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Pricing Strategy (pricing + strategy)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	72%

Selected Abstracts

A Guide to Global Transfer Pricing Strategy

JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 6 2001
Robert Feinschreiber
Global transfer pricing strategy involves an analytical approach that lets a business control its income tax cost on a worldwide basis. However, global transfer pricing is a complex topic. The author unravels these mysteries and guides the reader in negotiating the many twists and turns. © 2001 John Wiley & Sons, Inc. [source]

WHY ARE AMERICANS ADDICTED TO BASEBALL?

CONTEMPORARY ECONOMIC POLICY, Issue 1 2008
AN EMPIRICAL ANALYSIS OF FANDOM IN KOREA AND THE UNITED STATES
Theories of rational addiction posit that certain habit-forming goods,characterized by an increasing marginal utility of consumption,generate predictable dynamic patterns of consumer behavior. It has been suggested that attendance at sporting events represents an example of such a good, as evidenced by the pricing strategies of commercial sports interests. In this essay, we provide new evidence in support of rational addiction for the case of Major League Baseball but fail to find such support in data from the Korean Professional Baseball League. We then review the scientific literature on sports fans from the perspective of human behavioral ecology and propose a theory of endogenous habit formation among sports fans that could explain our findings. (JEL C32, D83, D87, D91, L83) [source]

Randal Heeb Innovation and Vertical Integration in Complementary Markets

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2003
Randal Heeb
This paper studies vertical integration by an essential-good monopolist into complementary markets. Unlike previous studies of complementary products, consumers are allowed to purchase some components of a complementary basket, but not others. Two different pricing strategies by the integrated firm may emerge. In mass-market equilibria, the price of the complement under integration is zero and it is given away with the essential good. Niche-market equilibria have more conventional pricing. This dichotomy is consistent with consumer software pricing. Integration enhances consumer and total surplus, unless it leads to exit by the higher-quality rival, in which case welfare is reduced. Exit is most likely when it is least damaging to consumer welfare. Integration reduces innovation by the rival firm. The effect on innovation by the integrated firm is ambiguous, but numerical computation of an extended model indicates that integration increases the innovation of the integrated firm and enhances welfare. [source]

Rent extraction, principal,agent relationships, and pricing strategies: vendor licensing during the 1996 Olympic Games in Atlanta

MANAGERIAL AND DECISION ECONOMICS, Issue 8 2001
Ralph C. Allen
Two-part pricing, price-discrimination, rent creation and extraction, principal,agent theory, and public choice perspectives on public bureaucracies are used to interpret a vendor-license marketing arrangement and controversy arising out of the 1996 Olympic Games in Atlanta, GA. Containing features predicted by principal,agency theory, Atlanta's arrangement with its marketing agent was a response to the behavior of public bureaucracies and a low cost method of converting visitors' consumer surplus to rent, which could be extracted by the marketing agent and then by Atlanta. Atlanta's incentive to enforce vendor property rights was influenced by the nature of the game between Atlanta and prospective vendors. Copyright © 2001 John Wiley & Sons, Ltd. [source]

Optimal operating policies in a commodity trading market with the manufacturer's presence

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 2 2010
Hui Zhao
Abstract With the help of the Internet and express delivery at relatively low costs, trading markets have become increasingly popular as a venue to sell excess inventory and a source to obtain products at lower prices. In this article, we study the operational decisions in the presence of a trading market in a periodic-review, finite-horizon setting. Prices in the trading market change periodically and are determined endogenously by the demand and supply in the market. We characterize the retailers'optimal ordering and trading policies when the original manufacturer and the trading market co-exist and retailers face fees to participate in the trading market. Comparing with the case with no trading fees, we obtain insights into the impact of trading fees and the fee structure on the retailers and the manufacturer. Further, we find that by continually staying in the market, the manufacturer may use her pricing strategies to counter-balance the negative impact of the trading market on her profit. Finally, we extend the model to the case when retailers dynamically update their demand distribution based on demand observations in previous periods. A numerical study provides additional insights into the impact of demand updating in a trading market with the manufacturer's competition. © 2009 Wiley Periodicals, Inc. Naval Research Logistics, 2010 [source]

Bayesian strategies for dynamic pricing in e-commerce

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 3 2007
Eric Cope
Abstract E-commerce platforms afford retailers unprecedented visibility into customer purchase behavior and provide an environment in which prices can be updated quickly and cheaply in response to changing market conditions. This study investigates dynamic pricing strategies for maximizing revenue in an Internet retail channel by actively learning customers' demand response to price. A general methodology is proposed for dynamically pricing information goods, as well as other nonperishable products for which inventory levels are not an essential consideration in pricing. A Bayesian model of demand uncertainty involving the Dirichlet distribution or a mixture of such distributions as a prior captures a wide range of beliefs about customer demand. We provide both analytic formulas and efficient approximation methods for updating these prior distributions after sales data have been observed. We then investigate several strategies for sequential pricing based on index functions that consider both the potential revenue and the information value of selecting prices. These strategies require a manageable amount of computation, are robust to many types of prior misspecification, and yield high revenues compared to static pricing and passive learning approaches. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2007 [source]

An Economic Justification for Open Access to Essential Medicine Patents in Developing Countries

THE JOURNAL OF LAW, MEDICINE & ETHICS, Issue 2 2009
Sean Flynn
This paper offers an economic rationale for compulsory licensing of needed medicines in developing countries. The patent system is based on a trade-off between the "deadweight losses" caused by market power and the incentive to innovate created by increased profits from monopoly pricing during the period of the patent. However, markets for essential medicines under patent in developing countries with high income inequality are characterized by highly convex demand curves, producing large deadweight losses relative to potential profits when monopoly firms exercise profit-maximizing pricing strategies. As a result, these markets are systematically ill-suited to exclusive marketing rights, a problem which can be corrected through compulsory licensing. Open licenses that permit any qualified firm to supply the market on the same terms, such as may be available under licenses of right or essential facility legal standards, can be used to mitigate the negative effects of government-granted patents, thereby increasing overall social welfare. [source]

Modeling market dynamics in competitive communication consumer markets

BELL LABS TECHNICAL JOURNAL, Issue 2 2008
Yuliy Baryshnikov
Emergence of converged multimedia services has led operators to seek clear tactical and strategic advantages in developing differentiated service offerings. Effectiveness of the offer strategies is influenced by factors such as service delivery investment, operations cost, market segment preferences, competitive multimedia offers, service pricing, and consumer price sensitivities. Differentiation in any of these factors in a competitive environment has a direct influence on market share and profitability of communication service providers. This paper describes a modeling approach that explicitly considers the factors mentioned. The model can be used to quantify the impact of operator's offer and the pricing strategies amid market share acquisition, churn reduction, and profitability. This paper presents the application of the model to various converged operator scenarios such as voice convergence, triple-and quadruple-play, and xVNO operators that may utilize services such as "targeted advertising" to subsidize telephony services. The study presented in this paper can be contrasted with the significant number of studies (in marketing literature, primarily) dedicated to the understanding of the market behavior of consumers, and of their reactions to price, features, or marketing campaigns. © 2008 Alcatel-Lucent. [source]

Incomplete Adoption of a Superior Innovation

ECONOMICA, Issue 268 2000
Harvey E. Lapan
We consider a model in which an innovating monopolist of a technologically superior intermediate input must sell this product to final output producers. Prior research shows that, with complete information, the monopolist's optimal strategy will lead to complete adoption of this technologically superior innovation. In this article we show that, when the price of some competitively supplied input used in the final product market is endogenous and is altered by adoption of the innovation, then the optimal pricing strategy of the monopolist may lead to incomplete innovation. Thus, the standard result of complete adoption of the superior technology is partly attributable to the partial equilibrium nature of prior models. [source]

Monopoly Price Dispersion Under Demand Uncertainty

INTERNATIONAL ECONOMIC REVIEW, Issue 3 2001
James D. Jr. DanaArticle first published online: 23 DEC 200
When a monopolist sets its price before its demand is known, then it may set more than one price and limit the availability of its output at lower prices. This article adds demand uncertainty and price rigidities to the standard model of monopoly pricing. When there are two states of demand and the ex post monopoly price is greater when demand is high then the monopolist's optimal ex ante pricing strategy is to set two prices and limit purchases at the lower price. [source]

A Guide to Global Transfer Pricing Strategy

Peer-to-Peer File Sharing and the Market for Digital Information Goods

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2010
Ramon Casadesus-Masanell
We study competitive interaction between two alternative models of digital content distribution over the Internet: peer-to-peer (p2p) file sharing and centralized client,server distribution. We present microfoundations for a stylized model of p2p file sharing where all peers are endowed with standard preferences and show that the endogenous structure of the network is conducive to sharing by a significant number of peers, even if sharing is costlier than freeriding. We build on this model of p2p to analyze the optimal strategy of a profit-maximizing firm, such as Apple, that offers content available at positive prices. We characterize the size of the p2p network as a function of the firm's pricing strategy, and show that the firm may be better off setting high prices, allowing the network to survive, and that the p2p network may work more efficiently in the presence of the firm than in its absence. [source]

Competition in prescription drug markets: is parallel trade the answer?

MANAGERIAL AND DECISION ECONOMICS, Issue 5 2010
Panos Kanavos
This article uses a price determination model with dynamic panel data estimation to examine the extent to which pharmaceutical parallel trade promotes price competition and leads to downward price convergence. Little evidence of sustainable price competition is found. We find that prices are mainly affected by regulation and by competition in the wholesale distribution chain; that the pricing strategy of parallel distributors resembles that of originator drugs in importing countries; and that there may be upward rather than downward price convergence. Drawing on the European evidence, the findings also indicate that opening the US market to parallel imports will not necessarily lead to competition and enhance pharmaceutical cost containment. Copyright © 2010 John Wiley & Sons, Ltd. [source]

Optimal dynamic pricing for sports games with habitual attendance

MANAGERIAL AND DECISION ECONOMICS, Issue 8 2008
Dong C. Won
This paper provides a theoretical analysis of the optimal pricing decisions of a sports team that maximizes lifetime profits in sports markets where game attendance is habit-forming for sports fans. The long-run equilibrium price and attendance level are found to be greater than the counterparts of the static framework, respectively. The infinite horizon model shows that the pricing strategy of the firm brings about an upward-crossing of two different dynamic price paths where the price path with stronger habit formation initially stays below, catches up, and ultimately rises above the price path with weaker habit formation. It is worth noting that the upward-crossing phenomenon is not fully understood in a finite-period model. Copyright © 2008 John Wiley & Sons, Ltd. [source]

Optimal pricing strategy for foreign market entry: a game theoretic approach

MANAGERIAL AND DECISION ECONOMICS, Issue 8 2006
Young-Han Kim
Given that pricing plays an important role in a company's international competitive strategy, researchers have long argued the need for theory building in the area of international pricing. This study develops an optimal pricing strategy for foreign market entry using a game theoretic framework. The proposed model assumes two firms, a local incumbent and a foreign entrant, competing in a market. Consumers know the quality of the incumbent's offering, but do not know how it compares to that of the foreign entrant's. Based on these assumptions, and using the theory of inference making, we propose an upward price distortion by the entrant firm as an optimal entry strategy under incomplete information. The paper presents a game theoretic derivation to establish that the game has a unique intuitive separating equilibrium where the entrant firm stands to gain by engaging in upward price distortion to signal high quality to consumers. Copyright © 2006 John Wiley & Sons, Ltd. [source]

Pricing training and development programs using stochastic CVP analysis

MANAGERIAL AND DECISION ECONOMICS, Issue 3 2005
James A. Yunker
This paper sets forth, analyzes and applies a stochastic cost-volume-profit (CVP) model specifically geared toward the determination of enrollment fees for training and development (T+D) programs. It is a simpler model than many of those developed in the research literature, but it does incorporate one advanced component: an ,economic' demand function relating the expected sales level to price. Price is neither a constant nor a random variable in this model but rather the decision-maker's basic control variable. The simplicity of the model permits analytical solutions for five ,special prices': (1) the highest price which sets breakeven probability equal to a minimum acceptable level; (2) the price which maximizes expected profits; (3) the price which maximizes a Cobb,Douglas utility function based on expected profits and breakeven probability; (4) the price which maximizes breakeven probability; and (5) the lowest price which sets breakeven probability equal to a minimum acceptable level. The model is applied to data provided by the Center for Management and Professional Development at the authors' university. The results suggest that there could be a significant payoff to fine-tuning a T+D provider's pricing strategy using formal analysis. Copyright © 2005 John Wiley & Sons, Ltd. [source]

Public sector refraction and spectacle dispensing in low-resource countries of the Western Pacific

CLINICAL & EXPERIMENTAL OPHTHALMOLOGY, Issue 4 2008
Jacqueline Ramke
Abstract Background:, Given that uncorrected refractive error is a frequent cause of vision impairment, and that there is a high unmet need for spectacles, an appraisal of public sector arrangements for the correction of refractive error was conducted in eight Pacific Island countries. Methods:, Mixed methods (questionnaire and semi-structured interviews) were used to collect information from eye care personnel (from Fiji, Papua New Guinea, Solomon Islands, Vanuatu, Cook Islands, Samoa, Tonga and Tuvalu) attending a regional eye health workshop in 2005. Results:, Fiji, Tonga and Vanuatu had Vision 2020 eye care plans that included refraction services, but not spectacle provision. There was wide variation in public sector spectacle dispensing services, but, except in Samoa, ready-made spectacles and a full cost recovery pricing strategy were the mainstay. There were no systems for the registration of personnel, nor guidelines for clinical or systems management. The refraction staff to population ratio varied considerably. Solomon Islands, Tuvalu and Vanuatu had the best coverage by services, either fixed or outreach. Most services had little promotional activity or community engagement. Conclusions:, To be successful, it would seem that public sector refraction services should answer a real and perceived need, fit within prevailing policy and legislation, value, train, retain and equip employees, be well managed, be accessible and affordable, be responsive to consumers, and provide ongoing good quality outcomes. To this end, a checklist to aid the initiation and maintenance of refraction and spectacle systems in low-resource countries has been constructed. [source]