how durable should durable products be made under different scenarios of technological advance abstract this paper addresses the question of how durable or reliable manufacturers of durable goods should make their products essentially consumers are likely willing to pay more for a more durable product yet increased durability depresses replacement demand we gain insight into this trade off by developing analytical models of the interplay between consumers and a monopolist manufacturer of durable goods we start this research from the base model that assumes symmetric information between the manufacturer and consumers and no technological advance we then extend it to more general models in which these assumptions are relaxed interesting managerial insights are obtained which explain well some realistic cases observed in practice 1 when the technology advances at a given non negative rate it is always optimal for the manufacturer to motivate consumers to replace the existing durable goods by using a buy back offer before the end of the life of the product 2 faster technological advance does not always bring quicker product replacements under some circumstances it might be optimal for manufacturers to extend the replacement cycle of the product and increase its durability when the technology advances more quickly and 3 when the rate of the technological advance is uncertain and is not directly observable by consumers consumers are willing to pay more than when the technological advance rate is known and constant

welfare impacts of index insurance in the presence of a poverty trap this paper evaluates the welfare impacts of an index based livestock insurance designed to compensate for satellite based predicted livestock mortality in northern kenya where previous work has established the presence of poverty traps we simulate household wealth dynamics based on rich panel and experimental data the bifurcated livestock dynamics associated with the poverty trap gives rise to insurance valuation that is highly nonlinear in herd size estimated willingness to pay among vulnerable groups who most need insurance is on average lower than commercially viable rates targeted premium subsidization nonetheless appears to offer more cost effective poverty reduction than need based direct transfers

diffusion of renewable energy technologies in south korea on incorporating their competitive interrelationships renewable energy technologies rets have attracted significant public attention for several reasons the most important being that they are clean alternative energy sources that help reduce greenhouse gas emissions to increase the probability that rets will be successful it is essential to reduce the uncertainty about its adoption with accurate long term demand forecasting this study develops a diffusion model that incorporates the effect of competitive interrelationships among renewable sources to forecast the growth pattern of five rets solar photovoltaic wind power and fuel cell in the electric power sector and solar thermal and geothermal energy in the heating sector the 2 step forecasting procedure is based on the bayus 1993 manage sci 39 11 1319 1333 price function and a diffusion model suggested by hahn et al 1994 marketing sci 13 3 224 247 in an empirical analysis the model is applied to the south korean renewable energy market

sales and operations planning a research synthesis abstract despite the growing body of literature on sales and operation planning s op efforts to synthesise the overall state of the art of research in this area are limited within this context this paper provides a systematic review of the literature on s op the purpose of this systematic review is twofold i to integrate the highly dispersed work on s op in order to identify and analyse s op as a business process and ii to assemble quantitative evidence of its impact on the performance of the firm a literature search framework is proposed with 271 papers reviewed and classified the framework embraces s op context information inputs and goals structure and processes outcomes and results the major expected outcome in most papers was a cross functional integration of plans although few studies report on the integration of finance plans into s op despite the existence of common process descriptors and definitions of s op there is a lack of unifying frameworks for maturity models measurement of s op and constructs related to the firm s performance the need for additional scientifically sound survey or case study research on s op is emphasised this paper contributes to a better understanding of s op s role as a determinant of firm s performance in the supply chain

diffusion of new products empirical generalizations and managerial uses the diffusion model developed by bass bass f m 1969 a new product growth model for consumer durables management sci 15january 215 227 constitutes an empirical generalization it represents a pattern or regularity that has been shown to repeat over many new products and services in many countries and over a variety circumstances numerous and various applications of the model have lead to further generalizations modifications and extensions of the model have lead to further generalizations in addition to the empirical generalizations that stem from the model we discuss here some of the managerial applications of the model

a framework of economic analysis for tapered technology manufacturing alliances abstract globalization of production has altered the configuration of supply chains in many industries besides outsourcing joint ventures and strategic alliances are increasingly established to create competitive production organizations this paper addresses a case of tapered technology manufacturing alliance between a process technology firm with captive manufacturing capability and an efficient manufacturing firm in an asset heavy industry a framework of economic analysis is first developed for fusing the factors of technology licensing manufacturing efficiency risk sharing and demand uncertainty analysis methods of capacity economics are next described for participation analysis capacity allocation and contract term tradeoffs finally we demonstrate the utility of the methods by numerical examples with stylized industry data and by an analysis of alliance stability when facing potential new entrants

a dynamic marketing operations interface model of new product updates abstract two critical success factors for nearly any firm are the introduction of new products and the integration of the marketing and operations functions within the business enterprise the series of products being considered are associated with sequential non disruptive innovations in technology but disruptive in fashion the study presents a model that integrates and builds upon the popular dynamic bass model for new product diffusion in marketing and the wagner and whitin dynamic lot sizing model a seminal model in operations management the end result is a model that simultaneously determines the optimal timing for the introduction of new product generations pricing production timing and produced quantities this model is then used to examine the impact of variations in marketing and operations parameters on both optimal profit and optimal product lifecycle length the study finds that larger profit and a faster pace of new product introductions are generally associated with faster diffusion lower price elasticity larger market potential lower new product introduction cost and more costly consumer products

peer effects in the diffusion of solar photovoltaic panels social interaction peer effects are recognized as a potentially important factor in the diffusion of new products in the case of environmentally friendly goods or technologies both marketers and policy makers are interested in the presence of causal peer effects as social spillovers can be used to expedite adoption we provide a methodology for the simple straightforward identification of peer effects with sufficiently rich data avoiding the biases that occur with traditional fixed effects estimation when using the past installed base of consumers in the reference group we study the diffusion of solar photovoltaic panels in california and find that at the average number of owner occupied homes in a zip code an additional installation increases the probability of an adoption in the zip code by 0 78 percentage points our results provide valuable guidance to marketers designing strategies to increase referrals and reduce customer acquisition costs they also provide insights into the diffusion process of environmentally friendly technologies

persistent poverty and informal credit abstract this paper explores the consequences of nonlinear wealth dynamics for the formation of bilateral credit arrangements to help manage idiosyncratic risk using original data on expected wealth dynamics social networks and informal loans among southern ethiopian pastoralist households we find that the threshold at which expected wealth dynamics bifurcate serves as a focal point at which lending is concentrated informal lending responds to recipients losses but only so long as the recipients are not too poor our results suggest that when shocks can have long term effects loans are best understood as providing a safety net rather than a scale neutral insurance mechanism furthermore the persistently poor are excluded from social networks that are necessary to obtain loans given in response to shocks

poverty traps and index based risk transfer products summary a growing literature suggests that in low income countries households with few assets can be trapped in chronic poverty this article reviews relevant threads of the poverty traps literature to motivate a description of the opportunities presented by innovative index based risk transfer products these products can be used to address some insurance and credit market failures that contribute to the persistence of poverty among households in low income countries applications are considered at the micro meso and macro levels 2008 elsevier ltd all rights reserved

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

a simulation based evaluation of the cost of cycle time reduction in agere systems wafer fabrication facility a case study abstract with the vast amount of capital invested in the semiconductor industry and the high level of competitiveness semiconductor manufacturers are continuously searching for new methods to gain more market share and increase their profits new technologies are continuously in demand and are pushing the semiconductor manufacturers to seek better market position through constant improvement in their processes and products agere systems is one of the leading companies in the microelectronics industry this paper presents a comprehensive framework for strategic capacity expansion of production equipment at agere systems wafer fabrication facility fab we integrate simulation modeling design of experiments statistical analysis and economic justification tools to aid in this highly complex decision making process we compliment the framework with a particular implementation the procedure involved studying the factors in the fab that significantly impact the cycle times of the four main technologies that are currently in process and will stay in demand for at least the next few years moreover the goal was to quantify the economic impact of reducing cycle times to accomplish the objectives of this research a valid simulation model of the production line of the fab was built the production equipment tool sets that significantly influence production cycle time were identified through factor screening experiments based on these factors several scenarios involving the acquisition of additional tools aimed at cutting down cycle times were identified and the operating characteristics curves were constructed these characteristics curves were used to relate cycle time to production volume capabilities finally an economic analysis was conducted to evaluate the return on investment in additional tools the outcome of the case study was the identification of bottleneck facilities in the fab that have a significant impact on the cycle time of the four technologies in the economic analysis the cost of adding machines to these facilities was compared with the benefits resulting from the increase in production capacities

predicting the competitive relationships of industrial production between taiwan and china using lotka volterra model abstractthis work is the first to apply lotka volterra model combined with genetic algorithm ga to predict the production relationships of high tech industry among different areas previous studies analysed the trade interdependency among various countries but few studies have highlighted the quantitative evidence of production relationships thus this study utilizes motherboard shipment volumes to predict the competitive relationships of industrial production on both sides of the taiwan strait specifically this work uses simultaneous non linear least square regression in combination with gas for numerical parameter optimization of the proposed lotka volterra model the results of parameter estimation reveal that shipment growth in china substantially promotes that in taiwan whereas the shipment growth in taiwan curtails that in china the standard deviation of the estimated parameters from the 3000 iterated simulations is small confirming the reliability and stability of our parameter estimations

marketing models and the lucas critique the lucas critique has been largely ignored in the marketing literature we present a number of conditions under which the critique is most likely to also apply in marketing settings next we provide some perspectives on how to diagnose and accommodate the lucas critique and identify various avenues for future research

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

welfare dynamics in rural kenya and madagascar this paper presents comparative qualitative and quantitative evidence from rural kenya and madagascar in an attempt to untangle the causality behind persistent poverty we find striking differences in welfare dynamics depending on whether one uses total income including stochastic terms and inevitable measurement error or the predictable structural component of income based on a household s asset holdings our results suggest the existence of multiple dynamic asset and structural income equilibria consistent with the poverty traps hypothesis furthermore we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households defence of a critical asset threshold through asset smoothing

the effects of expectations on technology adoption some empirical evidence n rosenberg 1976 argues that in many markets prospective buyers for an innovation are strongly influenced by expectations concerning the timing and significance of future improvements the primary objectives of this article are to provide a model of the innovation decision process of user firms that expect improvements in current best technology and to offer an empirical study that tests the model s predictions among other results the author finds empirical support for rosenberg s argument and demonstrates theoretically that compared to models without technological expectations and learning the optimal decision process is nonmonotonic copyright 1994 by blackwell publishing ltd

demand modeling of stochastic product diffusion over the life cycle abstract planning during the product life cycle plc poses a number of challenges for managers due to the pace of change and uncertainties in the marketplace the ability to better understand predict and make decisions based on manifestations of demand forms a set of important operational problems that ultimately affect the profitability of enterprises this paper models the stochastic diffusion of a product in the market as a geometric brownian motion gbm process that has a time varying drift rate the model is calibrated such that model parameters are able to feature different product types and diffusion conditions imperfect information on the expected peak demand is treated as model uncertainty and a bayesian approach is employed to update knowledge on it the demand model demonstrates robust performance over a wide range of conditions despite model uncertainty it provides both qualitative and quantitative information for manufacturers and service providers to design strategies for stochastic plc conditions as well as dynamic production planning

the german energy transition modeling competition and substitution between nuclear power and renewable energy technologies abstract this paper studies some quantitative aspects of the energy transition in germany the energiewende which envisages the complete abandonment of nuclear power and a strong reliance on photovoltaic and wind energy for electricity provision the major aim is to shed light on and measure with indirect tools the possible social effects on competition and substitution dynamics characterizing such transition in doing so an analysis on the innovation diffusion framework is proposed through the application of two diffusion models for a duopolistic competition unrestricted and standard ucrcd to the annual time series of consumption of nuclear and renewables wind and solar energy in germany in order to test empirically the presence of such substitution effect the obtained results confirm this conjecture and show that renewables have exerted a significant and measurable effect in determining the observed decline of nuclear power consumption in particular we find that the diffusion of renewables wind and solar is characterized by a high within word of mouth testifying the widespread belief of germans towards the energy transition while the parallel diffusion of nuclear power is characterized by a highly negative cross word of mouth due to the competing role exerted by renewables

evaluating alternative capacity strategies in semiconductor manufacturing under uncertain demand and price scenarios abstract because product demand is very volatile and machine and process technologies are advanced at a rapid pace capacity planning and investment in the semiconductor industry is a challenging task many studies have addressed mid and short term machine portfolio planning tasks of capacity planning however capacity planning should be considered in a framework of strategy planning in order to address the whole problem this paper describes a method of analysis for adapting capacity strategy to changing business environment the paper has three major parts in the first part empirical data analysis of a case study company yields predictive formulas for production and capacity costs the uncertainty of demand is also calibrated using the geometric brownian motion process in the second part experiments are designed to simulate demand and profit scenarios for comparing two capacity strategies in the third part the resultant data of simulation are analysed to gain insights to the relative performance of the two strategies in various scenarios the analysis method provides a framework for formulating capacity strategy and for integrating capacity planning with business planning

what should you do when your competitors send in the clones this paper develops a model to address an important problem facing a manufacturer of a durable product that is how can it plan its new product introductions to minimize the obsolescence of the old product preserve its market for the new product and keep copycat products at bay we analyze these issues by developing a two period model in which a firm sells an old product in period 1 and a new product in period 2 we consider various new product introduction strategies such as product replacement line extension and upgrading we find that the optimal response to a threat of competitive clones is to increase the level of product innovation this increase in innovation coupled with the entry of a competitive product implies that the incumbent firm has less of an incentive to leapfrog the old product or shelve the new product

optimum advertising policy over time for subscriber service innovations in the presence of service cost learning and customers disadoption abstract on the theoretical side this paper characterizes qualitatively optimal advertising policy for new subscriber services a monopolistic market is analyzed first for which customers disadoption discounting of future profits streams and a service cost learning curve are allowed after characterizing the optimal policy for a general diffusion model the results pertaining to a specific diffusion model for which advertising affects the coefficient of innovation that incorporates the disadoption rate are reported the results of the theoretical research show that the advertising policy of the service firm in the presence of customers disadoption could be very different from the same when disadoption is ignored on the empirical side four alternative diffusion models are estimated and their predictive powers using a one step ahead forecasting procedure compared the diffusion data analyzed are related to the canadian cable tv industry empirical research findings suggest that the specific diffusion model considered above is not only of theoretical appeal but also of major empirical relevance the analytical findings of the study are documented in six theoretical propositions for which proofs are provided in a separate appendix the results of a related numerical experiment together with the analytical findings pertaining to the competitive role of advertising are included managerial implications of the study together with directions for future research are also discussed

can insurance payouts prevent a poverty trap evidence from randomised experiments in northern kenya index based insurance can have welfare enhancing effects through two pathways by inducing policyholders to change their investment and risk management decisions or by mitigating weather related sh

cash transfers and index insurance a comparative impact analysis from northern kenya abstract cash transfers and index insurance have become popular interventions by development agencies worldwide yet surprisingly little is known about these programs comparative impacts on participant behavior or well being this paper exploits exogenous variation in program participation and panel data from kenya to compare the causal impacts of a cash transfer program hsnp and an index based insurance product ibli which were implemented contemporaneously among the same population we find that both programs benefit clients hsnp improves child health as measured by mid upper arm circumference muac and helps households maintain their mobility dependent livestock production strategies households with ibli coverage make productivity increasing investments reduce distress sales of livestock during droughts and see a marked increase in income per adult equivalent estimating the impacts per total program costs reveals that the two programs perform comparably on average while ibli s impacts per unit marginal cost are considerably larger than hsnp s

analysis on the growth of telecommunication services a global comparison of diffusion patterns with the development of the internet the telecommunication market has seen a rapid shift from voice based services to data based services relationships of substitutability and complementarity have emerged among communications technology services such as internet service mobile phone service and fixed telephone service the article analyses the diffusion patterns of communication services in different continents a modified logistic growth model is estimated using panel data for the years 1975 2004 the research forms a valuable framework for forecasting demand for new services based on the diffusion of incumbent services and can inform strategies for entering the communications network industry

manufacturing intelligence for semiconductor demand forecast based on technology diffusion and product life cycle abstract semiconductor industry is capital intensive in which capacity utilization significantly affect the capital effectiveness and profitability of semiconductor manufacturing companies thus demand forecasting provides critical input to support the decisions of capacity planning and the associated capital investments for capacity expansion that require long lead time however the involved uncertainty in demand and the fluctuation of semiconductor supply chains make the present problem increasingly difficult due to diversifying product lines and shortening product life cycle in the consumer electronics era semiconductor companies must forecast future demand to provide the basis for supply chain strategic decisions including new fab construction technology migration capacity transformation and expansion tool procurement and outsourcing focused on realistic needs for manufacturing intelligence this study aims to construct a multi generation diffusion model for semiconductor product demand forecast namely the smprt model incorporating seasonal factor s market growth rate m price p repeat purchases r technology substitution t in which the nonlinear least square method is employed for parameter estimation an empirical study was conducted in a leading semiconductor foundry in hsinchu science park and the results validated the practical viability of the proposed model this study concludes with discussions of the empirical findings and future research directions

patterns of rainfall insurance participation in rural india take up of an innovative rainfall insurance policy offered to smallholder farmers in rural india decreases with basis risk between insurance payouts and income fluctuations increases with household wealth and decreases with binding credit constraints these results are consistent with the predictions of a simple neoclassical model with borrowing constraints other patterns are less consistent with the benchmark model for example participation in village networks and measures of familiarity with the insurance vendor are strongly correlated with insurance take up decisions and risk averse households are less not more likely to purchase insurance these results may reflect household uncertainty about the product given their limited experience with it

traps and thresholds in pastoralist mobility this article presents a new approach to identifying poverty traps in east african pastoralist communities a flexible semiparametric estimation procedure is used to identify a bifurcation in the propensity to engage in the asset based mobile herding livelihood in comparison to the sedentary alternative as a function of herd size the identified threshold is consistent with previous evidence on poverty traps based on modeling herd stock dynamics the approach contributes to an emerging literature that seeks to identify poverty traps through testing the implications of the posited behavioral mechanism behind the trap as opposed to directly modeling asset dynamics the approach is further employed to provide complementary evidence on the relationship between ability and assets in sustaining mobile pastoralism

psychiatric disorders and labor market outcomes evidence from the national comorbidity survey replication this paper uses the national comorbidity survey replication to estimate effects of recent psychiatric disorder on employment hours worked and earnings we employ methods proposed in altonji et al 2005a which use selection on observable traits to provide information regarding selection along unobservable factors among males disorder is associated with reductions in labor force participation and employment when selection on observed characteristics is set equal to selection on unobserved characteristics the magnitudes of these effects for males are 9 and 14 percentage point reductions for participation and employment respectively among females we find negative associations between disorder and labor force participation and employment but these estimates are more sensitive to assumptions about selection there are no effects of disorder on earnings or hours worked among employed individuals

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

effect of price on the demand for durables modeling estimation and findings the focus of this article is on the effect of price on the adoption of durables most empirical research on the timing of adoption of new products has centered on the growth without explicitly incorporating any marketing mix variables recently some researchers have pursued ways of enriching the bass model by including such controllable variables as price and advertising our interest in this article is to propose diffusion models that incorporate price we use these models to study the price effect for four durable products we report the estimation results and discuss the insights they provide in particular our empirical results suggest that price influences consumers decisions on whether or not to buy and the diffusion process governs the timing of purchase given the decision to buy moreover we find that the estimated coefficient of imitation in the bass model is understated if price is inappropriately modeled

managing learning resources for consecutive product generations abstract in this paper we study how a firm should allocate its learning resources when it is concurrently producing two consecutive generations of one product we define learning resources as scarce firm specific resources that a firm allocates towards the improvement of the cost quality or timeliness of its existing products and processes we use empirically tested models for demand substitution and learning curves to formulate this problem and we present our results as propositions with regard to the optimal time at which a firm should direct all its learning resources to the newer product generation depending on the substitution rate of the two product generations the learning rate and the level of cross learning results indicate that learning resources should be managed through a firm wide coordination process that will spread rather than concentrate learning resources not in static but in a dynamic way to ensure continued high returns from these learning resources

marketing mix variables and the diffusion of successive generations of a technological innovation abstract research addressing the diffusion of successive generations of technological innovations has generally ignored the impact of marketing mix variables as a result there have been several calls for the development of multiple generation models that incorporate marketing mix variables the authors develop a model of first time sales and subscriptions for successive generations of a technological innovation which explicitly captures the effects of marketing mix variables through a proportional hazards framework the empirical analysis estimates the impact of price for two generations of cellular telephones in a european country the results suggest that there are important substantive insights to be gained from the parameter estimates for this marketing mix variable when intergenerational interdependencies are considered for example although the time path of the estimated price elasticities in a multiple generation setting closely follows those reported previously for single generations the auth

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

integration of speed economics into decision making for manufacturing management abstract decision methodologies for manufacturing management typically use cost as the sole or primary criterion of merit in this article we impute economic value for the speed of manufacturing deployment and execution thereby enabling the value of speed to be properly weighed against costs to illustrate we consider semiconductor industry data selling prices of major products have been declining at stable rates for many years we show that to good approximation these rates of price decline are insensitive to speed improvements achieved at individual factories and therefore it is relatively straightforward to calculate the revenue gains resulting from local speed improvements we embed these calculations in a delay cost model that we propose as a practical engineering tool to quantitatively assess revenue gains resulting from increased speed of engineering and manufacturing execution

the effect of microinsurance on economic activities evidence from a randomized field experiment we report results from a large randomized field to study how access to formal microinsurance affects production and economic develop ment we induce exogenous variation in insurance coverage at the village level by randomly assigning performance incentives to the village animal husbandry worker who is responsible for signing farmers up for the insur ance we find that promoting greater adoption of insurance significantly increases farmers sow production and this effect seems to persist in the longer run moreover the increase in sow production in response to the sow insurance does not seem to be the result of the substitution of other livestock

a diffusion model incorporating product benefits price income and information we start by assuming that a major benefit of many new durable products such as dishwashers and microwave ovens is time savings others such as vcrs also enhance the value of our leisure time using a household production framework we demonstrate that a utility maximizing individual will have a reservation price for the product which is a function of the product benefits and his wage rate by assuming that the wage rate has an extreme value distribution across the population we are able to derive for the aggregate process an income price dependent logistic adoption equation we then allow for the possibility that certain eligible consumers may delay their purchase of the product because they are unaware that it exists are suspicious of its quality or expect its price to fall unawareness uncertainty and hope for further price declines are assumed to decrease with the increase in the number of previous adopters the resulting diffusion model has the property that the product life cycle phenomenon can be explained jointly or separately by the income price process and the awareness uncertainty expectations process using data on household income on durable penetration within different income classes and on first purchase sales the aggregate diffusion model and its premises are tested and supported it is found that both the income price and awareness uncertainty expectations processes are at work however the dependence of the awareness uncertainty expectations delay process on the number of previous adopters e g word of mouth type effect exists only in certain product categories and is usually relatively weak it is demonstrated that if the word of mouth type effects are weak a price skimming strategy is optimal for a monopolist and also is likely to be implemented by oligopolists the sales forecasting implications of the model also are pursued

the dynamic pricing of next generation consumer durables learning curve effects aspects of consumer demand models e g reservation price distributions intertemporal utility maximizing behavior and competitive activity are reasons which have been offered to explain why prices of new durables decline over time this paper presents an alternative rationale based on the buying behavior for products with overlapping replacement cycles i e next generation products a model for consumer sales of a new durable is developed by incorporating the replacement behavior of a previous generation product pricing strategies for two product generations are investigated analytically and with numerical methods results indicate that durable replacement behavior leads to a wider set of optimal pricing strategies than previously obtained several empirical illustrations of industry pricing practices for successive product generations are also shown to be consistent with the theoretical results finally various areas for future research are outlined

a piecewise diffusion model of new product demands the bass model bm is a widely used framework in marketing for the study of new product sales growth its usefulness as a demand model has also been recognized in production inventory and capacity planning settings the bm postulates that the cumulative number of adopters of a new product in a large population approximately follows a deterministic trajectory whose growth rate is governed by two parameters that capture i an individual consumer s intrinsic interest in the product and ii a positive force of influence on other consumers from existing adopters a finite population purebirth process re formulation of the bm called the stochastic bass model sbm was proposed recently by the author in a previous paper and it was shown that if the size of the population in the sbm is taken to infinity then the sbm and the bm agree in probability in the limit thus the sbm expands the bm in the sense that for any given population size it is a well defined model in this paper we exploit this expansion and introduce a further extension of the sbm in which demands of a product in successive time periods are governed by a history dependent family of sbms one for each period with different population sizes a sampling theory for this extension which we call the piecewise diffusion model pdm is also developed we then apply the theory to a typical product example demonstrating that the pdm is a remarkably accurate and versatile framework that allows us to better understand the underlying dynamics of new product demands over time joint movement of price and advertising levels in particular is shown to have a significant influence on whether or not consumers are ready to participate in product purchase subject classifications marketing new products buyer behavior pricing probability diffusion inventory production stochastic nonstationary demand area of review manufacturing service and supply chain operations history received august 2003 revision received september 2004 accepted july 2005

collusive conduct in duopolies multimarket contact and cross ownership in the mobile telephone industry the deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition one example is the licensing of cellular telephone services in the united states where the fcc created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets taking advantage of the unique regulatory environment we test to what degree duopolistic competition leads to competitive market outcomes we find that cross ownership and multimarket contact are important factors in explaining non competitive prices

how does risk management influence production decisions evidence from a field experiment weather is a key source of income risk especially in emerging market economies this paper uses a randomized controlled trial involving indian farmers to study how an innovative rainfall insurance product affects production decisions the authors find that insurance provision induces farmers to invest more in higher return but rainfall sensitive cash crops particularly among educated farmers this shift in behavior occurs ex ante when realized monsoon rainfall is still uncertain the results suggest that financial innovation can mitigate the real effects of uninsured production risk

risk and ambiguity aversion behavior in index based insurance uptake decisions experimental evidence from ethiopia abstract index based insurance ibi is an innovative pro poor climate risk management strategy that suffers from low uptake evidence on the role of behavioral impediments in adoption of ibi is scant we conducted lab in the field experiments with 1139 smallholders out of whom 596 have adopted ibi in ethiopia to elicit their risk and ambiguity aversion behavior and examine whether risk and or ambiguity aversion can explain actual ibi uptake decisions our study suggests that an increase in risk aversion increases uptake but an increase in ambiguity aversion lowers uptake of ibi we also find evidence that an increase in risk aversion speeds up the uptake of ibi while an increase in ambiguity aversion delays the adoption of ibi

optimal production sales policies and entry time for successive generations of new products abstract this paper explores the optimal initial inventory at launch sales plan and introduction time for a new generation of a product we propose a multi generation demand model that accounts for supply constraints a mathematical model of the supply restricted multi generation diffusion problem is then developed and the optimal sales policy is derived closed form analytical expressions as well as numerical experiments are used to investigate the effect of consumers backlogging cost of production capacity unit profit margin for the products market expansion by the new generation and cannibalization of older generations through consideration of supply restrictions and lost sales we are able to generalize previous findings on market entry policy by showing that there is a continuous range of optimal introduction times we show that the inter dependence between production capacity and initial inventory varies based on the introduction time of the new generation we also provide an application of the proposed model in the case of sony s playstation 3 game console the results suggest that the company introduced the product too late and overproduced inventory which as supported by empirical evidence had a negative impact on the product s performance limitations and considerations for the application of the model are also discussed

the optimal pace of product updates some firms e g intel and medtronics use a time pacing strategy for product development pd introducing new generations at regular intervals if the firm adopts a fast pace introducing frequently it prematurely cannibalizes its old generation incurring high development costs while if it has a slow pace it fails to capitalize on customer willingness to pay for improved technology we develop a model to gain insight into which factors drive the pace we consider pd cost the diffusion rate coefficients of innovation and imitation the rate of margin decline and the degree to which a new generation stimulates market growth we find that a faster pace is generally associated with faster diffusion a higher market growth rate and faster margin decay not so intuitively we find that relatively minor differences in the development cost function can significantly impact the pace

a novel bass type model for product life cycle quantification using aggregate market data abstract product life cycle plc is a widely accepted concept that has been given significant attention in operations management and marketing literature however its quantification remains a major challenge this study aims to develop a unique and original analytical model for quantifying plcs using aggregate market data the bass diffusion model is used to forecast consumers first purchases of the product next the novelty loyalty based consumer utility nlbcu theory which has a confirmed neuropsychological basis is used to model repeat or replacement purchases the unique contribution of this work is that it synthesizes the prevailing innovation diffusion theory and the nlbcu theory to provide a distinct dynamic and endogenous perspective on consumer purchasing behavior across the entire plc the model s advantages include its simple mathematical formulation its minimal use of data and its harmony with the predominating ideas of the innovation diffusion literature through simulation studies and empirical investigations the descriptive power and data fitting performance of the model are demonstrated

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

price elasticity dynamics over the adoption life cycle little empirical research has been conducted to test the dynamic behavior of elasticities over the product life cycle competing specifications of price elasticity dynamics are examined to test the

a high tech product market share model with customer expectations in a product category based on dynamic technology new products enter the market in rapid succession and the competitive situation changes almost daily because technological features of available products tend to improve while prices tend to decline customers develop expectations that may influence their purchase decisions we model the impact of customer expectations regarding price and technology on product market share in the personal computer industry finding significant nonlinear effects of both these effects are observed when actual product price and or technology differ from expectations by a threshold amount our results suggest implementable implications for high tech product managers in particular price and technology should meet but not exceed customer expectations this does not mean that managers should strive for mediocrity rather continuous improvement should be implemented so that product development efforts lead customer expectations

a dynamic it adoption model for the soho market pc generational decisions with technological expectations thesmall office home office soho professionals comprise the fastest growing segment in the labor force today typically being a one person business based at home soho owners mostly rely on office information technology to single handedly run their entire operation despite the segment s ostensibly growing dependence and influence on the information technology it industry still very little is known about the dynamics between soho and it products with the purpose of addressing this void we investigate the soho professionals adoption patterns of multigenerational it products accordingly we develop and empirically estimate an individual soho levelinitial andrepeat purchase logit model that captures the procurement patterns for successive generations of technological products namely the pc category specifically we find that soho professionals procurement choices are influenced by a number of salient dimensions i e income performance price interpurchase time network externalities furthermore some soho owners are found to have a preference for a future expected generation over a currently available one which is explained via their business dispositions i e technology orientation result orientation search orientation toward accepting technological incertitude

empirical generalizations and marketing science a personal view marketing has matured to the point where it seems desirable to take stock of where we are what we have learned and fruitful directions for extending the knowledge base that has developed science is a process involving the interaction between empirical generalizations and theory an empirical generalization is a pattern or regularity that repeats over different circumstances and that can be described simply by mathematical graphic or symbolic methods one of the purposes of the empirical generalizations conference held at wharton on february 16 18 1994 was to develop a list of examples of such empirical generalizations in marketing empirical generalization can precede a theory to explain it or it can be predicted by a theory science is the process of interaction between theory and data that leads to higher level theories examples are provided here of empirical generalizations in marketing and their theoretical counterparts one example is provided of a higher level theory

experimental evidence on the drivers of index based livestock insurance demand in southern ethiopia while index based microinsurance has attracted considerable attention uptake rates have been weak in many low income countries we explore the purchase patterns of index based livestock insurance in southern ethiopia focusing on the role of accurate product comprehension and price we find that randomly distributed learning kits improve subjects knowledge of the products however we do not find strong evidence that the improved knowledge per se causes greater insurance uptake we also find that reduced price due to randomly distributed discount coupons has an immediate positive impact on uptake without dampening subsequent period demand due to reference dependence associated with price anchoring effects

measuring marketing mix effects in the 32 64 bit video game console market we investigate the short and long run effects of prices and software availability on the category level diffusion of 32 64 bit video game consoles in the usa we adopt an estimation framework that allows for a flexible intrinsic growth pattern for the hardware consoles and uses instrumental variables to control for the potential endogeneity of prices we find significant long term effects of prices and software availability on sales we find that using a non parametric hazard specification is important imposing parametric forms results in elasticities that are up to 30 smaller we use these results to derive implications for marketing policies over the life cycle of the industry copyright 2009 john wiley sons ltd

on bullwhip in supply chains historical review present practice and expected future impact abstract demand amplification or bullwhip as it is now called is not a new phenomenon since evidence of its existence has been recorded at least as far back as the start of the 20th century and is well known to economists yet industry worldwide still has to cope with bullwhip measured not just in terms of the 2 1 amplification which is frequently quoted but sometimes it is as high as 20 1 from end to end in the supply chain this can be very costly in terms of capacity on costs and stock out costs on the upswing and stockholding and obsolescence costs on the downswing in this paper we have identified 10 published causes of bullwhip all of which are capable of elimination by re engineering the supply chain we offer evidence on the present health of a family of supply chains and pinpoint much good practice this is in anticipation that such excellence will become normative in the near future as the learning experience gathers momentum and provided that human factors are properly addressed

dynamic product portfolio management with life cycle considerations we consider a portfolio of products in which each product probabilistically transitions through various life cycle stages the evolution through these life cycle stages is impacted by both marketing support and product launch decisions which are bound by a financial constraint in the form of restricted working capital in the model the joint working capital level serves to finance the portfolio expenditures and is decided a priori by the company we use an infinite horizon markov decision process mdp to find the optimal decisions to coordinate the operations and finance depending on the composition of the portfolio we find that the policy optimizing the product launch marketing support and inventory decisions under a working capital constraint is independent of the correlation between demand levels of the products in the portfolio we numerically demonstrate that the joint management of the products has a significant positive effect on the total profit reducing the amount of working capital used per product we also show that the optimal policy smooths aggregated demand levels as well as cash flows

shocks and their consequences across and within households in rural zimbabwe abstract increasing attention is now being paid to poverty dynamics in developing countries this work links the extent to which households smooth consumption or smooth assets given income shocks the empirical evidence on the churning of households in and out of poverty and the possibility that temporary shocks can have permanent consequences using longitudinal data from rural zimbabwe this paper extends the discussion of these issues by disaggregating the impact of shocks by levels of asset holdings by disaggregating the impact of shocks on individual level welfare and by assessing the extent to which such shocks have permanent consequences by doing so it assesses the validity of distinguishing between asset and consumption smoothing and provides insights into whether poverty dynamics assessed at the household level provide an adequate picture of dynamics at the individual level

modeling intercategory and generational dynamics for a growing information technology industry previous studies dealing with product growth have dealt only with substitution effects among successive generations of one product category and not with complementarity and competition provided by related product categories based on a broadened concept of the competitive information technology it market we develop a dynamic market growth model that is able to incorporate both interproduct category and technological substitution effects simultaneously the market potential for each category or generation is treated as a variable rather than a constant parameter which is typical of recently growing it sectors such as wireless telecommunications the model is calibrated its plausibility discussed and its face and predictive validity assessed using data on wireless telecommunications services from two asian markets results show that the market potential and sales growth of one category or generation is significantly affected by others and by the overall structure of a geographic market the model is shown to make relatively good predictions even when the data from recently introduced categories generations are limited

optimal entry timing in markets with social influence firms routinely face the challenging decision of whether to enter a new market where a firm s strong presence in an existing market has a positive influence the leverage effect on product adoption in the new market but the reciprocal social influence on the existing market is negative the backlash effect in this paper we show that a firm s optimal entry strategy in this situation cannot be characterized by the familiar now or never or now or at maturity strategies proposed in the literature we show that a strong leverage effect does not necessarily provide the justification for a firm to enter a new market and neither should a strong backlash effect necessarily deter a firm from embracing a new market the optimal strategy is predicated on a judicious trade off between the three factors of leverage backlash and patience thus an astute manager can always find the opportune time to enter the new market if she takes into account the dynamic and recursive nature of cross market interaction effects where leverage enhances the backlash but backlash weakens the leverage in a nonlinear dynamic fashion we illustrate that firms stand to benefit from explicit considerations of these effects in deciding whether and when to enter a new market furthermore we explore how the optimal time of entry into the new market relates to the time of peak sales for the existing market demonstrating that depending on the interactive effects of leverage and backlash entry could be optimal either before or after peak sales in the existing market

the impact of recent mental health changes on employment new evidence from longitudinal data abstractthis study uses longitudinal data and four different measures of mental health to tease out the impact of psychiatric disorder onsets and recoveries on employment outcomes results suggest that developing a mental health problem leads to a significant increase in the probability of transitioning to non employment while a recovery increases the probability of return to work among the not employed with a mental health problem no consistent effect was found on hours worked and earnings research and policy attention is needed with respect to early interventions such as job retention programmes to help workers with mental health problems remain employed as well as interventions that may lead to recovery and return to work more research is needed especially with data and models that can differentiate between the effects of mental health onsets and recoveries on employment exit and return to work transitions

stochastic wealth dynamics and risk management among a poor population we use herd history data collected among pastoralists in southern ethiopia to study stochastic wealth dynamics among a poor population although covariate rainfall shocks plainly matter household specific factors including own herd size account for most observed variability in wealth dynamics we find no support for the tragedy of the commons hypothesis past studies may have conflated costly self insurance with stocking rate externalities biophysical shocks move households between multiple dynamic wealth equilibria the lowest suggesting a poverty trap according to nonconvex path dynamics these findings have broad implications for development and relief strategies among a poor population vulnerable to climatic shocks a vast economic literature on risk management rests explicitly or implicitly on the classic friedmanite permanent income hypothesis studies of portfolio management consumption smoothing social insurance and the like all depend on the canonical assumption that stochastic income realisations are drawn from a stationary income distribution leading to consumption smoothing off a stable asset base the possibility of asset accumulation connects this literature to the immense literature on the theory and empirics of economic growth

real options and product life cycles in this paper i develop an option valuation framework that explicitly incorporates a product life cycle i then use the framework to value the real option to change a project s capacity standard techniques for valuing real options typically ignore product life cycle models and specify instead a constant expected growth rate for demand or price i show that this specification can lead to significant error in the valuation of capacity options in particular the standard technique tends to undervalue the option to contract capacity and overvalue the option to expand capacity this result has important implications for capital investment decisions especially in high technology industries that feature regular introductions of newly improved products

employment wages and alcohol consumption in russia 1 introductionconcerns regarding the relationship between alcohol consumption and labor market productivity are well grounded if problem drinking or alcoholism is considered a disease then it may have depressant effects on labor market productivity causing reductions in employment earnings and other labor market outcomes mullahy and sindelar 1993 1996 kenkel and ribar 1994 however there is a medical literature that documents a u shaped relationship between alcohol consumption and the risk of cardiovascular disease according to this literature moderate drinkers have a lower risk of cardiovascular disease than do either abstainers or heavy drinkers beaglehole and jackson 1992 doll et al 1994 consistent with this evidence several economists have found a positive association between moderate drinking and earnings berger and leigh 1988 french and zarkin 1995 heien 1996 hamilton and hamilton 1997 zarkin et al 1998 macdonald and shields 2001 this article investigates the impact of alcohol consumption on employment and wages in russia the primary contributions of the article are twofold first it enhances the economic literature on the relationship between alcohol consumption and labor market behavior by using data from a longitudinal survey the use of a longitudinal data set enables the estimation of a fixed effects model which helps avoid the potential bias caused by unobserved individual factors not captured in cross sectional models the use of a fixed effects model is an important extension to the literature because the data sets used in previous studies are cross sectional and usually lack adequate variables that could serve as identifying instruments to control for the endogeneity of alcohol consumption 1 furthermore the richness of the data set used in this article allows for the application of three alternative measures of alcohol consumption in the empirical analysis this is important because the relationship between alcohol consumption and labor market outcomes may be sensitive to the alcohol measure that is used the second notable contribution of this article is that it provides the first empirical evidence on the association between alcohol consumption and labor market outcomes in russia excessive alcohol consumption is a widespread problem in russia where per capita alcohol consumption is around 14 liters per year the world health organization who considers 8 liters to be a sign that a country has a critical consumption level for health problems quinn judge 1997 furthermore the dramatic fluctuations in mortality rates experienced in russia over the past 15 years have generated considerable attention to the potential effect of alcohol consumption on the overall health of the russian population it is important to investigate how labor market outcomes would be affected by alcohol consumption in a country which demonstrates such dramatic fluctuations in alcohol consumption and mortality consistent with the previous studies cross sectional results generally support the hypothesis of an inverse u shaped relationship between alcohol consumption and wages and employment results from the fixed effect models are found to be quite different from those of cross sectional models the positive effect of alcohol consumption on employment disappears for both males and females once the individual fixed effects are controlled for the results of the wage model lend support to a small and linear return to alcohol consumption but the effects are significant only at the 10 level the fixed effects estimates are smaller in magnitude and estimated with less precision compared with cross sectional estimates section 2 reviews the previous literature section 3 discusses the conceptual issues and empirical strategy section 4 introduces the data set section 5 provides a discussion of the results and sensitivity analyses section 6 concludes the article

a diffusion theory model of adoption and substitution for successive generations of high technology products this study deals with the dynamic sales behavior of successive generations of high technology products new technologies diffuse through a population of potential buyers over time therefore diffusion theory models are related to this demand growth furthermore successive generations of a technology compete with earlier ones and that behavior is the subject of models of technological substitution building upon the bass bass f m 1969 a new product growth model for consumer durables management sci 15january 215 227 diffusion model we develop a model which encompasses both diffusion and substitution we demonstrate the forecasting properties of the model by estimating parameters over part of the data and projecting shipments for later periods

agricultural decisions after relaxing credit and risk constraints the investment decisions of small scale farmers in developing countries are conditioned by their financial environment binding credit market constraints and incomplete insurance can limit investment in activities with high expected profits we conducted several experiments in northern ghana in which farmers were randomly assigned to receive cash grants grants of or opportunities to purchase rainfall index insurance or a combination of the two demand for index insurance is strong and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture the binding constraint to farmer investment is uninsured risk when provided with insurance against the primary catastrophic risk they face farmers are able to find resources to increase expenditure on their farms demand for insurance in subsequent years is strongly increasing with the farmer s own receipt of insurance payouts with the receipt of payouts by others in the farmer s social network and with recent poor rain in the village both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance imperfect trust that promised

time versus state in insurance experimental evidence from contract farming in kenya the gains from insurance arise from the transfer of income across states yet by requiring that the premium be paid upfront standard insurance products also transfer income across time we show that this intertemporal transfer can help explain low insurance demand especially among the poor and in a randomized control trial in kenya we test a crop insurance product which removes it the product is interlinked with a contract farming scheme as with other inputs the buyer of the crop offers the insurance and deducts the premium from farmer revenues at harvest time the take up rate is 72 compared to 5 for the standard upfront contract and take up is highest among poorer farmers additional experiments and outcomes indicate that liquidity constraints present bias and counterparty risk are all important constraints on the demand for standard insurance finally evidence from a natural experiment in the united states exploiting a change in the timing of the premium payment for federal crop insurance sho s that the transfer across time also affects insurance adoption in developed countries

isolating the determinants of innovativeness a split population tobit spot duration model of timing and volume of first and repeat purchase the authors present the split population tobit spot duration model to incorporate two conceptually distinct dimensions of innovativeness in a single framework namely the timing and volume of adoption rather than utilizing a diffusion model specification based on word of mouth and social contagion effects the present approach uses a growth model specification and delineates a general function of time to describe the distribution of adoption timing estimation and several validation exercises performed on a data set describing the diffusion of personal computers across a sample of over 3000 u s firms provide strong support for the superiority of the spot model over models derived from restricted conceptualizations of innovativeness the empirical work albeit modest tests the impact of covariates such as firm size and decision centralization on the dimensions of innovativeness and sheds light on some inconsistent findings in the innovation adoption literature the authors subsequently derive the e

pricing patterns of cellular phones and phonecalls a segment level analysis one expectation of the u s federal communications commission fcc in the early stages of the cellular communications industry was that the presence of two licensees in each market would ensure competition and thereby result in declining prices over time for both cellular phones handsets and phonecalls however industry observers have noted recently that although the price of handsets has declined over time the price of the phonecalls has not we investigate this interesting pricing issue by modeling the market interaction between the providers of cellular services and also their interaction with customers using a game theoretic framework a critical assumption in the development of our model is that there exist segments of customers with different valuations usage levels and price sensitivities for cellular service empirically we provide support for the existence of two customer segments viz business professional and personal from both secondary data on industry usage and revenue and primary data collected from a conjoint analysis study of cellular service customers from the latter source we also establish that the business professional customers are more sensitive to prices of phonecalls than the personal segment from our analytical model we characterize the conditions under which penetration and skimming pricing strategies for the handsets are profit maximizing from the sellers standpoint and derive the corresponding price of phonecalls one of our main analytical results is that a competitive structure can result in lower prices over time for the handset but higher prices for the phonecalls depending on production costs of the handset we are thus able to provide a theoretical explanation for the observed price patterns for the handset and phonecalls

licensing radical product innovations to speed up the diffusion abstract we present a differential game to study how companies can simultaneously license their innovations to other firms when launching a new product the licensee may cannibalize licensor s sales albeit this can be compensated by gains from royalties nonetheless patent royalties are generally so low that licensing is not an attractive strategy in this paper we consider the role of licensing to speed up the product diffusion word of mouth by licensee s customers and licensee s advertising indirectly push forward sales of the licensing company accelerating new product diffusion we find evidence that licensing can be a potentially profitable strategy however we also find that a weak intellectual property right ipr protection can easily diminish the financial attractiveness of licensing

optimizing product launches in the presence of strategic consumers a technology firm launches newer generations of a given product over time at any moment the firm decides whether to release a new version of the product that captures the current technology level at the expense of a fixed launch cost consumers are forward looking and purchase newer models only when it maximizes their own future discounted surpluses we start by assuming that consumers have a common valuation for the product and consider two product launch settings in the first setting the firm does not announce future release technologies and the equilibrium of the game is to release new versions cyclically with a constant level of technology improvement that is optimal for the firm in the second setting the firm is able to precommit to a schedule of technology releases and the optimal policy generally consists of alternating minor and major technology launch cycles we verify that the difference in profits between the commitment and no commitment scenarios can be significant varying from 4 to 12

employment unemployment and problem drinking the misuse of alcohol is estimated to result in enormous economic costs composed largely of reduced labor market productivity however there has been debate on this issue the purpose of this paper is to help to resolve this debate by presenting sound structural estimates of the relationship between measures of problem drinking and of employment and unemployment the analysis is based on the 1988 alcohol supplement of the national health interview survey we find that for both men and women problem drinking results in reduced employment and increased unemployment

risk sharing and transactions costs evidence from kenya s mobile money revolution we explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption in our panel sample adoption of the innovation increased from 43 to 70 percent we find that while shocks reduce consumption by 7 percent for nonusers the consumption of user households is unaffected the mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders we report robustness checks supporting these results and use the four fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation jel e42 g22 o16 o17 z13 in developing countries informal networks provide an important means by which individuals and households share risk though the insurance they provide is often incomplete economists have proposed a number of reasons for this incompleteness including information asymmetries which manifest in problems of moral hazard and limited commitment both of which induce positive correlations between realized income and consumption in this article we emphasize a complementary source of incompleteness transaction costs literally the costs of transferring resources between individuals we test the impact of transaction costs on risk sharing by analyzing data from a large panel household survey that we designed and administered in kenya over a three year period to capture the expansion of mobile money this financial innovation has allowed individuals to transfer purchasing power by simple short messaging service sms technology and has dramatically reduced the cost of sending money across large distances mobile money is a recent innovation in developing economies one of the first and most successful examples to date is kenya s m pesa 1 in just four years after its

monopolist pricing with dynamic demand and production cost this paper deals with pricing of a new product over time by a monopolist who maximizes the discounted profit stream the interdependency of cost and demand on cumulative production makes the problem inherently dynamic cost is assumed to be declining with cumulative production learning curve effect while demand is a function of price and cumulative sales representing word of mouth and saturation effects the paper addresses this problem in a general framework that includes several previous results as special cases and provides new insights in other situations while the learning curve and word of mouth effect cause prices to be lower than the price that maximizes immediate revenues the saturation factor has the opposite effect the price path over time is affected by these factors and the interest rate we characterize the price path under several different situations and interpret the results for policy guidelines