monopolistic competition increasing returns to specialization and output persistence abstract devereux et al economics letters 1993 41 57 61 showed that introducing together imperfect competition and increasing returns to specialization into real business cycle rbc type models results in making output more persistent than the underlying technology shocks we carry out a simple generalization of their model which clearly disentangles the two features and show that the added persistence is actually because of the increasing returns to specialization

a model of product line design and introduction sequence with reservation utility abstract cannibalization is a major concern for a firm when designing a product line in addition external options from outside the firm s product line may also play a significant role in this paper we investigate the impact of external options represented by reservation utility on product line design and introduction sequence we find that a heterogeneous reservation utility defines the relative attractiveness of segments and corresponding product line b reservation utility makes it more favorable to introduce products sequentially rather than simultaneously c aggregating segments is an effective way to mitigate cannibalization when it becomes too difficult to manage with different values of reservation utility across multiple segments and d introducing products in a non monotone order of quality can improve profit from simultaneous introduction when the value of reservation utility of a middle segment is particularly high

the biodiversity supergame this paper considers the ability of developed countries to sustain a cooperative agreement to compensate developing countries for the incremental costs of biodiversity conservation it is shown that depending on certain parameter values and the model specification such an agreement could only codify the non cooperative outcome or achieve the full cooperative outcome where global net benefits are maximized however where the agreement can sustain the full cooperative outcome net benefits will be only slightly larger than in the noncooperative outcome

aggregate fluctuations with national and international returns to scale cyclical movements in aggregate output factor inputs and productivity are all positively correlated across countries this article proposes a model in which positive cross country correlations of these variables result from increasing returns to the world wide variety of intermediate goods even if technology shocks are purely country specific the model also accounts for the observed positive relationship between bilateral trade volume and international comovements positive comovements can also arise with constant returns to variety but only if technology shocks are themselves strongly correlated the combination of constant returns and common shocks however tends to generate procyclical fluctuations of the trade balance

commonality in product design cost saving valuation change and cannibalization abstract offering a variety of products is important for a firm to attract different consumer segments however high product variety increases production and distribution costs modular product design and parts commonality are approaches used to counter this trend in cost and still offer a variety of products this paper develops a model to examine when modular products should be introduced and how much modularity to offer the model looks at a market consisting of a high segment and a low segment customers choose the product that maximizes their surplus which is defined as the product s utility minus its price presence of commonality affects the utility of a product greater commonality decreases production cost but makes the products more indistinguishable from one another this makes the product more desirable for the low segment but less desirable for the high segment the firm s objective is to design the products and set the prices so as to maximize its profit

multipliers imperfect competition or increasing returns to scale abstract in a recent paper rotemberg and woodford 1995 study the behavior of imperfectly competitive economies to conclude that imperfect competition magnifies the response of output to certain exogenous shocks we show that their results are entirely driven by the presence of increasing returns to scale and not by imperfect competition

analysis of an industrial component commonality problem we discuss a case study of an industrial production marketing coordination problem involving component commonality for the product line considered the strategic goal of the company is to move from the current low volume market to a high volume market the marketing department believes that this can be achieved by substantially lowering the end products prices however this requires a product redesign to lower production costs in order to maintain profit margins the redesign decision involves grouping end products into families all products within one family use the same version of some components this paper fits in the stream of recent literature on component commonality where the focus has shifted from inventory cost savings to production and development cost savings further we consider both costs and revenues leading to a profit maximization approach the price elasticity of demand determines the relationship between the price level and number of units sold consequently we integrate information from different functional areas such as production marketing and accounting we formulate the problem as a net present value investment decision we propose a mixed integer nonlinear optimization model to find the optimal commonality decision the recommendation based on our analysis has been implemented in the company in addition the application allows us to experimentally validate some claims made in the literature and obtain managerial insights into the trade offs

optimal temporal product introduction strategies under valuation changes and learning consider a firm facing two consumer segments with differing valuations for quality the demand is stationary and known and consumers make repeat purchase over two time periods however once a premium product is introduced the valuations of the consumers change in the next period the firm derives a cost savings due to learning effect in the second period the magnitude of which depends on the sales volume in the first period under such a situation should a firm introduce a premium product before a basic product or the vice versa should it introduce two products simultaneously when should a firm expand or consolidate its product line what is the optimal product introduction strategy for a firm using a two period stylized model we seek to answer these questions we characterize the optimal product introduction strategy for the firm we describe three easily calculable parameters that govern the optimal choice of the firm the conditions under which a firm should expand or consolidate its product line are discussed we study the effects of cost savings and customer valuation changes we show that the dominated product strategies in absence of these effects can be a part of an optimal product strategy of a firm under valuation changes and cost savings the managerial implications of the model are discussed

patents brand generic competition and the pricing of ethical drugs in canada some empirical evidence from british columbia 1981 1994 this paper examines the impact of the 1987 changes in the canadian patent act on the pricing of ethical drugs from 1969 to 1987 canada opted to control pharmaceutical prices by using the compulsory licensing provisions of the act to promote competition between branded drugs and their generic equivalents in 1987 however the act was amended to guarantee patent holders an extended period 7 10 years of protection this reduced brand generic competition by retarding generic entry and suggests that ceteris paribus after 1987 pharmaceutical prices increased relative to pre 1987 prices this hypothesis is examined for the period 1981 1994 using a sample of 82 drugs from the british columbia pharmacare programme the major conclusions are despite evidence of significant first mover advantages which resulted in higher brand prices competition from generics succeeded in reducing overall market prices prior to 1987 but after 1987 the efficacy of generic competition was reduced and both brand and market p

endogenous growth and real effects of monetary policy r d and physical capital complementarities we study the real long run effects of the structural stance of monetary policy and of inflation in the context of a monetary growth model where r d is complemented with physical capital accumulation we look into the effects on a set of real macroeconomic variables that have been of interest to policymakers the economic growth rate real interest rate physical investment rate capital to labor ratio r d intensity and velocity of money these variables have been previously analyzed from the perspective of different separated strands of the theoretical and empirical literature additionally we analyze the long run relationship between inflation and both the effectiveness of real industrial policy shocks and the market structure assessed namely by average firm size we present novel cross country evidence on the empirical relationship between the latter and long run inflation

markets institutions and forestry the consequences of timber trade liberalization in ecuador abstract although barriers to international trade were removed during the 1990s log prices remain inefficiently low in ecuador oligopsonistic conditions which prevailed in the forestry sector under protectionism have not been relieved by increased competition the problem is that new investment is discouraged by weak property rights corruption and dated legislation that hinders forest dwellers participation in the market economy unless and until institutional reform is undertaken to stimulate investment and competition the prospects for ecuador s tropical forests which are among the most biodiverse in the world will continue to be bleak

threat positions and the resolution of environmental conflicts in the classic externality problem of one polluting firm and a passive victim we consider bargaining when the firm has the prior right to pollute assuming that a threat made prior to bargaining is perceived to be credible the firm will commit itself to an output level that is higher than both the efficient and profit maximizing levels in an extension we assume that the firm makes an irreversible investment in production capability to give its threat credibility we show that a credible investment must be greater than or equal to the profit maximizing investment

full line or specialization strategy the negative effect of product variety on product line strategy abstract this paper studies the product line decisions of firms under two consumer segments differing in their quality sensitivity we focus on a negative impact of the product variety on the consumers motivation to purchase while each product is horizontally differentiated in the presence of this impact and high fixed costs relative to variable costs it is shown that when a highly quality sensitive segment exists it is always advantageous for the monopoly to specialize in only one product serving this segment however the appearance of a competitor can drastically change the product line in the market under the duopolistic setting where two firms sequentially determine their product lines we show that the leader gains a better financial result by offering its product to the low segment for many cases including the case where no product is offered to the high segment by either of the firms who are in equilibrium furthermore we obtain another interesting result that indicates that the follower s profit can exceed the leader s profit when the quality sensitivities between the two consumer segments are sufficiently different even though the two firms are symmetric except for the order of their product offerings

bargaining over environmental budgets a political economy model with application to french water policy in decentralized water management with earmarked budgets financed by user taxes and distributed back in the form of subsidies net gains are often heterogeneous across user categories this paper explores the role of negotiation over budget allocation and coalition formation in water boards to provide an explanation for such user specific gaps between tax payments and subsidies we propose a bargaining model to represent the sequential nature of the negotiation process in water districts in which stakeholder representatives may bargain upon a fraction of the budget only the structural model of budget shares estimated from the data on french water agencies performs well as compared with reduced form estimation empirical results confirm the two stage bargaining process and provide evidence for systematic net gains from the system for agricultural water users

trade related intellectual property rights north south trade and biological diversity in the trade related intellectual property rights trips agreement of gatt 1 january 1995 it was agreed to harmonise intellectual property rights ipr on an international level and to include the option for patent protection for all life forms such as plants and animals article 27 3 b patenting however leads to considerable conflicts between international trade and protection of biological diversity which can be illustrated by the example of seed production we make use of a three stage game to show the strategic incentives for implementation of two different property rights regimes patents and farmers rights on competition and biodiversity we show that the southern government has no incentive to acknowledge international patents even if farmers rights do exist the northern producer will always dominate in the output market if patents are applied but without farmers rights biodiversity will not be maintained by the southern government thus total payoff of the northern firm is maximized if both ipr regimes are implemented however if only farmers rights are valid biodiversity will be maximal

valuing biodiversity for use in pharmaceutical research biodiversity prospecting has been touted as a mechanism for both discovering new pharmaceutical products and saving endangered ecosystems it is unclear what values may arise from such activities however evidence from transactions is incomplete and existing theoretical models are flawed we calculate an upper bound on the value of the marginal species even under favorable assumptions this bound is modest slightly modified assumptions lead to drastically lower estimates we extend our findings to the value of the marginal hectare of habitat and find that the incentives for habitat conservation generated by private pharmaceutical research are also at best very modest

the biodiversity bargaining problem we employ cooperative bargaining theory and nash s rational threats idea to cast light on the biodiversity bargaining problem the problem of global environmental negotiations is argued to be of the nature of a bargaining problem in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier we discuss the importance of both efficiency bargaining frontier and fairness recognition of characteristics of bargainers in the choice of the appropriate contract we show that the incremental cost contract used to resolve the biodiversity bargaining problem is of the form of an extreme point contract that fails to recognise the contributions of the south to the production of cooperative surplus a rational response to such a contract is the use of threats of biodiversity destruction contracts must evince both efficiency and fairness in order to represent lasting solutions

welfare effects of global patent protection this paper uses a simple model of invention and patent protection to examine the welfare effects of extending patent protection from the country where invention takes place to another country that is only a consumer of invented products it is shown that while the welfare of the inventing country certainly rises with the extension of patent protection that of the other country probably falls and may well fall by more than the increase in welfare of the inventing country in particular as patent protection is extended to a larger and larger portion of the world the effect on the welfare of the world as a whole of extending it to the rest of the world becomes negative

the reliance of northern economies on southern biodiversity biodiversity as information abstract this paper addresses the issue of how biodiversity is used as an input into important industrial research and development processes biodiversity should be seen as an important source of a stock of information on which these research and development processes are built this stock of information is of the nature of an economic asset that depreciates as the environment creates new problems creating the need for a continual and perpetual supply of new information results are reported from a survey of the agricultural research and development industry demonstrating how the environment engenders new problems in a systematic fashion and how the industry makes recourse to biological diversity for stocks of information to address those problems the rate at which biological diversity is input into the research and development process is indicative of the extent of the reliance of this northern based industry on southern based biodiversity this reliance is very substantial and the elimination of biodiversity could be disastrous for these important industries in the near term

the biodiversity conservation game with heterogeneous countries biodiversity is an essential resource which we classify as conditionally renewable in order to achieve conservation and sustainable use of biodiversity virtually all nation states signed the united nations convention on biological diversity in this paper we investigate how the heterogeneity of countries in regard to ecosystems and wealth influences the stability of international biodiversity conservation agreements both without and with transfers we further examine the effect of different degrees of ecosystem substitutability we model a coalition formation game with players that have a continuous conservation choice the conservation benefit is dependent on wealth and ecosystem quality aggregation of global benefits respects differences in ecosystem substitutability in case of transfers a fund redistributes coalition benefits according to a sharing rule the main finding is that in the absence of transfers compared to the homogeneous situation heterogeneity in ecosystems and wealth reduces the size of a stable coalition the destabilising effect is stronger the higher the ecosystem substitutability optimal transfers facilitate a large stable coalition

foreign transfers and tropical deforestation what terms of conditionality the purpose of this paper is to propose a nonparametric interest rate term structure model and investigate its implications on term structure dynamics and prices of interest rate derivative securities the nonparametric spot interest rate process is estimated from the observed short term interest rates following a robust estimation procedure and the market price of interest rate risk is estimated as implied from the historical term structure data that is instead of imposing a priori restrictions on the model data are allowed to speak for themselves and at the same time the model retains a parsimonious structure and the computational tractability the model is implemented using historical canadian interest rate term structure data the parametric models with closed form solutions for bond and bond option prices namely the vasicek 1977 and cir 1985 models are also estimated for comparison purpose the empirical results not only provide strong evidence that the traditional spot interest rate models and market prices of interest rate risk are severely misspecified but also suggest that different model specifications have significant impact on term structure dynamics and prices of interest rate derivative securities

impulse dynamics and propagation mechanisms in a real business cycle model abstract in a typical real business cycle model we find that output dynamics are determined primarily by impulse dynamics and that endogenous propagation mechanisms are weak consequently the model must rely on external sources of dynamics in order to replicate the univariate dynamics of u s per capita gnp

fiscal policy monopolistic competition and finite lives abstract this paper studies the short run transitional and long run output effects of permanent and temporary shocks in public consumption under various financing methods to this end a dynamic macroeconomic model for a closed economy is developed which features a perfectly competitive final goods sector and a monopolistically competitive intermediate goods sector finitely lived households consume final goods supply labor and save part of their income amongst the findings for a permanent rise in public consumption are i monopolistic competition increases the absolute value of the balanced budget output multiplier ii positive long run output multipliers are obtained only if the generational turnover effect is dominated by the intertemporal labor supply effect iii short run output multipliers under lump sum tax financing are smaller than long run output multipliers if labor supply is elastic and iv bond financing reduces the size of long run output multipliers as compared to lump sum tax financing and may give rise to non monotonic adjustment paths if labor supply is sufficiently elastic and the speed of adjustment of lump sum taxes is not too high temporary bond financed fiscal shocks are shown to yield i permanent effects on output and ii negative long run output multipliers

bargaining and international environmental agreements this article surveys game theoretic papers focused on the negotiation process that leads to an international environmental agreement most of the papers considered apply bargaining theory although other approaches have been considered as well among other issues the papers considered analyze the burden sharing rule that will result from a negotiation over a global public good the role of information asymmetries the impact of unilateral commitments delegation and ratification whether or not countries are going to form groups during the negotiation process and the influence of the expectation of a future bargaining process on investment decisions the basic bargaining model is optimistic as it predicts that countries will reach an efficient agreement immediately however all the developments of this model surveyed afterwards are rather pessimistic and even the basic model has perverse incentives for pre negotiation signals

the effect of commonality on safety stock in a simple inventory model we examine the effects of component commonality on optimal safety stock levels in a two product two level inventory model the criterion is to minimize system safety stock subject to a service level constraint although our model is specialized its analysis provides insights not available in other multilevel inventory models

pests plagues and patents the paper investigates the interaction between dynamic forms of incentive mechanisms patent systems and dynamic forms of problems adaptations of pests and pathogens since biological problems recur the design of the incentive mechanism must take into consideration a the need for investments into rd and b the impact of this impermanence on the anticipated lifespan of any patent awarded for an innovation the results indicate that patent systems must be carefully tailored to the nature of the problem under consideration jel c7 h0 h3 q38

endogenous markups intensity of competition and persistence of business cycles in order to study the propagation mechanism of business cycles in particular to investigate how the intensity of competition affects market structure and output persistence over business cycles this paper presents a real business cycle model with imperfect competition and increasing returns to scale this analysis considers the markups of price over cost to be endogenous with endogenous markups two standard forms of oligopolistic competition bertrand and cournot are considered results show that 1 the propagation mechanism in the sense of output persistence is greater under cournot 2 the propagation mechanism is unequivocally greater with imperfect competition regardless of whether markups are endogenous or not and 3 under imperfect competition the propagation mechanism is greater with endogenous markups than with exogenous markups overall these results suggest that more intense competition produces lower persistence in output growth and thus a weaker propagation mechanism in a calibration exercise these differences were also found to be quantitatively important

operationalizing technology improvements in product development decision making abstract achieving competitive advantage and price premiums in many technology based markets requires the incorporation of current technology in new products to do so firms in hyper competitive environments increasingly plan and design their products concurrent with the independent development and validation of underlying technologies simultaneous validation of a core technology has important implications for a company s product positioning and launch sequence decisions making these traditional marketing decisions relevant to operations managers prior research has shown that to minimize cannibalization in the absence of such improvements in technology a firm should not launch low end products before high end products however concurrent evolution of technology can make it desirable and even necessary to introduce low end products before high end products this is because in technology based industries improvements in technology delay the introduction of a high end product and a firm must trade off the benefit of launching the low end product earlier greater discounted profits against the cost of cannibalization of high end product sales high end product cannibalization can be further reduced by offering the customer an option to upgrade from the low end to high end product with important implications for the firm s product positioning and introduction sequence decisions based on our study in the high technology industry we model the product positioning and introduction sequence decisions under the simultaneous evolution of technology our analysis indicates that it may be optimal in a variety of circumstances for a firm to launch products in an increasing order of performance even in the absence of network externalities besides presenting analytical results for product positioning and profit from different introduction sequences the paper also makes a contribution to managerial practice by providing insights in the form of a conceptual framework

the north s intellectual property rights standard for the south abstract we build a multi sectoral north south trade model to analyze international intellectual property rights ipr protection by comparing the nash equilibrium ipr protection standard of the south the developing countries with that of the north the developed countries we find that the former is naturally weaker than the latter moreover we show that both regions can gain from an agreement that requires the south to harmonize its ipr standards with those of the north and the north to liberalize its traditional goods market this demonstrates the merits of multi sectoral negotiations in the gatt wto

regulating global biodiversity what is the problem we distinguish between local problems of biodiversity loss and global ones where international cooperation is required global biodiversity regulation involves choosing the optimal stopping rule regarding global land conversions in order to ensure that some areas of unconverted natural reserves remain to support the production sector that exists on converted lands the basic difficulty with implementing a solution to this global problem lies in the asymmetry in endowments between those states that have previously converted and those that have not we demonstrate that the fundamental problem of global biodiversity regulation is similar to the bargaining problem analysed by nash rubinstein and others there are benefits from global land conversion and there must be agreement on their distribution before the conversion process can be halted since the institutions addressing global biodiversity problems are either highly ineffectual benefit sharing agreements prior informed consent clauses or very extreme incremental cost contracts the biodiversity bargaining problem remains unresolved for this reason we anticipate that suboptimal conversions will continue to occur as a way of protesting the ineffective and unfair approaches employed in addressing this problem to date

bargaining with surplus destruction in a two player alternating offer bargaining model if one player can destroy the surplus to be allocated then the value to bargain for is endogenous except at the beginning even with complete information the model has perfect equilibria with delayed agreement and or surplus destruction the model therefore explains inefficiency and destruction that may appear irrational we characterize the set of equilibrium payoffs and its limiting be haviour as the time between offers vanishes real time delay remains possible even in the limit we also consider the case of surplus destruction that is exogenously limited by the

species preservation and biodiversity value a real options approach abstract we evaluate biodiversity in a real options framework when the resources in use are substitutable we examine optimal conservation decisions given that a biodiversity loss is irreversible and that future use values are uncertain while species substitutability has been shown to reduce the value of diversity we show that the flexibility associated with substitutability is a source of value marginal species value is decreasing in the number of species but rising and convex in the value of the marginal species as we show in the two species homogenous model increased volatility raises biodiversity value and a positive correlation between species values both reduces the value of the pool of species and the value of biodiversity the role played by the correlation between the value of a species and the value of other species is reminiscent of the beta of a financial asset just like an asset with a negative beta derives additional value by providing insurance against fluctuations in the market portfolio a species whose value tends to move in the opposite direction as the species in use derives additional value from its higher probability to be available for substitution if the value of the species in use diminishes

what determines aggregate returns to scale abstract this paper develops a unified framework that incorporates four features important in existing models with increasing returns fixed costs decreasing marginal costs product variety and market power when fixed costs are not allowed to vary and profits are imposed to be zero in every period only the degree of returns to variety determines the degree of aggregate increasing returns to scale when fixed costs respond to changes in aggregate activity or the zero profit condition does not hold in the short run aggregate returns depend not only on product variety but also on diminishing marginal costs or market power the degree of market power however does not affect input prices which are critical to determine the uniqueness of equilibrium

signaling future actions and the potential for sacrifice we consider extensions of games where some players have the option of signaling future actions by incurring costs the main result is that in a class of games if one player can incur costs then forwards induction selects her most preferred outcome surprisingly the player does not have to incur any costs to achieve this the option alone suffices however when all players can incur costs one player s attempt to signal a future action is vulnerable to a counter signal by the opponent this vulnerability to counter signaling distinguishes signaling future actions from signaling types

the effects of sensitization and habituation in durable goods markets abstract we develop a model to study the impact of changes in price sensitivity on the firm as it introduces multiple generations of a durable product where unit costs are a convex function of quality we incorporate the psychological processes of sensitization and habituation into a model of discretionary purchasing of replacement products motivated by past experience when price sensitivity decreases with each purchase sensitization the myopic firm offers a higher quality product at a much higher price with each generation when price sensitivity increases with each purchase habituation the myopic firm engages in price skimming when sensitization is followed by habituation the myopic firm eventually provides higher quality than the market is willing to pay for leading to a steep drop off in sales and profits the actions of the forward looking firm depend on the discount rate a firm with a low discount rate builds its customer base before offering a higher quality and higher priced product in contrast a firm with a high discount rate quickly increases price and quality following the same path to falling profits of the myopic firm these results provide insight into the firm and consumer behaviors underlying the phenomenon of performance oversupply identified in the innovation literature

north south negotiations on emission reductions a bargaining approach this article models north south negotiations on emission reductions where the north provides side payments in exchange for the south s adoption of a more stringent emission standard we find that depending on where firms compete strong asymmetry among regions the two regions different valuations of side payments and climate change damage can produce self enforcing cooperative agreements moreover the south s optimal standard choice can be one of two polar cases i e either the cleanest or the dirtiest irrespective of the continuum of standards available the results above can also hold true when both parties bargain over the south s emission tax

monopolistic competition technology shocks and aggregate fluctuations abstract we analyze a real business cycle rbc model in which aggregate production exhibits increasing returns to specialization in conjunction with imperfect competition and free entry and exit of firms over the business cycle we show that the requirements of both high variance and high persistence in technology shocks that have been noted by critics of rbc theory may arise from the assumptions of perfect competition and constant returns to scale rather than from the general proposition that real productivity shocks can significantly account for the business cycle

the social value of biodiversity for r d the value of genetic resources for use in research and development r d activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search here we develop a moregeneralised framework in which genetic resources are used in r d at thebase of an industry that addresses recurring problems of resistance as inthe pharmaceutical or plant breeding industries the r d process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction schumpeterian competition andadaptive destruction natural selection and adaptation this frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena we then demonstrate the important differences between firm based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation there are six externalitiesin private patent based genetic resource valuation and five of theseindicate that private valuations will under estimate social values

welfare improving debt policy under monopolistic competition abstract we analyse the effects of debt policy in an overlapping generations model with monopolistic competition debt crowds out capital and raises interest rates but unlike competitive models this is welfare improving for all generations if the elasticities of substitution in production are low in a non competitive model the social marginal product of capital could be negative while the rate of interest exceeds the population growth rate the latter two are non negative and profits exceed investment

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

component commonality with service level requirements this paper extends recent results of baker et al baker k r m j magazine h l w nuttle 1986 the effect of commonality on safety stocks in a simple inventory model management sci 32 982 988 in understanding the impact of component commonality on stocking levels under service level constraints a model is formulated for an arbitrary number of products with general joint demand distribution the results obtained are not all intuitive while utilizing commonality is beneficial nothing general can be said about the resulting change in the components stock levels when the cost structure is of a particular simple form though some interesting general patterns do emerge we also discuss the case of using a service level measure where rationing of common components might be required and characterize the implied rationing rule

commonality decisions when designing for multiple markets abstract it is well established that a manufacturer s commonality decisions between related products are driven by trade offs between cost savings from standardization and demand effects of customization prior research has examined these trade offs in the context of product line design for a single geography where cannibalization is a primary concern however the insights from a single market may not readily apply when serving related products for different geographies where cannibalization ceases to be a concern the downside of commonality for geographically separated markets arises from a mismatch in customer preferences which results in disutilities in this paper we model the trade off between the consumer side disutilities and the cost side scale economies in the presence of demand uncertainty and derive the optimal extent of commonality between products for both the markets in the context of two product development strategies i primary market centric design pmd and ii design for multiple markets dfm our insights from analytical and numerical analysis show that when consumers are very picky and market uncertainty is low the dfm strategy outperforms the pmd strategy counter to the practice of introducing primary market centric products into emerging markets our study demonstrates the need for more customization especially in small but uncertain markets our research has important implications for automakers in integrating the diversity in tastes while making commonality decisions for multiple markets

strategic enhancement and destruction of fisheries and the environment in the presence of international externalities abstract this paper considers enhancement of fisheries and the environment in the presence of international externalities by enhancement we refer to investments which affect the costs and benefits of controlling fish harvest rates or pollution emission levels in a two country two period model it is shown that enhancement may be used strategically to influence the behavior of rival governments and that the strategic effect may either offset or reinforce the standard free rider problem associated with such investment in some cases countries may have an incentive to invest in environmental destruction i e negative enhancement if policies are not coordinated internationally