intergenerational economic mobility in the united states 1940 to 2000 we estimate trends in intergenerational economic mobility by matching men in the census to synthetic parents in the prior generation we find that mobility increased from 1950 to 1980 but has declined sharply since 1980 while our estimator places greater weight on location effects than the standard intergenerational coefficient the size of the bias appears to be small our preferred results suggest that earnings are regressing to the mean more slowly now than at any time since world war ii causing economic differences between families to become more persistent however current rates of positional mobility appear historically normal

dynamic replenishment from two sources with different yields costs and leadtimes abstract we study a single item periodic review inventory system with two sources of supply in house production and outsourcing the two sources differ in yields costs and leadtimes demands in consecutive periods are independent random variables and stockout is fully backlogged our problem is to characterize the optimal dynamic policy that simultaneously determines the in house production quantity and the outsourcing quantity for each period to minimize the total discounted cost we show that the optimal policy for in house production can be characterized by a threshold and the production quantity is decreasing in the starting inventory the optimal outsourcing policy however is more complex and a threshold type policy is only optimal under a more restrictive assumption about the yields comparative statics about the effects of yield uncertainty outsourcing on the optimal policy and cost performance are discussed

an inventory model embedded in designing a supply contract to reduce lead time and its variability modern supply and transportation contracts often specify the frequency of and volume available for future deliveries in advance even when final demand is somewhat uncertain yano and gerchak yano c a y gerchak 1989 transportation contracts and safety stocks for just in time deliveries manufacturing and oper management 2 314 330 we explore the joint optimization of contract parameters and inventory control policy in such environments we first model and derive the optimal periodic review inventory policy corresponding to a given supply contract which generates piecewise linear convex ordering costs the optimal policy has two critical levels and there is a range of stock levels for which the quantity ordered equals the contract volume to numerically compute the critical levels we model consecutive inventory levels as a markov chain whose steady state distribution is used to compute the holding shortage and transportation costs we then use the

strategic group formation and performance the case of the u s pharmaceutical industry 1963 1982 the focus of this paper is on three major questions 1 what is the theoretical rationale for the strategic group concept 2 does strategic group membership have performance implications and 3 are strategic groups and membership in strategic groups stable characteristics of industries a statistical procedure is proposed to longitudinally identify strategic groups the empirical setting is the u s pharmaceutical industry over the period 1963 82 while performance differences are found in terms of market share profitability differences between groups are not observed neither are differences found in terms of risk and risk adjusted performance these results are attributed to the existence of performance variation within each strategic group a dynamic model of competitive repositioning is proposed which helps integrate the findings from the study

variations in r d investments of family and nonfamily firms behavioral agency and myopic loss aversion perspectives the behavioral agency model suggests that to preserve socioemotional wealth loss averse family firms usually invest less in r d than nonfamily firms however behavioral agency model predictions a

joint pricing and production decisions with yield uncertainty and downconversion abstract we consider a firm who supplies two types of products high end and low end because of the uncertainty in the production process the yield rate of the high end products is uncertain the substandard high end products caused by the yield uncertainty can be transformed into the low end products with a certain cost we characterize the optimal pricing and production decisions and develop an algorithm to compute the optimal solution we also investigate the impact of the yield uncertainty on the firm s performance and explore how stability of market demand emergent fulfillment costs and downconversion cost influence this effect we find that i the profit of the firm deteriorates when the risk of the yield uncertainty is high in the face of yield uncertainty the firm prefers to decrease increase the production quantity of the high end low end products ii when the market demands are quite unstable the emergent fulfillment costs are low or the downconversion cost is high the firm has a low incentive to eliminate the yield uncertainty

depreciation policy changes tax earnings management and investment opportunity incentives abstract contrary to previous studies we find managers change depreciation policies in predictable ways we identify three dimensions of depreciation policy changes whether it is a method change or an estimate revision whether it is income increasing or decreasing and whether it applies to new assets only or both new and existing assets this disaggregation leads to three findings first a 1981 tax law altered the frequency of estimate revisions and method changes second firms adopting income increasing method changes for all assets experience worse performance than those adopting such changes only for new assets finally non income increasing policy changes are associated with changes in investment opportunities

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

trends in intergenerational income mobility previous studies of recent u s trends in intergenerational income mobility have produced widely varying results partly because of large sampling errors by making more efficient use of the available information in the panel study of income dynamics we generate more reliable estimates of the recent time series variation in intergenerational mobility our results which pertain to the cohorts born between 1952 and 1975 do not reveal major changes in intergenerational mobility

transitional dynamics and the distribution of wealth in a neoclassical growth model abstract the evolution of the personal distribution of wealth in a standard neoclassical growth model is studied if the economy is growing toward the steady state and preferences are such that marginal utility from consumption is infinite finite at some all positive non negative consumption level s then the average saving propensity of agents is positively negatively related to their wealth if the economy is decaying toward the steady state these relationships are reversed if wealth and average saving propensity are positively negatively related the distribution of current period wealth lorenz dominates is lorenz dominated by next period s distribution of wealth

centralization fiscal federalism and private school attendance a cge model is used to analyze the impact of public school financing on private school attendance the common perception that public school finance centralization will necessarily lead to greater private school attendance is not correct in such a model even when that centralization involves an extreme equalization as in california furthermore if centralization is less dramatic as in most states declines in private school attendance are even more pronounced this weakens the speculation that low exit rates to private schools in centralizing states imply that general public school quality does not drop as a result of such centralization

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

effects of the complementarity of child nutrition and education on persistent deprivation abstract this letter shows how unfavourable nutritional status may affect the evolution of income independently from its impact on life spans multiple steady states might emerge when it is assumed that nutrition is a component of human capital

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

biases in standard measures of intergenerational income dependence abstract estimates of the most common mobility measure the intergenerational elasticity can be severely biased if snapshots are used to approximate lifetime income however little is known about biases in other popular dependence measures using long swedish income series we provide such evidence for log linear and rank correlations and rank based transition probabilities attenuation bias is considerably weaker in rank based measures life cycle bias is strongest in the elasticity moderate in log linear correlations and small in rank based measures however there are important exceptions persistence in the tails of the distribution is considerably higher and long distance downward mobility lower than estimates from short run income suggest

supplier performance in vertical alliances the effects of self enforcing agreements and enforceable contracts the paper examines the significance of enforceability and adaptability in governing vertical alliances and their performance ramifications for suppliers literature on supplier relations suggests that suppliers are skeptical of close ties with their buyers helper 1991 helper and sako 1995 such skepticism persists in spite of the fact that buyers are writing longer enforceable contracts with fewer suppliers in this context the paper develops a transaction cost economics tce based model that distinguishes between the verifiable and nonverifiable aspects of governance attributes of safeguards incentive intensity and adaptability in explaining supplier performance variations the paper argues that the following factors prove valuable for suppliers 1 the adaptive and collaborative orientation fostered by the original equipment manufacturer s oem s credible commitment to the exchange and by information sharing on the part of the supplier 2 the presence of certain nonverifiable safeguards and 3 the incentives inherent in target pricing these assertions have been tested using data from the home appliance industry results indicate that information sharing together with 1 oem dependence and 2 target pricing does indeed enhance supplier performance also results suggest that while nonverifiable safeguards can help verifiable safeguards do not have a positive association with supplier interests under certain conditions then suppliers can venture into closer relationships with buyers and benefit

uncertainty and hyperbolic discounting we propose an evolutionary explanation for the pattern of intertemporal preference reversals often ascribed to hyperbolic discounting we take the view that preferences manifested for example in urges cravings and inclinations are the outcome of evolutionary forces and so will induce animals or humans to make survival maximizing choices in typical decision problems we show that if the typical problem involves payoffs whose realization times are uncertain then optimal preferences give rise to relatively patient behavior when the time horizon is long but induce a switch to impatience when the horizon grows short such reversals do not entail dynamic inconsistency in typical decision problems behavior there is optimal however if a decision maker is confronted with a choice for which the realization time uncertainty falls outside the evolutionary norm her preferences may well prompt her to behave inconsistently we argue that if such a choice problem recurs her evolutionarily endowed aability to learn will lead her to make self commitments against these urges this abstract was borrowed from another version of this item

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

pay as you go social security and the distribution of altruistic transfers this paper studies the impact of an unfunded social security system on the distribution of altruistic transfers in a framework where savings are due to both life cycle and random altruistic motivations we show that the effect of social security on the distribution of these transfers depends crucially on the strength of the bequest motive in explaining savings behaviour we measure this strength by the expected weight that individuals attach to the utility of future generations on the one hand if the bequest motive is strong then an increase in the social security tax raises the bequests left by altruistic parents on the other hand when the importance of altruism in motivating savings is sufficiently low the increase in the social security tax could result in a reduction of the bequests left by altruistic parents under some conditions on the attitude of individuals toward risk and on the relative returns associated with private saving and social security some implications concerning the transitional effects of introducing an unfunded social security scheme are also discussed

joint pricing and inventory replenishment decisions with returns and expediting abstract we study a single item periodic review model for the joint pricing and inventory replenishment problem with returns and expediting demand in consecutive periods are independent random variables and their distributions are price sensitive at the end of each period after the demand is realized a buyer can return excess stocks to a supplier or if there are stockouts the buyer can place an expediting order at the supplier to reduce the amount of shortage unfilled demands are fully backlogged we characterize the optimal dynamic policy that determines the pricing inventory replenishment and adjustment decisions in each period so that the total expected discounted profit is maximized for a very general stochastic demand function we can show that the optimal replenishment policy is a modified base stock policy the optimal pricing policy is a modified base stock list price policy and the optimal policy for inventory adjustment follows a dual threshold policy we further study the operational effect of returns and expediting analytical and numerical results demonstrate that returns and expediting lead to a significant profit increase in a number of situations including limited supply capacity sufficient flexibility of the expediting order high demand uncertainty and a price sensitive market

value destruction and financial reporting decisions the comprehensive survey reported here allowed analysis of how senior u s financial executives make decisions related to performance measurement and voluntary disclosure chief financial officers were asked what earnings benchmarks they cared about and which factors motivated executives to exercise discretion even sacrifice economic value to deliver earnings these issues are crucially linked to stock market performance the results show that the destruction of shareholder value through legal means is pervasive perhaps even a routine way of doing business indeed the amount of value destroyed by companies striving to hit earnings targets exceeds the value lost in recent high profile fraud cases

regression toward mediocrity in economic stature this paper provides estimates of the correlation in lifetime earnings between fathers and sons intergenerational data from the national longitudinal survey are used earlier studies conducted for the united states report elasticities of children s earnings with respect to parent s earnings of 0 2 or less suggesting extensive integenerational mobility these estimates however are biased downward by error contaminated measures of lifetime economic status estimates presented in this paper correct for the problem of measurement error and find the intergenerational correlation in income to be on the order of 0 4 this suggests considerably less intergenerational mobility than previously believed jel j62

pareto superiority of unegalitarian equilibria in stiglitz model of wealth distribution with convex saving function this paper extends the conclusions obtained by stiglitz and others about the asymptotic wealth distribution in the neo classical growth model when the saving function is convex it is shown not only that locally stable two class unegalitarian equilibria may exist along with the egalitarian equilibrium but also that they necessarily are pareto superior to it more generally the paper also analyzes the class of pareto optimal unegalitarian equilibria

economic and mechanical models of intergenerational transmission the author critically examines gary beckers attempt to integrate the theory of income distribution intragenerational differences with the theory of mobility intergenerational differences in an economic model of the family he assesses beckers claims of distinctiveness integration explanatory power and surprise and arrives at a rather skeptical view of the contribution that the core of microeconomics has made to this study of the family a reply by becker is included pp 514 8 excerpt

intergenerational persistence of earnings the role of early and college education recent empirical evidence from the united states indicates a high degree of persistence in earnings across generations designing effective public policies to increase social mobility requires identifying and measuring the major sources of persistence and inequality in earnings we provide a quantitative model of intergenerational human capital transmission that focuses on three sources innate ability early education and college education we find that approximately one half of the intergenerational correlation in earnings is accounted for by parental investment in education in particular early education we show that these results have important implications for education policy

computers obsolescence and productivity this paper develops a new technique for measuring the effect of computer usage on u s productivity growth standard national income and product accounts nipa measures of the computer capital stock which are constructed by weighting past investments according to a schedule for economic depreciation the rate at which capital loses value as it ages are shown to be inappropriate for growth accounting because they do not capture the effect of a unit of computer capital on productivity this is due to technological obsolescence machines that are still productive are retired because they are no longer near the technological frontier and anticipation of retirement affects economic depreciation using a model that incorporates obsolescence alternative stocks are developed that imply a larger computer usage effect this effect together with the direct effect of increased productivity in the computer producing sector accounted for the improvement in u s productivity growth over 1996 1998 relative to the

do short term objectives lead to under or overinvestment in long term projects we examine managerial investment decisions in the presence of imperfect information and short term managerial objectives prior research has argued that such an environment induces managers to underinvest in long run projects we show that short term objectives and imperfect information may also lead to overinvestment and we identify how the direction of the distortion depends upon the type of informational imperfection present when investors cannot observe the level of investment in the long run project suboptimal investment will be induced when investors can observe investment but not its productivity however overinvestment will occur there has been in recent years substantial public debate on the question of whether the long run investment decisions of the managers of publicly traded companies may be distorted by market pressures recent work by economists has tried to identify the potential source and nature of such distortions research has naturally focused on situations that are characterized by i short term managerial objectives the managers are concerned not only with the firm s long run stock price but also with the firm s short run stock price due to incentive schemes or the fear of losing control and ii imperfect information the market has less information than the firm s managers about the firm s long run projects the results of this research have indicated that in some situations short term objectives and imperfect information may lead to underinvestment in long run projects this paper seeks to extend prior work on the effects of short term objectives and imperfect information on long run investment decisions we demonstrate that imperfect information together with an emphasis on a firm s short run valuation may lead not only to underinvestment but also to overinvestment in long run projects the direction of the distortion depends

combined pricing and inventory control under uncertainty this paper addresses the simultaneous determination of pricing and inventory replenishment strategies in the face of demand uncertainty more specifically we analyze the following single item periodic review model demands in consecutive periods are independent but their distributions depend on the item s price in accordance with general stochastic demand functions the price charged in any given period can be specified dynamically as a function of the state of the system a replenishment order may be placed at the beginning of some or all of the periods stockouts are fully backlogged we address both finite and infinite horizon models with the objective of maximizing total expected discounted profit or its time average value assuming that prices can either be adjusted arbitrarily upward or downward or that they can only be decreased we characterize the structure of an optimal combined pricing and inventory strategy for all of the above types of models we also develop an efficient value iteration method to compute these optimal strategies finally we report on an extensive numerical study that characterizes various qualitative properties of the optimal strategies and corresponding optimal profit values

moving closer to the action examining compensation design effects on firm risk we examine the influence of ceo equity based compensation on strategic risk taking by the firm building off the behavioral agency model agency theory and prospect theory we develop arguments about when equity based compensation elements will increase or decrease executive risk propensity and in turn strategic risk taking incorporating a behavioral perspective into our models of incentive alignment provides us with new and potentially more accurate predictions about how individual elements of ceo pay will influence risk selection as well as how equity compensation interacts with cash compensation and with other factors to influence risk preferences in general this study provides evidence that ceo equity based compensation significantly influences strategic risk but that this influence is more nuanced and complex than conventional treatments of executive compensation assume in particular we find that different forms of equity based pay exhibit dissimilar influences on strategic risk and that their influence changes as their value and vesting status change second we find that cash based forms of pay moderate the incentive properties of equity based pay indicating that cash based pay may affect how executives perceive risks associated with equity pay finally we find that stock price volatility and board actions each also moderate the incentive effects of equity based pay in sum our results argue for increased recognition of a behavioral perspective on executive compensation and greater precision in how we measure and model the incentive alignment properties of ceo compensation

real economy effects of short term equity ownership investor time horizon varies by company industry and economic system in this article we explore the importance of this variation by studying the impact of shareholder time horizon on the investment decisions of the firms they own and externalities on the wider market we demonstrate theoretically that short term shareholders cause boards to care about the path of the stock price rationalising firms pursuit of investments for signalling reasons at the expense of long term value we demonstrate that short termism has spillover effects leading to higher costs of equity capital bubbles in the price of input assets and predictable excess returns we build testable cross country hypotheses and evaluate these using existing evidence coupled with a new dataset on owner duration of us and germanic firms

family economics and macro behavior in this 1987 presidential address to the american economic association the author explores the contributions of the field of family economics to macroeconomic analysis the focus is on family behavior as an active endogenous factor that both affects and is affected by the evolution of the economy much of the time is spent on long term economic growth although i also discuss short and long cycles in economic activity and the interaction between overlapping generations through social security transmission of inequality and in other ways many conclusions in these and presumably other macro areas change radically when family choices get the attention they deserve excerpt

unobservable family and individual contributions to the distributions of income and wealth this paper uses combinations of full brothers half brothers and fathers and sons to measure the effect of common family background on a household s income and wealth while the data are drawn from a nineteenth century population the intraclass correlation for income ranges from 13 to 18 which is similar to that found in modern samples intraclass correlations for wealth are significantly higher 18 35 than are those for income intraclass correlations of half brothers compared to those for full brothers suggest that fathers play a dominant role in the transmission of the common family effect when unobserved background is decomposed into individual and family effects the individual effect dominates the family effect for income while the family effect dominates the individual effect for wealth

newsvendor with multiple options of expediting we consider a manufacturer facing single period inventory planning problem with uncertain demand and multiple options of expediting the demand comes at a certain time in the future the manufacturer may order the product in advance with a relatively low cost she can order additional amount by expediting after the demand is realized there are a number of expediting options each of which corresponds to a certain delivery lead time and a unit procurement price the unit procurement price is decreasing over delivery lead time the selling price is also decreasing over time in this paper we assume that the manufacturer must deliver all products to the customer in a single shipment the problem can be formulated as a profit maximization problem we develop structural properties and show how the optimal solution can be identified efficiently in addition we compare our model with the classical newsvendor model and obtain a number of managerial insights

parental wealth and adult children s welfare in marriage abstract many studies find that parental resources importantly determine children s human capital schooling returns and earnings the collective household approach suggests that in addition parental resources of marital partners may importantly affect resource distributions within marriage this paper presents empirical results consistent with this framework they suggest that parental wealth continues to play roles in augmenting welfare of children into adulthood beyond provision of human capital in early life cycle stages or direct financial aid during adulthood and that actual transfers from parents to adult children do not fully measure influences of parental wealth on behaviors and welfare of adult children

corruption tax evasion and social values we provide a theoretical explanation for the vicious circle of political corruption and tax evasion in which countries often fall into we address this issue in the context of a model with two distinct groups of agents citizens and politicians citizens decide the fraction of their income for which they evade taxes politicians decide the fraction of the public budget that they peculate we show that multiple self fulfilling equilibria with different levels of corruption can emerge based on the existence of strategic complementarities indicating that corruption may corrupt furthermore we find that standard deterrence policies cannot eliminate the multiplicity of equilibria instead policies that impose a strong moral cost on tax evaders and corrupt politicians can lead to a unique equilibrium

swinging for the fences the effects of ceo stock options on company risk taking and performance we unpack the concept of managerial risk taking distinguishing among three of its major elements the size of an outlay the variance of potential outcomes and the likelihood of extreme loss we

joint replenishment and pricing decisions in inventory systems with stochastically dependent supply capacity abstract in this paper we study a joint optimization problem of replenishment and pricing for a periodic review inventory system with random supply capacity when making replenishment and pricing decisions at the beginning of each period the firm only knows the supplier s available capacity in the current period but does not know what will be the available capacity in future periods the salient feature of our model is that the random supply capacities for different periods are dependent several stochastic dependency structures are considered for the supply capacity sequence including the one lag and the multi lag dependency we show that the optimal inventory control policy is of the modified base stock type and the base stock level is decreasing in the available capacity of the current period and that the optimal pricing policy is a list price coined with markdown and markup this paper generalizes the work of federgruen and zipkin federgruen a zipkin p 1986a an inventory model with limited production capacity and uncertain demands i the average cost criterion mathematics of operations research 11 193 207 federgruen a zipkin p 1986b an inventory model with limited production capacity and uncertain demands ii the discounted cost criterion mathematics of operations research 11 208 215 in which the supply capacity and selling price are assumed to be fixed constants and the work of federgruen and heching federgruen a heching a 1999 combining pricing and inventory control under uncertainty operations research 47 454 475 on joint optimization of replenishment and pricing with unlimited supply capacity

snapshots versus movies empirical studies of the intergenerational inheritance of economic status should use observations on complete lifetime status profiles of parents and children to be consistent with underlying theory but they cannot only snapshots rather than movies on status are currently available in samples estimates of the degree of intergenerational inheritance may therefore be subject to lifecycle biases the paper investigates these in the context of a lifecycle earnings model and shows that these biases may be large that their direction varies and that correction methods suggested hitherto have questionable reliability until more complete data sets become available researchers should be more temperate in the conclusions they draw

managerial incentives and investment in r d in large multiproduct firms incentives for division managers in large firms affect their risk orientation and thus their decisions to invest in r d this paper reviews theory and hypothesizes that division managers incentive compensation that is based on financial performance is negatively related to risk taking as measured by r d intensity results of a study of 184 major u s firms suggest that incentives based on short term annual division financial performance are negatively related to total firm r d intensity after controlling for industry r d intensity firm diversification size and group structure furthermore the results suggest that an emphasis on long term financial incentives may mitigate the negative relationship between these incentives and r d intensity but does not promote risk taking the results suggest the importance of emphasizing strategic controls evaluating division managers based on operational understanding of strategies proposed strategic criteria as opposed to the use of financial controls evalua

technical note optimal dynamic joint inventory pricing control for multiplicative demand with fixed order costs and lost sales this note studies the optimal dynamic decision making problem for a retailer in a price sensitive multiplicative demand framework our model incorporates lost sales holding cost fixed and variable procurement costs as well as salvage value we characterize the structure of the retailer s discounted expected profit maximizing dynamic inventory policy for both finite and infinite selling horizon problems

takeover threats and managerial myopia this paper examines the familiar argument that takeover pressure can be damaging because it leads managers to sacrifice long term interests in order to boost current profits if stockholders are imperfectly informed temporarily low earnings may cause the stock to become undervalued increasing the likelihood of a takeover at an unfavorable price hence the managerial concern with current bottom line the magnitude of the problem depends on a variety of factors including the attitudes and beliefs of shareholders the extent to which corporate raiders have inside information and the degree to which managers are concerned with retaining control of their firms

joint pricing and inventory control with a markovian demand model abstract we consider the joint pricing and inventory control problem for a single product over a finite horizon and with periodic review the demand distribution in each period is determined by an exogenous markov chain pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged the surplus costs as well as fixed and variable costs are state dependent we show the existence of an optimal s s p type feedback policy for the additive demand model we extend the model to the case of emergency orders we compute the optimal policy for a class of markovian demand and illustrate the benefits of dynamic pricing over fixed pricing through numerical examples the results indicate that it is more beneficial to implement dynamic pricing in a markovian demand environment with a high fixed ordering cost or with high demand variability

coordinating inventory control and pricing strategies with random demand and fixed ordering cost the finite horizon case we analyze a finite horizon single product periodic review model in which pricing and production inventory decisions are made simultaneously demands in different periods are random variables that are independent of each other and their distributions depend on the product price pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged ordering cost includes both a fixed cost and a variable cost proportional to the amount ordered the objective is to find an inventory policy and a pricing strategy maximizing expected profit over the finite horizon we show that when the demand model is additive the profit to go functions arek concave and hence an s s p policy is optimal in such a policy the period inventory is managed based on the classical s s policy and price is determined based on the inventory position at the beginning of each period for more general demand functions i e multiplicative plus additive functions we demonstrate that the profit to go function is not necessarilyk concave and an s s p policy is not necessarily optimal we introduce a new concept the symmetrick concave functions and apply it to provide a characterization of the optimal policy

the dynamics of the wealth distribution and the interest rate with credit rationing are uniquely determined and wealth dispersion among individuals or firms is irrelevant introducing credit rationing into the solow model modifies these conclusions multiple stationary interest rates and wealth distributions can exist because higher initial rates can be self reinforcing through higher credit rationing and lower capital accumulation the wealth accumulation process is ergodic in every steady state but wealth mobility is lower with higher steady state interest rates aggregate output is higher in steady states with lower interest rates because credit is better allocated short run interest rate or distribution shocks can be self sustaining and can have long run effects on output through the induced dynamics of the wealth distribution and credit rationing

dynamic replenishment production and pricing decisions in the face of supply disruption and random price sensitive demand abstract we study a joint decision problem for replenishment production pricing strategies in the face of both supply and demand uncertainties the supply of the raw material suffers from a potential supply disruption while the demand for the finished goods is price sensitive and random we assume that the raw material is storable and unfilled demands are fully backordered we characterize the optimal policies for raw material replenishment finished goods production and pricing we find that the optimal replenishment policy is an order up to type for a given finished goods stock level while it is a threshold type for a given raw material stock level for either a given finished goods stock level or a given raw material stock level the optimal production policy is a threshold type and the optimal pricing policy is a modified list price type respectively

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

poverty traps and human capital accumulation in this paper i show that persistent inequality in the distribution of human capital and a negative relation between initial inequality and steady state aggregate output may follow from the fact that the poor require relatively higher returns to increase expenditure on education moreover i show that poverty traps emerging in models where individual transitions do not depend on aggregate dynamics though not robust to the introduction of idiosyncratic uncertainty may still be relevant observationally if idiosyncratic shocks occur with low probability in this context i also analyse the implications of introducing a public education system

intergenerational health mobility an empirical approach based on the echp despite the importance of the study of health mobility few attempts have been made to measure intergenerational mobility not only in the european union but also in other countries such as united states this article is focused on the study of intergenerational health mobility using data from the european community household panel echp in particular the relationships between self assessed health of parents and their sons are analysed the evidence obtained suggests that in spain sons reported health depends significantly on the self assessed health of their fathers

a behavioral understanding of investment horizon and firm performance observers have argued that firms overly emphasize short term results at the expense of long run value using a behavioral perspective we analyze three hypotheses related to this general argument first we examine the association of investment time horizons with firm performance contributing new theory that argues for a quadratic rather than linear association second because the tendency toward immediate results could reflect stock market pressures we consider how the interaction of investor patience and firm horizon relates to firm performance third we examine the argument s implication that most firms have investment horizons at a level where marginal increases in horizon associate positively with firm performance measuring horizon as the expected useful lives of capital expenditures we find empirical support for the hypothesized quadratic relation in a large scale multiyear sample of u s publicly held manufacturing firms and confirm that a majority of firms have horizons in the region where our models predict increases in horizon positively influence performance we also find that the most positive returns occur when long horizon investments are aligned with investor patience