Showing papers on "Fixed price published in 2015"
TL;DR: Simulation results show that the proposed scheduling method leads to significant reduction in energy costs for diverse load scenarios with the electricity demand from the grid, and the deployment of the proposed method is advantageous for both users and utilities.
151 citations
TL;DR: In this paper, the effect of fixed price regulation on cost structure and cost asymmetry is examined and it is shown that firms will attempt to influence their cost structures by increasing their cost elasticity (i.e., response of cost to changes in volume) and reducing the cost asymmetric (e.g., the differential response of costs to decreases in volume relative to increases in volume).
Abstract: This paper examines the effect of fixed price regulation on cost structure and cost asymmetry. We posit that a change in regulation from quantity regulation to fixed price regulation with a quantity constraint results in an increase in the operating risk faced by firms. In response, firms will attempt to influence their cost structures by increasing their cost elasticity (i.e., response of cost to changes in volume) and reducing the cost asymmetry (i.e., the differential response of cost to decreases in volume relative to increases in volume). Next, we argue that such responses to fixed price regulation will also be influenced by institutional constraints that restrict or allow such adjustments. We empirically test these predictions using data from the German hospital industry for the years 1993-2008. Analysis using 16,186 hospital-year observations indicates the following. First, fixed price regulation increases cost elasticity to a greater extent in for-profit hospitals relative to non-profit hospitals. Next, the change to fixed price regulation is associated with a decrease in cost asymmetry. This effect is stronger in the case of for-profit hospitals relative to non-profit or government hospitals and is not driven by differences in size or intensity of care. Our study reveals that economic as well as sociological factors influence firms’ cost structure responses to regulatory changes.
72 citations
TL;DR: In this paper, a game theoretic framework was used to show that pay-what-you-want pricing can generate positive profits and can also be more profitable than charging a fixed price to all consumers.
37 citations
01 Jan 2015
TL;DR: The SAM as mentioned in this paper provides a coherent, detailed database on production, incomes, consumption, investment, external trade and other flows in the economy, which forms the heart of various analytical models including SAM-based fixed price multiplier models and flexible price computable general equilibrium (CGE) models.
Abstract: Reliable quantitative analysis of sectoral and macro-economic policy requires sound data and appropriate analytical tools, as encompassed in the 2005-06 Ethiopia Social Accounting Matrix (SAM) presented in this paper. This SAM provides a coherent, detailed database on production, incomes, consumption, investment, external trade and other flows in the economy. It also forms the heart of various analytical models including SAM-based fixed price multiplier models and flexible price computable general equilibrium (CGE) models. An additional advantage of the SAM is that it allows the generation of various economic indicators that can assist policy making. Thus, it is hoped that the creation and dissemination of this SAM will open new vistas for economic research on Ethiopia, as well as benefit economic policy making.
31 citations
01 Jan 2015
TL;DR: In this paper, the authors examined the effects of the involvement of informed investors and the presence of information asymmetry in fixed price mechanism on over-subscription ratio in the Malaysian initial public offerings (IPO).
Abstract: This paper examines the effects of the involvement of informed investors and the presence of information asymmetry in fixed price mechanism on over-subscription ratio in the Malaysian initial public offerings (IPO).Analyzing the data on 373 IPOs listed on Bursa Malaysia from 2000 to 2012, we find an insignificant positive relationship between informed investors and over-subscription.However, the relationship between information asymmetry and over subscription is strongly negative.The negative effect of company size suggests that big companies that are considered to have lower information asymmetry receive less investors’ interest, as investments in low risks companies are expected to provide lower initial returns.
29 citations
TL;DR: This article developed a model incorporating self-image into the buyer's utility function and introduced heterogeneity in consumption utility and image-sensitivity, generating different purchase decisions and optimal prices across individuals.
25 citations
TL;DR: This paper proposes an incentive payment contract for stochastic projects defined by a series of stages or tasks that are outsourced to independent subcontractors and shows that this type of contract dominates a fixed price contract with respect to expected client's profit and schedule performance, regardless of payment timing considerations.
Abstract: In this paper we propose an incentive payment contract for stochastic projects defined by a series of stages or tasks that are outsourced to independent subcontractors. Projects defined by sequentially completed independent stages are common in new product development and other high-risk projects. Our goal is to maximize the client's expected discounted profit. Our proposed contract reflects the convex time-cost trade-off that is well known in the project scheduling literature. We show that this type of contract dominates a fixed price contract with respect to expected client's profit and schedule performance, regardless of payment timing considerations. Using a piecewise linear approximation, we show that our contract is a generalization of an incentive/disincentive contract that is frequently used in practice. We show how our contract can be used to find the optimal due date and penalties/bonuses in an incentive/disincentive contract. We compare this contract with several variations and discuss implications for both the client and subcontractors.
25 citations
TL;DR: In this article, the authors examine the role of pricing as a friction to the learning process by comparing outcomes under demand-based pricing to counterfactual pricing schemes and find that employing a fixed price (the industry standard) can hamper learning by reducing the incentive to experiment, resulting in less consumer surplus, but more expected revenue for the platform.
Abstract: This paper is an empirical examination of observational learning. Using data from an online market for music, I find that observational learning benefits consumers, producers of high-quality music, and the online platform. I also study the role of pricing as a friction to the learning pro- cess by comparing outcomes under demand-based pricing to counterfactual pricing schemes. I find that employing a fixed price (the industry standard) can hamper learning by reducing the incentive to experiment, resulting in less consumer surplus, but more expected revenue for the platform.
21 citations
TL;DR: The results support the existence of two contractual regimes: effect sizes on vendor profitability are indeed much larger in FP contracts than in TM contracts and positive effects of industry knowledge and client knowledge are positively associated with vendor profitability.
Abstract: In this paper, we investigate the effects of four determinants of vendor profitability in enterprise resource planning (ERP) outsourcing projects under two contractual regimes: fixed price (FP) contracts and time and material (TM) contracts. We hypothesize that effect sizes are larger under FP contracts than under TM contracts. From a transaction cost economics perspective, we hypothesize that project uncertainty and project size are negatively associated with vendor profitability. From a knowledge-based view of the firm perspective, we hypothesize that industry knowledge and client knowledge are positively associated with vendor profitability. We tested these hypotheses on a comprehensive archival data set comprising 33,908 projects from a major vendor in the ERP software market. Our results confirm and extend previous research. Our results support the existence of two contractual regimes: effect sizes on vendor profitability are indeed much larger in FP contracts than in TM contracts. Also in line with prior research, our results suggest negative effects of project uncertainty and project size in terms of project budget on vendor profitability and positive effects of industry knowledge on vendor profitability. Contrary to prior knowledge, we find that project size in terms of project duration is significantly positively associated with vendor profitability in FP contracts. Also contrary to what is known, we find a significant negative effect of client knowledge on vendor profitability in both contractual regimes.
20 citations
Posted Content•
TL;DR: In this paper, a profit-motivated on-demand transport service with coordinated drivers is proposed to maximize provider profits and the efficiency of the service, where passengers negotiate with the service provider.
Abstract: On-demand transport services in the form of dial-a-ride and taxis are crucial parts of the transport infrastructure in all major cities. However, not all on-demand transport services are equal. In particular, not-for-profit dial-a-ride services with coordinated drivers significantly differ from profit-motivated taxi services with uncoordinated drivers. As such, there are two key threads of research for efficient scheduling, routing, and pricing for passengers: dial-a-ride services (first thread); and taxi services (second thread). Unfortunately, there has been only limited development of algorithms for joint optimization of scheduling, routing, and pricing; largely due to the widespread assumption of fixed pricing. In this paper, we introduce another thread: profit-motivated on-demand transport services with coordinated drivers. To maximize provider profits and the efficiency of the service, we propose a new market mechanism for this new thread of on-demand transport services, where passengers negotiate with the service provider. In contrast to previous work, our mechanism jointly optimizes scheduling, routing, and pricing. Ultimately, we demonstrate that our approach can lead to higher profits, compared with standard fixed price approaches, while maintaining comparable efficiency.
20 citations
01 Nov 2015
TL;DR: Cumulon provides a highly elastic computation and storage engine on top of spot instances, and offers automatic cost-based optimization of execution, deployment, and bidding strategies.
Abstract: We describe Cumulon, a system aimed at helping users develop and deploy matrix-based data analysis programs in a public cloud. A key feature of Cumulon is its end-to-end support for the so-called spot instances---machines whose market price fluctuates over time but is usually much lower than the regular fixed price. A user sets a bid price when acquiring spot instances, and loses them as soon as the market price exceeds the bid price. While spot instances can potentially save cost, they are difficult to use effectively, and run the risk of not finishing work while costing more. Cumulon provides a highly elastic computation and storage engine on top of spot instances, and offers automatic cost-based optimization of execution, deployment, and bidding strategies. Cumulon further quantifies how the uncertainty in the market price translates into the cost uncertainty of its recommendations, and allows users to specify their risk tolerance as an optimization constraint.
07 Dec 2015
TL;DR: A negotiation strategy considering basic economical principles is introduced in this paper which was used for an exemplary resource allocation scenario and shows that negotiation based resource allocation can improve the well-being of consumer and provider.
Abstract: Usually, IaaS providers use the inflexible supermarket approach for trading resources: a provider offers a resource for a fixed price and consumers can buy the offered resources without negotiating with the provider (take it or leave it). Another possibility is an auction based approach. Auctions have well defined rules which are necessary to ensure fair and transparent resource allocation. However, these rules are limiting flexibility of consumers and providers. In this paper we present a negotiation based resource allocation mechanism following the offer-counteroffer negotiation protocol paradigm. On the one hand, this allocation mechanisms is similar to the supermarket approach as consumer and provider are able to communicate directly. On the other hand, the approach shows also similarities to auctions as the price is determined in a dynamic way. For justification and evaluation we developed a so called Bazaar-Extension for CloudSim which allows to run negotiations and to develop and simulate new negotiation strategies and market scenarios. Further a negotiation strategy considering basic economical principles is introduced in this paper which was used for an exemplary resource allocation scenario. The scenario shows that negotiation based resource allocation can improve the well-being of consumer and provider.
TL;DR: In this article, a real options model of a firm's make-or-buy decision under demand uncertainty is presented, where three distinct procurement regimes endogenously arise: buying, making or concurrent sourcing for, respectively, low, intermediate and high demand.
Abstract: We present a real options model of a firm's make-or-buy decision under demand uncertainty. "Making" is subject to decreasing returns to scale, fixed costs and capital investment. "Buying" happens at a fixed price and requires no investment. Three distinct procurement regimes endogenously arise: buying, making or concurrent sourcing for, respectively, low, intermediate and high demand. Capital constraints encourage buying or concurrent sourcing. Operating leverage peaks when the firm switches between buying and making, and it is lowest (and negative) at the switch between making and concurrent sourcing. This non-monotonic pattern mirrors and drives the behavior of the firm's beta.
TL;DR: In this article, a new group-buying mechanism originated in China where the new mechanism adopts a fixed group price rather than a dynamic pricing mechanism was studied and a sensitive parameter was employed to reflect the initial customer's seeking and communication cost.
Abstract: In this paper, we study a new group-buying mechanism originated in China where the new mechanism adopts a fixed group price rather than a dynamic pricing mechanism. We employ a sensitive parameter , reflecting the initial customer’s seeking and communication cost and formulate this new group-buying business as a game model. First, we formulate the basic model as a Stackelberg game where the website is the leader and the seller is the follower. Our result shows that the group-buying mechanism is more efficient when the value of is smaller, and there is also an upper bound for to adopt group-buying mechanism. Second, we establish three other group-buying game structures by considering different market power between the website and the seller. By comparing the maximum revenues and optimal decisions obtained under different market structures, some interesting and valuable managerial insights are established such that when to adopt a group-buying mechanism or a non-group-buying mechanism and how to make a deci...
TL;DR: The authors of as discussed by the authors argue that the risk that contracting partners will extract surplus in renegotiations (hold up) leads to underinvestment ex ante, especially when investments are relationship-specific, and raise doubts about whether it is a reasonable assumption that ex post renegotiation will always reach efficient outcomes.
Abstract: The last decade has seen a growth of new approaches in contract theory that go beyond the traditional models of complete and incomplete contracting to incorporate some of the most prominent psychological biases when modeling the behavior of contracting partners. Many of the traditional contracting models have been expanded to incorporate behavioral dimensions such as loss aversion, time inconsistency, or over-optimism, which allows researchers to more realistically explain the observed contracting behavior in the economy. 1 The property rights and incomplete contracting literature has only very recently started to embrace these new extensions. One of the central building blocks of incomplete contracting theories is the assumption that parties to a contract will always engage in ex post efficient renegotiation in the case of (un)foreseen shocks (Hart and Moore 1988, 1990). As long as the valuation of the good is higher for the buyer than the seller, mutually beneficial trade should occur. However, the risk that contracting partners will extract surplus in renegotiations (hold up) leads to underinvestment ex ante, especially when investments are relationship-specific. While these models have been very influential, several recent theories have raised doubts about whether it is a reasonable assumption that ex post renegotiation will always reach efficient outcomes. Hart and Moore (2008) and Hart (2009) argue that contracts act as a reference point for the feelings of entitlement of contracting parties. They show that rigid contracts (fixed price) work well in normal times. However, when a
TL;DR: In this article, the authors show that a PWYW pricing mechanism, if applied to ex post consumption, separates the decision to buy from the decision how much to pay, and the information asymmetries about the quality of the good are reduced during the act of consumption so that buyers are informed about the product's quality when they decide to pay.
Abstract: Pay What You Want (PWYW) pricing has received considerable attention recently. Empirical studies show that a PWYW pricing mechanism is able to increase a seller’s turnover and profit. This paper addresses PWYW pricing for bundles of experience goods. The paper shows that a PWYW pricing mechanism, if applied to ex post consumption, separates the decision to buy from the decision how much to pay. Information asymmetries about the quality of the good are reduced during the act of consumption so that buyers are informed about the product’s quality when they decide how much to pay. As a consequence, risk-averse buyers who would otherwise refrain from purchasing under a fixed price mechanism can be attracted to purchase under a PWYW pricing ex post consumption (PWYW-EPC) mechanism. In this case, the pricing mechanism itself constitutes a signal. The paper concludes that a PWYW pricing mechanism, applied to ex post consumption, can be a profitable strategy for a seller if she sells bundles of experience goods and if she wants to attract risk-averse buyers for realizing economies of scale in production.JEL Codes: D4 D49 D8 M31
Journal Article•
TL;DR: In this article, a customer behavior model based on a psychological method is proposed for simulating the behaviors of electricity consumers to select retailers and electricity contracts, and a novel marketing strategy considering the influence on interruptible load and consumer behavior is modeled to determine electricity fixed price, up-low limited real-time price and energy procurement allocation.
Abstract: Retail side competition will be introduced as the next step of Chinese electricity market development.Under this environment,retail side monopoly will be broken,which leads to a significant change in the marketing strategy of retailers.In this paper,new challenges for retailers and consumers under competition environment are discussed firstly.Then the customer behavior model based on a psychological method is proposed for simulating the behaviors of electricity consumers to select retailers and electricity contracts.For retailers,a novel marketing strategy considering the influence on interruptible load and consumer behavior is modeled to determine electricity fixed price,up-low limited real-time price and energy procurement allocation.Finally,numerical simulation is used to show the essential features of proposed model.
TL;DR: In this article, a tax and trade emission regulations system that controls both emission costs and emission quantities is described. But unlike a traditional carbon tax, regulated firms may also produce carbon credits which may be sold to the government.
TL;DR: In this paper, the authors draw a comparison between fixed time fixed price (FTFP) and time and material (TnM) pricing models to see which one is more acceptable to vendors along with researching on the reasons behind that.
Abstract: Purpose – The information technology (IT) industry has grown owing to the increase in IT outsourcing prompted by the need for cost reductions in organizations. The IT industry contracts are based on pricing models, which establish the terms and conditions of payment to be made to vendors by clients. The pricing models followed in the industry are mainly Fixed Time Fixed Price (FTFP) and Time and Material (TnM) and the remaining are mostly variations of these. Using the information collected from vendors, the purpose of this paper is to draw a comparison between these pricing models to see which one is more acceptable to vendors along with researching on the reasons behind that. The outsourcing engagement is also based on a set of processes to be used during the contract time and that is known as the Outsourcing Model (OM) being used. This research also derives how pricing models, OMs and Client Vendor Relationship (CVR) being developed are related. Design/methodology/approach – Hypothesis have been formul...
TL;DR: The main pricing models prevalent in the industry are Time and Material (TnM) and Fixed Time Fixed Price (FTFP) alternately also referred as Fixed Price.
Abstract: Purpose – The information technology (IT) outsourcing has been inexorably growing in spite of its downsides. The main reasons are financial gains and cost reductions, as well as it allows companies to focus on their core selling areas. Within IT outsourcing, offshoring has become a big success because it greatly reduces costs. Countries like India, China and Philippines are attracting a lot of IT outsourcing work. In order to save costs, companies have to work out the best pricing models with the vendors so enable profitability at both ends. The main pricing models prevalent in the industry are Time and Material (TnM) and Fixed Time Fixed Price (FTFP) alternately also referred as Fixed Price. There are various other pricing models now, which are mainly variations of these. The purpose of this paper is to show an empirical comparison between these models from the vendor’s perspective to see which of them has greater acceptability. Design/methodology/approach – The paper is an empirical paper in which liter...
TL;DR: In this article, the authors assessed the impact on retail electricity price through fuel adjustment charge (Ft) from Adder and feed-in tariffs (FIT) policy during 2010 to 2030 by using the alternative energy development plan (AEDP), optimization, and power development plans (PDP2010 rev.3).
TL;DR: In this article, the authors examined the effect of introducing the bookbuilding method upon IPO underpricing in China and found that after the pricing mechanism reform, the under pricing of IPOs was significantly higher than that of fixed price offerings.
Abstract: Using a sample of initial public offerings (IPOs) (A-shares) at the Shanghai Securities Exchange from 2003 to 2007, we examine the effect of introducing the bookbuilding method upon IPO underpricing in China. The results show that after the pricing mechanism reform, the underpricing of IPOs was significantly higher than that of fixed price offerings. The possible reason is that underwriters have no discretionary allocation in the hybrid bookbuilding/open offer method.
01 Jan 2015
TL;DR: The role and impact of economic evidence for policymaking in the field of information law is investigated in this article, which concludes that this role is positive rather than normative: legal or social norms maintain the upper hand as guiding principles for policy, more than the economic goal of welfare maximization.
Abstract: This dissertation contains nine articles with an empirical focus in copyright, telecommunication, and broadcasting. These articles address different research questions and employ a variety of methodological approaches. They all share an economic foundation and the aim to contribute to evidence based policymaking in the field of information law. Topics covered range from the welfare effects of illegal downloading, to those of public television; from the effectiveness of blocking access to The Pirate Bay to stop consumers from illegal downloading, to the effect of adequate legal online services on illegal downloading; from fixed price regulation for e‐books, to text and video relay services to enable the hearing impaired to use telephony services; from the valuation of commercial radio licenses, to setting renewal fees for telecommunication spectrum based on an auction. Using these nine articles as case studies, the role and impact of economic evidence for policymaking in the field of information law is investigated. It is concluded that this role is positive rather than normative: legal or social norms maintain the upper hand as guiding principles for policy, more than the economic goal of welfare maximization. However, this does not by any means render economic analysis useless. Increasingly, politicians, judges and stakeholders require economic analysis and economic evidence to make informed decisions about new policy measures, to make optimal decisions within existing legal boundaries and to fathom the consequences of proposed legal interventions. Without empirical evidence they may simply assume the effects of a policy measure as an article of faith.
TL;DR: The paper characterizes the family of continuous, strategy-proof and individually rational social choice functions whose range belongs to the interior of the set of feasible allocations, and shows how several features of abstract single-crossing domains can be derived endogenously in economic environments by exploiting the additional structure of classical preferences.
Abstract: This paper defines the single-crossing property for two-agent, two-good exchange economies with classical (i.e., continuous, strictly monotonic, and strictly convex) individual preferences. Within this framework and on a rich single-crossing domain, the paper characterizes the family of continuous, strategy-proof and individually rational social choice functions whose range belongs to the interior of the set of feasible allocations. This family is shown to be the class of generalized trading rules. This result highlights the importance of the concavification argument in the characterization of fixed-price trading rules provided by Barbera and Jackson (Econometrica 63:51–87, 1995), an argument that does not hold under single-crossing. The paper also shows how several features of abstract single-crossing domains, such as the existence of an ordering over the set of preference relations, can be derived endogenously in economic environments by exploiting the additional structure of classical preferences.
TL;DR: The proposed auction mechanism strategy‐proof group buying‐based auction mechanism formulates the problem of virtual machine allocation in clouds as a combinatorial auction problem, and holds some important property such as individual rationality, ex‐post budget balance, and truthfulness.
Abstract: We study the cloud resource auction problem where users can bid for resource bundle containing heterogeneous types of virtual machines, and providers allocate virtual machines to their users through group price model. Compared with fixed price model, which is not always the best approach for trading resources as its economically inefficient and inflexible nature, the group price model possess the better flexibility and monetary benefits for auction participants e.g., cloud providers and users. The proposed auction mechanism strategy-proof group buying-based auction mechanism, which formulates the problem of virtual machine allocation in clouds as a combinatorial auction problem, and holds some important property such as individual rationality, ex-post budget balance, and truthfulness, meanwhile guaranteeing efficiency in both the provider's revenue and system efficiency. Extensive simulation results show that the proposed mechanism yields the allocation efficiency and computational tractability compared with the mechanism with fixed price model. Copyright © 2015 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors developed a pricing model capable to help on service delivery whilst adding price flexibility on IT outsourcing contracts, where the desired flexibility is added through the balance between fixed and variable demand resulting in a mixed approach that satisfies customers and allow profit optimization.
Abstract: IT outsourcing contracts are known for their use of a fixed price. This happens mainly due to the need of the customer to accurately budget its IT operation costs. However, nowadays, the use of fixed price is regarded as an unfair approach for customers, consequently, private and public organizations demand flexible prices. As a result, IT providers are asked to abandon the fixed price and find new service delivery models suitable with a flexible price. This research seeks to develop a pricing model capable to help on service delivery whilst adds price flexibility on IT outsourcing contracts. The major contribution of this research is based on service unit identification, demand estimation, price setting and cost calculation, which are essential steps for a good contract execution. To develop our research, design science research methodology was applied. The desired flexibility is added through the balance between fixed and variable demand resulting in a mixed approach that satisfies customers and allow profit optimization. The proposed model is adaptable to each business deal.
01 Jan 2015
TL;DR: In this article, the authors analyse if retail prices for food products have converged in the time after this "shock" of the EU enlargement and show that offering unprotected sexual services is endogenous, local events influence the supply, demand and price of sexual services.
Abstract: This thesis looks at prices in two different markets.
The first one is the market for food products in Europe. With the introduction of the common market in 1992, most European markets have been integrated. When 10 more countries joined the EU in 2004, another round of integration took place and the common market was extended to these countries as well. We analyse if retail prices for food products have converged in the time after this "shock" of the EU enlargement. While there exists an extensive literature on convergence in general, this chapter is the first to be able to look at retail price convergence within the European Union at a micro-data level. By decomposing price convergence into within sub-groups and between sub-groups of countries convergence, we add further insight to the literature on what causes the strong price convergence within the enlarged EU.
The second market this thesis looks at is the one for internet facilitated sexual services in Germany. Sex work and the advertisement thereof is legal in Germany, which has led to a range of internet platforms concerned with selling sexual services. While many platforms only contain advertisements, one of these platforms gives sex workers the opportunity to sell their services either as an auction or at a fixed price. This has allowed us to create a dataset on sex work with information based on actual concluded contracts, which is a very unique feature in this kind of literature. Furthermore, each data point is geo- and time-referenced. This dataset is used to show that 1) offering unprotected sexual services is endogenous, 2) local events influence the supply, demand and price of sexual services, and 3) regional effects influence local prices and habits.
TL;DR: Wang et al. as discussed by the authors used behavioral finance theory and game theory to build the pricing and underpricing models with investors' heterogeneity based on different issuing mechanisms and provide a comparative analysis.
Abstract: Compared with the fixed-price mechanism, the bookbuilding mechanism has not changed the Chinese IPO high underpricing. How to develop scientific and reasonable IPO pricing, and reduce the high IPO underpricing has become a major challenge for China's securities market. In this paper, using behavioral finance theory and game theory, we build the Initial public offering (IPO) pricing and underpricing models with investors’ heterogeneity based on different issuing mechanisms and provide a comparative analysis. Firstly, our models show that IPO underpricing will not be eliminated by using either fixed-price or bookbuilding mechanisms, but when the investors’ heterogeneity expectation is the same, lower IPO underpricing can be obtained by the issuing of bookbuilding compared with that of fixed price. Secondly, the IPO underpricing may be larger than that under fixed price if the heterogeneity of investors under bookbuilding is larger than that under fixed price. Thirdly, the numerical analysis results provide strong support for our model. These findings further explains the cause of the high IPO underpricing long-standing in China.
Journal Article•
TL;DR: Preeti Thakur et al. as mentioned in this paper studied whether underpricing exists in Indian initial public offering (IPO) or not and studied the impact of regulatory framework on IPO Underpricing.
Abstract: Preeti Thakur, Assistant Professor at Maharishi Markandeshwar University Solan, India Abstract As we all know initial public offering (IPO) underpricing and regulatory framework is the hottest topic in the current industry, mainly because of India being a developing country and lot of growth in various sectors which leads a country to ultimate success. The purpose of this study is to study whether Underpricing exists in Indian IPO’s or not and to study the impact of regulatory framework on IPO Underpricing. In this research project the data is analyzed by descriptive and comparative method. The findings came out and it was found that Indian market have more underpricing than over pricing which can observed by descriptive method. On the based on the descriptive method, the average underpricing value is achieved 101% by fixed price and 27% by book building method. On the basis of comparative method, the value of underprice is less in case of book building method compare to fixed price method. On the basis of both the method, the book building method is the best method for getting of IPO pricing
TL;DR: In this article, the authors combine ideas from auction theory and recent work on pricing with strategic consumers to derive the optimal continuous time pricing scheme in this situation, under the assumption that buyers are split among those who have a high valuation and those having a low valuation for the item, they obtain the price path maximizing the seller's revenue.
Abstract: An important problem in electronic commerce is that of finding optimal pricing mechanisms to sell a single item when the number of buyers is random and they arrive over time. In this paper we combine ideas from auction theory and recent work on pricing with strategic consumers to derive the optimal continuous time pricing scheme in this situation. blue Under the assumption that buyers are split among those who have a high valuation and those having a low valuation for the item, we obtain the price path maximizing the seller's revenue. This amounts to conclude that, depending on the specific instance it is optimal to either use a fixed price strategy, or to use steep markdowns by the end of the selling season. To complement this optimality result we prove that under a large family of price functions there exists equilibrium for the buyers. Finally, we derive an approach to tackle the case in which buyers' valuation follow a general distribution. The approach is based on optimal control theory and is well suited for numerical computations.