Factor price

About: Factor price is a research topic. Over the lifetime, 2764 publications have been published within this topic receiving 86176 citations.

Managing Posterior Price Matching: The Role of Customer Boundedly Rational Expectations

Abstract: The posterior price-matching policy, whereby a firm promises to reimburse the price difference to a customer who purchases a product before the firm marks it down, has been used in practice The extensive literature has offered the following explanations for why posterior price matching is adopted: to reduce inventory, to soften competition, to price discriminate consumers, and to eliminate consumer strategic waiting incentives In this paper, we provide a novel explanation and investigate the role of consumer bounded rationality in the sense of anecdotal reasoning We adopt a simple model that allows us to isolate the role of customer bounded rationality on using posterior price matching We demonstrate that while it is never optimal to adopt posterior price matching when consumers have rational expectations, it can be optimal when they have boundedly rational expectations We show when and how a seller can intentionally mark down with some probability and adopt price matching to make a profit Ignoring customer bounded rationality can result in a significant profit loss Then, we build a dynamic programming model to investigate how the firm should dynamically manage its markdowns over the long run We show that a cyclic policy switching between a high and low markdown probability is typically optimal for exploiting customer bounded rationality We characterize the nature of the cyclic policy and the range in which it is optimal Our findings underscore the importance of consumer bounded rationality and provide managerial and practical guidelines on how to manage price matching when customers are boundedly rational The online supplement is available at https://doiorg/101287/msom20160612

Output expectations productivity trends and employment : the case of Greek manufacturing

Abstract: Recent contributions in dynamic analysis of labor demand suggest that employment in manufacturing can be regarded as being dependent on firms output expectations, factor prices, the level of fixed factors, technical progress and the business conditions at large.

Demand Uncertainty and Resale Price Maintenance

Abstract: When retailers must commit to shipment quantities prior to resolution of demand uncertainty, manufacturer stipulation of a minimum retail price is likely to be profitable for the manufacturer, and not damaging to the retailers. The reason is simple: If demand turns out to be low, the unfettered market-clearing price can lie below the price that maximizes total sales revenue. A minimum retail price that is binding in the low demand state can thus increase total revenue even though it saddles retailers with unsold merchandise. The ubiquity of full reimbursement for returns in Japan even though it is in theory merely a second-best way of achieving minimum retail price stipulations, reveals important aspects of manufacturer maintenance of retail prices having to do with enforcement problems, the allocation of risk-bearing and economic incentives. These aspects of resale price maintenance are relevant to the normative evaluation of the special exemptions for RPM that Japan's Fair Trade Commission has long maintained but is now phasing out.