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Fixed Costs (fixed + cost)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	71%

Selected Abstracts

A NOTE ON MARKET COVERAGE IN VERTICAL DIFFERENTIATION MODELS WITH FIXED COSTS

BULLETIN OF ECONOMIC RESEARCH, Issue 1 2008
Pei-Cheng Liao
L11; L13 ABSTRACT With fixed costs of quality improvement, we find that a covered market outcome with an interior solution in the price stage is not a Nash equilibrium. When the degree of consumer heterogeneity is high (low) enough, an uncovered market outcome (a covered market outcome with a corner solution in the price stage) is the only Nash equilibrium. When the degree of consumer heterogeneity is moderate, both of the two market outcomes are Nash equilibria, but an uncovered market outcome yields higher social welfare than a covered market outcome with a corner solution in the price stage. [source]

Estimating Labor Demand with Fixed Costs*

INTERNATIONAL ECONOMIC REVIEW, Issue 1 2004
Paola Rota
We consider a dynamic model in which firms decide whether or not to vary labor in the presence of fixed costs. By exploiting the first-order condition for optimality, we derive a semireduced form in which firms' intertemporal employment is defined by a standard marginal productivity condition augmented by a forward-looking term. We obtain a marginal productivity equilibrium relation that takes into account the future alternatives of adjustment or nonadjustment that firms face. We use the structural parameter from this condition to estimate the fixed cost within a discrete decision process. Fixed costs are about 15 months' labor cost. [source]

Efficiency in an Economy with Fixed Costs

JOURNAL OF PUBLIC ECONOMIC THEORY, Issue 2 2001
Andrea Dall'olio
It is by now well known that in an economy with increasing returns, first-best efficiency may be impossible to attain through an equilibrium concept based on market prices, even if firms are regulated to follow marginal cost pricing. We examine the efficiency issue in a special but important class of economies in which the only source of nonconvexities is the presence of fixed costs. Even in this context, it is possible that none of the equilibria based on marginal cost pricing are efficient (unless additional, strong assumptions are made). We argue that available results on the existence of an efficient two-part tariff equilibrium rely on very strong assumptions, and we provide a positive result using a weak surplus condition. Our approach can also be used to establish the existence of an efficient marginal cost pricing equilibrium with endogenously chosen lump-sum taxes if the initial endowment is efficient in the economy without the production technology. [source]

Estimating Labor Demand with Fixed Costs*

Algorithms for the multi-item multi-vehicles dynamic lot sizing problem

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 2 2006
Shoshana Anily
Abstract We consider a two-stage supply chain, in which multi-items are shipped from a manufacturing facility or a central warehouse to a downstream retailer that faces deterministic external demand for each of the items over a finite planning horizon. The items are shipped through identical capacitated vehicles, each incurring a fixed cost per trip. In addition, there exist item-dependent variable shipping costs and inventory holding costs at the retailer for items stored at the end of the period; these costs are constant over time. The sum of all costs must be minimized while satisfying the external demand without backlogging. In this paper we develop a search algorithm to solve the problem optimally. Our search algorithm, although exponential in the worst case, is very efficient empirically due to new properties of the optimal solution that we found, which allow us to restrict the number of solutions examined. Second, we perform a computational study that compares the empirical running time of our search methods to other available exact solution methods to the problem. Finally, we characterize the conditions under which each of the solution methods is likely to be faster than the others and suggest efficient heuristic solutions that we recommend using when the problem is large in all dimensions. © 2005 Wiley Periodicals, Inc. Naval Research Logistics, 2006. [source]

Optimal Two-Stage Design for Case-Control Association Analysis Incorporating Genotyping Errors

ANNALS OF HUMAN GENETICS, Issue 3 2008
Y. Zuo
Summary Two-stage design is a cost effective approach for identifying disease genes in genetic studies and it has received much attention recently. In general, there are two types of two-stage designs that differ on the methods and samples used to measure allele frequencies in the first stage: (1) Individual genotyping is used in the first stage; (2) DNA pooling is used in the first stage. In this paper, we focus on the latter. Zuo et al. (2006) investigated statistical power of such a design, among other things, but the cost of the study was not taken into account. The purpose of this paper is to study the optimal design under the given overall cost. We investigate how to allocate the resources to the two stages. Note that in addition to the measurement errors associated with DNA pooling, genotyping errors are also unavoidable with individual genotyping. Therefore, we discuss the optimal design combining genotyping errors associated with individual genotyping. The joint statistical distributions of test statistics in the first and second stages are derived. For a fixed cost, our results show that the optimal design requires no additional samples in the second stage but only that the samples in the first stage be re-used. When the second stage uses an entirely independent sample, however, the optimal design under a given cost depends on the population allele frequency and allele frequency difference between the case and control groups. For the current genotyping costs, we can roughly allocate 1/3 to 1/2 of the total sample size to the first stage for screening. [source]

A Framework for Facilitating Sourcing and Allocation Decisions for Make-to-Order Items

DECISION SCIENCES, Issue 4 2004
Nagesh N. Murthy
ABSTRACT This paper provides a fundamental building block to facilitate sourcing and allocation decisions for make-to-order items. We specifically address the buyer's vendor selection problem for make-to-order items where the goal is to minimize sourcing and purchasing costs in the presence of fixed costs, shared capacity constraints, and volume-based discounts for bundles of items. The potential suppliers for make-to-order items provide quotes in the form of single sealed bids or participate in a dynamic auction involving open bids. A solution to our problem can be used to determine winning bids amongst the single sealed bids or winners at each stage of a dynamic auction. Due to the computational complexity of this problem, we develop a heuristic procedure based on Lagrangian relaxation technique to solve the problem. The computational results show that the procedure is effective under a variety of scenarios. The average gap across 2,250 problem instances is 4.65%. [source]

Estimating Labor Demand with Fixed Costs*

Efficiency in an Economy with Fixed Costs

A single-period inventory placement problem for a serial supply chain

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 6 2001
Chia-Shin Chung
Abstract This article addresses the inventory placement problem in a serial supply chain facing a stochastic demand for a single planning period. All customer demand is served from stage 1, where the product is stored in its final form. If the demand exceeds the supply at stage 1, then stage 1 is resupplied from stocks held at the upstream stages 2 through N, where the product may be stored in finished form or as raw materials or subassemblies. All stocking decisions are made before the demand occurs. The demand is nonnegative and continuous with a known probability distribution, and the purchasing, holding, shipping, processing, and shortage costs are proportional. There are no fixed costs. All unsatisfied demand is lost. The objective is to select the stock quantities that should be placed different stages so as to maximize the expected profit. Under reasonable cost assumptions, this leads to a convex constrained optimization problem. We characterize the properties of the optimal solution and propose an effective algorithm for its computation. For the case of normal demands, the calculations can be done on a spreadsheet. © 2001 John Wiley & Sons, Inc. Naval Research Logistics 48:506,517, 2001 [source]

Does Sutton apply to supermarkets?

THE RAND JOURNAL OF ECONOMICS, Issue 1 2007
Paul B. Ellickson
I present empirical evidence that endogenous fixed costs play a central role in determining the equilibrium structure of the supermarket industry. Using the framework developed in Sutton (1991), I construct a model of supermarket competition where escalating investment infirm-level distribution systems is driven by the incentive to produce a greater variety of products in every store. Employing a store-level census and 51 distinct geographic markets, I demonstrate that the supermarket industry is a natural oligopoly in which a small number of firms (between four and six)capture the majority of sales, regardless of market size. [source]

Modelling selective breeding in protandrous, batch-reared Asian sea bass (Lates calcarifer, Bloch) using walkback selection

AQUACULTURE RESEARCH, Issue 10 2010
Nicholas Andrew Robinson
Abstract A bioeconomic simulation model for Lates calcarifer predicted that a strategy involving crossing current generation males with previous generation females would be a practical, effective and profitable way of dealing with protandry when batch rearing for selective breeding to improve the growth rate. The strategy allowed earlier initialization and more frequent ongoing rounds of selection, and resulted in a 16,19% higher overall response, than an alternative where each generation's males were crossed with the same generation's females. The strategy also yielded the highest short-term benefit,cost ratio (13:1 versus 7:1 after 8 years of selective breeding) and the highest short- and long-term value for participants in a breeding cooperative (a net present value of AU$28 million and an internal rate of return of 144% over 10 years), due to higher yields per fixed costs of production per unit area and due to savings in feed costs per kilogram of production. Breeding facilities of scale producing 50 full-sibling families per generation were found to be more profitable than those producing 100 families. [source]

A NOTE ON MARKET COVERAGE IN VERTICAL DIFFERENTIATION MODELS WITH FIXED COSTS

Factor Endowments and the Private Provision of Public Goods

BULLETIN OF ECONOMIC RESEARCH, Issue 2 2004
Simon Vicary
H4 Abstract The paper examines the consequences of increasing the size of the community in the standard model of the private provision of public goods when costs are variable. In contrast to an economy with fixed costs, the provision of the public good can fall with a larger community, and an increased provision of the public good is neither a necessary nor a sufficient condition for individual utility to rise. The paper also contributes to the literature on immiserizing growth in that it shows that capital accumulation can possibly result in lower utility for all individuals. [source]