Factor price

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

Competitive Firm and the Theory of Input Demand under Price Uncertainty: Comment

Abstract: In a recent paper Batra and Ullah (1974) investigate a competitive firm's demand for factors of production when all inputs are chosen before the output price is observed. They conclude (p. 547) that \"the risk-averse firm utilizes smaller quantities of inputs . . . than a firm operating under certainty\" and that \"the marginal and overall impacts of uncertainty need not be the same for input demand.\" In this note I show that the first of these conclusions is incorrect and then argue that the marginal and overall impacts of uncertainty are the same provided the firm's von Neumann-Morgenstern utility function exhibits decreasing absolute risk aversion. The model and notation I use are the same as in Batra and Ullah. From the first-order conditions Batra and Ullah correctly show (p. 541) that r < jufK(K, L) (1)

The Price Is Right...or is it? Demographic and category effects on consumer price knowledge

Abstract: For over a quarter of a century, the television game show The Price Is Right has been testing American consumers’ knowledge of prices for a wide array of products. The settings of this highly popular game show allow for a broad examination of the extent of price knowledge consumers possess across product categories. Much of our current perspective on consumer price knowledge has been limited by a restricted choice of product categories studied, and a lack of significant respondent incentives for providing accurate price responses. Using data from hundreds of contestants, highly motivated to provide accurate price estimates, this paper studies the impact of product‐ and consumer‐related factors on consumer price knowledge across 29 product categories.

An Empirical Analysis of Price Discrimination Mechanisms and Retailer Profitability

Abstract: Retailers typically engage in some form of price discrimination to increase profitability. In this article, the authors compare the impact on retailer profitability of two price discrimination mechanisms: quantity discounts based on package size (second-degree price discrimination) and store-level pricing or micromarketing (third-degree price discrimination). Whereas the latter has been well addressed in the marketing literature, there is limited empirical research on the use of quantity discounts for price discrimination. Using store-level sales data, the authors estimate a structural demand model, accounting for parameter heterogeneity and price endogeneity. They combine the parameter estimates with a model of retailer pricing to conduct optimal pricing and profitability simulations under several scenarios, ranging from constraining the retailer not to engage in any form of price discrimination to the least restrictive scenario of setting nonlinear price schedules specific to each store. The pr...