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

optimal monopolist pricing under demand uncertainty in dynamic markets we examine pricing policy for a monopolist facing uncertain demand in a market characterized by dynamics on the demand side such as diffusion or saturation effects and or on the cost side experience curve effects our model explicitly incorporates the impact of demand uncertainty and thus allows us to analyze the implications of uncertainty on the optimal price path by contrasting the stochastic policy with the corresponding deterministic policy we begin with an analysis of the general model and then focus on several special cases based on well known demand specifications to gain more specific insights and to suggest directional guidelines for dynamic pricing decisions in an uncertain environment in general the interaction among uncertainty demand and or cost dynamics and firm s discount rate thus farsighted firms operating under dynamic market conditions with high demand uncertainty such as high tech companies with innovative products for consumer or industrial markets should attach partic

the impact of sunday shopping on employment and hours of work in the retail industry evidence from canada abstract between 1980 and 1998 every canadian province passed legislation that in some way relaxed restrictions on sunday shopping this study exploits the variation in deregulation dates between provinces to identify how retail employers adjust employment and hours of work when deciding to open on sundays a major complication of this analysis is to first determine for which provinces the deregulation dates are useful indicators of increases in sunday store openings this paper uses a unique trading day regression approach to identify these provinces and then uses aggregate data from the selected provinces to estimate a simple dynamic labour demand model that allows employment and hours to be imperfect substitutes in production the results suggest that retailers needs for sunday labour were disproportionately satisfied through increases in employment levels comparison of the estimates at three levels of the retail industry suggests that the employment and hours gains were larger among general merchandise stores than among more specialized retail establishments and relatively modest at the aggregate retail industry level in addition despite evidence of an immediate shortfall in the employment level below the long run optimal level the results suggest that firms were unable to compensate by temporarily increasing the hours of their existing employees

a monetary policy strategy in good and bad times lessons from the recent past we evaluate the ecb s monetary policy strategy against some of the underlying economic features of the eurozone in normal times and during the financial crisis we show that in the years preceding the crisis the ecb s emphasis on monetary indicators and deliberate avoidance of excessive activism were justified by the underlying macroeconomic conditions that the ecb faced in the eurozone and contributed to avoid more volatile patterns of inflation and economic activity after the collapse of financial intermediation in late 2008 the strategy of the ecb was to adopt several non standard policy measures according to our quantitative evaluation of the impact of the main non standard policies decided in october 2008 and in may 2009 which notably did not include entering commitments regarding the future path of the policy rate such measures have significantly contributed to preserving price stability and forestalling a more disruptive collapse of the macroeconomy stephan fahr roberto motto massimo rostagno frank smets and oreste tristani

welfare implications of piracy with dynamic pricing and heterogeneous consumers abstract we present an information good pricing model with persistently heterogeneous consumers and a rising marginal propensity for them to pirate the dynamic pricing problem faced by a legal seller is solved using a flexible numerical procedure with demand discretisation and sales tracking three offsetting pricing mechanisms occur skimming compressing price changes and delaying product launch a novel trade off in piracy s effect on welfare is identified we find that piracy quickens sales times and raises welfare in fixed size markets and does the opposite in growing markets in our model consumers benefit from very high rates of piracy legal sellers always dislike it and pirate providers like moderate but not very high rates

software piracy an analysis of protection strategies software piracy by users is generally believed to harm both software firms through lower profits and buying customers through higher prices thus it is thought that perfect and costless technological protection would benefit both firms and consumers the model developed here suggests that in some circumstances even with significant piracy not protecting can be the best policy both raising firm profits and lowering selling prices key to the analysis is joining the presence of a positive network externality with the fact that piracy increases the total number of program users the network externality exists because consumers have an incentive to economize on post purchase learning and customization costs

unemployment institutions and reform complementarities re assessing the aggregate evidence for oecd countries there is no or limited consensus on the quantitative impact of institutions on unemployment which has led some to question the case for structural reforms recent studies suggest also that institutions interact with each other and cannot be analysed in isolation in this paper we estimate a standard reduced form model to explore the institutional determinants of unemployment and assess its robustness using a large battery of robustness checks we show that although the impact of each individual policy varies across countries due to policy interactions the simple linear model can be used to draw inferences for countries with an average mix of institutions the model is then extended to encompass systemic interactions in which individual policies interact with the overall institutional framework we find relatively robust evidence of broad reform complementarities

tracing the causes of the banking crisis we add the bernanke gertler gilchrist model to a modified version of the smets wouters model of the u s in order to explore the causes of the banking crisis the innovation of this article is estimating the model using unfiltered data allowing for non stationary shocks in order to replicate how the model predicts the crisis we find that traditional shocks account for most of the fluctuations in macroeconomic variables the non stationarity of the productivity shock plays a key role crises occur when there is a run of bad shocks based on this sample they occur on average once every 64 years and when they occur around 10 are accompanied by financial crisis financial shocks on their own even when extreme do not cause crises provided the government acts swiftly to counteract such a shock as happened in this sample

analysis of protection and pricing strategies for digital products under uncertain demand abstract we analyze pricing and protection digital rights management strategies in a two echelon supply chain that consists of a manufacturer and a retailer of digital products the demand for the legal non pirated product which depends on both price and monetary investment in protection is assumed to be uncertain three different supply chain models are analyzed manufacturer stackelberg retailer stackelberg and vertical integration we show that the retailer s utility function has no effect on the equilibrium strategies and suggest schemes to find these strategies for any utility function of the manufacturer further results are obtained under assumptions of either a multiplicative or an additive demand model we study the players strategies under different profit criteria reflecting different attitudes toward risk specifically the expectation criterion and the target criterion and for each criterion we obtain the dependence between the pricing and the protection investment we show that there are situations in which the manufacturer can increase his profit by giving up his leadership to the retailer even if the power balance is in his favor

piracy on the internet accommodate it or fight it a dynamic approach abstract this paper uses a dynamic stochastic model to solve for the optimal pricing policy of music recordings in the presence of p2p file sharing networks eroding their sales we employ a policy iteration algorithm on a discretized state space to numerically compute the optimal pricing policy the realistically calibrated model reflects the real world figures we observe and provides estimates of the optimal pricing policy as well as comparative statics figures the pricing policy is such that for a given p2p network size prices are increasing in the number of buyers of the product and for a given number of buyers of the product prices are non monotonic in the p2p network size surprisingly in the presence of p2p networks increases in production costs and decreases in the valuation of the product increase the consumer and total surplus a higher valuation of the product leads to a lower steady state price increased switching costs have a negative effect on prices and profits so the long term incentive to attract new consumers dominates the short term incentive to harvest loyal consumers the full enforcement of intellectual property rights has adverse effect on both consumer surplus and total welfare

optimal strategic pricing of reproducible consumer products this paper investigates the strategic pricing of consumer durable products which can be acquired through either purchase or reproduction e g computer software as copy piracy results in an opportunity loss its adverse effect on profits needs to be incorporated in strategic decisions such as pricing using a dual diffusion model which parsimoniously describes sales and copying and employing control theory methodology optimal price trajectories are derived for the period of monopoly the results indicate that a in absence of any protection skimming pricing strategies are generally optimal and b copy protection is warranted only when sales diffuse much faster than copying and the protection technology does not significantly raise the marginal production cost

the perverse effects of partial employment protection reform the case of french older workers abstract french firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system known as the delalande tax we evaluate the impact of this tax on layoffs as well as on hiring taking advantage of several changes in the measure since its introduction in 1987 a legislative change in 1992 exempted firms from the tax for workers who were hired after age 50 following this change the transition rate from unemployment to employment increased significantly for workers over 50 compared to workers under 50 the difference is sizeable between one third and one half of the initial transition rate evidence on the effect on layoffs is less clear cut the impact is sizeable only for the most stringent tax schedule after 1998

optimal policies of yield management with multiple predetermined prices it is a common practice for industries to price the same products at different levels for example airlines charge various fares for a common pool of seats seasonal products are sold at full or discount prices during different phases of the season this article presents a model that reflects this yield management problem the model assumes that 1 products are offered at multiple predetermined prices over time 2 demand is price sensitive and obeys the poisson process and 3 price is allowed to change monotonically i e either the markup or markdown policy is implemented to maximize the expected revenue management needs to determine the optimal times to switch between prices based on the remaining season and inventory major results in this research include 1 an exact solution for the continuous time model 2 piecewise concavity of the value function with respect to time and inventory and 3 monotonicity of the optimal policy the implementation of optimal policies is fairly facile because of the existence of threshold points embedded in the value function the value function and time thresholds can be solved with a reasonable computation effort numerical examples are provided

a bayesian approach to optimal monetary policy with parameter and model uncertainty abstract this paper undertakes a bayesian analysis of optimal monetary policy for the u k we estimate a suite of monetary policy models that include both forward and backward looking representations as well as large and small scale models we find an optimal simple taylor type rule that accounts for both model and parameter uncertainty for the most part backward looking models are highly fault tolerant with respect to policies optimized for forward looking representations while forward looking models have low fault tolerance with respect to policies optimized for backward looking representations in addition backward looking models often have lower posterior probabilities than forward looking models bayesian policies therefore have characteristics suitable for inflation and output stabilization in forward looking models

digital pricing with piracy and variety seeking abstract this paper aims to explore behavioral digital pricing which incorporates realistic consumer behavior into firms pricing and anti piracy investment models we consider a duopoly market with an original company and a pirated group selling digital products the demand is sensitive to both parties prices we extend the traditional hotelling model by taking into account the effects of externality on both parties we then propose three types of price competition games i cournot model ii stackelberg model with the original company as the leader and iii the stackelberg model with the pirated group as the leader in model ii if the value of externality effects is lower than a threshold the original company will benefit from the government anti piracy policy that tolerates some piracy finally we investigate the behavior of consumer variety seeking in a two period cournot model with the presence of variety seeking both the original and pirated parties will adopt higher prices in the first period surprisingly variety seeking brings higher profits to both parties in two periods

limited information estimation and evaluation of dsge models we advance the proposition that dynamic stochastic general equilibrium dsge models should not only be estimated and evaluated with full information methods these require that the complete system of equations be specified properly some limited information analysis which focuses upon specific equations is therefore likely to be a useful complement to full system analysis two major problems occur when implementing limited information methods these are the presence of forward looking expectations in the system as well as unobservable non stationary variables we present methods for dealing with both of these difficulties and illustrate the interaction between full and limited information methods using a well known model copyright 2009 john wiley sons ltd

the effect of piracy on the market penetration of subscription software software piracy is not necessarily harmful to a software firm seeking to launch a new product when strategically managed through the use of price and protection measures piracy establishes the initial adopters of the software who in turn influence other users to buy the product we examine the role of piracy in affecting the adoption of subscription software products we present an individual level model in an adaptive population setting intended to determine the price protection mix that maximizes the discounted profit stream over the life of the software an extension for nonsubscription software is also discussed

how much nominal rigidity is there in the us economy testing a new keynesian dsge model using indirect inference we evaluate the smets wouters new keynesian model of the us postwar period using indirect inference the bootstrap and a var representation of the data we find that the model is strongly rejected while an alternative new classical version of the model fares no better adding limited nominal rigidity to it produces a weighted model version closest to the data but on data from 1984 onwards the great moderation the best model version is one with a high degree of nominal rigidity close to new keynesian our results are robust to a variety of methodological and numerical issues

explaining the spread of temporary jobs and its impact on labor turnover this article provides a simple model that explains the choice between permanent and temporary jobs this model which incorporates important features of actual employment protection legislations neglected by the economic literature so far reproduces the main stylized facts about entries into permanent and temporary jobs observed in continental european countries we find that job protection has very small effects on total employment but induces large substitution of temporary jobs for permanent jobs which significantly reduces aggregate production

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

perishable asset revenue management with markovian time dependent demand intensities many industries face the problem of selling a fixed stock of items over a finite horizon these industries include airlines selling seats before planes depart hotels renting rooms before midnight theaters selling seats before curtain time and retailers selling seasonal items with long procurement lead times given a sunk investment in seats rooms or winter coats the objective for these industries is to maximize revenues in excess of salvage value when demand is price sensitive and stochastic pricing is an effective tool to maximize expected revenues in this paper we address the problem of deciding the optimal timing of price changes within a given menu of allowable possibly time dependent price paths each of which is associated with a general poisson process with markovian time dependent predictable intensities we show that a set of variational inequalities characterize the value functions and the optimal possibly random time changes in addition we develop an efficient algorithm to compute the optimal value functions and the optimal pricing policy

education market rigidities and growth the paper exploits macro panel data for oecd countries close to the technological frontier the education level product market rigidities and employment protection legislation would be significantly related to tfp growth with a substantial contribution of the interaction between market rigidities

does entry regulation hinder job creation evidence from the french retail industry are product market and entry regulation key sources of low employment growth in many european countries we investigate this question in the context of the french retail trade industry since 1974 approval by regional zoning boards has been required for the creation or extension of any large retain store in france we exploit a unique database that provides time and region specific variation in boards approval decisions we show that stronger deterrence of entry by the boards increased retailer concentration and slowed down employment growth in france

optimal starting times for end of season sales and optimal stopping times for promotional fares many industries face the problem of selling a fixed stock of items over a finite horizon these industries include airlines selling seats before planes depart hotels renting rooms before midnight theaters selling seats before curtain time and retailers selling seasonal goods such as air conditioners or winter coats before the end of the season given a fixed number of seats rooms or coats the objective for these industries is to maximize revenues in excess of salvage value when demand is price sensitive and stochastic pricing is an effective tool to maximize revenues in this paper we address the problem of deciding the optimal timing of a single price change from a given initial price to either a given lower or higher second price under mild conditions we show that it is optimal to decrease resp to increase the initial price as soon as the time to go falls below resp above a time threshold that depends on the number of yet unsold items

optimal pricing and quantity of products with two offerings this paper analyzes the decision of a firm offering two versions of a product a deluxe and a regular while both products satisfy the same market the deluxe version is sold at a high price relative to its cost and is aimed at the high end of the demand curve the regular version is sold at a low price relative to its cost and is targeted to customers at the low end of the demand curve this two offering strategy is especially popular with book publishers where a paperback book is introduced some time after the hardbound version is introduced the time between the introduction of the two versions of the product is accompanied by a downward shift in the demand curve due to customers losing interest in the product or satisfying their demand from a secondary used market we solve a profit maximization model for a firm using a two offering strategy the model is solved for linear and exponential deterioration in demand which is assumed to be deterministic also a model with linear deterioration in demand which is assumed to be stochastic is solved the results indicate that substantial improvements in profit can be obtained by using the two offering strategy numerical sensitivity analysis and examples are used to illustrate the results

regulation and investment use newly assembled data on regulation in several sectors of many oecd countries to provide evidence that regulatory reform of product markets is associated with an increase in investment a component of reform that plays a very important role is entry liberalization but privatization also has a substantial effect on investment sensitivity analysis suggests that our results are robust jel e22 l5

industrial pricing theory and managerial practice we organize the existing theoretical pricing research into a new two level framework for industrial goods pricing the first level consists of four pricing situations new product competitive product line and cost based the second level consists of the pricing strategies appropriate for a given situation for example within the new product pricing situation there are three alternative pricing strategies skim penetration and experience curve pricing there are a total of ten pricing strategies included in the framework we then identified a set of cost product market and information conditions which determine what pricing situation s a firm is facing as well as which strategies are appropriate within a given situation some of these determinant conditions are common to many pricing strategies e g highly elastic demand while others are unique to a given strategy within a particular pricing situation for example within the product line situation the profitability of supplementary sales is a unique determinant of the complementary product pricing strategy razor and blade pricing using this framework as a basis for an empirical study we examined how well current industrial pricing practice matches the prescriptions from the existing research our sample consisted of 270 respondents 27 response rate of these more than 50 indicated that they used more than one pricing strategy in formulating their most recent pricing decision for a high value industrial product sold in the united states as in previous research cost plus pricing was the most often cited pricing strategy 56 of the respondents since the respondents were able to indicate their use of more than one pricing strategy the data are of the pick k from n variety in order to model the managers pricing strategy choices we constructed a stacked binary logit with a separate observation for each strategy within a given pricing situation the signs of the determinant variables were estimated as interaction terms the new product pricing strategies skim penetration experience curve were used for new models in the market skim pricing was used in markets with high levels of product differentiation by firms at a cost disadvantage due to scale penetration pricing was used by firms with a cost advantage due to scale in markets with high level of overall elasticity but low brand elasticity experience curve pricing was used for minor innovations by firms with low capacity utilization in markets with a high level of differentiation the competitive pricing strategies leader parity and low price supplier were used in mature markets parity pricing was used by firms in a poor competitive situation i e high costs low market share low product differentiation these firms were also unable to take advantage of high levels of elasticity since their capacity utilization was high in contrast the low price supplier strategy was used by firmswith low costs due to scale advantages since they have low utilization these firms can take advantage of elastic brand demand none of the determinants were significantly related to the choice of leader pricing product line pricing strategies bundling complementary product and customer value pricing were more likely to be used by firms which sell substitute or complementary products bundle pricing was used for per sale contract pricing in markets with high levels of brand elasticity complementary product pricing razor and blade was used by firms that enjoyed high profitability on its supplementary sales using customer value pricing a firm offers a stripped down version of its current products to appeal to more price sensitive segments or to leverage new distribution channels this strategy was used to target a narrow segment in high growth markets where price changes are difficult to detect cost based pricing was more likely to be used in marketswhere demand is very difficult to estimate in such a situation cost based pricing makes a great deal of sense in general the results show that the managers pricing strategy choices are consistent with normative pricing research however questions about how managers combine their strategies to arrive at a final price as well as the organizational influences on pricing strategies remain important areas for future research

firm level employment labour market reforms and bank distress abstract we explore the impact of financial frictions on the employment effect of labour market reforms our study combines a new cross country reform database on labour market reforms with matched firm bank data for nine euro area countries over the period 1999 to 2013 while we find that labour market reforms are overall effective in increasing employment restricted access to bank credit can undo up to half of medium to long term employment gains at the firm level entrepreneurs without sufficient access to credit cannot reap the full benefits of more flexible employment regulation

containing piracy with product pricing updating and protection investments we consider a monopolistic producer offering software that is updated periodically but by the end of one period a pirated version is available at a transaction cost this presents the consumers who are different in terms of their willingness to pay for the original compared to the pirated version with possible strategies for either buying a new product or pirating it we address pricing and protection investment strategies to regain the profits affected by the piracy in particular we find that even when the transaction cost is exogenous the producer does not necessarily want to fully price out the piracy the decisive factor in such a case is the level of product newness relative to the transaction cost if the producer is able to achieve high newness for the updated product relative to the transaction cost then a high retail price ensures that he will gain the largest profit possible even though some of the demand will be lost due to piracy on the other hand when the transaction cost is endogenous the producer may have two alternatives in terms of profit for dealing with the piracy pricing the software out or investing heavily in software protection as newness levels rise the option of pricing out the piracy becomes increasingly preferable

how do incumbents respond to the threat of entry evidence from the major airlines this paper examines how incumbents respond to the threat of entry of competitors as distinguished from their response to competitors actual entry it uses a case study from the passenger airline industry specifically the evolution of southwest airlines route network to identify particular routes where the probability of future entry rises abruptly when southwest begins operating in airports on both sides of a route but not the route itself this dramatically raises the chance they will start flying that route in the near future we examine the pricing of the incumbents on threatened routes in the period surrounding such events we find that incumbents cut fares significantly when threatened by southwest s entry into their routes this is true even after controlling in several ways for airport specific operating costs the response of incumbents seems to be limited only to the threatened route itself and not to routes out of nearby competitor airports where southwest does not operate e g fares drop on routes from chicago midway but not chicago o hare the largest responses appear to be restricted to routes that were concentrated beforehand incumbents do experience short run increases in their passenger loads concurrent with these fare cuts this is consistent with theories implying incumbents will try to generate some longer term loyalty among current customers before the entry of a new competitor we examine evidence relating this demand building motive to frequent flyer programs and find suggestive evidence in favor of this notion there is only weak evidence that incumbents increase capacity on the routes

dismissal costs and innovation empirical evidence suggests that dismissal costs are negatively associated with r d intensity across countries but positively within countries over time this evidence can be rationalized theoretically with a negative entry effect and a positive innovation effect for incumbent firms

short term pain for long term gain market deregulation and monetary policy in small open economies abstract this paper explores the effects of labor and product market reforms in a new keynesian small open economy model with labor market frictions and endogenous producer entry we show that it takes time for reforms to pay off typically at least a couple of years this is partly because the benefits materialize through firm entry and increased hiring both of which are gradual processes while any reform driven layoffs are immediate some reforms such as reductions in employment protection increase unemployment temporarily implementing a broad package of labor and product market reforms minimizes transition costs importantly reforms do not have noticeable deflationary effects suggesting that the inability of monetary policy to deliver large interest rate cuts in their aftermath either because of the zero bound on policy rates or because of the membership in a monetary union may not be a relevant obstacle to reform alternative simple monetary policy rules do not have a large effect on transition costs

before it gets better the short term employment costs of regulatory reforms the article exploits long time series of industry level data in a group of oecd countries to analyze the short term labor market effects of reforms that lower barriers to entry and dismissal costs estimates show that both policies induce non negligible transitory employment losses the strength of these effects varies depending on the underlying industry and labor market structure and on cyclical conditions the employment cost of deregulation is higher in economic downturns and negligible in good times these findings prove robust to a set of specification and sensitivity checks and are confirmed after standard reverse causality and falsification tests

is economic recovery a myth robust estimation of impulse responses we estimate the impulse response function irf of gdp to a banking crisis using an extension of the local projections method we demonstrate that though robust to misspecifications of the data generating process this method suffers from a hitherto unnoticed bias which increases with the forecast horizon we propose a correction to this bias and show through simulations that it works well applying our corrected local projections estimator to the data from a panel of 99 countries observed between 1974 and 2001 we find that an average banking crisis yields a gdp loss of just under 10 in 10 years with little sign of recovery like the original local projections method our extension of it is widely applicable

the impact of digital channel distribution on the experience goods industry abstract we explore the impact of a digital channel for experience goods on the profitability and behavior of players in the supply chain and on piracy we consider a firm which can sell an experience good in physical form in digitized form or both we analyze different pricing schemes price for whole album on the retail channel and linear and nonlinear pricing for songs on the digital channel consumers are divided into a retail captive segment whose consumers are limited to the retail channel and a hybrid segment whose consumers have access to both retail and digital channels our findings indicate that for realistic problems the dual distribution channel is most profitable the profitability of the retail channel increases with the size of the retail captive segment and the number of desirable songs on an album relative to the total number of songs on it we show that a skimming pricing strategy is best for the retail channel the ability to sell the product in digitized form on the internet erodes much of the power once enjoyed by the record labels the digital channel may be the best way to promote new artists especially when the hybrid consumer segment is large we also find that piracy has a significant effect on channel profits for both the retail and digital channels piracy has the strongest negative impact on the exclusive retail channel consumers access to the digital channel reduces piracy in both digital and dual channel distribution dual channel suffers least from piracy because it allows retail captive consumers to still legally obtain the product

optimal pricing for information goods with piracy and saturation effect we analyze the pricing decision of a firm selling a product for which there is a significant and continuous saturation effect over time and that can be pirated assuming that the firm uses a skimming strategy we solve three profit maximization models given demand that is linearly decreasing in price few prices can be used over the life of the product the effects of both piracy and saturation are combined in the first model in the second model the firm can invest in technology or copyright enforcement to reduce piracy the third model describes the case in which piracy leads to increased awareness of the product and increased demand numerical sensitivity analysis and examples are used to illustrate the results the results indicate that under strong piracy and saturation effects a skimming strategy is suboptimal

crossing the river a comparative perspective on italian employment dynamics crossing the river a comparative perspective on italian employment dynamics this paper studies the unprecedented job destruction which occurred throughout europe during the recession of the early 1990s it raises the question whether changes in the institutional structure of various countries labour markets may have deepened the normal effects of the recession institutional legal and sociopolitical safety nets were used to protect many european employees from technological and demand shocks throughout the 1970s and early 1980s important steps have since been taken to deregulate industrial relations european labour markets may currently be in the middle of the river they already experience the negative employment aspects of an american labour market without yet enjoying its benefits based on a study of several countries the article concludes that the social costs of deregulation will be smallest if the intended destination of the transition is reached credibly and without hesitation policy makers must point decisively towards a well defined riverbank rather than leaving the labour market in the middle of the stream giuseppe bertola and andrea ichino

monopoly price dispersion under demand uncertainty when a monopolist sets its price before its demand is known then it may set more than one price and limit the availability of its output at lower prices this article adds demand uncertainty and price rigidities to the standard model of monopoly pricing when there are two states of demand and the ex post monopoly price is greater when demand is high then the monopolist s optimal ex ante pricing strategy is to set two prices and limit purchases at the lower price

a taxonomy and research overview of perishable asset revenue management yield management overbooking and pricing this paper proposes the term perishable asset revenue management to denote the field that combines the areas of yield management overbooking and pricing for perishable assets after summarizing the characteristics common to problems in this field the paper discusses the objectives and constraints faced by decision makers then it offers a comprehensive taxonomy with 14 different elements and reviews the research that has been done related to each element finally it suggests some important areas of future research that can help bridge the gap between theory and application

on the fit of new keynesian models this article provides new tools for the evaluation of dynamic stochastic general equilibrium dsge models and applies them to a large scale new keynesian model we approximate the dsge model by a vector autoregression and then systematically relax the implied cross equation restrictions and document how the model fit changes we also compare the dsge model s impulse responses to structural shocks with those obtained after relaxing its restrictions we find that the degree of misspecification in this large scale dsge model is no longer so large as to prevent its use in day to day policy analysis yet is not small enough to be ignored

the efficient estimation of econometric models with rational expectations the efficient estimation of econometric models with rational expectations by the substitution method usually entails the use of a non linear simultaneous equations estimator and hence is not very attractive computationally it is shown that for a wide class of problems efficient estimates can also be obtained with standard estimation methods if instead an errors in variables approach is used for many other problems although not providing fully efficient estimates because rationality is not imposed the errors in variables method will still have a strong appeal because otherwise it uses all of the structural information in the model unlike the substitution method when an incomplete information set is used it guarantees consistent estimates and it is easy to compute