toward a reconstruction of keynesian economics expectations and constrained equilibria a two period model of temporary equilibrium with rationing is presented paying particular attention to agents expectations of future constraints it is shown that with arbitrary constraint expectations many different types of current equilibrium may be consistent with the same set of current and expected future wages and prices and that constraint expectations exhibit bootstraps properties e g a higher expectation of keynesian unemployment tomorrow increases the probability that it will prevail today in addition the concept of rational constraint expectations i e perfect foresight of future constraints is introduced and shown to enhance rather than reduce the effectiveness of government policy

incumbents interests and gender quotas the introduction of mandatory gender quotas in party lists is a reform that many countries have recently adopted or have been considering the electoral system affects the incumbents incentives to make such reforms their details and their effectiveness we show that male incumbents can actually expect an increased incumbency advantage when gender quotas are introduced if they are elected through single member district majority rule on the other hand no expectation of male advantage can reduce the incumbents fear of being replaced if they are elected through closed list proportional representation as france has both electoral systems we validate the above argument using a formal model of constitutional design as well as an empirical analysis of the legislative elections in france displaying the existence of male bias in the last three elections we also show that parity may have assembly composition effects and policy effects that vary with the electoral system

a variance ratio test of random walks in foreign exchange rates the separate variance ratio tests under homoscedasticity and heteroscedasticity both provide evidence rejecting the random walk hypothesis using five pairs of weekly nominal exchange rate series over the period from august 7 1974 to march 29 1989 the rejections cast doubt on the random walk hypothesis in exchange rates which has received support in the existing literature furthermore since the rejections are robust to heteroscedasticity they suggest autocorelations of weekly increments in the nominal exchange rate series which may be consistent with the exchange rate overshooting or undershooting phenomenon in the past decade there has been a consensus that nominal exchange rates follow a random walk process since a unit root and uncorrelated increments are both required for a random walk process the random walk is usually supported in the existing literature either because a unit root component is detected in the exchange rate series or because the increment in the exchange rate is found to be serially uncorrelated for example meese and singleton 1982 and baillie and bollerslev 1989 both find a unit root component in the exchange rate series and the evidence provided in giddy and dufey 1975 cornell and dietrich 1978 logue sweeney and willett 1978 and hsieh 1988 all suggest that the exchange rate series contains uncorrelated increments in this paper the random walk hypothesis for the nominal exchange rate series is reexamined by applying a variance ratio test developed in lo and mackinlay 1988 to five pairs of weekly nominal exchange rate series over the period from august 7 1974 to march 29 1989 while there are two implications of the random walk unit root and uncorrelated increments this paper focuses on the uncorrelated increments aspect this is not only because there are some important departures from the random walk that unit root test cannot detect but also because the autocorrelation aspect may yield

keynesian models of deflation and depression revisited abstract this paper extends tobin s tobin j 1975 keynesian models of recession and depression american economic review 65 195 202 keynesian analysis of deflation to include a range of additional channels through which deflation exacerbates keynesian unemployment the paper provides further theoretical reasons why downward price level adjustment may not solve the keynesian problem these arguments challenge the received wisdom that keynes general theory is a special case resting on downwardly rigid prices and nominal wages this conventional wisdom has led many economists to recommend policies promoting downward flexibility these policies have created an environment in which deflation is more likely giving new relevance to keynesian analysis of deflation

on the local uniqueness of the fixed price equilibria a number of recent works have addressed the problem of describing the allocation of resources in an economy where prices are fixed at a value that may not achieve equilibrium of supply and demand in the classical sense it seems that by and large through the works of benassy 1975 dreze 1975 malinvaud younes 1977 and younes 1975 agreement has been reached as to the properties that an allocation should possess when transactions take place at given arbitrary fixed prices the purpose of this paper is to present a result in comparative statics which applies in this approach in the framework of an exchange economy a necessary and sufficient condition for the local uniqueness of the fixed price allocation in a neighbourhood of a competitive equilibrium is established under this condition in a neighbourhood of the competitive allocation the fixed price equilibrium is locally a continuous function of the price system a prerequisite for most studies in comparative statics this condition can be related to the stability of the quantity adjustment process associated with fixed price equilibria in a neighbourhood of the competitive equilibrium as is suggested by samuelson s principle of correspondence stability implies local uniqueness while the converse is not true finally it is shown that the fixed price equilibria are both locally unique and stable when the commodities are substitutes for the rationed consumers the paper is organized as follows section 2 presents the model and results the main proofs are gathered in section 3 while an appendix gives the properties of the derivatives of the consumer s demands the mathematical tools involved are first a generalization of the inverse function theorem for lipschitzian functions due to clarke 1976 and second the identity of sylvester for determinants gantmacher 1966 pp 32 33

the effect of derivative assets on information acquisition and price behavior in a rational expectations equilibrium this article shows that introducing derivative assets increases incentives to collect information about asset payoffs the increase in information collection makes the price of the underlying asset more informative and causes the expected price to increase extending the model to a dynamic setting with multiple risky assets we find the introducing derivative assets for one asset increases the expected prices of positively correlated assets and reduces price reaction to future earnings announcements these findings are consistent with the bulk of the empirical evidence on the relationship between the introduction of derivative assets and the behavior of asset prices article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

currency derivatives and exchange rate forecastability by incorporating new information generated by currency derivatives trading underlying exchange rates should be less forecastable than previously and the underlying currency markets should therefore be more efficient this hypothesis was tested for the first time for the period 1982 through 1997 on a clean sample of three major types of currency derivatives launched in two prominent markets various statistical tests indicate that following the introduction of the derivative contracts the underlying exchange rates became more random and the currencies involved tended thus to be priced more efficiently which supports the hypothesis

characterizations of pareto efficient fair and strategy proof allocation rules in queueing problems a set of agents with possibly different waiting costs have to receive the same service one after the other efficiency requires to maximize total welfare fairness requires to treat equal agents equally one must form a queue set up monetary transfers to compensate agents having to wait and not a priori arbitrarily exclude agents from positions as one may not know agents waiting costs they may have no incentive to reveal them we identify the only rule satisfying pareto efficiency equal treatment of equals in welfare or symmetry and strategy proofness it satisfies stronger axioms as no envy and anonymity further its desirability extends to related problems to obtain these results we prove that a rule single valued or not satisfies queue efficiency and strategy proofness if and only if it always selects efficient queues and sets transfers a la groves groves t 1973 incentives in teams econometrica 41 617 631 this holds in other problems provided the domain of quasilinear preferences is rich enough

nonlinearity and intraday efficiency tests on energy futures markets using high frequency data this paper first time comprehensively examines the intraday efficiency of four major energy crude oil heating oil gasoline natural gas futures markets in contrast to earlier studies which focus on in sample evidence and assume linearity the paper employs various nonlinear models and several model evaluation criteria to examine market efficiency in an out of sample forecasting context overall there is evidence for intraday market inefficiency of two of the four energy future markets heating oil and natural gas which exists particularly during the bull market condition but not during the bear market condition the evidence is also robust against the data snooping bias and the model overfitting problem and its economic significance can be very substantial

analysis of supply contracts with quantity flexibility this paper explores a class of supply contracts under which a buyer receives discounts for committing to purchases in advance the further in advance the commitment is made the larger the discount as time rolls forward the buyer can increase the order quantities for future periods of the rolling horizon based on updated demand forecast information and inventory status however the buyer pays a higher per unit cost for the incremental units such contracts are used by automobile and contract manufacturers and are quite common in fuel oil and natural gas delivery markets we develop a finite horizon dynamic programming model to characterize the structure of the optimal replenishment strategy for the buyer we present heuristic approaches to calculate the order volume in each period of the rolling horizon finally we numerically evaluate the heuristic approaches and draw some managerial insights based on the findings

infrastructure and public utilities privatization in developing countries should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors or should they run publicly owned firms and regulate prices at the expense of rents to insiders a theoretical model is used to answer these normative questions the analysis focuses on the tradeoff between fiscal benefits and consumer surplus during privatization of noncompetitive sectors privatization transfers control rights to private interests and eliminates public subsidies yielding benefits to taxpayers at the cost of increased prices for consumers in developing countries where budget constraints are tight privatization and price liberalization may be optimal for low profitability industries but suboptimal for more profitable industries and once a market has room for more than one firm governments may prefer to regulate the industry without a credible regulatory agency regulation is achieved through public ownership

when borch s theorem does not apply some key implications of market incompleteness with policy relevance today markets are incomplete when the assets available to the agents do not span the space of future contingencies efficiency is then assessed by the weak criterion of constrained efficiency efficiency relative to the set of allocations compatible with the asset structure that criterion requires firms to optimise relative to shadow prices reflecting shareholders preferences yet even when firms do so competitive equilibria on the markets for assets and commodities fail generically to be constrained efficient section 3 pareto superior allocations can be implemented through price wage rigidities and quantity constraints section 4 but nominal rigidities are conducive to multiple equilibria implying endogenous macroeconomic uncertainties that compound the primitive exogenous uncertainties section 5 various policy implications can be drawn which are of some relevance to the current crisis

social orderings for the assignment of indivisible objects in the assignment problem of indivisible objects with money we study social ordering functions which satisfy the requirement that social orderings should be independent of changes in preferences over infeasible bundles we combine this axiom with efficiency consistency and equity axioms our result is that the only social ordering function satisfying those axioms is the leximin function in money utility

ordering policy and coordination of a supply chain with two period demand uncertainty abstract we develop a two period game model of a one manufacturer and one retailer supply chain to investigate the optimal decisions of the players where stock out and holding costs are incorporated into the model the demand at each period is stochastic and price sharply drops in mid life we assume the retailer has a single order opportunity and decides how much inventory to keep in the middle of selling season we show that both the price protection mid life and end of life returns pme scheme and the only mid life and end of life returns me scheme may achieve channel coordination and access a win win situation under some conditions the larger the lowest expected profit of the retailer the lower the possibility of win win situation will be combined with the analysis of feasible regions for coordination policies we find that pme scheme is not always better than me scheme from the perspective of implementable mechanism finally we find that adopting the dispose down to ddt policy can bring a larger improvement of the expected channel profit in the centralized setting and it is interesting that by using ddt policy double marginalization occurs only at period 1 and however does not plague the retailer in period 2

unfair inequalities in health and health care inequalities in health and health care are caused by different factors measuring unfair inequalities implies that a distinction is introduced between causal variables leading to ethically legitimate inequalities and causal variables leading to ethically illegitimate inequalities an example of the former could be life style choices an example of the latter is social background we show how to derive measures of unfair inequalities in health and in health care delivery from a structural model of health care and health production direct unfairness linked to the variations in medical expenditures and health in the hypothetical distribution in which all legitimate sources of variation are kept constant fairness gap linked to the differences between the actual distribution and the hypothetical distribution in which all illegitimate sources of variation have been removed these two approaches are related to the theory of fair allocation in general they lead to different results we propose to analyse the resulting distributions with the traditional apparatus of lorenz curves and inequality measures we compare our proposal to the more common approach using concentration curves and analyse the relationship with the methods of direct and indirect standardization we discuss how inequalities in health care can be integrated in an overall evaluation of social inequality

direct versus indirect standardization in risk adjustment direct and indirect standardization procedures aim at comparing differences in health or in health care expenditures between subgroups of the population after controlling for observable morbidity differences there is a close analogy between this problem and the issue of risk adjustment in health insurance traditional methods of risk adjustment are analogous to indirect standardization they are equivalent to the so called conditional egalitarian mechanism in social choice in general they do not remove incentives for risk selection even if the effect of non morbidity variables is correctly taken into account a method of risk adjustment based on direct standardization does remove the incentives for risk selection but at the cost of violating a neutrality condition stating that insurers should receive the same premium subsidy for all members of the same risk group direct standardization is equivalent to the egalitarian equivalent or proportional mechanism in social choice the conflict between removing incentives for risk selection and neutrality is unavoidable if the health expenditure function is not additively separable in the morbidity and efficiency variables

where modern macroeconomics went wrong this paper provides a critique of the dsge models that have come to dominate macroeconomics during the past quarter century it argues that at the heart of the failure were the wrong microfoundations which failed to incorporate key aspects of economic behaviour e g incorporating insights from information economics and behavioural economics inadequate modelling of the financial sector meant they were ill suited for predicting or responding to a financial crisis and a reliance on representative agent models meant they were ill suited for analysing either the role of distribution in fluctuations and crises or the consequences of fluctuations on inequality the paper proposes alternative benchmark models that may be more useful both in understanding deep downturns and responding to them

the newsvendor problem with an in season price adjustment consider a retailer stocking a seasonal item facing a stochastic demand where information about the demand becomes more accurate as the selling season progresses the retailer places orders before the start of the season and in season reorders are not possible this article extends the classical newsvendor model by allowing the retailer to make an in season price adjustment after conducting a review and using the realized demand to obtain an accurate estimate of the remaining demand our results include answers to the following questions what price should the retailer choose how much should the retailer have ordered at the start of the season given the option of adjusting prices in season this model was motivated by a problem in car rental revenue management and has applications in perishable assets revenue management parm where price adjustments are needed towards the end of the selling season

licensing weak patents in this paper we revisit the issue of licensing weak patents under the shadow of litigation departing from the seminal paper by farrell and shapiro 2008 we consider innovations of any size and not only small innovations and we allow the number of licensees to be less than the number of firms in the downstream industry it is shown that the optimal two part tariff license from the patent holder s perspective may either deter or trigger litigation and conditions under which each case arises are provided we also reexamine the claim that the licensing revenues from weak patents overcompensate the patent holder relative to what a natural benchmark would command finally we suggest two policy levers that may alleviate the harm raised by the licensing of weak patents

on monopolistic competition and optimal product diversity workers rents also matter in the dixit stiglitz model of monopolistic competition entry of firms is socially too small other authors have shown that excess entry is also a possibility with other preferences for diversity we sow that workers rents also contribute to explain excess entry through a general equilibrium mechanism larger wages indeed raises the aggregate earnings and firms sales and profits which entices too many firms to enter we discuss the possibility of over provision of varieties by comparing the equilibrium to unconstrained and constrained social optima and to other regulatory frameworks where wages are not controlled

tax incidence in a model with perfect foresight of agents and rationing in markets abstract this paper examines the incidence of several taxes in a macroeconomic model producers and consumers optimize with perfect foresight price inertia leads to rationing in the market for goods and for labour in the long run the system tends towards walrasian equilibrium meanwhile there may be keynesian unemployment classical unemployment or repressed inflation with possible switches of regimes balanced budget policies are analysed by working through numerical examples

mean downside risk and mean variance newsvendor models implications for sustainable fashion retailing abstract newsvendor models have been well established for studying supply chain management problems with fashionable products in this paper we explore the mean downside risk mdr and mean variance mv newsvendor models under both the exogenous and endogenous retail price decision cases we first construct analytical models with the mdr and mv objectives we then show that the analytical solution schemes for both the mdr and mv problems are the same with the measures for sustainability such as the expected quantity of goods leftover the expected sales to expected goods leftover ratio the rate of return on investment and the probability of achieving a pre determined profit target we proceed to compare the levels of sustainability by the fashion retailers which employ the mean risk and the risk neutral models insights are generated

mean variance analysis of supply chains under wholesale pricing and profit sharing schemes in this paper we explore the use of a wholesale pricing and profit sharing scheme wpps for coordinating supply chains under the mean variance mv decision framework we first analytically establish the necessary and sufficient conditions for coordinating the centralized supply chain by wpss we then show that there exists a unique equilibrium of the stackelberg game with wpps in the decentralized case after that we discuss the information asymmetric case in which the retailer can be benefited by pretending to be more risk averse finally we propose a new measure for the manufacturer to prevent this cheating from happening insights are generated

mean variance analysis of a single supplier and retailer supply chain under a returns policy abstract in the literature most of the supply chain coordinating policies target at improving the supply chain s efficiency in terms of expected cost reduction or expected profit improvement however optimizing the expected performance alone cannot guarantee that the realized performance measure will fall within a small neighborhood of its expected value when the corresponding variance is high moreover it ignores the risk aversion of supply chain members which may affect the achievability of channel coordination as a result we carry out in this paper a mean variance mv analysis of supply chains under a returns policy we first propose an mv formulation for a single supplier single retailer supply chain with a newsvendor type of product the objective of each supply chain decision maker is to maximize the expected profit such that the standard deviation of profit is under the decision maker s control we study both the cases with centralized and decentralized supply chains we illustrate how a returns policy can be applied for managing the supply chains to address the issues such as channel coordination and risk control extensive numerical studies are conducted and managerial findings are proposed

cost benefit rules in a regionalized disequilibrium model in 1982 83 a mining company in northern sweden laid off 1 800 employees the parliament allotted sek 309 million for a program of job creating measures evaluation of these measures requires a welfare theoretic foundation this analysis focuses on the welfare implications of public production of private goods these effects depend on which market output is sold and the type of taxes used to balance the public budget the rules include partial and indirect spill over effects that can be interpreted in terms of multipliers and marginal propensities to consume

pricing and product line strategy in a supply chain with risk averse players abstract we study the pricing and product line strategy of a risk averse manufacturer who sells her products through a risk averse retailer we identify the conditions under which the manufacturer extends her product line or replaces the old product with a new product and find that i a higher retailer s risk aversion decreases the retail price but increases the unit wholesale price ii the manufacturer extends the product line if the price caps for both products are sufficiently high both her risk aversion and product substitutability are sufficiently low iii the manufacturer discontinues the old product if the relative price cap of the new product to the old product is sufficiently high her risk aversion is medium and product substitutability are sufficiently high further we find that i the decentralization of supply chain may increase product line length if the retailer s risk aversion and product substitutability are sufficiently high otherwise it may decrease product line length ii the endogenization of quality design increases the motivation to introduce a new product and iii the manufacturer extends or replaces the product line if quality cost is not too high

government outsourcing public contracting with private monopoly the article studies the impact of the government budget constraint on the regulation of natural monopolies in adverse selection contexts the government maximises total surplus but incurs some cost of public funds a la laffont and tirole 1993 government outsourcing is proposed as an alternative to regulation in which firms freely enter the market and choose their prices and output levels however government can contract ex post with the private firms this ex post contracting set up allows more flexibility than regulation where governments commit to both investment and operation cash flows this is especially relevant in case of high technological uncertainties

imperfect competition and the suboptimality of rational expectations abstract this paper investigates whether nonrational expectations can lead to outcomes which other things being equal pareto dominate rational expectations outcomes in order to carry out this investigation we construct an intertemporal micro based macroeconomic model with the two following strong points a it accommodates both rational and non rational expectations b both prices and quantities are determined by optimizing agents in particular prices are determined by explicit price setters using objective demand curves in this model the first theorem of welfare holds so that the walrasian equilibrium with rational expectations cannot be pareto dominated this conclusion is extremely fragile however and we show that as soon as some degree of imperfect competition is present rational expectations are suboptimal in the sense that they are dominated by irrational expectations

sharing the cost of a public good an incentive constrained axiomatic approach we study the problem of provision and cost sharing of a public good in large economies where exclusion complete or partial is possible we search for incentive constrained efficient allocation rules that display fairness properties population monotonicity says that an increase in population should not be detrimental to anyone demand monotonicity states that an increase in the demand for the public good in the sense of a first order stochastic dominance shift in the distribution of preferences should not be detrimental to any agent whose preferences remain unchanged under suitable domain restrictions we give an explicit characterization of all incentive constrained efficient allocation rules we then show that there exists a unique incentive constrained efficient and demand monotonic allocation rule the so called serial rule in the binary public good case the serial rule is also the only incentive constrained efficient and population monotonic rule

the impact of the listing of options in the foreign exchange market abstract this paper documents the impact of the introduction of foreign currency options and options on foreign currency futures on the underlying securities we find that the volatility of exchange rates decreases following the listing of options for a majority of the currencies under consideration in addition we find that trading volume and open interest in currency futures increases after option introduction this evidence is consistent with the notion that derivative securities are important innovations for stabilizing and increasing liquidity in the market for the underlying assets

forced saving redistribution and nonlinear social security schemes this paper studies the design of nonlinear social security schemes when individuals differ in productivity and in their degree of myopia myopic individuals may not save enough for their retirement the welfare function is paternalistic the rate of time preference of the farsighted is used for both types we show that the solution does not necessarily imply forced savings for the myopics paternalistic considerations are mitigated by incentive effects numerical results suggest that as the proportion of myopic individuals increases there is less redistribution and more forced saving and the desirability of social security increases

reflections on macroeconomics the turmoil that has characterized macroeconomics for at least a decade originated with the inflation that emerged in the late 1960 s and persisted stubbornly throughout the 1970 s the inability of the neoclassical synthesis to model inflation convincingly spawned the new classical models because they infer macroeconomic results more directly from principles of maximizing behavior they appeal to some as more rigorous many others reject them as irrelevant because neither the microeconomic behavior that these models postulate nor their macroeconomic implications are realistic the central postulates are that all agents are price takers and that all markets clear in the sense of walrasian auction markets in a dynamic or multiperiod context this means markets clear in rationally expected future prices the most controversial implications are policy ineffectiveness and in some versions the proposition that inflation could be eliminated with little cost in real output as one of those who was unimpressed with these more provocative postulates and implications i was distressed that anyone took them seriously and that the profession became so divided over important policy issues but it is also true that some more interesting ideas that were originally linked with the auction market model by robert lucas and other authors might not have been developed without the controversy one is that the rational expectations methodology should be applied in a thorough way to macroeconomic relations another is that private agents behavior will depend on the rules governing the conduct of policy or the policy regime i am optimistic that we are on the verge of generating more light and less heat than we have been recently the interesting new ideas and methodology that have developed in the course of the past decade s debates will continue to be explored but inevitably i believe these and other ideas will be examined within the framework of an economy that in crucial ways does not operate with auctionlike markets both the lack of empirical success with the classical postulates and the intellectual challenge of developing a more general micro foundation to supplant the auction model are pushing in this direction with this development the gap between rigor and reality should narrow as researchers differ less about the basic postulates underlying macro models

weak form efficiency in currency markets many past studies have found that currencies trend so technical trading rules produced statistically and economically significant profits in other words foreign exchange markets were weak form inefficient the study reported here reexamined this phenomenon with use of a new database of currency futures for 1975 2006 that includes old and newly liquid currencies the findings from the recent data are contradictory the profitability of trend following eroded for major currencies and their associated cross exchange rates around the mid 1990s newly liquid currencies after 2000 do trend however just as major currencies did in earlier years the evidence is consistent with early weak form inefficiency followed by vanishing trends as traders learn and adapt their strategies

a risk tolerance analysis for a joint price differentiation and inventory decisions problem with demand leakage effect abstract price differentiation is a commonly used practice in revenue management rm to improve a firm s profitability however most studies in the literature have considered a risk neutral firm to demonstrate the benefits of price differentiation the main contribution of this paper is in considering several important objectives while determining the optimal product prices and order production quantities for a risk adjusted firm with demand leakage effects in the presence of a price dependent stochastic demand the objectives considered include the maximization of a firm s expected profit and maximizing the probability of exceeding the risk adjusted expected revenue closed form expressions for optimal product prices and production quantities are derived for several of these objectives a numerical study is also presented to calibrate the impact of a firm s risk tolerance and other factors such as demand leakage market demand variability on the firm s profitability and its optimal decision

catastrophic walrasian equilibrium from the non walrasian viewpoint a three good macroeconomic example a walrasian equilibrium is catastrophic from the non walrasian viewpoint if some small deviation from the walrasian prices produces only non walrasian equilibrium allocations a long way from the walrasian allocation a precise account of this phenomenon is given for a class of three good single household private ownership production economies

did policy activism work abstract how macroeconomic policy activism influences business cycles remains a major unresolved question this paper compares the degree of cyclical stability in industrialized countries over three periods 1870 1913 1922 1937 and 1950 1979 two of which were little affected by demand management while the third saw a large degree of policy involvement the evidence shows that the 1950 1979 years were unprecedently stable neither problems of data reliability nor the influence of the world cycle nor the smaller role of agriculture appear to be responsible for this the major reason seems to be the greater influence of government which operated via automatic and discretionary policies and by changing expectations

analysis of supply chains with quantity based fixed incentives abstract this paper examines the use of quantity based fixed incentives to coordinate inventory decisions in a decentralized supply chain we consider a two stage supply chain of autonomous supplier and distributor and prove that the optimal ordering policy for the newsvendor distributor under fixed incentives is an s s type policy we further show that external and internal quantity based incentives can restore channel coordination in single period and channel members can benefit through arbitrary splitting of the resulting additional chain profit the single period results are extended to multiple periods and the impact of fixed incentives on the distributor s optimal stocking policy and channel efficiency are examined under three different multi period supplier strategies numerical examples are used to compare the multi period strategies and to provide additional managerial insights the results show that contrary to common belief incentive plans developed and maintained based only on current inventory data perform poorly in long term and that such incentive plans must be periodically updated to enhance their efficiency furthermore we show that high level of incentives designed to push too much inventory downstream of the supply chain can actually reduce the chain s efficiency

a two country disequilibrium model the implications of wage and price rigidities for several open economy macroeconomic questions are studied in a two country framework using comparative statics and numeric analytic solutions in contrast to a small country disequilibrium approach the proposed model highlights the critical dependence of trade balance stability and other comparative static results on the specification for the export rationing scheme although coordination of export rationing policies carries potential mutual benefits it is shown that these may not be realized due to game theoretic problems the analysis also offers new illustrations and more general results which emphasize 1 the dependence of the efficacy of macroeconomic policies on the specific set of wage and price rigidities as well as quantity constraints in both countries and 2 the likelihood that a devaluation will have perverse trade balance effects in supply constrained regimes

mean variance analysis of option contracts in a two echelon supply chain abstract this paper studies the implications of risk considerations for option contracts in a two echelon supply chain under the mean variance framework we first investigate the conditions for coordinating the supply chain by using option contracts we find that supply chain coordination is not always achieved contrasting with the result that properly designed option contracts can always coordinate a supply chain in the absence of risk considerations second we analyze the stackelberg game for a decentralized supply chain in two cases depending on whether the retailer s risk aversion threshold is known to the supplier we show that when the threshold is public information there exists a unique equilibrium in which the supplier with a higher risk tolerance prefers to reduce the exercise price and thus the retailer s order quantity increases when the retailer s risk aversion threshold is private information the retailer has an incentive to pretend to be less risk averse to curb this incentive distortion we design a new minimum option quantity commitment for the supplier we complement our theoretical results with numerical simulations

a risk averse newsvendor model under marketing dependency and price dependency abstract in this paper we analyze a single period inventory model where a risk averse newsvendor makes a joint decision on ordering pricing and marketing under the cvar risk measure criterion the newsvendor can exert marketing effort to enhance market demand we assume that the newsvendor s marketing effort affects the scale of the demand distribution and hence to model the marketing dependent demand as a multiplicative form we characterize sufficient conditions that guarantee existence and uniqueness of the optimal solutions under some mild assumptions on demand distribution expected demand function and marketing effort cost which are widely used in the related literature we show that the optimal order quantity increases in the newsvendor s marketing effort but the optimal price remains unchanged whether the demand is marketing dependent or not additionally we explore impact of exogenous parameters such as unit order cost salvage value and the newsvendor s risk aversion coefficient on the optimal decision variables and find that the optimal marketing effort always keeps the same changing direction with the optimal marketing independent order quantity as the exogenous parameters change this suggests that impact of the parameters on the optimal order quantity gets strengthened in the case of marketing dependent demand

manufacturer retailer contracting with asymmetric information on retailer s degree of loss aversion abstract in a recent paper wang c webster s 2007 channel coordination for a supply chain with a risk neutral manufacturer and a loss averse retailer decision sciences 38 3 361 389 the authors study a supply chain consisting of a risk neutral manufacturer and a loss averse retailer and show that the supply chain can be coordinated by three contracts buy back bb gain loss sharing gl and gain loss sharing and buy back glb they assume that the retailer s degree of loss aversion is common knowledge however this assumption cannot reflect real situations since in the real industry one party s degree of loss aversion is usually unknown by other parties in the present paper we propose a principal agent model assuming the retailer s degree of loss aversion to be asymmetric information within the principal agent framework we obtain the following results 1 an optimal mgl modified gl contract menu which is based on the gl contract studied in wang and webster 2007 is derived for the manufacturer the principal by mechanism design theory 2 under the mgl contract menu information asymmetry lowers the production quantity decreases the manufacturer s profit and deteriorates supply chain performance while increasing the retailer s utility 3 the mgl contract menu can coordinate the supply chain with asymmetric information in an implementable way if the wholesale price is endogenously determined by the manufacturer and its lower bound is 0