only portfolios this study analyzed the importance of allocation by economic sector and by size and style in purely u s stock portfolios and the importance of regional allocation policy in international stock portfolios the study found that allocation policy explains one third to nearly three quarters of among fund variation in returns nearly 90 percent of across time variation and more than 100 percent of the level of stock portfolio returns

a note on switching costs and technology choice it is a commonplace claim that the ibm pc owes its success not to technical superiority but to the belief that it would be successful this note presents a simple model where switching costs between brands say because of incompatible software can lead to an inferior technology being adopted switching costs arise when buyers find it costly to switch to a competitor once they have bought from one manufacturer even if ex ante their products were identical 1 if consumers care about which firms survive perhaps because they need to buy spare parts then their belief that particular firms will succeed may ensure that these firms do indeed succeed since possibly more efficient rivals may be unable o overcome consumers reluctance to buy one may therefore find inferior technologies being adopted this model can be seen as an example of the analysis of katz and shapiro 1986 in which expectations can also lead to poorer products winning out in their model this is because of network externalities that is to say consumers value a product more highly the more other consumers buy it here there are no direct network externalities but the presence of switching costs and increasing returns together generates an indirect externality since the more consumers who buy a product the more likely it is to survive and the more attractive it is to other consumers

price dispersion in the small and in the large evidence from an internet price comparison site this paper examines four million daily price observations for more than 1 000 consumer electronics products on the price comparison site http shopper com we find little support for the notion that prices on the internet are converging to the law of one price in addition observed levels of price dispersion vary systematically with the number of firms listing prices the difference between the two lowest prices the gap averages 23 per cent when two firms list prices and falls to 3 5 per cent in markets where 17 firms list prices these empirical results are an implication of a general clearinghouse model of equilibrium price dispersion

multi period competition with switching costs an overlapping generations formulation i examine an infinite period duoply market with positive consumer switching costs and overlapping generations of consumers when consumers have a finite time horizon then unlike beggs and klemperer 1992 the two firms may alternate dominance from one period to the next alternately charging high and low prices this agrees with the intuition that firms with a high locked in market share may set price so as to exploit that market share which causes a subsequent low market share among the new cohort of buyers leading to lower prices etc jel codes l13 d21 d43 d92

pricing with customer recognition abstract this article studies the dynamic effects of behaviour based price discrimination and customer recognition in a duopolistic market where the distribution of consumers preferences is discrete consumers are myopic and firms are forward looking in the static and first period equilibrium firms choose prices with mixed strategies when price discrimination is allowed forward looking firms have an incentive to avoid customer recognition thus the probability that both will have positive first period sales decreases as they become more patient furthermore an asymmetric equilibrium sometimes exists yielding a 100 0 division of the first period sales as a whole price discrimination is bad for profits but good for consumer surplus and welfare

power sector reform in small island developing states what role for renewable energy technologies abstract due to various pressures and desires more and more developing countries embark on power sector reform programmes yet there are a wide range of reform options and at present insufficient evidence is available as to which path will deliver best the desired objectives presently most small island developing states sids are dependent on high cost fossil fuel imports for power generation in spite of evidence that harnessing abundant domestic renewable sources of energy can deliver environmental social and economic benefits however depending on the type of power sector reform the transition towards renewable energy technologies rets can be either undermined or facilitated the specific focus on sids is justified because they have inherent characteristics that limit the degree to which the power sector can be transformed in comparison to larger continental developing countries with specific reference to sids this manuscript reviews the drivers and desires for power sector reform as well as presenting the available reform options and their implications on the up take of rets in addition to elaborating aspects of market governance other barriers to the consideration of rets such as financial bias in investment human capacity and environmental policy are discussed in view of this discussion which is based on evidence from recent reform programmes and theoretical academic literature recommendations are formulated that discourage full privatisation of the power sector as well as proposing less dogmatic lending conditions by international assistance bodies

revisiting dynamic duopoly with consumer switching costs abstract the degree of collusiveness of a market with consumer switching costs is analyzed in an infinite horizon model of duopolistic competition in contrast with previous analyses we assume that firms compete for the demand for a homogeneous good by setting prices simultaneously in each period this problem is formulated as a simple stochastic game and a symmetric stationary markovian perfect equilibrium with distinctive economic features is studied we show that switching costs unambiguously relax price competition in equilibrium but that on the contrary they may make tacit collusion more difficult to sustain journal of economic literature classification numbers c73 d43 l13

price discrimination with partial information does it pay off abstract this paper investigates the profit effects of price discrimination when firms have partial information about consumer preferences it shows that price discrimination can boost industry profit if firms have access to the right kind of information about consumer preferences while remaining ignorant of other relevant information

why competition may drive up prices abstract we show that the expected price of an incumbent firm may increase in response to increasing competition as it may become more profitable to exploit a rather immobile fraction of consumers instead of capturing a larger but more contested segment of the market to derive this result we consider two approaches of modelling the degree of competition first in a duopolistic setting competition is said to be more intense if the entrant s product becomes more attractive to the mobile fraction of buyers in this case we find that all buyers i e both the mobile and the immobile fraction may lose if the market becomes more competitive secondly in a model with two entrants competition is said to become intense if entrants serve an overlapping segment of the market for mobile buyers

determinants of portfolio performance in order to delineate investment responsibility and measure performance contribution pension plan sponsors and investment managers need a clear and relevant method of attributing returns to those

dispersion as cross sectional correlation we introduce the concept of cross sectional dispersion of stock market returns as an alternative to the time series approach to estimating the global correlation level of equity markets our objective is to derive a simple instantaneous measure of the general level of global market correlation our cross sectional method of estimating global correlation is dynamic and using cross sectional data gives instantaneous information on the trend of global correlation the traditional time series method requires a long period of observations and overlapping data have to be used to study the change in correlation both methods yield similar estimates for a long period however so a combination of the cross sectional and time series approaches should be of practical use to global asset managers

adaptive learning models of consumer behavior abstract in a model of dynamic duopoly optimal price policies are characterized assuming consumers learn adaptively about the relative quality of the two products a contrast is made between belief based and reinforcement learning under reinforcement learning consumers can become locked into the habit of purchasing inferior goods such lock in permits the existence of multiple history dependent asymmetric steady states in which one firm dominates in contrast belief based learning rules must lead asymptotically to correct beliefs about the relative quality of the two brands and so in this case there is a unique steady state

a search model where consumers choose quantity based on expected price i describe a price game in which consumers face search costs and base their quantity decision on the expected price because of search costs the choice of the firm they will buy from is described by a random process i show that the expected equilibrium price is above the monopoly price this result does not change if demand comes from a small share of perfectly informed consumers with zero search costs

dynamic decision making in a two stage supply chain with repeated transactions abstract this research investigates how the experience learned in repeated transactions by consumers and manufacturers would affect supply chain partners strategic decisions such as price order quantity and service level consumer demand depends on two factors 1 retailer price and 2 service level provided by the manufacturer in the past and current transaction periods game theory is used to understand interactions between the horizontally competitive suppliers and their vertical interactions to the common retailer in the one period looking ahead decision environment dynamic system concepts are integrated into the game theoretic model for understanding the evolution of the strategic decisions over multiple time periods the research shows that the manufacturer with any type of cost advantage for providing more services to its customers will capture a larger market than its competitor comparison of our model to the myopic model indicates that the myopic suppliers who ignore the customer learning effect on future periods shrink their market sizes and earn less profit over time the manufacturers who use the learning experience to plan future investment can prevent this phenomenon from happening and enhance their competitiveness

history based price discrimination and entry in markets with switching costs a welfare analysis abstract we analyze history based price discrimination in an asymmetric industry where an incumbent protected by switching costs faces an entrant who does not have access to information about consumers purchase histories we demonstrate that consumer surplus is higher with uniform pricing than with history based price discrimination we find that the entry decision is invariant to whether the incumbent implements history based pricing or uniform pricing this implies that the potential abuse of market dominance imposed by history based price discrimination is exploitation not exclusion finally we establish that the profit gain to the incumbent from history based pricing exceeds the associated loss to consumers

price competition with reduced consumer switching costs the case of wireless number portability in the cellular phone industry wireless number portability wnp is a telecommunication regulatory policy that requires cellular phone service providers to allow customers who switch service subscriptions to retain their original phone numbers the right to retain the number lowers the switching cost for a consumer thus the purpose of the policy is to induce more competition and facilitate the growth of new or small service providers in this paper we show that wnp drives market price downward as expected but with a surprising twistrather than helping the smaller firms grow the policy may accelerate the process of market concentration we find that the main contributing factor to this peculiarity is the discriminatory pricing scheme prevalent in the industrythat is a service provider charges a lower per minute fee for the calls initiated and received within the same network than for the calls connected across two networks under this pricing scheme a consumer who subscribes to a larger network would benefit more than if subscribing to a smaller network despite the relatively higher fixed access fee that the former may charge by lowering the barrier of switching wnp creates a market condition conducive for a larger network to gain market share we support our analysis with the empirical evidence gathered from hong kong where wnp was adopted in march 1999

endogenous switching costs in a duopoly model we analyze the effect of alternative pricing policies on the competitive outcome in a two period differentiated product duopoly model if firms can precommit to a second period price for their loyal customers equilibrium profits fall but if they precommit to a discount then the equilibrium profits increase in either case switching costs are endogenized in period two firms discriminate against newcomers

consumer switching costs and private information abstract we consider a standard model of consumer switching costs with demand uncertainty where firms observe private information about demand given this private information each firm forms beliefs over different demand realizations as well as beliefs over the other firm s information the main result here is that in the first period if firms observe information suggesting that future demand is likely to be high they will price aggressively sacrificing current profits for higher market share and the expectation of higher future profits

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

testing rebalancing strategies for stock bond portfolios across different asset allocations abstractwe compare the risk adjusted performance of stock bond portfolios between rebalancing and buy and hold across different asset allocations by reporting statistical significance levels our investigation is based on a 30 year dataset and incorporates the financial markets of the united states the united kingdom and germany to draw useful recommendations to investment management we implement a history based simulation approach which enables us to mimic realistic market conditions even if the portfolio weight of stocks is very low our empirical results show that a frequent rebalancing significantly enhances risk adjusted portfolio performance for all analysed countries and all risk adjusted performance measures

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

customer poaching and advertising this paper is a first look at the dynamic effects of customer poaching in homogeneous product markets where firms need to invest in advertising to generate awareness when a firm is able to recognize customers with different purchasing histories it may send them targeted advertisements with different prices it is shown that only the firm which advertises the highest price in the first period will engage in price discrimination a practice that clearly benefits the discriminating firm this poaching gives rise to the race for discrimination effect through which price discrimination may act actually to soften price competition rather than intensify it as a result all firms may become better off even when only one of them can engage in price discrimination this paper offers a first attempt to evaluate the effects of price discrimination on the efficiency properties of advertising in markets with low or no advertising costs allowing firms to price discriminate leads them to provide too little advertising which is not good for consumers and overall welfare only in markets with high advertising costs might firms overadvertise regarding the welfare effects price discrimination is generally bad for welfare and consumer surplus though good for firms

individual marketing with imperfect targetability our research investigates the competitive ramifications of individual marketing and information management in today s information intensive marketing environments the specific managerial issues we address are as follows first what kinds of incentive environments do competing firms face when they can only target individual customers imperfectly second does the improvement in an industry s targetability intensify price competition in the industry such that all competing firms become worse off third should a firm share its customer knowledge so as to improve its rival s targetability fourth how should an information vendor sell its information that can improve a firm s targetability finally do competing firms have the same incentives to invest in their own targetability to answer those questions we develop a simple model a la narasimhan 1988 in which each of the two competing firms have their own loyal customers and compete for common switchers we assume that each firm can classify its own loyal customers and switchers correctly only with a less than perfect probability this means that each firm s perceived customer segmentation differs from the actual customer segmentation based on their perceived reality these two competing firms engage in price competition as an extension we also allow the competing firms to make their investment decisions to acquire targetability we show that when individual marketing is feasible but imperfect improvements in targetability by either or both competing firms can lead to win win competition for both even if both players behave noncooperatively and the market does not expand win win competition results from the fact that as a firm becomes better at distinguishing its price insensitive loyal customers from the switchers it is motivated to charge a higher price to the former however due to imperfect targetability each firm mistakenly perceives some price sensitive switchers as price insensitive loyal customers and charges them all a higher price these misperceptions thus allow its competitors to acquire those mistargeted customers without lowering their prices and hence reduce the rival firm s incentive to cut prices this effect softens price competition in the market and qualitatively changes the incentive environment for competing firms engaged in individual marketing a prisoner s dilemma occurs only when targetability in a market reaches a sufficiently high level this win win perspective on individual marketing has many managerial implications first we show that superior knowledge of individual customers can be a competitive advantage however this does not mean that a firm should always protect its customer information from its competitors to the contrary we find that competing firms can all benefit from exchanging individual customer information with each other at the nascent stage of individual marketing when firms targetability is low indeed under certain circumstances a firm may even find it profitable to give away this information unilaterally however as individual marketing matures as firms targetability becomes sufficiently high further improvements in targetability will intensify price competition and lead to prisoner s dilemma therefore it is not only prudent politics but also a business imperative for an industry to seize the initiative on the issue of protecting customer privacy so as to ensure win win competition in the industry second we show that the firm with a larger number of loyal customers tends to invest more in targetability when the cost of acquiring targetability is high however the firm with a smaller loyal base can through information investment acquire a higher level of targetability than the firm with a larger loyal base as long as the cost of acquiring targetability is not too high as the cost further decreases competing firms will all have more incentives to increase their investments in targetability until they achieve the highest feasible level third an information vendor should make its information available nonexclusively exclusively when its information is associated with a low high level of targetability when the vendor does sell its information exclusively it should target a firm with a small loyal following if it can impart a high level of targetability to that firm finally our analysis shows that an information intensive environment does not doom small firms in fact individual marketing may provide a good opportunity for a small firm to leapfrog a large firm the key to leapfrogging is a high level of targetability or customer knowledge

dynamic labor market competition and wage seniority abstract we design an overlapping generations model of the labor market experienced workers bear costs of switching employers whereas the segment for junior workers is horizontally differentiated the literature typically explains wage seniority premia with reference to productivity gains generated by the accumulation of worker experience or mechanisms associated with incomplete information in contrast this paper characterizes how the wage seniority premium depends on the relative intensities of competition in the markets for junior and senior workers in particular we show that a wage seniority premium may prevail even under circumstances where senior workers are less productive than junior workers

dynamic price competition with network effects i consider a dynamic model of competition between two proprietary networks consumers die and are replaced with a constant hazard rate and firms compete for new consumers to join their network by offering network entry prices i derive a series of results pertaining to a existence and uniqueness of symmetric equilibria b monotonicity of the pricing function e g larger networks set higher prices c network size dynamics increasing dominance vs reversion to the mean and d firm value how it varies with network effects finally i apply my general framework to the study of termination charges in wireless telecommunications i consider various forms of regulation and examine their impact on firm profits and market share dynamics

importance of islands in renewable energy production and storage the situation of the french islands abstract the islands are often not or only partially connected to continental electrical networks and have to manage their energy supplies in reaching themselves the production demand balance while ensuring the quality of the delivered electricity the low consumption and the lack of interconnections induce higher energy costs than in other regions for increasing their security the islands prefer to use indigenous sources as renewable ones unfortunately the intermittence and stochastic character of these fatal energy sources make them more difficult to manage and it is aggravated in the case of small island networks the islands are good locations for using and testing new technologies of energy production and storage most islands have a good renewable energy re potential often underused the difficulties of electricity management in island grids are first shown particularly with the impact on the energy production cost then the problem of the integration of renewable energy sources res in island electrical grids is highlighted the energy situation of french islands is presented with a particular focus on the part of renewable sources a higher share of renewable energy in the energy mix can be reached only with the development of the energy production efficient prediction with the development of energy storage means and with an optimal management of the energy flux via the utilization of smart grids

history based versus uniform pricing in growing and declining markets abstract we analyze the markov perfect equilibria of an infinite horizon overlapping generations model with consumer lock in to compare the performance of history based and uniform pricing in growing and declining markets under history based pricing firms charge higher prices to locked in customers and lower prices to new customers we show that a high exit rate of consumers sufficiently declining market constitutes a sufficient condition for history based pricing to generate higher average prices than uniform pricing thereby harming consumer welfare in contrast a high consumer entry rate sufficiently growing market ensures that history based pricing intensifies competition compared with uniform pricing

the importance of asset allocation this article discusses the impact on performance of the long term asset allocation policy relative to the impact of active management most of the variation in time series returns for a typical fund comes from general market movement the remaining variation comes about equally from asset allocation policy and active management

are loyalty rewarding pricing schemes anti competitive abstract many economists and policy analysts seem to believe that loyalty rewarding pricing schemes like frequent flyer programs tend to reinforce firms market power and hence are detrimental to consumer welfare the existing academic literature has supported this view to some extent in contrast we argue that these programs are business stealing devices that tend to enhance competition in the sense of generating lower average transaction prices and higher consumer surplus in highly competitive environments this result is robust to alternative specifications of the firm commitment power and demand structures however it could be reversed if the number of firms is sufficiently small and if firms are restricted to use program designs with sufficiently weak commitment capacity

the equal importance of asset allocation and active management what is the relative importance of asset allocation policy versus active portfolio management in explaining variability in performance considerable confusion surrounds both time series and cross sectional regressions and the importance of asset allocation cross sectional regressions naturally remove market movements therefore the cross sectional results in the literature are equivalent to analyses of excess market returns even though the regressions were performed on total returns in contrast time series analyses of total returns do not naturally remove market movements time series analyses of excess market returns and cross sectional analyses of either total or excess market returns however are consistent with each other with market movements removed asset allocation and active management are equally important in determining portfolio return differences within a peer group finally an examination of period by period cross sectional results reveals why researchers using the same regression technique can get widely different results

how do switching costs affect market concentration and prices in network industries i investigate the effects of switching costs on the market outcome in network industries using a dynamic duopoly model of price competition in the presence of an outside option i find that the role of switching costs depends on network effects and the outside option without a viable outside option high switching costs can neutralize the tendency towards high market concentration associated with network effects but with a viable outside option switching costs increase market concentration furthermore switching costs lower prices if network effects are modest and there exists a viable outside option but generally raise prices otherwise

on the strategic choice of spatial price policy the strategic incentives with respect to the choice of price policy in spatial competition are analyzed in a duopoly model price discrimination emerges as the unique equilibriu m outcome in games with either simultaneous choice of policy and pric e or sequential choice where firms may commit first to uniform mill p ricing before the actual market stage nevertheless profits may be h igher with uniform pricing the authors models are applied to analyz e some common business practices that arise in geographical pricing like the basing point system and in the pricing of varieties or opti ons from a base product in a product differentiation context copyright 1988 by american economic association

market structure and the competitive effects of switching costs abstract we revisit the effects of switching costs on dynamic competition we consider stationary markovian strategies with market shares being the state variable and characterize a relatively simple markov perfect pricing equilibrium at which there is switching by some consumers at all times for the case of low switching costs and infinitely lived consumers we show that switching costs are pro competitive in the long run steady state while the overall effect in the short run transient state depends on market structure in particular switching costs are anti competitive in relatively concentrated markets and pro competitive otherwise

dynamic targeted pricing with strategic consumers abstract we investigate in this paper whether dynamic targeted pricing based on consumer purchase history could benefit a practicing firm even when consumers are strategic in that they actively seek to avail themselves of a low price in the future such strategic behavior on the part of consumers has been shown in the literature to render such dynamic targeted pricing unprofitable even for a monopoly firm we show that dynamic targeted pricing can benefit competing firms when they actively pursue customer recognition based on consumer purchase history this is because in order to pursue customer recognition competing firms need to price high to screen out price sensitive consumers and hence price competition is moderated as a result all competing firms can become better off with targeted pricing than without even when consumers behave strategically interestingly because of this competition moderation effect the paradoxical outcome occurs where dynamic targeted pricing may not benefit a monopolist but it may benefit competing firms we also show that dynamic targeted pricing can expand the market such that social welfare unambiguously improves

export subsidies and oligopoly with switching costs abstract i examine export policy using a two period model of oligopolistic competition with switching costs a switching costs model captures the idea that market share in one period affects profits and welfare in future periods if consumers are impatient firms and governments are patient and switching costs are significant then governments subsidize first period exports and tax second period exports otherwise governments tax exports in both periods although governments may subsidize first period exports each country is made worse off when both countries subsidize in addition firms dump p mc under conditions similar to those required for export subsidies

deconstructing income and income inequality measures a crosswalk from market income to comprehensive income recent research on levels and trends in the united states in income inequality vary substantially in how they measure income we show the sensitivity of alternative income measures in capturing income trends using a unified data set focusing solely on market income or including realized taxable capital gains based on irs tax return data in more comprehensive household income measures will dramatically increase inequality growth compared to capital gains measures more in keeping with haig simons principles using a measure of yearly accrued capital gains dramatically reduces observed growth in income inequality across the distribution but also equalizes income growth since 1989