total factor productivity intangible assets and spatial dependence in the european regions dettori b marrocu e and paci r total factor productivity intangible assets and spatial dependence in the european regions regional studies the aim of this paper is to analyse the determinants of the efficiency levels across the european regions firstly a regression based measure of regional total factor productivity is derived by estimating a spatial cobb douglas production function secondly the role played by intangible factors human capital social capital and technological capital on total factor productivity levels is investigated by applying the spatial two stage least squares 2sls method and the spatial heteroskedasticy and correlation consistent shac estimator to account for both heteroskedasticity and spatial autocorrelation it turns out that a large part of total factor productivity differences across the european regions is explained by disparities in the endowments of these intangible assets dettori b marrocu e and paci r

have trading rule profits in the currency markets declined over time abstract previous studies have reported mixed results regarding the success of technical trading rules in currency markets abnormal returns were observed in many studies using data up to the mid 1980s while more recent studies generally report less success for technical trading rules this paper tests whether moving average trading rule profits have declined over the period from 1971 to 2000 if so previous profits may represent a temporary inefficiency that has since been eliminated in the currency markets the hypothesis is tested using 18 exchange rate series over a longer time period than in previous studies rules are optimized for successive 5 year in sample periods from 1971 to 1995 and tested over subsequent 5 year out of sample periods results show that risk adjusted trading rule profits have declined over time from an average of over 3 in the late 1970s and early 1980s to about zero in the 1990s thus market inefficiencies reported in previous studies may have been only temporary inefficiencies

intertemporal price discrimination in infinite horizon in infinite horizon a credible durable good monopolist may resort to intertemporal price discrimination we provide an analytical characterization of his optimal price policy when consumers and the monopolist have different values for the trade because of distinct discount factors

can time preference be an instrument for price discrimination abstract it is shown that contrary to some claims in the literature a monopolist cannot use heterogeneous time preferences as an instrument for price discrimination

money back guarantees and market experimentation abstract we study the use of money back guarantees as a form of market experimentation in a market for experience goods with repeat purchases we show that extending the customer base in the second period by using a money back guarantee can be optimal only if a monopolist faces an uncertain distribution of buyers within the second period a money back guarantee allows the monopolist to discriminate between new and repeat purchasers while a pure price reduction does not thus whenever money back guarantees are feasible an optimal experimentation strategy includes a money back guarantee in the second period but not necessarily a price reduction

alfred marshall lecture social capital as good culture to explain the extremely long term persistence more than 500 years of positive historical experiences of cooperation putnam 1993 we model the intergenerational transmission of priors about the trustworthiness of others we show that this transmission tends to be biased toward excessively conservative priors as a result societies can be trapped in a low trust equilibrium in this context a temporary shock to the return to trusting can have a permanent effect on the level of trust we validate the model by testing its predictions on the world values survey data and the german socio economic panel we also present some anecdotal evidence that these priors are reflected in novels that originate in different parts of the country jel 04 016 043 p16

retail pricing and clearance sales sellers of new products are faced with having to guess demand conditions to set price appropriately but sellers are able to adjustprice over time and to learn from past mistakes additionally it is not necessary that all goods be sold with certainty it is sometimes better to set a high price and to risk no sale this process is modeledto explain retail pricing behavior and the time distribution of transactions prices start high and fall as a function of time on theshelf the initial price and rate of decline can be predicted and depends on thinness of the market the proportion of customers who are window shoppers and other observable characteristics copyright 1986 by american economic association

coase versus pacman who eats whom in the durable goods monopoly in standard durable goods monopoly models both the set of buyers and the set of prices are assumed to be continua if the set of buyers is finite the perfectly discriminating monopoly outcome is a unique subgame perfect equilibrium when the seller is sufficiently patient introducing instead a smallest unit of account yields the coasian outcome as a generically unique subgame perfect equilibrium for patient enough buyers a folk theorem is obtained if both sets are finite these results reflect a strategic disadvantage of having to make moves with a large impact on other players payoffs the analysis is extended to durable goods oligopoly

a market microstructure explanation for predictable variations in stock returns following large price changes prior empirical evidence of predictable variations in stock returns following large price changes is found to be at least in part driven by the sample selection bias arising from the systematic movement of closing transaction prices within the bid ask spread by using the average of the bid ask prices in the sample selection process the price reversal on the day following the events day 1 disappears for a short run period after day 1 however systematic abnormal return patterns are still observed these short run price reversals persist even after controlling for the influence of systematic trading patterns around the events however investigation of contrarian investment profits from these short run price reversals shows that the average abnormal returns are not large enough to cover the transaction price movement between the bid and ask prices

on the importance of the supply side in demand side management we discuss how the structure of market supply affects the evaluation of policies to promote energy efficiency in household appliances if competitive markets offer the levels that consumers demand product standards inefficiently restrict choice if suppliers price discriminate minimum standards can restrict the inefficient use of energy intensity to segment consumers we also compare the effects of average intensity standards energy prices and innovation and consider what the different behavioral predictions imply for empirical studies of energy efficiency good policymaking requires knowing not only how consumers value energy efficiency in their decision making but also how producers respond to those values

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

cyclic pricing by a durable goods monopolist in the model of this paper a monopoly seller of a durable good holds periodic sales as a means of price discrimination a new cohort of consumers enters the market in each period interested in purchasing the good either immediately or after a delay within each cohort consumers vary in their tastes for the good under broad conditions the seller will vary the price over time in most periods he will charge a price just low enough to sell immediately to consumers with a high willingness to pay periodically however he will drop the price far enough to sell to an accumulated group of consumers with a low willingness to pay

time varying risk premia volatility and technical trading rule profits evidence from foreign currency futures markets abstract this paper re examines the efficiency of foreign currency futures markets by evaluating the role of time varying risk premia and volatility in explaining technical trading rule profits the results show that large parts of the technical rule profits can be explained by the time varying risk premia estimated from a general model for the conditional capm the bootstrap distributions for the profits under the null model average one third to one half of the actual profits and enclose the actual profits well within the 90 confidence intervals time varying conditional volatility explains an additional 10 of the profits

intertemporal price discrimination with two products we study the two product monopoly profit maximization problem for a seller who can commit to a dynamic pricing strategy we show that if consumers valuations are not strongly ordered then optimality for the seller can require intertemporal price discrimination the seller offers a choice between supplying a complete bundle now or delaying the supply of a component of that bundle until a later date for general valuations we establish a sufficient condition for such dynamic pricing to be more profitable than mixed bundling so we show that the established no discrimination across time result does not extend to two product sellers under standard taste distributions

complementary goods creating capturing and competing for value this paper studies the strategic interaction between firms producing strictly complementary products with strict complements a consumer derives positive utility only when both products are used together we show that value capture and value creation problems arise when such products are developed and sold by separate firms nonintegrated producers although the firms tend to price higher for given quality levels their provision of quality is so low that in equilibrium prices are set well below what an integrated monopolist would choose when one firm can mandate a royalty fee from the complementor producer as often occurs in arrangements between hardware and software makers we find that the value capture problem is mitigated to some extent and consumer surplus rises however because royalty fees greatly reduce the incentives of the firm paying them to invest in quality the arrangement exacerbates the value creation problem and leads to even lower total quality surprisingly this result can reverse with competition specifically when the firm charging the royalty fee faces a vertically differentiated competitor the value creation problem is greatly reduced opening the door for the possibility of a pareto improving outcome in which all firms and consumers benefit it is worth noting that this outcome cannot be achieved by giving firms the option of introducing a line of product variants competition serves as a necessary commitment ingredient

some relations between volatility and serial correlations in stock market returns this article explores the relation between serial correlation and volatility for several different stock return series at daily and weekly frequencies it is found that serial correlations are changing over time and are related to stock return volatility an extension to the garch model is proposed and estimated revealing parameters consistent with other findings in this article copyright 1992 by university of chicago press

optimal best price policy abstract a best price policy bp is a promise by a seller to give her customer a refund if she reduces her price after the customer has already purchased the product we characterize the optimal bp policy as when the seller can control both the policy length when the promise expires and the refund scale what portion of the price difference is refunded we explain why the policy length is finite and varies across industries in a setting where consumers valuations decline over time we show that a finite length bp allows the seller to commit to not lowering her price too soon while at the same time letting her capture some of the benefits of intertemporal price discrimination however because the decline in consumers valuations is uncertain a bp does not allow the monopolist to achieve the profit she could earn with a full commitment

technological advances transaction costs and consumer welfare consumers incur many transaction costs in purchasing and using most products this paper examines the effects of a reduction in such consumer transaction costs caused by market level technological advances using a model in which consumers are simultaneously heterogeneous in their transaction costs and in their marginal valuations of product quality this paper highlights two mechanisms that can cause such reductions in consumer transaction costs to lower consumer surplus and reduce consumer share of the total social surplus specifically market level technological advances reduce different consumers transaction costs by different amounts and increase their reservation prices by different amounts which can lead to i product design changes that many current consumers do not like and ii homogenization in consumer reservation prices that allows a seller to extract more surplus through its pricing policy this paper also shows that consumers may be better off with seller induced higher consumer transaction costs finally the paper shows how depending on the nature of the quality production process such reductions in consumer transaction costs can either lower or raise product qualities and consumer prices

contingent pricing to reduce price risks the price for a product may be set too low causing the seller to leave money on the table or too high driving away potential buyers contingent pricing can be useful in mitigating these problems in contingent pricing arrangements price is contingent on whether the seller succeeds in obtaining a higher price within a specified period we show that if the probability of obtaining the high price is not too high sellers profit from using contingent pricing while economic efficiency increases the optimal contingent pricing structure depends on the buyer s risk attitude a deep discount is most profitable if buyers are risk prone a consolation reward is most profitable if buyers are risk averse to motivate buyers to participate in a contingent pricing arrangement the seller must provide sufficient incentives consequently buyers also benefit from contingent pricing in addition because the buyers with the highest willingness to pay get the product contingent pricing increases the efficiency of resource allocation

network externalities and market segmentation in a monopoly abstract network externalities characterize the consumption of many products in a setting where a monopolist does not price discriminate without externalities we show that presence of network externalities induces the monopolist to price discriminate and segment its market

reputation in bargaining and durable goods monopoly this paper analyzes durable goods monopoly in an infinite horizon discrete time game we prove that as the time interval between successive offers approaches zero all seller payoffs between zero and static monopoly profits are supported by subgame perfect equilibria this reverses a well known conjecture of coase alternatively one can interpret the model as a sequential bargaining game with one sided incomplete information in which an uninformed seller makes all the offers our folk theorem for seller payoffs equally applies to the set of sequential equilibria of this bargaining game

asymmetric return dynamics and technical trading strategies abstract we investigate the profitability of technical trading strategies based on an asymmetric reverting property of stock returns we identify an asymmetry in return dynamics for daily returns on the s p 500 index return dynamics evolve along a positive negative unconditional mean after a prior positive negative return the trading strategies based on this asymmetry generate a positive return for buy signals a negative return for sell signals and a positive return for the spread between buy and sell signals our results imply that the observed asymmetry in return dynamics is the main source of profitability for the implied strategies thereby corroborating arguments for the usefulness of technical trading strategies

scale externalities in korea this paper estimates the nature and magnitude of scale externalities in a developing country korea in the period 1983 1993 this is a period of rapid industry deconcentration from seoul to other metro areas providing a context where externalities are measured when local scale magnitudes are changing dramatically the data allow us to examine the emerging degree of national industrial concentration in different industries as related to their scale externality magnitudes we also examine whether individual industries agglomerate in cities which have a comparative advantage for that industry

knowledge innovation and productivity gains across european regions capello r and lenzi c knowledge innovation and productivity gains across european regions regional studies this paper studies the relationship between knowledge innovation and productivity in european regions looking for the sources of spatial heterogeneity across regions in the type of knowledge needed for innovation and in the propensity to innovate which mostly depend upon specific and systemic context conditions the conceptual framework of analysis is based on the strong belief that different modes of innovation characterize regions according to the presence absence of some context conditions that allow for the creation and or adoption of knowledge and innovation given the differences in knowledge and innovation intensity that characterize each mode pattern of innovation expectations are formulated on the achievement of productivity gains in regions characterized by different innovation patterns empirical evidence supports the conceptual expectations and shows that in regional innovation

in defence of the linear model an essay this essay discusses the strength and weaknesses of the so called linear model lm of innovation it is a reaction to the habit of criticising it as over simplistic mechanistic or simply blatantly wrong we argue that while some criticisms are of course well grounded many others are instead based on loose interpretations and unwarranted assumptions in order to separate the wheat from the chaff this essay first presents a comprehensive description of the linear model and differentiates it from the caricature many refer to second we discuss the main criticisms put forward and argue that many of them are not at all destructive but can be easily accepted within a refined version of the lm third we discuss the policy implications often derived or said to derive from the lm to argue that the lm itself is distinctively policy neutral other assumptions have to be added to justify alternative policy implications

risk aversion uncertain information and market efficiency abstract this paper develops and tests the uncertain information hypothesis as a means of explaining the response of rational risk averse investors to the arrival of unanticipated information the theory predicts that following news of a dramatic financial event both the risk and expected return of the affected companies increase systematically and that prices react more strongly to bad news than good an empirical investigation of over 9000 marketwide and firm specific events produces results consistent with these predictions we conclude that the market reacts to uncertain information in an efficient if not instantaneous manner

price discrimination with a resource constraint abstract introducing an aggregate resource constraint into mussa and rosen s mussa m rosen s 1978 monopoly and product quality journal of economic theory 18 2 301 317 model of monopoly price discrimination induces an upwards distortion in product quality for high valuation consumers because the standard downward distortions in product quality for other consumers relax the resource constraint

the voyage of the beagle into innovation explorations on heterogeneity selection and sectors the aim of the paper is to assess heterogeneity of the innovation process using exploratory factor analysis on micro data from the third community innovation survey in 13 countries we identify four patterns that can be interpreted as research user external and production ingredients of innovation all too often it is assumed that how firm innovate can be represented by differences across sectors and or countries to put this proposition under scrutiny we partition variability of the factors scores into components identified by these higher levels sectors and countries matter to a certain extent but far more of the variance is given by heterogeneity among firms within both of them however groups of firms produced by cluster analysis account for much higher share of the variance which indicates that the most relevant stratification of the data cuts across the established sectoral and national boundaries we discuss implications of these findings for understanding of selection in evolutionary economics and for the literature on innovation systems

stock returns following large one day declines evidence on short term reversals and longer term performance we examine stock returns following large one day price declines and find that the bid ask bounce and the degree of market liquidity explain short term price reversals further we do not find evidence consistent with the overreaction hypothesis we observe that securities with large one day price declines perform poorly over an extended time horizon while the concept of market overreaction has been noted for many years its formal description and examination is a relatively recent area of study debondt and thaler 1985 define the overreaction hypothesis as the overresponse to new information this hypothesis suggests that extreme movements in stock prices are followed by movements in the opposite direction to correct the initial overreaction and that the greater the magnitude of initial price change the more extreme the offsetting reaction one manner in which the overreaction hypothesis has been studied is the analysis of stock returns following large one day stock price declines brown harlow and tinic 1988 and atkins and dyl 1990 find significant reversals for stocks that experience one day price declines focusing on extreme price movements bremer and sweeney 1991 examine returns following one day price declines of 10 percent or more for fortune 500 firms that are in the center for research in security prices crsp data files they find significant positive three day abnormal returns over the period 1962 to 1986 and note that this three day recovery is inconsistent with stock prices fully and quickly reflecting relevant information they also suggest that market illiquidity may partially explain their findings the purpose of this study is to explain security return behavior following large one day declines our primary objective is to explore the role of the bid ask bounce market liquidity and overreaction in explaining price reversals in the three day period immediately following large one day declines large one day price declines are likely to be associated with substantial selling pressure enhancing the probability that a closing transaction is at a

durable goods monopoly with limited choice of commitment strategy when should the monopolist precommit consider a firm a monopolist offering a unique product to a fixed number of potential customers suppose that no consumer desires more than one unit of the good within a given period or across periods that is there is no value to repeat purchases in addition suppose that customers vary with respect to their initial reservation prices which decline over time a natural interpretation is that the monopolist is selling a good that is durable alternatively the firm is providing an entertainment or fashion good consumers may place a premium on obtaining the product quickly before it becomes less useful less stylish or less novel coase 7 conjectured that this firm s ability to extract surplus is limited because the firm has to compete with itself across time periods high valuation customers would be unwilling to pay a high initial price because they would anticipate that over time the firm will be reducing the price in order to sell to lower valuation customers subsequent literature formalizes this as a time inconsistency problem faced by a monopolist unable to make intertemporal commitments a separate strand of the literature proceeds from the polar assumption that the monopolist can precommit to any multiperiod pricing strategy comparison to coase s monopolist is simple higher profits are obtainable under precommitment because more surplus is extracted from high valuation customers an important proposition due to stokey 22 is that it will be optimal for the monopolist to precommit to a declining intertemporal price schedule if consumers with higher initial valuations have a higher rate of time preference 2 otherwise the optimal strategy is to hold price constant at the static monopoly level and to sell no more than the static monopoly quantity 3

the use of technical analysis in the foreign exchange market abstract technica or chartist analysis of financial markets involves providing forecasts or trading advice on the basis of largely visual inspection of past prices without regard to any underlying economic or fundamental analysis this paper reports the results of a questionnaire survey conducted on behalf of the bank of england among chief foreign exchange dealers based in london in november 1988 amongst other findings it is revealed that at least 90 per cent of respondents place some weight on this form of non fundamental analysis when forming views at one or more time horizons there is also a skew towards reliance on technical as opposed to fundamentalist analysis at shorter horizons which becomes steadily reversed as the length of horizon considered is increased a very high proportion of chief dealers view technical and fundamental analysis as complementary forms of analysis and a substantial proportion suggest that technical advice may be self fulfilling jel f31

on the profitability of technical trading rules based on artificial neural networks evidence from the madrid stock market in this paper we investigate the profitability of a simple technical trading rule based on artificial neural networks anns our results based on applying this investment strategy to the general index of the madrid stock market suggest that in absence of trading costs the technical trading rule is always superior to a buy and hold strategy for both bear market and stable market episodes on the other hand we find that the buy and hold strategy generates higher returns than the trading rule based on ann only for a bull market subperiod 2000 elsevier science s a all rights reserved

editorial geography of innovation new trends and implications for public policy renewal the aim of this special issue is threefold firstly it highlights major recent methodological advances to address the two key issues referred to above improving extended kpf analyses on the one hand and developing strategic approaches using microeconomic data on the other br br two papers are presented using knowldge production functions kpf they offer new methodologies to deal with the issue of regional heterogeneity when estimating kpf at the regional level in europe br br using more microeconomic approaches three papers contribute to the second topic they use micro economic data to show how firms strategies may interact with the local environment and impact upon the determinants of agglomeration dynamics br br secondly this issue draws attention to interesting new results emerging from the application of these new methodologies to the analysis of innovation dynamics in european regions and shows how they can help one to revisit some main tenets of received wisdom concerning the rationale and impact of public policies on the geography of innovation br br finally this special issue also identifies issues that still require further research particularly in relation to the development of new methodologies for the evaluation of public policies integrating the spatial dimension and the interdependencies between public policies implemented at different regional scales which remains no more than an emerging field in the geography of innovation br br the special issue concludes with a paper presenting a new theoretical framework for the analysis and evaluation of local innovation public policies using simulation methodology all these papers have important policy implications

productivity technology and economic growth what is the relationship the relationship between productivity technology and economic growth has been debated extensively in the endogenous growth growth accounting new economy and policy literature this paper briefly surveys the literature on total factor productivity tfp calculations the various techniques and problems associated with it we argue that tfp is not a measure of technological change and only under ideal conditions does it measure the supernormal profits associated with technological change the critical driving force of economic growth is not the super normal profits that technological change generates but rather the continuous creation of opportunities for further technological development six illustrations of when tfp fails to correctly measure these super normal profits are provided a version carlaw and lipsey s 2003b model of endogenous general purpose technology driven growth is then utilized to make some progress toward answering prescott s 1998 call for a theory of tfp the model is used to simulate artificial data and connect theoretical assumptions of returns to scale and resource costs to the conditions under which tfp miss measures the actual growth of technological knowledge

feedback traders and stock return autocorrelations evidence from a century of daily data the authors investigate whether the degree of autocorrelation shown by high frequency stock returns changes with volatility this may result from nontrading effects feedback trading strategies or variable risk aversion the authors results indicate that when volatility is low daily and hourly stock returns exhibit positive autocorrelation but when it is high returns exhibit negative serial correlation they also find an important asymmetry negative serial correlation is more likely after price declines this is consistent with price declines being more likely to induce positive feedback trading the authors also find no significant relation between margin requirements and the autocorrelation of returns copyright 1992 by royal economic society

linear non linear and essential foreign exchange rate prediction with simple technical trading rules abstract this paper investigates the predictability of spot foreign exchange rate returns from past buy sell signals of the simple technical trading rules by using the nearest neighbors and the feedforward network regressions the optimal choices for nearest neighbors hidden units in a feedforward network and the training set are determined by the cross validation method which minimizes the mean square error although this method is computationally expensive the results indicate that it has the advantage of avoiding overfitting in noisy environments and indicate that simple technical rules provide significant forecast improvements for the current returns over the random walk model

the reversal of large stock price decreases extremely large negative 10 day rates of return are followed on average by largerthan expected positive rates of return over following days this price adjustment lasts approximately 2 days and is observed in a sample of firms that is largely devoid of methodological problems that might explain the reversal phenomenon while perhaps not representing abnormal profit opportunities these reversals present a puzzle as to the length of the price adjustment period such a slow recovery is inconsistent with the notion that market prices quickly reflect relevant information recent research on stock returns has uncovered a substantial number of empirical findings that are broadly inconsistent with popular asset pricing models for example keim and stambaugh 1985 cross 1973 french 1980 gibbons and hess 1981 and rogalski 1984 find evidence of day ofthe week and weekend effects on stock returns while banz 1981 and reinganum 1983 find evidence of a size effect this paper presents evidence of another empirical puzzle consider the behavior of a firm s rate of return on days after it has experienced a large negative one day rate of return less than say 10 observed daily stock returns after such an extreme event are significantly larger than average on following days for a 10 fall the return above average is 1 773 for the day after and rises cumulatively to 2 215 by the second day this multiple day price adjustment is observed in a sample of firms that is largely devoid of methodological problems that might explain the reversal phenomenon the major interest of this phenomenon is the long recovery period of the stock price reversal such a slow recovery is inconsistent with the notion that market prices fully and quickly reflect relevant information

varying risk premia in international bond markets abstract cochrane and piazzesi cochrane j h piazzesi m 2005 bond risk premia american economic review 95 138 160 use forward rates to forecast future bond returns we extend their approach by applying their model to international bond markets our results indicate that the unrestricted cochrane and piazzesi 2005 model has a reasonable forecasting power for future bond returns the restricted model however does not perform as well on an international level furthermore we cannot confirm the systematic tent shape of the estimated parameters found by cochrane and piazzesi 2005 the forecasting models are used to implement various trading strategies these strategies exhibit high information ratios when implemented in individual countries or on an international level and outperform alternative approaches we introduce an alternative specification to forecast future bond returns and achieve superior risk adjusted returns in our trading strategy bayesian model averaging is used to enhance the performance of the proposed trading strategy

intertemporal price discrimination and sales strategy under incomplete information this article examines intertemporal price variations to provide a theoretical explanation for them when firms have only incomplete information about consumers reservation prices for the commodity we contend that some intertemporal price variations can result from attempts by firms to discriminate among consumers we demonstrate that such price discrimination is the optimal policy for a seller if consumers have a higher time discount rate than producers

rational frenzies and crashes most markets clear through a sequence of sales rather than through a walrasian auctioneer because buyers can decide whether to buy now or later rather than only now or never their current willingness to pay is much more sensitive to price than the demand curve is a consequence is that markets will be extremely sensitive to new information leading to both frenzies in which demand feeds on itself and crashes in which price drops discontinuously the paper also shows how a result from static auction theory the revenue equivalence theorem can be applied to solve for a dynamic price path

optimal production and selling policies with fixed price contracts and contingent price offers abstract this paper investigates optimal production and selling decisions for a single supplier with two types of customers specifically risk averse buyers would rather pay higher fixed prices with guaranteed supply contracts whereas risk prone buyers prefer to secure remaining stocks and pay lower contingent prices this study formulized this problem with a dynamic programming model and analyzed it further using successive approximations theoretical results indicate that no controls are needed for fixed price orders however thresholds exist for manufacturing and contingent price ordering policies these two types of threshold planes increased with the addition of waiting customers furthermore a sensitivity analysis of seasonal factors revealed that the optimal threshold plane shifts upward during high demand periods

intertemporal price discrimination uncertainty and introductory offers recent analyses of market equilibria have shown that it is possible for price dispersion to exist even in competitive markets for homogeneous goods the usual departure from the perfectly competitive extreme that leads to the possibility of price dispersed equilibria is the introduction of some form of imperfect information salop and stiglitz 1977 1982 braverman 1980 and sadanand and wilde 1982 have all shown that a competitive market may display more than one price in equilibrium in general these models feature equilibria exhibiting price dispersion because of the assumption that consumers find it costly to obtain full information on prices and or quality although the above models provide better characterisations of actual market structures they still exhibit a weakness and this has been highlighted by varian 1980 he argues that because they model spatial price dispersion it allows some stores to sell their product persistently at a lower price than available elsewhere this he argues ignores the possibility of consumers learning from experience as an alternative he proposed a model of temporal price dispersion in his model stores randomly select their price over time so that they can discriminate between the informed and uninformed sectors of the market at any one moment in time there can exist a price distribution he argues that the model could be viewed as an explanation of sales however it is typically the case that sales are predictable regular and well advertised rather than random and most stores seem to hold sales simultaneously in a recent paper sobel 1984 presents a model where stores periodically hold sales his model displays an equilibrium where stores adopt a cyclical pricing policy occurring because of known consumer heterogeneity this heterogeneity enables stores to price discriminate over time by occasionally holding sales in an attempt to capture all of the consumers with a low reservation price hence he argues that consumer heterogeneity may result in price dispersed equilibria over time in the model considered here there are similarities to those discussed above we present an intertemporal model where stores hold sales and these sales take the form of introductory offers the theme is about consumers who enter a market and choose to purchase a perishable commodity however each individual consumer is uncertain about the quality of a match at any store not previously sampled that is consumers cannot determine the quality of

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

consumer rationing and the posssibility of intertemporal price discrimination abstract intertemporal price discrimination is explained from consumer rationing if some consumers who have a low valuation for a good are served first at low prices high valuation consumers buy at a high price although they rationally foresee future price drops price discrimination then yields more profits to a monopolist than a uniform pricing strategy

the discriminating consumer product proliferation and willingness to pay for quality abstract the authors propose that a crowded product space motivates consumers to better discriminate between options of different quality specifically this article reports evidence from three controlled experiments and one natural experiment that people are prepared to pay more for high quality products and less for low quality products when they are considered in the context of a dense as opposed to a sparse set of alternatives to explain this effect the authors argue that consumers uncertain about the importance of quality learn from observing market outcomes product proliferation reveals that other consumers care to discriminate among similar alternatives and in turn this inference raises the importance of quality in decision making

non linear pricing and optimal shipping policies abstract a monopolist produces a good for sale to a buyer with uncertain valuation the seller seeks to implement a profit maximizing non linear pricing scheme which includes the time at which the good is shipped to the consumer if the buyer discounts future payoffs and the seller does not then delayed shipments act as an almost perfect substitute for complete information and the monopolist can extract almost all of the surplus from trade shipping policies thus serve as a powerful tool of enhancing price discrimination however if the seller is as patient as or even only slightly more patient than the buyer then she cannot benefit from delaying allocations

fashion and sales abstract when there is unpredictable fashion in taste it will be optimal to limit the stock of each variety of a horizontally differentiated durable good if consumers are uncertain about one another s taste they will then accept higher first period prices for perfect matches in order to avoid finding only bad matches on sale thus there exists a mechanism which allows a monopolist to price discriminate inter temporally even when it has predictable clearance sales and consumers are infinitely patient there is no distortion in product selection when this equilibrium arises

retail pricing and the costs of clearance sales the formalisation of a rule of thumb abstract this paper deals with the phenomenon of clearance sales these can be considered as cases of intertemporal price discrimination at first the good or service is sold at a high price and after a first period the price is reduced in mass consumption retailing the price reduction policy is applied as a matter of routine with typically one two or three reductions to understand such a policy we have to realize that there are costs involved with clearance sales in the paper a model is presented which can be used to answer questions like what is the optimal number of price reductions or what is the optimal price reduction schedule the paper also presents a matrix formulation of the model in addition some numerical examples are given

a note on the weak form efficiency of capital markets the application of simple technical trading rules to uk stock prices 1935 to 1994 abstract brock et al 1992 found technical trading rules to have predictive ability with regards to the dow jones index the current paper considers whether this result can be replicated on uk data the paper also considers whether investors could earn excess returns from technical analysis in a costly trading environment the paper concludes that although the technical trading rules examined do have predictive ability in terms of uk data their use would not allow investors to make excess returns in the presence of costly trading

price reversals bid ask spreads and market efficiency we examine the behavior of common stock prices after a large change in price occurs during a single trading day and find evidence that the stock market appears to have overreacted especially in the case of price declines however the magnitude of the overreaction is small compared to the bid ask spreads observed for the individual stocks in the sample we interpret this finding as being consistent with a market that is efficient after transactions costs are considered