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Journal articles on the topic 'Optimal Pricing Policy'

Author: Grafiati

Published: 4 June 2021

Last updated: 6 September 2023

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1

Egorov, Konstantin, and Dmitry Mukhin. "Optimal Policy under Dollar Pricing." American Economic Review 113, no. 7 (July 1, 2023): 1783–824. http://dx.doi.org/10.1257/aer.20200636.

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Empirical evidence shows that most international prices are sticky in dollars. This paper studies the policy implications of this fact in the context of an open economy model with general preferences, technologies, asset markets, nominal rigidities, and a rich set of shocks. We show that although monetary policy is less efficient and cannot implement the flexible-price allocation, inflation targeting and a floating exchange rate remain robustly optimal in non-US economies. The capital controls cannot unilaterally improve the allocation and are useful only when coordinated across countries. International cooperation benefits other economies, but is not in the self-interest of the United States. (JEL E31, E52, F14, F31, F38, F41)

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2

Ee, Mong Shan. "OPTIMAL ORDERING RULE FOR A PERISHABLE PRODUCT WITH A DYNAMIC PRICING POLICY." Journal of the Operations Research Society of Japan 56, no. 2 (2013): 57–68. http://dx.doi.org/10.15807/jorsj.56.57.

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3

Engel, Charles. "Currency Misalignments and Optimal Monetary Policy: A Reexamination." American Economic Review 101, no. 6 (October 1, 2011): 2796–822. http://dx.doi.org/10.1257/aer.101.6.2796.

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This paper examines optimal monetary policy in an open-economy two-country world with sticky prices under pricing to market. We show that currency misalignments are inefficient and lower world welfare. We find that optimal policy must target consumer price inflation, the output gap, and the currency misalignment. The paper derives the loss function of a cooperative monetary policymaker and the optimal targeting rules. The model is a modified version of Clarida, Galí, and Gertler (JME, 2002). The key change is that we allow pricing to market or local-currency pricing and consider the policy implications of currency misalignments. JEL: E52, F31, F41

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4

Nakov, Anton, and Carlos Thomas. "Optimal Monetary Policy with State-Dependent Pricing." Finance and Economics Discussion Series 2011, no. 48 (2011): 1–28. http://dx.doi.org/10.17016/feds.2011.48.

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Cremer, Helmuth, and Firouz Gahvari. "Nonlinear Pricing, Redistribution, and Optimal Tax Policy." Journal of Public Economic Theory 4, no. 2 (April 2002): 139–61. http://dx.doi.org/10.1111/1467-9779.00092.

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6

Ladany, Shaul P., and Avner Arbel. "Optimal cruise-liner passenger cabin pricing policy." European Journal of Operational Research 55, no. 2 (November 1991): 136–47. http://dx.doi.org/10.1016/0377-2217(91)90219-l.

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7

Wang, Xiao-Yong. "Effect of Carbon Pricing on Optimal Mix Design of Sustainable High-Strength Concrete." Sustainability 11, no. 20 (October 21, 2019): 5827. http://dx.doi.org/10.3390/su11205827.

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Material cost and CO2 emissions are among the vital issues related to the sustainability of high-strength concrete. This research proposes a calculation procedure for the mix design of silica fume-blended high-strength concrete with an optimal total cost considering various carbon pricings. First, the material cost and CO2 emission cost are determined using concrete mixture and unit prices. Gene expression programming (GEP) is used to evaluate concrete mechanical and workability properties. Second, a genetic algorithm (GA) is used to search the optimal mixture, considering various constraints, such as design compressive strength constraint, design workability constraint, range constraints, ratio constraints, and concrete volume constraint. The optimization objective of the GA is the sum of the material cost and the cost of CO2 emissions. Third, illustrative examples are shown for designing various kinds of concrete. Five strength levels (from 95 to 115 MPa with steps of 5 MPa) and four carbon pricings (normal carbon pricing, zero carbon pricing, five-fold carbon pricings, and ten-fold carbon pricings) are considered. A total of 20 optimal mixtures are calculated. The optimal mixtures were found the same for the cases of normal CO2 pricing and zero CO2 pricing. Optimal mixtures with higher strengths are more sensitive to variation in carbon pricing. For five-fold CO2 pricing, the cement content of mixtures with higher strengths (105, 110, and 115 MPa) are lower than those of normal CO2 pricing. As the CO2 pricing increases from five-fold to ten-fold, for mixtures with a strength of 110 MPa, the cement content becomes lower. Summarily, the proposed method can be applied to the material design of sustainable high-strength concrete with low material cost and CO2 emissions.

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8

LI, GENDAO, and BAOFENG SUN. "OPTIMAL DYNAMIC PRICING FOR USED PRODUCTS IN REMANUFACTURING OVER AN INFINITE HORIZON." Asia-Pacific Journal of Operational Research 31, no. 03 (June 2014): 1450012. http://dx.doi.org/10.1142/s0217595914500122.

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The return of used products (cores) is the beginning of remanufacturing. Although an appropriate pricing policy can effectively manage the returns, a static pricing policy cannot match the returns and demands because of the high uncertainties in both sides, which in turn results in high inventory cost or lost-sale cost. In this paper, we apply a dynamic pricing policy commonly used in retail setting to the core acquisition management in remanufacturing and study the pricing problem for used products with the objective of minimizing average cost over an infinite horizon. We formulate the pricing problem as a continuous-time Markov decision process and characterize the structural properties of the optimal policy. We also conduct a numerical study to investigate the benefit of dynamic pricing.

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9

Yan, Xiaoming, and Yong Wang. "An EOQ Model for Perishable Items with Supply Uncertainty." Mathematical Problems in Engineering 2013 (2013): 1–13. http://dx.doi.org/10.1155/2013/739425.

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This paper aims to develop a continuous inventory model for finding the strategy for a retailer that sells a seasonal perishable item over a finite planning time. The purpose of this retailer is to maximize the expected profit by choosing an optimal ordering quantity before the sales horizon and adopting an optimal pricing policy during the sales horizon. With the help of Pontryagin's maximum principle, we can obtain the optimal ordering quantity and the optimal pricing policy by solving a list of equations. For a special case, we not only characterize the structure of the optimal pricing policy for any given initial inventory level but also obtain the optimal solutions by solving a set of equations. A numerical analysis reveals the influence of some parameters on the optimal ordering quantity.

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10

Cho, Daeha, Yoonshin Han, Joonseok Oh, and Anna Rogantini Picco. "Uncertainty shocks, precautionary pricing, and optimal monetary policy." Journal of Macroeconomics 69 (September 2021): 103343. http://dx.doi.org/10.1016/j.jmacro.2021.103343.

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11

Wilson, Charles A. "On the Optimal Pricing Policy of a Monopolist." Journal of Political Economy 96, no. 1 (February 1988): 164–76. http://dx.doi.org/10.1086/261529.

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12

Fershtman, Chaim, and Uriel Spiegel. "Learning by doing, inventory and optimal pricing policy." Journal of Economics and Business 38, no. 1 (February 1986): 19–26. http://dx.doi.org/10.1016/0148-6195(86)90013-5.

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13

Li, Yuan, and Yumei Hou. "Joint Pricing and Inventory Replenishment Decisions with Returns and Expediting under Reference Price Effects." Mathematical Problems in Engineering 2019 (April 24, 2019): 1–17. http://dx.doi.org/10.1155/2019/3479678.

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This paper considers a single-item joint pricing and inventory replenishment problem under reference price effects in consecutive T periods. Demands in consecutive periods are sensitive to price and reference price with general demand distribution. At the end of each period, after the demand realization, a firm can return excess stocks to a supplier or place an expediting order to reduce the loss by shortage. Unfilled demands are fully backlogged. In order to maximize the total expected discounted profit with reference price effects the optimal pricing and inventory replenishment policies for regular order and the inventory adjustment decisions for returning/expediting are derived. The optimal replenishment policy for regular order is a base-stock policy, the optimal pricing policy is a base-stock-list-price policy, and the optimal policy for returning/expediting inventory adjustment follows a dual-threshold policy. Furthermore, the analysis of the operational impacts (from the perspective of adding returning/expediting and reference price effects, respectively) is researched. Numerical results also show that considering both returning/expediting and reference price effects is more profitable than considering only one of them.

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14

Bezpartochnyi, Maksym, Igor Britchenko, and Peter Lošonczi. "ENSURING ECONOMIC SECURITY OF TRADE ENTERPRISES IN THE FORMATION OF PRICING POLICY." Financial and credit activity problems of theory and practice 2, no. 43 (April 29, 2022): 146–56. http://dx.doi.org/10.55643/fcaptp.2.43.2022.3592.

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The article considers the problem of ensuring the economic security of trade enterprises by forming an optimal pricing policy. The methodology of formation the minimum and maximum selling prices of trade enterprise, maintenance of margin of economic security, which based on research of turnover costs and working capital of trade enterprise is offered. Based on statistical data of trade enterprises, the types of prices by product range are determined, which form a stable economic situation and ensure economic security of trade enterprise. The necessity of formation the optimal price policy and selling prices of trade enterprises with the use of Pareto efficiency tools and construction of single-criteria and multi-criteria tasks, indicators of quality of commodity resources of trade enterprises is substantiated. Using the Excel software processor and the “Regression” function, economic-mathematical models of optimal prices for the product range of trade enterprises are built. The results testified to the effectiveness of the proposed model of the optimal pricing policy of trade enterprises, as the obtained values are within the minimum selling prices, which provides economic security of trade enterprises. The process of forming the pricing policy of trade enterprises to ensure economic security is proposed, which is based on the principles of pricing, appropriate methodological tools and monitoring of market environment factors. Organizational, economic, legal, social and market (marketing) mechanisms for the formation of effective pricing policy of trade enterprises aimed at ensuring economic security are identified. This study is practically interesting for personnel of trade enterprises, regardless of organizational-legal forms of ownership and activities, and theoretically – for researchers dealing with pricing.

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15

Gao, Chunyan, Yao Wang, Liang Xu, and Yi Liao. "Dynamic Pricing and Production Control of an Inventory System with Remanufacturing." Mathematical Problems in Engineering 2015 (2015): 1–8. http://dx.doi.org/10.1155/2015/789306.

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We consider optimal pricing and manufacturing control of a continuous-review inventory system with remanufacturing. Customer demand and product return follow independent Poisson processes. Customer demand is filled by serviceable product, which can be either manufactured or remanufactured from the returned product. The lead times for both manufacturing and remanufacturing are exponentially distributed. The objective is to maximize the expected total discounted profit over an infinite planning horizon. We characterize the structural properties of the optimal policy through the optimality equation. Specifically, the optimal manufacturing policy is a base-stock policy with the base-stock level nonincreasing in the return inventory level. The optimal pricing policy is also a threshold policy, where the threshold level is nonincreasing in the return inventory level.

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16

Wang, Xue Wu, and Xiao Xin Zang. "Cooperative Pricing Decision Model in Supply Chain." Advanced Materials Research 228-229 (April 2011): 789–93. http://dx.doi.org/10.4028/www.scientific.net/amr.228-229.789.

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This paper considers a retailer who wishes to procure a kind of product to meet customer’s demand and shows that the supplier and the retailer’s cooperetive pricing decision . We gives the prices of Pareto optimal equlibrium and compares the prices with that of cooperative supply chain and find that noncooperative system profit is less than cooperative system profit. Furthermore, we shows that on some assumption, Pareto optimal price policy is equivalent to jointly decision policy, i.e., Pareto optimal price policy can reach the whole system maximum profit, and the numerical example indicates that with the retailer operating cost increasing, the total profit of supply chain is decreasing.

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17

Liu, Na, Tsan-Ming Choi, Chun-Wah Marcus Yuen, and Frankie Ng. "Optimal Pricing, Modularity, and Return Policy Under Mass Customization." IEEE Transactions on Systems, Man, and Cybernetics - Part A: Systems and Humans 42, no. 3 (May 2012): 604–14. http://dx.doi.org/10.1109/tsmca.2011.2170063.

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18

Chang, Ching-Ter, Cheng-Kung Chung, Jiuh-Biing Sheu, Zheng-Yun Zhuang, and Huang-Mu Chen. "The optimal dual-pricing policy of mall parking service." Transportation Research Part A: Policy and Practice 70 (December 2014): 223–43. http://dx.doi.org/10.1016/j.tra.2014.10.012.

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19

Mixon, J. Wilson, and Noel D. Uri. "On the optimal pricing policy of a dominant firm." De Economist 134, no. 2 (June 1986): 225–27. http://dx.doi.org/10.1007/bf01706291.

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20

Etro, Federico, and Lorenza Rossi. "Optimal monetary policy under Calvo pricing with Bertrand competition." Journal of Macroeconomics 45 (September 2015): 423–40. http://dx.doi.org/10.1016/j.jmacro.2015.06.004.

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21

Yang, Baimei, Chunyan Gao, Na Liu, and Liang Xu. "Dynamic Inventory and Pricing Policy in a Periodic-Review Inventory System with Finite Ordering Capacity and Price Adjustment Cost." Mathematical Problems in Engineering 2015 (2015): 1–8. http://dx.doi.org/10.1155/2015/269695.

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We consider a dynamic inventory control and pricing optimization problem in a periodic-review inventory system with price adjustment cost. Each order occurs with a fixed ordering cost; the ordering quantity is capacitated. We consider a sequential decision problem, where the firm first chooses the ordering quantity and then the sale price to maximize the expected total discounted profit over the sale horizon. We show that the optimal inventory control is partially characterized by as, s′, ppolicy in four regions, and the optimal pricing policy is dependent on the inventory level after the replenishment decision. We present some numerical examples to explore the effects of various parameters on the optimal pricing and replenishment policy.

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22

Maihami, Reza, and Isa Nakhai Kamal Abadi. "Dynamic Pricing and Ordering Policy for Non-Instantaneous Deteriorating Items." Advanced Materials Research 433-440 (January 2012): 6607–15. http://dx.doi.org/10.4028/www.scientific.net/amr.433-440.6607.

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In this paper, dynamic pricing and ordering policy for non-instantaneous deteriorating items is developed. Shortage is allowed and partially backlogged where as the backlogging rate is variable and dependent on the waiting time for the next replenishment. The major objective is to determine the optimal selling price and the optimal ordering policy simultaneously such that, the total profit is maximized. We first show that for any given selling price, optimal ordering policy schedule exists and unique. Then, we show that the total profit is a concave function of price. Next, we present a simple algorithm to find the optimal solution. Finally, we solve a numerical example to illustrate the solution procedure and the algorithm.

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23

Lei, Xiaowen, and Michael C. Tseng. "“WAIT-AND-SEE” MONETARY POLICY." Macroeconomic Dynamics 23, no. 5 (October 30, 2017): 1793–814. http://dx.doi.org/10.1017/s1365100517000451.

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This paper develops a model of the optimal timing of interest rate changes. With fixed adjustment costs and ongoing uncertainty, changing the interest rate involves the exercise of an option. Optimal policy therefore has a “wait-and-see” component, which can be quantified using option pricing techniques. We show that increased uncertainty makes the central bank more reluctant to change its target interest rate, and argue that this helps explain recent observed deviations from the Taylor Rule. An optimal wait-and-see policy fits the target interest rates of the Fed and Bank of Canada better than the Taylor Rule.

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24

Gayon, Jean-Philippe, Işılay Talay-Değirmenci, Fikri Karaesmen, and E. Lerzan Örmeci. "OPTIMAL PRICING AND PRODUCTION POLICIES OF A MAKE-TO-STOCK SYSTEM WITH FLUCTUATING DEMAND." Probability in the Engineering and Informational Sciences 23, no. 2 (February 16, 2009): 205–30. http://dx.doi.org/10.1017/s026996480900014x.

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We study the effects of different pricing strategies available to a production–inventory system with capacitated supply, which operates in a fluctuating demand environment. The demand depends on the environment and on the offered price. For such systems, three plausible pricing strategies are investigated: static pricing, for which only one price is used at all times, environment-dependent pricing, for which price changes with the environment, and dynamic pricing, for which price depends on both the current environment and the stock level. The objective is to find an optimal replenishment and pricing policy under each of these strategies. This article presents some structural properties of optimal replenishment policies and a numerical study that compares the performances of these three pricing strategies.

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Rautiainen, Aapo, Jussi Lintunen, and Jussi Uusivuori. "Market-Level Implications of Regulating Forest Carbon Storage and Albedo for Climate Change Mitigation." Agricultural and Resource Economics Review 47, no. 2 (August 2018): 239–71. http://dx.doi.org/10.1017/age.2018.8.

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We explore the optimal regulation of forest carbon and albedo for climate change mitigation. We develop a partial equilibrium market-level model with socially optimal carbon and albedo pricing and characterize optimal land allocation and harvests. We numerically assess the policy's market-level impacts on land allocation, harvests, and climate forcing, and evaluate how parameter choices (albedo strength, productivity of forest land, and carbon and albedo prices) affect the outcomes. Carbon pricing alone leads to an overprovision of climate benefits at the expense of food and timber production. Complementing the policy with albedo pricing reduces these welfare losses.

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Güler, Mehmet Güray, Mustafa Akan, and İsmail Sevim. "Optimal pricing policy with inventory related costs and reference effects." Pamukkale University Journal of Engineering Sciences 23, no. 4 (2017): 451–61. http://dx.doi.org/10.5505/pajes.2017.49002.

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27

Zhang, Linghong. "Optimal Dynamic Pricing of Perishable Products Considering Quantity Discount Policy." Journal of Information and Computational Science 10, no. 14 (September 20, 2013): 4495–504. http://dx.doi.org/10.12733/jics20102396.

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28

Zhang, Jianxiong, Zhenyu Bai, and Wansheng Tang. "Optimal pricing policy for deteriorating items with preservation technology investment." Journal of Industrial & Management Optimization 10, no. 4 (2014): 1261–77. http://dx.doi.org/10.3934/jimo.2014.10.1261.

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29

Pantelous, Athanasios A., and Eudokia Passalidou. "Optimal premium pricing policy in a competitive insurance market environment." Annals of Actuarial Science 7, no. 2 (August 21, 2012): 175–91. http://dx.doi.org/10.1017/s1748499512000152.

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AbstractIn this paper, we propose a model for the optimal premium pricing policy of an insurance company into a competitive environment using Dynamic Programming into a stochastic, discrete-time framework when the company is expected to drop part of the market. In our approach, the volume of business which is related to the past year experience, the average premium of the market, the company's premium which is a control function and a linear stochastic disturbance, have been considered. Consequently, maximizing the total expected linear discounted utility of the wealth over a finite time horizon, the optimal premium strategy is defined analytically and endogenously. Finally, considering two different strategies for the average premium of the market, the optimal premium policy for a company with an expected decreasing volume of business is derived and fully investigated. The results of this paper are further evaluated by using data from the Greek Automobile Insurance Industry.

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30

Shi, Jianmai, Guoqing Zhang, and Jichang Sha. "Optimal production and pricing policy for a closed loop system." Resources, Conservation and Recycling 55, no. 6 (April 2011): 639–47. http://dx.doi.org/10.1016/j.resconrec.2010.05.016.

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31

Liu, Liping, Lindu Zhao, and Xuejie Ren. "Optimal preservation technology investment and pricing policy for fresh food." Computers & Industrial Engineering 135 (September 2019): 746–56. http://dx.doi.org/10.1016/j.cie.2019.06.041.

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32

Teng, Jinn-Tsair, Chun-Tao Chang, and Suresh Kumar Goyal. "Optimal pricing and ordering policy under permissible delay in payments." International Journal of Production Economics 97, no. 2 (August 2005): 121–29. http://dx.doi.org/10.1016/j.ijpe.2004.04.010.

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33

Michaelis, Jochen. "Optimal monetary policy in the presence of pricing-to-market." Journal of Macroeconomics 28, no. 3 (September 2006): 564–84. http://dx.doi.org/10.1016/j.jmacro.2004.09.006.

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34

ZHANG, JU-LIANG. "INTEGRATED DECISION ON PRICING, PROMOTION AND INVENTORY MANAGEMENT." Asia-Pacific Journal of Operational Research 29, no. 06 (December 2012): 1250038. http://dx.doi.org/10.1142/s0217595912500388.

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Firms often utilize promotion (such as coupons, advertisements, recruitment of excellent salespeople, and leafleting etc.) and dynamic adjustment of price to manage customers as well as proper production/inventory plan to satisfy the customers to get maximal profit in a firm. The decision on promotion and pricing and the decision on production/inventory must support each other. This paper addresses coordinated decision on pricing, promotion(non-price promotion) and inventory management. Specifically, we study a single item, periodic review model. The demand function is a linear demand function in which the market scale can be affected by the promotion conducted in that period. Unsatisfied demands are fully backlogged. We characterize the structure of the optimal policy that simultaneously determines the price, the promotion and the ordering quantity to maximize the total discounted profit with finite and infinite period problems. We show that the optimal replenishment policy is the quasi base stock list price target promotion policy, i.e., there exist a critical inventory level, a list price and a target promotion such that it is optimal to order up to the critical level, charge the list price and conduct the target promotion when the initial inventory is below the critical level and order nothing, conduct a higher promotion and charge a proper price to increase the demand otherwise. We also prove that the expected demand and the optimal promotion are increasing in the inventory, and price and promotion are complementary. Then we extend the problem to the case with capacity constraint. We show that the modified quasi base stock list price target promotion policy is optimal. For the joint decision problem on pricing, promotion and inventory control with positive fixed setup cost, we show that the optimal policy is (s, S, p, e) policy. That is, there exist two critical inventory levels stand St(st≤ St), a list price ptand a target promotion etin period t such that order up to St, charge price ptand conduct promotion etwhen the initial inventory is less than stand order nothing, charge a proper price and conduct a proper promotion otherwise.

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35

Melnikov, Oleg. "Heuristic Rules for the Dynamic Pricing Problem." Organizations and Markets in Emerging Economies 14, no. 2(28) (July 13, 2023): 436–57. http://dx.doi.org/10.15388/omee.2023.14.99.

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This paper is devoted to the development of heuristics for the dynamic pricing problem. A discrete time model of dynamic pricing on the fixed time horizon is proposed. It is applicable to products that satisfy two properties: 1) product value expires at a certain predetermined date, and 2) consumers demand at most a single unit of the product. This type of demand structure allows deriving a simple system of recursive equations for optimal prices using dynamic programming techniques. Optimal pricing policy is expressed as a function of time to expiration and inventory levels of unsold products. An analytical solution to this problem was obtained for special cases, while for the general case, a numerical algorithm has been developed. Qualitative characteristics of the optimal pricing policy are established, and their implications for dynamics of inventories and prices are discussed. Based on these observations, a simple heuristic rule for dynamic price adjustments is proposed. Performance of this heuristic is evaluated against the optimal dynamic and fixed-price policies using Monte-Carlo experiments. Results demonstrate high efficiency of the proposed heuristic strategy and its even simpler derivatives. Heuristics’ adaptability and ease of implementation should make it suitable and attractive for small and medium businesses.

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Joo, Ji-Ho, Hyeon-Mo Ku, and Jae-Cheol Kim. "Optimal access pricing with interconnection obligation." Information Economics and Policy 13, no. 3 (September 2001): 331–38. http://dx.doi.org/10.1016/s0167-6245(01)00037-3.

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SHUKLA, D., U. K. KHEDLEKAR, R. P. S. CHANDEL, and S. BHAGWAT. "SIMULATION OF INVENTORY POLICY FOR PRODUCT WITH PRICE AND TIME-DEPENDENT DEMAND FOR DETERIORATING ITEM." International Journal of Modeling, Simulation, and Scientific Computing 03, no. 01 (March 2012): 1150001. http://dx.doi.org/10.1142/s1793962311500012.

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In a declining market for goods, we optimize the net profit in business when inventory management allows change in the selling prices n times over time horizon. We are computing optimal number of changes in prices, respective optimal prices, and optimal profit in each of the cycle for a deteriorating product. This paper theoretically proves that for any business setup there exists an optimal number of price settings for obtaining maximum profit. Theoretical results are supported by numerical examples for different setups (data set) and it is found that for every setup the dynamic pricing policy outperforms the static pricing policy. In our model, the deterioration factor has been taken into consideration. The deteriorated units are determined by the recurrence method. Also we studied the effect of different parameters on optimal policy with simulation. For managerial purposes, we have provided some "suggested intervals" for choosing parameters depending upon initial demand, which help to predict the best prices and arrival of customers (demand).

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38

Weyl, E. Glen, and Jean Tirole. "Market Power Screens Willingness-to-Pay*." Quarterly Journal of Economics 127, no. 4 (November 1, 2012): 1971–2003. http://dx.doi.org/10.1093/qje/qjs032.

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Abstract What is the best way to reward innovation? While prizes avoid deadweight loss, intellectual property (IP) selects high social surplus projects. Optimal innovation policy thus trades off the ex ante screening benefit and the ex post distortion. It solves a multidimensional screening problem in the private information held by the innovator: research cost, quality, and market size of the innovation. The appropriate degree of market power is never full monopoly pricing and is determined by measurable market characteristics, the inequality and elasticity of innovation supply, making the analysis open to empirical calibration. The framework has applications beyond IP policy to the optimal pricing of platforms or the optimal procurement of public infrastructure.

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Fendel, Ralf, Christoph Swonke, and Michael Frenkel. "Local Currency Pricing versus Producer Currency Pricing: Direct Evidence from German Exporters." German Economic Review 9, no. 2 (May 1, 2008): 160–79. http://dx.doi.org/10.1111/j.1468-0475.2008.00429.x.

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Abstract In new open-economy macroeconomic models, the assumption on the pricing behavior of firms in international trade plays a central role. Whether firms apply producer currency pricing (PCP) or local currency pricing (LCP) crucially affects, for example, the design of optimal monetary policy or the choice of the optimal exchange rate system. However, empirical evidence has so far been mixed and is furthermore mostly of an indirect nature. This paper draws direct evidence on the price-setting behavior of German exporters from a questionnaire-based survey. We find that PCP applies in more integrated markets. Differences between LCP firms and PCP firms mainly exist with respect to the use of mark-ups and in the validity of the law of one price for their respective products.

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Luo, Xiankang, and Jie Xing. "Optimal Surrender Policy of Guaranteed Minimum Maturity Benefits in Variable Annuities with Regime-Switching Volatility." Mathematical Problems in Engineering 2021 (July 13, 2021): 1–20. http://dx.doi.org/10.1155/2021/9969937.

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This study investigates valuation of guaranteed minimum maturity benefits (GMMB) in variable annuity contract in the case where the guarantees can be surrendered at any time prior to the maturity. In the event of the option being exercised early, early surrender charges will be applied. We model the underlying mutual fund dynamics under regime-switching volatility. The valuation problem can be reduced to an American option pricing problem, which is essentially an optimal stopping problem. Then, we obtain the pricing partial differential equation by a standard Markovian argument. A detailed discussion shows that the solution of the problem involves an optimal surrender boundary. The properties of the optimal surrender boundary are given. The regime-switching Volterra-type integral equation of the optimal surrender boundary is derived by probabilistic methods. Furthermore, a sensitivity analysis is performed for the optimal surrender decision. In the end, we adopt the trinomial tree method to determine the optimal strategy.

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Pang, Zhan, and Frank Y. Chen. "COORDINATED PRICING AND INVENTORY CONTROL WITH BATCH PRODUCTION AND ERLANG LEADTIMES." Probability in the Engineering and Informational Sciences 28, no. 4 (June 27, 2014): 529–63. http://dx.doi.org/10.1017/s0269964814000126.

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This paper addresses a joint pricing and inventory control problem for a batch production system with random leadtimes. Assume that demand arrives according to a Poisson process with a price-dependent arrival rate. Each replenishment order contains a single batch of a fixed lot size. The replenishment leadtime follows an Erlang distribution, with the number of completed phases recording the delivery state of outstanding orders. The objective is to determine an optimal inventory-pricing policy that maximizes total expected discounted profit or long-run average profit. We first show that when there is at most one order outstanding at any point in time and that excess demand is lost, the optimal reorder policy can be characterized by a critical stock level and the optimal pricing decision is decreasing in the inventory level and delivery state. We then extend the analysis to mixed-Erlang leadtime distribution which can be used to approximate any random leadtime to any degree of accuracy. We further extend the analysis to allowing three outstanding orders where the optimal reorder point becomes state-dependent: the closer an outstanding order is to its arrival or the more orders are outstanding, the lower selling price is charged and the lower reorder point is chosen. Finally, we address the backlog case and show that the monotone pricing structure may not be true when the optimal reorder point is negative.

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Sahay, Savita A. "Transfer Pricing Based on Actual Cost." Journal of Management Accounting Research 15, no. 1 (January 1, 2003): 177–92. http://dx.doi.org/10.2308/jmar.2003.15.1.177.

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This paper analyzes a simple transfer-pricing policy based on the actual cost of production. I show that the performance of actual cost-based transfer pricing can be improved by using an additive markup above the unit production cost. I also show that this additive policy dominates an entire class of alternative markup policies, including the more common multiplicative policy, in which the transfer price is set at the actual cost plus a percentage markup. The optimal additive markup is shown to increase with increasing prices for the firm's product, and decrease with the cost of the supplying division's investment.

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YAMAZAKI, AKIRA. "EQUILIBRIUM EQUITY PRICE WITH OPTIMAL DIVIDEND POLICY." International Journal of Theoretical and Applied Finance 20, no. 02 (March 2017): 1750012. http://dx.doi.org/10.1142/s0219024917500121.

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This paper proposes an equilibrium model for evaluating equity with optimal dividend policy in a jump-diffusion market. In this model, a representative investor having power utility over an aggregate consumption process evaluates the equity as the expected value of the discounted dividends with his stochastic discount factor, while a firm paying the dividends from its own cash reserves manages to maximize the equity price. This situation is formulated as a singular stochastic control problem of jump-diffusion processes. We solve this problem and give the equilibrium equity price and the optimal dividend policy. Numerical examples show that the aggregate consumption process and the investor’s risk aversion have a significant impact on the equity price and the dividend policy. This model provides a structural explanation of equity risk premiums that is consistent with the standard theory of asset pricing.

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Tran, Quoc H., Rachel T. A. Croson, and Barry J. Seldon. "Experimental Evidence on Transfer Pricing." International Journal of Management and Economics 50, no. 1 (June 1, 2016): 27–48. http://dx.doi.org/10.1515/ijme-2016-0010.

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Abstract We use incentivized economics experiments to test both the point predictions and comparative static predictions of optimal transfer pricing models, comparing behavior under varying conditions, including wholly versus partially-owned subsidiaries and different tariff and tax rates. As predicted, we find that transfer prices are responsive to relative tax and tariff rates as well as ownership proportions. Additionally, we examine convergence and learning in this setting. While individuals do not choose optimal transfer prices, their choices converge to optimal levels with experience. This paper thus makes two important contributions. First, by comparing behavior with theoretical predictions it provides evidence of whether (and when) individuals set transfer prices optimally. Second, by comparing behavior under conditions of full and partial ownership it provides evidence on the impact of policy interventions (like regulating ownership proportions by MNEs) on tax revenues.

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Kwon, H. Dharma, Steven A. Lippman, and Christopher S. Tang. "OPTIMAL MARKDOWN PRICING STRATEGY WITH DEMAND LEARNING." Probability in the Engineering and Informational Sciences 26, no. 1 (November 25, 2011): 77–104. http://dx.doi.org/10.1017/s0269964811000246.

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When launching a new product, a firm has to set an initial price with incomplete information about demand. However, after observing the demand over a period of time, the firm might decide to mark down the price, especially when the Bayesian updated belief about demand is lower than originally anticipated. We consider the case in which the manufacturer makes three decisions: initial price, when to mark down the price, and the markdown price. Modeling the cumulative demand as a Brownian motion with an unknown drift, we compute the posterior probability distribution of the unknown drift. We then show that it is optimal to mark down the price when the posterior probability is below a computable threshold. This threshold policy enables us to determine the optimal (a) regular price, (b) markdown price, and (c) markdown time. Additionally, we examine the impact of demand volatility and evaluate the value of learning.

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Khedlekar, Uttam, and Ram Tiwari. "Decision makings in discount pricing policy for imperfect production system." Yugoslav Journal of Operations Research 29, no. 2 (2019): 273–93. http://dx.doi.org/10.2298/yjor180607029k.

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In this paper, we discussed the effects of discount price on demand and profit in a diminishing market. A production plan has been suggested for an imperfect production system. Here, demand is considered to be price sensitive and negative power function of the selling price. This problem is solved by optimization, using the Hessian matrix of order three. The main objective is to find the optimal expected average profit, optimal selling price, discount rate, backorder level, and lot-size. The recommendations are provided to offer a price discount for limited sale season on different occasions. A numerical example is presented to validate the model and is graphically illustrated accordingly.

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Zhao, Lianxia, Hui Qiao, and Qi An. "Optimal pre-sale policy for deteriorating items." Numerical Algebra, Control & Optimization 12, no. 1 (2022): 109. http://dx.doi.org/10.3934/naco.2021054.

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<p style='text-indent:20px;'>Pre-sale policy is a frequently-used sales approach for deteriorating products, e.g, fruits, vegetables, seafood, etc. In this paper, we consider an EOQ inventory model under pre-sale policy for deteriorating products, in which the demand of pre-sale period depends on price and pre-sale horizon, and the demand of spot-sale period depends on the price and stock level. Optimal pricing decisions and economic order quantity are also provided. We compare pre-sale model with a benchmark inventory model in which all the products are sold in spot-sale period. Theoretical results are derived to show the existence and uniqueness of the optimal solution. Numerical experiments are carried out to to illustrate the theoretical results. And sensitivity analysis is conducted to identify conditions under which the pre-sale policy is better off than the spot-sale only policy.</p>

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Li, Hao, Xi Yang, Yu Tu, and Ting Peng. "Two-Period Dynamic versus Fixed-Ratio Pricing Policies under Duopoly Competition." Mathematical Problems in Engineering 2019 (March 28, 2019): 1–11. http://dx.doi.org/10.1155/2019/6567952.

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This paper introduces a two-period, pricing policy under duopoly competition between two firms offering an identical product to consumers who are intertemporal utility maximization. Firms have equal inventories of faultlessly replaceable and perishable products. The firms adjust prices to maximize profits and determine optimal pricing policies, choosing from dynamic pricing, fixed-ratio pricing, and elastic pricing policies. According to a duopoly competition model, the consumer is limited to a single firm visit per period. The consumer decides to purchase the product at current price from a firm and remain in the market to purchase product from the other firm in the next period or exit the market. The results offer three main conclusions. First, elastic pricing is consistent with dynamic pricing. Second, the more consumers visit the firm in the first period, the more profits the firm will make. Third, we explore the effectiveness of different pricing policies. The results show that although dynamic pricing is a more complex policy than fixed-ratio pricing, it may lead to decreased equilibrium profits when the firms sharply discounts prices and consumer rationality is unlimited.

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Shim, Eunha, Gretchen B. Chapman, and Alison P. Galvani. "Decision Making with Regard to Antiviral Intervention during an Influenza Pandemic." Medical Decision Making 30, no. 4 (July 2010): E64—E81. http://dx.doi.org/10.1177/0272989x10374112.

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Background. Antiviral coverage is defined by the proportion of the population that takes antiviral prophylaxis or treatment. High coverage of an antiviral drug has epidemiological and evolutionary repercussions. Antivirals select for drug resistance within the population, and individuals may experience adverse effects. To determine optimal antiviral coverage in the context of an influenza outbreak, we compared 2 perspectives: 1) the individual level (the Nash perspective), and 2) the population level (utilitarian perspective). Methods. We developed an epidemiological game-theoretic model of an influenza pandemic. The data sources were published literature and a national survey. The target population was the US population. The time horizon was 6 months. The perspective was individuals and the population overall. The interventions were antiviral prophylaxis and treatment. The outcome measures were the optimal coverage of antivirals in an influenza pandemic. Results. At current antiviral pricing, the optimal Nash strategy is 0% coverage for prophylaxis and 30% coverage for treatment, whereas the optimal utilitarian strategy is 19% coverage for prophylaxis and 100% coverage for treatment. Subsidizing prophylaxis by $440 and treatment by $85 would bring the Nash and utilitarian strategies into alignment. For both prophylaxis and treatment, the optimal antiviral coverage decreases as pricing of antivirals increases. Our study does not incorporate the possibility of an effective vaccine and lacks probabilistic sensitivity analysis. Our survey also does not completely represent the US population. Because our model assumes a homogeneous population and homogeneous antiviral pricing, it does not incorporate heterogeneity of preference. Conclusions. The optimal antiviral coverage from the population perspective and individual perspectives differs widely for both prophylaxis and treatment strategies. Optimal population and individual strategies for prophylaxis and treatment might be aligned through subsidization.

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Ban, Gah-Yi, and N. Bora Keskin. "Personalized Dynamic Pricing with Machine Learning: High-Dimensional Features and Heterogeneous Elasticity." Management Science 67, no. 9 (September 2021): 5549–68. http://dx.doi.org/10.1287/mnsc.2020.3680.

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We consider a seller who can dynamically adjust the price of a product at the individual customer level, by utilizing information about customers’ characteristics encoded as a d-dimensional feature vector. We assume a personalized demand model, parameters of which depend on s out of the d features. The seller initially does not know the relationship between the customer features and the product demand but learns this through sales observations over a selling horizon of T periods. We prove that the seller’s expected regret, that is, the revenue loss against a clairvoyant who knows the underlying demand relationship, is at least of order [Formula: see text] under any admissible policy. We then design a near-optimal pricing policy for a semiclairvoyant seller (who knows which s of the d features are in the demand model) who achieves an expected regret of order [Formula: see text]. We extend this policy to a more realistic setting, where the seller does not know the true demand predictors, and show that this policy has an expected regret of order [Formula: see text], which is also near-optimal. Finally, we test our theory on simulated data and on a data set from an online auto loan company in the United States. On both data sets, our experimentation-based pricing policy is superior to intuitive and/or widely-practiced customized pricing methods, such as myopic pricing and segment-then-optimize policies. Furthermore, our policy improves upon the loan company’s historical pricing decisions by 47% in expected revenue over a six-month period. This paper was accepted by Noah Gans, stochastic models and simulation.

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