optimal dynamic pricing of inventories with stochastic demand over finite horizons in many industries managers face the problem of selling a given stock of items by a deadline we investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm s objective is to maximize expected revenues examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry which markets space such as seats on airline flights cabins on vacation cruises and rooms in hotels that become worthless if not sold by a specific time we formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity resp price as a function of the stock level and the length of the horizon for a particular exponential family of demand functions we find the optimal pricing policy in closed form for general demand functions we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity finally we extend our results to the case where demand is compound poisson only a finite number of prices is allowed the demand rate is time varying holding costs are incurred and cash flows are discounted the initial stock is a decision variable and reordering overbooking and random cancellations are allowed

dynamic pricing of perishable assets under competition we study dynamic price competition in an oligopolistic market with a mix of substitutable and complementary perishable assets each firm has a fixed initial stock of items and competes in setting prices to sell them over a finite sales horizon customers sequentially arrive at the market make a purchase choice and then leave immediately with some likelihood of no purchase the purchase likelihood depends on the time of purchase product attributes and current prices the demand structure includes time variant linear and multinomial logit demand models as special cases assuming deterministic customer arrival rates we show that any equilibrium strategy has a simple structure involving a finite set of shadow prices measuring capacity externalities that firms exert on each other equilibrium prices can be solved from a one shot price competition game under the current time demand structure taking into account capacity externalities through the time invariant shadow prices the former reflects the transient demand side at every moment and the latter captures the aggregate supply constraints over the sales horizon this simple structure sheds light on dynamic revenue management problems under competition which helps capture the essence of the problems under demand uncertainty we show that the equilibrium solutions from the deterministic game provide precommitted and contingent heuristic policies that are asymptotic equilibria for its stochastic counterpart when demand and supply are sufficiently large this paper was accepted by yossi aviv operations management

rent control and prices of owner occupied housing we examine the relation between rent control and prices of owner occupied housing in th e presence of different qualities of housing while a rent ceiling and the price of condominiums are substitutes if housing is undifferentiated it is shown that this is not necessarily the case when housing differs in quality a complete dismantling of rent control may in fact increase the price of condominiums

out of control what can we learn from the end of massachusetts rent control abstract this paper uses the sudden end of rent control in massachusetts in 1995 to estimate the effects of rent control i examine boston msa data from the american housing survey years 1985 1998 to determine how rent control affected the quantity price and quality of rental housing my results suggest rent control had little effect on the construction of new housing but did encourage owners to shift units away from rental status and reduced rents substantially rent control also led to deterioration in the quality of rental units but these effects appear to have been concentrated in smaller items of physical damage i also examine specifications that allow rent control to affect rent levels both directly through controlled status and indirectly through spillover effects from nearby rent controlled units these estimates imply that rent control may have small effects on the price of the non controlled rental housing stock

on the imputation of rental prices to owner occupied housing this paper challenges the usual objections to the possibility of applying the rental equivalent approach to determine the weight that nonrental housing services should have in the consumer price index cpi using data from two spanish household budget surveys it is shown that market rents can be well represented in terms of an index of housing quality two geographical variables and the year of occupancy this parsimonious empirical model is used to impute a rental value to nonrental housing units taking into account the possible selection bias induced by systematic differences in housing characteristics between the market rental sector and the nonrental stock on average the estimated hedonic values are relatively close to the self imputations provided in the household surveys by the occupants of such dwellings therefore using either of the two alternatives to assess the importance of nonrental housing services in the cpi have small consequences for inflation instead dropping these services from the cpi creates a downward bias in the measurement of inflation of 0 33 percentage points per year during 1985 1992 and an upward bias of 0 38 percentage points per year during 1993 to 2000 jel c43 d12 r21 c21 e31

state misallocation and housing prices theory and evidence from china this paper examines the equilibrium price effects of the privatization of housing assets that were previously owned and allocated by the state i develop a theoretical framework that shows that privatization can have ambiguous effects on prices in the private market and that the degree of misallocation of the assets prior to privatization deter mines the subsequent price effects i test the predictions of the model using a large scale housing reform in china the results suggest that the removal of price distortions allowed households to increase their consumption of housing and led to an increase in equilibrium hous ing prices jel l33 018 p25 r31 r38 state participation in the housing market occurs in several forms in countries throughout the world the provision of subsidized housing as a welfare benefit to low income households is common throughout the western hemisphere in addition local governments in several cities in the united states have implemented regula tions that limit the increase of rents charged by landlords 1 this paper focuses on a form of state intervention in housing that occurs through the provision of subsidized homes to state employees the economic consequences of this area of research are potentially large as employer provided housing in the state sector is common throughout the developing world particularly in asia and sub saharan africa government regulation of the private market or the creation of a separate mar ket ensures that certain households have access to housing at prices that are below market value state interventions that aim to bring affordable housing to particu lar subsegments of the population can create economic inefficiencies they distort the decisions that individuals make regarding residential mobility joseph gyourko and peter linneman 1989 gordon a hughes and barry mccormick 1987 and employment michael svarer michael rosholm and jakob roland munch 2005 wang forthcoming and they lead to underinvestment in the construction and main

optimal dynamic pricing of perishable products with stochastic demand and a finite set of prices abstract consider a continuous time inventory problem in which a retailer sets the price on a fixed number of a perishable asset that must be sold prior to the time at which it perishes the retailer can dynamically adjust the price between any of a finite number of allowable prices demand for the product is poisson with an intensity that is inversely related to the price the optimal policy is piecewise constant the maximum expected revenue is nondecreasing and concave in both the remaining inventory and the time to go for a given inventory level the optimal price declines as the time at which the products perish approaches at any given time the optimal price is nonincreasing in the number of items remaining unsold these results are extended to i the case in which the prices and corresponding demand intensities depend on the time to go and ii the case in which the retailer can restock to meet demand at a unit cost after the initial inventory has been sold

on pricing of perishable assets with menu costs we consider dynamic pricing of perishable assets in the presence of price sensitive renewal demand processes unlike the existing works in the literature we explicitly incorporate non negligible price change costs which reflects the revenue management practice more realistically these costs are also known as menu costs in the economic literature the objective is to maximize the discounted expected profit for an initial inventory of q items by determining the selling prices dynamically we employ a dynamic programming approach and formulate a model that captures the price demand relationship we establish some theoretical results on the properties of the problem at hand specifically we establish the sufficient conditions under which the within period profit is concave in the selling price and in the remaining shelf life and furthermore show the structure of the myopically and asymptotically optimal pricing policy in a numerical study we investigate the impact of various system parameters and in particular the existence of menu costs on pricing decisions we observe that ignoring menu costs may be significantly misleading for the implementation of revenue management we also propose four implementable policy heuristics and examine their performances our findings support some results previously obtained in settings with continuous pricing and negligible price change costs and contradict some others 2009 published by elsevier b v

bundle pricing of inventories with stochastic demand we consider a retailer selling a fixed inventory of two perishable products over a finite horizon assuming poisson arrivals and a bivariate reservation price distribution we determine the optimal product and bundle prices that maximize the expected revenue our results indicate that the performances of mixed bundling pure bundling and unbundled sales strategies heavily depend on the parameters of the demand process and the initial inventory levels bundling appears to be most effective with negatively correlated reservation prices and high starting inventory levels when the starting inventory levels are equal and in excess of average demand most of the benefits of bundling can be achieved through pure bundling however the mixed bundling strategy dominates the other two when the starting inventory levels are not equal we also observe that an incorrect modeling of the reservation prices may lead to significant losses the model is extended to allow for price changes during the selling horizon it is shown that offering price bundles mid season may be more effective than changing individual product prices

dynamic pricing of inventory capacity with infrequent price changes we consider a problem of dynamically pricing a single product sold by a monopolist over a short time period if demand characteristics change throughout the period it becomes attractive for the company to adjust price continuously to respond to such changes i e price discriminate intertemporally however in practice there is typically a limit on the number of times the price can be adjusted due to the high costs associated with frequent price changes if that is the case instead of a continuous pricing rule the company might want to establish a piece wise constant pricing policy in order to limit the number of price adjustments such a pricing policy which involves optimal choice of prices and timing of price changes is the focus of this paper we analyze the pricing problem with a limited number of price changes in a dynamic deterministic environment in which demand depends on the current price and time and there is a capacity inventory constraint that may be set optimally ahead of the selling season the arrival rate can evolve in time arbitrarily allowing us to model situations in which prices decrease increase or neither we consider several plausible scenarios where pricing and or timing of price changes are endogenized various notions of complementarity single crossing property supermodularity and total positivity are explored to derive structural results conditions sufficient for the uniqueness of the solution and the monotonicity of prices throughout the sales period furthermore we characterize the impact of the capacity constraint on the optimal prices and the timing of price changes and provide several other comparative statics results additional insights are obtained directly from the solutions of various special cases

joint inventory allocation and pricing decisions for perishable products abstract we jointly determine the price and the inventory allocation for a perishable product with a predetermined lifetime we assume that the price of the product increases as the time when it perishes approaches as in the airline industry demand for the product is price sensitive to maximize the expected revenue we developed a discrete time dynamic programming model to obtain the optimal prices and the optimal inventory allocations for the product with a two period lifetime we then proposed three heuristics when the lifetime is longer than two periods the computational results showed that the expected revenues from the proposed heuristics were very close to that of the optimal solution we extended these results to i the case where the price for the product consistently decreases and ii the case where the price for the product first increases and later decreases

markets versus planning an assessment of the swedish housing model in the post war period the purpose of this study is to present a comparative economic systems evaluation of the swedish housing model the evaluation examines success in achieving equity as well as efficiency goals and incorporates key comparisons with the market oriented us housing model from the late 1940s up to the major housing reforms of the early 1990s a form of strong economic planning characterised the swedish housing sector by the early 1970s the housing standard for all income groups had been raised markedly and urban slums eliminated yet sweden s success came at huge resource cost while at the same time important equity goals were compromised for example swedish building costs are among the highest in the world while in sweden s major cities socioeconomic segregation is more pronounced than ever before in the post war period

rent control and misallocation rent control is still an important type of government regulation of housing markets in many countries and numerous researchers have studied its implications for allocation welfare and investments in housing the present paper aims to improve our understanding of the effect of second generation rent control when it is applied only to one sector of the rental market it is diagrammatically shown that the welfare effects are very different between a universal and a limited application of rent control studying the danish case of second generation rent control lower rents are found in controlled sectors and a minor increase of the rent in the uncontrolled sector using the area of living space in the dwelling as a measure for housing consumption evidence is also produced of both overallocation and underallocation of housing in the rent controlled sectors as envisaged by economic theory

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

revenue management model for on demand it services abstract this paper presents a model for applying revenue management to on demand it services the multinomial logit model is used to describe customer choice over multiple classes with different service level agreements slas a nonlinear programming model is provided to determine the optimal price or service level for each class through a numerical analysis we examine the impacts of system capacity and customer waiting incentives on the service provider s profit and pricing strategies

integration of pricing and capacity allocation for perishable products abstract for years pricing and capacity allocation decisions in most revenue management models have been carried out independently this article presents a comprehensive model to integrate these two decisions for perishable products we assume that the supplier sells the same products to different micro markets at distinct prices throughout the sales season the supplier faces decisions as to which micro markets or customer classes should be served and at what prices we show that i at any time a customer class is active being served if and only if the price offered is over a threshold level but the optimal price may not be the highest one of the supplier s choice ii when the price decision is made in conjunction with inventory it is similar to the procedure shown in pure pricing models i e the optimal price comes from a subset of prices that forms a maximum increasing concave envelope iii because of dynamic changes in the optimal prices the nested price structure does not necessarily hold in general and needs to be redefined and iv the optimal pricing and capacity control policy is based on a sequence of threshold points that incorporate inventory price and demand intensity numerical examples are provided

the effects of rent control expansion on tenants landlords and inequality evidence from san francisco using a 1994 law change we exploit quasi experimental variation in the assignment of rent control in san francisco to study its impacts on tenants and landlords leveraging new data tracking individuals migration we find rent control limits renters mobility by 20 percent and lowers displacement from san francisco landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner occupants and redeveloping buildings thus while rent control prevents displacement of incumbent renters in the short run the lost rental housing supply likely drove up market rents in the long run ultimately undermining the goals of the law

efficiency pricing tenancy rent control and monopolistic landlords this paper presents a model of tenancy rent control where rent increases on and evictions of sitting tenants are prohibited but nominal rents for new tenants are unrestricted if there is any inflation landlords prefer to take short staying tenants if there is no way for landlords to tell a tenant s type an adverse selection problem arises if landlords have monoply power then they may prefer not to raise the rent even when there is excess demand for housing these efficiency rents show that tenancy rent control can give rise to equilibria that look as if there were a flat ceiling on rents

is there a consensus among economists in the 1990 s in a 1976 survey kearl et al 1979 hereafter the 1976 survey concluded that the then widespread perception that there was little agreement among professional economists on matters of theory or policy was simply wrong however the most casual empiricism namely the continuing popularity of jokes about disagreements among economists suggests the perception of noneconomists has not changed much since the 1970 s what is the present state of consensus among economists this question is of interest because more than a decade has elapsed since the 1976 survey and during this time many issues confronting economists and the composition of the profession have changed 1 benjamin m friedman and lawrence h summers 1991 p ix for example have asserted that economic thinking in many subfields of the discipline now differs markedly from what it was in 1970 consensus among european economists has been examined by bruno s frey et al 1984 martin ricketts and edward shoesmith 1990 1992 focus exclusively on british economic opinion this paper provides the first general analysis of opinions of u s economists in more than a decade i the survey and questionnaire

a dynamic model of trade frictions and disequilibrium in the housing market a dynamic stock flow model is developed to analyze and simulate housing markets with partial rent control trade frictions and spillovers a notion of equilibrium is suggested and related to walrasian equilibrium existence uniqueness and comparative statics properties of equilibria are analyzed in some examples of housing markets with and without price control stability properties and dynamic responses to demand and supply shocks are studied by means of computer simulations in a final simulation experiment a black market for rent controlled dwelling units is introduced

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

transformation of optimization problems in revenue management queueing system and supply chain management abstract for revenue optimization problems in the literature on revenue management supply chain management and queueing systems some assumptions such as concavity of revenue functions or increasing generalized failure rate are often needed to ensure the problems to be analytically tractable we show that these assumptions are not necessary for this we present and study a parametric revenue maximization problem to unify some problems in the literature without the usual assumptions we transform the problem into an equivalent one where the revenue function is increasing continuous and concave we then apply the transformation method to a continuous time revenue management problem and conclude that the monotone results are robust to demand function and allowable price set also we apply the transformation method to study a parametric cost minimization problem we further apply our method to two optimal control problems in queueing systems and an inventory control problem in a supply chain with price only contract

revenue management with partially refundable fares we introduce and analyze an intertemporal choice model where customer valuations are uncertain and evolve over time the model leads directly to the study of call options on capacity that are similar to partially refundable fares we show that the capacity provider earns significantly higher revenues by selling real options on capacity than on low to high pricing we also investigate the social implications and show that the use of options is both socially optimal and socially efficient

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

price effects of rent control on controlled and uncontrolled rental housing in toronto a hedonic index approach this paper examines the price effects of rent controls with exemptions on rent controlled and non rent controlled housing in toronto a model of rent determination in the controlled and uncontrolled markets is presented the paper then applies a hedonic pricing technique to develop indices of the uncontrolled rent relative to the controlled rent for standardized sets of housing characteristics approximately one half of the difference in observed rents is attributable to quality differences between markets and one half to the effect of rent controls

revenue management under a general discrete choice model of consumer behavior customer choice behavior such as buy up and buy down is an important phenomenon in a wide range of revenue management contexts yet most revenue management methodologies ignore this phenomenon or at best approximate it in a heuristic way in this paper we provide an exact and quite general analysis of this problem specifically we analyze a single leg reserve management problem in which the buyers choice behavior is modeled explicitly the choice model is very general simply specifying the probability of purchase for each fare product as a function of the set of fare products offered the control problem is to decide which subset of fare products to offer at each point in time we show that the optimal policy for this problem has a quite simple form namely it consists of identifying an ordered family of efficient subsets s 1 s m and at each point in time opening one of these sets s k where the optimal index k is increasing in the remaining capacity x and decreasing in the remaining time that is the more capacity or less time available the further the optimal set is along this sequence we also show that the optimal policy is a nested allocation policy if and only if the sequence of efficient sets is nested that is s 1 s 2 s m moreover we give a characterization of when nesting by fare order is optimal we also develop an estimation procedure for this setting based on the expectation maximization em method that jointly estimates arrival rates and choice model parameters when no purchase outcomes are unobservable numerical results are given to illustrate both the model and estimation procedure

on availability discrimination under rent control statistical discrimination and search theory approaches are used to consider the behavior of a landlord with a vacant rental unit often and especially under rent control rents cannot be differentiated by tenant type although the expected maintenance and removal costs of observationally separable tenant groups may differ assuming that prospective tenants appear according to a random process when sought we solve the landlord s decision problems i whether he should search for a tenant or keep the rental unit unoccupied and ii if search is undertaken how long he should wait for a good tenant

an analysis of bid price controls for network revenue management bid prices are becoming an increasingly popular method for controlling the sale of inventoryin revenue management applications in this form of control threshold or bid prices are set for the resources or units of inventory seats on flight legs hotel rooms on specific dates etc and a product a seat in a fare class on an itinerary or room for a sequence of dates is sold only if the offered fare exceeds the sum of the threshold prices of all the resources needed to supply the product this approach is appealing on intuitive and practical grounds but the theory underlying it is not well developed moreover the extent to which bid price controls represent optimal or near optimal policies is not well understood using a general model of the demand process we show that bid price control is not optimal in general and analyze why bid price schemes can fail to produce correct accept deny decisions however we prove that when leg capacities and sales volumes are large bid price controls are asymptotically optimal provided the right bid prices are used we also provide analytical upper bounds on the optimal revenue in addition we analyze properties of the asymptotically optimal bid prices for example we show they are constant over time even when demand is nonstationary and that they may not be unique

a continuous time yield management model with multiple prices and reversible price changes this article studies a continuous time yield management model in which reversible price changes are allowed we assume that perishable assets are offered at a set of discrete price levels demand at each level is a poisson process to maximize the expected revenue management controls the price dynamically as sales evolve we show that a subset of these prices that form a concave envelope is potentially optimal we formulate the problem into an intensity control model and derive the optimal solution in closed form properties of the optimal solution and their policy implementations are discussed numerical examples are provided

simultaneous capacity and price control based on fuzzy controllers abstract analyzing the basic conditions of modern service and production processes the strengthened competition constraints and unpredictable demand fluctuations are obvious to cause an intense pressure to on the one hand reduce costs through an efficient process control and on the other hand optimize revenue through an adequate capacity and price control demand sided revenue optimization the objective of this article is to identify the revenue potential of a rule based implementation of revenue management as a method for simultaneous capacity and price control first the general conduction of this integrated method is described based on the available literature second the limitations and constraints in the use of the underlying model especially in terms of the applicability in practice and the impreciseness of information are illustrated third a solution concept is established that is able to cope with these limitations one crucial part will be the use of a fuzzy expert controller to handle the rule based approach after the description of the general use of fuzzy expert controllers an application for cases of fixed prices based on an example of the waste incineration industry is illustrated

time for revisionism on rent control economists traditional hostility to rent contols is based on models that treat the housing market as perfectly competitive and on the experience with hard controls in new york city and many european countries following world war ii the current soft rent control systems in north america are varied and qualitatively different from earlier hard controls the theoretical case against them is weak particularly when the housing market is viewed as imperfectly competitive the empirical case against them is weak too economists should reconsider their blanket opposition to current rent control systems and evaluate them on a case by case basis

maximizing revenues of perishable assets with a risk factor this article presents a risk sensitive pricing model to maximize sales revenue of perishable commodities with fixed capacity and finite sales horizon the model assumes a pair of predetermined prices and the poisson demand process whose intensity is a decreasing function of price when optimizing the expected revenue management takes business risk into account by adding a penalty or premium to the objective function we solve the continuous time model with the exact solution in closed form we further analyze the influence of risk attitude on optimal policies

the economics of tenancy rent control we consider a rent control regime where rent increases on and eviction of a sitting tenant are forbidden when apartments become vacant landlords may negotiate new rents if inflation exists landlords prefer to rent to short staying tenants since departure date contingent contracts are forbidden and landlords cannot tell whether tenants are short stayers an adverse selection problem arises with a pareto inefficient equilibrium when tenant types are determined endogenously multiple equilibria can arise where one equilibrium is pareto dominated abolition of the rent control regime cannot only shift the equilibrium out of this inferior outcome but also result in across the board lowering of rents

housing market spillovers evidence from the end of rent control in cambridge massachusetts we measure the capitalization of housing market externalities into residential housing values by studying the unanticipated elimination of stringent rent controls in cambridge massachusetts in 1995 pooling data on the universe of assessed values and transacted prices of cambridge residential properties between 1988 and 2005 we find that rent decontrol generated substantial robust price appreciation at decontrolled units and nearby never controlled units accounting for a quarter of the 7 8 billion in cambridge residential property appreciation during this period the majority of this contribution stems from induced appreciation of never controlled properties residential investment explains only a small fraction of the total

revenue management for low cost providers low cost providers have emerged as important players in many service industries the most predominant being low cost or the so called discount airlines this paper presents models and results leading toward understanding the revenue management outlook for a discount pricing firm a framework and model is formulated specifically for the airline industry but is generalizable to low cost providers in similar revenue management settings we formulate an optimal pricing control model for a firm that must underprice to capture a segment of exogenous demand two specific model formulations are considered a continuous deterministic version and a discrete stochastic version structural results are derived for the deterministic case providing insight into the general form of optimal underpricing policies the stochastic results support the structural insight from the deterministic solution and illuminate the effect of randomness on the underpricing policies

the effect of rent control on commute times this paper adds to the empirical literature on rent control we hypothesize that rent control affects commute times new jersey census tract data from the urban institute geolytics neighborhood change database show a positive and statistically significant relationship between rent control and commute times for 1980 1990 and 2000 for 1980 and 1990 we confirm that it is a lack of household mobility that is behind the longer commutes for 2000 detailed rent control data allow an examination of the consequences of the specific type of vacancy decontrol legislation the most restrictive ordinances have the strongest effect on commute times

the misallocation of housing under rent control the standard analysis of price controls assumes that goods are efficiently allocated even when there are shortages but if shortages mean that goods are randomly allocated across the consumers that want them the welfare costs from misallocation may be greater than the undersupply costs we develop a framework to empirically test for misallocation the methodology compares consumption patterns for demographic subgroups in rent controlled and free market places we find that in new york city which is rent controlled an economically and statistically significant fraction of apartments appears to be misallocated across demographic subgroups jel c25 d12 d61 r20

periodic pricing of seasonal products in retailing this paper studies intertemporal pricing policies when selling seasonal products in retail stores we first present a continuous time model where a seller faces a stochastic arrival of customers with different valuations of the product for this model we characterize the optimal pricing policies as functions of time and inventory we use this model as a benchmark against which we compare more realistic models that consider periodic pricing reviews we show that the structure of the optimal pricing policies in this case is consistent with the procedures observed in practice retail stores successively discount the product during the season and promote a liquidation sale at the end of the planning horizon we also show that the loss experienced when implementing periodic pricing reviews instead of continuous policies is small when the appropriate number of reviews is chosen several interesting economic insights emerge from our analysis for example uncertainty in the demand for new products leads to higher prices larger discounts and more unsold inventory finally we study the effect of announced discount policies on prices and profits we show that stores that have adopted this type of strategy usually set prices such that with high probability the merchandise is sold during the first periods and the largest discounts rarely take place

pricing in revenue management for multiple firms competing for customers abstract we consider the pricing strategies of multiple firms providing the same service in competition for a common pool of customers in a revenue management context the firms have finite capacity and the demand at each firm depends on the selling prices charged by all firms each of which satisfies demand up to a given capacity limit we use game theory to analyze the systems when firms face either a deterministic demand or a general stochastic demand the existence and uniqueness conditions of a nash equilibrium are derived and we calculate the explicit nash equilibrium point when the demand at each firm is a linear function of price we also conduct sensitivity analysis of the equilibrium prices with respect to cost and capacity parameters

housing quality maintenance and rehabilitation this paper investigates a representative landlord s profit maximization problem in a stationary economy the landlord must decide on the quality of his housing units at the time of construction maintenance expenditure over the life of the building and the time of demolition or rehabilitation the analysis can be applied to other problems with similar economic structure notably equipment and durable good maintenance overhaul and replacement

the effects of partial coverage rent control on the price and quantity of rental housing abstract rent control is widely used but its effects are little understood a two sector model is provided that predicts the effects of rent control on both the price and quantity of rental housing and allows estimates of the size of these effects with limited amounts of data from jurisdictions which have controlled and uncontrolled sectors among other things the model indicates the relationship between the price of rental housing in the absence of rent control and controlled and uncontrolled rent levels under a partial coverage regime

optimal bundle formation and pricing of two products with limited stock abstract in this study we consider the stochastic modeling of a retail firm that sells two types of perishable products in a single period not only as independent items but also as a bundle our emphasis is on understanding the bundling practices on the inventory and pricing decisions of the firm one of the issues we address is to decide on the number of bundles to be formed from the initial product inventory levels and the price of the bundle to maximize the expected profit product demands follow a poisson process with a price dependent rate customer reservation prices are assumed to have a joint distribution we study the impact of reservation price distributions initial inventory levels product prices demand arrival rates and cost of bundling we observe that the expected profit decreases as the correlation between the reservation prices of two products increases with negative correlation bundling cost has a significant impact on the number of bundles formed when the product prices are low the retailer sells individual products as well as the bundle mixed bundling when they are high the retailer sells only bundles pure bundling the expected profit and the number of bundles offered decrease as the variance of the reservation price distribution increases for high starting inventory levels the retailer reduces bundle price and offers more bundles the number of bundle sales decreases and the number of individual product sales increases when the arrival rate increases since the need for bundling decreases impacts of substitutability and complementarity of products are also investigated the retailer forms more bundles or charges higher prices for the bundle or both as the products become more complementary and less substitutable

equilibrium under price controls with endogenous transactions costs abstract in this paper we present an equilibrium model for an exchange economy with fixed prices and endogenously determined search or transactions costs given the fixed prices endogenously determined equilibrium buying and selling prices which include transactions costs result these costs occur on either the demand or supply side of each market but not both we see an eventual application of this approach to an evaluation of welfare costs of either economy wide wage and price controls or sector specific price controls such as energy in the final section we present some simple numerical examples which illustrate the approach

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

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

equity and efficiency aspects of rent control an empirical study of new york city modem rent controls arose during world war ii to deal with the war related influx into urban areas since then numerous cities have either considered adopted or eliminated rent controls the policy debate about the desirability of rent controls continues unabated and becomes particularly acute when high inflation rates drive up rents rapidly rent controls have both efficiency and distributional consequences the economics literature has produced theoretical insights about the inefficiencies created by rent controls this literature is frequently cited by opponents of rent controls who argue that the efficiency costs of rent controls are manifested in a decaying housing stock and altered mobility patterns proponents of rent control invariably argue that the distributional impacts of rent controls outweigh efficiency costs considering the large number of cities that have investigated or adopted rent controls relatively little empirical research documents either the efficiency or distributional effects of rent controls the most notable exceptions are the studies of new york city by de salvo 3 olsen 13 and roistacher 15 and the studies of los angeles by rydell et al 16 and fallis and smith 4 more recently linneman lo and marks 12 have further examined ramifications of rent controls in new york city and vancouver this paper fills some gaps in knowledge about the effects of rent controls we examine rent controls in new york city in 1968 using the new york city housing and vacancy survey 2 the paper extends the work of olsen 13 although there are important differences in both the questions addressed and methodology used this paper examines in detail the distributional consequences of rent controls for new york city residents both

airline seat allocation with multiple nested fare classes this paper addresses the problem of determining optimal booking policies for multiple fare classes that share the same seating pool on one leg of an airline flight when seats are booked in a nested fashion and when lower fare classes book before higher ones we show that a fixed limit booking policy that maximizes expected revenue can be characterized by a simple set of conditions on the subdifferential of the expected revenue function these conditions are appropriate for either the discrete or continuous demand cases these conditions are further simplified to a set of conditions that relate the probability distributions of demand for the various fare classes to their respective fares the latter conditions are guaranteed to have a solution when the joint probability distribution of demand is continuous characterization of the problem as a series of monotone optimal stopping problems proves optimality of the fixed limit policy over all admissible policies a comparison is made of the optimal solutions

a multiproduct dynamic pricing problem and its applications to network yield management a firm has inventories of a set of components that are used to produce a set of products there is a finite horizon over which the firm can sell its products demand for each product is a stochastic point process with an intensity that is a function of the vector of prices for the products and the time at which these prices are offered the problem is to price the finished products so as to maximize total expected revenue over the finite sales horizon an upper bound on the optimal expected revenue is established by analyzing a deterministic version of the problem the solution to the deterministic problem suggests two heuristics for the stochastic problem that are shown to be asymptotically optimal as the expected sales volume tends to infinity several applications of the model to network yield management are given numerical examples illustrate both the range of problems that can be modeled under this framework and the effectiveness of the proposed heuristics the results provide several fundamental insights into the performance of yield management systems

price ceilings in competitive markets with variable quality abstract this paper analyzes the impact of a price ceiling on a competitive market for a good which yields a utility bearing characteristic the household characteristic producing technology is linear firms have u shaped cost curves in quantity and in total amount of characteristic produced essentially the market is cleared by an equilibrium hedonic price the hedonic price rises in response to the excess demand gap induced by a ceiling on output price bringing the market from an unconstrained equilibrium into a constrained equilibrium a price ceiling also leads to a fall in quality a fall in consumer welfare and locally a rise in producer welfare

technical note price trends in a dynamic pricing model with heterogeneous customers a martingale perspective this note describes probabilistic properties of optimal price sample paths in a dynamic pricing model with a finite horizon and limited stock we assume that customer arrivals follow a nonhomogeneous poisson process we show that if customers willingness to pay increases rapidly over time then the optimal price process follows a submartingale which implies an upward price trend alternatively if customers willingness to pay decreases rapidly over time then the optimal price process follows a supermartingale which implies a downward price trend

the stochastic knapsack revisited switch over policies and dynamic pricing the stochastic knapsack has been used as a model in wide ranging applications from dynamic resource allocation to admission control in telecommunication in recent years a variation of the model has become a basic tool in studying problems that arise in revenue management and dynamic flexible pricing and it is in this context that our study is undertaken based on a dynamic programming formulation and associated properties of the value function we study in this paper a class of control that we call switch over policies start by accepting only orders of the highest price and switch to including lower prices as time goes by with the switch over times optimally decided via convex programming we establish the asymptotic optimality of the switch over policy and develop pricing models based on this policy to optimize the price reductions over the decision horizon

technical note personalized dynamic pricing of limited inventories prior work has investigated time and inventory level dependent pricing of limited inventories with finite selling horizons we consider a third dimension in addition to time and inventory level that the firms can use in setting their prices the information that the firm has at the individual customer level an arriving customer provides a signal to the firm which is an imperfect indicator of the customer s willingness to pay and the firm makes a personalized price offer depending on the signal inventory level and time we consider two different models full personalization and partial personalization in the full personalization model the firm charges any price it wishes given the customer signal while in the partial personalization model the firm can charge one of two prices we find that a mere correlation between the signals and customers willingness to pay is not sufficient to ensure intuitive relationships between the signal and the optimal prices we determine a stronger condition which leads to several structural properties including the monotonicity of the optimal price with respect to the signal in the full personalization model for the partial personalization model we show that the optimal pricing policy is of threshold type and that the threshold is monotonic in the inventory level and time

the effect of rent control on the price of rental housing an hedonic approach it is widely believed that rent control leads to a decline in the quality of rental housing this study examines the effect of rent control on the quality of rental housing in new york city quality change is linked to the suppression of rent below

on trees and logs abstract in this paper we contrast the main workhorse model in asset pricing theory the lucas 1978 tree model lt model to a benchmark model in financial equilibrium theory the real assets model ra model it is commonly believed that the two models entail similar conclusions since the lt model is a special case of the ra model but this is simply wrong implications of these models can be strikingly at odds indeed under the widely used log linear specification of households preferences we show that for a large set of initial endowments the lt model even with potentially complete financial markets admits only peculiar financial equilibria in which the stock market is completely degenerate in that all stocks offer the same investment opportunity and yet allocation is pareto optimal we investigate why the lt model is so much at variance with the ra model and uncover new results on uniqueness of financial equilibria and introduction of portfolio constraints obtaining in the lt model but not in the ra model