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This article represents the "positive view" of price discrimination--offenses and defenses against the Robinson-Patman Act. It provides guideposts for the businessman who wants to implement a marketing program in accordance with sound business judgment, rather than by default out of vague apprehension of a vague law. [ABSTRACT FROM AUTHOR]

The article presents an analysis of price discrimination and seeks to address its purpose and underlying factors. Doctors and lawyers are known to practice personal discrimination in that they charge different prices based on a person's income or personal condition. A pricing method based on earning power is noted; it involves commission-type rates paid to the seller, which depend on the productivity, popularity or circulation of a product. An example of this is newspaper cartoon authors, who are paid in proportion with the newspaper's market size. Bargaining power is described as a method by which buyers or sellers adjust their prices depending on the demand or supply for an item.

In this article, we consider and investigate the cases when the retailer's capitals are restricted and when the supplier offers another kind of 2-level trade credit. This means that the supplier offers 2-level trade credit for the retailer to settle the account and the retailer's capitals are restricted, so the retailer decides to pay off the unpaid balance as follows: Firstly, the retailer decides to pay off the unpaid balance at the end of the first credit period if the retailer can pay off all accounts and, in addition, the retailer can use the sales revenue to earn interest throughout the replenishment cycle time. Secondly, the retailer decides to pay off all accounts either after the end of the first credit period, but before the second credit period, or after the second credit period if the retailer cannot pay off the unpaid balance at the end of the first credit period. Additionally, the delay will incur interest charges on the unpaid and overdue balance due to the difference between the interest earned and the interest charged. Consequently, the main purpose of this article is to characterize the optimal solution processes and (in accordance with the functional behavior of the cost function) to search for the optimal replenishment cycle time. Finally, numerical examples are given to illustrate the theoretical results which are proven in this article by means of mathematical solution procedures. [ABSTRACT FROM AUTHOR]

Assuming that the asset priceXfollows a geometric Brownian motion, we study the optimal prediction problem where the infimum is taken over stopping timesofXandis a hidden aspiration level (having a potential of creating a resistance or support level forX). Adopting the ‘aspiration-level hypothesis’ and assuming thatis independent fromX, we show that a wide class of admissible (non-oscillatory) laws oflead to unique optimal trading boundaries that can be viewed as the ‘conditional median curves’ for the resistance and support levels (with respect toXandT). We prove the existence of these boundaries and derive the (nonlinear) integral equations which characterize them uniquely. The results are illustrated through some specific examples of admissible laws and their conditional median curves. [ABSTRACT FROM PUBLISHER]

The article presents a commentary on the paper "The Psychophysics of Pricing," by Joseph M. Kamen and Robert J. Toman. In the analysis the authors concluded that their data supported a fair price theory and contradicted Weber's Law as it applies to price. The commentator claims that other evidence tends to support two conclusions concerning the subjective perception of price. These are that the subjective price scale of the buyer seems to follow a logarithmic scale and that there is a range of acceptable prices for certain products. The author contends that Kamen and Toman failed to present evidence on whether the subjects showed a lack of discriminability as the price level increased.

An M/M/1 retrial queue is studied for local area network applications in which the server will take delayed vacations upon completion of a service. An announced price charged by the server is imposed on the customers who decide to enter the system for service. These customers have to make decisions upon arrival to balk or to enter the system for service based on their expected payoff and available information about the status of the server. On the other hand, the server faces the revenue maximization issue once the customers' Nash equilibrium strategies are obtained for any announced price. We further study how the social planner, whose goal is to maximize the overall welfare of the customers and the server, determines the price to charge a joining customer. Finally, the sensitivity of the solution of revenue optimization and the socially optimal price as well as the balking behaviour of customers with respect to some main indicators of the system are explored via numerical experiments. [ABSTRACT FROM AUTHOR]

We consider a Markovian queueing system with N heterogeneous service facilities, each of which has multiple servers available, linear holding costs, a fixed value of service and a first-come-first-serve queue discipline. Customers arriving in the system can be either rejected or sent to one of the N facilities. Two different types of control policies are considered, which we refer to as 'selfishly optimal' and 'socially optimal'. We prove the equivalence of two different Markov Decision Process formulations, and then show that classical M/M/1 queue results from the early literature on behavioural queueing theory can be generalized to multiple dimensions in an elegant way. In particular, the state space of the continuous-time Markov process induced by a socially optimal policy is contained within that of the selfishly optimal policy. We also show that this result holds when customers are divided into an arbitrary number of heterogeneous classes, provided that the service rates remain non-discriminatory. [ABSTRACT FROM AUTHOR]

Consider n servers having different exponential service distributions. All servers are initially busy and there are m customers waiting in queue in an ordered line. A server becoming idle is offered to the first in line, if rejected it is then offered to the second, and so on. The objective of each person in line is to minimize their expected time until service completion. We give a simple approach for finding the optimal policy and also show that this policy also minimizes the expected sum of the times the customers spend in the system. [ABSTRACT FROM PUBLISHER]

We analyze the problem of a jury that must rank a set of contestants whose socially optimal ranking is common knowledge among jurors who may have friends among the contestants and may, therefore, be biased in their friends' favor. We show a natural mechanism that is finite and complete informational, with no simultaneous moves (i.e., it is solvable by backward induction), which implements the socially optimal ranking with subgame perfect equilibria. [ABSTRACT FROM AUTHOR]

This paper examines the socially optimal (and also equilibrium) locations of two stores or libraries on a linear market of unit length. If each consumer has probability $$w$$ of finding a desired product at each store, then the socially optimal locations are never completely centralized for full information, but are completely centralized for $$w \le 0.5$$ when costly visit search is necessary. The Nash equilibrium locations of two stores, and various alternative models for the socially optimal locations of two stores, are also examined. [ABSTRACT FROM AUTHOR]

The article discusses the reaction of stock markets to consolidations and mergers of corporations in the United States, including in regard to the strategic bidding for corporation purchases and the U.S. government's regulations of corporate takeovers. The relationship between bidding for corporation takeover and the socially optimal price of the corporation purchase is discussed.

The goal of this paper is to reexamine the optimal design and efficiency of loyalty rewards (LRs) in markets for final consumption goods. Although the literature to date has emphasized the role of LRs as endogenous switching costs (which distort the efficient allocation of consumers), l analyze instead the ability of alternative designs to foster consumer participation and increase total surplus. First, the efficiency of LRs depends on their specific design. A commitment to the price of repeat purchases can involve substantial efficiency gains by reducing price-cost margins. However, discount policies imply higher future regular prices and are likely to reduce total surplus. Second, firms may prefer to set up inefficient rewards (discounts), especially in circumstances where a commitment to the price of repeat purchases triggers Coasian dynamics. [ABSTRACT FROM AUTHOR]

Abstract: The paper describes an EOQ model of a perishable product for the case of price dependent demand, partial backordering which depends on the length of the waiting time for the next replenishment, and lost sale. The model is solved analytically to obtain the optimal price and size of the replenishment. In the model, the customers are viewed to be impatient and a fraction of the demand is backlogged. This fraction is a function of the waiting time of the customers. In most of the inventory models developed so far, researchers considered that inventory accumulates at the early stage of the inventory and then shortage occurs. This type of inventory is called IFS (inventory followed by shortage) policy. In the present model we consider that shortage occurs before the starting of inventory. We have proved numerically that instead of taking IFS, if we consider SFI (shortage followed by inventory) policy, we would get better result, i.e., a higher profit. The model is extended to the case of non-perishable product also. The optimal solution of the model is illustrated with the help of a numerical example. [Copyright &y& Elsevier]

High unemployment is widely regarded as the most important challenge facing European policy-makers today. At unemployment rates of between 6.5% and 25% across the countries of the Union, Europe's performance compares particularly unfavourably with that of the United States. But does this answer for an inability to understand the fundamental causes of the problem, being them economic, social or political or a failure to find the economic policies that will solve it? Or is there merely a lack of political will in the social system application? Is 'social dumping' still present under a common EU social policy of the Lisbon Treaty and if so, which is its 'face 'now? Is social dumping to be welcomed, as a healthy energy which will oblige countries to lighten the excessive and harmful regulations imposed on EU labour markets? How should the circumstances of the new EU member states be taken into account when applying labour legislation concerning social policy and when tackling unemployment? [ABSTRACT FROM AUTHOR]

In this paper we study the social desirability of the structure regulation which transforms a single multi-product monopoly into an oligopoly where the industry produces differentiated complementary goods. In particular, we pay special attention to the cross-subsidization which will be eliminated by the structure regulation. It is established that if horizontal externalities between the goods are not too strong, then the monopoly has a socially optimal price structure. In contrast, the oligopoly always distorts the price structure. We also demonstrate that the monopoly will cross-subsidize a product if and only if this product has a relatively low absolute advantage. [ABSTRACT FROM AUTHOR]

Although the not-for-profit sector contributes greatly to aggregate output in many industries, there has been little explicit analysis of the economic consequences of applying antitrust policy in this sector. Despite the differences between for-profit and nonprofit firms stressed in conventional economic analyses, U.S. antitrust law generally does not distinguish between these two organizational forms. This paper argues that, under plausible assumptions and with possible exceptions, the same incentives to restrain trade exist in the nonprofit sector as in the for-profit sector. Altruistic firms benefit from exploiting market power, even when they would price below cost in the absence of competition. In fact, the efficiency gains from antitrust policy may often be larger for nonprofit firms. Therefore, a policy of promoting competition has social value even when producers' motivations are altruistic. The argument for uniform antitrust treatment of the two sectors extends to exemptions from antitrust law as well. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to conceptualize several dimensions of product-price knowledge and to develop measurement variables that qualify a person's product-price knowledge. Assuming product-price knowledge is a multidimensional construct, the relationship between its dimensions is to be investigated and consumer characteristics are to be analyzed according to whether they influence these dimensions. Design/methodology/approach - Drawing on existing research, the paper theoretically develops a framework that proposes a taxonomy of product-price knowledge and leads to a road map to identify determinants that probably affect a person's product-price knowledge. Applying data on 319 shoppers, a path model simultaneously estimates the internal structure of the specified dimensions of product-price knowledge, and determines the influence of the selected consumer characteristics on product-price knowledge. Findings - The proposed taxonomy sees product-price knowledge as encompassing not just isomorphic prices, i.e. actually or formerly perceived and recalled prices. Rather, inferential prices, such as the normal price, or the upper reservation price for a product, as well as knowledge about price-setting conditions and confidence in memorized prices, comprise important elements of a person's product-price knowledge. As a result, there are several measurement variables to qualify a person's product-price knowledge. The empirical results identify price mavenism, price consciousness, the use of a shopping list, and shopping frequency, as determinants of the accuracy and size of, and confidence in, one's product-price knowledge, even though the impact structure is not uniform. There are some indications that formerly encountered price stimuli represent a relatively obsolete part of a consumer's product-price knowledge. Research limitations/implications - Research on product-price knowledge should not be restricted to measuring the accuracy of recalled paid prices. Size of product-price knowledge, and confidence in one's price knowledge, are identified as measures that are at least equally important to qualify a person's product-price knowledge as accuracy. Furthermore, size and confidence are also additional dependent variables in analyzing determinants of consumers' product-price knowledge. This is important for researchers and practitioners. Originality/value - The proposed taxonomy and the empirical results lead to finer grained understanding of product-price knowledge as a multi-dimensional construct and its determinants. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to investigate the effectiveness of price bundling and message framing on attitudes, intentions, and beliefs about attributes of teeth whitening products. Although each of these variables, message framing and price bundling, has been explored individually, few attempts have been made to investigate them jointly. This study is based on a full factorial design that allows for testing of interaction effects. Second, the market for whitening products is maturing, resulting in a target market that is gaining knowledge about these products. Thus, we use knowledge as a covariate in the above investigation to determine if the communication strategy should be changed as the product moves from introduction to maturity. Design/methodology/approach - The study is based on a 2 × 2 factorial design with price bundling (bundle price - individual price) and framing (positive - negative). The setting for the study is a hypothetical brand name of teeth whitening products. Findings - The results reveal a mixed picture with respect to effectiveness of pricing and framing on attitudes and intentions. The effect of price bundling is not significant on attitudes; it is significant on intentions. Framing has a greater impact on intentions than on attitudes. Nevertheless, the interaction effects are significant on both attitudes as well as intentions. Finally, the impact of knowledge as a covariate is significant. Research limitations/implications - Caution is advised in extrapolating the results beyond the issues investigated in the study. Practical implications - The findings help marketers in formulating effective marketing strategy using both price bundling and message framing strategies. Originality/value - Although price bundling and message framing have been explored in marketing studies, the research is lacking on the combined effects of these two important variables. The findings show a significant interaction effect of pricing and framing on changing attitudes and intentions. Prior research recommends using negative framing. The present research shows that for bundle products, a positive framing approach is desirable. [ABSTRACT FROM AUTHOR]

Delayed incentives in the form of cash mail-in rebates have become very popular. We develop and solve a model for jointly determining optimal price and rebate value for a heterogeneous consumer market. Consumers are divided into three segments: rebate independent, fully rebate dependent, and partially rebate dependent. Partially rebate-dependent consumers' redemption probability depends on the value of the rebate relative to a reference value. Data show that the probability of redemption increases linearly in rebate value for small rebate values and at a decreasing rate as the rebate value becomes large. The model shows that two consumer attributes are critical in determining the effectiveness of rebates. The first is the reference value. The larger the reference value, the larger the optimal rebate value and the higher the profit. The second is the distribution of consumers among the three segments. Profit decreases as the proportion of consumers in the probabilistic redeemers segment decreases. There is, however, a threshold value where profit increases as the proportion of consumers in the partially rebate-dependent segment decreases. This occurs because as the rebate-independent and fully rebate-dependent consumers are priced out of the market, a seller can increase both price and rebate value substantially without having to be burdened by the heavy cost of rebates for the fully rebate-dependent segment. If the reference value for the partially rebate-dependent segment is high, such a strategy may prove profitable.Journal of Revenue and Pricing Management (2008) 7, 85–105. doi:10.1057/palgrave.rpm.5160111 [ABSTRACT FROM AUTHOR]

This paper investigates the problem of optimal districting in the context of a simple model of legislative elections. In the model, districting matters because it determines the seat-vote curve, which describes the relationship between seats and votes. The paper first characterizes the optimal seat-vote curve and shows that, under a weak condition, there exist districtings that generate this ideal relationship. The paper then develops an empirical methodology for computing seat-vote curves and measuring the welfare gains from implementing optimal districting. This is applied to analyze the districting plans used to elect U.S. state legislators during the 1990s. [ABSTRACT FROM AUTHOR]

This paper analyzes sequential auctioning of single units of an indivisible good to a fluctuating population composed of overlapping generations of unit-demand bidders. Two phenomena emergent in such a market are investigated: forward-looking bidding strategies, and closed-loop selling strategies that involve learning from past prices. The buyers shade their bids down, i.e., bid less than they would in a single isolated auction, whenever they expect the seller to sell another unit of the good in the near future. Unlike in exogenous sequences of auctions, the optimal bidding strategy thus depends on the seller's selling strategy. The converse dependence also occurs: the seller can learn about current demand from past realized prices, and sell only in periods with high-enough demand. Such learning depends on the extent of bid-shading because the seller needs to invert the bidding strategy to learn. In equilibrium, buyer bid-shading persists even when the seller does not sell in every period, but it is self-regulating in that it eventually vanishes when the existence of the market is threatened by low seller profits. In this sense, auction markets have a "self-preservation instinct." General properties of learning about current demand from past auction prices are also investigated and characterized. [ABSTRACT FROM AUTHOR]

On May 18, 2006, the second annual Revenue Management and Price Optimization conference was held at the Georgia Institute of Technology. The theme of the conference was on how the Internet is changing traditional revenue management and pricing practices. The conference brought together experts and thought leaders from more than 30 companies spanning airlines, hotels, car rentals, cruise lines, apartment rentals, aircraft manufacturing, retailing, distribution, e-mail marketing, on-line travel, logistics, sports, performing arts, software providers, and others. This paper summarises the key discussions from this conference and synthesises experts' perspectives on near-term opportunities and challenges facing their industries.Journal of Revenue and Pricing Management (2006) 5, 237–247. doi:10.1057/palgrave.rpm.5160042 [ABSTRACT FROM AUTHOR]

The implications of Rawls' 'maxi-min' welfare criterion for intergenerational justice are explored for a simple model in which each generation cares about its own and the next generation's level of consumption. In contrast with the conclusion drawn by Arrow from his narrower formulation of the problem, it is shown that the Rawlsian criterion need not preclude long run capital accumulation. The general forms of the optimal consumption, capital and utility streams are also derived under alternative assumptions about the psychic trade-off between own consumption and consumption of one's immediate descendents. [ABSTRACT FROM AUTHOR]

The article presents a commentary to the paper "The Psychophysics of Pricing," by Joseph M. Kamen and Robert J. Toman. The authors suggest that Weber's Law refers to the stable proportionality of the smallest difference in stimulus intensity perceptible to the individual. Based on this assessment the authors conclude that this law should not be expected to apply directly to consumer's reactions to price changes. They note alternate studies which suggest that the consumer's subjective price scale has a logarithmic tendency and that curves of constant elasticity fitted to mass consumption data and average prices can be fitted to derive numerical estimates of demand elasticities.