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Limit price
About: Limit price is a research topic. Over the lifetime, 4865 publications have been published within this topic receiving 148546 citations.
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TL;DR: In this paper, a model is formulated of the reseller's response when the supplier offers a temporary reduction in price, assuming that the market demand for the product is elastic with respect to the selling price.
Abstract: A common practice in product distribution is the case in which the supplier offers a temporary reduction in price. It is suggested in the literature that in such situations, the reseller may engage in forward buying (i.e., purchasing additional stock at the reduced price offered by the supplier for later sale at the regular selling price). In this paper, a model is formulated of the reseller's response when the supplier offers a temporary reduction in price. It is assumed that the market demand for the product is elastic with respect to the selling price the reseller sets. A procedure for determining the optimal response of the reseller is developed. The model presented in this paper can easily be adapted to the case in which the reseller faces a permanent increase in the price charged by the supplier.
36 citations
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TL;DR: In this paper, the authors developed and estimated a model of a company's energy price exposure and presented evidence showing that increases in a company’s environmental sustainability lowers its energy prices.
Abstract: Energy security issues and climate change are two of the most pressing problems facing society and both of these problems are likely to increase energy price variability in the coming years. This paper develops and estimates a model of a company’s energy price exposure and presents evidence showing that increases in a company’s environmental sustainability lowers its energy price exposure. This result is robust across two different measures of energy prices. These results should be useful to companies seeking new ways of addressing energy price risk as well as governments concerned about the impact that energy price risk can have on economic growth and prosperity.
36 citations
TL;DR: Wang et al. as discussed by the authors analyzed the effects of energy price fluctuations on the demand and supply of energy in China, focusing on the industries that depend on energy inputs, and they were able to apply these effects and analyze the Chinese energy industry.
35 citations
TL;DR: In this article, the authors focus on the positive economics of entry, exit, and the persistence of dominant firms and oligopolies, which is a core research topic in economics.
Abstract: The third area is critical for policy. This has kept our attention focused on the other two areas. Not until we understand the causes and consequences of concentrated industry structure can we comment on the relevant welfare economics. The positive economics of entry, exit, and the persistence of dominant firms and oligopolies are thus a core research topic. The positive questions are very difficult, like many posed by the world and not by logic. Traditional empirical efforts to distinguish among competing hypotheses have made little progress. This is due in no small part to the complexity of the question. The two main efficiency defenses of concentrated industry structure are scale economies and firm heterogeneity. Traditional methods use proxies for barriers to entry that could equally plausibly be proxies for the efficiencies. Recent theoretical work on entry and entry barriers has been very successful in teaching us about the importance of strategy, irreversibility, and information. But it has not emphasized links to observables. The observable differences between a theory predicting nearly efficient outcomes and a related theory predicting harmful barriers to entry can be very subtle. To use theory in a direct way, it seems, we must draw dozens
35 citations
TL;DR: In this paper, the authors show that consumers pay more when an amount model is used, while the seller has lower profits and different promotional strategies when a amount model was used, and consumer behavior is constrained by the amount model.
Abstract: Does it matter if managers use an absolute amount or the relativepercentage discount when determining the optimal price and promotionalstrategy for a good? Intuitively, one might expect that the results ofboth models (deal amount and deal percentage) would be identical. Thisresearch shows that the deal-percentage model dominates the deal-amountmodel on three dimensions: (1) consumers pay more when an amount modelis used, (2) the seller has lower profits and different promotionalstrategies when an amount model is used, and (3) consumer behavior isunrealistically constrained by the amount model. This research showsthat whenever the seller offers a promotion in the deal-amount model,the net price paid by the consumer (regular price minus the deal) isalways higher than the net price in the deal-discount model. Thisresult implies that the ultimate price and promotional strategy (suchas depth of promotion, timing of promotions, and so on) prescribed bythe models are different. Additionally, this research shows that whenconsumers respond similarly in the models, the seller's profits arehigher in the deal-percentage model. This finding is a direct result ofthe higher net price in the deal-amount model. Finally, contrary toempirical findings in the marketing literature, the deal-amount modelrequires consumers to respond more strongly to price changes than topromotions (that is, the promotional elasticity plus one must be lessthan the magnitude of the price elasticity) for the optimal price to bepositive. The deal-percentage model does not place similar restrictionson consumer behavior.
35 citations