on the robustness of robustness checks of the environmental kuznets curve hypothesis since its first inception in the debate on the relationship between environment and growth in 1992 the environmental kuznets curve hypothesis ekc hereafter has been subject of continuous and intense scrutiny the most recent line of investigation criticizes the ekc hypothesis on more fundamental grounds in that it stresses the lack of sufficient statistical testing of the empirical relationship and questions the very existence of the notion of ekc attention is in particular drawn on the stationarity properties of the series involved per capita emissions or concentrations and per capita gdp and in case of presence of unit roots on the cointegration property that must be present for the ekc to be a well defined concept only at that point can the researcher ask whether the long run relationship exhibits an inverted u pattern on the basis of panel integration and cointegration tests for sulfur stern 2004 and perman and stern 1999 2003 have presented evidence and forcefully stated that the ekc hypothesis does not exist in this paper we ask whether similar strong conclusions can be arrived at when carrying out tests of system fractional integration and cointegration as an example we use the controversial case of carbon dioxide emissions the results show that more ekcs come back into life relative to traditional integration cointegration tests however we confirm that the ekc hypothesis remains a fragile concept

optimal dynamic pricing of inventories with stochastic demand over finite horizons in many industries managers face the problem of selling a given stock of items by a deadline we investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm s objective is to maximize expected revenues examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry which markets space such as seats on airline flights cabins on vacation cruises and rooms in hotels that become worthless if not sold by a specific time we formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity resp price as a function of the stock level and the length of the horizon for a particular exponential family of demand functions we find the optimal pricing policy in closed form for general demand functions we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity finally we extend our results to the case where demand is compound poisson only a finite number of prices is allowed the demand rate is time varying holding costs are incurred and cash flows are discounted the initial stock is a decision variable and reordering overbooking and random cancellations are allowed

competitive targeted advertising with price discrimination this paper investigates the eects of price discrimination by means of targeted advertis ing in a duopolistic market where the distribution of consumers preferences is discrete and where advertising plays two major roles it is used by rms as a way to transmit relevant information to otherwise uninformed consumers and it is used as a price discrimination device we compare the rms optimal marketing mix advertising and pricing when they adopt mass advertising non discrimination strategies and targeted advertising price discrim ination strategies if rms are able to adopt targeted advertising strategies we nd that the symmetric price equilibrium is in mixed strategies while the advertising is chosen deter ministically our results also unveil that as long as we allow for imperfect substitutability between the goods rms do not necessarily target more ads to their own market in par ticular rms optimal marketing mix leads to higher advertising reach in the rival s market than in the rms own market provided that advertising costs are su ciently low in relation to the consumer s reservation value the comparison of the optimal marketing mix under mass advertising strategies and targeted advertising strategies reveals that targeted adver tising might constitute a tool to dampen price competition in particular if advertising costs are su ciently low in relation to the value of the goods we obtain that average prices with non discrimination mass advertising are below those with price discrimination and targeted advertising regardless of the market segment accordingly when i goods are imperfect substitutes ii advertising is not too expensive and iii targeted advertising constitutes an eective price discrimination tool price discrimination through targeted advertising may be detrimental to social welfare since it boosts industry pro ts at the expense of consumer surplus

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

micro incentives and municipal behavior political decentralization and fiscal federalism in argentina and mexico summary this article analyzes the mixed results of political and fiscal decentralization in latin america by comparing taxing and spending policies in six cities in argentina and mexico consistent with previous studies we find that decentralization has been frustrated by overconcentration of power at the provincial level and large vertical fiscal imbalances though we characterize these as functional elements in a system of redistributive policy making that benefits a wide array of provincial and municipal actors we seek to add a new dimension to the literature by arguing that micro level incentives conditions and circumstances particular to specific places are more important determinants of municipal behavior than macro level structures those policy and institutional changes intended to make officials more responsive to local conditions federalism local elections intergovernmental transfers and own source revenues we conclude that the theory of decentralization relies on a flawed conception of the causal mechanisms that are hypothesized to create responsiveness in local officials

robust assortment optimization in revenue management under the multinomial logit choice model we study robust formulations of assortment optimization problems under the multinomial logit choice model the novel aspect of our formulations is that the true parameters of the logit model are assumed to be unknown and we represent the set of likely parameter values by a compact uncertainty set the objective is to find an assortment that maximizes the worst case expected revenue over all parameter values in the uncertainty set we consider both static and dynamic settings the static setting ignores inventory consideration whereas in the dynamic setting there is a limited initial inventory that must be allocated over time we give a complete characterization of the optimal policy in both settings show that it can be computed efficiently and derive operational insights we also propose a family of uncertainty sets that enables the decision maker to control the trade off between increasing the average revenue and protecting against the worst case scenario numerical experiments show that our robust approach combined with our proposed family of uncertainty sets is especially beneficial when there is significant uncertainty in the parameter values when compared to other methods our robust approach yields over 10 improvement in the worst case performance but it can also maintain comparable average revenue if average revenue is the performance measure of interest

interrelationships between income health and the environment extending the environmental kuznets curve hypothesis abstract this paper examines the link between the health indicators and the environmental variables for a cross section of countries widely dispersed on the economic development spectrum while environment and income are seen to have an inverted u shaped relationship environmental kuznets curve ekc hypothesis it is also well established that environment and health are positively related our study focuses on the implications of this for the relationship between health and income in the early phases of income growth the gains in health and the losses in environmental quality could cancel each other out and this challenges the idea that as incomes increase health would always improve to empirically analyse these issues we estimate a two stage least squares model that focuses on the impact of income and the environment on health status with environment being an endogenous variable our results show that the environmental stress variable has a significant negative effect on health status at the same time gross national product gnp levels are shown to vary positively with health status variables we find that the health gains obtained through improved incomes can be negated to a significant extent if the indirect effect of income acting via the environment is ignored research findings in this regard would be a useful policy instrument towards maximising both the environmental and health gains that come with economic growth and development

assimilation and the earnings of young internal migrants this paper investigates if young internal migrants in the united states experience economic assimilation as they adapt to their new residential location using data from the national longitudinal survey of youth the authors examine how the hourly earnings of interstate migrants are affected by the number of years they have spent in their destination state their study indicates that internal migrants initially earn less than natives but that this wage differential disappears within a few years moreover the initial wage disadvantage of internal migrants depends upon the distance moved and economic conditions in the destination labor market copyright 1992 by mit press

between estimates of the emissions income elasticity abstract recent papers by wagner and vollebergh et al point out some fundamental econometric problems with traditional methods of estimating the environmental kuznets curve ekc and propose alternative approaches that avoid these issues wagner notes that traditional methods do not take into account the presence of powers of unit root variables and cross sectional dependence in the data while vollebergh et al point out that the time effects are not uniquely identified in the ekc model the between estimator is a simple estimator that also addresses the concerns of these authors it makes no a priori assumption about the nature of the time effects and is likely to provide consistent estimates of long run relationships in real world data situations i apply several common panel data estimators including the between estimator to oecd and global carbon and sulfur emissions datasets the between estimates of the sulfur income elasticity are 0 732 in the oecd and 1 067 in the global data set and the estimated carbon income elasticity is 1 612 in the oecd and 1 509 globally

climate policy bucket or drainer abstract worldwide industry is responsible for about 40 of greenhouse gas ghg emissions making it an important target for climate policy energy intensive industries may be particularly vulnerable to higher energy costs caused by climate policy if companies cannot offset rising energy costs and would face increased competition from countries without climate policy they may decide to relocate their industrial production to the countries without climate policy the resulting net effect of climate policy on ghg emissions in foreign countries is typically referred to as carbon leakage carbon leakage may lead to higher global ghg emissions due to the use of less advanced technology in less developed countries based on a literature review of climate policy earlier environmental policy and analyses of historical trends this paper assesses the carbon leakage effects of climate policy for energy intensive industries reviews of past trends in production location of energy intensive industries show an increased global production share of non annex 1 countries however from empirical analyses we conclude that the trend is primarily driven by regional demand growth in contrast climate policy models show a strong carbon leakage even though future climate policy may have a more profound impact than environmental policies in the past the modelling results are doubtful leakage generally seems to be overestimated in current models especially as potential positive spillovers are often not included in the models the ambiguity of the empirical analyses and the modelling results warrants further research in the importance of production factors for relocation

bundle pricing of inventories with stochastic demand we consider a retailer selling a fixed inventory of two perishable products over a finite horizon assuming poisson arrivals and a bivariate reservation price distribution we determine the optimal product and bundle prices that maximize the expected revenue our results indicate that the performances of mixed bundling pure bundling and unbundled sales strategies heavily depend on the parameters of the demand process and the initial inventory levels bundling appears to be most effective with negatively correlated reservation prices and high starting inventory levels when the starting inventory levels are equal and in excess of average demand most of the benefits of bundling can be achieved through pure bundling however the mixed bundling strategy dominates the other two when the starting inventory levels are not equal we also observe that an incorrect modeling of the reservation prices may lead to significant losses the model is extended to allow for price changes during the selling horizon it is shown that offering price bundles mid season may be more effective than changing individual product prices

interstate migration in mexico variations on the todaro theme abstract this study of migration in mexico is based upon a modified todaro approach and utilizes census data in a simultaneous equations model of 13 variables it is unique in several ways a it introduces proxy variables for employment probability and cost of migration that have not heretofore been found in the literature but for which data are often available b it illustrates that in some important cases census data have advantages not available through surveys and c it finds that in some sense land reform in mexico may have operated perversely finally the study opens a new avenue for the study of informal sector growth

identifying reduced form relations with panel data the case of pollution and income abstract in this paper we propose a solution to the non robustness that plagues the estimation of inverted u shaped relationships using panel data such as the relation between pollution and income when dependent and independent variable like pollution and income are both time related separating the effect of the independent variable from time effects brings about a fundamental identification dilemma the imposition of restrictions on the controls might drive the shape of the relationship between the dependent pollution and independent income variables our solution consists of imposing the very weak constraint that arbitrary cross sectional units have the same relationship we apply our methodology to two widely studied cases namely so 2 and co 2 emissions interestingly our estimates are insensitive to the required subjective choices but also strongly differ from the literature so far we find consistent positive income effects for both cases and time effect estimates with a clear u shaped trend for so 2 emissions but only slightly so for co 2 emissions

who moves a logit model analysis of inter provincial migration in canada this paper addresses the topic of inter provincial migration in terms of the basic question who moves panel logit models of the probability that an individual changes his or her province of residence from one year to the next over the 1982 1995 period are estimated using tax based longitudinal data it is found that moving is i inversely related to the home province s population size presumably reflecting local economic conditions and labour market scale effects while language also plays an important role ii more common among residents of smaller cities towns and especially rural areas than those in larger cities iii negatively related to age marriage and the presence of children for both men and women iv positively related to the provincial unemployment rate the individuals receipt of unemployment insurance except entry men having no market income except for entry men and entry women and the receipt of social assistance especially for men v slightly positively related

estimation of short run and long run elasticities of energy demand from panel data using shrinkage estimators this article discusses the problem of obtaining short run and long run elasticities of energy demand for each of 49 states in the united states using data for 21 years estimation using the time series data by each state gave several wrong signs for the coefficients estimation using pooled data was not valid because the hypothesis of homogeneity of the coefficients was rejected shrinkage estimators gave more reasonable results the article presents in a unified framework the classical empirical bayes and bayes approaches for deriving these estimators

simple policies for dynamic pricing with imperfect forecasts we consider the classical single product dynamic pricing problem allowing the scale of demand intensity to be modulated by an exogenous market size stochastic process this is a natural model of dynamically changing market conditions we show that for a broad family of gaussian market size processes simple dynamic pricing rules that are essentially agnostic to the specification of this market size process perform provably well the pricing policies we develop are shown to compensate for forecast imperfections or a lack of forecast information altogether by frequent reoptimization and reestimation of the instantaneous market size

rationality of migration the paradigm of a rational individual acting on the earnings enhancing benefits of migration is subjected to statistical scrutiny using data from turkey results with robust selectivity correction support the rationality hypothesis both migrants and nonmigrants chose the option in which they had comparative advantage however the estimated gain from moving is negative for a substantial portion of migrants whereas a minority realize very high returns this suggests that migration is a lottery individuals are willing to invest in a proposition that has a high probability of yielding negative returns because of the potential for a very large payoff

dynamic pricing with uncertain production cost an alternating move approach abstract this article studies a two firm dynamic pricing model with random production costs the firms produce the same perishable products over an infinite time horizon when production or operation costs are random in each period each firm determines its price and production levels based on its current production cost and its opponent s previous price level we use an alternating move game to model this problem and show that there exists a unique subgame perfect nash equilibrium in production and pricing decisions we provide a closed form solution for the firm s pricing policy finally we study the game in the case of incomplete information when both or one of the firms do not have access to the current prices charged by their opponents

convergence of per capita carbon dioxide emissions in the eu legend or reality abstract designing appropriate environmental and energy policies in order to meet the kyoto protocol s carbon dioxide co 2 reduction targets in the european union eu requires a detailed examination and thorough understanding of co 2 emission trends across the eu member states this paper investigates whether co 2 emissions have converged across 22 european countries over the 1971 to 2006 period the bayesian shrinkage estimation method is employed to do this work and the results reveal the following first the hypothesis of absolute convergence in per capita co 2 emissions is supported and a slight upward convergence is observed second the fact that countries differ considerably in both their speed of convergence and volatility in emissions makes it possible to identify different groups of countries third the results with respect to convergence do not vary much once the share of industry in gdp is accounted for in a conditional convergence analysis however a decreasing share of industry in gdp seems to contribute to a decline in per capita emissions these findings may carry important implications for both national and eu environmental policies

dynamic pricing when consumers are strategic analysis of posted and contingent pricing schemes abstract we study dynamic pricing policies for a monopolist selling perishable products over a finite time horizon to strategic buyers buyers are strategic in the sense that they anticipate the firm s price policies it is expensive and administratively difficult for most brick and mortar retailers to change prices placing limits on the number of price changes and the types of pricing policies they can adopt the simplest policy is to commit to a set of price changes a more complex alternative is to let the price depend on sales history we investigate two pricing schemes that we call posted and contingent pricing using the posted pricing scheme the firm announces a set of prices at the beginning of the horizon in the contingent pricing scheme price evolution depends upon demand realization our focus is on the posted pricing scheme because of its ease of implementation counter to intuition we find that neither a posted pricing scheme nor a contingent pricing scheme is dominant and the difference in expected revenues of these two schemes is small limiting the number of price changes will result in a decrease in expected revenues we show that a multi unit auction with a reservation price provides an upper bound for expected revenues for both pricing schemes numerical examples suggest that a posted pricing scheme with two or three price changes is enough to achieve revenues that are close to the upper bound dynamic pricing is only useful when strategic buyers perceive scarcity we study the impact of scarcity and derive the optimal stocking levels for large markets finally we investigate whether or not it is optimal for the seller to conceal inventory or sales information from buyers a firm benefits if it does not reveal the number of units it has available for sale at the beginning of the season or subsequently withholds information about the number of units sold

a probabilistic approach to pricing a bundle of products or services the authors propose a probabilistic approach to optimally price a bundle of products or services that maximizes seller s profits their focus is on situations in which consumer decision making is o

a nested logit migration model with selectivity in this paper we specify a multiple choice migration model with selectivity we estimate this model using observations on individuals drawn from the 1971 census of venezuela there are two main innovations in this paper we apply a correction for the presence of selectivity in wage equations in the context of a multiple choice migration model and we apply a less restrictive technique for modelling multiple discrete choices than in previous studies we study the choices of individuals among 23 states of venezuela each individual is observed to have chosen one state so one wage is observable per person our hypothesis is that individuals choose where to locate on the basis of an evaluation of costs and benefits associated with choosing each state we measure the benefits associated with choosing a given state by means of the wage a person could earn in this state since we observe only one wage for each person we have to impute the unobserved wages for the states this person did not choose in order to study the role of wages in migration however it is possible that unobserved factors which affect both an individual s choice of location and his wages may result in sample selection bias if we try to estimate state specific wage equations by ols on the basis of the self selected samples we apply an estimator proposed by lee 1983 to estimate state specific wage equations free from sample selection bias the wage equations permit us to investigate whether individuals who choose particular states earn different wages from observationally identical individuals drawn from the population at random in the context of a developing country where internal migration flows are large evidence on the selectivity of migration will enhance our understanding of an important labor market adjustment mechanism evidence that people who choose particular locations earn more in those locations than would observationally identical individuals drawn at random from the population positive selection will suggest that migration decisions are made according to the principle of comparative advantage in modelling the choice of location we test whether subsets of states are more highly similar to each other than to other states unobserved similarities between states may arise because of similar amenities or economic conditions which are not otherwise explicitly controlled for in the model we implement the

internal and international migration in mexico 1995 2000 using micro data from mexico and us 2000 population censuses and following a multi choice variant of roy s 1951 model this article pools into one model the determinants of internal and international migration in mexico while paying explicit attention to the potential problem of self selection the results reveal that ignoring multiple destinations in the migration decision might lead to erroneous inferences about the determinants of migration and the type of selection after controlling for wage differences the results suggest that single adult men with low schooling levels tend to migrate to the us while married women and men with higher levels of schooling tend to migrate within mexico we also found that there are strong differences between domestic and international social networks

international migration self selection and the distribution of wages evidence from mexico and the united states we use the 1990 and 2000 mexican and u s population censuses to test borjas s negative selection hypothesis that the less skilled are those most likely to migrate from countries with high skill premia earnings inequality to countries with low skill premia earnings inequality we find that mexican immigrants in the united states are more educated than nonmigrants in mexico and were mexican immigrants to be paid according to current skill prices in mexico they would be concentrated in the middle of mexico s wage distribution these results are inconsistent with the negative selection hypothesis and instead suggest that there is intermediate selection of immigrants from mexico

migration networks and microenterprises in mexico are migration networks associated with lower capital costs or the alleviation of capital constraints we examine these questions with data measuring access to remittance flows among small scale entrepreneurs in mexico using a survey of more than 6000 self employed workers and small firm owners located in 44 urban areas of mexico we estimate the impact of attachment to migration networks on the level of capital investment the capital output ratio sales and profits of microenterprises the impact is identified from the geographic pattern of migration from mexico driven by the completion of rail lines in the early 1900s for the full sample of firms we find that migration is associated with higher investment levels and higher profits but not higher sales the strongest effects on investment are in the categories of automobiles tools and inventories when the sample is limited to firms in high capital sectors investment sales and profits all increase with attachment to the migration networks suggesting that attachment to the migration network alleviates capital constraints in those sectors

marital status and earnings of young men a model with endogenous selection it is a matter of course in applied labor economics to presume that marital status is a predetermined contributor to earnings among young males we find no evidence to support that proposition we estimate a model of earnings determination that permits endogenous selection of marital status our estimates are based on a sample of young employed males from the michigan panel survey of income dynamics they indicate that marital status viewed in this manner does not significantly shift the mean earnings profile our sensitivity tests indicate that this conclusion is robust with respect to a variety of alternative specifications excerpt

migration and the urban to rural earnings difference a sample selection approach in particular i conjecture that in many parts of rural africa a self selection mechanism may occur that sorts migratory and nonmigratory workers in a manner consistent with the notion that those workers who are most likely to benefit from migration do so and workers least likely to benefit from migration do not in other words individuals sort themselves into migratory and nonmigratory workers given their characteristics for instance rural workers with relatively more human capital skills are most likely to migrate because the discrepancy is larger between earnings from rural unskilled jobs that underutilize their skills and earnings from skilled jobs in urban areas that more fully realize their potential given their characteristics therefore participation in the migratory labor stream is strongly assumed to be influenced by the workers anticipated earnings as a migrant versus his or her anticipated earnings from working in the rural area as a nonmigrant it is thus conceivable that the urban to rural earnings difference would be positive for workers with relatively greater skills and that their incidence of migration may be higher this study tests this hypothesis excerpt

the heterogeneity of carbon kuznets curves for advanced countries comparing homogeneous heterogeneous and shrinkage bayesian estimators we investigate carbon kuznets curves ckc relationships for advanced countries grouped in policy relevant groups north america and oceania south europe north europe by means of various homogeneous heterogeneous and shrinkage bayesian panel estimators we try to provide an answer to the question how sensitive are the ckc estimates to changes in the level of parameters heterogeneity we do find that in coherence with their policy and economic commitment to carbon reductions and environmental market based instruments implementation bell shapes are present only for northern eu which leads the group of advanced countries the other two lag behind we show for the first time that ckc shapes are present if we net out europe of the southern and less developed countries this is coherent with the kuznets paradigm the negative side of the tale is that they characterize a bunch of few countries other advanced countries lag behind and are far from reaching a ckc dynamics heterogeneous and bayesian

trade the pollution haven hypothesis and the environmental kuznets curve examining the linkages abstract this paper examines the extent to which the ekc inverted u relationship can be explained by trade and specifically the migration or displacement of dirty industries from the developed regions to the developing regions the pollution haven hypothesis phh using detailed data on north south trade flows for pollution intensive products the evidence for the phh is assessed emissions of 10 air and water pollutants are then estimated controlling for trade openness structural change and dirty north south trade flows evidence of pollution haven effects is found although such effects do not appear to be widespread and appear to be relatively small compared to the roles played other explanatory variables

economic models for the environmental kuznets curve a survey abstract the environmental kuznets curve ekc refers to an inverted u shaped relationship between some pollutant level and per capita income i e the environmental quality deteriorates at early stages of economic growth and subsequently improves at a later stage since the early 1990s a considerable number of empirical studies have been conducted on the ekc and although there is no conclusive proof it has been recognized that the ekc emerges as an empirical regularity however some recent studies cast doubt on the concept and methodology of empirical results and evidence of the existence of the ekc has been questioned in fact how economic growth affects the environmental quality i e the shape of the ekc is still controversial in order to identify the actual relationship between the environmental quality and economic growth it is essential to develop economic models from various points of view this paper overviews the current stage of theoretical models that explain such relationship

carbon intensity and economic development 1962 1991 a brief exploration of the environmental kuznets curve the relationship between national carbon dioxide emissions intensity co2 emitted per unit of gross domestic product and level of economic development has changed from essentially linear in 1962 to strongly curvilinear in 1991 the inverted u curve reached statistical significance briefly in the early 1970s and increasingly since 1982 this is the result not of groups of countries passing through stages of development but of efficiency improvements in a small number of wealthy countries combined with worse performance in poor and middle income countries the curvilinear relation is deepening and is likely to persist due to constraints on poorer countries in the world economy

economic growth trade and energy implications for the environmental kuznets curve abstract the environmental kuznets curve ekc hypothesis asserts that pollution follows an inverted u path with respect to economic growth the ekc has been explained in terms of structural changes in the composition of economic output and increased environmental regulation at higher income levels while some authors have incorporated the impact of trade policy orientation on the ekc the impact of the actual movement between countries of goods that embody pollution has not been considered this paper attempts to econometrically quantify the effect using pooled cross country and time series data the ekc hypothesis is examined with respect to commercial energy consumption the source of many serious environmental problems it was found that while both industrializing and industrialized countries have added to their energy requirements by exporting manufactured goods the growth has been substantially higher in the former at the same time industrialized countries have been able to reduce their energy requirements by importing manufactured goods exports of manufactured goods by industrialized countries has thus been an important factor in generating the upward sloping portion of the ekc and imports by industrialized countries have contributed to the downward slope

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

mixed bundling of two independently valued goods this paper develops analytical results and insights for the mixed bundling problem of pricing a product line consisting of two component goods with valuations distributed uniformly and independently in 0 a1 and 0 a2 respectively with a1 a2 and a bundle of the two goods this setting has previously been considered analytically intractable by deriving component good prices as exact algebraic functions of the optimal bundle price i reduce the multiproduct pricing problem to a univariate nonlinear optimization problem in the bundle price when the two component goods are sufficiently asymmetric in valuations the optimal solution is partial mixed bundling one component good is not sold separately for which i derive exact conditions and optimal prices an exact analytical solution is also given for mixed bundling of two information goods component goods with zero marginal costs for the general case i derive a closed form approximation of the optimal bundle price pb 0 5724w1 0 5695w2

mobility and the return to education testing a roy model with multiple markets self selected migration presents one potential explanation for why observed returns to a college education in local labor markets vary widely even though u s workers are highly mobile to assess the impact of self selection on estimated returns this paper first develops a roy model of mobility and earnings where workers choose in which of the 50 states plus the district of columbia to live and work available estimation methods are either infeasible for a selection model with so many alternatives or place potentially severe restrictions on earnings and the selection process this paper develops an alternative econometric methodology that combines lee s 1983 parametric maximum order statistic approach to reduce the dimensionality of the error terms with more recent work on semiparametric estimation of selection models e g ahn and powell 1993 the resulting semiparametric correction is easy to implement and can be adapted to a variety of other polychotomous choice problems the empirical work which uses 1990 u s census data confirms the role of comparative advantage in mobility decisions the results suggest that self selection of higher educated individuals to states with higher returns to education generally leads to upward biases in ols estimates of the returns to education in state specific labor markets while the estimated returns to a college education are significantly biased correcting for the bias does not narrow the range of returns across states consistent with the finding that the corrected return to a college education differs across the u s the relative state to state migration flows of college versus high school educated individuals respond strongly to differences in the return to education and amenities across states

information access income distribution and the environmental kuznets curve abstract recent empirical studies have tested the hypothesis of an environmental kuznets curve ekc focusing primarily on the relationship between per capita income and certain types of pollutant emissions given the stock nature of many pollution problems emissions only partially account for the environmental impacts moreover almost all of the studies have given consideration to little more than income levels as explanatory variables this paper empirically tests the hypothesis of the ekc existence for a stock sensitive indicator that is the percentage of protected area pa within national territory it does theorize that economic growth is a necessary condition in order to better address environmental issues but it also stresses that other variables income distribution education information accessibility may play a fundamental role in determining environmental quality contrary to other studies that mainly focus on the calculation of the income level corresponding to the transition point this paper is more concerned with the calculation of environmental quality corresponding to that transition point that is the minimum level of environmental quality that a country is willing to accept this paper highlights the idea that if the transition point is determined primarily by income level social policies determine the level of environmental quality corresponding to that point

transitional impacts of environmental policy in an endogenous growth model to explore the link between a tighter environmental policy and economic growth the authors employ an endogenous growth model with endogenous technological progress in abatement technologies the environment which is modelled as a renewable resource acts both as a public consumption good and as a public input into production the entire transition towards a new balanced growth path after a tightening of environmental policy is computed analytically the authors find sharp contrasts between short run and long run effects whereas the level and the growth rate of output may decline in the short run income growth may improve in the long run copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

revenue management through dynamic cross selling in e commerce retailing we consider the problem of dynamically cross selling products e g books or services e g travel reservations in the e commerce setting in particular we look at a company that faces a stream of stochastic customer arrivals and may offer each customer a choice between the requested product and a package containing the requested product as well as another product what we call a packaging complement given consumer preferences and product inventories we analyze two issues 1 how to select packaging complements and 2 how to price product packages to maximize profits we formulate the cross selling problem as a stochastic dynamic program blended with combinatorial optimization we demonstrate the state dependent and dynamic nature of the optimal package selection problem and derive the structural properties of the dynamic pricing problem in particular we focus on two practical business settings with the emergency replenishment model and without the lost sales model the possibility of inventory replenishment in the case of a product stockout for the emergency replenishment model we establish that the problem is separable in the initial inventory of all products and hence the dimensionality of the dynamic program can be significantly reduced for both models we suggest several packaging pricing heuristics and test their effectiveness numerically

migration self selection and earnings in philippine rural communities abstract estimated returns to schooling investments can be misleading if migration causes significant shifts in population distribution across time data gathered in rural philippine communities show that the more educated and experienced individuals are more likely to outmigrate causing a sample selection bias in the estimation of wage equations the observed wages were then lower than the conditional population mean of an entire cohort residing originally in the area controlling for self selection the wage returns to schooling and experience were higher finally the sample selectivity variable accounts substantially for the difference in the wages of men and women

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

dynamic and targeted bundle pricing of two independently valued products abstract bundling is when two or more products are offered as a single unit and at a price lower than the sum of the individual prices of the products we study a multi segment market in which a retailer aims to clear the inventory of an item by bundling it with a second product which is independently valued we investigate the question of how dynamic and segment specific bundle pricing impacts retailer s revenue we develop a revenue model that integrates the dynamic and segment specific aspects of the pricing decisions and present a computational study to analyze their revenue impact relative to a price promotion for the individual item only the computational results indicate that the bundle offers are most effective when the initial inventory of the item under consideration is high the results also demonstrate that dynamic pricing is beneficial when the initial inventory of the item is low an additional revenue improvement is observed when the price of the bundle is dynamically optimized in the computational study segment specific pricing is observed to have no direct impact on revenue when prices are static segment specific and dynamic pricing however can bring about substantial revenue improvements that are an increasing function of the initial inventory level of the item we consider the correlation in consumers valuations of the bundled products and show that dynamically priced and segment specific bundle offers yield a robust revenue performance mitigating the potentially revenue diminishing impact of positive correlation in consumers valuations of the products

periodic pricing of seasonal products in retailing this paper studies intertemporal pricing policies when selling seasonal products in retail stores we first present a continuous time model where a seller faces a stochastic arrival of customers with different valuations of the product for this model we characterize the optimal pricing policies as functions of time and inventory we use this model as a benchmark against which we compare more realistic models that consider periodic pricing reviews we show that the structure of the optimal pricing policies in this case is consistent with the procedures observed in practice retail stores successively discount the product during the season and promote a liquidation sale at the end of the planning horizon we also show that the loss experienced when implementing periodic pricing reviews instead of continuous policies is small when the appropriate number of reviews is chosen several interesting economic insights emerge from our analysis for example uncertainty in the demand for new products leads to higher prices larger discounts and more unsold inventory finally we study the effect of announced discount policies on prices and profits we show that stores that have adopted this type of strategy usually set prices such that with high probability the merchandise is sold during the first periods and the largest discounts rarely take place

optimal bundle formation and pricing of two products with limited stock abstract in this study we consider the stochastic modeling of a retail firm that sells two types of perishable products in a single period not only as independent items but also as a bundle our emphasis is on understanding the bundling practices on the inventory and pricing decisions of the firm one of the issues we address is to decide on the number of bundles to be formed from the initial product inventory levels and the price of the bundle to maximize the expected profit product demands follow a poisson process with a price dependent rate customer reservation prices are assumed to have a joint distribution we study the impact of reservation price distributions initial inventory levels product prices demand arrival rates and cost of bundling we observe that the expected profit decreases as the correlation between the reservation prices of two products increases with negative correlation bundling cost has a significant impact on the number of bundles formed when the product prices are low the retailer sells individual products as well as the bundle mixed bundling when they are high the retailer sells only bundles pure bundling the expected profit and the number of bundles offered decrease as the variance of the reservation price distribution increases for high starting inventory levels the retailer reduces bundle price and offers more bundles the number of bundle sales decreases and the number of individual product sales increases when the arrival rate increases since the need for bundling decreases impacts of substitutability and complementarity of products are also investigated the retailer forms more bundles or charges higher prices for the bundle or both as the products become more complementary and less substitutable

a combined approach for segment specific market basket analysis abstract market baskets arise from consumers shopping trips and include items from multiple categories that are frequently chosen interdependently from each other explanatory models of multicategory choice behavior explicitly allow for such category purchase dependencies they typically estimate own and across category effects of marketing mix variables on purchase incidences for a predefined set of product categories because of analytical restrictions however multicategory choice models can only handle a small number of categories hence for large retail assortments the issue emerges of how to determine the composition of shopping baskets with a meaningful selection of categories traditionally this is resolved by managerial intuition in this article we combine multicategory choice models with a data driven approach for basket selection the proposed procedure also accounts for customer heterogeneity and thus can serve as a viable tool for designing target marketing programs a data compression step first derives a set of basket prototypes which are representative for classes of market baskets with internally more distinctive complementary cross category interdependencies and are responsible for the segmentation of households in a second step segment specific cross category effects are estimated for suitably selected categories using a multivariate logistic modeling framework in an empirical illustration significant differences in cross effects and price elasticities can be shown both across segments and compared to the aggregate model

a note on probability distributions with increasing generalized failure rates distributions with an increasing generalized failure rate igfr have useful applications in pricing and supply chain contracting problems we provide alternative characterizations of the igfr property that lead to simplify verifying whether the igfr condition holds we also relate the limit of the generalized failure rate and the moments of a distribution

a graphical analysis of bundling by comparing the demand for a bundle and the vertical sum of the demands for its components this article analyzes the profitability and welfare consequences of bundling if it does not lower costs bundling tends to be profitable when reservation values are negatively correlated and high relative to costs if bundling lowers costs and costs are high relative to average reservation values positively correlated reservation values increase the incentive to bundle bundling and charging a price equal to the sum of the components prices lowers consumer surplus bundling can however increase consumer surplus when it results in lower prices copyright 1995 by university of chicago press

information sharing and tax competition among governments abstract the residence based principle has been proposed as a second best measure to the full international coordination of capital tax policies this system requires that tax authorities have full information about the foreign investments of their residents however the degree of information transmission among governments can be considered as a strategic variable we show that under some features of the tax system there will not be any information sharing while there are institutional arrangements under which governments may transmit partial information for strategic purposes we also show that full information sharing is not necessarily a pareto optimum

a multiproduct dynamic pricing problem and its applications to network yield management a firm has inventories of a set of components that are used to produce a set of products there is a finite horizon over which the firm can sell its products demand for each product is a stochastic point process with an intensity that is a function of the vector of prices for the products and the time at which these prices are offered the problem is to price the finished products so as to maximize total expected revenue over the finite sales horizon an upper bound on the optimal expected revenue is established by analyzing a deterministic version of the problem the solution to the deterministic problem suggests two heuristics for the stochastic problem that are shown to be asymptotically optimal as the expected sales volume tends to infinity several applications of the model to network yield management are given numerical examples illustrate both the range of problems that can be modeled under this framework and the effectiveness of the proposed heuristics the results provide several fundamental insights into the performance of yield management systems

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

a panel data heterogeneous bayesian estimation of environmental kuznets curves for co2 emissions this article investigates the environmental kuznets curves ekc for co2 emissions in a panel of 109 countries during the period 1959 to 2001 the length of the series makes the application of a heterogeneous estimator suitable from an econometric point of view the results based on the hierarchical bayes estimator show that different ekc dynamics are associated with the different sub samples of countries considered on average more industrialized countries show evidence of ekc in quadratic specifications which nevertheless are probably evolving into an n shape based on their cubic specification nevertheless it is worth noting that the eu and not the umbrella group led by us has been driving currently observed ekc like shapes the latter is associated to monotonic income co2 dynamics the eu shows a clear ekc shape evidence for less developed countries consistently shows that co2 emissions rise positively with income though there are some signs of an ekc analyses of future performance neverthe

a climate change policy induced shift from innovations in carbon energy production to carbon energy savings abstract we develop an endogenous growth model with capital labor and carbon energy as production factors and three technology variables that measure accumulated innovations for carbon energy production carbon energy savings and neutral growth all markets are complete and perfect except for research for which we assume that the marginal social benefits exceed the marginal private benefits by factor four the model constants are calibrated so that the model reproduces the relevant global trends over the 1970 2000 period the model contains a simple climate module and is used to assess the impact of induced technological change itc for a policy that aims at a maximum level of atmospheric co2 concentration 450 ppmv itc is shown to reduce the required carbon tax by more than a factor 2 and to reduce costs of such a policy by half when we do not constrain aggregate r d expenditures to benchmark levels costs are further reduced numerical simulations show that knowledge accumulation shifts from energy production to energy saving technology we discuss reasons for differences between our results and earlier results reported in the literature

technical note personalized dynamic pricing of limited inventories prior work has investigated time and inventory level dependent pricing of limited inventories with finite selling horizons we consider a third dimension in addition to time and inventory level that the firms can use in setting their prices the information that the firm has at the individual customer level an arriving customer provides a signal to the firm which is an imperfect indicator of the customer s willingness to pay and the firm makes a personalized price offer depending on the signal inventory level and time we consider two different models full personalization and partial personalization in the full personalization model the firm charges any price it wishes given the customer signal while in the partial personalization model the firm can charge one of two prices we find that a mere correlation between the signals and customers willingness to pay is not sufficient to ensure intuitive relationships between the signal and the optimal prices we determine a stronger condition which leads to several structural properties including the monotonicity of the optimal price with respect to the signal in the full personalization model for the partial personalization model we show that the optimal pricing policy is of threshold type and that the threshold is monotonic in the inventory level and time

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

purchasing pricing and quick response in the presence of strategic consumers we consider a retailer that sells a product with uncertain demand over a finite selling season the retailer sets an initial stocking quantity and at some predetermined point in the season optimally marks down remaining inventory we modify this classic setting by introducing three types of consumers myopic consumers who always purchase at the initial full price bargain hunting consumers who purchase only if the discounted price is sufficiently low and strategic consumers who strategically choose when to make their purchase a strategic consumer chooses between a purchase at the initial full price and a later purchase at an uncertain markdown price in equilibrium strategic consumers and the retailer make optimal decisions given their rational expectations regarding future prices availability of inventory and the behavior of other consumers we find that the retailer stocks less takes smaller price discounts and earns lower profit if strategic consumers are present than if there are no strategic consumers we find that a retailer should generally avoid committing to a price path over the season assuming such commitment is feasible committing to a markdown price or to not mark down at all is often too costly inventory may remain unsold even in the presence of strategic consumers the better approach is to be cautious with the initial quantity and then mark down optimally furthermore we discuss the value of quick response the ability to procure additional inventory after obtaining updated demand information albeit at a higher unit cost than the initial order we find that the value of quick response to a retailer is generally much greater in the presence of strategic consumers than without them on average 67 more valuable and as much as 558 more valuable in our sample in other words although it is well established in the literature that quick response provides value by allowing better matching of supply with demand it provides more value often substantially more value by allowing a retailer to control the negative consequences of strategic consumer behavior